This is Bloomberg Wall Street Week.
I mean may not have an overall recession. We're having a rolling recession. To KNYE, roll looks pretty strongly when it comes to jobs.
The financial stories that shape our world.
Three major regional bank failures sent shockwaves through the banking system. We're all trying to figure out what to make of generative AI through.
The eyes of the most influential voices.
Welcome down, Doctor Paul Krugman, Ryan moynihan, a Bank of America, deebro Lair of the Paulson Institute, well then Hubbard of the Columbia Business School.
Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
Inflation numbers, big mergers, IPOs, but they were all overshadowed by war in the Middle East. This is Bloomberg Wall Street Week. I'm David Weston. This week. Richard Hawes of Centerview Partners on Israel's war against Hamas in Gaza. Special contributor Larry Summers on the controversy over Harvard's position on the war.
The statement by thirty student groups blaming all violent sewn Israel was a absurdity.
And Greg Fleming of Rockefeller Capital Management on how investors respond to geopolitical turmoil.
Investors David have a hard time measuring geopolitical risk.
Global Wall Street began the week trying to absorb the awful news coming out of Israel and Amma's terrorist attack on civilians and military. As word came of death and destruction.
It's simply.
Depravity in the worst measurable way. And the initial Israeli responds with more on the way out of an understanding that there are civilians.
Here whom are not our enemy and.
We do not want to target them.
We are asking them to evacuate so that we would be able to continue to.
Strike military targets belonging to hamas in the Gazza stere.
Even as we kept one eye on Israel, the world of finance and business went on with a major merger in the oil industry between Exxon and Pioneer. You have to become a diversified company with.
Slots right into our existing unconventional business.
Another initial public offering came to market, this one from Birkenstock. The first trade was at forty one bucks. This deal got priced at forty six, so you're talking about an elebor percent decline for the open. The critical CPI numbers came in on Thursday, the last read before the FEDS meeting next month.
The numbers come in a little bit hotter than anticipated, with CPI up four tenths. The forecast was for a three tenths increase, but that's down from six tenths to the months before. The core comes in up three tenths, which is bang on.
In the end, the markets reacted to all the turmoil this week with surprising calm. But before we go through the markets, we begin with the big story of the week, and for that we welcome Richard Hawes, now of Center Few Partners and so recently ambassador has served as President and Council of Foreign Relations for almost twenty years. So Richard, thank you so much for being here. You have a
new newsletter out called Home and Away on substack. You write today about this subject, and one of the things you warn about is if Israel in fact goes into Gaza, it could create more problems than it solves. Explain.
But don't get me wrong, David, I believe Israel should get involved in Gaza. It should go after those who undertook these heinous barbaric acts. It's important to say that terrorists cannot act with impunity. Israel also needs to restore the terrens, rebuild its defenses, which obviously failed. But to go in really big, I do worry would cause at least as many, if not more, problems than it would solve.
You'd create a lot of sympathy for the Palestinians and for Hamas because there would inevitably be all sorts of civilian casualties. Israel itself would take many more casualties it's military, some of them would be abducted. I worry this could become the grounds for war, widening that in Lebanon and other places. Iran, using his bulla there, would take this
as something of an opportunity. I think the United States, which has been rightfully so supportive of Israel up to now, would be pressured to rethink its position, maybe call for a ceasefire. So Israel really needs to think about what it does. The good news Israel does have options, and I would say what it ought to do is really two things. It ought to go in but very discreetly, where it has intelligence, go after those Hamas fighters could be very targeted on them, could be from the air
could be from the ground with smaller units. Secondly, rebuild your defenses they failed. Rebuild the walls, put troops there, increase your readiness. Don't underestimate Hamas ever Again, but in Western Israel, be prepared potentially for next time, if only because you don't want there to be a next time.
Talk about the specific objective of any sort of invasion of guys. It's understandable the Prime Minister Nya, who must act as you say, what was done by Hamas is beyond inexcusable, just inconceivable what happened. At the same time, the Prime Minister is said he wants to eliminate Hamas? Is that a realistic objective in Gaza?
Short answers know it's to be very hard to find himas It's not like it's an army in an open battlefield with tanks and planes and the rest.
Doesn't It doesn't work that way.
Also, Hamas is much a movement or network, it's even an idea, David. So it's not just that you're going to create all sorts of resistance. Remember Donald Rumsfeld's quote when we were using drones to kill terrorists, How do we know we're not creating more future terrorists than the ones we're getting. I think that would come into play. So Hamas or some organization like it, some movement like it,
will survive, might even be stronger afterwards. And as the Israelis learned in many places in lebanonor and Gaza, historically easier to get in than it is to get out. And when you get out, how do you know you could put something better than endoors in its place. So again, Israel needs to act, but it needs to act smart. It needs to act in a really careful way.
You know Gaza, You've been to Gaza City, you know how difficult that terrain is. As it were, it's so densely popular that it'd so many buildings. One of the objectives here is to rescue the hostages, of which we don't know how many there are, but upwards of one hundred at least hostages. Is that realistic? Is it conceivable that they could go in and actually rescue the hostages? Really hard?
To rescue hostages, you need totally good intelligence, then you need total surprise. That's loading assumption on assumption. I think the more likely way the hostages get out is there's a swap You've got hundreds of Hamas operatives in Israeli prisons, thousands of Palestinians from the West Bank who have the Israelis and charged with crimes. So I think if there's
an exchange here, that would be the way we work. Indeed, David, one of the reasons I would argue, one of the two reasons Hamas took so many hostages was one to deter Israeli attacks, but secondly to set up this kind of a swamp.
Richard, you mentioned the possibility of expanding this conflict beyond Israel and Gaza. And obviously this is first and foremost to a humanitarian issue, a tragedy and inconceivable tragedy. It also has potential economic ramifications, particularly if there's expansion. What about you mentioned Lebanon, You mentioned particularly Iran, because a lot of people on Wall Street are very concerned if this goes, for example, to involve Iran, then it could really have substantial economic effects.
But they ought to be worried about that, and that's why again it's so important it's not widened. I think the United States or to let Iran know that it will be held accountable for anything that Habola does. As well as not an independent entity. I think we may be able to get the Chinese involved. China's the principal importer of Iranian oil. If the Chinese don't want to see that oil flow interrupted by American arms, they may
want to lean on Iran terrain in Hbola. There's things we can and should do here because this could grow, could grow.
In other ways too day.
But you can imagine Arab regimes around the region threatened potentially by public unrest if things get bad enough in Gaza, so in the Middle East. One of the rules of history, as bad as things get, they can all always get worse. That ought to be one of our goals here. By our I mean the United States and Israel to manage this.
Richard, you are a career diplomat, and from what I've read of history, typically these things are resolved ultimately through some sort of agreement, not throughout and out warren destruction of the other side. It's too early to really move forward, I'm sure on diplomacy, but it may not be too early to think about what that might look like down the road and position ourselves.
I think I have to think about tranches or phases we talked about one which is a prisoner for a hostage swap. I can imagine some kind of a ceasefire or modus vivendi agreement. The big question, though, is how do you make some progress on the Palestinian issue. Wildly optimistic, ambitious, I get it, but I think what we've learned, David is normalization between Israel and Arab governments can only go so far. It can't survive if you will absent or
apart from the Palestinians totally. There's got to be a Palomestinian dimension to this. It won't be with hamas they have ruled themselves out for time immemorial. But Israel needs a Palestinian partner. Israel needs a Palestinian state, not as a favorite to the Palestinians, as a favor to itself. If Israel is going to remain a democratic, Jewish, secure, prosperous state, it needs a Palestinian state that's willing to
coexist with it peacefully. That has to be the long term goal of Israeli and American foreign policy and diplomacy.
I know how difficult it is.
I spent decades working on it, but I think what we've learned the hard way of the last few days. In a vacuum where there is no hope, then if the only game in town is terrorists, terrorists will do with terrorists do, and we can't allow that to be the only game in town.
There are those who specula that we can't know. Certainly, I can't know what was really in Hamas's mind, but there are those who speculating part of the triggering banked. Here were reports about a possible arrangement with Saudi Arabia, Israel, and the United States, even at this late date in understanding Saudi Arabia right now said they're going to suspend
that talks about really reconciling with Israel. Is there a potential constructive rule for Saudi Arabia in this sort of solution you described so, I think you're right.
I think Hamas at Iran's Behess probably wanted to normalization. Hamas also wanted to do its version of station identification. They like to portray themselves. It's the only Palestinian entity willing and able to take on Israel. Look Saudi Arabia, the Crown prins MBS wants to normalize with Israel. He can't in this setting right now. It's too volatile, the Palestinian angles too uncertain, but it's important, but they still.
Want to do it.
Saudi Arabia wants the security pack with the United States. They want a nuclear program that the United States supports. So yes, I think we already get Saudi Arabia involved, and that could be one of the ways again to work with Israel, which wants normalization with Saudi Arabia. That's one of the reasons Israel might need to think more creatively about what they hold out as a possibility to Palestinians who are willing to live with it in peace.
Richard, thank you so very much for spending time with us. That is Richard has now Centerview Partners. Coming up, we go through the market reaction to a very busy week with Mona Mahajen of Edward Jones. That's next on Walfree Week on Bloomberg.
This is Bloomberg Well Street Week with David Weston from Bloomberg Radio.
This is Wall Street Week. I'm David Weston. There was plenty for the markets that digests this week, including but going beyond, events in the Middle East. In the end, the S and P five hundred was up almost a half a percent end at forty three twenty eight, while
the Anasdak lost almost two tens of percent. While the real ups and downs really were once again over in the bond market, with the yield on the tenure starting the week up over four point eight to zero and giving up over eighteen basis points in a shortened trading week to end up at four point six y two. Take us through what we saw. Welcome back now, Monhama Hodgen. She is Edward Jones, Senior Investment Strategeres Mada. Great to have you back with us. Let's start with that bond activity.
It has been pretty busy in the bond market in the last couple of weeks. Last week was how the yields go way up this week they came in. What was the cause of it as far as you could say, how much of that was safe haven because of the geopolitical turmoil?
Yeah, thanks David. What a harrowing week in the headlines, But to your point, markets held in there. There was a lot of resilience coming out of the broader s and P five hundred in particular, and we do think part of that was driven by this flight to safety or safe haven response. So typically when a geopolitical crisis hits, you see investors flock towards areas like the dollar, like gold, and like treasury bonds. So all three of those played out this week, but most notable for markets was the
flight to treasury bonds, which pushed yields notably lower. So, as you just showed in that chart, yields had been climbing almost two highs of this cycle just as of last week, and this week they reversed that course. So that brought some much needed relief for broader equity markets. And it's interesting, even though equity markets did end up higher,
where did people and where did investors hang out? Well, we really saw outperformance come from the defensive parts of market, areas like consumer staples, like utilities, some of those interest rate sensitive parts of market like real estate. So it wasn't necessarily a tech driven or AI rally that we've seen really in recent weeks as well. So more broadly, we'd say this move in treasury yields was partly a flight to safety response, partly maybe last week was a
top in the near term for yields. We certainly heard a couple of Fed officials this week talk about maybe a pause in the rate hiking cycle. We do think there may be some volatility ahead, especially as there's uncertainty around these auctions that are coming up. But more broadly, we think the trend over time could be stability and hopefully a move lower.
So let's talk about that moment specifically. You talked about highs of the cycle on a top what leads you to believe that maybe that's what we've seen. We also got some CPI numbers that were a little bit high this week, a little hot. We had University of Michigan sentiment coming in with increased expectations of inflation. So what makes you think that maybe we've seen the high of the cycle on the tenure, Yeah.
It was interesting. The inflation prints were certainly mixed. We had again a little bit of a tick higher and headline inflation and the gradual move lower and core inflation. But even despite the mixed inflation numbers, which normally would have spooked markets and driven treasure yields higher, we saw a pretty muted response. So treasure yields were steady today. We actually saw another move lower, and in our view, you know, while we do think there's volatility always around
the bond market. We do think the FED and really global central banks may be looking towards a pause. The FED has already talked about rate cuts in twenty twenty four. Now, what are some of the counters to this. Well, certainly the US has incurred a lot of deficits over time, and those deficits will have to be funded, and we've seen that. You know, this week we had a thirty year yield auction. There wasn't as much demand as we had hoped. That did temporarily drive yields higher and we
saw sell off in the market. So we may get bouts of volatility like that, but we think generally the direction of travel, especially as a FED, you know, it's very much doing the quantitative tightening. Now it's not a big buyer in the bond space, but over time that program may stabilize as well. So we do think over time we'll see central banks kind of coordinate in a pause and pivot lower, which will put some downward pressure on the bond deal space.
That just was only asked, what is the volatility in the bond market, and particularly on the long end in the thirty year that we've seen. As you say, there aren't as many buyers because the FED is out of the game and there are questions about what's going with China and Japan as well. At the same time, the supply is really really large. Are you concerned at all about increased volatility in the bond market or do you think it's going to settle back down if why?
Yeah. You know, what we'd say broadly is the environment we really had that propelled a lot of these growth stocks and risk appetite over the last ten years. And you know, post financial crisis was an environment where the FED was closer to the zero bound and treasurreye olds were in the one and a half to two percent range. When we think about the next ten years, it could
look very different. So to your point, we don't expect the FED to go back to the zero bound, and we do think treasuries may remain elevated versus history, so maybe somewhere in the three to four percent range. So in that environment, you really do have to think about acid allocation maybe a bit differently. You know, growth and value you or maybe a combination of both makes more sense. And certainly bonds have a better or more substantial role in your portfolio. You can now get yields, you can
now get some potential for appreciation. If over time we do get treasure fields moving lower, that does support investment grade and longer duration bonds as well. So what we'd say overall is, while we may not stay at these elevated levels, we certainly don't expect to return to where we saw in the last decade. As well.
You're also going to yield out of cash or cash equivalents like CDs and things like that. Are your clients going into CDs because it can be pretty attractive right now, and goodness knows, it's pretty flexible, not much risk there.
Yeah, it's certainly interesting, especially when we get these headlines and volatility, politics, geopolitics. There is this natural response, should I just hide out in the CDs? They're offering five percent plus?
You know?
Our response is always, look, they are attractive for now. They have some interesting yields, really what we haven't seen in any time in recent history. So we understand the appeal. But for long term investors there's a few risks, one reinvestment risks, So over time those yields may not be there, they may start moving lower, so when you have to
reinvest those CDs, it may be a lower rate. Two, there's an opportunity cost, and we've already seen the S and P five hundred up about twelve percent this year, even with the volatility, and so you know already it's exceeded that five percent or so cash like yields. And then thirdly, you know we've seen historically over time cash
relative to really any other asset class has underperformed. So for long term investors, we would certainly recommend complementing slowly some of that CD cash like money with longer duration parts of the market, with strategic acid allocations, you know, that are aligned to your goals longer term. So that's what gets you to meet or exceed your financial quicker.
Resu And do you need to go into bonds and for fear that maybe the fids are going.
To start cutting rates, You know, we do think that there is an attractive opportunity and really it's compelling versus anytime in recent history for that longer duration part of the market in the investment grade space, and usually historically that period between a FED pause and that first cut is your opportunity. Markets start pricing it in very quickly
as the sped starts signaling rate cuts ahead. So we think the months ahead could provide that window of opportunity for bond investors really like we haven't seen in recent years. And so we do think there's a compelling opportunity for bond investors in the mind.
Why did we actually get to that pause? Thank you so much to Monamahadjen of Edward Jones. Coming up, we turn to the world of real estate in a time of higher rates with Kathy Marcus co CEO of Pgium real Estate.
I think sellers are having a very tough time coming to term with the new prices.
That's next on Wall Street Week on Bloomberg.
This is Bloomberg Wall Street Week with David Weston from Bloomberg Radio.
Repricing the world. That's what sharply higher rates mean for just about every asset.
Class starting in the mid sixties who had an inverse correlation between bond yields and stock prices. Then you went for about a twenty twenty five year period where for most of the time you had a positive correlation. We're back in negative correlation territory.
We're seeing it in stocks.
By observation over I don't know forty years or so of watching equity markets is that they are keenly attuned to interest rates as a more direct transmission mechanism to equity prices, simply because interest rates are our discount, our discount rate on future cash flows.
We're seeing it in the drop off in M and A activity as sellers come to terms with the new lower prices that buyers are willing to pay.
We're certainly beginning to see a significantly a greater amount of activity. It hasn't manifested itself yet in announced transactions, but announced M and A for the first six months of the year was down.
And boy, are we seeing it in bonds.
We're more or less in the range for treasuries that we're that we're going to see.
But perhaps no asset class has been hit harder by the jumping rates than real estate, and in particular commercial real.
Estate financing is harder to get today because of concerns about real estate, and also buildings have to have strong cash flows to support the higher interest rates that are associated with financing.
Leaving investors to wonder whether now is the time to pick up some bargains or whether they'd be trying to catch a falling knife.
I think the banks in the US will lose hundred and fifty billion dollars in office over time here, and they are about there's about two trillion of equity in the bank, so it's like a ten percent hit to US banking equity. But I really think the focus on losses in US commercial real estate is going to be in the office.
Sector and to sort through the bargains from the falling knives in real estate. We welcome to somebody who knows the area terribly well, Kathy Marcus. She is PGIM real Estate co CEO and GLOE COO. Kathy, Welcome to Wall Street. Great to have you here.
Thank you.
So lots going on with real estate, in part because of what's gone on with rates. Start with the beginning question, there's been sort of a repricing of real estate because of those higher rates. Where are we in that process.
Well, there are really two parallel repricings that are going on right now, one which has already happened and potentially over corrected a little bit, which are the public real estate markets, the re market, and then the private real estate markets, which have taken much much more time and where we might be you call it sixty to seventy percent through and that is an average because the different
sectors are behaving very, very differently. The fundamentals are very different among the different sectors, and the impact that rates have had on the valuations and the private valuation process in general is a little bit different and had the experiences have been different for the different sectors on the private side.
Are sellers having a tough time coming to terms of the new prices?
I think sellers are having a very tough time coming to term with the new prices and the gap between where buyers and sellers think things should trade, and then overlay that with where the lenders may or may not be willing to lend. The transactions market is so muted right now. I can't actually remember a time that it's been dismuted before, and it's only gotten worse since rates have spiked, you know, really just recently.
Well, if you have to refinance in this world is a very different world from just two or three years ago, at what point to do a lot of the sellers have to refinance and it really has to change what's going on.
Well, that will happen over time and there are, you know, maturities that are coming up. There are maturities that have already occurred where there's been a bit of a kicking the can down the road, particularly in the office sector. So if you think about it and office loan matures and so what normally happens. You could refinance that office asset generally at the same or higher loan balance, or you could sell the asset. Neither one of those things
is really possible right now. The option that's available to people right now is to potentially extend the loan, and often that requires some sort of an equity paydown, which generally, particularly office space, is not that appealing to borrowers because in some cases they feel like they're throwing good money after that.
So that's office space. As you suggest that, there are a lot of different parts that come under real estate, and there's a big variety. Where are there some opportunities out there right now that you're interested, particularly within the broader real estate market.
I'm really glad you mentioned that, because it is definitely a common misconception that the office sector dominates the investable universe in real estate, and that's not the case. It's never been the case that it's dominated. It certainly has been higher than it is right now. But in the private markets, if allocations to office were in the high forty percent range, they're now about twenty percent. And in the public markets, the percentage of the read index that
is pure office is hovering somewhere around five percent. So it is far less of a sort of eight hundred pound gorilla than it was at one point. But I do think that gets a little bit overblown in terms of where we see opportunity right now, the operative term is necessity things like housing, things like grocery, anchored retail, things like infi logistics. So the basic necessities of life.
We call them sort of necessity retail necessity properties. It's food, shelter and your Amazon deliveries, right, the things that nobody can live without.
Talk about shelter just for a moment, because we are hearing about the possibility that it's difficult or even impossible to get insurance for some housing. Now, certainly we have issues in California, We've had them in Florida. How is that affecting the marketplace?
It's impacting all kinds of property. It's not just single family homes, which is really where the headlines tend to be. But in certain markets in California, in Florida, so many Insuran have pulled out of those markets because of all of the losses that they've had with climate issues over the past couple of years, to the point that you're really talking about order of magnitude about thirty percent increases year over year for the past couple of years in
insurance coverage. So that's obviously very difficult for individual homeowners, but it's also difficult for investors, those.
Of us who are basically I says, tend to be US centric and our thinking, particularly when it comes to real estate. Yes, but there's real estate around the world. As you look around the world, do you see markets that are particular opportunities right now?
There are certainly markets where the dynamic is different and
that can create opportunity. And in particular where I would say there's great opportunity is in Mexico in the industrial space and particularly along the border, and you have a lot of multinational companies that are located there looking for logistics and distribution type space, and many of those leases their dollars denominated, so you have kind of the premium over a very similar You can have an Amazon build south of the border or Amazon building north of the border,
and there's a pretty significant spread in those yields. So that I find to be very interesting and we find that to be a very compelling investment right now. If I go to Asia, the markets are functioning, you know, much more normally in Asia than they are in the US and or Europe. And while transactions activity is definitely muted there, it's not in the same scale that it is in terms of the decrease for Europe and Asia.
And Europe.
Really the repricing there, I think is a little bit further along than it is in the US. But the interest rates you know, obviously really impacting the European market. The European banks are pretty much out of the market from a lending perspective, and that has been composed a
little bit even more stress on that market. And we have to consider the fact that while you know, the rising interest rates we've been at about a little more than a year here in the US where that's had a huge impact, but Europe was you know, really immediately impacted by the Ukraine War, and so it's been just a longer period of distress in Europe.
I've heard said Kathy that every business at this point is a tech business. I'm not sure if that's right, but certainly tech is changing your business. How is it changing your business?
It's changing our business in many many ways. And you might have seen that we recently launched an innovation lab, and that is multi pronged in terms of having leveraging AI and data, in particular our proprietary data from our
platform in order to have better investment outcomes. But another really big and actually quite important aspect of the research and development and investment that we intend to do in technology through our lab, with our university partners and with other technology companies is to address issues around climate and ESG. And it's very interesting in the real estate space because there really isn't that kind of controversy around ESG that
you might find in other sectors. You know, having lower energy costs and using less water, that's just more income for you as an investor in real estate, and that's just going to improve your value. So we really have a great focus on that. And if you think about you know how many companies have made net zero pledges by twenty fifty. The only way to get there is really to have technology, to use technology, most of which does not exist.
Kathy's great to have you on Willshret Week. Thank you for being here. That's Kathy Marcus. She's PGUM real Estate co CEO and Global COO. Coming up, A deadly game of chess plays out in the Middle East. We go through the moves with Bloomberg Senior market editor John Authors. That's next on Wall Street Week on Bloomberg. Ok, okay, this is Wall Street.
Weeek.
I'm David weston. The tragic warren Israel inflamed sentiments around the world, and as people very publicly chose sides, it drew some institutions into the controversy, including Harvard, which even its former president Larry Summers, took issue.
With the statement by thirty student groups blaming all violents on Israel was a moral absurdity that appeared to reflect views at Harvard, and I thought it was very important that the Harvard administration, the Harvard leadership made clear that
those students were not speaking for the Harvard community. And at the same time, in the same way that previous leaders flew the Ukrainian flag over Harvard Yard after Putin's invasion in the same way that Harvard stood with America after nine to eleven, I thought it was appropriate for there to be a strong Harvard statement condemning in the strongest possible terms Tomas terrorism, and after a couple of days without such a statement, that I expressed my view publicly,
having expressed it privately before. There was an initial statement that frankly I wasn't very strong and didn't distance Harvard from the student groups. And now I'm glad to report that President Gay has condemned terrorism in strong terms and has distanced Harvards from the thirty student group.
Thanks to our special contributor to Larry Summers of Harvard. Our one more thought this week. It comes from our senior markets editor, John Arthur's.
At this point, I think we are fully discounting the obvious next step, which is that this will lead to a broader Israeli incursion into the Gaza Strip and what could obviously be quite an ugly land war. But the idea that that is going to have any collateral consequences, or that it's going to spread into southern Lebanon, Hezbola, Iran most significantly, at this point, I would say, isn't
priced in by the markets at all. I'm not saying it should be priced in as one hundred percent as a certainty, but the risks are so great that we do get that kind of escalation that I'm surprised markets are as calm as they are. If it spreads to Iran, that's the single biggest question. And once it spreads to Iran again, it depends exactly how it does so how far it goes. But then comparisons to the Yom Kiporl
war in nineteen seventy three at least become possible. You can see why the Israeli aim, after the appalling things that Hamas has just done, would be to eliminate Hamas. You can also see that that's going to be really difficult to do and possible, arguably impossible to do without causing the kind of civilian casualties that other people are not going to be able to tolerate. That that will create a broader disturbance across the region. I don't really see.
It would be wonderful if there was, if there was some kind of a deal whereby even the Saudi Arabians felt comfortable to recognize Israel, that's conceivable, But the whole point of this exercise appears to have been to stop that from happening. Obviously, it would be really wonderful if the Israeli Palestinian question itself could be resolved. I don't myself see how these appalling events have brought that any closer.
The idea of an outcome in which both Israelis and Palestinians considered to be just unfair is further away than ever, which is a tragedy. But I just don't quite see how that's kind of a positive outcome is available, how we would expect to get there from here?
That does it? For this episode of Wall Street Week, I'm David Weston. This is Bloomberg. See you next week.