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Israel, Markets, and a Possible Recession · Bloomberg Intelligence

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Speaker 2: Bloomberg Interactive Brooker's studio. It is day for I guess
1:01
Speaker 2: of the truce or just the cessation or halt? I
1:04
Speaker 2: guess in hostilities between Israel and hamas and some hostage
1:08
Speaker 2: exchanges are taking place. That's the good news, and question
1:11
Speaker 2: happens is what happens now? Wendy Schiller, professor at Brown University,
1:16
Speaker 2: joins us. Wendy, I, you know the reporting I'm seeing
1:19
Speaker 2: is that President Biden had you know, had been pushing
1:21
Speaker 2: for and continues to push for this pause in fighting,
1:25
Speaker 2: maybe get some more hostages out. Where do you think
1:28
Speaker 2: we are right now? Where's the administration right now on
1:31
Speaker 2: its policy with Israel and Hamasen.
1:34
Speaker 3: I think the Administration maintains its support for Israel in
1:38
Speaker 3: the sense of defending itself, but they also recognize not
1:42
Speaker 3: only the loss of life of civilians in Gaza, but
1:45
Speaker 3: that the international community is not on this side of
1:49
Speaker 3: this issue.
1:50
Speaker 4: And as the.
1:52
Speaker 3: Casualties mount in Gaza, you know, the United States will
1:55
Speaker 3: then have to defend Israel's action without having really a
1:59
Speaker 3: lot of control over what Israel does, which is a
2:02
Speaker 3: fairly precarious position for President Biden to be in and
2:05
Speaker 3: for the United States to be in. You don't want
2:07
Speaker 3: to waiver on your support, but you don't want to
2:09
Speaker 3: have to be the apologist or the explainer for another
2:11
Speaker 3: country's military offensive. So this is the big question mark,
2:15
Speaker 3: how do you describe it?
2:17
Speaker 4: Do you keep saying that.
2:18
Speaker 3: Israel's defending itself or is there a point at which
2:20
Speaker 3: you say, well, we believe Israel's gone far enough. I
2:23
Speaker 3: don't see Biden never saying that, but that's what he's
2:26
Speaker 3: going to have to do in private conversations.
2:28
Speaker 4: With a lot of European leaders.
2:29
Speaker 5: Where does Congress stand when it comes to foreign aid?
2:33
Speaker 3: Where talking about where Congress stands is almost impossible these days, right,
2:38
Speaker 3: because we have Democrats and Republicans. Democrats controlling the Senate,
2:41
Speaker 3: Republicans pseudo controlling the House, but really internally divided on
2:45
Speaker 3: this very question jes of foreign aid. And you have
2:48
Speaker 3: a very large contingent of the Republican majority that does
2:51
Speaker 3: not want to give money, especially to Ukraine, but now
2:54
Speaker 3: sort of thinks, okay, maybe not even Israel.
2:57
Speaker 4: Why are we.
2:57
Speaker 3: Giving billions of dollars of taxpayer money to foreign nations
3:02
Speaker 3: for conflicts we can't control? And as that grows within
3:05
Speaker 3: the Republican caucus, it will get more and more difficult
3:08
Speaker 3: for Speaker Johnson to get any kind of foreign aid
3:10
Speaker 3: bill through the House.
3:13
Speaker 2: When do you assert any reason to believe that the
3:15
Speaker 2: Biden administration and the State Department are not on the
3:18
Speaker 2: same page as it relates to our policy towards Israel
3:20
Speaker 2: and what's happening there.
3:23
Speaker 3: In the end of the day, Biden is the commander
3:25
Speaker 3: in chief and the President of the United States who
3:27
Speaker 3: runs the cabinet. So the State Department may have internal disagreements,
3:31
Speaker 3: but I don't think there's an anti question that the
3:33
Speaker 3: Secretary of State is on the same page as Biden.
3:36
Speaker 4: Whether the Secretary of State is trying to move Biden
3:39
Speaker 4: in one way or the other, you know, we're not sure.
3:41
Speaker 3: But in the end of the day, the State Department
3:43
Speaker 3: still reports to the President of the United States. Even
3:45
Speaker 3: civil servants still report to the commander in chief and
3:48
Speaker 3: the executive So there can't be a lot of public disconnect.
3:51
Speaker 4: And if there is, that's going to be a job
3:53
Speaker 4: in the Sect State to clean up. For President Biden.
3:57
Speaker 5: What would be the next immediate steps when it comes
4:00
Speaker 5: to Israel trying to prolong its truce with Tomas.
4:04
Speaker 4: Well, this is a big question mark.
4:06
Speaker 3: You know, what is the strategic position of Israel in
4:09
Speaker 3: terms of security?
4:10
Speaker 4: You know, can they afford to prolong the cease fire.
4:13
Speaker 4: Yes they can.
4:14
Speaker 3: If they are getting ten fifteen hostages released every day
4:18
Speaker 3: every other day, they can justify that cease fire to
4:21
Speaker 3: their own people. Remember, they still have a lot of
4:23
Speaker 3: explaining to do about how security was so lapsed.
4:27
Speaker 4: That they allowed this attack to happen. Now, when I
4:30
Speaker 4: say allow, I'm not saying.
4:31
Speaker 3: That they know invited them in, but nonetheless irresponsible for
4:34
Speaker 3: national security. And they still have to explain that they
4:36
Speaker 3: haven't had any chance to do that because they've been
4:39
Speaker 3: on the offensive. But if the ceasefire continues to hold,
4:42
Speaker 3: then I think the Israeli people will say, how did
4:44
Speaker 3: this happen in the first place, and what are you
4:46
Speaker 3: doing to keep us safe now? And that's constant pressure
4:50
Speaker 3: on the Israeli government to continue its offensive in Gaza.
4:53
Speaker 2: Well, I think probably one of the challenge, or one
4:56
Speaker 2: of the questions that I don't have an answer for,
4:58
Speaker 2: is that if the is Real government, how do I
5:01
Speaker 2: define mission accomplished? You can't get rid of a terrorist
5:06
Speaker 2: organization per se, and that's kind of the end goal
5:10
Speaker 2: they've set up here. So they're kind of in a
5:12
Speaker 2: box here. How do you think they try to play that?
5:15
Speaker 3: Well, Paul, I mean I think if you're of a
5:16
Speaker 3: certain age, you remember George W. Bush standing on Air
5:20
Speaker 3: Force carrier, I believe his carrier saying, you know, we're done,
5:23
Speaker 3: and we were a long way, right, at least ten
5:25
Speaker 3: to fifteen years away, I from being done in Iraq.
5:28
Speaker 4: So I think that is a fundamental question.
5:30
Speaker 3: I think the idea of what is a status quo
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Speaker 3: that will allow Israel to defend itself consistently?
5:37
Speaker 4: What is the security status quo?
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Speaker 3: And you know, eradicating I'm assle with something that's who said,
5:43
Speaker 3: It's unclear how long that's in yon, who lasts after
5:46
Speaker 3: this immediate military engagement is over, he may be replaced.
5:51
Speaker 3: And the question is what is justifiable in terms of
5:53
Speaker 3: Israeli security? And that's going to be a question that
5:56
Speaker 3: Biden will have to continue to answer and the Israeli
5:58
Speaker 3: government will have to tell the world, you know, what
6:00
Speaker 3: is enough?
6:01
Speaker 4: And you're right, it is very difficult to quote unquote
6:04
Speaker 4: eradicate an organization.
6:05
Speaker 3: That was duly elected in Gaza has been the government
6:09
Speaker 3: in Gaza, and it's almost impossible to weed out.
6:13
Speaker 4: Without you know, very very large civilian casualties.
6:16
Speaker 5: Walk us through what's going on in the House as
6:19
Speaker 5: it was voting to limit those funds to Iran.
6:23
Speaker 3: Yeah, so the funds for Iran is really a messaging
6:26
Speaker 3: failure by the Biden administration and a messaging win for
6:29
Speaker 3: the GOP. This is Iranian money that they made by
6:33
Speaker 3: selling fuel on the international market, and it was sort
6:36
Speaker 3: of kept aside. They couldn't have it's like you know,
6:39
Speaker 3: South Korea had it, other people had it. It's and
6:41
Speaker 3: we are allowing it to be released back to Iran. However,
6:45
Speaker 3: the Biden administration has put a stop on the vast
6:47
Speaker 3: majority of that money and will not allow it to
6:50
Speaker 3: be released until there's no visible evidence of Iranian encouragement
6:55
Speaker 3: of hamas R Hesblah in the Middle East.
6:57
Speaker 4: So that could be a long way and a long
6:59
Speaker 4: time for Iran to wait for that money.
7:01
Speaker 3: But the Biden administration has gotten caught on that messaging
7:03
Speaker 3: because of the deal they made theoretically for the release
7:07
Speaker 3: of American hostages in Iran. So this is the problem
7:10
Speaker 3: governments have when they make deals to negotiate for hostages.
7:13
Speaker 3: This is what Israel is doing right now, what America
7:16
Speaker 3: is doing, and the problem is Iran is actively funding,
7:19
Speaker 3: as far as we know, a lot of terrorist organizations
7:22
Speaker 3: which could pose a security threat to the United States.
7:25
Speaker 4: So it puts the Bide administration in a very difficult position.
7:28
Speaker 2: When you mentioned the speaker, Johnson's in a familiarly a
7:32
Speaker 2: familiarly difficult situation and trying to get everybody together to move,
7:37
Speaker 2: particularly in a Republican Party here to move in one
7:40
Speaker 2: direction as it relates to some of these foreign policy issues.
7:44
Speaker 2: Any reason to believe that he can in fact succeed
7:48
Speaker 2: where maybe his prep predecessors did not, and that includes
7:52
Speaker 2: aid for Israel and Ukraine.
7:56
Speaker 3: I think, Paul there's a very short window for him
8:01
Speaker 3: to succeed, literally till the end of the year, or
8:03
Speaker 3: as we might say, till the Iowa primary. You know,
8:06
Speaker 3: when Trump if Trump, When if Trump wins his first primary,
8:11
Speaker 3: he becomes the spokesperson for the Republican Party, and there
8:14
Speaker 3: is no voice louder than Donald Trump's, particularly when he'll
8:18
Speaker 3: start to win the primary, and then Johnson has almost.
8:20
Speaker 4: No maneuvering room.
8:21
Speaker 3: And you can imagine that Trump will be adamant against
8:24
Speaker 3: spending money except perhaps to help Israel, depends on their calculations.
8:29
Speaker 3: But that's going to make things so much more difficult.
8:31
Speaker 3: It'll be twenty twenty four, it'll be technically an election year.
8:34
Speaker 3: Primary season gears up. Even though most people have to
8:37
Speaker 3: register to run in a primary by the end of
8:38
Speaker 3: this year, there are some loopholes in a lot of states.
8:41
Speaker 3: So members of Congress, particularly Republicans, will be watching what
8:44
Speaker 3: Trump says, not as much what Johnson says, and I
8:47
Speaker 3: just think his maneuvering room almost goes to zero.
8:50
Speaker 2: So, Wendy, do you think that the GOP the Republican
8:55
Speaker 2: Party is ready to support and back another run by
9:00
Speaker 2: President Bush? I mean President Trump.
9:04
Speaker 3: I think talking about the Republican Party as a model
9:06
Speaker 3: with the group is a difficult thing to do right
9:07
Speaker 3: now as we are seeing cracks in.
9:09
Speaker 4: The Democratic Party, so very difficult to know.
9:12
Speaker 3: I think there is excitement brewing among the wing of
9:15
Speaker 3: the party that doesn't want to see Trump, either because
9:17
Speaker 3: they don't like Trump's or they think Trump will lose
9:20
Speaker 3: for Nikki Haley, and the jockeying right now is DeSantis Haley.
9:24
Speaker 3: DeSantis is really getting his endorsements in line in Iowa.
9:27
Speaker 3: And if he can make a strong enough showing against
9:30
Speaker 3: Trump and better than Haley, then I think he's back
9:33
Speaker 3: in the conversation and I think if you have viability
9:36
Speaker 3: with either of those two candidates, then I think it's
9:39
Speaker 3: not quite as certain that Trump ends up being the nominee.
9:42
Speaker 2: All Right, Wendy, thank you so much for joining us.
9:44
Speaker 2: Really appreciate it. Wendy Schiller, she's a professor at Brown University,
9:48
Speaker 2: and we can talk to Professor Schiller about a wide
9:51
Speaker 2: range of political and geopolitical issues as well. So a
9:54
Speaker 2: lot going on in the market light and a lot
9:57
Speaker 2: just it's going to take place early over the next
9:59
Speaker 2: several weeks.
10:01
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10:14
Speaker 2: All right, s and P five hundred. It's up almost
10:16
Speaker 2: nineteen percent year to date.
10:17
Speaker 5: It's up about ten one alone is it's up over
10:20
Speaker 5: eight percent.
10:21
Speaker 2: Exactly, It's and so but a lot of people I
10:24
Speaker 2: just don't feel like there's that conviction behind it. And
10:26
Speaker 2: I think maybe it's just because it's not you know,
10:28
Speaker 2: you back out the magnificent seven and then it's like,
10:30
Speaker 2: all right, we're five to six percent. So I'm just
10:32
Speaker 2: not sure we go here, particularly as we think about
10:34
Speaker 2: twenty twenty four. But our next guest, I know she
10:36
Speaker 2: has an opinion. Katie Kaminski. She's a chief research strategist
10:40
Speaker 2: at Alpha Simplex. Katie, thanks so much for joining us here.
10:44
Speaker 2: I mean, what do you make of what we've seen
10:47
Speaker 2: in the equity markets this year and how does that
10:49
Speaker 2: set you up for your twenty twenty four outlook.
10:53
Speaker 7: Oh that's a good question. I mean, I think the
10:54
Speaker 7: biggest shock we've seen is just that divergence. I mean,
10:58
Speaker 7: you look at the numbers and they look good, but
11:01
Speaker 7: the truth is the average company hasn't done as well,
11:04
Speaker 7: and so I think people are nervous about this excitement
11:08
Speaker 7: that we're having this relief rally. But at the same
11:10
Speaker 7: time they're saying, why is cooler data or weakness actually
11:14
Speaker 7: a good sign? I think we have a lot of
11:16
Speaker 7: things we have to digest right now.
11:17
Speaker 5: Well, Katie, you're not only a strategist, you're also a
11:20
Speaker 5: co portfolio manager, So I want to hear how are
11:23
Speaker 5: you advising clients to position going into yurine and what
11:27
Speaker 5: do they buy, what do they sell going into next year?
11:30
Speaker 7: Well, I think the biggest thing we've focused on is
11:33
Speaker 7: fixed income, and that's where we've come to this inflection point,
11:36
Speaker 7: and I think we have to figure out are we
11:38
Speaker 7: going to get those cuts or are we going to
11:40
Speaker 7: have to wait longer for them. So I think investors
11:43
Speaker 7: have to really think about what the potential impact of
11:46
Speaker 7: opportunities for fixed income is the next year, and then
11:50
Speaker 7: also consider how does this tighter policy continue to percolate
11:54
Speaker 7: through the equity markets and where does that create opportunities
11:57
Speaker 7: and where does that create problems for in places based
12:01
Speaker 7: on just sort of that duration exposure that might be
12:03
Speaker 7: more prolonged than we like.
12:07
Speaker 2: So, Katie, do you think we've seen peak rates back
12:09
Speaker 2: in late October?
12:12
Speaker 7: That is the billion dollars?
12:15
Speaker 2: Do be honest when you're the one to.
12:18
Speaker 5: Tell us, well, you know what's interesting?
12:20
Speaker 4: Yeah?
12:21
Speaker 7: So sorry, yeah, No, what's interesting is we're really at
12:24
Speaker 7: that inflection point because I've been looking at the trends
12:27
Speaker 7: and fixed income and we started off with the inverted curve.
12:30
Speaker 7: We moved to a disinversion this year. The next phase
12:34
Speaker 7: is naturally a steeper yield curve. The question is do
12:38
Speaker 7: we have a steeper yield curve because of some difficult
12:41
Speaker 7: situation where we actually have higher rates for longer or
12:44
Speaker 7: do we get cuts. And I think that's where I'm
12:48
Speaker 7: I'm not sure yet to be honest, but I do
12:50
Speaker 7: think we need to have a steep yield curve at
12:51
Speaker 7: some point.
12:52
Speaker 5: How do you view the direction of the economy and
12:56
Speaker 5: also consumer spending because there's so much still kind of
12:59
Speaker 5: gloom out there, well, the consumer pulling back. I mean,
13:01
Speaker 5: if you look at those third quarter GDP numbers, we'll
13:03
Speaker 5: get another revision on that later this week. I mean
13:06
Speaker 5: that was close to five percent growth. You look at
13:08
Speaker 5: the Atlanta FED numbers, obviously those are coming down around
13:11
Speaker 5: two percent for the fourth quarter. But just on the
13:13
Speaker 5: back of this record online sales for Black Friday, I mean,
13:16
Speaker 5: should we really be concerned about consumer spending?
13:20
Speaker 7: Well, this has been a continual question as well, is
13:22
Speaker 7: that consumers are just being much more resilient than people
13:27
Speaker 7: have it expected. And I think that's why this narrative
13:30
Speaker 7: of when do we cut rates? When are we done
13:33
Speaker 7: has been so hard because there hasn't been a clear
13:37
Speaker 7: sign that we're ready to cut anytime soon. Because consumers
13:42
Speaker 7: continue to be resilient, and you know, the recent data
13:45
Speaker 7: this week has really already showed that that you know,
13:48
Speaker 7: it's not clear, Katie.
13:50
Speaker 2: I guess the one on one of the trades that
13:53
Speaker 2: we read about a lot to shear was you know,
13:54
Speaker 2: the hedge funds short treasuries. Do you think that's still
13:58
Speaker 2: the case or they kind of covered that here?
14:01
Speaker 7: I think, I mean, okay, this is a great question.
14:03
Speaker 7: I love this question because I'm a quant and when
14:06
Speaker 7: I look at the signals right now, what is alarming
14:08
Speaker 7: to me is long term signals are still short in
14:11
Speaker 7: fixed income given the moves that we've seen until recently,
14:15
Speaker 7: shorter term signals are moving more on the long side.
14:18
Speaker 7: So we're seeing this sort of mixed view on fixed income.
14:22
Speaker 7: So that inflection point that so I do think because
14:25
Speaker 7: of that, there are going to be some investors who
14:28
Speaker 7: still think this may not be over yet, and so
14:30
Speaker 7: I think that's mixed, but there's definitely less of them
14:33
Speaker 7: than there were before.
14:34
Speaker 5: What about in the commodities market? What is energy telling
14:38
Speaker 5: us about the direction of the economy.
14:41
Speaker 7: This is really one of my favorite questions because we
14:44
Speaker 7: have really been pointing to the energy moves earlier in
14:47
Speaker 7: the fall, when we started to see energy prices surging again.
14:51
Speaker 7: But look what happened recently. Energy is now a short signal,
14:55
Speaker 7: and that's been one of the more recent developments, and
14:58
Speaker 7: that tells us that we didn't really have enough legs
15:01
Speaker 7: and that energy move to cause some serious issues for inflation,
15:05
Speaker 7: which is a positive sign, i'd say for this inflation
15:09
Speaker 7: narrative of raising rates is a little bit more likely
15:12
Speaker 7: to be over soon, which I think is good for
15:14
Speaker 7: the consumer. It's good for this getting to target, and
15:18
Speaker 7: you know, it's something to continue watching. But definitely it
15:21
Speaker 7: had moved to a point where we were watching it,
15:24
Speaker 7: but now it's come back and now it's short. Are
15:27
Speaker 7: the signals for energy?
15:28
Speaker 2: You're interesting?
15:29
Speaker 5: All right?
15:29
Speaker 2: So in a treasury remark, well, why can't I just
15:32
Speaker 2: go buy a two year treasury and get my close
15:34
Speaker 2: to five percent and just kind of call it a
15:37
Speaker 2: couple of years.
15:37
Speaker 7: Here, Well, the problem is you're going to have to
15:40
Speaker 7: roll that over, right, So.
15:41
Speaker 2: Two years A lot can happen in two years.
15:44
Speaker 7: Yeah, that's true. And so I think where the challenge
15:47
Speaker 7: is is that if you look at where the curve
15:49
Speaker 7: is today, we still don't have that duration premium there.
15:54
Speaker 7: So if you buy longer term debt and we do
15:56
Speaker 7: have an environment where yields continue to be higher, that
16:00
Speaker 7: might be negative MPV in relative terms, and I think
16:02
Speaker 7: that's where I think you have to think about what
16:06
Speaker 7: is going to happen for cuts is going to dictate
16:09
Speaker 7: when we get to that and that steeper curve or
16:12
Speaker 7: a more normal yield curve. So yeah, the two year
16:15
Speaker 7: looks still very good, and I think that's why people
16:16
Speaker 7: are buying it right now, and that's why yields have
16:18
Speaker 7: been going down because people think this opportunity might not last.
16:22
Speaker 7: So maybe it's time to buy treasuries because you want
16:25
Speaker 7: to lock in those rates.
16:26
Speaker 5: I only have about forty five seconds left. But what's
16:28
Speaker 5: the top question that you hear from your clients?
16:32
Speaker 7: Oh, I think the biggest question is are we done?
16:35
Speaker 7: Our interest rate's going to go down?
16:37
Speaker 6: And when?
16:38
Speaker 7: And tell me now, because I think everybody really wants
16:40
Speaker 7: that for many reasons, because we're used to lower rates.
16:44
Speaker 7: But we have been very strong this year saying higher
16:47
Speaker 7: for longer, and to be honest, most of the year
16:49
Speaker 7: we've been correct. So I would generally have been telling
16:52
Speaker 7: them to be patient and that to expect that higher
16:55
Speaker 7: rates could last longer than you'd like.
16:58
Speaker 2: Kittie, thank you so much for joining us. Really appreciate
17:00
Speaker 2: getting some of your time today, Katie Kaminski. She is
17:03
Speaker 2: the chief research strategist at Alpha Simplex. We're up there,
17:08
Speaker 2: and I think someone Cambridge, Massachusetts or something in a
17:10
Speaker 2: couple of decent schools up there, so I understand, So
17:13
Speaker 2: we appreciate getting a few minutes for a time.
17:15
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17:36
Speaker 2: at Brokers Studio in our HQ here in New York City.
17:40
Speaker 2: Good news on the geopolitical front. I think it's good news.
17:43
Speaker 2: Cutter says Israel Hamas agree to extend truce for two days.
17:48
Speaker 2: Let's get some color on this developing story. Bobby Ghost
17:51
Speaker 2: joins us. He's Bloomberg Opinion. He knows this part of
17:54
Speaker 2: the world very very well. Lots of experience. Bobby, I
17:59
Speaker 2: take this as good news. How do you take this?
18:01
Speaker 8: No, Yeah, it's good news. It's good news for the
18:04
Speaker 8: families of the hostages that are going to be released.
18:06
Speaker 8: We don't know the exact number, but good news for them.
18:09
Speaker 8: It gives them hope. It's good news for the Palestinians
18:12
Speaker 8: who live in Gaza because it gives them two more
18:13
Speaker 8: days without the sky falling on their heads. It's good
18:17
Speaker 8: news for President Biden, who has articulated several times that
18:21
Speaker 8: he wanted the truth to be extended. It's good news
18:24
Speaker 8: for all of those constituencies. For Benjamin Ettnia, who the
18:28
Speaker 8: Prime Minister of Israel. The question was always going to
18:32
Speaker 8: be the balancing of all this pressure from within and
18:37
Speaker 8: without to extend the truth with the military calculation, And
18:41
Speaker 8: the military calculation was, you know, if you extend, does
18:45
Speaker 8: that give Hamas more time to re arm itself, to
18:47
Speaker 8: regroup its fighters and become a danger. Do you lose momentum?
18:53
Speaker 8: Do you lose the optics? So he's clearly decided that
18:57
Speaker 8: two days is adequate at least for now.
19:00
Speaker 5: What are the next immediate steps to see whether or
19:03
Speaker 5: not this truth could be extended for even longer beyond
19:06
Speaker 5: those two days?
19:07
Speaker 8: Well, again those calculations. He's going to be the NETNA
19:10
Speaker 8: who's going to be informed by his generals about what
19:13
Speaker 8: their best assessment is. And I think we will see
19:16
Speaker 8: extensions on one day, two days at a time, not
19:20
Speaker 8: for a a week long or even a month long.
19:23
Speaker 2: So how do you think the generals, how do you
19:25
Speaker 2: think the generals and the military folks are defining success
19:29
Speaker 2: on a daily basis. It kind of reminds me a
19:31
Speaker 2: little bit of Vietnam when it was his body count.
19:34
Speaker 8: Well, if that was the case, and the body count
19:37
Speaker 8: is overwhelmingly on the Palestinian side, we don't know very
19:42
Speaker 8: much of Israel's military casualties injured or or killed. We
19:49
Speaker 8: have a pretty good idea of how many Palestinians are dying.
19:52
Speaker 8: There's been some reports from Israeli military that they believe
19:55
Speaker 8: that between one thousand and two thousand Hamas fighters have
19:58
Speaker 8: been killed. That's out of a grand total of you know,
20:03
Speaker 8: many more thousands of Palestinians. So again, these numbers kind
20:09
Speaker 8: of they're fairly small numbers because by Israel's assessment, Hamas
20:13
Speaker 8: has thirty thousand fighters, and if they're only killed, say
20:17
Speaker 8: two thousand, shows there's a long way to go.
20:20
Speaker 5: Will additional aid be able to be distributed there based
20:24
Speaker 5: on those two days truth being extended, Yes.
20:26
Speaker 8: That's to be expected that that border crossing in Rafa
20:30
Speaker 8: south of Gaza into Egypt, that will be very busy,
20:34
Speaker 8: lots of aid going in. I mean, the scale of
20:38
Speaker 8: what the people in Gaza needs is off the chart.
20:40
Speaker 8: So even several hundred trucks a day is not going
20:43
Speaker 8: to cover it, but better that than nothing. So, you know,
20:46
Speaker 8: again for that reason too, this is good news within
20:50
Speaker 8: reason for the Palestinian people in Gaza.
20:53
Speaker 2: Or do you think the United States State Department feels
20:55
Speaker 2: isn't a good outcome? Like what do you think the
20:59
Speaker 2: United States State Department and is kind of hoping for
21:01
Speaker 2: rooting for trying to get our policy there.
21:04
Speaker 8: Well, so it's not so much the State Department. This
21:07
Speaker 8: policy has been run out of the White House. We've
21:10
Speaker 8: had there's been reports of quite a lot of disappointment
21:14
Speaker 8: and anger in the State Department that White House is
21:16
Speaker 8: running this without regard to the State Department's advice. So
21:21
Speaker 8: this is President Biden taking the lead essentially, and what
21:25
Speaker 8: he wants to see is, you know, hamas greatly greatly diminished,
21:31
Speaker 8: but quickly so that the sort of daily reports of
21:36
Speaker 8: human casualties, of civilian casualties, innocent people being killed, that
21:40
Speaker 8: can end. So he would like to see this result quickly,
21:44
Speaker 8: but this is not playing out on his timeline, is
21:48
Speaker 8: playing out on the timeline of Hamas and Israel, and
21:50
Speaker 8: so he can put pressure on Israel, and clearly to
21:54
Speaker 8: some degree has succeeded with this truce being extended. But
21:57
Speaker 8: there's only so much that even the President of the
21:59
Speaker 8: United States can do.
22:00
Speaker 5: From your purview, and I'm sure it's difficult to gauge,
22:04
Speaker 5: but what do you think is the timetable for how
22:06
Speaker 5: long this conflict could continue to go on for?
22:09
Speaker 8: It's really hard to tell. The question is whether or
22:12
Speaker 8: not Israel changes its goals. The original goal that netanyahuo
22:17
Speaker 8: articulated is that Hamas must be essentially eliminated. That's as
22:22
Speaker 8: I said, thirty thousand fighters that that will require weeks, months,
22:27
Speaker 8: years to pull off. But if the goal is changed,
22:31
Speaker 8: and if it's you know, a new kind of target,
22:34
Speaker 8: which is that Hamas is greatly reduced or Hamas gives
22:38
Speaker 8: up control of Gaza, still very high bar to get over,
22:43
Speaker 8: but at least then you can you can speculate about
22:46
Speaker 8: a timeline right now, the end state is so vague
22:51
Speaker 8: that it's impossible to say how long this might take.
22:54
Speaker 2: You know, I kind of think that I haven't seen
22:56
Speaker 2: on then, you know, the cable news networks many images
23:00
Speaker 2: of rockets landing in Israel. Is that because I'm just
23:04
Speaker 2: not paying attention or have they been reduced? And does
23:07
Speaker 2: that indicate that maybe Israel is in fact impacting the
23:11
Speaker 2: bility of Hamas to wage war.
23:13
Speaker 8: There have been fewer rocket attacks, no question, volleys of
23:16
Speaker 8: them every now and again, but certainly not with the
23:18
Speaker 8: intensity that we saw on and after the seventh of
23:22
Speaker 8: October the first few days. You know, those rockets have
23:25
Speaker 8: to be smuggled in. Some of them are the sort
23:28
Speaker 8: of lower tech ones are manufactured within Gaza. You know,
23:34
Speaker 8: since October seven terrorist attack, Israel has been minding those
23:39
Speaker 8: borders more carefully, and the destruction in Gaza City has
23:43
Speaker 8: greatly sort of reduced the arms caches and Hamas's ability
23:48
Speaker 8: to build new rockets. So yeah, but Israel's concern will
23:53
Speaker 8: be that if the truce continues, then Hamas will have
23:56
Speaker 8: the ability to bring in more rockets and build more
24:00
Speaker 8: rockets and start firing those off again.
24:02
Speaker 5: So during the truth is truth, isn't there a concern
24:06
Speaker 5: also that potentially, if you're thinking about Hamas, would they
24:09
Speaker 5: be able to potentially bring in reinforcements or are there
24:12
Speaker 5: any sort of stipulation on what they were able to
24:14
Speaker 5: do during the two day period.
24:17
Speaker 8: But they don't really need reisforcements from the outside, and
24:20
Speaker 8: smuggling in human beings in the middle of a war
24:23
Speaker 8: situation can be quite tricky, especially when you know that
24:26
Speaker 8: Israel and Egypt presumably are on a high state of
24:29
Speaker 8: alert watching for any movement of large groups of people
24:33
Speaker 8: in that direction. And you know, the Hamas, unlike let's
24:38
Speaker 8: say is SIS and some other terrorist groups that we're
24:39
Speaker 8: familiar with, tends to depend on its own on Palestinians
24:44
Speaker 8: to form the bulk of its fighting force. It gets
24:47
Speaker 8: weapons from Iran, it gets money from Iran and other
24:50
Speaker 8: sources internationally. But for actual manpower, it has plenty of
24:54
Speaker 8: manpower within Gaza. But the concern would be weapons. Are
24:59
Speaker 8: they able to smuggle weapons either by sea or through
25:02
Speaker 8: those tunnels that we've been reading about for years and years. Again,
25:06
Speaker 8: you'd hope that particularly the Egyptians would be on a
25:10
Speaker 8: high alert and prevent that from happening. But it's been
25:13
Speaker 8: known to happen in the past, where even in the
25:15
Speaker 8: middle of a conflict situation with Israel, Hamas has shown
25:19
Speaker 8: the ability of smuggling in or building new weapons.
25:23
Speaker 2: All right, So we're, you know, fifty days plus into this.
25:28
Speaker 2: How united is the Israeli population to what's happening these days?
25:32
Speaker 2: Is that wavered at all? Do we have any reporting?
25:35
Speaker 8: Well, it's wavered on the political spectrum. So the vast
25:39
Speaker 8: majority to go buy the polls. The vast majority of
25:42
Speaker 8: Israeli's want Benjamin Netania who gone. They want him to
25:44
Speaker 8: pay the price for his failings as a leader which
25:47
Speaker 8: led to the October seven attack. On the other hand,
25:51
Speaker 8: there seems to be still quite a lot of support
25:54
Speaker 8: for the military operation. It was an incredibly traumatic event
25:59
Speaker 8: for the Israeli the terrorist attack, and they do want
26:03
Speaker 8: to see uh, they do want to make sure that
26:05
Speaker 8: that day, that the horrors of that day are never
26:08
Speaker 8: visited on them again. So they would like to see
26:11
Speaker 8: their military succeed, But they don't want to see their
26:15
Speaker 8: military having to occupy Gaza for an extended period of time.
26:20
Speaker 8: So quite a mixed bag there's a lot of support
26:23
Speaker 8: for the military, but no very little support for Netanya
26:26
Speaker 8: who himself.
26:27
Speaker 2: So you think Nenya who stays in power as long
26:29
Speaker 2: as there are you know, active operations.
26:33
Speaker 8: Well, he's counting on that. That's for sure, that that
26:36
Speaker 8: his people won't want to change horses in the middle
26:38
Speaker 8: in red stream. But there are calls for his resignation
26:42
Speaker 8: that are coming from some prominent voices, including farmer military leaders,
26:47
Speaker 8: from our intelligence chiefs, former prime ministers. If that pressure
26:52
Speaker 8: keeps building, then he'll have to He'll all.
26:55
Speaker 2: Right, a lot of a lot of moving parts there, certainly,
26:58
Speaker 2: Bobby Gosh, thank you so much for joining us. Goash's
27:00
Speaker 2: a calmness for Bloomberg Opinion. Joining us live here in
27:02
Speaker 2: our studios here in New York City.
27:05
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27:25
Speaker 2: George legend On was shreet in my opinion he's chairman
27:29
Speaker 2: of Sanders Mars Harris. But he's been doing this a
27:32
Speaker 2: long time. I'm not calling George old here. I'm saying
27:35
Speaker 2: he's been on Wall Street a long time. He began
27:36
Speaker 2: his career as a stockbroker at E. F. Hutton, one
27:39
Speaker 2: of my favorite. If you don't know what that is,
27:41
Speaker 2: go google it or go to YouTube and see the commercials.
27:44
Speaker 2: But I interviewed with him way back in the day.
27:47
Speaker 2: I'm talking eighty eight or eighty nine when he was
27:49
Speaker 2: at Bach. Did not get the just that did not
27:53
Speaker 2: derail my career, I went on. But he's not chairman
27:56
Speaker 2: of Sanders Mars. George, thanks so much for taking the time.
27:59
Speaker 2: We shake getting a few minutes of your time here.
28:02
Speaker 2: I want to take advantage of your perspective, your experience, George.
28:05
Speaker 2: I mean, we've had a crazy two to three years
28:07
Speaker 2: here in these markets, what with a pandemic and whatnot.
28:11
Speaker 2: When you sit back and maybe talk to your biggest clients,
28:14
Speaker 2: what are you telling them these days?
28:17
Speaker 9: Well, I appreciate being called a legend, because a legend
28:21
Speaker 9: is basically synonymous. It has been and I apologize for
28:28
Speaker 9: your not getting the job or or or credential beat
28:35
Speaker 9: looking back. UH is very educational and instructive. It's not
28:41
Speaker 9: terribly predictive.
28:42
Speaker 3: Though.
28:43
Speaker 9: One of the wonderful things about the investment world, financial world,
28:47
Speaker 9: for everybody is that it's ever changing. It's it's ever dynamic,
28:55
Speaker 9: it's it's sort of like a kaleidoscope. And what was
28:58
Speaker 9: in the past or or the things that creates circumstances
29:03
Speaker 9: a year ago, five years ago, three years ago, doesn't
29:06
Speaker 9: really matter. So the interaction of finance, emotion, world affairs,
29:12
Speaker 9: economic affairs that creates Wall Street or investment is very
29:18
Speaker 9: different going ahead than it's ever that it's ever been
29:21
Speaker 9: in the past, and I think that that is particularly
29:24
Speaker 9: exciting today. Most pundits believe that the market, at least
29:32
Speaker 9: over the shorter term, is over extended. It's rallied a
29:36
Speaker 9: lot in November, and they think, well, it's time for
29:39
Speaker 9: a pullback. It's too extended. But again, I think that
29:44
Speaker 9: that's historic or a retrospective reasoning rather than a good
29:50
Speaker 9: view of what lies ahead for us.
29:53
Speaker 5: From your purview, how do you view the American consumer
29:57
Speaker 5: and the resiliency there when you still have so many
30:00
Speaker 5: people questioning the strength but yet we're still continuing to
30:03
Speaker 5: see especially with these latest sales numbers for Black Friday
30:07
Speaker 5: as well as Cyber Monday, that American consumers continue to spend.
30:11
Speaker 9: The American consumer, actually, probably consumers and the households worldwide
30:19
Speaker 9: are really what drive economies and drive growth and productivity.
30:25
Speaker 9: We tend, I think, to look to the FED, to
30:28
Speaker 9: look to the government, to look to the leaders of
30:32
Speaker 9: the EU to either create prosperity or to create recessions
30:39
Speaker 9: or economic contraction. That's not right. It's really the individual
30:45
Speaker 9: and collective energy gusto of the household that that creates
30:53
Speaker 9: what lies ahead, and the US case of recent weeks,
30:58
Speaker 9: and I think going forward, uh, what lies ahead is
31:03
Speaker 9: people want to do better. People are invigorated, people will
31:07
Speaker 9: spend because they'll work, and they're they're earning good money
31:10
Speaker 9: and actually now a better money in real terms than
31:14
Speaker 9: they have for several years. So I think the pessimists,
31:17
Speaker 9: uh yeah, may may may be blinded to what really
31:22
Speaker 9: drives the economies. It's not the FED, it's it's individuals.
31:27
Speaker 9: It's households.
31:29
Speaker 2: George, and you're I'm just looking through some of your
31:31
Speaker 2: notes here you have it. I think a really out
31:33
Speaker 2: of consensus call here buy regional bank stocks, why do
31:38
Speaker 2: you say that there's definitely a lot of concern out there?
31:41
Speaker 4: All right?
31:41
Speaker 9: First the disclaimer, our company owns a regional bank, so
31:45
Speaker 9: I've got to build in bias. Start with that. Step
31:50
Speaker 9: away from it. There are a very few regional banks
31:56
Speaker 9: that are in somewhat compromised positions. Republic National Bank, Silicone
32:03
Speaker 9: Valley Bank were really wealth management firms that lent excessively
32:09
Speaker 9: as a way to attract clients to their wealth management platform.
32:15
Speaker 9: I understand their rationale, but it was poorly done. There
32:19
Speaker 9: are some number of regional banks that have lent too
32:24
Speaker 9: much money to commercial real estate enterprises of one sort
32:31
Speaker 9: or another, and they are apt to be squeezed. But
32:35
Speaker 9: of the over four thousand banks in the United States,
32:38
Speaker 9: there are very few that are in that predicament. Broadly speaking,
32:43
Speaker 9: community bankers are very very cautious. They're conservative, they're very
32:50
Speaker 9: aware of the regulatory oversight is placed on them, and
32:55
Speaker 9: the stocks are extremely inexpensive now for a half or
33:01
Speaker 9: a quarter of what they did a year or two ago.
33:04
Speaker 9: So I think that the pessimism regarding regional banks should
33:10
Speaker 9: have been or should be limited to a very small number,
33:14
Speaker 9: and the rest are screamingly cheap, with strong growth prospects
33:18
Speaker 9: ahead of them, and in many cases a generous dividend yields.
33:24
Speaker 5: We only have about a minute left, But what's the
33:26
Speaker 5: top question that you hear from your clients.
33:30
Speaker 9: The biggest question that our customers have is should I
33:34
Speaker 9: be involved in equities or are they simply too risky
33:38
Speaker 9: in a world where I can get a five percent
33:40
Speaker 9: return on the five year treasury. Our answer to that
33:47
Speaker 9: is on both the five year treasury yielding four and
33:50
Speaker 9: a half percent is more have to appreciate and throw
33:54
Speaker 9: off a positive real return. But people who turn their
33:58
Speaker 9: back on equities are blind to the fact that American
34:02
Speaker 9: business can prosper in this type of interest rate climate
34:07
Speaker 9: and grow at a very substantial rate.
34:11
Speaker 2: Hey, George, thanks so much for joining us. Really a
34:13
Speaker 2: treat to get a few minutes of your time. George
34:15
Speaker 2: Ball he is a chairman of Sanders, Mars and Harris.
34:19
Speaker 2: And if you want to find out about a couple
34:20
Speaker 2: of really really high quality investment bank workers firms and
34:23
Speaker 2: back in the day, go Google Base Company and EF
34:27
Speaker 2: Hutt and some of two of the best names out there.
34:30
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