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The War’s Impact On Global Markets And Oil · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
• 0:04
  Speaker 1: my co host Matt Miller. Every business day we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
• 0:11
  Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
• 0:15
  Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. All right, in the
• 0:22
  Speaker 1: wall of worry, we've got Slovan growth, rising interest rates,
• 0:27
  Speaker 1: UM and valuation are some concerns, and now you have
• 0:30
  Speaker 1: geopolitical risk to add into the um. The whole panoply
• 0:34
  Speaker 1: of issues for this market to navigate. Let's check in
• 0:37
  Speaker 1: on the economic outlook underpinning all of this. We can
• 0:40
  Speaker 1: do that with Pete Earle. He's the economist at the
• 0:42
  Speaker 1: American Institute of Economic Research. Pete, has your economic outlook
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  Speaker 1: changed at all given what we've seen coming out of
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  Speaker 1: Ukraine over the last week or so. Good morning, Gentlemen's
• 0:54
  Speaker 1: good to talk to you. It's great to be back. Um, yeah,
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  Speaker 1: it certainly has. Um. When we last folk in October November,
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  Speaker 1: we had oil Brant and West excess between say fifty
• 1:06
  Speaker 1: five and seventy dollars a barrel maybe consumer demand was high,
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  Speaker 1: but it was being blunted a bit we think by
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  Speaker 1: supply chain pressures, and inflation was running about five And
• 1:18
  Speaker 1: I seem to recall that I mentioned that the ugliest
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  Speaker 1: word in economics, which is siflation, was back, but I
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  Speaker 1: didn't think it was where. I didn't think it was
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  Speaker 1: really reasonable concern because there we had inflation, but there
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  Speaker 1: was no real stagnation happening. And I think at this point, uh,
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  Speaker 1: we we've pivoted, and the last two weeks and perhaps
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  Speaker 1: the last few days, things have changed quite a bit.
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  Speaker 1: We see commodities across the board rising pretty precipitously, even
• 1:44
  Speaker 1: with COVID slipping to the back burner. Now we have
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  Speaker 1: consumer sentiment falling. Consumer it fell in January, consumer competence
• 1:52
  Speaker 1: fell a bit in February, and there's a host of
• 1:54
  Speaker 1: other signs that we may we may actually see rising inflation,
• 1:59
  Speaker 1: rising general price level with slowing growth. There's a few
• 2:02
  Speaker 1: other issues embedded in there. But the answer is yes,
• 2:04
  Speaker 1: I do think we are turning a corner here. Do
• 2:07
  Speaker 1: we need um the Fed though too? Well? Is the
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  Speaker 1: market going to rethink whether the Fed hikes six seven
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  Speaker 1: eight times this year? Even if we're looking at rising prices, UM,
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  Speaker 1: they're not rising for any reason the FED can put
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  Speaker 1: a stop to other than demand. So the only way
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  Speaker 1: the FED can really slow UM inflation is by slowing
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  Speaker 1: economic growth. Yeah, so I think that they are. I
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  Speaker 1: think all the talk about a hundred seventy basis point
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  Speaker 1: moves are completely off the table, certainly for March. UM.
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  Speaker 1: I don't think the FED will move any greater than
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  Speaker 1: SAPs this year, but I will go out on a
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  Speaker 1: limb and say that when James Bullard of the St.
• 2:49
  Speaker 1: Louis FED said he would like to see rates on
• 2:51
  Speaker 1: hundred basis points higher by July, I don't think that
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  Speaker 1: will happen. But I do think he was sort of
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  Speaker 1: paving the way for unconventional not unconventional, but unusual monetary
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  Speaker 1: policy measures. So what I see are maybe not seven
• 3:04
  Speaker 1: or eight UH hikes of basis points this year, but
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  Speaker 1: I see the heightened possibility of intermeding hikes, for example
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  Speaker 1: between the FO and C meeting, such as we haven't
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  Speaker 1: seen since UH two thousand eight or so, and before
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  Speaker 1: that since long term capital collapsed supply chain. That's another
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  Speaker 1: economic issue that has been with us as a result
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  Speaker 1: of this pandemic um. You know, initially we thought it
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  Speaker 1: would be relatively short term, but here we are beginning
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  Speaker 1: year three. Here, how do you think about the global
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  Speaker 1: supply chain? And maybe the events in Ukraine may exacerbate
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  Speaker 1: some of those issues, but how do you think about
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  Speaker 1: that as you think about your economic outlook. It's it's
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  Speaker 1: it's complicated, because I see some signs that the supply
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  Speaker 1: chain morass is actually easy. UM world container rates have
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  Speaker 1: leveled off. The Baltic Exchange dry index is half of
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  Speaker 1: what it was in October, although it's up a little
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  Speaker 1: bit on the Ukraine conflict, and the cast freight index
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  Speaker 1: is at levels we haven't seen since the start of
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  Speaker 1: the pandemic um. Even at the port of Los Angeles,
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  Speaker 1: which has sort of been the focal point um the
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  Speaker 1: number of containers ship and and by the way, the
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  Speaker 1: counting convention was changed, we have to bear that in mind.
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  Speaker 1: But even so, the number of container ships is down
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  Speaker 1: to the seventies from well over one hundred six or
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  Speaker 1: eight weeks ago. So the components in the rise of
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  Speaker 1: prices that I think we impute to um UH supply
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  Speaker 1: chain issues, I think is starting to to to to
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  Speaker 1: um to sort of dissipate. However, kicking a number of
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  Speaker 1: Russian institution institutions off of swift UM introduces entirely new issues. Uh.
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  Speaker 1: We could very easily see new supply chain issues or
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  Speaker 1: I should say new price pressure zoning to scarcity arise
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  Speaker 1: as a result of kicking a bunch of those institutions
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  Speaker 1: that deal in say oil, natural gas and grains off
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  Speaker 1: of swift So uh, it could be exit frying pan,
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  Speaker 1: enter fire. I wonder what I wonder what happens now
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  Speaker 1: in Europe as a result of mean, do they need
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  Speaker 1: to stop buying gas, oil, aluminum from Vladimir Putin? Are
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  Speaker 1: they going to have to do that? And then what
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  Speaker 1: happens to their economy for for some amount of time
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  Speaker 1: they may have to, But I think we are at
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  Speaker 1: a point right now where um, we will see um
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  Speaker 1: a real gut check of ideology where many nations are
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  Speaker 1: buying from from certain resources, especially UM carbon based uh
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  Speaker 1: uh you know, energies and and petroleum and things like
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  Speaker 1: that from nations because they don't want to do it
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  Speaker 1: at home because of the green wave we've seen. But
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  Speaker 1: I think, UM, this this incident, especially if it drives
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  Speaker 1: prices sizeably higher, but we're still really looking at you know,
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  Speaker 1: ninety five dollar oil. If we get prices one for barrel,
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  Speaker 1: that sort of thing in the next few months, um,
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  Speaker 1: we may see a real reconsideration of the ideologies which
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  Speaker 1: led many nations to pursue more costly, in some cases,
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  Speaker 1: less tested green energy at the cost of ignoring. Okay, Hey, Pete,
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  Speaker 1: thanks so much for joining us, taking the time. We
• 6:08
  Speaker 1: appreciate it. Pete Earle economists at the American Institute of
• 6:12
  Speaker 1: Economic Research, giving us his outlook. Take a look a
• 6:18
  Speaker 1: Bitcoin up ten percent trading today forty two hundred up
• 6:23
  Speaker 1: ten point one per cent, So a huge move there
• 6:26
  Speaker 1: for bitcoin. I'll call that out for for Tom Keene.
• 6:28
  Speaker 1: All right, let's talk commodities, guys. I have my g
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  Speaker 1: l c O screen up Global Commodity screen on the
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  Speaker 1: Bloomberg terminal. All of energy higher, metals higher, most of
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  Speaker 1: the big aggs higher, wheat, soybeans, cotton higher. So commodities
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  Speaker 1: definitely moving higher. We want to get a sense of
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  Speaker 1: kind of what's moving this market, so we turned to
• 6:46
  Speaker 1: Everett Millman, chief market analyst at Gainesville Coins. Everett, what's
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  Speaker 1: your call across commodities here at a time when we
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  Speaker 1: have rising geopolitical tensions in Eastern Europe. Right well, appears
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  Speaker 1: that gold has certainly held up its bona fides as
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  Speaker 1: a faith haven asset UM. It has certainly rallied amid
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  Speaker 1: all this conflict, but also the economic sanctions that the
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  Speaker 1: West is imposing on Russia UM will almost certainly drive
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  Speaker 1: up the prices for many of these other major commodities UM.
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  Speaker 1: Even though the Russian economy makes up less than two
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  Speaker 1: percent of global GDP, they are one of the largest
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  Speaker 1: exporters of a lot of these really important commodities like nickel, aluminum,
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  Speaker 1: cobalts UM. As you mentioned obviously the key energy commodities
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  Speaker 1: like oil and natural gas. The fact that energy is
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  Speaker 1: rising is just going to make it more expensive to
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  Speaker 1: get all of those resources out of the ground, and
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  Speaker 1: even agricultural commodities. Russia exports more than ten percent of
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  Speaker 1: the world's fertilizer. They're a major exporter of grains like
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  Speaker 1: wheat and barley. So everything in the commodity space is
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  Speaker 1: really connected to this, and we should expect to see
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  Speaker 1: higher prices going forward. So what's the margin or what
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  Speaker 1: are we really waiting for for a reversal of this
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  Speaker 1: is this p puarly on geopolitical tensions. Because these prices,
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  Speaker 1: these commodities, they were rising before the Russian invasion, before
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  Speaker 1: the onset of the geopoliticals What are we watching for
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  Speaker 1: for reversal of some of the action. Do we have
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  Speaker 1: to wait for demand destruction? I think so. I mean,
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  Speaker 1: that's an excellent point that prices were already rising, we
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  Speaker 1: were already dealing with elevated inflation. I think the real
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  Speaker 1: reversal possibility would be a de escalation of this proposal
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  Speaker 1: to band Russia from the Swift system. I think that
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  Speaker 1: is a very potent um sanction. And really the direction
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  Speaker 1: of how long this goes on, all the disruptions and
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  Speaker 1: markets I think will be based mainly on that if
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  Speaker 1: the West is continue to be that aggressive with sanctions.
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  Speaker 1: All right, let's given this environment, given this backdrop here, ever,
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  Speaker 1: what are the two or three most common calls you're
• 8:49
  Speaker 1: having with your clients? What are you telling them? Where
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  Speaker 1: are you telling them to be exposed here? Well, obviously
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  Speaker 1: gold it's always a safe place during on certain times
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  Speaker 1: like this, especially given at the Russian ruble has been tumbling,
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  Speaker 1: so that may force the Russian Central Bank to liquidate
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  Speaker 1: some of its gold. It's large stockpile of gold in
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  Speaker 1: order to support its foreign exchange value. UM. I'm also
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  Speaker 1: looking at platinum and palladium UM. Russia is far and
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  Speaker 1: away the world's number one exporter of palladium and an
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  Speaker 1: annual basis that's somewhere between and of the global supply.
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  Speaker 1: So if there is more difficulty in getting palladium out
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  Speaker 1: of Russia and it being one of the only sources UM,
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  Speaker 1: that is certainly an area that investors are going to
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  Speaker 1: want to be exposed to, because really the only the
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  Speaker 1: path of least resistances for palladium prices to continue to
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  Speaker 1: climb U due to that supply shortfall. We could see
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  Speaker 1: you mentioned gold in particular. This is interesting to me.
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  Speaker 1: I've been saying this all morning, the fact that gold
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  Speaker 1: and the dollar are up higher together that it's usually
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  Speaker 1: a sign a very very acute stress. Talk to us
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  Speaker 1: a little bit about what turns gold around. In particular,
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  Speaker 1: if you continue to see it, I mean gold, after
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  Speaker 1: the end of the day, it's priceton dollars. So does
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  Speaker 1: the currency mean nothing right now for the metal or
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  Speaker 1: is this purely a matter of haven demand? I think
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  Speaker 1: it really is haven demand, and only in these extremely
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  Speaker 1: high stress times do we see that both the dollar
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  Speaker 1: and gold and the Japanese end would all be rallying
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  Speaker 1: at the same time. UM. I think that the major
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  Speaker 1: kind of pivot point here between gold and the dollar
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  Speaker 1: is whether or not we're going to get any kind
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  Speaker 1: of quick relief for de escalation or for diplomacy to
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  Speaker 1: prevail here, because until then there really is no reason
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  Speaker 1: for investors to to sell their safe havens to get
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  Speaker 1: out of those assets that they really are the only
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  Speaker 1: game in town in terms of weathering the uncertainty. UM.
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  Speaker 1: Gold is always good across borders, so there is even
• 10:47
  Speaker 1: as I mentioned before, with Russia possibly selling its gold,
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  Speaker 1: there is some evidence that gold bars minted in Russia
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  Speaker 1: have been ending up in vaults in London. So there's
• 10:57
  Speaker 1: already some indication that perhaps we will be gold used
• 11:01
  Speaker 1: in international trade or um to bolster the Russian central
• 11:05
  Speaker 1: banks form reserves. Everett Milman, thank you so much for
• 11:09
  Speaker 1: joining us. We always appreciate getting your take on the
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  Speaker 1: commodities market. Everett Milman, chief market analyst at Gainesville Coins.
• 11:20
  Speaker 1: Right now, let's switch over to the markets. The market outlook,
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  Speaker 1: Lots of bricks in that wall of worry. Now we
• 11:26
  Speaker 1: have to include geopolitical risk. Uh, and the markets are
• 11:29
  Speaker 1: trying to digest that we have. Markets are mixed today
• 11:32
  Speaker 1: off the bottoms, but again investors are trying to get
• 11:34
  Speaker 1: a sense of how they price this Outlet's checking with
• 11:36
  Speaker 1: Brett Ewing, chief market strategists for First Franklin Financial Services. Brett,
• 11:41
  Speaker 1: thanks so much for joining us here. Kind of what
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  Speaker 1: are you telling your clients here over the last five days. Well, first,
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  Speaker 1: thanks for having me on today. Um, Yes, there's been
• 11:52
  Speaker 1: a lot of turmoil, a lot of concern out there
• 11:54
  Speaker 1: in the recent weeks with the volatility in the markets,
• 11:57
  Speaker 1: and certainly our clients are talking to us and wanting
• 12:00
  Speaker 1: some insight, and what we're trying to convey to them
• 12:03
  Speaker 1: is we are still put the FED as one of
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  Speaker 1: the biggest risk into the markets for two and we're
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  Speaker 1: also guiding them to look a little out past these
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  Speaker 1: geopolitical risks. And you can go back over the last
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  Speaker 1: eighty years and really look at every geo political event
• 12:21
  Speaker 1: and it's really a short run phenomenal in the market,
• 12:24
  Speaker 1: meaning that the average raw down is around about four
• 12:27
  Speaker 1: point five with the recovery rate around forty two days,
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  Speaker 1: So an event like that, we're trying to look past
• 12:34
  Speaker 1: that and look out over the next eighteen months really,
• 12:37
  Speaker 1: and so what we're doing here is positioning. We're taking
• 12:40
  Speaker 1: advantage of this volatility and specifically looking at the small
• 12:44
  Speaker 1: and MidCap sectors. So talk us a little bit about
• 12:48
  Speaker 1: I mean, you said that you want to look past
• 12:50
  Speaker 1: the geopolitical tensions, but isn't there a commodity read through
• 12:54
  Speaker 1: that then kind of hits essentially the American recovery story.
• 12:59
  Speaker 1: Is that perhaps worth making a bigger deal of over
• 13:04
  Speaker 1: the FED. Well, I think the commodity spikes that we're
• 13:09
  Speaker 1: seeing right here are most likely going to be short lived.
• 13:14
  Speaker 1: I think that when we look at the oil markets
• 13:17
  Speaker 1: right here, of course it's all it's reaching multi year
• 13:20
  Speaker 1: highs UM. Again, we think it's closer to the peak
• 13:25
  Speaker 1: than it than it um than most people realize UM.
• 13:29
  Speaker 1: As a matter of fact, last week we actually sold
• 13:32
  Speaker 1: a lot of our oil stocks into the strength and
• 13:37
  Speaker 1: we just feel there's on a relative basis, there's a
• 13:40
  Speaker 1: lot better asset classes that have just been decimated, whether
• 13:44
  Speaker 1: it's growth, tech or other all MidCap stocks out there,
• 13:49
  Speaker 1: so we feel there's better places to park that capital
• 13:52
  Speaker 1: going forward. All Right, let's talk about tech, because a
• 13:55
  Speaker 1: lot of folks have, you know, the last twelve months
• 13:58
  Speaker 1: as the as the rotation trade as works so well,
• 14:00
  Speaker 1: they've been kind of rotating out of some of those
• 14:02
  Speaker 1: big tech names. Now you get some folks saying, hey,
• 14:04
  Speaker 1: I like tech, just I need the tech that actually
• 14:07
  Speaker 1: makes money um as opposed to some of the more
• 14:10
  Speaker 1: high flying revenue growth stories. How do you think about
• 14:13
  Speaker 1: tech and allocating capital there? Yeah? Absolutely, I mean, look
• 14:20
  Speaker 1: is going to be a stock pickers year. There's a
• 14:22
  Speaker 1: lot of great technology companies that have you know, it's
• 14:25
  Speaker 1: the baby with the bathwater syndrome here just been thrown
• 14:29
  Speaker 1: out and decimated here in the short run. But we're
• 14:32
  Speaker 1: taking advantage of that. I think there's a lot of
• 14:34
  Speaker 1: great opportunities within tech. There's a lot of tech companies
• 14:37
  Speaker 1: out there that have wonderful moats around their business model,
• 14:41
  Speaker 1: and those are the areas that I would be um
• 14:43
  Speaker 1: advising people to take advantage of. We'll talk to us
• 14:48
  Speaker 1: a little bit about perhaps the value rotation. I think
• 14:51
  Speaker 1: a lot of people started off two thinking was going
• 14:54
  Speaker 1: to be kind of a continuation of what we started
• 14:56
  Speaker 1: off in one, and yet it doesn't seem like that
• 15:01
  Speaker 1: strong kind of conviction essentially for the value at the
• 15:04
  Speaker 1: start of the year has really persisted in the last
• 15:07
  Speaker 1: six weeks or so. Do you think it can really
• 15:09
  Speaker 1: revive itself. I think there's there's certainly a few areas
• 15:14
  Speaker 1: within value that I would we would continue to look at. UM.
• 15:19
  Speaker 1: I do think that the areas that I feel have
• 15:23
  Speaker 1: a lot of upside is more of an asset class
• 15:26
  Speaker 1: story within the small mid cap stocks. The valuation on
• 15:32
  Speaker 1: those asset classes is the spread between large cap and
• 15:36
  Speaker 1: small MidCap right here is those is the widest dating
• 15:40
  Speaker 1: back twenty years. You have to go back to two
• 15:43
  Speaker 1: thousand one. UM. Typically the small MidCap areas of the
• 15:48
  Speaker 1: market are are you know, their four ps well above
• 15:51
  Speaker 1: the large cap and right now it's quite the opposite.
• 15:55
  Speaker 1: All right, Brett, thanks so much for joining us. We
• 15:57
  Speaker 1: appreciate your time. You in chief. Market strategy is for
• 16:00
  Speaker 1: First Franklin Financial Services. Let's get the latest here on
• 16:08
  Speaker 1: some of these sanctions. I'll probably focus on what we're
• 16:11
  Speaker 1: seeing from the global banking system and the impact that
• 16:15
  Speaker 1: may have on Russia. Shinalie Bassik Wall Street Border for
• 16:18
  Speaker 1: Bloomberg News drains us here in our Bloomberg Interactive Broker
• 16:21
  Speaker 1: studio and she like, can you help me here, Just
• 16:24
  Speaker 1: tell me what's SWIFT is and why it's important. Yeah. Well,
• 16:28
  Speaker 1: it is a cooperative that serves as a global messaging
• 16:33
  Speaker 1: system to the global financial system. So that's more than
• 16:36
  Speaker 1: eleven thousand entities across more than two hundred countries, and
• 16:40
  Speaker 1: it's governed by the G ten banks and incorporated in Belgium.
• 16:43
  Speaker 1: So when the globe comes together and say they want
• 16:46
  Speaker 1: to ban Russia from SWIFT, what you really saw at
• 16:49
  Speaker 1: the end of the day is the US announced moves
• 16:52
  Speaker 1: and other countries announced moves to really cut off a
• 16:54
  Speaker 1: number of Russian banks and entities from that payment system.
• 16:59
  Speaker 1: Here's the thing, Paul, there's a lot of questions around
• 17:01
  Speaker 1: what the ultimate impact of this will be. The reason
• 17:04
  Speaker 1: that a lot of countries did we're opposing this. Germany
• 17:07
  Speaker 1: in particular, was uncertain of doing this for at the
• 17:09
  Speaker 1: beginning is because if you cut off payments, then all
• 17:13
  Speaker 1: of a sudden, do you start to make it very
• 17:14
  Speaker 1: difficult to make transfers among energy companies and counterparts? For example?
• 17:19
  Speaker 1: Will it have an impact that has a backlash on
• 17:23
  Speaker 1: the energy trade between Russia and Russia and Germany, and
• 17:28
  Speaker 1: really what is an ultimate economic impact on the countries
• 17:31
  Speaker 1: that are pushing the band themselves. So let me just
• 17:34
  Speaker 1: dumb this down for me, um, because I really needed.
• 17:38
  Speaker 1: My understanding of this system is kind of like, I
• 17:41
  Speaker 1: guess the only way I can describe it as back
• 17:43
  Speaker 1: in high school, when I worked for the high school newspaper,
• 17:45
  Speaker 1: we had a rule that when you send an email,
• 17:47
  Speaker 1: you have to send a goded email back the idea
• 17:49
  Speaker 1: that you have confirmation, right, And that's the way I
• 17:52
  Speaker 1: think of about the system, right. It's a payment confirmation
• 17:54
  Speaker 1: system that essentially, if you don't get that confirmation, that
• 17:57
  Speaker 1: payment isn't necessarily being delivered in a kind of trustworthy way.
• 18:01
  Speaker 1: Am I getting that right? Here's the thing. Ultimately, it
• 18:03
  Speaker 1: doesn't control the payments, You're right. It only oversees the messaging.
• 18:07
  Speaker 1: And by the way, it's not really led to go
• 18:08
  Speaker 1: into the messaging. But any bank and any entity that's
• 18:12
  Speaker 1: involved in the system being able to store those messages
• 18:16
  Speaker 1: and track those messages helps those banks comply with sanctions rules,
• 18:20
  Speaker 1: which is why swift is important even in an era
• 18:22
  Speaker 1: of sanctions. One of the things that people worry about
• 18:26
  Speaker 1: and remember since two thousand fourteen, Russia and China did
• 18:29
  Speaker 1: try to create alternatives. It didn't really take off to
• 18:32
  Speaker 1: such a massive degree. But can Russia and China create
• 18:35
  Speaker 1: bigger alternatives to swift That was one concern. But the
• 18:38
  Speaker 1: reality is this is the central This is a central
• 18:41
  Speaker 1: way to communicate across banks across the world. So even
• 18:44
  Speaker 1: if they left this and an alternate system is being made,
• 18:47
  Speaker 1: then how do you transact with the normal global financial
• 18:50
  Speaker 1: system as you know? It's it is a little bit
• 18:53
  Speaker 1: meta alright, So yeah, I guess the way I'm thinking about,
• 18:56
  Speaker 1: it's just gonna make it much more difficult for Russia
• 18:58
  Speaker 1: to do business and putting increasing to pressure on them.
• 19:02
  Speaker 1: Um another thing, another angle. I wanted to get your
• 19:05
  Speaker 1: sense from its like the JP Morgan's of the world,
• 19:07
  Speaker 1: the Bank of Americas, these big global the cities, these
• 19:09
  Speaker 1: big global institutions, what are they saying about their business
• 19:13
  Speaker 1: in Russia with Russia? All that kind of thing. So
• 19:15
  Speaker 1: remember again, since when there were more restrictions kind of imposed,
• 19:20
  Speaker 1: over time, a lot of banks have really stepped back.
• 19:23
  Speaker 1: So most US banks don't have a meaningful explosion Russia,
• 19:25
  Speaker 1: which is why those sanctions on those Russian banks themselves
• 19:28
  Speaker 1: is so important. Suburb Bank and the v TB are
• 19:31
  Speaker 1: fifty of the country's global assets. And then you know,
• 19:35
  Speaker 1: all of the five banks combined are like sevent So
• 19:38
  Speaker 1: if you take City Group, it's like a couple of
• 19:40
  Speaker 1: billion dollars of exposure of assets in Russia, not meaningful
• 19:44
  Speaker 1: to the bank itself. But with that said, remember how
• 19:47
  Speaker 1: entwined the global financial system is. City Group and JP
• 19:51
  Speaker 1: Morgan are big global transaction banks, which means they're effectively
• 19:55
  Speaker 1: the banker to other banks that help these payments from
• 19:58
  Speaker 1: one country to another happens. So what we're hearing right
• 20:01
  Speaker 1: now is a lot of bankers in talks with the
• 20:03
  Speaker 1: Treasury Department to figure out what the actual rules are
• 20:06
  Speaker 1: because that has not been made clear to the bankers
• 20:08
  Speaker 1: themselves yet. And so now all these banks basically have
• 20:11
  Speaker 1: to figure out how to entangle entangle themselves from any
• 20:15
  Speaker 1: transactions that may involve any of these sanctions entities, and
• 20:19
  Speaker 1: remember there are many. Now, well, let's talk about the
• 20:21
  Speaker 1: energy piece of this, right because I believe, and correct
• 20:24
  Speaker 1: me if I'm wrong, but I believe there was discussion
• 20:26
  Speaker 1: among the White House about how you actually kind of
• 20:29
  Speaker 1: separate the energy payments from the entire metric, And one
• 20:33
  Speaker 1: of them was simply you can have them denoted or
• 20:36
  Speaker 1: have some sort of marker um, which is having me
• 20:38
  Speaker 1: give me horrible biology DNA flashbacks, um. But the other
• 20:42
  Speaker 1: piece was if they're all kind of going through one bank,
• 20:45
  Speaker 1: can you just target that one bank? Any update on
• 20:48
  Speaker 1: how they're going to target the energy piece of it, Well,
• 20:50
  Speaker 1: that's the big question here, right If they wanted to
• 20:52
  Speaker 1: target the energy sector, why don't they just target the
• 20:54
  Speaker 1: energy sector? Why is this all being done through financial mechanisms? Interestingly,
• 20:59
  Speaker 1: and just as important, and I'm sure you guys have
• 21:01
  Speaker 1: been talking about it as the band with the central bank,
• 21:03
  Speaker 1: the Russian Central Bank. So if you're going to target
• 21:05
  Speaker 1: Russians economy right now, the way they are doing it
• 21:08
  Speaker 1: is absolutely by targeting Russia's financial infrastructure, and they're doing
• 21:12
  Speaker 1: almost every means to do that and do it effectively.
• 21:16
  Speaker 1: But if you're going to target the energy system, then
• 21:19
  Speaker 1: why don't you just do that by means of the
• 21:22
  Speaker 1: companies and the people that own them. I think that's
• 21:24
  Speaker 1: the next leg of this story that has a lot
• 21:26
  Speaker 1: of big question marks that are rolling rolling into it. Yeah. Interesting,
• 21:31
  Speaker 1: it's far and wide. It's been a weekend. We're just
• 21:33
  Speaker 1: sanctions and you know, pull business out of Russians. Just
• 21:36
  Speaker 1: it's just incredible news flow and continues today. And I'll
• 21:39
  Speaker 1: point out there's a Bluebird editorial written by the Editorial
• 21:41
  Speaker 1: board on the terminal entitled Wielding Swift against Russian banks
• 21:45
  Speaker 1: is a big risk um and it's a great explainer
• 21:49
  Speaker 1: for how swift works in the real world and how
• 21:52
  Speaker 1: there could be some negative repercussions um by the nying
• 21:55
  Speaker 1: Swift to the entire Russian economy. So I recommend that
• 21:59
  Speaker 1: Snelle Basset, Wall Street reporter Bloomberg News joining us here
• 22:02
  Speaker 1: on our Bloomberg inter active Brooker studio. She does every
• 22:04
  Speaker 1: Monday giving us the latest from Wall Street, which is
• 22:07
  Speaker 1: her beat. Thanks for listening to the Bloomberg Markets podcast.
• 22:11
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• 22:14
  Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm
• 22:18
  Speaker 1: on Twitter at Matt Miller and on Fall Sweeney I'm
• 22:22
  Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can
• 22:25
  Speaker 1: always catch us worldwide at Bloomberg Radio