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- [00:00]
Narrator/Advertiser
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- [00:31]
Ulf Kristersson
noise about AI, but time's too tight for more promises.
- [00:34]
Jonathan Ferro
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Market Analyst/Nathan Hager
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Jonathan Ferro
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- [00:46]
Ulf Kristersson
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Jonathan Ferro
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Market Analyst/Nathan Hager
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Jonathan Ferro
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Market Analyst/Nathan Hager
that moves the business and lets create smarter business.
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Narrator/Advertiser
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- [01:55]
Jonathan Ferro
This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferro along with Lisa Abramowicz and Annmarie Horden. Join us each day for insight from the best in markets, economics and geopolitics. From our global headquarters in New York City, we are live on Bloomberg Television weekday mornings from 6 to 9am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen to. And as always on the Bloomberg Terminal and the Bloomberg Business app. Judy Emanuel of Evercore maintaining a 7750s and P year end price target Writing Stocks have become more volatile as the wall of worry is large around adoption, spend, regulation, profit, sustainability and capital raise. Julian joins us now for more. Julian, good morning.
- [02:35]
Market Analyst/Nathan Hager
Good morning.
- [02:36]
Jonathan Ferro
We often say on this program you can learn something about the data and you can learn something from how the market responds to the data this morning. Numbers from Samsung fantastic record quarterly profit stock gets hammered. What can you learn from that this morning?
- [02:50]
Market Analyst/Nathan Hager
So what you can learn is the sentiment around the trade in our view is probably as cautious as it was in the first quarter of the year. Coming into the reporting season in April that actually caused the market to pivot higher. It really is this. Every one of these aspects has now become a global glass half empty type of view. But at the end of the day what we think that this earnings season will show is that like this report last night, there is incredible strength and you know, if, if positioning gets to one way it gets taken off. But the longer term trend, the fact that these stocks and this theme is driving financial markets in the global economy higher is intact.
- [03:41]
Jonathan Ferro
Judy, in the short to medium term it does feel like there's been a turn though off the back of the micron numbers, 85% margin, Samsung record quarterly profits. And yet the market is punishing some of those stories and you start to see a rotation back to the big spenders, the hyperscalers. We've heard from multiple people in the last 24 hours. That's the trade they like now leading into the so called like 7, not the max 7 part of the market that has struggled matter Microsoft and leaning away from some of the chip makers. What you make of that call, I'm
- [04:07]
Market Analyst/Nathan Hager
going to have to use that one.
- [04:08]
Jonathan Ferro
It's not mine, it's not mine.
- [04:09]
Market Analyst/Nathan Hager
For what it's worth, kind of like that. If you look at the last two and a half years, particularly into earnings season, it's much more about positioning in terms of short term reactions. And in that respect, look, we know where all the money and all the profit has been this last two or three months. Look at some of these names, how much they've run up 200, 300% off of the March 30 low. This kind of digestion is completely normal and frankly we'd argue it's healthy as is the rotation into some of these names which are going to report stellar earnings and oh by the way, because they've been punished so much, are trading at pretty reasonable valuations.
- [04:55]
Narrator/Advertiser
On top of that you have the headwind of higher oil prices now put to the side. Right, because oil prices have made a round trip back to where they were before the start of the Iran war. How positive of a talking point is that going to be for the companies and sectors outside of tech?
- [05:10]
Market Analyst/Nathan Hager
I think it's very underappreciated as a profound positive. We went back and we looked at, you know we, we started the war in March by doing this analysis of when oil price went above the 24 month moving average by 30 or 40%. That that would be a market disruption event. The retreat back to $70 and below is almost one of the fastest spike unwinds on record and it's absolutely unequivocally positive. The market averages 17% gains in the 12 months following that return to earth of the oil gas.
- [05:50]
Narrator/Advertiser
It's a huge relief for the consumer especially since we had seen pressure on the consumer, both high income as well as lower income. I'm curious to get your take on whether this the change in oil makes the Fed minutes that we're going to get next tomorrow almost obsolete because you know we're not going to get a whole lot of information anyway from Kevin Marsh because he's not one to be totally communicative. But does it matter as much what the Fed says now that oil prices have come down so much?
- [06:17]
Market Analyst/Nathan Hager
It matters less and but will be interesting is how much of a read we get or don't get into that closed door family fight I that Chair Wash keeps talking about. Look, but in our view we don't think the Fed's going to move this year and we don't think that you're on hold.
- [06:36]
Jonathan Ferro
Why?
- [06:38]
Market Analyst/Nathan Hager
Two things. Number one, the oil price can have very salutary disinflationary effects throughout the rest of the economy. Look, we saw the world's largest retailer make that announcement whether it was prompted or not prompted. But that did happen and that is real. And then the other aspect of it is is the AI driven inflation is something if you listen to Chair Wash, he said we're going to give it time. We're going to, you know, we don't want to make the mistake that was made in late 1999 by assessing the technological revolution as a bubble and raising rates when it wasn't necessary.
- [07:19]
Jonathan Ferro
Raises a good question. The disconnect Deutsche Bank's written about it in the last 24 hours. There still is a bit of a disconnect here. We've had a res in crude prices from triple digits down to the 60s on WTI Brent in the low 70s. But we haven't reset the Fed hike debate. In fact this market still primed for Fed hikes. What's going on there and why I
- [07:38]
Market Analyst/Nathan Hager
think it is this sort of getting used to the discomfort of less transparency, less communication from the Fed.
- [07:49]
Jonathan Ferro
Do you see tension reduce communication equaling income, increased hawkishness is that the right way to look at this. I've had pushback from some people to
- [07:57]
Market Analyst/Nathan Hager
that in our mind it isn't. But given the fact that that initial press conference used, you know, was really a primer on fighting inflation, the concept of price stability being, you know, number one mandate, it's understandable. But again, in our view, the markets miss reading the intention. And I liken it more to the Greenspan era, which a lot of people talked about. The concept of jawboning the markets into where you wanted them to go.
- [08:32]
Narrator/Advertiser
Or does the decreased communication lead to increased volatility? The Vix closing below 16 for a second straight day. But we might get more volatility in the rates market, which will then of course trickle into the equity market.
- [08:44]
Market Analyst/Nathan Hager
Well, there's a lot of things going on, of course, and I think again, oil where it is certainly helps the rest of asset market volatility. It's also the summer where we're digesting, the market's rotating. And then the other part of this volatility is the fact that even though you're seeing more volatility in the tech sector, you're seeing less volatility elsewhere. In fact, you're seeing an entire cohort of stocks on a day to day basis move inversely to the S and P S and P500, the likes of which we haven't seen in 25 years.
- [09:20]
Jonathan Ferro
Negative beta stocks. It's been a call for you. Walk us through it.
- [09:23]
Market Analyst/Nathan Hager
So, so basically what it means is it's a variety of industries.
- [09:29]
Interviewer/Reporter
Energy.
- [09:29]
Market Analyst/Nathan Hager
You can understand intuitively why it would move inversely to the S&P 500. Utilities, consumer staples, and strangely enough, insurance stocks. We scratch our heads as to why. But if you look at the last six months and a day in and day out basis, this group of stocks, a number larger than you've seen in 25 years, move inversely to the S&P 500. Last Thursday, with NASDAQ selling off, you had all of those sectors that I mentioned. Insurance stocks were up 3% yesterday. The exact opposite happened. But what it tells you is a people are trying to diversify. The fact that AI is everywhere now. It's in bonds, it's in gold, it's an emerge. I mean, is Korea an emerging market anymore? We don't know the.
- [10:21]
Narrator/Advertiser
By some measures.
- [10:22]
Market Analyst/Nathan Hager
By some measures. But it also tells you that the demand for stocks remains very.
- [10:29]
Jonathan Ferro
Feels like one trade in the market right now, which is what you're getting at. And people are looking for alternatives increasingly as well. Typically, we'd sit on the program like this. And we'd say the market is not the economy, the economy is not the market, but the economy increasingly is firing on one engine, isn't it? Aren't they the same thing at the moment?
- [10:44]
Market Analyst/Nathan Hager
And that's the problem for investors, really. And that's why, again, these negative beta stocks are getting as much attention as they are because you do want to, you know, portfolio theory tells you you don't want to put all your eggs in one basket. Nevertheless, the market has gravitated, as has the economy, to putting most of its eggs in the basket. We think there's more room to run, to be clear. But again, you know, I dive. Diversified portfolio is something most investors are hoping to achieve.
- [11:20]
Jonathan Ferro
Gillian the geopolitics Ukraine was a market story three, four years ago. It's not anymore. The Middle east was a market story three, four months ago. It's not anymore. Have we been conditioned to ignore all of this? Is a question asked the so Mike Wilson of Morgan Stanley just yesterday. It feels that way. You condition just to ignore whatever happens in the next 24 hours?
- [11:39]
Market Analyst/Nathan Hager
Well, it goes back to the bigger picture of equity markets and investing is earnings driven. We know that. We're very fond of showing the S&P 500 versus earnings going back 30 years and the correlation. There are years where it doesn't work, but in general, it works very well. And there are times when, in terms of valuation, in terms of volatility, geopolitics matters. I mean, could we have been having this conversation, you know, in the middle of March? I don't think so. But then again, oil was $110 a barrel at that point. And now we're at a price where we know that the economy can function perfectly well. And in fact, when you think of something like the rally that we've seen in certain small cap stocks, much more sensitive to macroeconomic inputs like the price of oil and much more of price takers than price makers. It really tells you that geopolitics is on the back burner now. That's not to say that it won't. And look, we've got midterms coming up in November. We won't talk about those till that's a famous line there. But. But again, you will have bouts of volatility surrounding both politics and geopolitics. And as much as we love the summer, we remember what tends to happen in September and October anyway.
- [13:09]
Narrator/Advertiser
Geopolitics matter for earnings of defense companies. We've seen that in Europe. Does it matter for defense companies in the US because increasingly you're seeing the European countries choose to buy local
- [13:20]
Market Analyst/Nathan Hager
and you know, given the dialogue and the, the difficulty of the relationship, it certainly makes sense. But again, remember that the President is, you know, actively, I think he tweeted it last night about building the defense budget here and we know they're going to be buying from US defense companies.
- [13:44]
Narrator/Advertiser
So going forward, how do you see the strong dollar affecting defense companies, their ability to sell to overseas customers?
- [13:52]
Market Analyst/Nathan Hager
Well, again, this goes back to the whole, you know, the geopolitical relationship and to your point that people will probably have a tendency to buy local currency, it's one of these kind of odd times where currency has really been taken out of the equation for, for the meantime, yes, it's rallied a little, but if you look back, it's a essentially gone nowhere for a year at the broader dollar index level. And we think that the downtrend that started a year and a half ago is intact. But with the dollar, you know, things don't tend to move in a straight line.
- [14:33]
Jonathan Ferro
Trying to finish on the banks record highs at the close yesterday that would be reporting this time next week. This time next week that's all we'll be talking about the financials once that trade starting to work outside of Goldman, outside of Morgan Stanley for the others.
- [14:46]
Market Analyst/Nathan Hager
Because again there's this understanding that people are at the moment taking chips off the table in AI and oh by the way, the earnings power of financial companies is just absolutely record and the valuations, look, the valuations in a lot of things are stretched by historical standards, but relatively there's plenty of attractive opportunities.
- [15:08]
Jonathan Ferro
Found that strange that the financials didn't keep pace with the tech story for much of this year. It was up to me because they were making so much money from the tech story, from the IPOs, from the amount of money being raised.
- [15:18]
Market Analyst/Nathan Hager
But, but again if you're a, an active manager looking for multi week or month, two month performance, you're going to have a tendency to go with where the momentum has been. And actually if you read about some of the hedge fund performance in the last few days, you actually use shorts where the negative momentum has been. There's been a lot of, a lot of churn in the markets within the context of this ongoing bull market.
- [15:48]
Jonathan Ferro
Good to see you. Stay with us. More Bloomberg surveillance coming up after this.
- [15:58]
Market Analyst/Nathan Hager
Before we had AT&T business wireless coverage,
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Public.com Advertiser
our delivery GPS wasn't the most reliable. Once our driver had to do a
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Market Analyst/Nathan Hager
14 point turn to get back on route. A 14 point turn.
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Public.com Advertiser
An influencer even livestream the whole thing.
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Market Analyst/Nathan Hager
Not good for business. Now with AT&T business Wireless, routes are updating on the fly and deliveries are on time. The influencer did get us 53 new followers though. AT&T business Wireless Connecting changes everything.
- [16:28]
Public.com Advertiser
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Torsten Slok
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Narrator/Advertiser
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Market Analyst/Nathan Hager
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Narrator/Advertiser
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Market Analyst/Nathan Hager
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Market Analyst/Nathan Hager
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- [18:12]
Jonathan Ferro
Apollo noting a lack of profit margin gains due to AI outsourcing side of the tech sector. Torsten Slok of Apollo writing, there's a mismatch between current earnings expectations and the actual time firms need to generate ROI on AI investments, and it could have significant implications for many AI company valuations. Thorsten joins us now for more. Torsten, good morning. Good to see you. Let's build on that quote. What are you tracking right now? What are you saying?
- [18:37]
Torsten Slok
Well, what's really, really important this discussion is of course profit margins have been phenomenal in the Magnificent Seven. But what really is critical is that now we need to see profit margins go up outside the Magnificent Seven. In other words, what's going on with S&P493 becomes very, very critical because at this point, profit margins S and P493 have just not gone up. So therefore, one very important conclusion and one very important place to look for signs of AI beginning to have an impact is to look at what's going on in earnings growth, profit margins, and overall the health of the S&P493 as a result of the technological improvements we're seeing at the moment.
- [19:11]
Jonathan Ferro
Mets are also making a call potentially as well that the ROI on selling excess capacity might be higher than using it internally. Does that reinforce some of this message for you?
- [19:21]
Torsten Slok
Well, the issue, of course, is that there is a huge, of course, build out of capacity and compute, and there will literally be unlimited demand for compute. The question is just at what price and who will the buyers be and where is that capacity coming from? And the big picture still remains that AI is a very revolutionary technology. Everyone agrees on that. But the key question now is how long time is it going to take before this shows up, especially in profit margins outside the Magnificent Seven? Because if the S&P 493, let's say that it takes several years before profit margins begin to go up, the question is whether the implicit earnings assumptions in the Magnificent Seven are too high or too fast relative to what's actually going to happen. So that mismatch between are we going to see profit margins, earnings growth go up outside this, the Magnificent Seven, is that going to come slower? Is it going some faster? Is absolutely critical for a conversation about what should the value be of the Magnificent Seven.
- [20:13]
Narrator/Advertiser
Today, in exactly one week's time, as John was reminding us, the big banks begin reporting earnings. And we have the kickoff of the earnings season. There's going to be a lot of discussion on AI and what it means for jobs in the banking sector. How do you parse through what the companies say to really understand what it means in terms of whether they're going to cut jobs or not?
- [20:32]
Torsten Slok
What's really challenging about this is to talk about exposure because there's a lot of different studies already that look at what is the exposure meaning AI exposure in different occupations. These two, these buckets, these two studies fall into different buckets of one saying what is the actual exposure in terms of actual AI usage? So this is trying to measure, say, what are people using Claude for what tasks and what request did they get? And therefore measuring and quantifying the actual usage of AI. Another bucket is studies that look at, well, let's theoretically assume what is the economist exposure to AI and then try to match that with occupations and figure out what is employment in those sectors. And those studies, of course, are what you call more theoretical. So the challenge is that there is not an agreement about what does AI exposure mean. So that's raising all these questions around, well, what does it even mean when we say that a certain part of the economy is exposed to AI? Because there's just not at this point in the studies that look at this a really good way to quantify what exposure means. And that means also for the financials, that means for legal services, that means for consultants, that we're having some challenges figuring out how do we even quantify what is the impact of AI? We all know that it's going to make a big difference, but the speed with which this difference comes along, how many people is impacting today, next month, next year? It becomes absolutely critical when you again think about that company valuations today are the net present value of the cash flows that these companies get in the future.
- [21:55]
Narrator/Advertiser
We're also hearing a changing story, a changing narrative from companies themselves. There is a Wall Street Journal story about how the narrative has shifted, at least from open AI and anthropic, from these doomsday scenarios to a future where workers actually keep their jobs but just do it better thanks to AI. What does that tell you?
- [22:10]
Torsten Slok
Yeah, and RAMP had a really interesting study over the last week that they put out where they basically looked at what has been the cost and the spending on AI among different companies. And what they did that they looked at, well, what was the job growth in those companies that had more spending on AI? And they did indeed find that more spending on AI, it actually resulted in more job growth. So one way of looking at this is one dimension of saying, what's the actual spending relative to the more theoretical matching of occupations with what's been going on with job growth in those sectors that also have been spending on AI.
- [22:42]
Jonathan Ferro
So austin to your point for this all together. This is a potential risk to valuations, which is an obvious market risk. Is it a macro risk as well? In central Portugal, I believe you were there, big conversation about this. We've got a story in the market right now that feels like one trade and increasingly a story in the economy that feels like we're firing on one engine. How much is it one and the other?
- [23:01]
Torsten Slok
Absolutely. It's actually three different things. First of all, it's of course, everywhere in markets because the concentration to the story is so strong. Think about it. For the last 15 years, the main lesson in finance is factor investing. And now we're staring at one factor that's driving all financial markets. In equities, the concentration is very high. In AI, you also look at issuance, high yield, issuance, even venture capital, the concentration in AI is very, very strong. So in markets, let's disagree. The exposure or the factor plays a very, very critical role at the moment when it comes to the economy. Also, if you look at actual spending on data centers and energy, if you add up what that contributes to GDP this year is roughly about 0.7% out of a 2% GDP growth this year. If you add about 0.3 coming from the wealth effect because of high stock prices, that's also very important. And finally, let's also not forget that the hyperscalers are issuing so much IG corporate debt that this is crowding out demand for US Treasuries. Because if you are bond manager and investment grade credit, you can either buy sovereigns, US Treasuries, you could buy financials. That's what you've been doing for a long time. But now you can also buy 700 billion in hyperscalers. So it's not only that it has an impact on markets overall and his impact on gdp, but it actually also has an impact on demand for Treasuries. So yes, the conversation and the panel I was on in Central was exactly around this risk that is indeed now a more and more prominent factor. Basically not only the economy, but also in financial markets.
- [24:21]
Jonathan Ferro
What's the consensus on how to manage that risk?
- [24:24]
Torsten Slok
Well, the challenge is page one in your finance textbook. If there's one factor you're trying to avoid is to try to pick another factor. But the question is, what is that other factor? Momentum is a growth. Is it value? Value has some opportunities because it's not growth. So that's why. Ways of looking at parts of the private markets, public markets, that is. Value investing is indeed one place to hide. But it has to be value investing that's indeed protecting you against the downside risks that come along if AI does not deliver in the end.
- [24:53]
Jonathan Ferro
Stay with us. More Bloomberg surveillance coming up after this.
- [25:01]
Public.com Advertiser
Support for this show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on public. You can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English like if the Vix hits 25, buy a put option on the S&P 500 or if my cash balance goes above $20,000. Move the excess into my Direct Index. You approve the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and and fund your account in five minutes or less. That's public.com market paid for by Public
- [25:57]
Torsten Slok
Investing Brokerage Services by Open to the Public Investing Inc.
- [26:00]
Public.com Advertiser
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- [26:10]
Narrator/Advertiser
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- [26:41]
Market Analyst/Nathan Hager
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Market Analyst/Nathan Hager
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Interviewer/Reporter
President Trump has arrived here on the tarmac in Turkey preparing for those meetings of 32 leaders of those NATO allies. We're very pleased to be joined by one of them, the Prime Minister of Sweden, Ulf Kristersson. Thank you so much for speaking to us here on the sidelines of the NATO summit. As we've just been saying, President Trump has just landed here in Turkey. What is the message from the European arm of NATO to the President of the United States?
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Ulf Kristersson
Well, the basic message I believe and I hope, is to confirm what we decided last year. We're all committed to to an increase in European defence investments. This burden shifting in an orderly way, but very decisive way that we can prove that decisions have been made already and we see good results from it. That's one. Another, I hope is to confirm our commitment to Ukraine. Ukraine is not losing this war, but they still need our help to be able to do in a decent piece. And of course what we're discussing today to increase the Europe, not least the European capabilities of having a bigger, a good defense industrial base, which we have proven quite significantly here today.
- [28:27]
Interviewer/Reporter
And of course there are things that can go wrong in these meetings, as they often they sometimes do.
- [28:31]
Ulf Kristersson
Yeah.
- [28:32]
Interviewer/Reporter
And one of the things that has been highlighted by the US Administration is that not everybody is necessarily moving at the same pace in terms of that burden sharing. The United States has indicated that potentially you could get a tiered system within NATO of rewards and consequences for those that don't. Do you agree with that in terms of a sort of method to put pressure for NATO allies to reach those targets?
- [28:52]
Ulf Kristersson
I think everybody expects a quite thorough assessment of how well we have achieved what we decided last year. And there are no secrets behind, you know, between NATO members. So I think that would be tough discussions on that. But that's, that's the name of the game. But still, I think that Margaret, the General Secretary General's basic message is that we are stepping up and we are doing it decisively. And Europe is, and Canada, we are taking a bigger share of the, of the overall responsibility, which we should.
- [29:29]
Interviewer/Reporter
And of course, one of the issues that the President United States has demonstrated some dissatisfaction with was NATO's role in any sort of way on the conflict in Iran. We now have had this news crossing that a tanker has been ship hit, a Qatari tanker. That obviously has great consequences for the Europeans. Do you believe that the Europeans should be playing a role at this stage here? Is this a conversation that will be fleshed out for the President of the United States?
- [29:51]
Ulf Kristersson
I'm not that sure that that will be a discussion having here, but we've obviously had it over the last months and Sweden is among the many European countries said that we are willing and able to, to, to do efforts to, to safeguard freedom of navigation after reasonable cease fire has been, has been reached and we, we are committed to that.
- [30:15]
Interviewer/Reporter
Can you say a little bit more about what those things could include and what and how, you know, because obviously we're in a cease fire now. It's not exactly a peace. At what stage you think the Europeans would be willing to engage?
- [30:24]
Ulf Kristersson
Well, that is an ongoing discussion between different European partners. So I, I cannot be too precise on that. But we have different capabilities that could be, could used in that region. And of course, for all European countries, freedom of, freedom of navigation is an extremely important virtue in itself. So we, we fully acknowledge that we also have a responsibility into that.
- [30:50]
Interviewer/Reporter
And of course, as you mentioned, the conflict in Ukraine still top of the agenda for the Europeans. Zelensky will be speaking with President Trump trying to bring that up the agenda for the President of the United States. There is a real sense that there is a momentum shift on the Battlefield striking deep within Russia, the sense that Putin may be a little bit more on the ropes, particularly economically. Given that opportunity. What is it appropriate for Europe to do to try to escalate that pressure and try to help?
- [31:13]
Ulf Kristersson
Yeah, honestly, to, to step up. Because what we are doing other basically the right things, supporting Ukraine and pressurizing Russia and we should not take these, the latest successive for Ukraine as a reason to, to decrease our support. Quite the opposite. You know, to make it so super clear for Russia that time is not on their side. With a 90 billion euros loan from Europe to Ukraine, that also creates a trustworthy long term commitment for Ukraine. So I think we are on the right track. What we see right now is actually increasing Russia increasing their attacks on, on big cities like kids. That also gives us a good reason to, to provide more of the kind of air defense needed in Ukraine to be able for them to, to defend themselves while they also are, are defending themselves on Russian soil.
- [32:18]
Interviewer/Reporter
And there's been an increasing debate about diplomatic engagement on the European side with the Russians. Where do you fall on the debate? Do you think that we're any more closer at the European side to have a collective person willing to put forward and a really sort of serious engagement with the.
- [32:33]
Ulf Kristersson
Well, I normally think that that discussion starts at the wrong place, so to speak. It starts with who should represent. I mean the big thing is that Russia, Ukraine is willing to negotiate a decent peace. Europe, both EU Europe and the broader Europe. We are perfectly willing to support Ukraine in that difficult task. It is obviously Russia who is not willing to in any way negotiate. They have a maximalistic view on the war against Ukraine. And as long as Russia is the obstacle for negotiations, the question needs to be put to Russia. Of course, if the situation comes where Russia is willing to negotiate on decent preconditions, Ukraine wants to negotiate and they want the European support for that, then we will sort that out.
- [33:26]
Interviewer/Reporter
And also thinking about the pressure that is building on Russia, we've had more and more warnings and discussions from European leaders concerned that there could be a direct confrontation between Europe and Russia. Where do you sort of put that in sort of the risk assessment as today, particularly as the newest member of naito?
- [33:44]
Ulf Kristersson
Well, nothing new really. We all realize that Russia, there is a lot of pressure on Russia. They are having very, very little success on the battlefield. They have a severely hit economy and they refuse to negotiate. What would they do? And right now they increase their attacks on Kyiv. All the countries in Russia's neighborhoods or in the region are well prepared for different kind of hybrid threats against our countries. They can take a variety of forms. I think Russia is very well aware of that. Attacking a NATO country would be an extremely bad idea. We don't see any signs of that. But we do see a lot of signs of different kind of hybrid threats and activities, undersea cables being destroyed and the Russian shadow fleet acting in a reckless way and all of these things. I think we have never been as well prepared as we are right now.
- [34:48]
Jonathan Ferro
This is the Bloomberg Surveillance Podcast, bringing you the best in markets, economics and geopolitics. You can watch the show live on Bloomberg TV weekday mornings from 6am to 9am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen. And as always, on the Bloomberg Terminal and the Bloomberg Business app,
- [35:12]
Torsten Slok
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