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- [00:00]
IBM Representative
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- [01:03]
Christina Raffini
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- [01:38]
Adobe Acrobat Advertiser
Bloomberg Audio Studios Podcasts Radio News welcome to the Bloomberg this Weekend Podcast with David Gura, Christina Raffini and Lisa Mateo.
- [01:54]
David Gura
Thanks for joining us for today's selection of conversations from the show.
- [01:57]
Derek Wallbank
You can listen to our favorite discussions
- [01:59]
IBM Representative
right here on the podcast, but also make sure to join us live every Saturday and Sunday morning starting at 7am Eastern.
- [02:05]
Lisa Mateo
We're on Bloomberg Television Radio and the Bloomberg Business app bringing you unique takes and in depth interviews on news, politics, lifestyle and culture.
- [02:17]
Christina Raffini
We are getting some breaking news. The President posting on his social media network that the US Will begin a blockade of ships to and from the Strait of Hormuz. Nuclear, he says was not among the points. Agreed to a very detailed post out on Truth Social just minutes ago. The President says that the US Will begin blockading ships trying to enter Hormuz and begin destroying mines that Iranians laid in the strait. Christina, the President said too he's asked the Navy to talk to get in touch with every vessel that paid the Iran toll and any Iranian who fires that, the U.S. will be, quote, unquote, blown to hell.
- [02:51]
David Gura
That's right. And again, this is coming from the president, not CENTCOM or the Pentagon, but he says the. The blockade will begin shortly. Other countries will be involved. Iran will not be allowed to profit off this illegal act of extortion. He says they want money and more importantly, they want nuclear. We want to turn now to former Ambassador John Bolton. Of course, he was a former national Security adviser under President Trump during the first administration and U.S. ambassador to NATO. Ambassador Bolton, last time you were on the show, you were talking about how you had advocated for this at your time at nsc. You wish they would have done it then. You were glad they did it now. But in that intervening time, you voiced some concerns, both in writing and on some of the other networks about how this is proceeding. I'm wondering, I mean, we wanted to get your take on these seemingly failed talks in Pakistan, but now I want to ask you what your thoughts on. On this blockade that's being announced by President Trump just minutes ago.
- [03:45]
John Bolton
Right. Well, I come from the perspective that the only way to get true peace and security in the Middle east is to have regime change in Iran. You can negotiate all you want with these people. It's not going to change anything. And I think the failure of the Islamabad negotiations just makes the point as clearly as one can. I think the ceasefire was a mistake. But just dealing with where we are right now, part of the problem here was caused by Donald Trump a few weeks ago lifting American sanctions on the shipment of Iranian oil. And I think he was motivated by fear of rising international oil prices and he thought a few tankers might get the price down. I don't think that's correct. I think it was insignificant. But what he was doing was allowing Iran to ship oil, not the Gulf Arabs, but Iran, presumably to get paid, to gain resources, to use in their military to kill Americans financing the war against us. That never made any sense. And he should reimpose the sanctions. I think that maybe. I haven't seen these tweets, but I think that may be what he's doing. And a blockade makes sense. You don't have to attack Carg Island. I don't think that was ever realistic. The point is no Iranif, no Gulf Arab oil gets out, no Iranian oil gets out. Let's see how they feel about that in Tehran.
- [05:05]
Christina Raffini
We're going to get back to the blockade in a second. But you mentioned regime change. So I've got to ask you, this administration, the US Administration, seems to think that, that what has happened in Iran over the last six weeks constitutes as regime change. Do you agree?
- [05:19]
John Bolton
That's ridiculous. Look, what we're dealing with is a group of religious fanatics pursuing a radical ideology. And it permeates the core of ayatollahs at the top and certainly permeates the Revolutionary Guard. Now, the leadership of both the civilian side of the government and the Revolutionary Guard has been severely harmed by the last six weeks. Not enough, obviously, but it's beginning to fracture the regime at the top. There are signs of that inside Iran. And I think the devastation that's been unleashed against the instruments of Iranian state power, the Revolutionary Guard, the Quds Force, the besieged militia, are having a real effect inside Iran. I think the ceasefire was a mistake. The last thing you want to do is let up before you really do crack the regime and it collapses internally. That gives internal opponents and people who defect from the regime a chance to take over. Not guaranteed, but a chance.
- [06:16]
Christina Raffini
Well, I think the challenge with that, Ambassador, some would point out, is there's not a clear group of those people. There's not clear opposition, there's not clear defectors. Who are the names who would be an acceptable leader of this country to you?
- [06:29]
David Gura
And are those moderates left? Because we've seen reports that many of them were potentially killed during some of these strikes.
- [06:34]
John Bolton
Yeah, there were no moderates in the regime. If you judge by the most important criteria, who favors getting Iranian nuclear weapons, they all favor it. The opposition is really quite widespread across the country. It is disorganized, that's a fact. But it's not like Iran had a two party system. And we're saying, well, we want this party out and the other party in. I do think there will be a lot of turmoil. I think that's what happens after a 47 year long dictatorship begins to collapse. And I don't think you can dictate who the leaders are going to be from the outside. But what we can say is if this regime begins to come apart, there are plenty of people inside who, seeing the ship going down, will decide they don't want to go down with it.
- [07:19]
David Gura
But Mr. Ambassador, what is the end goal here? Because, you know, we have your op ed from earlier this week where you say the US Cannot leave without finishing the job. And we've been talking this morning. That was a fear of a lot of allies that, that the Trump administration, America, would leave. With the strait not fully reopened. It looks like they are taking action on that front. But even if they do, this regime has proven, I think, more durable than a lot of people in this current administration thought. I'm wondering if you thought they would outlast this long and if they do start to crumble. To your point, there are no moderates in the country. What replaces them?
- [07:52]
John Bolton
The people are the moderates. The regime itself is not, does not, is not a happy house for moderates. The Revolutionary Guard and the ayatollahs have to be replaced. I don't think anybody can say with confidence that the regime has survived. You know, they've been building it for 47 years. We've attacked it for six weeks. A little patience is required here. The Gulf Arabs will tell you, I think, that they don't look forward to living as vassals to the ayatollahs in Tehran. They want the strait opened. And I think now is the time to do it militarily. Because if we cannot show today that we can open the strait, what happens three years from now when the ayatollahs decide to close it again? If you want to live under that kind of regime, that is a guarantee of higher oil prices for a long time and the Gulf Arabs being subordinate.
- [08:47]
David Gura
I also want to ask you, you know, I watched the Trump administration pull out of the JCPOA the first time. The situation going into negotiations in Pakistan overnight, the elements on the ground were not that different than the agreement that the US Pulled out of. Do you think that was a smart decision to even go to those negotiations? Do you think it gave Iran a card it wouldn't have had if JD Vance hadn't touched down in Islamabad?
- [09:16]
John Bolton
Well, I don't think the negotiations gave them a card. I think the ceasefire gave them a card. They'd been subjected to six weeks of constant bombardment. Now they've had at least some time to be able to regroup, to see if they can reconnect, re establish communications. I think you need to put the pressure back on. The immediate point is to open the strait. If we open the strait to Gulf Arab oil, but not to Iranian oil, that would be the ideal interim fix,
- [09:43]
Christina Raffini
I think, on, on opening the strait and back to this idea of the blockade which you, you have pushed for in your New York Times op, Eddie. Right. If American combat forces entering the region can help open the strait by controlling territory on Iran's side, acknowledging the inevitable, inevitable risks, that would be more sensible strategically, does this mean US Forces actually on the ground in Iran?
- [10:07]
John Bolton
Yes, I said more strategic. More strategic than Taking Carg Island. Look, while we've watched for the past 10 or 15 years, Iran has been fortifying a number of islands in the Gulf. That's how they've set up this tolling system. Now, at least three of those islands are actually claimed by the United Arab Emirates, Abu Musa, Greater Tunba and Lesser Tunba. They're filled with tunnels that probably have missiles and other equipment. I think those are the kinds of targets that we need to neutralize so that we can make the strait safe for maritime transit. The military will have much more detailed knowledge of this, and I'm sure that's what they're thinking about. Now. It's not just clearing the mines from the strait, although that's obviously important, but protecting convoys of tankers from anti ship missiles, swarms of Iranian fast boats of which we've sunk a great number, and Iranian drones dropping weapons from the sky.
- [11:05]
David Gura
You said we need to be patient with regime change, with, with change in Iran, but I'm wondering what that means. How long do you think this could take? How long do you think America should stay in this, considering this is a president who campaigned on no more forever wars? And do you think the president and the American public have the attention span for how long this could potentially take in order to see real durable change?
- [11:31]
John Bolton
Well, it's certainly the case. The president promised no more wars. That's his problem. I mean, he apparently doesn't think too much of the pledge because that's what he's doing now. And it is important to get the American public to understand why we're doing this, which is another problem of President Trump. He did not make what I think is a very compelling case for regime change before the war. He didn't try to persuade the American people. He didn't work with Congress, he didn't brief our allies, he didn't work with the Iranian opposition. It's still not too late, but a lot of the problems could have been alleviated. And you ask how long? I don't think you can put a time frame on it. I just want to introduce one radical concept. Victory that we actually defeat the regime, remove the threat of Iran's nuclear weapons program, remove the threat of international terrorism, remove the threat that's really almost as grave as those two, and that's Iranian control over the Strait of Hormuz.
- [12:27]
David Gura
Ambassador, I understand that, but also, you live in the real world. You've lived in Washington. We've got midterms coming up. We've been talking all morning about what this is doing for prices for the American public and how voters vote on kitchen table issues, and that's affordability. The longer this persists, the more we're going to see uncertainty in markets. Even if the strait is open, it's not going to be open at the tempo that it was before, certainly not for some time. Aren't those two going to hit the road potentially before this job is accomplished? And do you think this administration giving what's coming in November will wait it out, or do you think they will cut and run before the job is time?
- [13:02]
John Bolton
Well, consider the cost of not succeeding. That has cost, too. I think the president could make a very effective case that if you could get Gulf oil, Gulf Arab oil, coming out of the region again, given that before this started the world was awash with petroleum, people were talking about the surplus and what to do about it. I think prices would come down very quickly, especially when it looks like it is safe to bring maritime traffic through the Gulf. Simply the fact that the Gulf is open will cause prices to drop dramatically. So I think it's look, we should have done this six weeks ago. He should have seen this at the beginning. He said, I was surprised that they tried to close the strait. I was surprised they attacked the Gulf Arab states. I can't imagine the Pentagon didn't warn him of these dangers beforehand. Maybe he just didn't pay attention.
- [13:53]
Christina Raffini
The president in that true social post at the top of the hour, just before the hour, said that nuclear was not among the points agreed to. We know that's certainly a sticking point for both parties when it comes to these discussions. It has been for years at this point. Ambassador, you're all too familiar with that. Is there a way for the US to get this country to dismantle its nuclear enrichment program without changing the regime at the top?
- [14:21]
John Bolton
No, I think that's the clear point. If you cannot change a regime's behavior and you don't want to live under an unacceptable threat like disappearing in a mushroom cloud, then the answer is change the regime. George W. Bush put it very, very well when he was president. He said, we cannot allow the world's most dangerous weapons to fall into the hands of the world's most dangerous people. And a lot of those most dangerous people are running the regime in Tehran.
- [14:50]
David Gura
All right. Ambassador John Bolton, thank you so much for joining us this morning. Stay with us for more on Bloomberg this weekend, right after this.
- [15:01]
Podcast Narrator
For many men, mental health challenges aren't recognized until they've already taken a toll. Work pressure, financial stress, changing relationships and traditional expectations around MASCULINITY can quietly wear men down, often without clear warning signs. In season three of the Visibility Gap, Dr. Guy Winch and his guests explore how these pressures show up, how to spot them earlier, and how men can access meaningful support. Listen to the new season of the Visibility Gap, a podcast presented by Cigna Healthcare.
- [15:31]
Adobe Acrobat Advertiser
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- [16:03]
Public Advertiser
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- [17:25]
David Gura
We want to bring in our reporter panel. We've got Axios National Security Editor Dave Lawler timing. Dave, we're glad we've got you this morning. Jeff Mason is back with us, scrambled back in front of his camera. Jeff, we always appreciate you and Congressional reporter Alicia Diaz making her debut on the show on a very busy morning. Thank you all so much for joining us. Dave, I think I'm going to start with you. Do we know, have we heard anything from the Pentagon about what this blockade will entail? The President when the true social tweet says other countries are involved, do we know which ones? And more broadly, logistically, from a military standpoint, how do you execute something like this?
- [18:02]
Dave Lawler
Yeah, look, President Trump has said for quite a while that, well, he's, I will say he's flip flopped on this point, but he's wanted to build an international coalition to open the Strait of Hormuz. A lot of European countries who could have brought some capabilities to bear were not willing to do that when there was a risk of coming under Iranian fire. That includes the French, the British. So as far as I understand, their positions have not changed. Some of the Gulf states, the uae, for example, have suggested they would be willing to play some role in this, but they don't have the same level of, of naval assets to bring to bear in this coalition. So perhaps some support roles from some of those states as well as Israel. But yeah, President Trump has changed his position from we don't need to open the strait to we'll have allies work with us to open the strait to. The allies won't do it, forget it, we'll leave and they'll take care of it to now announcing, I guess, that the US is going to play first and foremost a role in imposing a blockade and in figuring out what gets in and what gets out of the strait.
- [19:04]
Christina Raffini
Jeff is just, let's take a step back here and try to parse through what exactly this means for the US's role in the region right now. Is this an escalation in a time where there's supposed to be a cease fire to negotiate?
- [19:17]
Dave Lawler
Yeah, I mean, it's an escalation of sorts. Yes. It's not an escalation of military might yet.
- [19:23]
Christina Raffini
Although, as I said, the threats of it are there.
- [19:26]
Dave Lawler
Exactly. The threats are still there. And that's how he concluded his most recent Truth social post. And that's also how he went into the negotiations, by saying if they didn't lead to a deal, then the shooting would start again. I think it's actually quite interesting that that's not what he led with here. Instead he led with this blockade, creating more questions about how that's going to work, which countries are going to be involved. The spot on question that Christina asked, which is how does the military even execute this? And then leaving the clear conclusion that the US is not moving out of the region but, but going to stay. So that's a long way of saying it's an escalation of sorts. And I tell you what, I think it'll be very interesting to see how markets react to this tomorrow, because the fact of any blockade, be it by the United States or other countries, preventing ships from going through the strait that has been the biggest economic ramification of this war, has been the closing of that strait and the impact on oil prices, which President Trump desperately wants to bring down, so that the gasoline prices are in the United States anyway, are at a more palatable place come November.
- [20:38]
David Gura
ALICIA I want to bring you in because there is, correct me if I'm wrong, I think there's a war powers resolution vote coming up on the Hill next week. Question we ask all lawmakers from all sides of the aisle every time we have on is realistically, is there anything Congress can do to stop not only this president, but really any president that wants to take a military action, action like this, and can they even get on the same page to try?
- [21:03]
Alicia Diaz
It's a great question. And as we know, you know, the president has no issue going around congressional authority. The war powers vote specifically will be largely symbolic. Even if it passes through the House and the Senate, the president has the power to veto it. However, Congress still holds the power of the purse. There's still a roughly $200 billion supplemental funding request for defense spending sort of looming in the background here. And so there are only so many creative budgetary moves that the White House can do before they will have to turn to Congress and say, you know, we do need extra spending to put some might behind this conflict in the Middle East. And so it will be a stretch to see can he get, you know, a sufficient number of members behind what is potentially an unpopular war?
- [21:54]
Christina Raffini
I'm glad you said that, because this is exactly the needle that these members of Congress have to thread, especially those members who are up for reelection, you know, come November. How do they do this? Or what are they doing in a way that shows that they support the president or possibly if they start to push away from the president's position because this is unpopular, to try to win reelection.
- [22:16]
Alicia Diaz
ALICIA Exactly. I've talked to election analysts and experts who say that it's possible we get to a point relatively soon where Republicans start to question, you know, do I side with how my constituents are feeling or do I continue to side with the president? What's going to be more beneficial for me, what is going to position me best to get up for reelection, you know, especially with the midterms looming this November. So it is possible we start to see more of that fraying and what is already a very slim majority and kind of a disorganized Republican Party, especially in the House.
- [22:57]
David Gura
Dave, I want to go back to you and ask, first of all, if you've heard just even in the last intervening minutes, anything from CENTCOM or the Pentagon, Any details? I'm assuming the answer is no, but if I'm wrong, please correct me. I also want to ask, I mean, there's a ton of military equipment from the US in the Middle East. Obviously, we tracked it for weeks as it was all heading over there. Do they have logistically the equipment they would need to execute something like this? And is the Pentagon, is the military getting a bit overstretched? Because we had Venezuela, we have this, and now Trump is already talking about potential action in Cuba at some point, does the rubber meet the road? And even a very loyal DOD is going to say we have to pick some priorities because we can't be everywhere at once.
- [23:38]
John Bolton
Sure, yeah.
- [23:39]
Dave Lawler
The, for the aircraft carrier, one of the two that's in the region, is setting records for the amount of time that that crew has been on that ship. They were involved in the Venezuela operation. Now they're over in the Gulf. There's been some good reporting about just how stretched they are. That particular crew, you sort of extend that out to the full range of the forces that the US Is bringing to bear. Certainly, you know, you could see the U.S. the troops themselves and the equipment being stretched. You know, some stuff needs repairs, needs to be rotated out, etc. Now, whether there's enough in the region to pull this off. Now, it depends exactly how they're going to execute this mission. There's been some doubt cast on the idea that the US or even its allies have enough to be able to escort individual tankers in and out of the strait. Now, that's not what Trump is saying here. He's talking about a blockade. I'm trying to visualize even where you would position assets in order to impose a total blockade. Very, very difficult. It is a narrow stretch of water, but not narrow enough that unless the US Is willing to open fire on vessels that come through, which maybe we are, that you could interdict everything that's coming in and out of the strait. But obviously there has been some thought put into that on the Pentagon side. This has been one of the options that's presented to Trump over the past several weeks. Yeah, it's going to be a question of how they execute it and whether they then think, okay, we need to bring even forced to bear in the region, which will suggest to people sitting back in the US to lawmakers Et cetera, that this is going to be a longer, costlier, potentially bloodier campaign, depending on what tactics exactly the military is using at a time when they were just sort of preparing the American people for this to be over. Right. It was just a few days ago that Pete Hegseth said all of the military objectives had been achieved. President Trump himself was sort of talking in a tone that suggested he thought it was time to get out. And now, after just one day of talks, we could be back into a point where we're looking at an expanding US Operation in the Gulf. Now, I don't want to speak too soon. Those announcements were just made minutes before we all came on air, literally minutes ago.
- [26:00]
David Gura
We'll give you some leeway there, Dave.
- [26:01]
Dave Lawler
Still making sense of it. But yeah, I mean, the signal could be that the US Is stepping up the operation in and around the Gulf rather than one or two more weeks, as President Trump had said previously.
- [26:15]
David Gura
Jeff, I'm wondering if, you know, and we may not know at this point who we think got in the president's ear about this because we talked previously, it seemed to me at least that the president was kind of saying, well, the strait could be open. The strait could not be open. He'd almost lost interest in it. And now we get this up about facing this very forceful tweet, language and action from the White House. Do we think this is Vance coming back and giving him a call? Do we think this is someone else in his orbit pushing this?
- [26:40]
Lisa Mateo
Who.
- [26:40]
David Gura
Who does this sound like to you as someone who covers this administration intimately?
- [26:45]
Dave Lawler
Well, honestly, Christine, I think it's just reality getting into his ear. I mean, the fact that the strait was an open question mark was a huge vulnerability for this president, for the United States, for the rest of the world. And it's a vulnerability that largely wasn't there before this war began. So even though he has used sort of positive language to say, oh, it'll just open up on its own, that was never realistic. And, and I think it also raises questions now, again, there's so many questions that are being raised about what's realistic about this blockade. There weren't that many ships going through in the first place. Certainly the point of the blockade appears to be that he wants to prevent any ships going through that Iran had blessed. So that's going to impact Iran and up pressure on them economically and also increased pressure on other countries that were supporting Iran. But I don't know the answer to who got into his ear. I think certainly it's. He said that Vice President Vance and his other two envoys had briefed him, so I think they would be the last people who he must have been on the phone with. But in general, he had to address the strait in some way, and this is how he's decided to address it.
- [27:58]
David Gura
The person who called was reality, as Jeff puts it so eloquently.
- [28:02]
Christina Raffini
Hey, Alicia, we got to make a little bit of a pivot here because you cover Congress, and we do have a member of Congress who's in the news right now, and that would be Eric Swalwell, who is facing pressure to step down from the governor's race in California. Questions about his own future. An investigation opened here in New York about sexual assault allegations. Could you just bring us up to speed on what could happen to him and three other members of Congress that, you know, now we're talking about could actually be expelled for various reasons.
- [28:33]
Alicia Diaz
Of course, it's definitely not, you know, a great time in the California governor's race. Hakeem Jeffries already put out a statement, you know, condemning the actions and the allegations, asking Swalwell to step down from the governor's race. To me, it seems like only a matter of time to not have the party leader on your side. It just seems like a grim chance of continuing in that race, and that really shakes things up. It's going to be interesting to see how California plays out. And of course, there's allegations amongst other members in both parties. And so as the midterms continue to play out, it'll be interesting to see how this all goes.
- [29:17]
David Gura
All right, Alicia Diaz, our congressional reporter, Jeff Mason on the White House beat, and Dave Lawler joining us from Axios, their national security editor. Thank you all so much. Stay with us for more on Bloomberg this weekend, right after this.
- [29:35]
Podcast Narrator
For many men, mental health challenges aren't recognized until they've already taken a toll. Work pressure, financial stress, changing relationships, and traditional expectations around masculinity can quietly wear men down, often without clear warning signs. In season three of the Visibility Gap, Dr. Guy Winch and his guests explore how these pressures show up, how to spot them earlier, and how men can access meaningful support. Listen to the new season of the Visibility Gap, a podcast presented by Cigna Healthcare.
- [30:05]
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- [30:42]
Public Advertiser
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- [31:49]
Christina Raffini
Let's bring in Bloomberg Intelligence senior commodity strategist Mike McGlone who watches the oil markets as part of his remit for Bloomberg Intelligence. Mike, I just want to get your reaction to escalation like this. In the strait of hormones moves an area responsible for about a fifth of the world's oil. What does this do to oil prices?
- [32:07]
Mike McGlone
Yeah, you know the answer to that, Tim. It's a question of how high they go. When we open up Monday morning or open up actually tonight. But you're seeing the indication of wealth reversion or destruction in Bitcoin. It's down 3%. It's only really active market is trading right now risk assets. So I think what we're seeing right now is we're going to probably see a decent amount of crude oil rally, energy prices rally on Sunday night, Monday, a decent amount of decline in the stock market. The question is how much and how this is resolved. But just the fact that still that there's still aggression there from Iran, the fact that we've not been able to open secure that straight, maybe this will help make it happen. But that's the big unknown and that's the key thing about markets and unknown and the key thing to think about here is the stock market gap back to unchanged on the weekend on the year on Friday this might have been that sell Signal.
- [32:56]
David Gura
Mike, we've also got Lisa Mateo here with us at the table and I know she's got many questions for you. So go ahead, Lisa.
- [33:02]
Lisa Mateo
Mike, I want to ask because there's so many different benchmarks, like for example, the difference between Brent and WTI crude. Can you talk about how they're behaving differently and how they have been historically?
- [33:12]
Mike McGlone
Brent, WTI has a, is a better grade historically traded at a higher price, but that changed in 2011 or 12. So when the US supply started to be excessive and then it traded at a lower price. Now what we have is the rest of the world demand pull on U.S. exports because we're a net exporter of crude oil liquid fuels. If you include Canada, it's around 8 million barrels a day. But there is a key sore thumb I'm worried about. We have a president who started this war and has a big problem with inflation and prices going higher. To me the risk is he might ban exports which to pressure US prices lower but not care about the rest of the world. So that's the key thing that's happening right now. We're beating up wti. I think the risk is there might be one decision to limit the ability for US oil prices go higher because we're absolutely a net exporter.
- [33:59]
David Gura
I mean, that's what's been surprising on an economic, economic level about the president taking on this conflict right now because to your point, he is obsessed with inflation. He is obsessed with wanting to say prices are going down. Do you think you will see this other places, this shock throughout the different places throughout the economy? What do you think this is going to do for inflation? Because one of the things we've been talking about is even if it's open a little bit, the strait is not open fully. Production is not springing back to where it was. What is the tail end of this and where do you think you're going to see it impact?
- [34:30]
Mike McGlone
Well, it's still early days. It reminds me a lot. There's a big combination here of 9, 11 when we had that major shock was a psychological shock in the attack and 2008 when we had that big pump in energy prices. And one thing to remember is the risk is post inflation deflation. Now we're in inflation right now. But the thing is when you have a global energy crisis and crude oil spikes, it's its own worst enemy. It only goes up so far. Supply comes on, demand collapses and the whole economy goes down. So the key theme for me now is if we see some we're seeing demand destruction, it's early days. You certainly see that prices of diesel. The price of diesel in this country is shot up and of course in the rest of the world. But typically that'll shut down the demand and it can really adjust people's capital decision making. And to me, the key trigger is consumer sentiment. We see Mr. Trump the lowest in his polls with some people said, since when Mr. Nixon right before the impeachment. So he has nothing to lose. But I think this is one of those things. This is really bad as we head towards the midterms. This is really bad for the consumer. And key question is, what's our president going to do about it?
- [35:31]
Christina Raffini
Well, what can the President actually do about it? If he does ban exports, does that actually make a dent? Because my understanding, Mike, and you know this better than anyone else, is because the oil that the US Produces is a different type of oil that's not necessarily refined by our refineries that we have throughout the country that actually get that refined product to us.
- [35:52]
Mike McGlone
That's the key theme. Tim, you nailed it. There's a difference, major difference between the actual price of that crude oil and refined products. They're a different market and a lot of that's imported in the US but the bottom line is before used to be no refineries in your backyard. I guess we have to shift that. It's the key fact is drastic measures and really low. You know, getting your back up against the wall usually means certain significant decisions. So I don't know where it's going to go. The key theme is this was probably supposed to be mopped up in a week, meaning we were supposed to be able to say that the strait would be cleared and it's not. So questions, what are they going to do next?
- [36:28]
Lisa Mateo
The next question we have is the Strait of Hormuzza. Right? That's what we've been talking about. Is there anything else that we should be concerned about or worried about that we're not talking about?
- [36:38]
Mike McGlone
Well, the thing is, it's the human ability when there's necessity for invention. Now, we're hearing a lot of workarounds. For instance, Saudi Arabia has had a pipeline going to the Red Sea. There's been talk about, there's been the China Iranian Railway. I'm sure they can get oil through China from Iran to China that way. But this is the fog of the war. I assume five years from now we're going to look back and the strait won't be as significant. We'll find the workaround we like we did in 2022, it just accelerated that trend of technology replacing fossil fuels. But right now, the bottom line, Mr. Trump, I think his advisor is how Mr. Trump, there's one thing you need to do here, you got to open that straight, whatever it takes. And maybe this is the next step.
- [37:20]
David Gura
Speaking of the President, he's been very bullish and optimistic that the US action in Venezuela is going to really pump some energy, no pun intended, into that oil sector. But to Tim's point, this is a different kind of oil. It's very heavy, it's hard to refine and that oil sector is really, really degraded, needs a lot of repairs. I've seen that's on like a seven year timeline. Is there any possibility that Venezuela can get online fast enough to make a dent in some of these prices that we're seeing or is the President not quite accurate on that?
- [37:51]
Mike McGlone
I think it's more the latter. We know his bravado. I mean it's going to go there. And when people say long term, that's the key thing about commodities. The elasticity of commodities is a complete bull market. But the thing is this Venezuelan issue really marked the bottom in crude oil around $55 a barrel. And obviously now we're pushing on 100 in that fund contract. That's a long term thing. But in the mid and the point is on the big picture that's part of that shift in the world from the Middle east and the strait doesn't matter as much to the US the price maker status in crude oil has shifted to the western hem from Canada, Argentina, US in the middle US most significant part about it and who's leading this war? Us. So I'm just thinking what are the next iterations? The key thing I'm worried about as we head into in the market now is we've never seen this kind of volatility in crude oil and gold without it tricking out to the stock market. And the stock market got back to unchanged on Friday. I think this might bring out pretty significant sell tickets and I'm really worried about that.
- [38:52]
Christina Raffini
Hey, we want to talk about bitcoin, but just before we do that. 30 seconds, Mike. Because you live through the global, global financial crisis, watching oil closely, you understand the patterns and, and what this does to economies. What would be your call about a price of oil being linked to a recession in the US in the next few months?
- [39:11]
Mike McGlone
Exactly. I do think by the end of the year crude oil that December contract more likely to go to 50 than 100 right now. It's about 73 and that's part of the stock market dropping 10, 20%.
- [39:22]
Dave Lawler
Wow.
- [39:22]
Derek Wallbank
Okay.
- [39:23]
Christina Raffini
first I was excited to hear that and then not so much.
- [39:26]
Lisa Mateo
Well, I'm looking at my screen here, Mike, and I'm seeing bitcoin down about 3%. Just, just above 70,000 right now. I mean, did that surprise you? I mean it usually something like this, bitcoin wouldn't, wouldn't it make some, some big moves.
- [39:40]
Mike McGlone
It's a highly volatile risk gasket. It trades on weekend. It's the only thing people can buy or sell and it's in a bear market and it's near the upper end of the range. I think that's part of Bitcoin dropping pound at least 50 this year and I don't see why it shouldn't go lower. The thing is about bitcoin, it's just, it was, it got way too high high last year and now there's an unlimited supply of similar cryptocurrencies. So that's a bubble that's still bursting.
- [40:03]
David Gura
Mike, I got one more short one before we let you go. I've been curious about safe havens and what safe havens are left. Gold, obviously one of the go tos but has not been performing quite as well or the way one would expect. Talk us through it, where we're at and what you do.
- [40:19]
Mike McGlone
So I love being part of. I can't give make trade recommendations and stuff but compliance has never said I can't overweight treasuries and to me that's
- [40:27]
John Bolton
what it's supposed to be.
- [40:29]
Mike McGlone
Overweight treasuries hide from the market. If you're not long energy, it's not the time because energy goes up and then it makes it go back down. The key theme to remember here though is gold warned us this was prescient. Last year was the best year for gold since 1979. Now it makes sense. But the end of February, it was the Most expensive ever versus Bloomberg Commodity Index. It was near a 50 year high versus a basket of treasuries and a 50 year high versus a 60 month moving average around there. I don't think I'll ever be able to say that again. Gold is now a highly volatile risk asset. And when stock market goes down, gold's more likely to go down.
- [41:00]
David Gura
That is crazy to me. All right, Mike McGlone has spoken.
- [41:05]
Lisa Mateo
Stay with us for more on Bloomberg this weekend, right after this.
- [41:13]
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- [43:36]
Lisa Mateo
Welcome back to Bloomberg this Week and I'm Liz Matei alongside Christina Ruffini. Tim Sandbank also joining us this morning. So AI, it's used for a lot of things, right? Maybe a personal trainer? I've kind of thought about it. Maybe Christine.
- [43:48]
David Gura
I have to and I'm so anti AI, but this is the one place I would use it. And Bloomberg Senior Economics and Government Editor Derek Wallbank is making a pretty strong case that I should because he ran that Very experience experiment. Excuse me. To help him run today's Paris Marathon. He's actually running it right now. Our control room says he's around the 10 mile mark. We believe in you, Eric. You can do this. Derek wrote about his journey in the weekend essay@bloomberg.com and we talked to him just before the race. Derek, thank you so much for joining us. Are you a marathon person? Have you done marathons before?
- [44:21]
Derek Wallbank
I'm so not this person.
- [44:23]
Mike McGlone
I don't think.
- [44:26]
Derek Wallbank
No. I tried a marathon like more than 10 years ago and it was a complete disaster. I mean, really complete disaster. I think a lot of runners sometimes will say that, oh, this didn't go well. And you look at the time and it's like, oh, my goodness. No, this was genuinely a complete disaster. It was the Marine Corps Marathon in Washington. I went to a podiatrist afterwards because I had so many problems. And they were like, congratulations. Congratulations on your only ever marathon you're ever going to do.
- [44:53]
Mike McGlone
This is dumb.
- [44:54]
Derek Wallbank
You're never going to do this. So this is not me. But I sort of decided, look, you know, I wanted to try something that I couldn't do, right? And I wanted to sort of get myself in a, in a, in a fitness shape that I, that I wasn't in and that I couldn't get into. And I was like, okay, if I'm going to do this, I need to make some changes. What could I do? And I was like, I know what I'm going to do. I'll go get a trainer. Better yet, let me just build one myself.
- [45:25]
Lisa Mateo
And you did. That's exactly what you did. I totally get where you are. I did the New York marathon, tore my meniscus, and I swear I would never do another one again. So you're a better person than me, but you have apps like Strava Runa, right? You have human coaches, but you decided on Chat GPT. Okay, so why did you decide to go that route with this?
- [45:47]
Derek Wallbank
Well, look, so I'm living now in San Francisco, right? It's the world capital of artificial intelligence. And every single time that you talk to somebody, I've discovered the number one question is, what are you doing? What are you building? You know, what are you trying to develop? And so there's this sort of spirit in the city that, like, anything is possible. And the I can kind of do a lot. So I guess there's a little bit of, like, optimism in the water that, that all things are kind of possible. This is like San Francisco, I would say, is like all things positive on AI, where a lot of other places are like very much all things negative. And so there's a little bit of that optimism that I was trying to do, but there was also this, this curiosity, right, which is basically what could I do with. Seemed like it would be a really smart way for me to be able to figure out what I can do, maybe what it cannot do. And I, and you know, use myself as my own guinea pig. I'm always happy to sort of do that.
- [46:53]
David Gura
I have not run a marathon. I don't want to run a marathon. I want to, want to run a marathon, Vaughn. I keep waiting. I turned 40 this year and I thought maybe it'll kick in and I'll have a midlife crisis and what?
- [47:03]
John Bolton
Nope.
- [47:04]
David Gura
But as someone who's tried this once before, I'm assuming you trained a little bit before. What was the training regimen? What was different? What did chat, GPT and our overlords tell you to do?
- [47:17]
Derek Wallbank
Yeah, so, so it was really interesting. So I spent about an hour feeding this thing, this beast that I was building. Basically all of the training that I had done for everything before, all of my 5k runs, my 10k runs, you know, the soccer I was doing, the tennis I was playing, all of that, I fed it, all of that came out with a plan for me of sort of going out about five or six days a week of doing something. But it was a lot, it was a lot more structured. But what I found that was really different. It was, it was a lot more responsive, it was a lot more personalized. I could go back and say, hey, look, here's how I'm feeling, here's what I was thinking. And it would make adjustments for me. And that was something I'd never really seen before. You know, if something went wrong, it was able to be a lot more responsive than before. I should actually, in this, in the, in the process of doing this article, I talked to some people who were, who are developing AI based fitness apps on the very, on the very vanguard of this technology. They said that's actually something they're hoping to be able to build in future editions. So that's actually something. It's not really out there, but that was something really cool. On the downside though, AI does have its limits, limitations. You know, at some point my, my AI system started hallucinating. It has a, it has a limit on how much stuff you can tell it before. It doesn't really know what's important and what's not important. So, you know, it's not necessarily an easy cure. All this, this got, got very difficult to be able to manage as we were going through.
- [49:03]
Lisa Mateo
All right, Derek, are you gonna go when you do your next marathon? Because you know you're gonna, or maybe you're Iron man or whatever.
- [49:09]
David Gura
No.
- [49:09]
Lisa Mateo
Are you going for the app, the Human or the ChatGPT? Which are you going if you had
- [49:14]
Alicia Diaz
to do this again?
- [49:15]
Derek Wallbank
Yeah, I'm going for a mix of humans and technology for sure. You know, you try and figure out how to get out, how to be moving, how to be positive and going forward. And any way you do that is good, but technology alone is not going to get you there. It can help though, and I do think that the, that this, this increase in AI technology is going to maybe make some of this a little bit more accessible to the general public than it has been before. Because it's certainly if, if nothing else, it's a lot cheaper than some of the other options that may be on the table right now.
- [49:54]
David Gura
Thanks for joining us on today's Bloomberg this Weekend podcast. Don't forget to tune in live for the show every Saturday and Sunday morning starting at 7am Eastern.
- [50:02]
Podcast Narrator
We're on Bloomberg Television Radio and the
- [50:04]
IBM Representative
Bloomberg Business app, bringing you unique takes and in depth interviews on news, politics, lifestyle and culture.
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