Trump Threatens Escalation With Sides at Odds on Peace Talks

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2:00Or watch us live on YouTube. Lots of headlines going back and forth here as it relates to Iran and the Middle East. Let's get the latest reporting. Ethan Barronner, Israel Bureau Chief for Bloomberg News. He is based in Tel Aviv. Ethan, I guess if nothing else, Iran and the US as it relates to this 15 point plan. Some progress seems to be being made here. What can you tell us? I'm not sure I'd characterize it as progress, but I mean, you know, the Americans have presented a 15 point plan. I think it's fair to say that the 15 points are pretty much what they demanded of Iran before they went to war with it. Iran said no then, then they went to war and then they're gone back and made the same demands. And it looks like Iran has said no once again. So I don't know. Yeah, it doesn't look like progress does it? No. But I mean, they're talking. Is the fact, I mean, Scarlet and I were just saying just the fact that they're talking feels a little bit better.

3:00I guess so. I mean, you know, it's it's an interesting question about good and bad. I mean, obviously from the most perspective abroad, everybody would like this thing to come to an end. I've just written a story that we put on the Bloomberg wire a couple of hours ago that says in this country in Israel, that is not the goal. The goal is victory, not stopping the war. So, you know, the idea is to stop Iran from having the capacity to threaten Israel and the region any longer. And if the war stops, that won't happen unless it stops under the terms that President Trump has put forward, and that doesn't seem very likely. At the same time, Iran is moving forward. For instance, it's been able to export a lot of oil, make a lot of money by sending oil to China, for instance. It's also charging some ships, a transit fee to get through the straight-up form. So financially, you know, they're pocketing some money. They are. I'm not sure you'd love to switch places with them.

4:00They're losing all their infrastructure, but pocketing a few bucks in oil. I mean, sure. Look, I am not saying that the war is going great from the American perspective. I don't know. It's very difficult for us to assess. And there's always a propaganda war underway at the same time. There's an actual physical war in attempt to persuade the other side to back down. And it doesn't look at the moment that either side is. Now, it is also true that from an American perspective, rising oil prices and all this kind of stuff for what has seemed to be a war of choice is causing a lot of political trouble for the president. And in Iran, I think there's less political trouble. It's after all an authoritarian situation. And they may be willing to put up with a lot more suffering than the West is. We shall see. Ethan, if President Trump were to decide to end this war for whatever reason he sees, is it a fair assumption that Israel will go along with that? It's a fair assumption. Yes.

5:00I mean, as much as this country would like to see it completed appropriately, it is much more important to it to maintain its strong relationship with the United States with this administration. And it is certainly made clear that it will take its cue from the president on this. Absolutely. Ethan, what are you looking at next? How are you determining how to kind of keep score here? I'm trying not to keep score. I'm not really sure it's all that useful for me. I mean, there are a bunch of things we're watching all at once. One is the level of attacks by the Iranians on their neighbors and on Israel. So those have gone down to some extent. In the first days of the war, there were maybe 75 or 80 a day here. And now there are about a dozen or 8, 10, 12, that kind of thing. Is that because the Israelis have successfully taken out their launchers? Possibly. Is it because the Iranians are husbanding their stuff? Possibly. Another issue, of course, is in addition to the growing international markets pressure to end this thing,

6:04is the interesting fact that the Emirates and the Saudis seem now, although they didn't want this war to happen, more enthusiastic about ending it along the same lines as Israel's argument has been, because they feel there's a sort of damically hanging over their heads with these Iranian attacks of the last week. Will that make a big difference? It'll make some difference. And of course, are there going to be airborne ground troops from the Americans heading there? Looks like they are in the coming days. So there's a lot that we're watching, a lot. Stay with us, more from Boomerick Intelligence coming up after this. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off,

7:06deep in the work that moves the business. Let's create smart to business, IBM. If you follow markets, you know the value of long-term thinking. You plan, you diversify, you prepare for volatility. But even the best strategies can prevent every bad day. For more than 75 years, Cincinnati Insurance has helped individuals and businesses navigate tough moments with expertise, personal attention, and independent agents who focus on relationships, not transactions. The Cincinnati Insurance companies let them make your bad day better. Find an agent at CINFIN.com. This podcast is brought to you by Wise, the app for international people using money around the globe. When it comes to sending money abroad, many providers claim to offer free fees and competitive rates. But don't be fooled. This can be code for inflated exchange rates. With the Wise account, you can send, spend, and receive money in over 40 currencies, without ever having to worry about hidden fees.

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9:09It's all about oil prices. And oil prices right now are higher by more than 3%. Brent crude the global benchmark at $106. That is, of course, raising concerns about inflation and stagflation and demand destruction. Let's bring in Kathy and Twissle. She is managing director and private wealth advisor at Morgan Stanley joining us from Delray Beach, Florida. Kathy, the rise in oil prices has remained elevated. You know, day in and day out in my back track, it might come back again. Yet we know that oil prices are unlikely to go down anytime soon, even when the straight of hormones opens up. How does that color how you view investing in risky assets? Absolutely. There's a lot of different things that we're thinking about right now. And clearly this, you know, this Iran war oil shock is the big event. However, we want to think about our clients and what they're thinking about and how we can better position portfolio. So, you know, last week's data confirmed our inflation fears.

10:11PPI came in hot. And the longer oil stays elevated, the harder it will be for the Fed to control these upstream price pressures. And what that means for clients and just the general population is that everything is more expensive. We have a tax on gas and they're also very, very concerned about their portfolios. Because usually when we have these issues with oil, we will see some downward pressure on both the equity and the bond market. So what we're looking at is favoring some high defensive stocks. And like such as like energy, financials, healthcare, reducing overbought semiconductors, unprofitable tech and low quality credit. What's interesting, the market looks like on the surface, like surprisingly resilient, but underneath it's like a violent rotation going on. And energy and AI infrastructure are booming while software companies and private credit lenders are showing signs of stress. So these are all things we think about and we're trying to remove some of the risk in the client's portfolio and add some more forward looking investments.

11:16How about on the fixed income side here? How much credit risk do you think folks should be taking in this environment? Because boy, you can just sit there to two year treasury and get close to 4% here right now. Yeah, no, we think that investing right now in safer risk assets is the smarter move and the smarter play where advising clients not to be in high yield. Because you're not getting paid for high yield. And these are the times where you'll start to see high yield assets start to crumble a little bit. So we want to avoid that. I look at it. If you've got money and investments and money in the bank, you've won the game. We want to protect it. We want to grow it methodically, not take it undue risk. Where does gold fit into that? For a while everyone was flocking to gold and they thought as almost a risk asset given how it was performing. And they've definitely pulled back from that as concerns about the prospect of fewer rate cuts and now even talk of a rate hike really infect the market. Yeah, on the rate hike issue, we don't anticipate a rate hike. We are still looking at two rate cuts towards the end of the year.

12:23So it will be interesting to see that unfold. In terms of positioning with gold, we still like real assets. We like energy infrastructure commodities reads and gold and metals still play a position there. Basically, again, when oil driven inflation fears take over stocks and bonds tend to drop at the same time. So real assets provide a natural shield against inflation. So that's why we like to add that to the portfolio too. So we've been adding real assets. Even though gold is down about 16% since the start of the world hasn't done very much. No, it hasn't, but it also, you know, anytime there's a downward trend, there also might be a buying opportunity there and just with the thought of where we are in the markets in the economy right now and with the oil price is going up. It's just basically a hedge and we don't put a large percentage of clients into gold, but we do a small percentage. Inching scar that just as you were talking about gold, piece of research just hit my inbox from Richard Rosenberg, Rosenberg Research.

13:26First bullet point, we maintain our long term bullish call on gold and are looking for the most attractive reentry point since we trimmed our position. So he says maybe buy on the weakness here. Kathy, how about in the municipal bonds? I know down in Florida, you guys famously do not have those state taxes. But for those of us in high tax jurisdictions, muties have been really, really attractive here. How do you allocate to municipal bonds for your clients? Absolutely. That's a great question. And we have lots of clients in high tax rate states, including New York. So we are using municipal bonds. The short term and intermediate term municipal bonds are very pricey right now and not as attractive. So we are using long term municipal bonds, which have still great value for clients and placing them there. So we do like municipal bonds and we are continuing to utilize them, especially in an environment where taxes are high and they make, you know, make go higher at some point. This is the Bloomberg Intelligence Podcast available on Apple, Spotify, and anywhere else you get your podcasts.

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