Germany Leads Military Buildup in Greenland in Response to Trump

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2:15Couldn't stop talking about this. Yeah. Authoritarian regimes that previously benefited from close ties to the Kremlin have found Russian support lacking when it mattered most. Yeah, let's go through some of the bullet points. Venezuela's officials think their security relationship with Moscow was a paper tiger, citing the failure of Cuban and Russian intelligence agencies to help protect Nicolas Maduro. And then the consequence is a breakdown in trust with security partnerships between Venezuela, Cuba, and Russia, with Maduro's successor, Delce Rodriguez, now having little option but to accept American offers of cooperation.

2:47So just curious about what's going on here. And it feels like Russia may be being pushed in a corner or maybe separated from some of the folks that it was, you know, had alliances with. We knew it was time to get Ed Price back on the program. He's a non-resident senior fellow at NYU. He's also a former British trade official. He joins us here in the Bloomberg Interactive Brokers Studio. Did what happened in Venezuela in the aftermath show that the security relationships that Venezuela thought it had with Russia and China were not effective at all? Or was it the fact that this was the U.S. firepower and there's nobody that can compete with that?

3:26What's the difference, right? I mean, they messed around and they found out in the words of the president. and yet I think it shows another thing which you know Carol and I were discussing before we went on which is that the United States and the West more broadly are fighting battles now that we would otherwise be fighting in in a future World War III and I think that's very uncomfortable explain what you mean by that well we're doing things for example hitting Iran and basically going into Venezuela and saying right we we own this place now which in a general war scenario might be sensible things to do, right?

4:00It might be sensible to destroy Iranian nuclear capabilities if we are in a war. Let's remember that Iran and Russia are, on the face of things, close friends, despite this article. But that's uncomfortable, right? Because as Westerners, we all grew up on stories of Pearl Harbor, the invasion of Poland, and so on. And so the fact that we are now the first mover is very morally uncomfortable. That doesn't necessarily mean that it's strategically redundant. In fact, it could be quite the opposite. Why are we the first mover, in your view? Well, I think that we've realized as the West broadly that we lost the first global information war which was undeclared It was fought in the last decade or so on the internet and our populace has been subjected both sides of the pond to poison Intellectual poison.

4:43I mean there are people that believe in all sorts of conspiracy theories now Like I had one the other day that the Titanic was fake. I mean, it's ridiculous But this was I know it's ridiculous, but but this is the the reality of it And so now we've realized that we can't fight as an open economy, as an open society against authoritarian disinformation. We're making different moves and we're using hard power. So meaning that the tariffs, sanctions don't necessarily work. What needs to happen is military action in order to remove an adversary. Well, I think what we... Every case is different, of course, but I'm just trying to make sure I understand what you're saying.

5:17I think that broadly speaking, the United States is reconfiguring to a war footing. We are not going to get to a position of autarky, which is zero trade. But we are cutting off strategic trade with someone, with a country, I should say, that we now consider to be a strategic adversary. Germany is rearming. Israel has destroyed the capability of Iran in many ways and all of its Hezbollah and all its other proxies. So I think that we are, as I say, we're making moves on a chessboard without waiting for our adversaries. Is this good, in your view? It's good until it's bad. It's good until it's bad.

5:50There's never a moment that you can say in global strategy. Well, this is the obvious move We have to make it like when you woke up stats Saturday morning and you you saw that Maduro was out Did you say to yourself? Finally, what did you say? Well two things one good riddance because it's a very good thing that the United States has the ability to remove Dictators and he had his he had his feet on the throat of the Venezuelan people But on the other hand, we're using our hard power and it's it's one and done So if we're going to use our hard power, eventually that will affect the level of trust that we project in the world.

6:23And somehow that's going to feed back into treasury markets. That's going to feed back into the way we fund our military, which is through debt. So you said it's good until it's bad. So what does bad look like? Well, bad would be the reaction function in Russia and or China coming to blows, right? Direct blows. If you notice, what we're trying to do is we're trying to get to a strategic threshold whereby under the Biden administration and under the Trump administration, we're keeping the Russians in check. We are keeping the Chinese in check. We are doing things that don't necessarily introduce great power conflict, great power war.

6:57But of course, we don't control these other sides. And it might be that looking at, I mean, this is to your question, Tim. It might be that the Chinese looking at Maduro deters them from Taiwan. They might think, well, we're not ready. or whatever that was, that was crazy. Or it might be that they think we need to speed up because our strategic window is closing. I think a lot of people have questions. Go ahead. Well, which one is more likely? Because I think that has been somewhat of a debate, right? I mean, Ed, in terms of does China now feel emboldened to be like, okay, now let's go after Taiwan?

7:26Yeah. Or does it be like, that was a little freaky. I'm going to, we're going to just lay low for a little bit. Well, I'll let you in on a secret, okay? In the world of security analysts, We don't know which one is more likely And I'll give you an example to back that up before the first world war there was symmetrical deterrence The armed camps in Europe both had equal force and yet there was a war Before the second world war the British changed attack. They said well We better not try and race Hitler We better try diplomacy appeasement because we obviously in the first world war provokes the Germans into attacking and yet there was a war So you have one example of a major conflict starting.

8:04Yeah with symmetrical deterrence and an arms race on both sides. And you have another example of one side saying, maybe we should hang back. So net, net, we don't know how these things begin. I want to jump to Iran. We're speaking with Ed Price right now, a senior fellow at New York University. He's also a former British trade official. He joins us here in the Bloomberg Interactive Brokers Studio. The president, when we actually saw crude oil fall after the president made these comments, he said that he's been informed by sources on the other side that killing has stopped in Iran. He says well watch and see what the process is Oil fell close to two percent after the president signals he could hold off on attacking iran What would an attack on iran look like and what would the what would the outcome of that be?

8:48For the united states and for the iranian people Well, I mean first of all, we should have done this 20 years ago We went into the wrong country iraq and that mistake is echoing through history now What would it look like? It doesn't seem that the president is a boots on the ground kind of guy. I think it would be very air heavy. Like we saw at the nuclear facilities in 2025. Absolutely. Right. And that was the right thing to do. And if I can be partisan, I think this would be the right thing to do as well. The Iranian regime is oppressing its people. But again, it's very difficult because the lesson we did learn from Iraq and Afghanistan is it's very hard to put in place a government of your choosing afterwards.

9:25So we would have to see a full uprising in the country. We would have to find people either in this country or in Iran to run the place. That's not an off-the-ground scenario. No, no. I mean, what are the Middle Eastern allies in the region likely to do? Because this is complicated. Well, I think Israel's done what it's going to do, right? So Israel has played its hand very expertly. And the only reason we're even talking about Iran being in a position for regime change is because Israel hits it so hard. I think if we're thinking about American allies, I think Kingdom of Saudi Arabia would be the key player.

10:01That's what I'm thinking, yeah. They would be the key player to get on board. And of course, the Saudis and the Iranians have been looking at each other for years, thinking, you know, which side has the best leadership claim to regional Islam, to the region as a general matter. So I think if the KSA got on board, we would see a shift. And ultimately, the KSA and Israel have to get together as they were going to before October 7th and normalize relations. And that would be a new Middle East. That's what I'm curious. Is it possible that we are seeing the beginning of a new Middle East where there isn't so much conflict?

10:38Or is there no way for that to happen? This is my opinion. I think it's Iran behind all of this stuff. George W. Bush was once caught on a hot mic saying to Tony Blair, we just need Iran to stop doing all this stuff. Yeah, yeah, that's true. It's Iran. They funded Hezbollah and so on. So if you can get Iran, if you can get Iran, I think I think the whole region would calm down. Our Bloomberg News team reporting that Germany is taking the lead on of European nations sending military personnel to Greenland. This after Denmark said its meeting with top US officials intent on controlling the world's biggest island revealed that a quote, fundamental disagreement remains.

11:13Your view on what should be done about Greenland? Nothing. The United States should do nothing on Greenland. As smart as it would be and as moral as it would be to go in and help the Iranian people liberate themselves, it would be as dumb and as stupid and as destructive for us to go into Greenland. It would rupture our alliance with the EU. And by the way, I just mentioned the Germans are rearming. And they're our friends right now. But I mean, they're going to be a formidable military within the next decade. So not as formidable as the US perhaps, but I think it It'd be silly. We always want more time with Ed Price.

11:48So just come back soon. I will. Good to see you. Ed Price, of course, senior fellow, non-resident at NYU, former British trade official, and more joining us right here in our Bloomberg Interactive Broker Studio. Thank you. Thank you. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

12:06They told us to expect change. They warned us about the transition. But honestly, they forgot the best part. This is the chapter where we finally focus on us. LifeMD delivers expert menopause and midlife care right from your home. From hormone health to holistic wellness, LifeMD helps you feel your best for the best years of your life. LifeMD, it's just getting good. Visit LifeMD.com slash goodlife. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need.

12:47Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off. Deep in the work that moves the business. Let's create smarter 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't 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.

13:33The Cincinnati Insurance Companies. Let them make your bad day better. Find an agent at CINFIN.com. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. Well, as you know by now, the U.S. Supreme Court did not rule on challenges to President Trump's tariffs for a second time. Tim was mentioning, and we'll see if third time's the charm. That happened earlier today, leaving the world to wait until at least next week to learn the fate of his signature economic policy.

14:11This is a big one, Tim. Yeah. Meantime, research by Morgan Stanley's Matt Hornbach caught the attention of our team. A big shout out to Talia on our team for bringing this to our attention, noting that there may be room for nuance when the Supreme Court does finally rule. All right. So let's get into it. Matt is Managing Director, Global Head of Macro Strategy over at Morgan Stanley. He joins us here in studio. Great to have you here. Welcome. Welcome. the Supreme Court. So we're still waiting. You've got some research out. I mean, to be real, there could be one extreme, they could fully repeal it, right?

14:41Or they could fully back the president's AIPA towers. How likely, though, in your view, before we get into the nuances, how likely is it to be one of those extremes, Matt? I think it's less likely than the middle gray area where there could be room for nuance. You know, these are complicated matters. And And there are lots of different opinions that are likely being held by different members of the Supreme Court. So we do think that the sort of black and white scenarios are less likely than that middle ground gray area. Where we do think that there's room for differences of opinion to come through in the final opinion whenever it gets released.

15:24When the president was in Detroit at the Economic Club yesterday, he said we should win on tariff Supreme Court case. He said that. And he said, well, figure something out if we don't win the tariff case. Is he right to think that he will win it? Well, I think the president is right to think whatever he would like to think. In the end, it depends on the group of individuals who are tasked with setting the law of the land. So I don't know if he's right or if he's not right. The Supreme Court will tell us one way or the other. So when we do hear from the Supreme Court, let's say it doesn't go directly in the president's favor.

15:56He said, we'll figure something out if we don't win the tariff case. what's a likely scenario for his team to figure out how it can legally implement or keep these tariffs should the IEPA tariffs be ruled unconstitutional? Absolutely. Well, I mean, I think the first thing to note is that there are already bilateral agreements that are sort of working their way through the system. Some of them have been finalized as far as we think they might be finalized. Others are probably still in a period of back and forth. But the president does have the ability to do bilateral deals with countries, number one.

16:33Number two, he has other authorities that are at his disposal to take some of the emergency tariffs that he put in place and kind of repackage them under these different authorities. So, for example, Section 232, Section 301, right? These are numbers that many people may not be familiar with, but, you know, starting in 2016, they are now very quickly became aware of these different authorities that the president has to implement tariffs. So I think he's got some of those authorities. There's a section 122, which allows the president to put up to a 15 percent tariff on countries for a limited period of time.

17:15So there are definitely things that he could do. We didn't hear anything about Congress and using the powers of Congress to do this. That's what I think is interesting. And we want to get into what you see is there are more nuances in terms of how this plays out. But it does, you do wonder about the precedent that's set by this ultimate Supreme Court ruling about what this means going forward and the role that Congress has historically and is supposed to be playing when it comes to living tariffs. Absolutely. And I think this is one of the possibilities that the Supreme Court could lay out is they could lay out some kind of a time frame for the administration to get the approval of Congress in order to keep the emergency tariffs in place.

17:56So this is what we mean by nuance, is that there's lots of different ways this could play out. And one of the ways is that the Supreme Court could encourage the administration to gain the approval of the Congress in order to keep the tariffs in place for an extended period of time. Go back to checks and balances, perhaps, right? Like that would be the message. You did share with our producer, Talia, a note about these in-between scenarios, and I just want to pull out some of it. It said, should, this is your word, should the Supreme Court overturn the IEPA tariffs? We think the two main considerations for investors with respect to the U.S.

18:30Treasury's financing needs are the magnitude and timing of when refunds would begin. The impact to, we think, the impact to Treasury issuance would be limited to bills. Limited refund scenario, likely no meaningful changes to bill issuance. Partial refund scenario, the Treasury likely makes a small increase to regular bill auction sizes. fast scenario of the Treasury likely issues a few ad hoc cash management bills. So in other words, they're going to have to come up with some money. So very possibly, yes, they may have to come up with some money. I think earlier this week, there was a truth social post by the president relating to the issue of refunds.

19:06And the president made it, I think, clear that it's not going to be so easy to figure out who exactly is owed refunds and on what time frame They're going to be paid those refunds. And so I think from our perspective, even if the Supreme Court makes it clear that refunds will need to be paid at some point, the administration may have a lot of leeway to pay the refunds on their particular timeline. And so for the U.S. Treasury, who will ultimately have to push the button and send the funds, exactly when they need to raise the funds in order to send them through the wires is going to be very unclear.

19:49And, you know, when they do decide they need to get the money, they may pre-fund the Treasury General account by issuing some Treasury bills. I think that's very, very normal. And the bill market can certainly handle that. Could it be inflationary? Could the refunds be inflationary? Well, from the perspective of our economics team, the refunds that we might be talking about. We're putting a lot of carts before a lot of horses. That's exactly right. But but even if we take the extreme scenario of the refunds getting paid on a reasonable time frame, our economists don't expect it will subtract that much from inflation because of the tariff rates would be coming down.

20:28And they also don't expect that it would add that much to real GDP. Because I'm just thinking stimulus checks. When I hear a refund check come in in the form of tariffs, I'm thinking what happened with stimulus checks during the COVID pandemic? Well, we have to also bear in mind that these refunds are very likely mostly will be paid to companies. Yeah. And not necessarily to households. And maybe just helps out those companies who've been dealing with higher costs. Hey, one last question. Are there any in-between scenarios when it comes to an independent Fed under President Trump, in your view?

20:57Well, I think there's lots of considerations here, Carol. And when we think about the independence of the Fed, the first thing we need to understand is that we're talking about a committee of individuals. And so in order to gain overriding control on this committee, you'll need more than just the chair of the Federal Reserve. Number two, whoever ends up being the next chair of the Federal Reserve, when they make a decision on policy, they're going to have to explain it to the investing public and to the public at large in a way that's credible. And if that explanation does not strike people as credible, then financial markets will extract a price.

21:37So the market is kind of the checks and balances. Absolutely. On any Fed. You know, I'm reading 1929 by Aaron Orsorkin. Andrew. Andrew, sorry. And it's just interesting, like you think about the pressure on the Fed back then during the panic, and you're just thinking about the pressure here. It's different, but you just weather, you know, what this would mean for the financial markets going forward. That's right. I think I'm kind of related to this. What is really important is that whoever is in charge of the Fed and whatever the committee ends up looking like, that they get the best quality data from our statistical agencies, the Bureau of Labor Statistics, the Bureau of Economic Analysis that they possibly can get.

22:16And one of the things that has happened since the government shutdown in October is that the quality of the data has deteriorated. The response rates to the labor market report have plummeted. It's really important that whoever is in the Fed, at the Fed, they get the best quality data that they can get to make the best decisions for the American people they can. Come back soon. Love to continue this. Matt Hornback, he's managing director, global head of macro strategy over at Morgan Stanley. Well, the president's tariffs, certainly on executive minds around the U.S. and around the globe, so too, Tim, is the economic backdrop.

22:50We got some data today. Yeah, retail sales rose in November by the most since July, fueled by a rebound in auto purchases and resilient holiday shopping. Wholesale inflation in the U.S. picked up slightly in November from a month earlier on a jump on energy costs. Also, U.S. previously on home sales climbed in December to the fastest pace since 2023, a welcome sign for a housing market that has lacked momentum for a couple of years. So that's what's going on. So we wanted to take a deeper dive into the U.S. economic picture based on some of this, and especially when it comes to the labor market.

23:18With us is Karen Kimbrough. She is chief economist over at LinkedIn. She joins us from Sunnyvale, California. Karen, good to be checking in with you. We keep getting data on the U.S. economy, some old, some more current. Compare that with what the data you guys get on the LinkedIn platform, especially when it shows the U.S. labor market. Does it all kind of tell the same U.S. economic story in your view? Our data at LinkedIn definitely reflects the publicly available data, although our data typically comes out in real time. And I would say sometimes even in advance of the releases. So, for example, we are seeing a lot of hiring data, a lot of quits related data and a lot of data about job transitions.

24:01It just tells us about the health of the labor market. And what we're seeing right now, honestly, is a labor market that's holding on. As you just mentioned and your previous speaker mentioned, it's been a couple of years of low momentum for the economy. But we're seeing hiring actually in the last month picked up 6%. So on the month, we saw a little 6 % bump in hiring, which meant employers are back out there looking for talent. We think that could continue. But by and large, it has been a sluggish labor market. And a lot of that, in our opinion, had to do with the really big run up in interest rates that we saw back in 2022 and 2023.