Bloomberg Surveillance TV: September 25th, 2026

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1:38This is the Bloomberg Surveillance Podcast. I'm Jonathan Farrow, along with Lisa Abramowitz and Anne-Marie Hordern. 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 9 a.m. 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. We begin this hour with stocks creeping car as crude and bond pressure eases on hopes for a Hormer's deal. Peter Cheve Academy writing, markets seem to react positively to any story, rumor or hope that is positive.

2:14That relationship might need to change. Pete joins us now for more. Pete, good morning. Good morning. Just elaborate on that if you can. What do you mean by that? I think as Lisa just said, the market's now finally starting to realize we shouldn't get overly excited about these talks, right? For a while, it felt like any time we had talks, we sold off on oil. Any time there was actually physical damage done to oil pipelines, we kind of shoved it off. And I think we're starting to shift. It's almost a show-me sort of stage where, yeah, we need to see real progress on this and real shipments to really get comfortable.

2:44And some of that's going on, but not enough. Where do you want to see more of an adjustment in bonds and equities? Where do you expect to see it? You know, I would think in oil prices, I think that could go a bit higher. I think bonds, if anything, maybe got ahead of themselves a little bit. You know, I was very surprised how aggressively bonds reacted to the S &P data. It tends not to respond that much. And that looked like maybe it was a washout of a lot of people who were betting on Besson. You know, a lot of hedge funds were telling me, well, you don't want to bet against Besson. Well, I think we found it was safe to bet against Besson.

3:12So I think bonds have already priced in a lot. I think it's really in oil and probably equities a little bit. Does it make sense to you that bond yields and oil prices are trading so much in lockstep? Not really, though, again, I think this all comes back to my overall view that liquidity is very narrow and thin in a lot of these markets, and it's very algo-driven. So whatever the algos are trading, it works, right? If we wake up every morning and you can look at the price of oil in guest treasuries, the algos are all doing that. So until something breaks and termines that, we're going to get those correlations because it's very electronic.

3:42It's very thin trading. which, again, is why we moved so much on Tuesday when yields blew out. I want to elaborate on the idea of the faith in Scott Besson and the Besson put that had been baked into the market that maybe now is getting unwound. Yesterday, there was a second round of buybacks of those 20 to 30-year treasuries. And Scott Besson, the Treasury Secretary, had said previously that he was willing to buy back up to$6 billion worth. Yesterday, as yields reached the highest levels going back to 2007, he bought$4 billion worth, less than that. What does that tell you about when he plans to go in hard and how big of a put this actually is?

4:17So, one, this is nothing close to when we have the Draghi whatever-it-takes moment, right? He said to buy up to$6 billion, but they're only looking to buy the illiquid bonds, and they're not looking to pay through the market, right? If you're really trying to drive bond yields lower, you buy through the market, especially if we're at the highest yields ever. So this is still kind of tweaking at the nuances, like, oh, this bond's illiquid. We can take it out of your portfolio, so maybe we can buy something liquid. This is not all in trying to get the yields down. Otherwise, we'd have bought all$6 billion or more and said, this is dirt cheap.

4:45Well, as we've been talking about on this program, for Besson, it's that the president needs to solve a foreign policy issue. What are your generals telling you about potentially these deals that could be on the table for a ceasefire? We've been here before and talks have broken down. You know, I think our overall view is that, one, Iran's really good at negotiating. So if we get back and sucked into the negotiating table, it's really unlikely that we do anything. I think as a whole, we've liked the fact that Trump has tried to take the midterm elections off as a deadline. That gives us some more flexibility.

5:14A couple of our generals are talking about maybe that opens up the possibility to take over some of these smaller islands. Not Cargill Island, but start somewhere in the strait. So one thing we're watching closely is to see if any of the Marine Expeditionary Forces, if they move their hospital ships close enough. So kind of as a rule of thumb, the hospital ships would have to be within an hour of where we're attacking so that you can evacuate by helicopter any soldier that's hurt. It's a huge part of the military culture is ensuring the best possible treatment. So right now we're not close to doing that.

5:40So watch for any troop movements where we would put our hospital ships, which are phenomenal, closer to where we would attack. Those are the things, again, we might not have to attack. I think revamping pressure would be the right way to go. I also feel we missed a huge opportunity. We have the civilian leadership here. I don't know how much power they really have. But we could have sent a much different messaging rather than we might bomb you again, we might not bomb you again. And so I think we're not overly impressed and that this would be truly just to get oil back flowing and not really do much longer.

6:07It was a huge week for diplomacy. Where do you stand right now in terms of how do you view potentially a ceasefire on energy infrastructure between Russia and Ukraine? Because going into this week, that was a huge message from this White House. No, I think we it's a very confusing element. It's, you know, at one side, if you asked our generals and admirals what Ukraine should do when they were invaded on day one, hit Russian infrastructure, hit Russian train lines, all these things. and we didn't allow them to do that. So they're finally freeing up and doing some of this. One thing that I think is really interesting and kind of nuanced is the attack weapons that Ukraine is using are really almost homegrown at this stage, right?

6:40So they're not relying on the U.S. weaponry as much for the attack. Clearly, they need Patriot missiles. We have some issues, I guess, whether we have enough Patriot missiles, how much we want to sell. I think we're getting very mixed messaging on who the U.S. really supports and is diesel now driving everything rather than Russia-Ukraine? I think that's probably a bit unfortunate. We would like to see, I think, more pressure put on Russia and Russia come back to the table to get Ukraine diesel. Do you think diesel is dictating everything? I think diesel is definitely dictating everything at this stage.

7:09What are the consequences for markets, if that's the case? You know, I think I would regret if we actually do some sort of export restriction. I think short term we might get some benefits. Longer term, just thinking of this from a practical standpoint, right, the U.S. is one of the best places to do business, right? We honor contracts. We do all these things. You start putting these artificial export constraints. We've moved down a notch. We're probably still one of the best places to do business, but it's slightly different. I think it accelerates things. I was waiting for when Anne-Marie was interviewing Ruda yesterday.

7:39He was talking to me, ProSec, right? He's like, we need to build refineries. I don't think he'll have much success, but everywhere across the globe has to realize we cannot be dependent on anyone else for everything. We need more and more core done at home. I think ProSec's going global. I was kind of screaming at the TV for Ruda to say something along those lines, but this has to happen. And he didn't say. No, he didn't say trademark. We're getting closer, though. People are starting to use that term. Can you put this all together and give us a sense of whether you're getting more bearish or more bullish on risk assets, given the uncertainties that are growing, the increasing dependence on diesel and frankly, a real question about what the Fed is going to what the Fed's going to do.

8:17I would say I'm getting extremely bullish on energy globally and anything that feeds on the energy, the ProSec. And within that, I think you can really be bullish than all the kind of infrastructure. Anything that's going to go along to building out infrastructure, yes, there's going to be headwinds. I think you can be bearish on bonds because that is going to be inflationary, right? If it was cheaper to do it this way, we'd already be doing it. So I think it's going to be hard to get inflation under that two and a half sort of percent for long. So global inflation, global higher yields, love the energy, love infrastructure.

8:45AI and compute, that's a separate conversation. I think that has nothing to do with yields or ProSec. That is, does this deliver or not? And that's still questionable, I think. If you're bullish energy, you short Japan and Europe. I actually want to be really long some of their energy companies. I'm long and will continue to buy BP, Royal Dutch Shell, Total, because I think at some point the light's going to go off and say, we need to do this. Like, this is kind of silly. Yes, we need to have carbon footprint. But if we're buying it from someone else, the carbon footprint just got shifted. I've thought that for years.

9:14And I think, you know, Europe always needs to get kicked a bunch of times. You're sort of underestimating how gripped they are by the green lobby in Europe. So I always kind of, the best analogy I think I can give is the European debt crisis. Europe had to get kicked in the teeth four, five, six times before we finally got to do whatever it takes. I think we're at three or four right now, so maybe there's a couple more kicks in the teeth. They've been a crisis for four years by an energy crisis on their doorstep, and I haven't seen a change at all. It is depressing. Again, the language is slightly changed.

9:40One thing I will say, Canada and Australia, both of whom are very much on the green path, both seem to be realizing we have resources, let's harness this. So you are starting to see it develop elsewhere. So, again, I think Canadian energy does well. At some point, maybe this Greenland deal is also a sign that Trump will change his attitude to North American allies, you know, Canada and Mexico, and figure out how we do all this. Like, the one thing that confuses me most, and I think as a national security issue, we are very supportive. Data centers AI, we need that, we need to build it out. But then why are we tariffing aluminum from Canada when aluminum is going into these data centers?

10:11I think we need a more cohesive message. Pete, Germany was shutting down nuclear when Russia invaded Ukraine and had to restart coal. their energy policy doesn't make sense. Correct. I think China, unfortunately, had the best energy policy, right? They built out everything. They built out coal and natural gas. And now Elon Musk tweets every day, more and more of this coming from solar. But they built out everything that was needed. And my running joke has always been, I think we're back to it again, is if only the nuclear energy had hired the Bitcoin marketing team, we'd have nuclear energy everywhere instead of Bitcoin at$85 ,000.

10:42And to be honest, I actually like Bitcoin for a trade, but it does feel like how we lost that narrative and everything talked about Bitcoin and no one talked about nuclear energy. Stay with us. More Bloomberg Surveillance coming up after this.

10:58If you invest or lead a business, one-sided views aren't enough. Join me, Brad Rogoff, and my team at Barclays Research as we debate what's driving markets on the Flipside podcast. Find the Flipside wherever you get your podcasts. With Jatchy BT, you can do more than get answers. You can get things done. When you're running a business and looking to expand, you need a clear view of the landscape before making any decisions. ChatGPT can help you prepare. Connect your Google Drive, point to relevant files and reports, and ask chat to research competitors, industry forecasts, and market signals. It can turn the findings into a strategic deck in your team's template that you can review before presenting to your leadership team.

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11:55Our next conversation with the former White House trade official, Kate Kulukwis. She writes the following, that the summit reinforces managed competition rather than a broader U.S.-China reset. The more fundamental strategic and economic disputes remain very much in place. Kate joins us now for more. Kate, let's just build on what Anne-Marie was talking about. 2015 was a very different Donald Trump, now president. What's changed over the last decade with his relationship with this country? It's a fascinating question, this trajectory of Donald Trump in China. And I think very much what we've seen in this second term is a focus on a big deal.

12:29He wants for his legacy to leave the U.S. and China, it appears, in a better place than when he started. And so we've seen a very different approach, even from his first term, which was very much marked by confrontation, high tariffs, a lot of acrimony to what we saw in the last couple of days, which began with a tarmac welcome, which is fairly unusual for this president, certainly any president. And then this dinner, followed today by a day of public events at museums and lots of fanfare, but little substance. Will it actually work? Well, you know, it will work, I suppose, in terms of the president's goals.

13:12He wanted a beautiful meeting. He wanted a lot of pomp and circumstance. So by all accounts, he has succeeded in that in that endeavor. Will it work for the U.S. relationship with China? That remains to be seen. The fact that we have very little detail on any deals reached. All we have so far is a statement by the Treasury Secretary the day before the president and President Xi met. So, you know, we still have a lot to learn about what was discussed yesterday to make any decision about whether this was a success or not for the United States. I struggle with the photos because just this summer we had Michael Kratzios of the White House coming out and saying how moonshot AI distilled anthropic fable from development for their K3 model.

13:54This is a Chinese AI model. We had reports about how China might be in control of some very sensitive parts of U.S. F-35s. Then we have more stories about how China is helping the Iranian military and giving them dual-use components. So for this White House, what are they winning out of this? I mean, out of this meeting, do you expect something like a host of rare earths to be sent to the United States? Well, that certainly is the goal of the negotiators on the U.S. side. And I think the fact that we have no deal to announce tells me that we're not we're not closer to those things that you're articulating.

14:30It tells me that the negotiators on the U.S. side at least don't feel like they secured enough to do much more than a two month delay. That's really just kicking the can down the road to enable more negotiations to happen. So I wouldn't paint this as a failure. If this was a two-month delay, it's certainly a disappointment. But to me, it signals, again, that the negotiators are not where they want to be. And hopefully what that means is that on the U.S. side, they are holding the line on those issues. The access to rare earths and critical minerals is absolutely the most critical issue on the U.S.

15:05side. The negotiators thought they had secured an objective, a commitment from the Chinese the last time the leaders met. It's clear they're unhappy with that. And so the Chinese have asked, let's just delay this truce. They're happy with where things are. The U.S. is not. And that's why they've given only two months to keep this moving. Kate, one of the criticisms that people on the show have had is that they just don't understand the North Star of some of these trade negotiations. They don't understand exactly what the non-negotiables are for the United States, what the end goals are, who is getting a higher tariff rate and who isn't.

15:39Do you have a more consistent understanding of the framework being used here? Well, I think it's a fair criticism. But if I had to find one North Star for the president, it is domestic resiliency. It is a goal for the United States to never have to depend on another trading partner for the things that it needs. I believe that's his North Star. I think we've seen over the period of this administration a recognition that we do have to rely on friends and allies for certain components. We can't grow here. We can't mine here. But when it comes to China, I do believe this is the North Star to change the dynamic in which China can restrict and choke off the materials that we need for our economy.

16:24So I think this does remain the goal. I think the administration will continue to work toward this goal while maintaining positive relationships with the Chinese. Stay with us. More Bloomberg surveillance coming up after this.

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18:17Let's talk about something that didn't really come up, and that was Taiwan. Let's stick with politics. Paraguay advocating for Taiwan's inclusion in the UN. The president of Paraguay, Santiago Pena, pledging his country's support to the General Assembly during his address, saying Taiwan has concrete contributions to make to peace, development, and human rights. I reaffirm our support for the full and meaningful participation of the Republic of China, Taiwan, in the United Nations. President Pena joins us now for more. Mr. President, good morning. Good to see you. Good morning, John. Nice to be here.

18:45As an economist, I know you were itching to weigh in on the housing story. Maybe we can do that later. Yes. Let's talk about a more serious issue if we can. Let's start here. Why have you chosen as a nation, as a leader, to establish this relationship with Taiwan? History. And the history beyond the 70 years' relation between Paraguay and Taiwan, which has been a great relation, a great history. But it's the history of Paraguay. When you go back to 170 years ago, Paraguay was the most advanced and developed nation in the Western Hemisphere, in South America. And we have to face a war of extermination.

19:20Brazil, Argentina, and Uruguay joined together to eliminate Paraguay from the face of the earth. We fought for six years at the end of the war. They killed 90 % of the male population, and they took 60 % of our own territory. So hardship is something that we embrace, and we know how to survive and navigate through very turbulent waters between two large countries like Brazil and Argentina. So we rely a lot on the experience also of Taiwan. I think that Taiwan being next to a large country and being such a strong leader in terms of technology production, I think there is an advantage. I have seen the experience of all the countries in South America moving from Taiwan relations with China relations, and none of them are better off.

20:07In fact, Paraguay not having relations with China is a country which is doing much better than the rest of the countries. We have been growing faster than any other country. Over the last 60 years, Paraguay is the top performer in South America. We have been growing 1 ,500 percent. So I think that there are a lot of incentives. China is a very large country. We do trade with them. But in terms of a model as a country, an open economy, a country that have to rely on international markets and not in a single market, I think the experience of Taiwan makes a lot of sense for us. As I listened to you answer the question, you're very keen to point out the moral stance you're taking.

20:49You then elaborated by saying you're not paying an economic price. Are there economic benefits directly from Taiwan from taking this stance? I mean, the economic benefit is learning from their experience. I think that not only having access to their market, we do have, Paraguay is a very large producer and exporter of beef, pork, and we export to the Taiwanese market. It's more than 20 million market, high income population. So there are benefits in the short term. But the benefit in the longer term, I think, are coming from a moral shared values. but more importantly, our capacity to adapt and learn under difficult circumstances.

21:36We have a lot of educational programs. We have a Taiwanese university with Taiwanese teachers. We are working in bringing together the best of Paraguay with the best of Taiwan. And I think on this technological race, we have a lot to gain. Paraguay is so rich in energy. We are a very large producer of green renewable energy. And Taiwan, with all the capacity that they have on semiconductors, we think that we can join forces and make one of the more strategic alliances in the West Hemisphere. And they're building a data center in Paraguay, right? That's right. That's why I was saying we have the energy, they have the technology.

22:19We are bringing together to build a computer center in Paraguay that is going to be quite transformational. When it comes to other countries looking to potentially expand, build out in Paraguay, because you have low taxes, you have an abundance of energy, Taiwan is clearly going there for the data centers for all of that. What other countries, did you get a sense while you were here along the UN General Assembly, I know you met with President Trump, that other companies want to come to Paraguay? Absolutely. I mean, Brazilian companies are the largest one. Brazil is the largest foreign direct investor in Paraguay.

22:53But investment is coming from everywhere. everywhere. We signed a free trade agreement between Mercosur, which Paraguay sparked, with Europe at the beginning of this year. So we see European companies that are trying to compete in a world that is much more complicated with higher yields, with price of fuel that are taking a lot of competitiveness from their economies. So the quest for where to find the place where you're going to have the best conditions is going to put Paraguay on the top of the list. In terms of international markets, Paraguay has come a long way. We are double investment grade.

23:31We are among the three best performers in Latin America together with Chile and Uruguay. So in this world that we are going to see higher yields, we're going to see more scarce capital, I think that Paraguay is going to be a very strong competitor. I know that the Trump administration put up some high tariffs for a lot of countries looking to get their beef exports. into the United States. Are you sending more of your beef to the U.S. right now? Yes, but we are sending with the tariff. Paraguay doesn't have a particular tariff. We are one of the largest exporters, and humbly, I think the Paraguayan beef is the best in the world.

24:12So is the President of the United States asking you to send more? Yes, they are sending, but they have decided not to allocate a particular quota for Paraguay. and they have a particular quota in South America for Argentina and then the rest of the world. And we are within that category, which, of course, Brazil takes most of it because it's a much larger market. But we are expanding our export. I mean, the U.S. with the prices currently, they are demanding more and more. And Paraguay is a very reliable and strong partner. So let's talk about bond yields because clearly you're excited about them and so are we.

24:50but I do want to ask you about how much pressure that puts on the nation. You've been doing everything right in terms of getting your debt down and trying to fortify the economy, and yet debt yields are still above 9 % for Paraguay. And we're seeing around the world this is a global story. How much does that challenge your ambitions at a time where the trade that's the bedrock of the nation is also getting challenged from all the tariffs and the different supply chain issues? No, we have seen the spreads for Paraguay has come down. I mean, we are under 100. I think 80 or 90 is the spread of Paraguay today with the treasuries.

25:24So we are, again, we are among the best performers in Latin America. So when people ask me, okay, are you afraid that the capital is going to be scarce and you're going to be worse off? Well, there's a very long list of other countries who are going to be much, much worse than Paraguay. So I think that the currency crisis is great for differentiation because people are going to start looking into more detail. Which is the country that is growing the most? That would be Paraguay. Which is the country who is managing inflation the best? That would be Paraguay. Inflation over the last 12 months in Paraguay has been 1.5%.

26:031.5%. So we have a very strong track record of strong economic fundamentals. And the economy is growing. I mean, we have been growing for the last four years over 5%. And I think this will continue because we're not seeing one sector. All the things that Anne-Marie was telling, low taxes, ease of doing business. This is the great environment that investment is looking, not only from my region, but from every part of the world. This is the kind of guy who had a mortgage. If he did have a mortgage, it would have a two-handle. 100%. He would just nail the bottom of rates exactly there in 2021, whenever it was.

26:44Yeah, and he would also back it by beef exports and the export of renewable energy so that you can get down to 1.5%. Because let me tell you, our beef and our polka both are great. I like how he fired shots at the Argentiniers, didn't you? Our beef is better than yours. In fairness, I will say that any other country in Latin America, particularly South America, particularly neighboring countries, are very happy to do so. What separates your beef from theirs? What makes it better? Well, John, in 1580, an expedition led from Asuncion, my capital, to found Buenos Aires. And on that expedition, they took one bull and seven cows.

27:24That was the first cattle that arrived to Argentina. So it came from Paraguay. I knew you'd have the history. I love it. It's terrible. I would have just made that up. I'd have no idea, but I love it. I'd be there for it. I'm here for it. Mr. President, thank you, sir. 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.

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