Cycle during that period. We havent spoken a great deal about impeachment. I am curious as to the decision to take questions. This was originally scheduled as an address to the nation. Now it is turning into a press conference. Why . Kevin that is how the president prefers that. You saw a preview of it at the state Department Yesterday with secretary pompeo. The president and Administration Officials and private conversations, and what i would predict to be increasingly public conversations over the next day or so, are going to push back on the notion that the strike against soleimani was not the right course of action. This is someone that even democrats have noted is someone who is a bad actor. The democrats are saying they disagree with how the administration conducted it. The president has suggested that new evidence is going to be released that will illustrate why he ultimately made that decision, and we could get a foreshadowing of that in just a few minutes as we await the president. But to your point directly, the criticism privately on capitol hill from republicans has been that this has been a muddled messaging strategy from the white house as it relates to National Security. Some have raised parallels to how the president has sought to communicate on this particular issue with how he communicated with north Korean Leader kim jongun. However, the stakes militaristic lee seem to be much higher given the severity of the attacks of the last several days. Vonnie it is only a few months since President Trump was talking about a handshake with the iranian president hassan rouhani. Clearly that is off to the table for the moment, or is Anything Possible . Kevin for the moment, it would appear that way. We should also note there was that Prisoner Exchange a few that the u. S. Special comeiator largely helped up working aroundtheclock with the National Security team, including secondary pompeo, as well as defense secretary mark esper. That notion of unpredictable rhetoric in terms of how the president typically negotiates these things is on full display. We should note to your point, and it is a good one, that kentucky senator rand paul, a republican from kentucky, spoke out against the president s Foreign Policy yesterday in an interview with fox news. That contrasts with reports that our very own bloomberg reporter gave several weeks ago that he would be in line to negotiate with iran. Secretary pompeo has pulled the visa for the foreign secretary to be able to travel here in response to their expansionary policies. Either way, a broader view here is that since the administrations decision to withdraw from the jcpoa, the Iran Nuclear Deal, european allies were critical of that decision. Now the state department is sending a top official to europe within the coming weeks in order to try to rally support from europe around iran. This is playing out virtually in real time with the 2020 election campaign. You are hearing from the frontrunners of the democratic party, joe biden, Pete Buttigieg , Elizabeth Warren, Bernie Sanders, being critical of how the president is dealing with this. Senator Elizabeth Moran last night calling for a deescalation senator Elizabeth Warren last night calling for a deescalation in middle east tensions. Joe biden has said he believes the decision to withdraw from the jcpoa was the wrong decision. However, no one is saying that iran should have a nuclear weapon. No one is saying that soleimani was a good actor. So it is differences in how to accomplish the goal, but the frame itch of the debate still remains very much intact. Guy Kevin Cirilli, stay with us. We are awaiting the president of the United States, who is excited to be shortly from the white house to speak shortly from the white house. Lets get the perspective from an economic point of view. David page is joining us from axa investments. You have predicted with your models what is going to happen in 2020. To what extent does any of what is happening here change those models . David at the moment, it doesnt change those models. What we have been talking about is whether we see escalation or not from here. Collation has a Market Impact on the u. S. Economy, on the global economy. But if we dont get escalation from here and markets have a very to did of reaction so far, if we dont get escalation, if this marks the end of where we go for now, we will continue as normal, and on the back of the u. S. China trade deal, we are expecting much more risk on attitudes. Really, it depends on the course of actions from here. Vonnie what would be considered escalation, though . If it changes our relationship with china, if there is pressure on china to move into the iran corner, for example, is that escalation . Does that impact the market . David it is, if you see a Market Reaction to it. We are really playing this on a minute by minute basis. I is aink it is negative, yes, that will feedback quickly. See thexpecting to resolution of the china trade deal provide a small lift to global trade, a small boost to the economy, but we are not in a great place to take additional shocks coming through. If we see a realignment of global geopolitical tensions that delivers that stock, that is something the markets are going to Pay Attention to, and that could have an impact. But for now, we are really just watching to see where things go. Guy we are awaiting the president of the United States. Lets talk about where the effect of these conflicts are filthy most. The channels into are felt the most. The United States has a lot of oil, and its economy looks largely immune from what is happening in the gulf right now. But if you look at india and china, the effect is much greater. David thats right. There are very clear parallels with what we saw happening in 1990. We had a very vulnerable u. S. Economy then. We saw an iraq strike and well prices spiked, and that led to recession. The u. S. Economy is a very different place today. There are stress points across the rest of the world, but it is not just the channel through oil. The channel also comes through uncertainty in financial conditions. The impact we would see in terms of real activity for china, for india, for japan, all of those places that see a lot of oil trade come through the straits of hormuz, that could impact activity there. It could impact trade there. If global trade is affected, it could be a tailwind to global activity throughout 2020. That is probably going to have a more Material Impact on the u. S. Economy. Vonnie Brown Brothers harriman out with a note was a while ago saying that Foreign Policy is the new trade policy, iran is the new china, and that President Trump needs to walk the fine line between appearing hawkish on Foreign Policy to his base without imploding the economy. It is a little worrisome that this might be the beginning of a whole series of policy moves. Do you see it that way . Do your clients get concerned about u. S. Foreign policy . David if that is the way it pans out, we would be concerned about it. It is not immediately apparent. Clearly, and many ways, they are a million miles apart. But the concept that the white house is very mindful of the state of the economy, particularly as we go into the second half of this year and the election, should mean that the white house has some expectation of what the impact of its policy is on economics. That is why we saw some shift, we would argue, in u. S. Position on trade which is allowed this trade one this phase one trade deal. , it is another argument, while the white house wouldnt want a situation to escalate. We think we are seeing both sides trying to give off ramps to each other, trying to give possibilities to deescalate this so it doesnt become anything more personal that impacts Financial Markets and the economy. From the u. S. Perspective, i think they want to deescalate with a mind for the political outlook for. The coming year guy own to get an understanding outlook for the coming year. Guy i want to get an understanding of this for the consumer. As you look back to previous conflicts, how does what happens in the political universe media,r through the through everybody talking about this, into Consumer Confidence . Invinciblensumer is right now. David historically, when we look back to geopolitical tensions, we are always worried about the impact on oil prices and the impact that has for inflation. It is the inflation story that affects real disposable income. There is a risk if we see that coming through. But of the moment, a very modest reaction on prices. The Second Channel is a little more difficult to see. Consumer confidence is often reflective of equity markets, and that reflects what we see come through. Example, falling Consumer Confidence when we see a sharp decline in equities. If we see develop its that lead to tightening financial conditions, we can be pretty sure that will be backed up by weakening Consumer Sentiment and probably a softening and spending. It does present a real risk, but only if we see escalation coming through. I think the point is key for the u. S. Consumer because the u. S. Consumer has had quite a long run. It had a very solid middle of 2019. It finished 2019 on slightly weaker footing, but it is unlikely we will see nominal income growth. Weve got payrolls on friday, but we expect to see a very modest continued slow down and employment growth over the next couple of years. Earnings we are not expecting to accelerate marginally. Inflation we suspect is going to rise very gradually. So the real income outlook looks increasingly difficult for u. S. Consumers. It looks like u. S. Consumer spending does gradually, but consistently, slows over the coming years. That is going to be a problem. Vonnie i does want to jump in and say we are expecting the Vice President to join the president at the podium today. Mike pence will be with donald trump for this statement to the u. S. Public. We come back to Kevin Cirilli for a moment. Who is in the room . As we know, congress was not consulted, nor really informed of anything that happened regarding iran over the last few days. Is there any support from the hill . Kevin yes, there is support from the hill. Virtually all republicans with the exception of a few libertarians are supporting the president in terms of his actions. I interviewed a republican congressman who served in the middle east in the army yesterday on bloomberg radio, and he indicated he is fully supportive of the president s actions. He is a member of one of the top members of the Foreign Affairs committee. Meanwhile, democrats are raising concerned about how the president has conducted this without raising the prospect of a longerterm strategy as it relates to iran. Lastly, in terms of who the president is consulting with the president last night meeting in the situation room with secretary pompeo, with defense secretary esper, and having that conversation. Behindthescenes, what administration and cabinet level officials have been saying is that the killing of soleimani was in fact a measured response, and that the president had wanted to take additional, more aggressive action, but decided against it. There is this openended question as to how the president will respond to this particular point, but i think if you look more broadly speaking at the economic pressure that is being placed on the situation not just between the United States and iran, but with china in the shadow now, that is definitely being weighed upon by this administration. You hear that from Administration Level officials when they describe the economic component of what they call their maximum Pressure Campaign against iran. It has a military component, and economic component, and a diplomatic component. In terms of how they are working with congress, there were several briefings on capitol hill. Democrats have called for there to be hearings. Democrats want to be more involved in that process. It has reopened a broader debate, and i will finish this quickly, about the use of the executive branch and whether or not it needs to have congressional approval. That has predated this administration. David, let me come back to you and talk to you about this from a different angle then kevin is addressing. Tomorrow we hear from clara and a whole range from clarida and a whole range of fed officials. Last year, we were talking about the fed enabling trumps policy when it came to china. The fed is also sitting in the background here as well, potentially enabling trump in his policy toward iran as well. If theres a problem with the economy, the fed is there, right . David the feds mandate is to achieve full employment and make sure inflation doesnt overshoot. Sometimes that is as benign as whether fiscal policy is easing or tightening, but it may force external policy. So the fed will respond to this, and it will respond depending on the magnitude of the reaction from its market indicators. As yet, theres little to respond to, and they will not do anything other than keep a watch on what is happening at the moment. But yes, the fed would stand ready to provide some support. Vonnie just briefly on britain, britain has managed to not really take two strong of a position on what is going on between the u. S. And iran at the moment. Britain has many of its own problems to be dealing with as well. I am curious as to how britain will feel like it should align itself here. David yes, arent we all . I think it is a bit of a awkward situation for the u. K. Probably liesiran closer to the european policy, urging deescalation, much like we have seen from germany and france. At the same time, the u. K. Is putting itself in a situation where it desperately needs to see trade agreements, through pretty quickly, and particularly if the government proceeds with transition at the end of 2020. It needs to keep the president as its friend. I think the u. K. Is actually having to keep a relatively tight lip on exactly what it says. I am not sure it is going to put a strong position one way or the other. Guy we have ursula von der leyen in london today. Her meeting with Boris Johnson is about to start. She spoke earlier on, saying that getting a trade deal done with the eu within a year looks impossible. So the u. K. Has a number of different ways it needs to look here to try and figure out, but to broaden it out as vonnie has done, lets talk about the e. U. If the president deals with this, is this a zerosum game . Is one of the big risks to the eu this year whether or not we get any kind of conflict developing between the United States and eu on the trade front . To what extent does what is happening here with iran make the e. U. More important to the United States, and therefore less likely we get a trade deal . Can i draw the connections between all of these events, do you think . David inevitably when you are looking at multilateral powers, what you have to do for a situation in the middle east and its complicity, you need allies. What the president and u. S. Administers and have done is close avenues to certain allies. The u. S. Was not likely to try to put out fires over a trade deal with china in q4 of last year only to start fires with the eu. We are not accepting that to escalate in any way significantly as we have seen with china. However, with regard to this, it is very difficult. U. K. , haveluding the been continuous supporters of the Iran Nuclear Deal that was done earlier, and it was u. S. That pulled out of that. Insofar as the eu could encourage all parties back to the table into some sort of the escalation, that would be seen as something that would be of relative success, but it is not clear that any of the parties are anywhere near moving in that direction so far. It looks like it stresses the importance of having allies at this stage. Vonnie the longer we are in administration of the likes which was elected in 2016 here in the United States, and then we saw a wave of that kind of election around the world, the longer we are in those, the more multinational organizations have less power and are being ignored , and are being held accountable for promises and so on. Is the whole world order changing . David discuss in 30 seconds. Yes, in a sense it is. Clearly, there has been a significant realignment, whether you call it identity politics, nationalization, or whether you see it as a purely National List of element. There is a less purely nationalist development. That it issense leading to outcomes that are not in the global interest. You are seeing a problem coordination. We have been in a situation where previous more liberal governments have accepted that there would be individual costs to nationstates, but that had brought a degree of coordination and a degree of boosts to everyone. That is breaking down, so it is very hard on an individual nationstate basis to argue for those costs. But when you see it happening across the board and the problems of the coordination, this is an example of it, arguably, the bilateral tariff war with china as another example of it, you see more of those costs started to ratchet up. You recognize what a benefit the multipolar Global Community use have, and it doesnt have that power anymore. Whether that is a turning point that we are inevitably loc