Stocks Climb as Oil Pares Gain on Iran Deal Hopes

**SPEAKER_1** (0:02)
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**Tom Keene** (0:27)
This is too short a visit. Becca Wasser has been nothing short of a miracle for Bloomberg Economics in monitoring the war, our material, our approach. How Becca, is the military basically telling the commander in chief, they can't get it done?

**Becca Wasser** (0:48)
Well, they're not telling him that they can't get it done, but they're saying that they are running low of some of the most critical missiles and munitions that they might need to carry out our president's orders. And they're saying, we could do this, but the risks to forces and the risks to mission are incredibly high. And that means that there's the potential risk of failure, something that we know US. President Donald Trump doesn't want to see. So that is conditioning some of the president's options when it comes down to what's been happening on the battlefield in Iran.

**Paul Sweeney** (1:19)
Becca, I'm not sure how we got here. I've never once heard our military not having enough material here. What is the expectation for replenishing some of our stock buys here, whether it's how long it will take, how much it will cost? I mean, what are we talking about here?

**Becca Wasser** (1:36)
Yeah, I think it's worth kind of just quickly looking back at past history and more recent history. Past history, we heard things about shell famine in World War I, where when there's a shortage of material, there's adaptation to continue fighting. And more recently, in the fight against the Islamic State, the US military actually ran low of some of its preferred missiles and ended up having to pull from other theaters. So there's ways to make this work. But when we are looking at replenishment, right now, there is a generational gap in missiles. And that means that it's going to take years and years to actually rebuild this at billions of dollars. And so the Pentagon has made a lot of efforts to try and ramp up production, working hand-in-hand with those prime contractors. But the goal there is to ramp up by 2030 That means that there's going to be that gap in time. And that's a really, really scary place to be when we're looking at the potential for deterrent and the ways that other potential adversaries could come in and try and erode US military might, as well as global stability.

**Paul Sweeney** (2:43)
So Becca, that leads, I guess, to the next question, which is, you know, strategy for the president and the Pentagon here, because it seems like this conflict, you know, initially President Trump thought it would be four to six weeks. Obviously, that is not the case. How much longer can is the expectation that this will drag on? I mean, it sounds there's a lot of aspects here.

**Becca Wasser** (3:04)
At Bloomberg Economics, we made an early call that this was going to be a protracted conflict, which means that it's a long war where there are cycles of fighting and then periods of unrest and reconstitution as both sides try and rebuild and regroup. And I think that's exactly what we're seeing now. Right now, we are in a period where the president has decided to dial back on military pressure with a preference towards economic pressure. And part of that is to give time to have more options and to try and regroup where needed.

**Tom Keene** (3:36)
Becca, I've got the acclaimed Bloomberg headline dump, folks. This is basically every news organization worldwide. Thank you, Matthew Winkler and John Mickletwaite for this gift. And Becca, I've got up top, Pakistan jawboning in Tehran signals our US, Iran are, quote, close to some arrangement, unquote. In 14 headlines below it, I have from a news organization, UKMTO, vessel in the South Red Sea hit by unknown projectile, cargo vessel near Yemen resulted in casualties. I mean, the cacophony of news to me, Becca, sounds like a war.
If we're in a war right now with all your abilities, are we even, are we winning or losing? Is it an early World War I standstill? What kind of war is this?

**Becca Wasser** (4:28)
I think it's a war that no one can outright win. And again, that comes back to it is a protracted war. It's a protracted conflict, which means there's just going to be continued fighting. It's a war of attrition where both sides are trying to ground down their capabilities, but also will. And so eventually it means that someone's going to need to make a choice to pull back and potentially for the US to go home, which frankly has been the US playbook in Iraq, Afghanistan and other places.