Bloomberg Surveillance Bloomberg Surveillance TV: May 12th, 2026
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May 12, 2026 
Michael Gapen, Morgan Stanley chief U.S. economist focused on inflation and Fed policy. Elizabeth Economy, China policy expert at Hoover Institution. Katherine Thompson, Cato Institute defense and foreign policy analyst on Iran. They discuss CPI surprises and drivers. They debate U.S.-China summit priorities, Taiwan timing, China’s leverage, and Iran escalation risks.
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U.S. Escalation With Iran Has Undermined Strategy
- Katherine Thompson says U.S. policy has drifted from stated national security strategy, escalating conflict with Iran beyond core priorities.
- She warns escalation limits options to prevent renewed fighting and leaves the U.S. disadvantaged at diplomatic tables with China.
China Sees U.S. Middle East Focus As Leverage
- Thompson argues China will press big security issues like Taiwan when the U.S. is distracted by the Middle East.
- She expects China to use the president's distraction to push its security agenda and extract concessions.
Summit Will Emphasize Economic Stabilization
- Elizabeth Economy expects the summit to prioritize stabilizing the economic relationship through mechanisms like a board of trade.
- She expects trade wins (soybeans, energy, planes) and parallel Chinese pushes to be treated as 'normal' trade.