1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,239 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,680 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify, or 8 00:00:31,280 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:37,519 Speaker 2: Terminal and the Bloomberg Business App. Julian and Manuel of 10 00:00:37,640 --> 00:00:40,320 Speaker 2: Evercore looking for deals. Our base case is that the 11 00:00:40,360 --> 00:00:42,680 Speaker 2: lows of this sell off have been seen and that 12 00:00:42,760 --> 00:00:45,880 Speaker 2: a recession will be narrowly averted. But the clock is ticking. 13 00:00:45,920 --> 00:00:49,159 Speaker 2: The art of the deal needs to begin bearing through. Julian, 14 00:00:49,200 --> 00:00:51,479 Speaker 2: good morning, Good morning. How exhausting is all of this? 15 00:00:52,040 --> 00:00:56,320 Speaker 3: You said twenty four hours. It's felt like twenty four weeks. Basically, Look, 16 00:00:57,120 --> 00:00:59,320 Speaker 3: we knew this was going to be this way. 17 00:00:59,640 --> 00:00:59,920 Speaker 4: Okay. 18 00:01:00,280 --> 00:01:02,920 Speaker 3: I think if you go back to January twentieth and 19 00:01:03,000 --> 00:01:06,319 Speaker 3: you saw everything that was done on inauguration. 20 00:01:05,880 --> 00:01:07,640 Speaker 4: Day, to expect this. 21 00:01:09,360 --> 00:01:13,120 Speaker 3: Is part for the course, really, but again, it is 22 00:01:13,200 --> 00:01:14,720 Speaker 3: the narrative of. 23 00:01:15,120 --> 00:01:16,039 Speaker 4: Several weeks ago. 24 00:01:16,200 --> 00:01:19,800 Speaker 3: There were still questions as to whether the Trump administration 25 00:01:20,319 --> 00:01:23,600 Speaker 3: was willing to tolerate a recession to achieve some of 26 00:01:23,640 --> 00:01:26,680 Speaker 3: its aims. What we've seen in the last twenty four 27 00:01:26,720 --> 00:01:28,720 Speaker 3: hours and going back to. 28 00:01:28,640 --> 00:01:30,640 Speaker 4: The pivot in early April, is. 29 00:01:30,600 --> 00:01:35,160 Speaker 3: That is absolutely not the case, and removing the large 30 00:01:35,240 --> 00:01:38,360 Speaker 3: left tail outcome in markets has been very positive. 31 00:01:38,400 --> 00:01:40,920 Speaker 2: Rewiring the system is difficult. We've talked about it a 32 00:01:40,959 --> 00:01:42,959 Speaker 2: few times on this program, that you've got both a 33 00:01:43,000 --> 00:01:45,640 Speaker 2: shock to the cycle and a potential shock to the system. 34 00:01:45,880 --> 00:01:48,160 Speaker 2: But what we've also seen and witnessed down in Washington, 35 00:01:48,240 --> 00:01:51,120 Speaker 2: DC is that some of these policies are so extreme, 36 00:01:51,520 --> 00:01:54,280 Speaker 2: so out there that they're somewhat self limiting, that are 37 00:01:54,280 --> 00:01:56,920 Speaker 2: almost negotiating with themselves on certain issues. You get the 38 00:01:56,960 --> 00:01:59,640 Speaker 2: same sense when you look at what's happening down in Washington. 39 00:02:00,040 --> 00:02:02,600 Speaker 3: There is an element to that, and again it is 40 00:02:02,600 --> 00:02:04,640 Speaker 3: is the you know, the shock to the system. 41 00:02:04,720 --> 00:02:07,440 Speaker 4: This this concept that you know. 42 00:02:07,440 --> 00:02:10,760 Speaker 3: The all in raw number to global way to taris 43 00:02:11,040 --> 00:02:13,960 Speaker 3: is higher than smooth Hawley. You don't really need to 44 00:02:14,000 --> 00:02:16,920 Speaker 3: say much more than that, And that is the element 45 00:02:17,400 --> 00:02:21,760 Speaker 3: of you know, self limiting. But again it goes back 46 00:02:21,800 --> 00:02:26,120 Speaker 3: to the negotiating style. You know, throw out the maximalist 47 00:02:26,160 --> 00:02:29,040 Speaker 3: case out there and then see and wait for the 48 00:02:29,080 --> 00:02:31,000 Speaker 3: other side to start responding. 49 00:02:31,080 --> 00:02:32,799 Speaker 1: And we saw that in Trump's first administration. 50 00:02:32,960 --> 00:02:33,639 Speaker 5: This is a phrase. 51 00:02:33,639 --> 00:02:35,320 Speaker 1: I don't think the president likes this idea of a 52 00:02:35,360 --> 00:02:38,519 Speaker 1: Trump put. But have we now seen that there is 53 00:02:38,560 --> 00:02:40,280 Speaker 1: a Trump put and there is a level that they 54 00:02:40,320 --> 00:02:42,240 Speaker 1: are unwilling to deal with. 55 00:02:42,440 --> 00:02:45,200 Speaker 3: Well, I wouldn't necessarily call it a put per se, 56 00:02:45,320 --> 00:02:48,840 Speaker 3: but again it just goes back to this idea that 57 00:02:48,880 --> 00:02:52,359 Speaker 3: there's an acknowledgment that the extremity of what they're trying 58 00:02:52,400 --> 00:02:54,680 Speaker 3: to do and the speed with which they're trying to 59 00:02:54,720 --> 00:02:57,320 Speaker 3: do it. And remember all of this is set against 60 00:02:57,440 --> 00:03:01,080 Speaker 3: a debt ceiling negotiation that has to happen in the 61 00:03:01,120 --> 00:03:04,840 Speaker 3: next two months, and then further on down the line, 62 00:03:04,919 --> 00:03:08,880 Speaker 3: the acknowledgement that the traditional historical tendency is for the 63 00:03:08,960 --> 00:03:12,720 Speaker 3: Republicans will lose the House of Representatives in twenty twenty six, 64 00:03:12,919 --> 00:03:14,240 Speaker 3: so you have to front. 65 00:03:14,000 --> 00:03:16,320 Speaker 4: Load all of this. So that is the shock to 66 00:03:16,360 --> 00:03:17,000 Speaker 4: the system. 67 00:03:17,120 --> 00:03:20,920 Speaker 3: But again, you know there is no wish for a recession, 68 00:03:21,240 --> 00:03:25,040 Speaker 3: and so you know by that virtue the Trump put 69 00:03:25,080 --> 00:03:28,320 Speaker 3: itself does seem to exist south of five thousand. 70 00:03:28,400 --> 00:03:30,000 Speaker 1: On the end desk, John brought up a great point 71 00:03:30,040 --> 00:03:32,440 Speaker 1: on whether or not they're negotiating with themselves. Maybe the 72 00:03:32,480 --> 00:03:35,080 Speaker 1: President is going through the motions out loud, but also 73 00:03:35,120 --> 00:03:39,200 Speaker 1: behind the scenes there are two three different rivals. This 74 00:03:39,360 --> 00:03:42,040 Speaker 1: is a cast of characters. In terms of the cabinet. 75 00:03:42,240 --> 00:03:44,360 Speaker 1: At this moment, it does look like Scott Besson, the 76 00:03:44,360 --> 00:03:47,080 Speaker 1: Treasury Secretary, is leading the charge on a lot of this. 77 00:03:47,600 --> 00:03:48,320 Speaker 5: Is this rally? 78 00:03:48,440 --> 00:03:50,760 Speaker 1: Is this relief just temporary? I say, if Peter Navarro 79 00:03:51,280 --> 00:03:53,960 Speaker 1: comes back into being one of those driving forces. 80 00:03:53,840 --> 00:03:57,880 Speaker 3: Well, if you look at the cast of characters, there 81 00:03:57,880 --> 00:04:01,560 Speaker 3: are some who are more volatile, some who are less volatile. 82 00:04:02,040 --> 00:04:06,240 Speaker 3: Secretary Bestent is clearly the lower volatility, the vic sub 83 00:04:06,360 --> 00:04:09,880 Speaker 3: thirty type individual, which is what we have this morning. 84 00:04:10,960 --> 00:04:14,880 Speaker 3: But again going back to the first Trump administration, that's 85 00:04:14,920 --> 00:04:18,120 Speaker 3: the way he likes to run it. The court fights 86 00:04:18,240 --> 00:04:19,120 Speaker 3: amongst itself. 87 00:04:19,160 --> 00:04:20,839 Speaker 2: The problem that Jindine, you've touched on it. That's what 88 00:04:20,880 --> 00:04:23,360 Speaker 2: we have this morning. What do we have tomorrow? You've 89 00:04:23,360 --> 00:04:25,640 Speaker 2: got a constructive view that goes beyond just five minutes. 90 00:04:26,040 --> 00:04:27,279 Speaker 2: What does the rest of the year break. 91 00:04:28,440 --> 00:04:32,960 Speaker 3: The rest of the year brings progress on the initiatives 92 00:04:33,320 --> 00:04:37,000 Speaker 3: that have been brought forth. You know, look, from our 93 00:04:37,040 --> 00:04:40,640 Speaker 3: point of view, if you think about a timeline, what 94 00:04:40,680 --> 00:04:43,679 Speaker 3: you're going to get on May seventh from the Fed 95 00:04:44,000 --> 00:04:46,560 Speaker 3: is a we told you we weren't budging. 96 00:04:46,880 --> 00:04:48,480 Speaker 4: We're waiting to see more data. 97 00:04:48,800 --> 00:04:51,400 Speaker 3: We have every indication that we don't need to move 98 00:04:51,440 --> 00:04:54,760 Speaker 3: on interest rates now. So by that virtue, you've actually 99 00:04:54,760 --> 00:04:57,159 Speaker 3: got to put some tariff points on the board between 100 00:04:57,200 --> 00:05:00,120 Speaker 3: now and May seventh more likely, and you know it 101 00:05:00,200 --> 00:05:03,040 Speaker 3: seem reasonable to expect you'll start to hear better news. 102 00:05:03,160 --> 00:05:05,080 Speaker 2: I think this is an important exercise. You've got to 103 00:05:05,080 --> 00:05:07,240 Speaker 2: try and get your head through summer. Let's get to 104 00:05:07,240 --> 00:05:09,480 Speaker 2: the end of the summer and look out twelve months. 105 00:05:09,640 --> 00:05:10,680 Speaker 2: What does that world look like. 106 00:05:11,000 --> 00:05:13,920 Speaker 3: We actually have to project that far out, Jonathan. I mean, 107 00:05:14,000 --> 00:05:18,520 Speaker 3: investing is only a one week thing now. No, Look, 108 00:05:20,200 --> 00:05:24,280 Speaker 3: the bottom line here is all of this has been 109 00:05:24,560 --> 00:05:30,000 Speaker 3: a disruption to the way America does business, no question 110 00:05:30,040 --> 00:05:33,160 Speaker 3: about that. And what you're hearing from companies now is 111 00:05:33,240 --> 00:05:36,680 Speaker 3: earning season gets into full swing is how they're trying 112 00:05:36,680 --> 00:05:39,080 Speaker 3: to deal with it. But the bottom line is is 113 00:05:39,360 --> 00:05:42,920 Speaker 3: after they're dealing with it. The last two years of 114 00:05:43,080 --> 00:05:50,200 Speaker 3: really being incredibly diligent and responsible about guarding and maintaining 115 00:05:50,279 --> 00:05:54,400 Speaker 3: margins at the corporate America level means there is going 116 00:05:54,440 --> 00:05:57,560 Speaker 3: to be an ability to make the transition. And so 117 00:05:57,640 --> 00:06:01,040 Speaker 3: from our point of view, if you're thinking about the markets, 118 00:06:01,320 --> 00:06:05,120 Speaker 3: the fact that consensus is looking for nine percent earnings 119 00:06:05,120 --> 00:06:08,640 Speaker 3: growth this year down from fourteen our views, you're still 120 00:06:08,640 --> 00:06:09,400 Speaker 3: going to get. 121 00:06:09,200 --> 00:06:11,960 Speaker 4: Five actually means that, you. 122 00:06:11,920 --> 00:06:14,520 Speaker 3: Know, the implication is a, there won't be a recession, 123 00:06:14,960 --> 00:06:19,400 Speaker 3: which we is our base case, but B for equity markets, 124 00:06:19,960 --> 00:06:23,799 Speaker 3: that's fine, that's his quote unquote transition period. 125 00:06:23,880 --> 00:06:25,480 Speaker 1: What would make you change your mind and think we 126 00:06:25,680 --> 00:06:27,240 Speaker 1: the US could tip into a recession. 127 00:06:28,920 --> 00:06:33,640 Speaker 3: The data would have to start rolling over severely, you know. 128 00:06:33,760 --> 00:06:37,200 Speaker 3: And look, we do think the data is going to moderate. 129 00:06:37,920 --> 00:06:42,480 Speaker 3: But again it goes back to this idea that what 130 00:06:42,640 --> 00:06:47,960 Speaker 3: we have seen post pandemic is a different world pre pandemic. 131 00:06:48,080 --> 00:06:52,040 Speaker 3: So the sentiment data has been absolutely abysmal, but it 132 00:06:52,120 --> 00:06:56,039 Speaker 3: really hasn't had any material effect on the hard data. 133 00:06:56,480 --> 00:06:59,200 Speaker 3: If that is no longer the case, and we switch 134 00:06:59,320 --> 00:07:03,200 Speaker 3: back to pre pandemic relationship, which we don't see, and 135 00:07:03,240 --> 00:07:05,799 Speaker 3: that's why everyone is so much on pins and needles, 136 00:07:06,000 --> 00:07:09,600 Speaker 3: particularly for the May second employment report and then the 137 00:07:09,640 --> 00:07:14,720 Speaker 3: weekly jobless data. That's a different set of circumstances. We 138 00:07:14,800 --> 00:07:15,880 Speaker 3: just don't see that right now. 139 00:07:15,920 --> 00:07:18,240 Speaker 2: We're already seeing the data be distorted, though flatted, by 140 00:07:18,280 --> 00:07:20,760 Speaker 2: some pull forward. We saw that in retail sales, particularly 141 00:07:20,760 --> 00:07:23,400 Speaker 2: auto purchases, which I find amazing. You're worried about the economy, 142 00:07:23,440 --> 00:07:26,200 Speaker 2: so you've got to buy car America. That's where we are. 143 00:07:26,480 --> 00:07:28,080 Speaker 2: I want to understand what the rest of the summer 144 00:07:28,120 --> 00:07:30,640 Speaker 2: brings once you pull forward activity. Are we going to 145 00:07:30,680 --> 00:07:32,480 Speaker 2: hit some an pockets in the next few months. 146 00:07:32,840 --> 00:07:33,760 Speaker 4: I think there will be. 147 00:07:34,080 --> 00:07:37,320 Speaker 3: And if you go back to that last inflation report, 148 00:07:37,800 --> 00:07:42,000 Speaker 3: which was softer than expected, is that a lot of 149 00:07:41,720 --> 00:07:45,920 Speaker 3: the distortion was by a decline in price in used 150 00:07:45,960 --> 00:07:49,320 Speaker 3: cars because people were buying new cars in front of 151 00:07:49,760 --> 00:07:53,240 Speaker 3: the tariffs. So I think, again, this is one of 152 00:07:53,240 --> 00:07:57,840 Speaker 3: these things in this higher volatility environment we're living with 153 00:07:58,560 --> 00:08:05,240 Speaker 3: the data being distorted. But if the overall trend remains intact, 154 00:08:05,600 --> 00:08:07,480 Speaker 3: you know, our assumption is we're going to be. 155 00:08:07,440 --> 00:08:08,920 Speaker 4: Able to get through this without a recess. 156 00:08:08,920 --> 00:08:10,360 Speaker 2: So I spick up the pieces. We've done a lot 157 00:08:10,360 --> 00:08:12,840 Speaker 2: of damage, not just at the index level, but Nathan index. 158 00:08:12,880 --> 00:08:15,360 Speaker 2: We're seeing some real damage to some big tech names, 159 00:08:15,520 --> 00:08:18,000 Speaker 2: some high fliers of the last several years. As you 160 00:08:18,040 --> 00:08:19,800 Speaker 2: look at picking up the pieces what you like this. 161 00:08:19,760 --> 00:08:24,360 Speaker 3: Morning, we actually are of the view and this is 162 00:08:24,440 --> 00:08:29,440 Speaker 3: typical in when bear markets end, is that the things 163 00:08:29,480 --> 00:08:32,520 Speaker 3: that got sold off the harders, which in this case 164 00:08:32,720 --> 00:08:35,720 Speaker 3: where the bull market leaders of the prior two years. 165 00:08:35,520 --> 00:08:37,040 Speaker 4: Are going to resume the mantle. 166 00:08:37,480 --> 00:08:39,960 Speaker 3: Call it mag seven, call whatever you want, but the 167 00:08:40,000 --> 00:08:43,160 Speaker 3: fact is is that part of the US market's, a 168 00:08:43,240 --> 00:08:45,920 Speaker 3: large part of the US market's out performance has been 169 00:08:45,960 --> 00:08:49,640 Speaker 3: driven by technology, and for US, that is a story 170 00:08:49,679 --> 00:08:50,880 Speaker 3: that has further to run. 171 00:08:50,960 --> 00:08:53,040 Speaker 2: Alphabet and it's twenty four rounds of white Julian. It 172 00:08:53,120 --> 00:08:54,840 Speaker 2: is good to see you, sir. As a wise, Ji 173 00:08:54,880 --> 00:09:07,560 Speaker 2: and Emmanuel have evercore kitchigs of self gen writing. Less 174 00:09:07,559 --> 00:09:10,680 Speaker 2: FED independence equals a weeker dollar. Even if we assume 175 00:09:10,720 --> 00:09:12,960 Speaker 2: the president can't or won't fire the FED chair, the 176 00:09:13,040 --> 00:09:16,400 Speaker 2: makeup of the FMC can change over time. Kit joined 177 00:09:16,440 --> 00:09:18,240 Speaker 2: us now for more, Kit, welcome to the program, Sir? 178 00:09:18,440 --> 00:09:21,200 Speaker 2: Do those words do enough to repair the damage done? 179 00:09:22,640 --> 00:09:25,960 Speaker 6: They do enough to stop the move We've had and 180 00:09:26,080 --> 00:09:28,920 Speaker 6: calm things down. You know, it looked stretched, But no, 181 00:09:29,520 --> 00:09:32,559 Speaker 6: I think that the heart of the issue is that 182 00:09:32,760 --> 00:09:35,839 Speaker 6: the rest of the world is dramatically overinvested in US 183 00:09:35,920 --> 00:09:40,400 Speaker 6: assets and probably now realizes that they need to. 184 00:09:40,480 --> 00:09:43,720 Speaker 2: Like not, Kit, we've seen that rebalancing it started, and 185 00:09:43,760 --> 00:09:45,839 Speaker 2: to your point, the dollar long that's built up goes 186 00:09:45,880 --> 00:09:48,199 Speaker 2: beyond just a couple of years. It's been built up 187 00:09:48,480 --> 00:09:50,000 Speaker 2: over the space of more than a decade. 188 00:09:50,280 --> 00:09:50,480 Speaker 5: Kit. 189 00:09:50,520 --> 00:09:53,520 Speaker 2: How much but rebalancing do you expect to see in 190 00:09:53,600 --> 00:09:54,640 Speaker 2: the years to come? 191 00:09:56,559 --> 00:09:57,959 Speaker 4: How long would be the string? I guess. 192 00:09:59,120 --> 00:10:02,160 Speaker 6: I mean, it's still the world strongest economy, biggest economy. 193 00:10:02,320 --> 00:10:05,800 Speaker 6: You know, they still do great things, So I don't 194 00:10:05,840 --> 00:10:08,839 Speaker 6: think it'll all get reversed. I do sort of sit 195 00:10:08,880 --> 00:10:12,560 Speaker 6: and ponder the nineteen eighties when the dollar went straight 196 00:10:12,640 --> 00:10:15,880 Speaker 6: up on the back of President Reagan's policies, and it 197 00:10:16,480 --> 00:10:19,800 Speaker 6: gave it all up without the lews US losing its exceptionalism. 198 00:10:20,800 --> 00:10:23,000 Speaker 6: So I, you know, kind of it could go down 199 00:10:23,000 --> 00:10:24,360 Speaker 6: in the long run further than I think. 200 00:10:26,360 --> 00:10:29,040 Speaker 1: Kid, the Treasury Secretary recently said to me last week 201 00:10:29,080 --> 00:10:32,600 Speaker 1: that the US still has a strong dollar policy. Do 202 00:10:32,720 --> 00:10:36,760 Speaker 1: their policies actually match that? 203 00:10:36,800 --> 00:10:37,079 Speaker 5: Well? 204 00:10:37,320 --> 00:10:41,480 Speaker 6: Yes, well, okay, the dollar is strong. The US has 205 00:10:41,559 --> 00:10:46,200 Speaker 6: been running fiscal policies that are consistent with a strong currency, 206 00:10:46,200 --> 00:10:50,480 Speaker 6: not a weaker one. But I don't see how the 207 00:10:50,600 --> 00:10:55,920 Speaker 6: current policies are consistent with the dollar not losing some 208 00:10:56,000 --> 00:10:57,560 Speaker 6: of its exceptional. 209 00:10:56,960 --> 00:11:00,880 Speaker 1: Strength, except some strength maybe will be lost. But you 210 00:11:01,000 --> 00:11:05,160 Speaker 1: still think that the US is the reserve currency. 211 00:11:07,080 --> 00:11:10,679 Speaker 6: Yeah, Look, we still don't have a candidate or an alternative. 212 00:11:11,679 --> 00:11:14,600 Speaker 6: You know, we've done We've done gold, silver, the pround, 213 00:11:14,600 --> 00:11:17,200 Speaker 6: and the dollar in the last five hundred years. 214 00:11:18,080 --> 00:11:19,280 Speaker 2: Which is why a lot of people are going to 215 00:11:19,280 --> 00:11:20,080 Speaker 2: stick with the US dollar. 216 00:11:20,120 --> 00:11:20,240 Speaker 4: Kate. 217 00:11:20,280 --> 00:11:23,040 Speaker 2: There are questions though about the current account deficit that's 218 00:11:23,080 --> 00:11:26,000 Speaker 2: currently been ran and how you would track that foreign capital. 219 00:11:26,080 --> 00:11:27,839 Speaker 2: You're either going to do that through the FX channel 220 00:11:27,960 --> 00:11:30,640 Speaker 2: through a weaker currency, or you need much higher rates. 221 00:11:30,920 --> 00:11:32,439 Speaker 2: Is it one or the other or both for you? 222 00:11:32,559 --> 00:11:33,840 Speaker 2: And how do you think that plays out in the 223 00:11:33,840 --> 00:11:34,440 Speaker 2: coming months. 224 00:11:37,679 --> 00:11:40,480 Speaker 6: I think it's going to be both over time. But 225 00:11:40,760 --> 00:11:45,240 Speaker 6: I think part of the challenges if domestic capital leaves, 226 00:11:45,240 --> 00:11:48,840 Speaker 6: for example, you know, the world's biggest net investor abroad, 227 00:11:49,080 --> 00:11:52,600 Speaker 6: Germany has work to do at home, so they'll attract 228 00:11:52,640 --> 00:11:56,760 Speaker 6: capital back. Then the US needs to save more at 229 00:11:56,800 --> 00:12:00,480 Speaker 6: the margin as well. They can't go on running such 230 00:12:00,480 --> 00:12:03,720 Speaker 6: a big current account deathits can't necessarily run such a 231 00:12:03,720 --> 00:12:07,240 Speaker 6: commodative fiscal policy, and so I think we'll see a 232 00:12:07,320 --> 00:12:08,440 Speaker 6: change in the States as well. 233 00:12:09,120 --> 00:12:11,760 Speaker 2: The most interesting chart for me KIT is over in Europe, 234 00:12:11,800 --> 00:12:15,960 Speaker 2: and it's the euro versus China EUROCNY. I think over 235 00:12:16,000 --> 00:12:18,440 Speaker 2: the last several months has been fascinating KIT, because, as 236 00:12:18,480 --> 00:12:20,640 Speaker 2: we've talked about in this program, the biggest threat to 237 00:12:20,679 --> 00:12:23,320 Speaker 2: price stability in Europe at the moment might be Chinese exports. 238 00:12:23,640 --> 00:12:25,880 Speaker 2: Based on that chart, could become a bigger problem in 239 00:12:25,920 --> 00:12:28,000 Speaker 2: the months to camp. KIT. What kind of relationship do 240 00:12:28,040 --> 00:12:30,520 Speaker 2: you anticipate in between the two trading blocks in the 241 00:12:30,520 --> 00:12:32,120 Speaker 2: next year or so, What does it mean for this 242 00:12:32,200 --> 00:12:35,199 Speaker 2: currency pair, and what ultimately does it mean for interest 243 00:12:35,240 --> 00:12:35,960 Speaker 2: rates to the ECB. 244 00:12:38,880 --> 00:12:41,280 Speaker 6: I think it's going to be a difficult relationship at 245 00:12:41,280 --> 00:12:44,480 Speaker 6: the margin anyway, just because China needs to find other 246 00:12:44,520 --> 00:12:47,559 Speaker 6: places to export to and Europe is going to be 247 00:12:47,679 --> 00:12:51,880 Speaker 6: very wary of them dumping in any form into the 248 00:12:51,880 --> 00:12:55,200 Speaker 6: European market. The challenge that we have at the foreign 249 00:12:55,200 --> 00:12:58,600 Speaker 6: ex change level is that the yuan, the Chinese currency, 250 00:12:58,800 --> 00:13:02,200 Speaker 6: really doesn't move very much, so it's static. So if 251 00:13:02,200 --> 00:13:03,920 Speaker 6: the euro goes up against the dollar, it's going to 252 00:13:03,920 --> 00:13:12,199 Speaker 6: go up again against the yuan. Kit you said that, no, continue, sorry, 253 00:13:12,200 --> 00:13:14,000 Speaker 6: and I was gonna say so. The result of that 254 00:13:14,160 --> 00:13:17,760 Speaker 6: is that we're getting a very strong euro against the yuan, 255 00:13:18,160 --> 00:13:21,320 Speaker 6: which is going to deflate Europe at a time when 256 00:13:21,320 --> 00:13:23,440 Speaker 6: that's not really what they want to do, and it 257 00:13:23,520 --> 00:13:27,160 Speaker 6: leans against the fiscal expansion, and it limits how strong 258 00:13:27,160 --> 00:13:28,640 Speaker 6: the euro can stay and get. 259 00:13:29,440 --> 00:13:31,840 Speaker 1: You said that the Europeans are going to be weary 260 00:13:31,920 --> 00:13:34,440 Speaker 1: of the Chinese dumping on their market. Kit, do you 261 00:13:34,440 --> 00:13:36,959 Speaker 1: think it's enough for the Europeans to put up their 262 00:13:37,000 --> 00:13:38,839 Speaker 1: own tier walls when it comes to China. 263 00:13:40,920 --> 00:13:44,720 Speaker 6: No, I don't think. I think Europe is very aggressively 264 00:13:44,760 --> 00:13:48,600 Speaker 6: against formal tariffs, so, but I do think that once 265 00:13:48,640 --> 00:13:53,920 Speaker 6: you've started kind of challenging free trade, that the whole 266 00:13:53,960 --> 00:13:56,440 Speaker 6: thing is a more fragile edifice. And so it'll with 267 00:13:56,480 --> 00:13:58,720 Speaker 6: a splinter a bit because we just get all these 268 00:13:58,800 --> 00:13:59,560 Speaker 6: knock on effects. 269 00:13:59,679 --> 00:14:02,360 Speaker 2: Quick final question for your kit, Euro dollar one fourteen. 270 00:14:02,720 --> 00:14:05,160 Speaker 2: At the moment, we will remember the day's pre negative 271 00:14:05,200 --> 00:14:08,280 Speaker 2: rates back in twenty fourteen, when they were implemented that summer. 272 00:14:08,559 --> 00:14:11,959 Speaker 2: We remember how stubborn the euro was, stubborn euro strength. 273 00:14:12,200 --> 00:14:14,040 Speaker 2: What are we going back to? What kind of world? Kit? 274 00:14:14,120 --> 00:14:16,040 Speaker 2: Are we going back to the pre negative rate era 275 00:14:16,120 --> 00:14:18,480 Speaker 2: of say one twenty one, thirty one, forty? How do 276 00:14:18,520 --> 00:14:19,240 Speaker 2: you think about that? 277 00:14:20,520 --> 00:14:23,320 Speaker 6: I can't see how in real terms that the europe 278 00:14:23,320 --> 00:14:25,360 Speaker 6: can justify the levels of sort of sly, the one 279 00:14:25,400 --> 00:14:27,880 Speaker 6: thirty one to forty levels, I think they're gone. Frankly, 280 00:14:28,640 --> 00:14:30,560 Speaker 6: I think we'll see one twenty again. I think that's 281 00:14:30,600 --> 00:14:33,000 Speaker 6: probably that's the bit I can manage in my head. 282 00:14:33,440 --> 00:14:39,040 Speaker 6: But the European economy needs to develop much stronger underlying 283 00:14:39,080 --> 00:14:41,960 Speaker 6: growth to get above that for a lot, to stay above. 284 00:14:41,720 --> 00:14:44,640 Speaker 2: That, Kit, appreciate your input as always, sir, Thank you. 285 00:14:44,720 --> 00:14:57,880 Speaker 2: Kit Jig's there of selk gen danis of Wentworth raising 286 00:14:57,920 --> 00:15:01,320 Speaker 2: its price targets a three point fifty writing recommitting a 287 00:15:01,440 --> 00:15:04,120 Speaker 2: CEO and leaving its dogs Roll is the biggest and 288 00:15:04,160 --> 00:15:07,160 Speaker 2: best possible news investors could have heard. Tesla got back 289 00:15:07,200 --> 00:15:10,280 Speaker 2: its biggest asset, Musk Dana. I've joined this now for 290 00:15:10,320 --> 00:15:12,920 Speaker 2: more Dank and Monica to see it. Okay, so you're 291 00:15:12,920 --> 00:15:14,880 Speaker 2: saying this is a recommitment other people would look at 292 00:15:14,880 --> 00:15:16,320 Speaker 2: this and say, well, he's still going to be that 293 00:15:16,360 --> 00:15:17,880 Speaker 2: two days a week, and that's a problem. 294 00:15:18,040 --> 00:15:20,280 Speaker 7: I mean, I view this this was an off rahnd. 295 00:15:20,400 --> 00:15:22,200 Speaker 7: I mean, however, you want to sort of weave what 296 00:15:22,360 --> 00:15:24,600 Speaker 7: one to two days. I think this is the beginning 297 00:15:24,600 --> 00:15:27,800 Speaker 7: of the end for him at duge with Trump Whitehouse, 298 00:15:28,280 --> 00:15:31,040 Speaker 7: because that was a different musque. On the conference call, 299 00:15:31,320 --> 00:15:33,320 Speaker 7: that was a different musk. And we've seen actually over 300 00:15:33,360 --> 00:15:36,080 Speaker 7: the years he dressed it head on, read the. 301 00:15:36,160 --> 00:15:38,200 Speaker 4: Room, and we've talked about it. This was it was 302 00:15:38,240 --> 00:15:38,920 Speaker 4: a fork. 303 00:15:38,680 --> 00:15:40,360 Speaker 8: In the road, a moment of truth. 304 00:15:40,480 --> 00:15:43,400 Speaker 7: Sure he took advantage of it, and I believe now 305 00:15:43,400 --> 00:15:44,480 Speaker 7: it's a new chapter. 306 00:15:45,480 --> 00:15:47,240 Speaker 4: And anyway, the dark chapter. 307 00:15:47,040 --> 00:15:47,520 Speaker 7: In the past. 308 00:15:47,600 --> 00:15:49,920 Speaker 2: Let's unpack the perceived problem of the last few months 309 00:15:49,920 --> 00:15:52,720 Speaker 2: that you called a dark chapter. Some people believe money 310 00:15:52,760 --> 00:15:55,840 Speaker 2: in fact, that the president and Elon Musk relationship has 311 00:15:55,960 --> 00:15:58,440 Speaker 2: damaged the brand in the mind of liberals. Want to 312 00:15:58,440 --> 00:16:01,080 Speaker 2: be very clear about that. Points had the stock. Do 313 00:16:01,120 --> 00:16:03,240 Speaker 2: you acknowledge that that is what's happened over the past 314 00:16:03,280 --> 00:16:03,840 Speaker 2: few months. 315 00:16:03,880 --> 00:16:04,800 Speaker 4: We've talked about it. 316 00:16:04,880 --> 00:16:07,840 Speaker 9: I mean, it's the brand damage is real. 317 00:16:07,920 --> 00:16:10,400 Speaker 7: It's been a dark cloud on Tesla's that we talked 318 00:16:10,400 --> 00:16:14,520 Speaker 7: about anywhere from ten to twenty percent because Tessa became 319 00:16:15,080 --> 00:16:16,240 Speaker 7: a political symbol. 320 00:16:16,360 --> 00:16:18,600 Speaker 2: Why would that change If Elon Musk is still that 321 00:16:18,640 --> 00:16:19,640 Speaker 2: two days a week. 322 00:16:20,280 --> 00:16:22,400 Speaker 7: Again and I don't believe he's a good again. The 323 00:16:22,440 --> 00:16:24,000 Speaker 7: one two days a week, however you want to like 324 00:16:24,080 --> 00:16:26,720 Speaker 7: phrase it. My view is, and we talked about in 325 00:16:26,760 --> 00:16:30,360 Speaker 7: the show, this is the off ram to be like, okay, 326 00:16:30,520 --> 00:16:32,680 Speaker 7: one two days a week and I'm gone. I'm not 327 00:16:32,720 --> 00:16:34,720 Speaker 7: saying that you're not going to see him at times 328 00:16:34,800 --> 00:16:39,560 Speaker 7: with Trump, but we believe this is his taking a 329 00:16:39,600 --> 00:16:44,080 Speaker 7: massive step back recommitting to Tesla. And look, this was 330 00:16:44,080 --> 00:16:46,440 Speaker 7: a different Musk on the conference call. This was not 331 00:16:46,640 --> 00:16:50,480 Speaker 7: the normal Musk. This is one reading the room, aware 332 00:16:50,520 --> 00:16:53,120 Speaker 7: of everything going on from a brand perspective, and I 333 00:16:53,200 --> 00:16:56,040 Speaker 7: believe this it's going to start a new chapter with 334 00:16:56,200 --> 00:16:58,320 Speaker 7: the brand damage is still going to be there, but 335 00:16:58,400 --> 00:17:00,680 Speaker 7: I believe at least it will be continued. He doesn't 336 00:17:00,720 --> 00:17:03,840 Speaker 7: double down, and this was an important time I think 337 00:17:03,880 --> 00:17:08,080 Speaker 7: would define the future of Tesla if Musk actually doubled down. 338 00:17:08,160 --> 00:17:10,360 Speaker 1: Dude, But how does he fix a brand damage? Now, 339 00:17:10,400 --> 00:17:12,680 Speaker 1: to Jonathan's point, one to two weeks in the White House, 340 00:17:12,680 --> 00:17:15,760 Speaker 1: he's also still the self proclaimed first buddy. He's still 341 00:17:15,800 --> 00:17:18,640 Speaker 1: going to be out there advocating for the president. 342 00:17:19,160 --> 00:17:22,080 Speaker 7: I think that's gonna be significantly diminished. I mean, I'd 343 00:17:22,080 --> 00:17:25,400 Speaker 7: be surprised if we sit here one two, three months 344 00:17:25,440 --> 00:17:28,239 Speaker 7: and that's still happening, even on social media. I mean, 345 00:17:28,240 --> 00:17:30,680 Speaker 7: he's still gonna say what he wants, but I think 346 00:17:30,720 --> 00:17:33,080 Speaker 7: even some of that will be diminished. Look, I don't 347 00:17:33,080 --> 00:17:35,600 Speaker 7: know if it's the board, if it's some of his confidence, 348 00:17:35,720 --> 00:17:37,440 Speaker 7: but the reality is for Tesla. 349 00:17:37,720 --> 00:17:39,280 Speaker 4: Look, that's why this was a code read. 350 00:17:40,080 --> 00:17:42,600 Speaker 1: Is this a moment though for Tesla to realize that 351 00:17:42,680 --> 00:17:46,639 Speaker 1: they actually need to brand themselves as Tesla, not as 352 00:17:46,760 --> 00:17:48,200 Speaker 1: synonymous with Elon Musk. 353 00:17:48,480 --> 00:17:51,760 Speaker 7: I think that's that ship sailed because I think the 354 00:17:51,840 --> 00:17:52,560 Speaker 7: reality is. 355 00:17:52,680 --> 00:17:55,200 Speaker 9: Musk as Tesla, Tesla is Musk. 356 00:17:55,960 --> 00:17:59,080 Speaker 7: And so much of that has been a positive despite 357 00:17:59,119 --> 00:18:02,359 Speaker 7: you know, maybe some critic the last three months. 358 00:18:02,480 --> 00:18:03,879 Speaker 9: It's been the reason it's. 359 00:18:03,800 --> 00:18:06,400 Speaker 7: Been a dark chapter, not just because of the quarter delivered, 360 00:18:06,720 --> 00:18:10,520 Speaker 7: but the brand damage and what ultimately Tess became a 361 00:18:10,520 --> 00:18:13,760 Speaker 7: political symbol. And I think it's a recognition that needs 362 00:18:13,760 --> 00:18:14,160 Speaker 7: to end. 363 00:18:14,320 --> 00:18:16,480 Speaker 1: Where in the world do they need to do the 364 00:18:16,520 --> 00:18:18,760 Speaker 1: most work to bring customers back. 365 00:18:19,119 --> 00:18:21,440 Speaker 7: Well, I think China or China's the hearts and lungs 366 00:18:21,480 --> 00:18:23,800 Speaker 7: of the growth story. I mean BYD has obviously been 367 00:18:24,040 --> 00:18:26,800 Speaker 7: very strong Neo and others, and I think China is 368 00:18:26,840 --> 00:18:29,480 Speaker 7: where you really need to start to turn this around. 369 00:18:29,880 --> 00:18:31,720 Speaker 7: The brand damage in Europe, I think a. 370 00:18:31,720 --> 00:18:33,400 Speaker 9: Lot of that you might be permanent. 371 00:18:33,400 --> 00:18:36,880 Speaker 7: And we've talked about potentially twenty percent US maybe ten 372 00:18:36,920 --> 00:18:41,400 Speaker 7: percent brand damage. And my view is just that's still 373 00:18:41,400 --> 00:18:43,920 Speaker 7: going to be there, but you had to contain it. 374 00:18:44,280 --> 00:18:46,879 Speaker 7: You have to start to in terms of autonomous robotics 375 00:18:47,160 --> 00:18:49,320 Speaker 7: and this was this was a moment, so. 376 00:18:49,320 --> 00:18:51,359 Speaker 2: Show me the gross where does it come from and 377 00:18:51,440 --> 00:18:52,399 Speaker 2: how soon does it come. 378 00:18:52,520 --> 00:18:55,480 Speaker 7: Well, I believe a huge part of the valuation is 379 00:18:55,520 --> 00:18:57,760 Speaker 7: going to be autonomous and robotics. I mean my view, 380 00:18:57,800 --> 00:19:00,919 Speaker 7: like on Supervised FST, you will start in Austin in June, 381 00:19:01,280 --> 00:19:03,520 Speaker 7: when you look out over the coming years, I I 382 00:19:03,600 --> 00:19:08,199 Speaker 7: believe autonomous and robotics will be ninety percent of the 383 00:19:08,280 --> 00:19:10,480 Speaker 7: valuation of the story over the coming years. 384 00:19:10,480 --> 00:19:12,120 Speaker 2: You spend a lot of time with the product. How 385 00:19:12,160 --> 00:19:14,160 Speaker 2: good is it right now? Full self trying to think. 386 00:19:14,480 --> 00:19:17,919 Speaker 7: I mean, I think we're probably what's called seventy five 387 00:19:18,359 --> 00:19:20,280 Speaker 7: percent that to where you need to. 388 00:19:20,240 --> 00:19:22,639 Speaker 2: Be seventy progress half we made so I think seventy 389 00:19:22,640 --> 00:19:24,920 Speaker 2: five to I see now where we say, twelve months ago, 390 00:19:25,080 --> 00:19:25,760 Speaker 2: three months ago. 391 00:19:25,640 --> 00:19:27,520 Speaker 9: I think we were probably if I go back maybe 392 00:19:27,520 --> 00:19:27,960 Speaker 9: a year. 393 00:19:27,800 --> 00:19:30,800 Speaker 7: Ago, say we're probably sixty percent sixty five. No, you 394 00:19:30,840 --> 00:19:33,080 Speaker 7: got now technically you gotta get to nine nine point 395 00:19:33,119 --> 00:19:36,000 Speaker 7: nine nine us to get there. But I believe they're 396 00:19:36,000 --> 00:19:39,480 Speaker 7: making huge traction. And I think when we get to 397 00:19:39,560 --> 00:19:43,439 Speaker 7: unsupervised FSD in Austin, it's a huge step to where 398 00:19:43,480 --> 00:19:45,879 Speaker 7: the story needs to get to. And my whole point 399 00:19:45,920 --> 00:19:50,720 Speaker 7: is if this was an Intel, a Boeing, okay it's 400 00:19:50,760 --> 00:19:53,479 Speaker 7: a disaster, it doesn't even matter in terms of but 401 00:19:53,560 --> 00:19:55,919 Speaker 7: for Tesla, it's my view, along with the video too 402 00:19:56,040 --> 00:19:59,280 Speaker 7: best often technology companies in the world. That's what was 403 00:19:59,320 --> 00:20:01,919 Speaker 7: so frustrating and why we were so loud, because you 404 00:20:02,080 --> 00:20:06,760 Speaker 7: can't burn the house down now on this. You need 405 00:20:06,800 --> 00:20:08,800 Speaker 7: to actually focus in the future. And I think that's 406 00:20:08,800 --> 00:20:12,760 Speaker 7: why that's why that was a different Musk on the conference, cause. 407 00:20:12,520 --> 00:20:14,440 Speaker 1: When do we get to the point where we see 408 00:20:14,480 --> 00:20:17,199 Speaker 1: Elon Musk's realization of Americans really won't go out and 409 00:20:17,200 --> 00:20:18,240 Speaker 1: be buying cars anymore. 410 00:20:19,160 --> 00:20:21,119 Speaker 7: Look, I think that that's still much more of a 411 00:20:21,880 --> 00:20:22,760 Speaker 7: longer term view. 412 00:20:22,840 --> 00:20:24,280 Speaker 9: I mean, I think for decade. 413 00:20:24,400 --> 00:20:26,600 Speaker 7: Look, I think that's something that you're gonna have to 414 00:20:26,640 --> 00:20:28,439 Speaker 7: go past to twenty thirty. 415 00:20:29,240 --> 00:20:30,359 Speaker 9: And I'm not a believer in that. 416 00:20:30,400 --> 00:20:34,800 Speaker 7: I'm believer autonomous is gonna be a huge piece. Robotics 417 00:20:34,880 --> 00:20:37,280 Speaker 7: is a huge piece. But that's much more, you know, 418 00:20:37,320 --> 00:20:39,520 Speaker 7: I think when you will long return. But the reality now, 419 00:20:39,520 --> 00:20:42,840 Speaker 7: it's about turning it around. It's about containing the brand damage. 420 00:20:42,840 --> 00:20:46,280 Speaker 7: And it's also it's about must leaders lead? This is 421 00:20:46,320 --> 00:20:48,800 Speaker 7: the time to lead, and I think I think Must 422 00:20:48,840 --> 00:20:51,080 Speaker 7: took for him a huge step forward on. 423 00:20:51,160 --> 00:20:54,480 Speaker 1: We're not just dowage. He's involved in neuralink x XAI. 424 00:20:55,640 --> 00:20:59,280 Speaker 1: He is spread very thin. So why do you think 425 00:20:59,320 --> 00:21:01,840 Speaker 1: all that tension is going to come rushing back to Tesla? 426 00:21:02,080 --> 00:21:04,399 Speaker 7: And And that's who much is always going to be. 427 00:21:04,640 --> 00:21:08,879 Speaker 7: But it's about the political damage that he did, because 428 00:21:09,040 --> 00:21:14,159 Speaker 7: ultimately it became a political symbol for Trump administration, for Duge. 429 00:21:13,800 --> 00:21:14,919 Speaker 9: And that can't happen. 430 00:21:15,240 --> 00:21:21,040 Speaker 7: And I think this, I truly believe he underestimated the 431 00:21:21,080 --> 00:21:23,680 Speaker 7: life of its own, that this was ultimately going to become. 432 00:21:24,040 --> 00:21:26,119 Speaker 7: And I think over the last few weeks there was 433 00:21:26,160 --> 00:21:29,720 Speaker 7: a recognition like, look this, this cannot sustain showing forward. 434 00:21:29,840 --> 00:21:32,480 Speaker 2: Are you over estimating the leadership accunty has in the 435 00:21:32,560 --> 00:21:34,199 Speaker 2: SEC test. So this is the question that comes from 436 00:21:34,200 --> 00:21:36,040 Speaker 2: my blowback subscriber. Let me to read it to you. 437 00:21:36,320 --> 00:21:38,400 Speaker 2: B Y d If introduced CONTs with double the range 438 00:21:38,440 --> 00:21:40,639 Speaker 2: of Tesla and a five minute recharge. Tesla has the 439 00:21:40,640 --> 00:21:43,240 Speaker 2: same caress seven years ago, numb innovation in the range 440 00:21:43,359 --> 00:21:46,320 Speaker 2: and recharge. They were an also ran in China. Won't 441 00:21:46,359 --> 00:21:47,040 Speaker 2: you sent back to that? 442 00:21:47,080 --> 00:21:51,240 Speaker 7: I'd say, let's talk in six months when we actually 443 00:21:51,320 --> 00:21:55,040 Speaker 7: start to actually have from an autonomous perspective in terms 444 00:21:55,119 --> 00:21:57,560 Speaker 7: of new vehicles that I believe are ultimately going to 445 00:21:57,600 --> 00:22:02,840 Speaker 7: be out there, Refreshes and Musk and Tesla. How many 446 00:22:02,920 --> 00:22:05,119 Speaker 7: times have been count out? I mean, I can tell 447 00:22:05,119 --> 00:22:07,880 Speaker 7: you in the last decade, I probably count on both hands. 448 00:22:07,920 --> 00:22:09,640 Speaker 2: I remember how many times Speed why DA would count 449 00:22:09,680 --> 00:22:10,240 Speaker 2: it out as well. 450 00:22:10,400 --> 00:22:14,400 Speaker 9: But I'm more posit. I'm not negative on BYD. 451 00:22:14,880 --> 00:22:18,000 Speaker 7: My view is just when you look at the opportunity 452 00:22:18,040 --> 00:22:21,400 Speaker 7: for Tesla, it is going to be really about autonomous 453 00:22:21,400 --> 00:22:22,639 Speaker 7: and the robotics future. 454 00:22:22,680 --> 00:22:23,439 Speaker 9: And I think from. 455 00:22:23,359 --> 00:22:27,400 Speaker 7: Musk last night, this this will be a moment in time. Historically, 456 00:22:27,880 --> 00:22:30,119 Speaker 7: he had a choice. He made the right choice in 457 00:22:30,160 --> 00:22:32,399 Speaker 7: my opinion, And I think now we start a new chapter, 458 00:22:32,720 --> 00:22:35,520 Speaker 7: still out with the chop ahead challenges. 459 00:22:35,119 --> 00:22:39,040 Speaker 1: But byd has something Tesla doesn't, which is easy access 460 00:22:39,080 --> 00:22:42,199 Speaker 1: to the batteries. And China has eighty five percent of 461 00:22:42,240 --> 00:22:45,040 Speaker 1: the lithium. They have the processing to make these batteries 462 00:22:45,080 --> 00:22:48,399 Speaker 1: and the raw materials. How challenging is that path forward 463 00:22:48,440 --> 00:22:50,840 Speaker 1: for Tesla and other American EV makers, But. 464 00:22:50,880 --> 00:22:53,800 Speaker 7: Also it goes back to Musk in terms of Beijing 465 00:22:54,000 --> 00:22:56,480 Speaker 7: and in terms of everything we've seen with Giga in Shanghai. 466 00:22:56,520 --> 00:22:59,760 Speaker 7: I mean the point is, like Tesla is, you know, 467 00:23:00,200 --> 00:23:03,480 Speaker 7: is cemented in China. It's not like they're just a 468 00:23:03,640 --> 00:23:06,720 Speaker 7: US car man you're trying to get into China. That's 469 00:23:06,720 --> 00:23:09,680 Speaker 7: why from a raw material from production, from a vertically 470 00:23:09,760 --> 00:23:12,600 Speaker 7: integrated perspective. But when you talk about the raw materials, 471 00:23:12,640 --> 00:23:14,879 Speaker 7: and we've said it like that, that comes down to 472 00:23:15,520 --> 00:23:19,000 Speaker 7: talk about tariffs and talk about everything. Where where's the 473 00:23:19,000 --> 00:23:22,040 Speaker 7: materials coming from. They're not coming from New Jersey and 474 00:23:22,119 --> 00:23:24,480 Speaker 7: they're come from China. And I think that's also why 475 00:23:24,600 --> 00:23:26,680 Speaker 7: a lot of things happen in the white house walls 476 00:23:26,680 --> 00:23:30,800 Speaker 7: cave it in, and it's you could talk fairytale reality. 477 00:23:31,000 --> 00:23:34,040 Speaker 7: And that's why I also Musca's anti tariffs speaks to 478 00:23:34,040 --> 00:23:34,639 Speaker 7: some of the issues. 479 00:23:34,640 --> 00:23:36,800 Speaker 1: You all the bad things to be the first buddy, 480 00:23:36,800 --> 00:23:37,639 Speaker 1: but not the good things. 481 00:23:37,760 --> 00:23:41,600 Speaker 7: You literally got all the bad things, like all the 482 00:23:41,640 --> 00:23:44,879 Speaker 7: bad things in a horror show, none of the good. 483 00:23:45,520 --> 00:23:47,439 Speaker 9: And that's why we're here where we are. 484 00:23:47,560 --> 00:23:49,480 Speaker 2: It's certainly not the conversation we have with you back 485 00:23:49,480 --> 00:23:50,480 Speaker 2: in November decemba time. 486 00:23:50,600 --> 00:23:53,639 Speaker 7: It's a lot different than that Cinderella story that turned 487 00:23:53,680 --> 00:23:55,560 Speaker 7: into basically Nightmare and Elm Street. 488 00:23:55,640 --> 00:23:57,280 Speaker 9: But now we take a new chapter. 489 00:23:57,520 --> 00:23:59,679 Speaker 2: Then we'll say it's another famiery tale. It's gonna say it, 490 00:24:00,040 --> 00:24:00,600 Speaker 2: so my question. 491 00:24:10,920 --> 00:24:13,480 Speaker 10: I am here at the International Monetary Fund. It is 492 00:24:13,520 --> 00:24:15,880 Speaker 10: a very different series of meetings. There aren't the same 493 00:24:15,960 --> 00:24:19,040 Speaker 10: kinds of banners outside. It's a more subdued kind of feeling. 494 00:24:19,080 --> 00:24:22,280 Speaker 10: And yet there are people collecting in Washington, DC for 495 00:24:22,320 --> 00:24:24,959 Speaker 10: the first time since President Trump was inaugurated from all 496 00:24:25,000 --> 00:24:29,080 Speaker 10: around the world, including the president of the Bundesberg, Jachham Nagel, 497 00:24:29,119 --> 00:24:31,879 Speaker 10: who joins us, now, I'm so glad to see you, 498 00:24:31,920 --> 00:24:33,560 Speaker 10: and I want to start with this question of how 499 00:24:33,560 --> 00:24:35,720 Speaker 10: different are these IMF meetings. 500 00:24:36,119 --> 00:24:39,119 Speaker 11: I guess this year, I guess this meeting is a 501 00:24:39,200 --> 00:24:42,320 Speaker 11: very special one. I think the world economy is in 502 00:24:42,359 --> 00:24:46,320 Speaker 11: a very delicate situation, and I will use this time 503 00:24:46,359 --> 00:24:49,000 Speaker 11: here to learn a little bit more of what we 504 00:24:49,080 --> 00:24:53,000 Speaker 11: can do to make it better, to make the economy running. 505 00:24:53,280 --> 00:24:55,719 Speaker 11: Have you better understanding what's going on? And there are 506 00:24:55,760 --> 00:24:58,640 Speaker 11: a lot of There are really a lot of uncertainties. 507 00:24:59,000 --> 00:25:01,840 Speaker 10: One of the uncertainties is what's coming from the United States, 508 00:25:01,880 --> 00:25:04,920 Speaker 10: in particular when it comes to tariffs, and how much 509 00:25:05,320 --> 00:25:08,320 Speaker 10: that not only is a ramification for the US economy 510 00:25:08,359 --> 00:25:09,879 Speaker 10: but also the global economy. 511 00:25:10,200 --> 00:25:11,960 Speaker 5: How are you thinking about. 512 00:25:12,040 --> 00:25:14,200 Speaker 10: Tariffs and how much they could depress growth? 513 00:25:14,240 --> 00:25:16,120 Speaker 5: Say in Germany, I. 514 00:25:16,080 --> 00:25:19,440 Speaker 11: Said a couple of months ago, when it comes to tariffs, 515 00:25:19,960 --> 00:25:23,239 Speaker 11: I was of the opinion that this will trigger a 516 00:25:23,240 --> 00:25:25,919 Speaker 11: lot of problems. And now we see how the problems 517 00:25:26,400 --> 00:25:30,160 Speaker 11: evolved over the last couple of weeks and months, and 518 00:25:30,240 --> 00:25:33,560 Speaker 11: so we have to have a better understanding how we 519 00:25:33,640 --> 00:25:36,879 Speaker 11: can find, let me say, a kind of a compromise, 520 00:25:36,960 --> 00:25:40,080 Speaker 11: a kind of a level playing field that brings us 521 00:25:40,119 --> 00:25:44,960 Speaker 11: closer together. Because chists, these are so tervists are not 522 00:25:45,000 --> 00:25:45,680 Speaker 11: a good policy. 523 00:25:45,760 --> 00:25:46,480 Speaker 8: This is for sure. 524 00:25:46,880 --> 00:25:48,160 Speaker 5: If they stay. 525 00:25:48,920 --> 00:25:50,800 Speaker 10: Is there a sense that it gives you more room 526 00:25:51,080 --> 00:25:51,840 Speaker 10: to cut rates? 527 00:25:52,480 --> 00:25:54,520 Speaker 11: I think, first of all, I guess we have to 528 00:25:54,600 --> 00:25:57,960 Speaker 11: take into account as central bankers also terrorists. 529 00:25:57,960 --> 00:26:01,119 Speaker 8: What does it mean for Europe? I guess when. 530 00:26:00,960 --> 00:26:03,879 Speaker 11: We're talking about monitor policy in the US system, we 531 00:26:03,920 --> 00:26:06,400 Speaker 11: are on a good pass. I guess we can come 532 00:26:06,480 --> 00:26:10,160 Speaker 11: close to price stability over the course of this year. 533 00:26:10,160 --> 00:26:13,320 Speaker 11: And this is good news. But there's a lot of uncertainty, 534 00:26:13,359 --> 00:26:16,359 Speaker 11: and so we said last week because of that, we 535 00:26:16,440 --> 00:26:19,320 Speaker 11: have to be very cautious. We have to wait what 536 00:26:19,520 --> 00:26:23,320 Speaker 11: might come, how this uncertainty might evolve over the next week. 537 00:26:23,400 --> 00:26:26,399 Speaker 11: So we have this meeting to meeting approach, and this, 538 00:26:26,560 --> 00:26:30,200 Speaker 11: I guess is the best way to conduct monitor policy. 539 00:26:30,040 --> 00:26:31,320 Speaker 5: Since the beginning of last year. 540 00:26:31,640 --> 00:26:33,800 Speaker 10: Since a peak rate of four and a half percent 541 00:26:33,920 --> 00:26:37,640 Speaker 10: at the ECB, you've cut right seven times deposit rate 542 00:26:37,720 --> 00:26:39,200 Speaker 10: of two and a quarter percent. 543 00:26:39,520 --> 00:26:40,200 Speaker 5: Is that neutral? 544 00:26:41,320 --> 00:26:43,320 Speaker 8: I will not speculate about neutral. 545 00:26:43,359 --> 00:26:46,359 Speaker 11: I guess only in a hindsight we really know where 546 00:26:46,800 --> 00:26:49,919 Speaker 11: neutral may be war or maybe is so I guess 547 00:26:50,080 --> 00:26:52,760 Speaker 11: I have to look what the numbers, the figures are 548 00:26:52,840 --> 00:26:55,440 Speaker 11: telling me, and there I see a lot of let 549 00:26:55,480 --> 00:26:58,600 Speaker 11: me say good news when it comes to the inflation story. 550 00:26:59,000 --> 00:27:01,639 Speaker 11: When we talk about economic cross there's a lot of 551 00:27:01,720 --> 00:27:05,320 Speaker 11: more uncertainty because terravices are not good for economic crows. 552 00:27:05,400 --> 00:27:07,359 Speaker 8: So the latest news. 553 00:27:07,119 --> 00:27:09,880 Speaker 11: That we got from the IMF here we know that 554 00:27:09,920 --> 00:27:12,320 Speaker 11: this is for Europe not good news. We are in 555 00:27:12,359 --> 00:27:16,760 Speaker 11: a stagnating situation. So stagnation is the picture for this year. 556 00:27:16,760 --> 00:27:19,960 Speaker 11: Maybe recession for my country, for Germany, I cannot exclude 557 00:27:19,960 --> 00:27:23,439 Speaker 11: a slide. Let me say recession this year. So this 558 00:27:23,600 --> 00:27:26,800 Speaker 11: is what we have to work on, and monetary policy 559 00:27:26,800 --> 00:27:29,320 Speaker 11: can only give us a good indication when it comes 560 00:27:29,359 --> 00:27:32,600 Speaker 11: to a good direction when it comes to when it 561 00:27:32,640 --> 00:27:34,800 Speaker 11: comes to stable prices. 562 00:27:35,320 --> 00:27:38,280 Speaker 10: The thread of tariffs has had an unexpected effect in 563 00:27:38,400 --> 00:27:43,160 Speaker 10: market of actually weakening the dollar pretty substantially and strengthening 564 00:27:43,160 --> 00:27:45,440 Speaker 10: the euro, which on the margins could actually be a 565 00:27:45,480 --> 00:27:49,960 Speaker 10: disinflationary force, especially if you're important goods from overseas That 566 00:27:49,960 --> 00:27:52,439 Speaker 10: would lead to lower effective prices in euros. 567 00:27:52,480 --> 00:27:53,280 Speaker 5: Does that give you some. 568 00:27:53,240 --> 00:27:57,120 Speaker 10: Breathing room to actually cut rates in response to potential weakness, 569 00:27:57,520 --> 00:28:00,119 Speaker 10: if that reduces some of the inflationary pressure. 570 00:28:00,000 --> 00:28:03,239 Speaker 11: I guess it's much too early to really come to 571 00:28:03,320 --> 00:28:08,159 Speaker 11: the final conclusion, what does this tariff scenario mean for 572 00:28:08,320 --> 00:28:11,480 Speaker 11: both sides of the Atlantic. It seems to be, at 573 00:28:11,560 --> 00:28:16,440 Speaker 11: least from the moment, that the price of that tariffic 574 00:28:16,520 --> 00:28:19,680 Speaker 11: decision has to be paid in the United States and 575 00:28:20,040 --> 00:28:22,400 Speaker 11: not in Europe. It seems to be that prices might 576 00:28:22,480 --> 00:28:26,080 Speaker 11: go up much more in the United States compared to 577 00:28:26,160 --> 00:28:29,240 Speaker 11: the European Union. When it comes to economic growth, I 578 00:28:29,280 --> 00:28:32,400 Speaker 11: think the picture is pretty much the same. It's also 579 00:28:32,680 --> 00:28:35,920 Speaker 11: a track on the economic growth here in the United States. 580 00:28:35,600 --> 00:28:37,040 Speaker 8: Also in Europe. 581 00:28:37,359 --> 00:28:40,719 Speaker 11: But I will not speculate about monitory policy and what 582 00:28:40,760 --> 00:28:42,320 Speaker 11: we will do next in our next meeting. 583 00:28:42,480 --> 00:28:45,160 Speaker 10: How much are you watching what China is doing in 584 00:28:45,280 --> 00:28:48,960 Speaker 10: terms of any trade barriers from the US causing them 585 00:28:49,000 --> 00:28:52,600 Speaker 10: to export more of their productions, say to Germany and 586 00:28:52,800 --> 00:28:58,360 Speaker 10: potentially lower prices with respect to an abundance of exports 587 00:28:58,480 --> 00:29:00,000 Speaker 10: to the countrary, I think. 588 00:29:01,720 --> 00:29:04,160 Speaker 8: China is an important player here. This is for sure. 589 00:29:04,680 --> 00:29:08,600 Speaker 11: I guess it's not only for US the Europeans, let 590 00:29:08,600 --> 00:29:10,280 Speaker 11: me say, a very uncomfortable situation. 591 00:29:10,760 --> 00:29:12,520 Speaker 8: I guess also for China. 592 00:29:12,640 --> 00:29:15,880 Speaker 11: And yes, there might be a scenario that they are 593 00:29:15,880 --> 00:29:20,400 Speaker 11: looking for new markets. Additional markets was already being a 594 00:29:20,480 --> 00:29:25,040 Speaker 11: market for Chinese products, but now maybe they can maybe 595 00:29:25,160 --> 00:29:29,560 Speaker 11: use your more compared to the past, as an additional market. 596 00:29:29,600 --> 00:29:32,440 Speaker 11: But as I alluded to already, I think it's a 597 00:29:32,480 --> 00:29:36,200 Speaker 11: lot of speculating. It's a lot of speculation. What does 598 00:29:36,240 --> 00:29:39,920 Speaker 11: that mean this tarriff discussion? And it's too early to 599 00:29:40,000 --> 00:29:44,720 Speaker 11: really assess what is the detail in really any aspect. 600 00:29:44,760 --> 00:29:47,280 Speaker 10: It's much too early just to add to the confusion. 601 00:29:47,280 --> 00:29:48,800 Speaker 10: And if you really are looking for any kind of 602 00:29:48,840 --> 00:29:52,280 Speaker 10: compass and want to just change everything. Germany has been 603 00:29:52,600 --> 00:29:55,480 Speaker 10: known for the zero depth break and this idea of 604 00:29:55,720 --> 00:29:58,960 Speaker 10: not raising the deficit any capacity that has changed. We've 605 00:29:58,960 --> 00:30:02,080 Speaker 10: been talking extensively about spending not only for defense but 606 00:30:02,120 --> 00:30:05,240 Speaker 10: also for a whole host of different investments. Does that 607 00:30:05,280 --> 00:30:08,440 Speaker 10: create more inflationary pressure? Does that just improve the growth picture? 608 00:30:08,480 --> 00:30:10,520 Speaker 10: How does that sort of influence some of your modeling. 609 00:30:11,080 --> 00:30:13,600 Speaker 11: It is important to say that the role of Germany 610 00:30:14,520 --> 00:30:18,880 Speaker 11: does not change, or that didn't change, because the stabilica 611 00:30:19,040 --> 00:30:25,640 Speaker 11: anchor of Germany is still there. So, as I said, 612 00:30:25,720 --> 00:30:28,520 Speaker 11: I think we're living in a very complicated world, so 613 00:30:28,600 --> 00:30:32,560 Speaker 11: it was necessary from a German perspective to do more 614 00:30:33,240 --> 00:30:35,160 Speaker 11: regarding defense spending. 615 00:30:35,640 --> 00:30:37,280 Speaker 8: Was also clear that we have to do. 616 00:30:37,840 --> 00:30:42,560 Speaker 11: Much more when it comes to overcoming our infrastructure issue. 617 00:30:42,680 --> 00:30:46,360 Speaker 11: So I guess this fiscal package is an important message 618 00:30:46,800 --> 00:30:51,920 Speaker 11: to the world that Germany is doing its homework and 619 00:30:51,960 --> 00:30:54,840 Speaker 11: we will improve over time. The economy will do much 620 00:30:54,880 --> 00:30:58,680 Speaker 11: better over the next years, and for me as a 621 00:30:58,720 --> 00:31:01,640 Speaker 11: center panker, this is at the end good news. 622 00:31:01,920 --> 00:31:02,960 Speaker 5: But is it inflationary? 623 00:31:04,080 --> 00:31:06,520 Speaker 11: As far as I can overseee the current situation, it 624 00:31:06,560 --> 00:31:09,360 Speaker 11: will not be inflationary because we are coming out of 625 00:31:09,720 --> 00:31:13,640 Speaker 11: a situation stagnation tea maybe a kind of a recession, 626 00:31:14,040 --> 00:31:17,960 Speaker 11: so it's not inflationary over the next course of the years. 627 00:31:18,240 --> 00:31:21,960 Speaker 11: It's helpful to the economy, means more economic growth, and 628 00:31:23,240 --> 00:31:24,040 Speaker 11: this is good news. 629 00:31:24,240 --> 00:31:26,280 Speaker 10: One thing that's happened over the past couple of weeks 630 00:31:26,280 --> 00:31:29,560 Speaker 10: in particular, has been this fear of the United States 631 00:31:29,680 --> 00:31:32,840 Speaker 10: losing its position as the currency of the world, as 632 00:31:32,880 --> 00:31:35,480 Speaker 10: well as treasury is having a special status. 633 00:31:35,800 --> 00:31:37,320 Speaker 5: And one thing that we've seen in the flow is a. 634 00:31:37,320 --> 00:31:39,760 Speaker 10: Lot of money going into German boots as we're the 635 00:31:39,840 --> 00:31:42,400 Speaker 10: new haven and we're hearing a lot about diversification away 636 00:31:42,440 --> 00:31:44,640 Speaker 10: from the United States into German assets. 637 00:31:45,240 --> 00:31:47,440 Speaker 5: Do you welcome that? Do you think that would be positive. 638 00:31:48,200 --> 00:31:51,640 Speaker 11: Well, I think that it is not good news that 639 00:31:51,680 --> 00:31:55,120 Speaker 11: there's a lot of let me say, doubt regarding the 640 00:31:55,240 --> 00:32:01,600 Speaker 11: safe haven of US treasuries. Think this is not good news. 641 00:32:02,200 --> 00:32:05,760 Speaker 11: And you're absolutely right. Some of that money went to 642 00:32:06,400 --> 00:32:09,920 Speaker 11: German boons. But all in all, we need the US 643 00:32:09,960 --> 00:32:13,720 Speaker 11: treasury market is a good stable market that gives a 644 00:32:13,720 --> 00:32:17,960 Speaker 11: lot of let me say, certainty, and we should overcome 645 00:32:18,600 --> 00:32:22,920 Speaker 11: this turbulent situation and we should give back the US 646 00:32:23,000 --> 00:32:26,400 Speaker 11: treasure it is safe haven status because it is not 647 00:32:26,520 --> 00:32:29,160 Speaker 11: helpful to all of us. If there are some doubts 648 00:32:29,240 --> 00:32:33,880 Speaker 11: uncertainty around you here about the US treasuring market, it. 649 00:32:33,880 --> 00:32:37,120 Speaker 10: Wouldn't necessarily provide a support the same kind of privilege 650 00:32:37,400 --> 00:32:40,120 Speaker 10: of spending I don't want to say recklessly, but with 651 00:32:40,160 --> 00:32:41,400 Speaker 10: abundance in Germany. 652 00:32:41,640 --> 00:32:44,360 Speaker 5: If Germany were to have that safe heaven status. 653 00:32:44,280 --> 00:32:48,440 Speaker 11: I think Germany, and I alluded to that is the 654 00:32:48,480 --> 00:32:52,480 Speaker 11: stability anchor of Europe. In Europe, German boons is a 655 00:32:52,520 --> 00:32:56,720 Speaker 11: perfect example for this. And this will not go away. 656 00:32:57,040 --> 00:33:00,120 Speaker 11: But we need a good US treasuring market. This is 657 00:33:00,160 --> 00:33:02,880 Speaker 11: so important for the financial markets worldwide. 658 00:33:03,000 --> 00:33:05,040 Speaker 10: Speaking of which you're going to be meeting with Jerome Powell, 659 00:33:05,040 --> 00:33:08,000 Speaker 10: the Fed chair at these meetings this week. 660 00:33:08,320 --> 00:33:09,200 Speaker 5: What are you going to ask him? 661 00:33:09,880 --> 00:33:12,040 Speaker 8: I think Jarum Paul he is a great guy. 662 00:33:12,600 --> 00:33:16,520 Speaker 11: I really admire him what he did over his career 663 00:33:17,280 --> 00:33:21,080 Speaker 11: in center banking. And so we talk about the current situations. 664 00:33:21,320 --> 00:33:24,400 Speaker 10: So the current situation is potentially some sort of threat 665 00:33:24,400 --> 00:33:26,720 Speaker 10: to central bank independence. That was taken off the table 666 00:33:26,760 --> 00:33:29,400 Speaker 10: to some degree when President Trump yesterday, in response to 667 00:33:29,400 --> 00:33:32,200 Speaker 10: a reporter, said that he has no intention of firing 668 00:33:32,520 --> 00:33:35,600 Speaker 10: Veeder J. Powell and that this was media speculation that 669 00:33:35,720 --> 00:33:39,400 Speaker 10: was RONA. Mack, not necessarily any real indication that he 670 00:33:39,640 --> 00:33:41,760 Speaker 10: was planning to remove him before his term was up 671 00:33:41,840 --> 00:33:45,440 Speaker 10: early next year. How concerned are you about threats to 672 00:33:45,520 --> 00:33:46,480 Speaker 10: central bank independence? 673 00:33:46,520 --> 00:33:49,720 Speaker 11: So what is important to me is that independence of 674 00:33:49,960 --> 00:33:53,680 Speaker 11: center banks. This is the DNA of center banking, of 675 00:33:54,120 --> 00:33:58,240 Speaker 11: good center banking. So we shouldn't let me say a 676 00:33:58,320 --> 00:34:02,640 Speaker 11: question to a certain that this is maybe something that 677 00:34:02,680 --> 00:34:06,920 Speaker 11: we could see in danger. So independence of central bank 678 00:34:07,040 --> 00:34:09,279 Speaker 11: is of utmost importance. 679 00:34:09,960 --> 00:34:11,520 Speaker 8: And J. 680 00:34:11,719 --> 00:34:14,760 Speaker 11: Powley, he is a great center banker. He did a 681 00:34:14,800 --> 00:34:17,640 Speaker 11: marvelous good job. And I guess this is also seen 682 00:34:17,680 --> 00:34:18,920 Speaker 11: here in the United States. 683 00:34:19,040 --> 00:34:22,319 Speaker 10: Do you worry about some sort of financial instability if 684 00:34:22,520 --> 00:34:24,040 Speaker 10: that continues to be called into question. 685 00:34:24,880 --> 00:34:27,839 Speaker 11: I will not speculate here, but in a scenario that 686 00:34:27,920 --> 00:34:32,239 Speaker 11: you just mentioned, I cannot exclude such a scenario that 687 00:34:32,320 --> 00:34:34,920 Speaker 11: there is then maybe a lot of globulence coming to 688 00:34:35,000 --> 00:34:37,800 Speaker 11: the market if this is in question, and we should 689 00:34:37,880 --> 00:34:42,600 Speaker 11: avoid that that shouldn't come as a realistic scenario, should 690 00:34:42,600 --> 00:34:45,640 Speaker 11: avoid that this is of such a danger for the 691 00:34:45,640 --> 00:34:51,319 Speaker 11: world economy. And so I really hope that there's enough 692 00:34:51,480 --> 00:34:54,399 Speaker 11: understanding how dangerous this could be. 693 00:34:54,560 --> 00:34:57,600 Speaker 10: There's a question about what Europe can do to insulate 694 00:34:57,640 --> 00:35:00,880 Speaker 10: itself and to draw itself closer, and that maybe some 695 00:35:00,960 --> 00:35:04,160 Speaker 10: of the finance ministers and central banking chiefs can form 696 00:35:04,200 --> 00:35:07,120 Speaker 10: something of a closer union to try to fortify themselves 697 00:35:07,360 --> 00:35:10,200 Speaker 10: away from that type of volatility. Have you seen material 698 00:35:10,239 --> 00:35:13,000 Speaker 10: steps toward that to try to establish that type of 699 00:35:13,040 --> 00:35:15,160 Speaker 10: stability in the continent. 700 00:35:15,520 --> 00:35:16,040 Speaker 8: Absolutely. 701 00:35:16,040 --> 00:35:19,640 Speaker 11: I think Europe has I guess now better understanding that 702 00:35:19,680 --> 00:35:22,680 Speaker 11: we have to do our homework becoming more resilient. 703 00:35:23,320 --> 00:35:25,680 Speaker 8: We have to implement all what. 704 00:35:25,800 --> 00:35:29,920 Speaker 11: To be discussed over the years, just allude to the 705 00:35:29,920 --> 00:35:33,879 Speaker 11: captain market union, banking union, maybe a little bit more 706 00:35:34,000 --> 00:35:38,480 Speaker 11: physical integration. So Europe has to stand together in these 707 00:35:38,520 --> 00:35:42,799 Speaker 11: complicated times. But on top of that, also these meetings here, 708 00:35:42,880 --> 00:35:46,879 Speaker 11: the IMF meeting, Development Meeting, these two three days are 709 00:35:46,960 --> 00:35:51,000 Speaker 11: so important to all of us to work on international 710 00:35:51,000 --> 00:35:56,040 Speaker 11: cooperation Module Letter. So the Mulji letteralism of our work 711 00:35:56,120 --> 00:35:58,160 Speaker 11: is so important in these days. 712 00:35:58,440 --> 00:35:59,800 Speaker 8: So I will use these days. 713 00:35:59,600 --> 00:36:03,200 Speaker 11: Here in Washington, TC to get a better understanding to 714 00:36:03,560 --> 00:36:07,759 Speaker 11: convince the partners here that the corporation is key in 715 00:36:07,800 --> 00:36:08,360 Speaker 11: these days. 716 00:36:08,440 --> 00:36:10,560 Speaker 10: In the United States, there seems to be a move 717 00:36:10,640 --> 00:36:14,120 Speaker 10: away from financial debt or incurring more debt, and there's 718 00:36:14,120 --> 00:36:17,160 Speaker 10: this concern about the fiscal deficit in a pretty significant way. 719 00:36:17,320 --> 00:36:20,000 Speaker 10: There is a goal to try to retrench some of 720 00:36:20,040 --> 00:36:22,560 Speaker 10: the spending over the past few years. In Europe, it 721 00:36:22,560 --> 00:36:24,480 Speaker 10: seems like there is a move in the opposite direction. 722 00:36:24,520 --> 00:36:27,839 Speaker 10: We talked about that with respect to Germany, that there 723 00:36:27,920 --> 00:36:30,880 Speaker 10: is a greater degree of willingness to spend. Do you 724 00:36:30,920 --> 00:36:34,440 Speaker 10: think that that is appropriate throughout the entirety of the continent, 725 00:36:34,920 --> 00:36:37,960 Speaker 10: given the fact that there is this desire to try 726 00:36:37,960 --> 00:36:40,920 Speaker 10: to rebuild and regenerate a whole host of industries. 727 00:36:41,920 --> 00:36:44,239 Speaker 11: Let me disagree a little bit here because I do 728 00:36:44,320 --> 00:36:46,960 Speaker 11: not see that there is a momentum that we're going 729 00:36:47,080 --> 00:36:51,200 Speaker 11: away from physical discipline. We have still a good understanding 730 00:36:51,360 --> 00:36:55,040 Speaker 11: in Europe that we are currently in this complicated situation, 731 00:36:55,120 --> 00:36:58,680 Speaker 11: so we have to do much more compared to defense 732 00:36:58,719 --> 00:37:03,480 Speaker 11: spending to compared to the past. But if that period 733 00:37:03,600 --> 00:37:07,160 Speaker 11: is history, then we have to come back to physical discipline. 734 00:37:07,200 --> 00:37:10,080 Speaker 11: And this is a and this is understood in Europe, 735 00:37:10,120 --> 00:37:12,120 Speaker 11: and we will go back to that physical. 736 00:37:11,840 --> 00:37:13,279 Speaker 5: Discipline going forward. 737 00:37:13,360 --> 00:37:14,759 Speaker 10: Do you ever see a time when you can see 738 00:37:14,840 --> 00:37:18,440 Speaker 10: zero rates again from the ECB or even negative? 739 00:37:19,600 --> 00:37:22,640 Speaker 11: Well, as I said, I will not speculate here. 740 00:37:22,719 --> 00:37:25,239 Speaker 8: I think we do what we have to do in. 741 00:37:25,200 --> 00:37:28,840 Speaker 11: Our next meeting, and this is this is our mandate, 742 00:37:28,960 --> 00:37:32,759 Speaker 11: this is our huge responsibility, and we did I guess 743 00:37:32,800 --> 00:37:36,440 Speaker 11: pretty well over the past three years, and I'm very 744 00:37:36,480 --> 00:37:39,759 Speaker 11: optimistic when it comes to price stability that mission will 745 00:37:39,800 --> 00:37:42,160 Speaker 11: be accomplished over the course of this year. 746 00:37:42,520 --> 00:37:43,640 Speaker 10: So do you think that you are going to get 747 00:37:43,680 --> 00:37:45,560 Speaker 10: back down to two percent over the course of this year? 748 00:37:45,640 --> 00:37:46,200 Speaker 8: Absolutely? 749 00:37:46,600 --> 00:37:46,920 Speaker 5: Okay. 750 00:37:46,960 --> 00:37:49,040 Speaker 10: And you don't think that necessarily there has to be 751 00:37:49,080 --> 00:37:52,400 Speaker 10: any material change whatsoever to policy to get there. 752 00:37:53,320 --> 00:37:58,759 Speaker 11: No, there's no autopilot. I think we are decent central bankers. 753 00:37:59,120 --> 00:38:02,279 Speaker 11: So we'll us did the data and then we will 754 00:38:02,320 --> 00:38:04,440 Speaker 11: find maybe the right decisions. 755 00:38:03,960 --> 00:38:06,040 Speaker 10: You Ukham Nagle, thank you so much for being with us. 756 00:38:06,120 --> 00:38:09,000 Speaker 10: Jachem Nagle, the President of the BUNDESPEG. 757 00:38:09,800 --> 00:38:13,360 Speaker 2: This is the Bloomberg Surveillance Podcast, bringing you the best 758 00:38:13,360 --> 00:38:16,680 Speaker 2: in markets, economics, and geopolitics. You can watch the show 759 00:38:16,719 --> 00:38:19,680 Speaker 2: live on Bloomberg TV weekday mornings from six am to 760 00:38:19,800 --> 00:38:23,560 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify, 761 00:38:23,719 --> 00:38:25,960 Speaker 2: or anywhere else you listen, and as always, on the 762 00:38:25,960 --> 00:38:28,399 Speaker 2: Bloomberg Terminal and the Bloomberg Business app.