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Speaker 1: Brought you by Bank of America Mary Lynch. Investing in

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Speaker 1: local communities, economies and a sustainable future. That's the power

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Speaker 1: of global connections, Mary Lynch, Pierce Fenner, and Smith Incorporated

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Speaker 1: Member s I p C. Welcome to the Bloomberg Surveillance Podcast.

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Speaker 1: I'm Tom Keene with David Gura. Daily we bring you

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Speaker 1: insight from the best of economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com,

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Speaker 1: and of course, on the Bloomberg for Just days away

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Speaker 1: from the first round of elections in France and tomorrow

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Speaker 1: the World Bank and the International Monetary Fund begin their

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Speaker 1: Spring meetings in Washington. Tumillby there with Francine Laqua and

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Speaker 1: an incredible lineup of guests, and our coverage begins this

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Speaker 1: morning with John Lipsky, former first Deputy Managing Director of

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Speaker 1: the IMF. He was acting Managing director for time as well.

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Speaker 1: He's now that Peter G. Peterson Distinguished Scholar at the

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Speaker 1: Henry Kissinger Center for Global Affairs in the School of

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Speaker 1: Advanced International Studies at the Johns Hopkins University in Washington,

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Speaker 1: and John Lipsky joins US now from our Bloomberg nine

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Speaker 1: one one studios in Washington. Great to have you with

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Speaker 1: us again, John, Thanks very much for being here this morning.

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Speaker 1: Thanks happy to Let's start with the world economic outlook

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Speaker 1: we got this week. I imagine you've poured over it,

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Speaker 1: and I wonder sort of what you've what you've what

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Speaker 1: you've seen there, what you've drawn from it, what that's

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Speaker 1: going to sort of what the bedrock is going to

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Speaker 1: be there for the meetings that that start tomorrow. Well, indeed,

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Speaker 1: the UH much has been made of the fact that

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Speaker 1: the i m F actually upgraded their growth forecast for

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Speaker 1: two thousand seventeen two thousand and eighteen. It's been a

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Speaker 1: long time since they've adjusted their forecast upwards, but the

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Speaker 1: adjustment is tiny point one percent, and in fact the

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Speaker 1: trend remains very sluggish growth, especially in the advanced economies.

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Speaker 1: Their forecasting growth of under two percent when the long

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Speaker 1: term average for those for the advanced economies has been

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Speaker 1: nearly three percent. So from that longer term perspective, UH

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Speaker 1: this is not such a happy picture. And for the

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Speaker 1: emerging economies they see growth still only at about the

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Speaker 1: at about the long term average about four and a

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Speaker 1: half percent. But before the crisis hit in two thousand seven,

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Speaker 1: those countries were growing by seven to eight percent. So

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Speaker 1: it is remains a rather modest picture for growth, and

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Speaker 1: the Fund continues to say risks are tilted to the

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Speaker 1: downside and points out some specific things that need to

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Speaker 1: be done. So even though the mood music is is

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Speaker 1: a little more upbeat than previously, uh, this is not

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Speaker 1: as good as it should be or could be. Yeah,

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Speaker 1: your former colleague Christine Leguard telling our friends in lack

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Speaker 1: With just a couple of days ago that spring is

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Speaker 1: in the air for for the global economy. So we

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Speaker 1: can use either metaphor the mood music or or or

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Speaker 1: the the spring being in the air. Let me ask

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Speaker 1: you about the degree to which the French election is

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Speaker 1: going to distract from the goings on in Washington this weekend,

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Speaker 1: that being a major risk event. Well, indeed, it's a

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Speaker 1: mainly because of what it might suggest the atmosphere around

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Speaker 1: the European Union is going to be for the coming months.

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Speaker 1: After all, we also have a German election coming in

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Speaker 1: the in the fall, we're going to start the negotiations

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Speaker 1: over so called Brexit, the UK's departure from the European Union.

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Speaker 1: So this French election could have a fair amount to

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Speaker 1: do with the the atmosphere surrounding that. And when we

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Speaker 1: look at the European growth figures, they remain better than

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Speaker 1: they have been, still subdued. The I m F says,

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Speaker 1: the European banking system still needs attention. So Europe will

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Speaker 1: continue to be the focus and the French election will

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Speaker 1: provide a kind of weather vane for the where the

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Speaker 1: wind is blowing. I want to ask you about multi

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Speaker 1: ladderalism and how it relates to to this current administration.

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Speaker 1: You have the IMF meeting this weekend with with the

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Speaker 1: World Banking Concert with the World Bank. Who's going to

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Speaker 1: make the case for multi ladderalism and from multi ladd institutions?

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Speaker 1: Is this the venue to do it? I know that

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Speaker 1: Christine Legard will be on stage with Steven manuch In

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Speaker 1: the Treasury Secretary. They'll do an interview over the course

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Speaker 1: of of the meetings. Is this the forum to make

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Speaker 1: that case to the US presidential administration? Oh? Absolutely, and

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Speaker 1: I'm sure this will be a message that we're repeated

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Speaker 1: many many times. Uh. The I m F is, of

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Speaker 1: course trying to lead the way in representing UM. Let's

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Speaker 1: call it a neutral technical voice saying that in fact,

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Speaker 1: international collaboration has a real substance to it and produces

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Speaker 1: better as the holds out the the promise of better

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Speaker 1: economic results. But remember the Group of twenty UH Foreign

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Speaker 1: Finance ministers are meeting tonight and tomorrow and later this UH.

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Speaker 1: This year, the the G twenty leaders are going to

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Speaker 1: meet in Germany, and that will be a really critical

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Speaker 1: moment to see how the US intends to to participate

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Speaker 1: in the G twenty. Will it take a leadership role

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Speaker 1: or an adversarial role or essentially ignore the whole organization

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Speaker 1: which has been the key venue for the large economies

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Speaker 1: to collaborate on economic programs. Good morning everyone, David Gerr

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Speaker 1: and Tom keenan New York in our Washington Studios FM

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Speaker 1: Washington Studios with the Johns Hopkins University. John Lipsky, of course,

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Speaker 1: his service to Solomon Brothers and JP Morgan in recent years,

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Speaker 1: that's a joke. And then his work at the International

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Speaker 1: Monetary Fund. John, you had two tours of duty at

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Speaker 1: the i m F. I believe as a young lad

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Speaker 1: minted out of Stanford, you darken the door. How is

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Speaker 1: the i m F different today for when you first

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Speaker 1: walked in the door with Nut Wixel and John Madred

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Speaker 1: Kine's well, dramatically different time. Because remember, even though the

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Speaker 1: i m F and the Breton Wood system were designed

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Speaker 1: to be international, when I first walked in the door

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Speaker 1: in four UH, the world was still divided by the

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Speaker 1: Cold War, and membership in the I m F was

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Speaker 1: restricted to Western countries. After the global system became truly

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Speaker 1: global for the first time, and that was reflected in

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Speaker 1: the I m F and other international institutions. So today

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Speaker 1: the membership has brought er. It's truly a venue for

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Speaker 1: global considerers. You've lived the joy of being the chief

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Speaker 1: pinata people taking shots at you about the forecasting ability

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Speaker 1: of Ken Rogoff and Olivier Blanchard, and now the good

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Speaker 1: professor from Berkeley, Mariye Hobbs felt enjoys being beaten to

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Speaker 1: death pushed back against the harsh critics of I m

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Speaker 1: F guestimates in the acclaimed Blue, Green, and Red books

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Speaker 1: helped me out here with what they get wrong. Oh

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Speaker 1: but let's let me start by saying what they get right.

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Speaker 1: They I think that the clearly the world economic outlook

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Speaker 1: forecast of the m F remains the principal benchmark forecast

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Speaker 1: for the global economy. Uh. You can like it, disagree

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Speaker 1: with it, but it tends to point to the key

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Speaker 1: issues and discusses them in depth and in a serious way.

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Speaker 1: So it provides a tremendously useful benchmark for discussions. Uh,

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Speaker 1: it would be I think too narrow to say, well,

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Speaker 1: let's do a scorecard and see if they get it

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Speaker 1: right to the decimal points it is. It tries to

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Speaker 1: focus on the critical near term issues, so that's what

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Speaker 1: they get right. Let's put it this way. Let's put

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Speaker 1: it this way. There is a market test. H it

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Speaker 1: is the benchmark global forecast that you'll find everyone taking

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Speaker 1: into account and either agreeing with their disagreement. But if

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Speaker 1: it didn't have that basic quality, it wouldn't be the benchmark.

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Speaker 1: John Let's I was talking with Tom yesterday we were

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Speaker 1: doing a book live and I said to him, is

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Speaker 1: there a theme for this this year's spring meetings? And

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Speaker 1: he says, there's always a theme, but it gets scrapped

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Speaker 1: just a few hours. And I'm at you mean, thinking

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Speaker 1: like Mike Tyson, everyone has a plan until they get

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Speaker 1: punched in the mouth. Is America first going to be

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Speaker 1: the de facto theme of of of the conference this weekend. Well,

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Speaker 1: for sure, there's going to be an awful lot of

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Speaker 1: interest in the in the new Trump administration's participation in

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Speaker 1: the meetings, and especially not just in the I m

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Speaker 1: F meeting itself, but in the G twenty ministerial and

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Speaker 1: to see, uh whether the what, what kind of participation

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Speaker 1: and attitude is projected by the U S authorities. But

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Speaker 1: not just not just after all we just talked about there,

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Speaker 1: they're the live issue of Greece and the current uh

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Speaker 1: let's call them friendly negotiation between the i m F

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Speaker 1: and the European Union over resolving that there's the uncertainty

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Speaker 1: about Europe. All of these will be important, but overriding

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Speaker 1: will be the question of is there the commitment to

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Speaker 1: international cooperation collaboration to sustain the international trade and financial

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Speaker 1: system that has produced such good results for such time

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Speaker 1: but seems to be under under attack or where do

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Speaker 1: we stand in that regard? John Lipsky, thank you so much.

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Speaker 1: With the JOHNS. Hopkins University h Dr Lipsky of course

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Speaker 1: for years at JP morgan Um Economics. He wrote the

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Speaker 1: first chapter to my book years ago David Gurrow with

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Speaker 1: one James Glassman who darkens our door on Jobs Day,

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Speaker 1: and it was smart and they were way out front

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Speaker 1: on the job economy. And this mystery, one of the

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Speaker 1: mysteries here which is alluded to by Madame Legarde, but

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Speaker 1: permeates all of our work. Where's the wage growth? Where's

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Speaker 1: the wage growth? In every country? Where's where's the wage growth?

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Speaker 1: And you wonder if that could be the surprise here

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Speaker 1: wrapped her on of course the French election. It is

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Speaker 1: an appropriate day to speak of fair and balanced David.

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Speaker 1: Foreign Affairs magazine actually is fair and balanced. Not that

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Speaker 1: I would editorialize, uh there, but but they're fair and

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Speaker 1: they're balanced, and in their new issue, which is hard hitting,

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Speaker 1: there are articles in support of where this administration would

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Speaker 1: like to go. That's a good setup, isn't it. Absolutely Rose,

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Speaker 1: the editor of Foreign Afairs, joining us here in our

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Speaker 1: eleven three oh studios in New York. Let me go

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Speaker 1: straight to your note at the beginning of the issue

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Speaker 1: here you talk about the three ways by which you

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Speaker 1: have to disentangle what this administration is doing when it

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Speaker 1: comes to foreign policy. Say you're looking for the normal,

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Speaker 1: the incompetent UH, and the dangerous and you warn't here

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Speaker 1: the damage is already being done. What do you What

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Speaker 1: did you set out to do with this issue in particular, Well,

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Speaker 1: you know, it's very hard to cover the Trump administration

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Speaker 1: in real time because we are still trying to figure

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Speaker 1: out what's going on, and they're so nontransparent and they're

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Speaker 1: so unusual. It's also difficult for magazine like Foreign Affairs

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Speaker 1: for as print edition because we have a long lead time,

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Speaker 1: and so you have to it. What we wanted to

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Speaker 1: do was evaluate with this issue what they're actually been

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Speaker 1: doing and what the consequences are. And what are most

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Speaker 1: of our authors are saying is that they really don't

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Speaker 1: know what they're doing on foreign policy, and the instincts

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Speaker 1: that they brought to the administration to power UH actually

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Speaker 1: are all wrong because they're out to essentially dismantle a

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Speaker 1: global system that actually has been working pretty well. And

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Speaker 1: so UH. Their process of what you're seeing this spring

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Speaker 1: and presumably what you'll continue to see over the next

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Speaker 1: few months as well, is the education of the Trump administration.

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Speaker 1: They've realized it seems already that their initial approach, the

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Speaker 1: bannoned view of the world just isn't gonna fly and

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Speaker 1: doesn't work. Now they're floundering to try to do something else.

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Speaker 1: They've brought in a more moderate people, They've empowered people

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Speaker 1: like Kushner and Cone and Dina Powell and and so forth.

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Speaker 1: But I still don't think they have a new actual

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Speaker 1: governing strategy. And since they don't actually have an ideology

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Speaker 1: or a sense of what they want to achieve, Uh,

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Speaker 1: no one really knows what they're going to do when

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Speaker 1: they haven't staffed up the administration. So we're all essentially

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Speaker 1: watching and waiting for their process of self education to

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Speaker 1: get to the point where we can actually get back

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Speaker 1: to the business of running the country in the world.

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Speaker 1: You've got a guy like Bob Cohen Princeton via Duke

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Speaker 1: and Harvard thinking about the liberal international order. Do you

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Speaker 1: get the sense of that kind of contemplation is happening

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Speaker 1: within the White House? This education is taking place. But

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Speaker 1: does the White House see what it's doing in those

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Speaker 1: sort of broader terms. I think, uh, not really. Uh,

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Speaker 1: there's no evidence that this White House actually understands, at

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Speaker 1: least the White House, the new people who have come

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Speaker 1: in understands what the liberal order is, what the system

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Speaker 1: in the global UH trading networks are and and security networks,

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Speaker 1: what alliances we have, and how to make that operate.

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Speaker 1: There are a lot of professionals in maybe parts of

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Speaker 1: the U. S. Government, but there's this disconnect between the

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Speaker 1: White House. UH. And while the removal of Flynn and

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Speaker 1: those professionals closer to the center of power, UH, it's

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Speaker 1: still not clear that they are actually running things. And

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Speaker 1: at this point, I think everybody is over interpreting UH

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Speaker 1: But it's clear they don't. They have no idea what

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Speaker 1: to do on Syria, they don't know what they want

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Speaker 1: to do on trade, they don't know what they want

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Speaker 1: to do on Russia China, and so we're all waiting

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Speaker 1: until they kind of figure that out. We got a

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Speaker 1: minute and a half left. State the case for the

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Speaker 1: president's policy. You do that in your new issue. But

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Speaker 1: the state of the case of the president's policy is

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Speaker 1: there was a great deal of complacency about how things

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Speaker 1: were going and that was unjustified, and that in effect,

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Speaker 1: sort of like the electoral surprise of the Brexit and

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Speaker 1: then Trump. UH, there was a was a recognition by

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Speaker 1: large sectors of the population in America around the world

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Speaker 1: that the liberal order that had been keeping sort of

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Speaker 1: things basically stable and moving forward was disproportionately benefiting some

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Speaker 1: groups in society and screwing the middle classes the lower

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Speaker 1: classes and UH not paying enough attention, and that those

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Speaker 1: things needed to be remedied. And the best argument so

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Speaker 1: far is that by UH challenging our assumptions, by moving

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Speaker 1: to address some of the problems with globalization, by sending

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Speaker 1: the signal that the unitis can't be pushed around, we

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Speaker 1: are bringing back a certain degree of UH sober American

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Speaker 1: leadership and confronting real problems that have been brushed under

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Speaker 1: the rug. The problem is you need to have a

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Speaker 1: professional competence UH developing that into an actual strategy and

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Speaker 1: putting it in place, and we don't haven't seen that yet,

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Speaker 1: partly because there are no people in the top echelon

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Speaker 1: the administration who actually have good jobs yet. Can I

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Speaker 1: do my usual sales picture. Here's here's the issue, folks.

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Speaker 1: The heritage of Foreign Affairs Magazine is spectacular. Gideon Rose

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Speaker 1: Bloomberg dot com slash lens. Yeah, this is fascinating. Robert

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Speaker 1: Kaplan is not your normal FED president, and critically he's

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Speaker 1: not the normal FED resident of the heritage of the

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Speaker 1: Dallas Fed. It goes back to the Georgia School and

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Speaker 1: the good work of Robert McTeer, among the others. And

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Speaker 1: then they brought in Kaplan of a small school in

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Speaker 1: Boston called Harvard University. Michael McKee picked himself up the floor.

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Speaker 1: Here is our Michael McKee were the president of the

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Speaker 1: Dallas FED. Thank you very much, and we would like

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Speaker 1: to welcome Robert Caplan, the president of the Dallas Federal

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Speaker 1: Reserve Bank, to Bloomberg Radio and TV worldwide. Thanks for

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Speaker 1: joining us this morning and having us down here and

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Speaker 1: in the Big d Welcome to Texas. The consensus forecast

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Speaker 1: for first quarter in GDP one and a half percent,

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Speaker 1: so called hard data, has been soft. The soft data

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Speaker 1: has been strong, the yield curve flattening, tenure coming down

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Speaker 1: a lot, but the financial condition indexes are loosening. So

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Speaker 1: what is really going on? Other is there something happening

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Speaker 1: that we're not picking up. Well, Uh, let me talk.

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Speaker 1: Let me start with the last part on the tenure.

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Speaker 1: My own my own sense is the tenure is is

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Speaker 1: reflecting the fact that expected GDP growth is going to

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Speaker 1: be uh, maybe sluggish as it has been the last

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Speaker 1: several years. And also there's some geopolitical events, particularly what's

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Speaker 1: going on in Europe, potentially other geopolitical events military and

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Speaker 1: otherwise that might be causing people on balance to be

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Speaker 1: in the US dollar be in the tenure. I think

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Speaker 1: in terms of GDP growth for the first quarter, I

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Speaker 1: think the key underpinning to this economy still though for me,

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Speaker 1: is the U S. Consumer household balance sheets in the

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Speaker 1: United States are in relatively good shape, household debt services

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Speaker 1: in very good shape. So the consumers got the ability

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Speaker 1: to spend, and they're almost seventy of the economy. The

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Speaker 1: question is will they spend uh, And I think there's

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Speaker 1: also some uncertainties for them. The healthcare reform discussion may

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Speaker 1: have some chilling effect on some consumers because they're not

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Speaker 1: sure how much their healthcare is going to cost. Maybe

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Speaker 1: some other uncertainties. So my own view is, uh, the

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Speaker 1: the household sector ultimately is going to spend this year

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Speaker 1: because they've got the capacity to, and so I think

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Speaker 1: we'll have a little better GDP growth than first quarter suggests.

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Speaker 1: But I do think because of aging demographics and a

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Speaker 1: number of other headwinds, perspective, GDP growth still is challenging,

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Speaker 1: and I still think that's the big issue for this

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Speaker 1: country to deal with. Well. The markets have started to

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Speaker 1: price out more aggressive FED action. The FED this year

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Speaker 1: sort of pivoted towards a faster pace of moves. Is

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Speaker 1: there anything that tells you that that pivot may have

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Speaker 1: stopped or slowed now? I still I still think uh,

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Speaker 1: uh the uh, the three um, the median of three

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Speaker 1: rate increases for this year we've already done one is

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Speaker 1: still a good baseline. Uh. If the economy develops a

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Speaker 1: little more slowly and we can we can do less

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Speaker 1: than that. If the economy is a little stronger, we

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Speaker 1: can do more than that. But I still think we're

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Speaker 1: making good progress toward full employment. There's still some labor slack,

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Speaker 1: but I think we're approaching full employment. The trickier issue

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Speaker 1: is inflation. The work we're doing here in Dallas and

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Speaker 1: our work on the Dallas trim means suggests the core

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Speaker 1: inflation continues to slowly gradually move up. But I think

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Speaker 1: UH excess capacity globally, particularly in China, UH and and

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Speaker 1: possibly growing because they keep investing in excess capacity in China.

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Speaker 1: And second, technology and technology enabled disruption which is impacting

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Speaker 1: businesses pricing power and also increasingly replacing people with technology.

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Speaker 1: Those are having downward pressure impacts on inflation. So I

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Speaker 1: think the inflation mandate will have to watch a little

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Speaker 1: more closely. But I still think, having said all that,

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Speaker 1: the three is probably a good baseline. But patients means

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Speaker 1: to me when I say we should be grad frual inpatient,

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Speaker 1: it means we we have the ability and the flexibility

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Speaker 1: UH to wait and see how the economy unfolds. Turn

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Speaker 1: over a few more cards, and I would counsel that

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Speaker 1: that's quite appropriate that we exercise that patience basis points

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Speaker 1: to to one the proper setting for rates at this

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Speaker 1: moment or should they be higher, And it's just a

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Speaker 1: process of getting there. Here's how I think about that. UH.

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Speaker 1: For me, I always think about what's the neutral rate.

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Speaker 1: I've talked to you before about what's the rate at

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Speaker 1: which we're neither accommodative or restrictive. If you ask me today,

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Speaker 1: I would say that neutral rate, and it's a theoretical

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Speaker 1: rate and it can change, is closer to two than

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Speaker 1: to three. So for its seventy basis points. Now, that

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Speaker 1: tells me in that framework, we're still accommodative. But uh,

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Speaker 1: we don't have that much room to get to neutral.

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Speaker 1: So we're accommodative, but probably not as a comidative as

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Speaker 1: people think. Uh. And so that's how I look at it.

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Speaker 1: So I still think basis points is appropriate place to be.

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Speaker 1: And I think if we continue to make progress unemployment

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Speaker 1: and inflation, and the economy unfolds around two percent GDP growth,

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Speaker 1: I still think it'll be appropriate to get a little

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Speaker 1: closer to neutral and continue to remove accommodation for years.

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Speaker 1: I would come down here and ask you when is

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Speaker 1: the Fed going to raise interest rates? But the question

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Speaker 1: Wall Street is asking now is when is the Fed

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Speaker 1: going to tell us what their plans for the balance

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Speaker 1: sheet are? How soon do you think we get the

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Speaker 1: program that you want? Uh. My own view has been

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Speaker 1: that we need to get a little further along in

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Speaker 1: so called normalization of rates before we begin to let

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Speaker 1: the balance sheet run off. For me, I think that

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Speaker 1: could be as soon as later this year or maybe

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Speaker 1: early next year, we should begin the process of letting

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Speaker 1: the balance sheet roll off. That means not selling securities.

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Speaker 1: It means letting our treasury securities and mortgage backed securities

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Speaker 1: run off as they mature. And I still believe we

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Speaker 1: should do that gradually, patiently. But I think that process

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Speaker 1: again could begin as early as at the end of

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Speaker 1: this year, and I think that's appropriate. Yes, I think

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Speaker 1: it should be phased in. I think it should be gradual,

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Speaker 1: and the objective to me ought to be to do

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Speaker 1: it in a way that's gradual enough that we don't

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Speaker 1: have a material impact on either the treasury market or

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Speaker 1: the mortgage backed securities markets. A lot of decisions have

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Speaker 1: to be made on the operational aspects of this. When

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Speaker 1: do When can we expect an announcement on that? Uh?

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Speaker 1: I think similar to that time frame, I think I

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Speaker 1: think it's appropriate at least a couple of three months

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Speaker 1: before we begin that we make some type of announcement

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Speaker 1: as to the plan. And so I don't want to

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Speaker 1: prejudge what the exact tim into that will be. But again,

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Speaker 1: if I think we're going to start as soon as

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Speaker 1: later this year early next year. I think we should

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Speaker 1: make some announcement at least a couple of months in

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Speaker 1: advance of that. Now, the balance sheet question is how

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Speaker 1: big should it be at the end if you're going

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Speaker 1: to determine how you're going to taper, Do you have

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Speaker 1: an idea of what you'd like to see? Well, I

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Speaker 1: don't think we have an exact fix on that, because

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Speaker 1: that we've got much more global liquidity, we have a

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Speaker 1: different financial regime, capital regime. UH, it's gonna be bigger

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Speaker 1: than the eight billion we used to run, but I

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Speaker 1: think still the balance sheet could be substantially below the

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Speaker 1: four and a half trillion we are today, and so

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Speaker 1: I think we'll we'll it'll be lower meaningfully than where

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Speaker 1: it is, but it's going to be higher than it

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Speaker 1: was eight years ago. Do you want to keep substantial

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Speaker 1: access reserves in the system to be able to continue

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Speaker 1: the repo and ioe er system of managing five I

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Speaker 1: think for the time being, I think we should. But

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Speaker 1: I also think that's something that would be healthy for

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Speaker 1: us to visit and revisit as this process unfolds. UH.

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Speaker 1: Fiscal policy, did you include any stimulus in your forecast

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Speaker 1: for this year that you're having to back off on. Now,

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Speaker 1: I've said consistently since this since the election, I'm not

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Speaker 1: explicitly factoring in any fiscal or structure reforms into my forecast.

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Speaker 1: And the reason why is some of the things being

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Speaker 1: discussed I think are positive. UH. Regulatory review if it's

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Speaker 1: done thoughtfully, infrastructure spending, if it's done appropriately. UH. Tax

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Speaker 1: reform underlining the word reform, I think could be helpful,

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Speaker 1: But I also think some of the policies being discussed

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Speaker 1: could be negative, UH, depending on healthcare, how it's actually

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Speaker 1: dealt with, how we deal with immigration. UH. I've said

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Speaker 1: consistently the biggest challenge we face in this country is

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Speaker 1: slowing workforce growth. We need policies that either help workers

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Speaker 1: get retrained and discourage workers back into the workforce, But

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Speaker 1: at some point we're gonna need policies that probably take

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Speaker 1: a more constructive look at immigration if going to grow

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Speaker 1: GDP adequately. And so I think I don't know which

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Speaker 1: of the positive or may challenging policies are going to

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Speaker 1: get implemented, and so my I think the best approach

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Speaker 1: is to do what we've done, which is make a

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Speaker 1: forecast based on things as they are, but will continue

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Speaker 1: to monitor and adapt as policies are enacted. Speaking of immigration,

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Speaker 1: you're on the border, you have the greatest interaction with Mexico.

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Speaker 1: Have you seen a change in the economic relationship since

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Speaker 1: Donald Trump came to off Yeah, yes, I've've seen a

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Speaker 1: lot of concern. I spent a lot of time, as

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Speaker 1: you know, in Mexico and with the head of the

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Speaker 1: Central Bank and mster Finance, and my biggest concern would

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Speaker 1: be I believe NAFTA will get renegotiated, and I'll stay

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Speaker 1: away from the details, but I think I'm confident about

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Speaker 1: that because a lot of those concessions were already made

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Speaker 1: as part of t p p UM. I think, uh,

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Speaker 1: there are other parts of the rhetoric that are having

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Speaker 1: inflammatory effect on the mood, the public mood in Mexico.

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Speaker 1: There's gonna be a presidential election in July of eighteen,

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Speaker 1: and I think the United States benefits enormously economically and

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Speaker 1: geopolitically from a good relationship and a constructive relationship with Mexico.

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Speaker 1: And so I want to I want to be vigilant

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Speaker 1: that the rhetoric here does not create a situation where

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Speaker 1: uh it makes it much more likely that the person

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Speaker 1: gets elected president of Mexico is going to be more

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Speaker 1: negative to the United States that that may turn out

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Speaker 1: to be the way to get elected in Mexico, and

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Speaker 1: I don't think that's uh likely to be in the

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Speaker 1: interests either economically or geopolitically of the United States. Thanks

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Speaker 1: for listening to the Bloomberg Surveillas podcast. Subscribe and listen

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Speaker 1: to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform

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00:28:00,520 --> 00:28:04,080
Speaker 1: you prefer. I'm on Twitter at Tom Keene. David Gura

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Speaker 1: is at David Gura. Before the podcast, you can always

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Speaker 1: catch us worldwide. I'm Bloomberg Radio, brought you by Bank

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Speaker 1: of America Mary Lynch. Dedicated to bringing our clients insights

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00:28:26,840 --> 00:28:30,479
Speaker 1: and solutions to meet the challenges of a transforming world.

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