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Speaker 1: Member s I p C. Welcome to the Bloomberg Surveillance Podcast.
Speaker 1: I'm Tom Keene with David Gura. Daily we bring you
Speaker 1: insight from the best of economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com,
Speaker 1: and of course, on the Bloomberg for Just days away
Speaker 1: from the first round of elections in France and tomorrow
Speaker 1: the World Bank and the International Monetary Fund begin their
Speaker 1: Spring meetings in Washington. Tumillby there with Francine Laqua and
Speaker 1: an incredible lineup of guests, and our coverage begins this
Speaker 1: morning with John Lipsky, former first Deputy Managing Director of
Speaker 1: the IMF. He was acting Managing director for time as well.
Speaker 1: He's now that Peter G. Peterson Distinguished Scholar at the
Speaker 1: Henry Kissinger Center for Global Affairs in the School of
Speaker 1: Advanced International Studies at the Johns Hopkins University in Washington,
Speaker 1: and John Lipsky joins US now from our Bloomberg nine
Speaker 1: one one studios in Washington. Great to have you with
Speaker 1: us again, John, Thanks very much for being here this morning.
Speaker 1: Thanks happy to Let's start with the world economic outlook
Speaker 1: we got this week. I imagine you've poured over it,
Speaker 1: and I wonder sort of what you've what you've what
Speaker 1: you've seen there, what you've drawn from it, what that's
Speaker 1: going to sort of what the bedrock is going to
Speaker 1: be there for the meetings that that start tomorrow. Well, indeed,
Speaker 1: the UH much has been made of the fact that
Speaker 1: the i m F actually upgraded their growth forecast for
Speaker 1: two thousand seventeen two thousand and eighteen. It's been a
Speaker 1: long time since they've adjusted their forecast upwards, but the
Speaker 1: adjustment is tiny point one percent, and in fact the
Speaker 1: trend remains very sluggish growth, especially in the advanced economies.
Speaker 1: Their forecasting growth of under two percent when the long
Speaker 1: term average for those for the advanced economies has been
Speaker 1: nearly three percent. So from that longer term perspective, UH
Speaker 1: this is not such a happy picture. And for the
Speaker 1: emerging economies they see growth still only at about the
Speaker 1: at about the long term average about four and a
Speaker 1: half percent. But before the crisis hit in two thousand seven,
Speaker 1: those countries were growing by seven to eight percent. So
Speaker 1: it is remains a rather modest picture for growth, and
Speaker 1: the Fund continues to say risks are tilted to the
Speaker 1: downside and points out some specific things that need to
Speaker 1: be done. So even though the mood music is is
Speaker 1: a little more upbeat than previously, uh, this is not
Speaker 1: as good as it should be or could be. Yeah,
Speaker 1: your former colleague Christine Leguard telling our friends in lack
Speaker 1: With just a couple of days ago that spring is
Speaker 1: in the air for for the global economy. So we
Speaker 1: can use either metaphor the mood music or or or
Speaker 1: the the spring being in the air. Let me ask
Speaker 1: you about the degree to which the French election is
Speaker 1: going to distract from the goings on in Washington this weekend,
Speaker 1: that being a major risk event. Well, indeed, it's a
Speaker 1: mainly because of what it might suggest the atmosphere around
Speaker 1: the European Union is going to be for the coming months.
Speaker 1: After all, we also have a German election coming in
Speaker 1: the in the fall, we're going to start the negotiations
Speaker 1: over so called Brexit, the UK's departure from the European Union.
Speaker 1: So this French election could have a fair amount to
Speaker 1: do with the the atmosphere surrounding that. And when we
Speaker 1: look at the European growth figures, they remain better than
Speaker 1: they have been, still subdued. The I m F says,
Speaker 1: the European banking system still needs attention. So Europe will
Speaker 1: continue to be the focus and the French election will
Speaker 1: provide a kind of weather vane for the where the
Speaker 1: wind is blowing. I want to ask you about multi
Speaker 1: ladderalism and how it relates to to this current administration.
Speaker 1: You have the IMF meeting this weekend with with the
Speaker 1: World Banking Concert with the World Bank. Who's going to
Speaker 1: make the case for multi ladderalism and from multi ladd institutions?
Speaker 1: Is this the venue to do it? I know that
Speaker 1: Christine Legard will be on stage with Steven manuch In
Speaker 1: the Treasury Secretary. They'll do an interview over the course
Speaker 1: of of the meetings. Is this the forum to make
Speaker 1: that case to the US presidential administration? Oh? Absolutely, and
Speaker 1: I'm sure this will be a message that we're repeated
Speaker 1: many many times. Uh. The I m F is, of
Speaker 1: course trying to lead the way in representing UM. Let's
Speaker 1: call it a neutral technical voice saying that in fact,
Speaker 1: international collaboration has a real substance to it and produces
Speaker 1: better as the holds out the the promise of better
Speaker 1: economic results. But remember the Group of twenty UH Foreign
Speaker 1: Finance ministers are meeting tonight and tomorrow and later this UH.
Speaker 1: This year, the the G twenty leaders are going to
Speaker 1: meet in Germany, and that will be a really critical
Speaker 1: moment to see how the US intends to to participate
Speaker 1: in the G twenty. Will it take a leadership role
Speaker 1: or an adversarial role or essentially ignore the whole organization
Speaker 1: which has been the key venue for the large economies
Speaker 1: to collaborate on economic programs. Good morning everyone, David Gerr
Speaker 1: and Tom keenan New York in our Washington Studios FM
Speaker 1: Washington Studios with the Johns Hopkins University. John Lipsky, of course,
Speaker 1: his service to Solomon Brothers and JP Morgan in recent years,
Speaker 1: that's a joke. And then his work at the International
Speaker 1: Monetary Fund. John, you had two tours of duty at
Speaker 1: the i m F. I believe as a young lad
Speaker 1: minted out of Stanford, you darken the door. How is
Speaker 1: the i m F different today for when you first
Speaker 1: walked in the door with Nut Wixel and John Madred
Speaker 1: Kine's well, dramatically different time. Because remember, even though the
Speaker 1: i m F and the Breton Wood system were designed
Speaker 1: to be international, when I first walked in the door
Speaker 1: in four UH, the world was still divided by the
Speaker 1: Cold War, and membership in the I m F was
Speaker 1: restricted to Western countries. After the global system became truly
Speaker 1: global for the first time, and that was reflected in
Speaker 1: the I m F and other international institutions. So today
Speaker 1: the membership has brought er. It's truly a venue for
Speaker 1: global considerers. You've lived the joy of being the chief
Speaker 1: pinata people taking shots at you about the forecasting ability
Speaker 1: of Ken Rogoff and Olivier Blanchard, and now the good
Speaker 1: professor from Berkeley, Mariye Hobbs felt enjoys being beaten to
Speaker 1: death pushed back against the harsh critics of I m
Speaker 1: F guestimates in the acclaimed Blue, Green, and Red books
Speaker 1: helped me out here with what they get wrong. Oh
Speaker 1: but let's let me start by saying what they get right.
Speaker 1: They I think that the clearly the world economic outlook
Speaker 1: forecast of the m F remains the principal benchmark forecast
Speaker 1: for the global economy. Uh. You can like it, disagree
Speaker 1: with it, but it tends to point to the key
Speaker 1: issues and discusses them in depth and in a serious way.
Speaker 1: So it provides a tremendously useful benchmark for discussions. Uh,
Speaker 1: it would be I think too narrow to say, well,
Speaker 1: let's do a scorecard and see if they get it
Speaker 1: right to the decimal points it is. It tries to
Speaker 1: focus on the critical near term issues, so that's what
Speaker 1: they get right. Let's put it this way. Let's put
Speaker 1: it this way. There is a market test. H it
Speaker 1: is the benchmark global forecast that you'll find everyone taking
Speaker 1: into account and either agreeing with their disagreement. But if
Speaker 1: it didn't have that basic quality, it wouldn't be the benchmark.
Speaker 1: John Let's I was talking with Tom yesterday we were
Speaker 1: doing a book live and I said to him, is
Speaker 1: there a theme for this this year's spring meetings? And
Speaker 1: he says, there's always a theme, but it gets scrapped
Speaker 1: just a few hours. And I'm at you mean, thinking
Speaker 1: like Mike Tyson, everyone has a plan until they get
Speaker 1: punched in the mouth. Is America first going to be
Speaker 1: the de facto theme of of of the conference this weekend. Well,
Speaker 1: for sure, there's going to be an awful lot of
Speaker 1: interest in the in the new Trump administration's participation in
Speaker 1: the meetings, and especially not just in the I m
Speaker 1: F meeting itself, but in the G twenty ministerial and
Speaker 1: to see, uh whether the what, what kind of participation
Speaker 1: and attitude is projected by the U S authorities. But
Speaker 1: not just not just after all we just talked about there,
Speaker 1: they're the live issue of Greece and the current uh
Speaker 1: let's call them friendly negotiation between the i m F
Speaker 1: and the European Union over resolving that there's the uncertainty
Speaker 1: about Europe. All of these will be important, but overriding
Speaker 1: will be the question of is there the commitment to
Speaker 1: international cooperation collaboration to sustain the international trade and financial
Speaker 1: system that has produced such good results for such time
Speaker 1: but seems to be under under attack or where do
Speaker 1: we stand in that regard? John Lipsky, thank you so much.
Speaker 1: With the JOHNS. Hopkins University h Dr Lipsky of course
Speaker 1: for years at JP morgan Um Economics. He wrote the
Speaker 1: first chapter to my book years ago David Gurrow with
Speaker 1: one James Glassman who darkens our door on Jobs Day,
Speaker 1: and it was smart and they were way out front
Speaker 1: on the job economy. And this mystery, one of the
Speaker 1: mysteries here which is alluded to by Madame Legarde, but
Speaker 1: permeates all of our work. Where's the wage growth? Where's
Speaker 1: the wage growth? In every country? Where's where's the wage growth?
Speaker 1: And you wonder if that could be the surprise here
Speaker 1: wrapped her on of course the French election. It is
Speaker 1: an appropriate day to speak of fair and balanced David.
Speaker 1: Foreign Affairs magazine actually is fair and balanced. Not that
Speaker 1: I would editorialize, uh there, but but they're fair and
Speaker 1: they're balanced, and in their new issue, which is hard hitting,
Speaker 1: there are articles in support of where this administration would
Speaker 1: like to go. That's a good setup, isn't it. Absolutely Rose,
Speaker 1: the editor of Foreign Afairs, joining us here in our
Speaker 1: eleven three oh studios in New York. Let me go
Speaker 1: straight to your note at the beginning of the issue
Speaker 1: here you talk about the three ways by which you
Speaker 1: have to disentangle what this administration is doing when it
Speaker 1: comes to foreign policy. Say you're looking for the normal,
Speaker 1: the incompetent UH, and the dangerous and you warn't here
Speaker 1: the damage is already being done. What do you What
Speaker 1: did you set out to do with this issue in particular, Well,
Speaker 1: you know, it's very hard to cover the Trump administration
Speaker 1: in real time because we are still trying to figure
Speaker 1: out what's going on, and they're so nontransparent and they're
Speaker 1: so unusual. It's also difficult for magazine like Foreign Affairs
Speaker 1: for as print edition because we have a long lead time,
Speaker 1: and so you have to it. What we wanted to
Speaker 1: do was evaluate with this issue what they're actually been
Speaker 1: doing and what the consequences are. And what are most
Speaker 1: of our authors are saying is that they really don't
Speaker 1: know what they're doing on foreign policy, and the instincts
Speaker 1: that they brought to the administration to power UH actually
Speaker 1: are all wrong because they're out to essentially dismantle a
Speaker 1: global system that actually has been working pretty well. And
Speaker 1: so UH. Their process of what you're seeing this spring
Speaker 1: and presumably what you'll continue to see over the next
Speaker 1: few months as well, is the education of the Trump administration.
Speaker 1: They've realized it seems already that their initial approach, the
Speaker 1: bannoned view of the world just isn't gonna fly and
Speaker 1: doesn't work. Now they're floundering to try to do something else.
Speaker 1: They've brought in a more moderate people, They've empowered people
Speaker 1: like Kushner and Cone and Dina Powell and and so forth.
Speaker 1: But I still don't think they have a new actual
Speaker 1: governing strategy. And since they don't actually have an ideology
Speaker 1: or a sense of what they want to achieve, Uh,
Speaker 1: no one really knows what they're going to do when
Speaker 1: they haven't staffed up the administration. So we're all essentially
Speaker 1: watching and waiting for their process of self education to
Speaker 1: get to the point where we can actually get back
Speaker 1: to the business of running the country in the world.
Speaker 1: You've got a guy like Bob Cohen Princeton via Duke
Speaker 1: and Harvard thinking about the liberal international order. Do you
Speaker 1: get the sense of that kind of contemplation is happening
Speaker 1: within the White House? This education is taking place. But
Speaker 1: does the White House see what it's doing in those
Speaker 1: sort of broader terms. I think, uh, not really. Uh,
Speaker 1: there's no evidence that this White House actually understands, at
Speaker 1: least the White House, the new people who have come
Speaker 1: in understands what the liberal order is, what the system
Speaker 1: in the global UH trading networks are and and security networks,
Speaker 1: what alliances we have, and how to make that operate.
Speaker 1: There are a lot of professionals in maybe parts of
Speaker 1: the U. S. Government, but there's this disconnect between the
Speaker 1: professional staff of the government, all the technocrats, and the
Speaker 1: White House. UH. And while the removal of Flynn and
Speaker 1: the replacement with McMaster was an excellent sign that brings
Speaker 1: those professionals closer to the center of power, UH, it's
Speaker 1: still not clear that they are actually running things. And
Speaker 1: at this point, I think everybody is over interpreting UH
Speaker 1: really random decisions and actions and words by the administration
Speaker 1: as if they actually are reflective of some larger strategy.
Speaker 1: But it's clear they don't. They have no idea what
Speaker 1: to do on Syria, they don't know what they want
Speaker 1: to do on trade, they don't know what they want
Speaker 1: to do on Russia China, and so we're all waiting
Speaker 1: until they kind of figure that out. We got a
Speaker 1: minute and a half left. State the case for the
Speaker 1: president's policy. You do that in your new issue. But
Speaker 1: the state of the case of the president's policy is
Speaker 1: there was a great deal of complacency about how things
Speaker 1: were going and that was unjustified, and that in effect,
Speaker 1: sort of like the electoral surprise of the Brexit and
Speaker 1: then Trump. UH, there was a was a recognition by
Speaker 1: large sectors of the population in America around the world
Speaker 1: that the liberal order that had been keeping sort of
Speaker 1: things basically stable and moving forward was disproportionately benefiting some
Speaker 1: groups in society and screwing the middle classes the lower
Speaker 1: classes and UH not paying enough attention, and that those
Speaker 1: things needed to be remedied. And the best argument so
Speaker 1: far is that by UH challenging our assumptions, by moving
Speaker 1: to address some of the problems with globalization, by sending
Speaker 1: the signal that the unitis can't be pushed around, we
Speaker 1: are bringing back a certain degree of UH sober American
Speaker 1: leadership and confronting real problems that have been brushed under
Speaker 1: the rug. The problem is you need to have a
Speaker 1: professional competence UH developing that into an actual strategy and
Speaker 1: putting it in place, and we don't haven't seen that yet,
Speaker 1: partly because there are no people in the top echelon
Speaker 1: the administration who actually have good jobs yet. Can I
Speaker 1: do my usual sales picture. Here's here's the issue, folks.
Speaker 1: The heritage of Foreign Affairs Magazine is spectacular. Gideon Rose
Speaker 1: and his team have kicked a new life into it.
Speaker 1: It is fabulous article to article, in short essay to
Speaker 1: short essay. Their bonus round have it in large friendly
Speaker 1: funds and my eyes. Thank you, Gideon, Foreign Affairs Magazine.
Speaker 1: It's the price of a Martini. Get it brought you
Speaker 1: by Bank of America. Mary Lynch Dedicated to bringing our
Speaker 1: clients insights and solutions to meet the challenges of a
Speaker 1: transforming world. That's the power of global Connections. Mary Lynch,
Speaker 1: Pierce Federan Smith Incorporated, Member s I p C. There's
Speaker 1: something new from Bloomberg. It's called Lens. Starting right now,
Speaker 1: you can use the Bloomberg Io s app off your
Speaker 1: iPhone or iPad, or our new Google Chrome extension to
Speaker 1: read any news story on any website, scan it, and
Speaker 1: then instantly see the news stories relevant market data from Bloomberg.
Speaker 1: In addition, see all the bios of the key people
Speaker 1: mentioned in the story. It's called Lens, and it is
Speaker 1: just that, a lens into the people and the data
Speaker 1: of any story you may be reading. Again, Lens brings
Speaker 1: you the power of Bloomberg's news and data download or
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Speaker 1: the Chrome Store to try lens out. Learn more at
Speaker 1: Bloomberg dot com slash lens. Yeah, this is fascinating. Robert
Speaker 1: Kaplan is not your normal FED president, and critically he's
Speaker 1: not the normal FED resident of the heritage of the
Speaker 1: Dallas Fed. It goes back to the Georgia School and
Speaker 1: the good work of Robert McTeer, among the others. And
Speaker 1: then they brought in Kaplan of a small school in
Speaker 1: Boston called Harvard University. Michael McKee picked himself up the floor.
Speaker 1: Here is our Michael McKee were the president of the
Speaker 1: Dallas FED. Thank you very much, and we would like
Speaker 1: to welcome Robert Caplan, the president of the Dallas Federal
Speaker 1: Reserve Bank, to Bloomberg Radio and TV worldwide. Thanks for
Speaker 1: joining us this morning and having us down here and
Speaker 1: in the Big d Welcome to Texas. The consensus forecast
Speaker 1: for first quarter in GDP one and a half percent,
Speaker 1: so called hard data, has been soft. The soft data
Speaker 1: has been strong, the yield curve flattening, tenure coming down
Speaker 1: a lot, but the financial condition indexes are loosening. So
Speaker 1: what is really going on? Other is there something happening
Speaker 1: that we're not picking up. Well, Uh, let me talk.
Speaker 1: Let me start with the last part on the tenure.
Speaker 1: My own my own sense is the tenure is is
Speaker 1: reflecting the fact that expected GDP growth is going to
Speaker 1: be uh, maybe sluggish as it has been the last
Speaker 1: several years. And also there's some geopolitical events, particularly what's
Speaker 1: going on in Europe, potentially other geopolitical events military and
Speaker 1: otherwise that might be causing people on balance to be
Speaker 1: in the US dollar be in the tenure. I think
Speaker 1: in terms of GDP growth for the first quarter, I
Speaker 1: think the key underpinning to this economy still though for me,
Speaker 1: is the U S. Consumer household balance sheets in the
Speaker 1: United States are in relatively good shape, household debt services
Speaker 1: in very good shape. So the consumers got the ability
Speaker 1: to spend, and they're almost seventy of the economy. The
Speaker 1: question is will they spend uh, And I think there's
Speaker 1: also some uncertainties for them. The healthcare reform discussion may
Speaker 1: have some chilling effect on some consumers because they're not
Speaker 1: sure how much their healthcare is going to cost. Maybe
Speaker 1: some other uncertainties. So my own view is, uh, the
Speaker 1: the household sector ultimately is going to spend this year
Speaker 1: because they've got the capacity to, and so I think
Speaker 1: we'll have a little better GDP growth than first quarter suggests.
Speaker 1: But I do think because of aging demographics and a
Speaker 1: number of other headwinds, perspective, GDP growth still is challenging,
Speaker 1: and I still think that's the big issue for this
Speaker 1: country to deal with. Well. The markets have started to
Speaker 1: price out more aggressive FED action. The FED this year
Speaker 1: sort of pivoted towards a faster pace of moves. Is
Speaker 1: there anything that tells you that that pivot may have
Speaker 1: stopped or slowed now? I still I still think uh,
Speaker 1: uh the uh, the three um, the median of three
Speaker 1: rate increases for this year we've already done one is
Speaker 1: still a good baseline. Uh. If the economy develops a
Speaker 1: little more slowly and we can we can do less
Speaker 1: than that. If the economy is a little stronger, we
Speaker 1: can do more than that. But I still think we're
Speaker 1: making good progress toward full employment. There's still some labor slack,
Speaker 1: but I think we're approaching full employment. The trickier issue
Speaker 1: is inflation. The work we're doing here in Dallas and
Speaker 1: our work on the Dallas trim means suggests the core
Speaker 1: inflation continues to slowly gradually move up. But I think
Speaker 1: UH excess capacity globally, particularly in China, UH and and
Speaker 1: possibly growing because they keep investing in excess capacity in China.
Speaker 1: And second, technology and technology enabled disruption which is impacting
Speaker 1: businesses pricing power and also increasingly replacing people with technology.
Speaker 1: Those are having downward pressure impacts on inflation. So I
Speaker 1: think the inflation mandate will have to watch a little
Speaker 1: more closely. But I still think, having said all that,
Speaker 1: the three is probably a good baseline. But patients means
Speaker 1: to me when I say we should be grad frual inpatient,
Speaker 1: it means we we have the ability and the flexibility
Speaker 1: UH to wait and see how the economy unfolds. Turn
Speaker 1: over a few more cards, and I would counsel that
Speaker 1: that's quite appropriate that we exercise that patience basis points
Speaker 1: to to one the proper setting for rates at this
Speaker 1: moment or should they be higher, And it's just a
Speaker 1: process of getting there. Here's how I think about that. UH.
Speaker 1: For me, I always think about what's the neutral rate.
Speaker 1: I've talked to you before about what's the rate at
Speaker 1: which we're neither accommodative or restrictive. If you ask me today,
Speaker 1: I would say that neutral rate, and it's a theoretical
Speaker 1: rate and it can change, is closer to two than
Speaker 1: to three. So for its seventy basis points. Now, that
Speaker 1: tells me in that framework, we're still accommodative. But uh,
Speaker 1: we don't have that much room to get to neutral.
Speaker 1: So we're accommodative, but probably not as a comidative as
Speaker 1: people think. Uh. And so that's how I look at it.
Speaker 1: So I still think basis points is appropriate place to be.
Speaker 1: And I think if we continue to make progress unemployment
Speaker 1: and inflation, and the economy unfolds around two percent GDP growth,
Speaker 1: I still think it'll be appropriate to get a little
Speaker 1: closer to neutral and continue to remove accommodation for years.
Speaker 1: I would come down here and ask you when is
Speaker 1: the Fed going to raise interest rates? But the question
Speaker 1: Wall Street is asking now is when is the Fed
Speaker 1: going to tell us what their plans for the balance
Speaker 1: sheet are? How soon do you think we get the
Speaker 1: program that you want? Uh. My own view has been
Speaker 1: that we need to get a little further along in
Speaker 1: so called normalization of rates before we begin to let
Speaker 1: the balance sheet run off. For me, I think that
Speaker 1: could be as soon as later this year or maybe
Speaker 1: early next year, we should begin the process of letting
Speaker 1: the balance sheet roll off. That means not selling securities.
Speaker 1: It means letting our treasury securities and mortgage backed securities
Speaker 1: run off as they mature. And I still believe we
Speaker 1: should do that gradually, patiently. But I think that process
Speaker 1: again could begin as early as at the end of
Speaker 1: this year, and I think that's appropriate. Yes, I think
Speaker 1: it should be phased in. I think it should be gradual,
Speaker 1: and the objective to me ought to be to do
Speaker 1: it in a way that's gradual enough that we don't
Speaker 1: have a material impact on either the treasury market or
Speaker 1: the mortgage backed securities markets. A lot of decisions have
Speaker 1: to be made on the operational aspects of this. When
Speaker 1: do When can we expect an announcement on that? Uh?
Speaker 1: I think similar to that time frame, I think I
Speaker 1: think it's appropriate at least a couple of three months
Speaker 1: before we begin that we make some type of announcement
Speaker 1: as to the plan. And so I don't want to
Speaker 1: prejudge what the exact tim into that will be. But again,
Speaker 1: if I think we're going to start as soon as
Speaker 1: later this year early next year. I think we should
Speaker 1: make some announcement at least a couple of months in
Speaker 1: advance of that. Now, the balance sheet question is how
Speaker 1: big should it be at the end if you're going
Speaker 1: to determine how you're going to taper, Do you have
Speaker 1: an idea of what you'd like to see? Well, I
Speaker 1: don't think we have an exact fix on that, because
Speaker 1: that we've got much more global liquidity, we have a
Speaker 1: different financial regime, capital regime. UH, it's gonna be bigger
Speaker 1: than the eight billion we used to run, but I
Speaker 1: think still the balance sheet could be substantially below the
Speaker 1: four and a half trillion we are today, and so
Speaker 1: I think we'll we'll it'll be lower meaningfully than where
Speaker 1: it is, but it's going to be higher than it
Speaker 1: was eight years ago. Do you want to keep substantial
Speaker 1: access reserves in the system to be able to continue
Speaker 1: the repo and ioe er system of managing five I
Speaker 1: think for the time being, I think we should. But
Speaker 1: I also think that's something that would be healthy for
Speaker 1: us to visit and revisit as this process unfolds. UH.
Speaker 1: Fiscal policy, did you include any stimulus in your forecast
Speaker 1: for this year that you're having to back off on. Now,
Speaker 1: I've said consistently since this since the election, I'm not
Speaker 1: explicitly factoring in any fiscal or structure reforms into my forecast.
Speaker 1: And the reason why is some of the things being
Speaker 1: discussed I think are positive. UH. Regulatory review if it's
Speaker 1: done thoughtfully, infrastructure spending, if it's done appropriately. UH. Tax
Speaker 1: reform underlining the word reform, I think could be helpful,
Speaker 1: But I also think some of the policies being discussed
Speaker 1: could be negative, UH, depending on healthcare, how it's actually
Speaker 1: dealt with, how we deal with immigration. UH. I've said
Speaker 1: consistently the biggest challenge we face in this country is
Speaker 1: slowing workforce growth. We need policies that either help workers
Speaker 1: get retrained and discourage workers back into the workforce, But
Speaker 1: at some point we're gonna need policies that probably take
Speaker 1: a more constructive look at immigration if going to grow
Speaker 1: GDP adequately. And so I think I don't know which
Speaker 1: of the positive or may challenging policies are going to
Speaker 1: get implemented, and so my I think the best approach
Speaker 1: is to do what we've done, which is make a
Speaker 1: forecast based on things as they are, but will continue
Speaker 1: to monitor and adapt as policies are enacted. Speaking of immigration,
Speaker 1: you're on the border, you have the greatest interaction with Mexico.
Speaker 1: Have you seen a change in the economic relationship since
Speaker 1: Donald Trump came to off Yeah, yes, I've've seen a
Speaker 1: lot of concern. I spent a lot of time, as
Speaker 1: you know, in Mexico and with the head of the
Speaker 1: Central Bank and mster Finance, and my biggest concern would
Speaker 1: be I believe NAFTA will get renegotiated, and I'll stay
Speaker 1: away from the details, but I think I'm confident about
Speaker 1: that because a lot of those concessions were already made
Speaker 1: as part of t p p UM. I think, uh,
Speaker 1: there are other parts of the rhetoric that are having
Speaker 1: inflammatory effect on the mood, the public mood in Mexico.
Speaker 1: There's gonna be a presidential election in July of eighteen,
Speaker 1: and I think the United States benefits enormously economically and
Speaker 1: geopolitically from a good relationship and a constructive relationship with Mexico.
Speaker 1: And so I want to I want to be vigilant
Speaker 1: that the rhetoric here does not create a situation where
Speaker 1: uh it makes it much more likely that the person
Speaker 1: gets elected president of Mexico is going to be more
Speaker 1: negative to the United States that that may turn out
Speaker 1: to be the way to get elected in Mexico, and
Speaker 1: I don't think that's uh likely to be in the
Speaker 1: interests either economically or geopolitically of the United States. Thanks
Speaker 1: for listening to the Bloomberg Surveillas podcast. Subscribe and listen
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Speaker 1: you prefer. I'm on Twitter at Tom Keene. David Gura
Speaker 1: is at David Gura. Before the podcast, you can always
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