1 00:00:09,840 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,400 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. We're 5 00:00:27,440 --> 00:00:29,760 Speaker 1: pricing at extrets, We're pricing out a recession. I don't 6 00:00:29,760 --> 00:00:31,880 Speaker 1: think we're pricing in an acceleration of growth, and that 7 00:00:31,920 --> 00:00:35,000 Speaker 1: distinction maybe explains that huge sentiment shifts over the last 8 00:00:35,040 --> 00:00:36,560 Speaker 1: couple of weeks. I want to bring it down on 9 00:00:36,640 --> 00:00:39,040 Speaker 1: BMP Para, our chief US economist and head of Markets 10 00:00:39,080 --> 00:00:42,120 Speaker 1: three sixty North America. Good morning, tit down morning. Let's 11 00:00:42,159 --> 00:00:44,519 Speaker 1: talk about it, shall we. We've had a massive sentiment 12 00:00:44,600 --> 00:00:47,120 Speaker 1: shift in global markets over the last couple of months. 13 00:00:47,120 --> 00:00:50,440 Speaker 1: We've had the bears over the weekend finally starting to capitulate. 14 00:00:50,440 --> 00:00:53,080 Speaker 1: What's your message at the moment. So I don't think 15 00:00:53,120 --> 00:00:56,600 Speaker 1: we're out of the woods here here. Um As as 16 00:00:56,640 --> 00:01:00,760 Speaker 1: Tom just mentioned, both the various fair now casts on 17 00:01:00,760 --> 00:01:04,160 Speaker 1: our own now casts are suggesting that this quarter is 18 00:01:04,160 --> 00:01:05,920 Speaker 1: going to shape up to be a pretty ugly one. 19 00:01:06,440 --> 00:01:09,959 Speaker 1: Uh And it's my view that the weakness that we're 20 00:01:09,959 --> 00:01:11,920 Speaker 1: going to see this quarter is actually going to spill 21 00:01:11,959 --> 00:01:13,959 Speaker 1: over into next How does it spill over? Because that's 22 00:01:14,000 --> 00:01:16,080 Speaker 1: the distinction of the bulls and the bears here on 23 00:01:16,160 --> 00:01:19,640 Speaker 1: GDP growth is the spillover effect? How does it spill 24 00:01:19,680 --> 00:01:22,679 Speaker 1: over into the next quarter? Um? It Basically the consumer 25 00:01:23,040 --> 00:01:25,880 Speaker 1: um is, while it's going to be resilient, it cannot 26 00:01:26,400 --> 00:01:31,720 Speaker 1: remain immune from this big a synchronized global manufacturing downturn. 27 00:01:31,840 --> 00:01:34,680 Speaker 1: We saw this back in two thousand fifteen sixteen, where 28 00:01:34,720 --> 00:01:37,720 Speaker 1: we saw two quarters of very subpar growth. I think 29 00:01:37,720 --> 00:01:40,600 Speaker 1: we're going to see it again. What about export import dynamics? 30 00:01:40,720 --> 00:01:45,600 Speaker 1: Um So, Yeah, with x US global growth the weakest 31 00:01:45,680 --> 00:01:48,640 Speaker 1: we have seen in five years. Uh um, we think 32 00:01:48,680 --> 00:01:50,640 Speaker 1: that exports are going to get a and John, this 33 00:01:50,720 --> 00:01:54,320 Speaker 1: is killing Forget about imports and trade war export of 34 00:01:54,360 --> 00:01:57,680 Speaker 1: American product? What do you export to? You know that 35 00:01:57,800 --> 00:02:00,920 Speaker 1: that just that partial difference Menchel in the next year. 36 00:02:01,000 --> 00:02:02,360 Speaker 1: So what does it mean for the FED view? I'm 37 00:02:02,360 --> 00:02:04,640 Speaker 1: going to quote your research and our view FED policy 38 00:02:04,640 --> 00:02:07,280 Speaker 1: will shift from mid cycle adjustment to an extended the 39 00:02:07,320 --> 00:02:10,840 Speaker 1: patient easing cycle of one hundred and fifty basis points. 40 00:02:11,120 --> 00:02:12,919 Speaker 1: Put some meat on those bonds. What does that mean 41 00:02:13,280 --> 00:02:17,200 Speaker 1: so precisely, What that means is we see another round 42 00:02:17,840 --> 00:02:21,600 Speaker 1: um of insurance cuts sort of coming something along the 43 00:02:21,639 --> 00:02:27,560 Speaker 1: lines of basis points. Once the FED realizes, uh, that 44 00:02:27,880 --> 00:02:31,000 Speaker 1: it's not going to be just one quarter isolated quarter 45 00:02:31,080 --> 00:02:34,160 Speaker 1: of weakness but against bill, when do we stop? When 46 00:02:34,200 --> 00:02:36,240 Speaker 1: do we stop calling them insurance cuts? When we're back 47 00:02:36,320 --> 00:02:38,359 Speaker 1: down to zero? I have to wonder, you know, at 48 00:02:38,360 --> 00:02:41,720 Speaker 1: this point we're entering into accommodative. Major central banks increase 49 00:02:41,720 --> 00:02:45,200 Speaker 1: the balance, She's by the most in October since December. 50 00:02:45,320 --> 00:02:49,720 Speaker 1: Why isn't that going to fuel perhaps a bookcase. So 51 00:02:49,760 --> 00:02:52,840 Speaker 1: I think it actually is supporting sentiment right now, but 52 00:02:53,240 --> 00:02:55,560 Speaker 1: we have to remember that Marthy policy works with a 53 00:02:55,680 --> 00:02:59,280 Speaker 1: lag uh and uh. While I think the markets are 54 00:02:59,400 --> 00:03:03,000 Speaker 1: very happy that the previous sort of cycle of insurance 55 00:03:03,000 --> 00:03:06,120 Speaker 1: cuts has been successful in reducing the downside risk of 56 00:03:06,160 --> 00:03:10,919 Speaker 1: a recession, we think of that again. The weakness that's 57 00:03:10,919 --> 00:03:15,400 Speaker 1: spilling over into services into consumers will mean that the 58 00:03:15,400 --> 00:03:20,120 Speaker 1: FED is going to have to um enter another um 59 00:03:20,280 --> 00:03:23,640 Speaker 1: short and and patient, yes, but still never less another 60 00:03:23,639 --> 00:03:27,120 Speaker 1: easing cycle. Is it back to ston Fisher's ultra accommodative 61 00:03:27,680 --> 00:03:29,760 Speaker 1: because the chart would suggest so. If you get the 62 00:03:29,800 --> 00:03:32,560 Speaker 1: number of right cuts you're talking about, right, and that's 63 00:03:32,600 --> 00:03:36,080 Speaker 1: exactly the context that we're working here. We are over 64 00:03:36,160 --> 00:03:40,160 Speaker 1: reliant upon central banks to do everything, um and every 65 00:03:40,200 --> 00:03:43,760 Speaker 1: single time the markets could so then what was that? Well, 66 00:03:43,800 --> 00:03:45,840 Speaker 1: this is important. What was the headline last week? One 67 00:03:45,840 --> 00:03:48,000 Speaker 1: of the FED speakers, maybe it was Powell, you were 68 00:03:48,040 --> 00:03:50,760 Speaker 1: doing a John in one headline talked about asset bubbles. 69 00:03:51,080 --> 00:03:53,720 Speaker 1: You know they didn't use that language, but is now 70 00:03:53,840 --> 00:04:01,160 Speaker 1: twenty eight asset bubble. I think we'll no hindsight whether 71 00:04:01,200 --> 00:04:03,520 Speaker 1: it needed is a bubble or not. Um. I do 72 00:04:03,600 --> 00:04:07,520 Speaker 1: think that there is some underlying strengths within trend growth 73 00:04:07,560 --> 00:04:10,920 Speaker 1: in the economy that suggests that, you know, maybe in 74 00:04:10,920 --> 00:04:14,720 Speaker 1: the long term of these equity levels are justified, but 75 00:04:14,800 --> 00:04:17,200 Speaker 1: certainly in the shorter term data. I sort of see 76 00:04:17,240 --> 00:04:20,560 Speaker 1: a lot of people, uh, you know, breathing size of 77 00:04:20,600 --> 00:04:26,120 Speaker 1: relief that the trade deal is almost there, and I'm 78 00:04:26,640 --> 00:04:29,560 Speaker 1: frankly sort of switching my head here saying you're starting 79 00:04:30,000 --> 00:04:32,840 Speaker 1: I'm on a triple. Ever, did you see how he 80 00:04:32,880 --> 00:04:36,840 Speaker 1: answered that question? That was like BMP message very pause pause, 81 00:04:37,360 --> 00:04:42,680 Speaker 1: He's got his look in the future. Ever, Crater will 82 00:04:42,720 --> 00:04:45,599 Speaker 1: know in this can I get to the take from UBS. Okay, 83 00:04:45,680 --> 00:04:47,920 Speaker 1: UBS of one of the banks, one of the group 84 00:04:48,839 --> 00:04:51,039 Speaker 1: over the last couple of weeks, over the last week, 85 00:04:51,080 --> 00:04:54,760 Speaker 1: that has raised that global equity upgrade. They've lifted things. 86 00:04:54,760 --> 00:04:57,000 Speaker 1: So I'm Morgan Stanley, JP, Morgan and UBS. This is 87 00:04:57,000 --> 00:04:58,760 Speaker 1: the UBS take, and I want you to pick out 88 00:04:58,760 --> 00:05:01,560 Speaker 1: the bit that you would push back hardest. Done. UBS 89 00:05:01,640 --> 00:05:04,880 Speaker 1: c IO Mark Hafully saying the following, we upgrade on one. 90 00:05:05,200 --> 00:05:08,640 Speaker 1: The US China trade negotiations have made progress to Central 91 00:05:08,640 --> 00:05:12,120 Speaker 1: Bank accommodation has increased. Three earnings expectations of fallen, and 92 00:05:12,240 --> 00:05:16,000 Speaker 1: four there are tentative signs of economic stabilization. Of those 93 00:05:16,040 --> 00:05:19,040 Speaker 1: four points, what are you pushing back on the most 94 00:05:19,080 --> 00:05:22,360 Speaker 1: at the moment? Probably number one and number four. Um, 95 00:05:22,400 --> 00:05:27,359 Speaker 1: I think that first on the US trying to trade talks, yes, uh, 96 00:05:27,400 --> 00:05:30,760 Speaker 1: the prognosis looks reasonably good for there to be a 97 00:05:30,800 --> 00:05:34,040 Speaker 1: phase one deal. But that's because Phase one contained all 98 00:05:34,040 --> 00:05:36,760 Speaker 1: of the easy stuff and all the harder stuff has 99 00:05:36,800 --> 00:05:40,000 Speaker 1: been kicked off to to phase two. And speaking with 100 00:05:40,040 --> 00:05:43,680 Speaker 1: my former colleagues both at State and at US TRUM, 101 00:05:44,200 --> 00:05:46,000 Speaker 1: I don't I don't see a reason why we should 102 00:05:46,000 --> 00:05:49,400 Speaker 1: be any more confident about a phase two than we 103 00:05:49,400 --> 00:05:52,080 Speaker 1: were on the competencive deal six months earlier. What are 104 00:05:52,080 --> 00:05:54,880 Speaker 1: they saying? How that? How how that ended? Those conversations 105 00:05:54,880 --> 00:05:57,239 Speaker 1: with the former colleagues. What are they saying. So they're saying, 106 00:05:57,480 --> 00:06:01,200 Speaker 1: UM that Uh, you know, of course the boilerplate language 107 00:06:01,480 --> 00:06:05,760 Speaker 1: that you know, negotiations continue, and they can't specify any 108 00:06:05,800 --> 00:06:09,240 Speaker 1: any details. But they did emphasize how important it was, 109 00:06:09,320 --> 00:06:11,960 Speaker 1: both to Ambassador Lightheiser and to the U S general 110 00:06:12,000 --> 00:06:16,440 Speaker 1: negotiating stance, that there be an enforcement mechanism to ensure 111 00:06:16,480 --> 00:06:20,920 Speaker 1: that the commitments of the Chinese make are indeed actually executed. UM. 112 00:06:21,040 --> 00:06:24,599 Speaker 1: And that remember had tripped up the deal before. UM. Again, 113 00:06:24,640 --> 00:06:26,280 Speaker 1: I don't see why we should be more optimist. So 114 00:06:26,320 --> 00:06:29,360 Speaker 1: these are officials working in the administration right now. They're 115 00:06:29,440 --> 00:06:31,919 Speaker 1: essentially telling you that if we don't have an enforcement mechanism, 116 00:06:32,279 --> 00:06:35,200 Speaker 1: we don't have a deal. That's right, UM. And an 117 00:06:35,200 --> 00:06:37,640 Speaker 1: Ambassador Lighthiser has been very public about that, both in 118 00:06:37,680 --> 00:06:42,839 Speaker 1: testimony before Congress as well as in general. UM. It's understandable, UM, 119 00:06:43,200 --> 00:06:45,839 Speaker 1: given the context. But that sort of means that they're 120 00:06:45,839 --> 00:06:48,640 Speaker 1: going to really have to wrestle out this very difficult 121 00:06:48,839 --> 00:06:52,360 Speaker 1: sort of aspect to the negotiations before we can really 122 00:06:52,400 --> 00:06:55,920 Speaker 1: see an end to US China trade policy concertainty. And 123 00:06:56,000 --> 00:06:59,480 Speaker 1: that is not including all the other aspects around geopolitics 124 00:06:59,520 --> 00:07:02,880 Speaker 1: and rountic oology around you know, Hong Kong, Roan Shinjong 125 00:07:03,440 --> 00:07:05,880 Speaker 1: that is also heating up the temperature drum. Thank you 126 00:07:05,920 --> 00:07:24,280 Speaker 1: so much, Daniel, and thanks to this morning the Interview 127 00:07:24,320 --> 00:07:26,920 Speaker 1: of the day on a RAMCO and you can do 128 00:07:27,000 --> 00:07:30,560 Speaker 1: this with Ellen Wald the Atlantic Council Global Energy Center. 129 00:07:30,600 --> 00:07:34,000 Speaker 1: Her book Saudi Inc. Is definitive. I take it back 130 00:07:34,000 --> 00:07:36,280 Speaker 1: to Robert Lacey and his book on the Kingdom of 131 00:07:36,320 --> 00:07:41,520 Speaker 1: Saud of years ago. Saudi Inc. Is just absolutely superb Ellen. 132 00:07:41,800 --> 00:07:45,520 Speaker 1: This deal is not working out the headline this morning 133 00:07:45,520 --> 00:07:47,920 Speaker 1: they're going to cancel the London road show, They're not 134 00:07:47,920 --> 00:07:50,920 Speaker 1: going to do a New York road show. What do 135 00:07:51,200 --> 00:07:58,000 Speaker 1: institutions know that the retail in Saudi having this force 136 00:07:58,200 --> 00:08:02,040 Speaker 1: down their throats don't know? What do we know where 137 00:08:02,040 --> 00:08:06,360 Speaker 1: we're saying we're not doing this transaction? Well, I think 138 00:08:06,400 --> 00:08:10,840 Speaker 1: that the institutions, at least outside Saudi Arabia know that 139 00:08:11,240 --> 00:08:14,240 Speaker 1: this is a an I p O that's being forced 140 00:08:14,360 --> 00:08:19,440 Speaker 1: for um in many ways political reasons and that it's 141 00:08:19,480 --> 00:08:24,400 Speaker 1: a company that's controlled by an absolute monarch who may not, 142 00:08:24,640 --> 00:08:28,440 Speaker 1: in fact probably will not, given its history, make decisions 143 00:08:28,560 --> 00:08:30,880 Speaker 1: about the company that are in the best interests of 144 00:08:30,920 --> 00:08:35,520 Speaker 1: the company. And these institutional investors, these foreign funds, know 145 00:08:35,920 --> 00:08:39,520 Speaker 1: that if they're invested in this, they will have absolutely 146 00:08:39,640 --> 00:08:44,880 Speaker 1: no legal recourse when when the government decides to use 147 00:08:44,960 --> 00:08:47,600 Speaker 1: the company for its own own purposes. You know when 148 00:08:47,600 --> 00:08:49,839 Speaker 1: Ali Baba came out, I remember the up war over 149 00:08:49,960 --> 00:08:53,840 Speaker 1: Grand came An Island accounting. Um, your epilogue is for 150 00:08:53,960 --> 00:08:57,319 Speaker 1: their sons. Do the sons of the Kingdom of Saud 151 00:08:57,440 --> 00:09:01,120 Speaker 1: have legit accounting for a Ramco or can you suggest 152 00:09:01,160 --> 00:09:03,559 Speaker 1: that we actually don't even know what the balance sheet is. 153 00:09:04,720 --> 00:09:07,360 Speaker 1: I think the balance sheet is probably I think that 154 00:09:07,400 --> 00:09:11,040 Speaker 1: the accounting is probably pretty solid going here. I mean 155 00:09:11,120 --> 00:09:14,439 Speaker 1: we we we knew going into this that Saudi Aramco 156 00:09:14,679 --> 00:09:17,240 Speaker 1: was the most profitable company in the world. We didn't 157 00:09:17,280 --> 00:09:19,920 Speaker 1: know quite how much. I think the accounting is pretty solid. 158 00:09:19,960 --> 00:09:23,120 Speaker 1: It's really the decision making that's the issue. And the 159 00:09:23,120 --> 00:09:27,040 Speaker 1: biggest question is the reason that Saudi Aramco has been 160 00:09:27,120 --> 00:09:31,000 Speaker 1: so profitable over the years is precisely because the sons 161 00:09:31,160 --> 00:09:35,600 Speaker 1: of avdilosis. Even so, left the company alone, They let 162 00:09:35,600 --> 00:09:38,680 Speaker 1: it do its sting. They left the oil men make 163 00:09:38,760 --> 00:09:42,079 Speaker 1: the best decisions for the long term profitability of the company, 164 00:09:42,280 --> 00:09:45,960 Speaker 1: and that helped the country. Now that's not necessarily the case. 165 00:09:46,000 --> 00:09:49,679 Speaker 1: In fact, the spines are increasingly clear that this isn't 166 00:09:49,679 --> 00:09:52,320 Speaker 1: going to be the case. And that really what this 167 00:09:52,880 --> 00:09:56,920 Speaker 1: next generation of sons, the grandsons want to do is 168 00:09:57,000 --> 00:09:59,480 Speaker 1: they want to gut the company for their own purposes. 169 00:10:00,040 --> 00:10:03,640 Speaker 1: Want That isn't a good sign for investors who want 170 00:10:03,640 --> 00:10:06,120 Speaker 1: to make money on this, Helen, Why is a Ramco 171 00:10:06,200 --> 00:10:08,280 Speaker 1: going ahead with this I p O if we can 172 00:10:08,280 --> 00:10:11,360 Speaker 1: call it that to raise billion dollars They targeted a 173 00:10:11,400 --> 00:10:14,280 Speaker 1: hundred billion dollars. They're getting it from their local investors 174 00:10:14,320 --> 00:10:17,559 Speaker 1: with leveraged cash. Apparently, why not just call it a 175 00:10:17,640 --> 00:10:21,400 Speaker 1: day and and do it another time? Yeah, And and 176 00:10:21,520 --> 00:10:23,920 Speaker 1: I really I've been saying that they should do this, 177 00:10:23,960 --> 00:10:26,840 Speaker 1: particularly after the attacks on on Upkake and whole racism, 178 00:10:26,840 --> 00:10:28,920 Speaker 1: and you know, this is a really good opportunity to 179 00:10:28,960 --> 00:10:31,880 Speaker 1: take a step back, take a breather, and reevaluate the 180 00:10:31,920 --> 00:10:35,640 Speaker 1: merits of this, because it's not going to bring in 181 00:10:35,720 --> 00:10:38,000 Speaker 1: the kind of foreign cash they were looking for. And 182 00:10:38,080 --> 00:10:40,719 Speaker 1: so what the i p O has essentially become is 183 00:10:40,760 --> 00:10:45,920 Speaker 1: a transfer of wealth from Saudi financial institutions, wealthy Saudis, 184 00:10:46,160 --> 00:10:50,319 Speaker 1: Saudi businesses, and Saudi just just general Saudi citizens. It's 185 00:10:50,360 --> 00:10:53,040 Speaker 1: become a transfer of wealth from them to the government 186 00:10:53,520 --> 00:10:56,080 Speaker 1: and that's going to tie up a lot of capital 187 00:10:56,520 --> 00:10:58,880 Speaker 1: in this i p O. They couldn't be used for 188 00:10:58,920 --> 00:11:02,559 Speaker 1: all sorts of other actual economic diversification in the country. 189 00:11:02,840 --> 00:11:05,160 Speaker 1: And then can we call this Saudi Arabia's version of 190 00:11:05,160 --> 00:11:09,880 Speaker 1: a billionaires wealth tax? M um, except that it's not 191 00:11:09,960 --> 00:11:14,160 Speaker 1: all for billionaires. You've also got regular Saudis who are 192 00:11:14,480 --> 00:11:17,880 Speaker 1: taking out mortgages on their homes, they're selling other stocks, 193 00:11:17,920 --> 00:11:21,880 Speaker 1: they're they're borrowing money to invest in this. So it's 194 00:11:21,920 --> 00:11:25,160 Speaker 1: not it's not just a billionaire wealth sex it's it's 195 00:11:25,200 --> 00:11:29,240 Speaker 1: basically attack. Now they will get equity in this company, 196 00:11:29,679 --> 00:11:31,800 Speaker 1: but it's going to be locked up for at least 197 00:11:31,880 --> 00:11:34,960 Speaker 1: six months, and that's gonna mean there's very little liquidity 198 00:11:35,000 --> 00:11:38,719 Speaker 1: after the shares start trading, and um, it could we 199 00:11:38,800 --> 00:11:41,360 Speaker 1: could see the creation of a bubble. And then if 200 00:11:41,400 --> 00:11:44,080 Speaker 1: other investors say they do end up getting these Russian 201 00:11:44,200 --> 00:11:48,360 Speaker 1: or Chinese cornerstone investors. Those people might start selling within 202 00:11:48,559 --> 00:11:53,120 Speaker 1: these six months, whereas regular Saudias can't or are incentivized 203 00:11:53,160 --> 00:11:56,640 Speaker 1: not to. And we could find that after an initial 204 00:11:56,720 --> 00:11:59,839 Speaker 1: bump up in price, it could drop like a stone. 205 00:12:00,120 --> 00:12:03,360 Speaker 1: Could this be a threat to social stability and explore 206 00:12:03,400 --> 00:12:06,240 Speaker 1: that a little bit further. Yeah, that's that's the next 207 00:12:06,320 --> 00:12:09,320 Speaker 1: question to ask is what's going to happen with political 208 00:12:09,320 --> 00:12:12,880 Speaker 1: and social stability in Saudi Arabia Because this i p 209 00:12:13,000 --> 00:12:16,360 Speaker 1: O was promised to them politically, was promised to them 210 00:12:16,760 --> 00:12:19,719 Speaker 1: as both something good for them and good for the economy, 211 00:12:20,000 --> 00:12:23,080 Speaker 1: good for their their future prospects, and if that doesn't 212 00:12:23,120 --> 00:12:26,920 Speaker 1: pan out, there could be issues, especially in a region 213 00:12:26,960 --> 00:12:32,400 Speaker 1: that is now basically on fire with UH with protesters 214 00:12:32,600 --> 00:12:36,719 Speaker 1: who are protesting the lack of economic opportunity, and this 215 00:12:36,800 --> 00:12:39,480 Speaker 1: could really bring this to the fourth Saudi Arabia has 216 00:12:39,520 --> 00:12:43,520 Speaker 1: traditionally been you know, very very stable. People have really 217 00:12:43,559 --> 00:12:46,400 Speaker 1: not been interested in protesting. I mean, I think during 218 00:12:46,440 --> 00:12:50,080 Speaker 1: the Arab Spring they had a protest with maybe five protesters. 219 00:12:50,880 --> 00:12:55,640 Speaker 1: But when you're talking about people's livelihoods, different different issues 220 00:12:55,679 --> 00:12:58,920 Speaker 1: arise and and we could definitely see some social instability 221 00:12:58,960 --> 00:13:00,640 Speaker 1: as a result. What is a Ramco do with the 222 00:13:01,120 --> 00:13:04,400 Speaker 1: billion dollars? Well, Ramco is not actually getting the twenty 223 00:13:04,400 --> 00:13:07,120 Speaker 1: five billion dollars, which is which which is the irony 224 00:13:07,160 --> 00:13:09,480 Speaker 1: of it all. Ramco doesn't need twenty five billion dollars. 225 00:13:09,480 --> 00:13:13,080 Speaker 1: They're spending forty billion dollars on Capex. You know, they 226 00:13:13,120 --> 00:13:17,040 Speaker 1: don't need this money. It's the Saudi government that's getting it. Uh. 227 00:13:17,040 --> 00:13:18,959 Speaker 1: And what is it the day think they're going to 228 00:13:19,040 --> 00:13:21,200 Speaker 1: do with billion dollars? I don't think this is really 229 00:13:21,240 --> 00:13:24,520 Speaker 1: about the billion dollars. This is about the fact that 230 00:13:25,040 --> 00:13:27,960 Speaker 1: they want to sell shares and more shares of Ramco, 231 00:13:28,040 --> 00:13:31,160 Speaker 1: put more shares on the market later to generate cash 232 00:13:31,160 --> 00:13:35,640 Speaker 1: when they need it for their interesting and somewhat bizarre 233 00:13:36,280 --> 00:13:40,559 Speaker 1: uh project megaprojects. And so it's not necessarily about the 234 00:13:41,120 --> 00:13:43,640 Speaker 1: billion they're going to get now. It's about the shares 235 00:13:43,679 --> 00:13:45,440 Speaker 1: that they're going to sell and the money they hope 236 00:13:45,440 --> 00:13:47,680 Speaker 1: to make on it later. Self. Bank gets on the 237 00:13:47,679 --> 00:13:50,439 Speaker 1: phone straight after the I p O gives him a call, 238 00:13:50,559 --> 00:13:52,800 Speaker 1: said you've got some spare money, can we invest it 239 00:13:52,880 --> 00:13:55,160 Speaker 1: for you? Is that where this is going to Well? No, 240 00:13:55,280 --> 00:13:57,560 Speaker 1: I think it's very and I think that's a really 241 00:13:57,600 --> 00:14:00,600 Speaker 1: important point, particularly after the zaniness of Off Bank in 242 00:14:00,600 --> 00:14:03,640 Speaker 1: their combo with Yahoo Japan and I think it's called 243 00:14:03,720 --> 00:14:09,320 Speaker 1: live z company whatever this weekend, I mean this this 244 00:14:09,320 --> 00:14:12,760 Speaker 1: this a Ramco, which was so prestigious when we were kids, 245 00:14:12,760 --> 00:14:14,520 Speaker 1: like to have a job with a Ramco, was this 246 00:14:14,640 --> 00:14:18,480 Speaker 1: huge deal, etcetera. To consult with them whatever? I mean, 247 00:14:18,520 --> 00:14:21,720 Speaker 1: do they understand there's a rule book out there institutionally 248 00:14:21,760 --> 00:14:23,760 Speaker 1: you have to go by. Do do you have any 249 00:14:23,840 --> 00:14:27,720 Speaker 1: research within Saudi inc That they understand their rules of 250 00:14:27,800 --> 00:14:32,800 Speaker 1: the road in bringing a transaction public? Well, this is 251 00:14:32,800 --> 00:14:36,960 Speaker 1: a really good question, and it seems that a Ramco. 252 00:14:37,840 --> 00:14:40,880 Speaker 1: Ramco was pretty well well versed in these issues. I mean, 253 00:14:41,280 --> 00:14:44,280 Speaker 1: they got their books in order. It's really I think 254 00:14:44,320 --> 00:14:47,680 Speaker 1: from from what I hear from courses and inside, is 255 00:14:47,800 --> 00:14:52,320 Speaker 1: that the political that the monarchy who's pushing this, whose 256 00:14:52,360 --> 00:14:55,560 Speaker 1: idea this was, it was not getting good advice, is 257 00:14:55,600 --> 00:14:59,600 Speaker 1: being advised by people who are not specialists or experts 258 00:14:59,680 --> 00:15:02,680 Speaker 1: in I p O s. And that that's one of 259 00:15:02,680 --> 00:15:06,280 Speaker 1: the reasons that it really was bungled and kind of 260 00:15:06,800 --> 00:15:10,560 Speaker 1: done in a very backwards, non traditional way, that that 261 00:15:10,720 --> 00:15:14,000 Speaker 1: frankly foreign investors really aren't interested in this could have 262 00:15:14,040 --> 00:15:17,440 Speaker 1: been great. This company is great. This I Peo could 263 00:15:17,520 --> 00:15:20,600 Speaker 1: have been great had they had they done the right way. 264 00:15:20,800 --> 00:15:23,000 Speaker 1: Ellen will thank you so much. I can't say enough. 265 00:15:23,040 --> 00:15:27,440 Speaker 1: Saudi inc. The Arabian Kingdom, pursuit of oil. I'm just extraordinary, 266 00:15:27,440 --> 00:15:45,520 Speaker 1: extraordinary book. Have you ever been to the O two 267 00:15:45,600 --> 00:15:48,440 Speaker 1: out in Greenwich? What do you see that actually went 268 00:15:48,480 --> 00:15:52,160 Speaker 1: there for the Olympics And they do like big concerts 269 00:15:52,160 --> 00:15:56,160 Speaker 1: and all that there out there's the Intercontinental which is 270 00:15:56,160 --> 00:15:59,720 Speaker 1: where they held this conference today where the elite meat 271 00:15:59,720 --> 00:16:03,480 Speaker 1: degree eaten, the Kennedy show up, labor parties. Jeremy Corbyn 272 00:16:03,800 --> 00:16:06,320 Speaker 1: was over there. He caught up with Bloomberg's and Edwards 273 00:16:06,440 --> 00:16:08,520 Speaker 1: in London in the last hour or so. I'm pleased 274 00:16:08,560 --> 00:16:10,760 Speaker 1: to say that Ann Edwards joined us on the phone 275 00:16:10,760 --> 00:16:12,720 Speaker 1: to talk about that interview. Anna, great to have you 276 00:16:12,760 --> 00:16:15,520 Speaker 1: with us on the program. So let's discuss it. Jeremy 277 00:16:15,520 --> 00:16:18,320 Speaker 1: Corbyn according to the polls over the weekend, falling further 278 00:16:18,360 --> 00:16:21,640 Speaker 1: behind the Conservative Party led by Boris Johnson. What did 279 00:16:21,640 --> 00:16:25,120 Speaker 1: he say about closing that gap? Yeah, he says he 280 00:16:25,200 --> 00:16:27,600 Speaker 1: can close the gap. He says he's enjoying and trying 281 00:16:27,640 --> 00:16:30,040 Speaker 1: to close that gap. And that's best done by getting 282 00:16:30,040 --> 00:16:32,920 Speaker 1: out there in campaigning, which is no small feet when 283 00:16:32,920 --> 00:16:35,400 Speaker 1: it's getting colder and darker and wester the closer we 284 00:16:35,440 --> 00:16:37,840 Speaker 1: get to election on December the twelve here in the UK, 285 00:16:38,200 --> 00:16:40,520 Speaker 1: and so just that, yeah, just catch up on the polling. 286 00:16:40,560 --> 00:16:43,800 Speaker 1: There were three over the weekends that gave the Conservative 287 00:16:43,800 --> 00:16:47,080 Speaker 1: Party in Boris Johnson a double digit percentage point league 288 00:16:47,400 --> 00:16:50,800 Speaker 1: over Jeremy Corbyn, although the Labor Party are also always 289 00:16:50,880 --> 00:16:53,680 Speaker 1: quick to remind us how much damage they did for 290 00:16:53,760 --> 00:16:57,360 Speaker 1: threason aids lead back in two thousands and seventeen. Other 291 00:16:57,400 --> 00:17:01,120 Speaker 1: parallels here Anna before between now and he's seventeen, and 292 00:17:01,200 --> 00:17:03,640 Speaker 1: the gap, the distance between the two parties coming into 293 00:17:03,680 --> 00:17:07,399 Speaker 1: the election. Well, the similarity is that we started with 294 00:17:07,720 --> 00:17:10,000 Speaker 1: a situation where the Conservative Party has a big leave 295 00:17:10,280 --> 00:17:13,800 Speaker 1: and that's why both leaders to Evenate and Boris Johnson 296 00:17:14,680 --> 00:17:17,000 Speaker 1: feel that they can take these gambles of getting us 297 00:17:17,040 --> 00:17:20,600 Speaker 1: into early election situations. But that's maybe where the parallels end. 298 00:17:20,680 --> 00:17:23,240 Speaker 1: I mean, Boris john a very different campaigners. Certainly the 299 00:17:23,280 --> 00:17:26,760 Speaker 1: Conservative Party believe Boris Johnson is a very different campaigner 300 00:17:26,920 --> 00:17:30,000 Speaker 1: and he certainly hasn't been losing right up to this point. 301 00:17:30,160 --> 00:17:32,960 Speaker 1: You know, you're our best student of this. Okay, it's CBI. 302 00:17:33,040 --> 00:17:35,840 Speaker 1: Everybody trots up to you know, get the corporate message 303 00:17:35,840 --> 00:17:39,360 Speaker 1: and all that, and they're preaching to the business community. 304 00:17:39,640 --> 00:17:43,640 Speaker 1: Is the nation transfixed by this election? I mean, compared 305 00:17:43,680 --> 00:17:46,320 Speaker 1: to all the other elections you've covered, how does this 306 00:17:46,359 --> 00:17:49,199 Speaker 1: one line up so far? Yeah, there's been a lot 307 00:17:49,240 --> 00:17:51,440 Speaker 1: of talk about how this has This campaign hasn't really 308 00:17:51,480 --> 00:17:53,399 Speaker 1: taken off yet. And to be honest with you, after 309 00:17:53,440 --> 00:17:57,119 Speaker 1: the intensity and the drama around Brexit and the deadline 310 00:17:57,320 --> 00:17:59,879 Speaker 1: at the end of October, it almost felt like the 311 00:18:00,080 --> 00:18:03,080 Speaker 1: country needed to take a break at the beginning of November. 312 00:18:03,160 --> 00:18:06,400 Speaker 1: Those things have had a slow start. But last week 313 00:18:06,400 --> 00:18:09,240 Speaker 1: with the announcement that we got of the intention to 314 00:18:09,240 --> 00:18:11,960 Speaker 1: provide free broadband from the Labor parties, that's something that 315 00:18:12,040 --> 00:18:16,720 Speaker 1: did capture the country's imagination. If you like it, you'd start. 316 00:18:16,920 --> 00:18:19,560 Speaker 1: We also haven't had the manifesto yet. We wait till 317 00:18:19,560 --> 00:18:22,879 Speaker 1: Thursday to get the Labor Party manifesto and the Story manifesto. 318 00:18:22,920 --> 00:18:25,760 Speaker 1: He's coming in sort of drips and drabs, if you like. 319 00:18:25,880 --> 00:18:29,040 Speaker 1: It's slowly being released. I think they're trying to maximize 320 00:18:29,080 --> 00:18:33,040 Speaker 1: media coverage. So yeah, things are slow. Well, Brexit is 321 00:18:33,080 --> 00:18:35,679 Speaker 1: one issue and it's definitely dominated the headlines, but the 322 00:18:35,720 --> 00:18:39,320 Speaker 1: spending plan that Jeremy Corbyn put out possibly having a 323 00:18:39,400 --> 00:18:42,560 Speaker 1: bigger effect on confidence. How is that reading and what 324 00:18:42,600 --> 00:18:45,320 Speaker 1: did you have to say about that? Yeah, I mean 325 00:18:45,560 --> 00:18:48,240 Speaker 1: that he refers you back to the extent of their 326 00:18:48,320 --> 00:18:51,240 Speaker 1: spending colleges and the numbers that they put out there. 327 00:18:51,240 --> 00:18:53,600 Speaker 1: He says that's very trumps sparent. Everybody can see what 328 00:18:53,680 --> 00:18:55,280 Speaker 1: they plan, and he says that we're going to see 329 00:18:55,280 --> 00:18:57,800 Speaker 1: a scale of investment never seen before in the UK, if, 330 00:18:57,880 --> 00:18:59,880 Speaker 1: of course he's Prime minister. The other thing to bear 331 00:18:59,920 --> 00:19:02,040 Speaker 1: in mind is even if he does manage to somehow 332 00:19:02,080 --> 00:19:05,520 Speaker 1: become against the polling evidence become Prime minister, that might 333 00:19:05,560 --> 00:19:07,440 Speaker 1: have to be in some sort of confidence as the 334 00:19:07,520 --> 00:19:10,639 Speaker 1: Blay arrangement with other parties who have their own criteria 335 00:19:10,640 --> 00:19:14,680 Speaker 1: around spending in their own manifesto pledges. So it isn't 336 00:19:14,680 --> 00:19:18,120 Speaker 1: necessarily as simple as taking his manifesto and turning down 337 00:19:18,119 --> 00:19:20,680 Speaker 1: into into a reality if he is in down in 338 00:19:20,680 --> 00:19:22,880 Speaker 1: the Street. But certainly the guilt markets have all been 339 00:19:22,880 --> 00:19:27,160 Speaker 1: pretty transfixed by this idea that whoever we get as 340 00:19:27,560 --> 00:19:29,600 Speaker 1: Prime minister, we're going to end up with a lot 341 00:19:29,600 --> 00:19:31,960 Speaker 1: more physical stimulus in the UK, which is a real 342 00:19:32,040 --> 00:19:34,280 Speaker 1: about face from over the last ten years or so 343 00:19:34,400 --> 00:19:38,720 Speaker 1: talking about austerity, austerity, austerity and belt tightening and the 344 00:19:38,840 --> 00:19:41,080 Speaker 1: virtue of all of that. And now we do seem 345 00:19:41,119 --> 00:19:43,120 Speaker 1: to be in a very different era. And let's wrap 346 00:19:43,119 --> 00:19:45,520 Speaker 1: things up by talking about monetary policy shown we Governor 347 00:19:45,560 --> 00:19:49,359 Speaker 1: Carney is said to leave at the start of Did 348 00:19:49,400 --> 00:19:51,200 Speaker 1: you speak to Mr Corbyn about the future of the 349 00:19:51,200 --> 00:19:53,919 Speaker 1: Bank of England? I did, and I said, you know, 350 00:19:54,080 --> 00:19:55,920 Speaker 1: you'll have a lot to decide if you are Prime 351 00:19:55,920 --> 00:19:59,280 Speaker 1: Minister on December the thirteenth, you have a lot to 352 00:19:59,320 --> 00:20:01,000 Speaker 1: decide that one of the things will be whether you 353 00:20:01,119 --> 00:20:04,679 Speaker 1: ask Mark Arne to stay for another term. Remember he's 354 00:20:04,680 --> 00:20:06,879 Speaker 1: supposed to leave on the steady one to January. And 355 00:20:06,960 --> 00:20:09,080 Speaker 1: he said all he could tell me was that they 356 00:20:09,080 --> 00:20:11,880 Speaker 1: have a very good relationship the Labor Party with Mark Arney. 357 00:20:11,920 --> 00:20:14,000 Speaker 1: I asked him again and he told me again, all 358 00:20:14,080 --> 00:20:15,680 Speaker 1: I can say is you have a very good relationship. 359 00:20:15,720 --> 00:20:18,560 Speaker 1: As if that's perhaps holds some deeper meaning to judge 360 00:20:18,560 --> 00:20:20,760 Speaker 1: for yourself when you see the exchange. He then did 361 00:20:20,760 --> 00:20:23,159 Speaker 1: say he's made no commitment to anybody posts them of 362 00:20:23,200 --> 00:20:25,960 Speaker 1: the twelve very good and Edwards, thank you so much 363 00:20:25,960 --> 00:20:29,679 Speaker 1: on the campaign travel driving forward our television coverage in 364 00:20:29,720 --> 00:20:32,159 Speaker 1: the London early morning in her wonderful work on the 365 00:20:32,240 --> 00:20:48,480 Speaker 1: politics of Europe and the United Kingdom. Right now, Julia 366 00:20:48,800 --> 00:20:51,880 Speaker 1: Carnado joins us from macro policy perspective. Julia, we don't 367 00:20:51,960 --> 00:20:55,080 Speaker 1: usually talk to you about generations of the market across 368 00:20:55,080 --> 00:20:59,080 Speaker 1: the three minute span, but we'll go there this morning. Um, Julia, 369 00:20:59,440 --> 00:21:03,480 Speaker 1: I'm kidding folks. We're gonna get a huge disparity between 370 00:21:03,600 --> 00:21:07,959 Speaker 1: a FED patient and pausing and others really stepping up 371 00:21:07,960 --> 00:21:10,600 Speaker 1: a slower g d P and the FED that will 372 00:21:10,600 --> 00:21:15,240 Speaker 1: still remain active even towards ultra accommodative. How do you 373 00:21:15,240 --> 00:21:18,719 Speaker 1: fit into that mix? Well, I think the FED is 374 00:21:18,720 --> 00:21:21,840 Speaker 1: is justified in taking a pause right now. It was 375 00:21:21,880 --> 00:21:25,120 Speaker 1: a little surprising how strongly they signaled that their on hold. 376 00:21:25,160 --> 00:21:27,160 Speaker 1: I think that what we'll see in the minutes this 377 00:21:27,200 --> 00:21:31,119 Speaker 1: week that reflects some dissension on the committee, some divergence 378 00:21:31,160 --> 00:21:35,240 Speaker 1: of views, but the data do show some stabilization. I think. 379 00:21:35,560 --> 00:21:38,320 Speaker 1: I agree that the optimism has gone a little far 380 00:21:38,480 --> 00:21:41,919 Speaker 1: to hang a lot on these first round trade talks, 381 00:21:41,960 --> 00:21:46,199 Speaker 1: which are really in substance pretty cosmetic uh and and 382 00:21:46,280 --> 00:21:48,879 Speaker 1: the global growth picture. Sure, we might be stabilizing, but 383 00:21:49,000 --> 00:21:51,280 Speaker 1: that's far from saying that we're heading into a new 384 00:21:51,320 --> 00:21:53,600 Speaker 1: renewal of growth. So I think there's a lot of 385 00:21:53,680 --> 00:21:56,960 Speaker 1: uncertainty about the growth outlook. I was struck by a 386 00:21:56,960 --> 00:22:02,280 Speaker 1: Bloomberg Economics projection about the effects of the trade wars 387 00:22:02,400 --> 00:22:05,359 Speaker 1: on the US and the global economy. The biggest drag 388 00:22:05,400 --> 00:22:08,280 Speaker 1: comes from the uncertainty does that go away even if 389 00:22:08,280 --> 00:22:10,840 Speaker 1: we get a trade truth. So yeah, I think you're 390 00:22:10,920 --> 00:22:13,720 Speaker 1: right that that's that's exactly where where we need to 391 00:22:13,720 --> 00:22:16,399 Speaker 1: focus right now, because we see it in the investment data. 392 00:22:16,520 --> 00:22:19,960 Speaker 1: Right there's a there's a divergence between the market sentiment 393 00:22:20,400 --> 00:22:24,040 Speaker 1: that has really taken signal from every sort of hint 394 00:22:24,160 --> 00:22:26,360 Speaker 1: of progress in the in the phase one trade talk 395 00:22:26,680 --> 00:22:29,320 Speaker 1: and what actual businesses are dealing with on the ground, 396 00:22:29,359 --> 00:22:33,120 Speaker 1: which is a tremendous amount of uncertainty that they're judging 397 00:22:33,160 --> 00:22:36,760 Speaker 1: to be sort of a semi permanent feature of the landscape, 398 00:22:36,960 --> 00:22:39,680 Speaker 1: that they're going to have to reorganize global supply chains, 399 00:22:40,040 --> 00:22:43,280 Speaker 1: they're going to have to manage these political risks, and 400 00:22:43,320 --> 00:22:47,440 Speaker 1: that's not something that's you know, conducive to productivity and profitability. 401 00:22:47,520 --> 00:22:49,760 Speaker 1: So I think that there is a divergence between what's 402 00:22:49,800 --> 00:22:53,240 Speaker 1: happening on the ground and the mood swings in the market. Judy, 403 00:22:53,320 --> 00:22:55,359 Speaker 1: just to get the audience on top of the lettuce 404 00:22:55,400 --> 00:22:58,199 Speaker 1: reporting worldwide around the trade story. This is coming from 405 00:22:58,240 --> 00:23:01,080 Speaker 1: the Beijing bureau chief over at CNBC see I quota 406 00:23:01,200 --> 00:23:03,200 Speaker 1: on Twitter. At the moment, the mood in Beijing about 407 00:23:03,200 --> 00:23:07,479 Speaker 1: trade and the deal is pessimistic. A government source tells 408 00:23:07,520 --> 00:23:12,160 Speaker 1: me China troubled after the President said no tariff roll back, 409 00:23:12,200 --> 00:23:14,000 Speaker 1: and she goes on to explain just a little bit 410 00:23:14,000 --> 00:23:17,400 Speaker 1: more just how important is tariff roll back to ultimately 411 00:23:17,440 --> 00:23:20,679 Speaker 1: get some kind of truth between the United States and China. Ja. 412 00:23:21,680 --> 00:23:23,760 Speaker 1: I mean, to be honest, it's hard for me to 413 00:23:23,960 --> 00:23:28,600 Speaker 1: see a very meaningful and enduring truth because the issues 414 00:23:28,640 --> 00:23:32,679 Speaker 1: that divide the US and China are not easily resolved. 415 00:23:32,800 --> 00:23:36,800 Speaker 1: So again, this phase one promised to be mainly cosmetic 416 00:23:37,520 --> 00:23:39,959 Speaker 1: um and it's hard for me even to see how 417 00:23:40,160 --> 00:23:43,480 Speaker 1: the Trump administration is going to really concede to rolling 418 00:23:43,560 --> 00:23:47,880 Speaker 1: back existing tariffs and giving up that leverage, and how 419 00:23:48,040 --> 00:23:50,680 Speaker 1: Beijing is going to give up on any kind of 420 00:23:51,000 --> 00:23:55,520 Speaker 1: meaningful assurances on intellectual property. So I really don't see 421 00:23:55,960 --> 00:23:59,240 Speaker 1: how we can make a meaningful progress that eliminates that 422 00:23:59,320 --> 00:24:02,520 Speaker 1: really lifts of this uncertainty. What is your GDP called 423 00:24:02,560 --> 00:24:06,280 Speaker 1: twelve months forward? Well, I think we've got well, so 424 00:24:06,359 --> 00:24:09,720 Speaker 1: we've got trend growth in in the US, so we're 425 00:24:09,800 --> 00:24:13,800 Speaker 1: right now tracking below trend on Q four, we're around 426 00:24:13,880 --> 00:24:16,840 Speaker 1: one and a quarter percent, reflecting some of the drag 427 00:24:16,920 --> 00:24:21,480 Speaker 1: from on investment um. But and we've got trend growth 428 00:24:21,600 --> 00:24:25,359 Speaker 1: in in now. That's presuming that some of this monetary 429 00:24:25,400 --> 00:24:29,399 Speaker 1: accommodation is able to do that. The uncertainty tax and 430 00:24:29,840 --> 00:24:32,000 Speaker 1: the rubber really hits the road with with the global 431 00:24:32,000 --> 00:24:34,879 Speaker 1: stabilization that Jonathan alluded to at the top of the 432 00:24:34,880 --> 00:24:37,840 Speaker 1: broadcast Julie over the weekend with a beverage of May 433 00:24:37,840 --> 00:24:40,560 Speaker 1: and somebody asked me, if we have one percent GDP 434 00:24:40,640 --> 00:24:43,760 Speaker 1: growth a year one and a quarter percent, what portion 435 00:24:43,840 --> 00:24:46,040 Speaker 1: of America is in recession? I mean, if it's not 436 00:24:46,080 --> 00:24:50,960 Speaker 1: distributed equally, what percentage of Americans are enjoying recession with 437 00:24:51,080 --> 00:24:56,120 Speaker 1: a sub two percent GDP statistics? The answer is a lot. Well, yeah, 438 00:24:56,200 --> 00:24:58,920 Speaker 1: I mean, I think what we've seen the the good 439 00:24:58,960 --> 00:25:01,320 Speaker 1: thing that we've seen as the resiliency in the labor 440 00:25:01,440 --> 00:25:05,000 Speaker 1: market and even the sort of lower tear of the 441 00:25:05,040 --> 00:25:08,119 Speaker 1: wage earners really enjoying some wage gains in a strong 442 00:25:08,200 --> 00:25:11,359 Speaker 1: job market, and that's held up despite what has been 443 00:25:12,040 --> 00:25:14,560 Speaker 1: a recession in the manufacturing sector. So I think if 444 00:25:14,600 --> 00:25:18,640 Speaker 1: you are in the manufacturing sector, you are seeing layoffs, 445 00:25:18,720 --> 00:25:22,439 Speaker 1: you are seeing a tougher environment. But if you're in 446 00:25:22,440 --> 00:25:25,080 Speaker 1: the service sector, things have still been pretty good and 447 00:25:25,119 --> 00:25:28,680 Speaker 1: that rebiliency has been very encouraging. Julia, Thank you so much. 448 00:25:28,760 --> 00:25:46,840 Speaker 1: Julia Carne out of Macro Policy Perspectives this morning, Paul, 449 00:25:46,920 --> 00:25:49,480 Speaker 1: this is great. It's always good to talk precious metals. 450 00:25:49,760 --> 00:25:54,479 Speaker 1: I mean, all that's going on there, but particularly if 451 00:25:54,520 --> 00:25:57,679 Speaker 1: they can gaze at the two carrots special from Tiffany's 452 00:25:57,680 --> 00:26:00,240 Speaker 1: and as a gemologist, tell you if you did hope. Okay, 453 00:26:00,880 --> 00:26:02,640 Speaker 1: how often do we talk to somebody on the South 454 00:26:02,640 --> 00:26:06,560 Speaker 1: Side that's in actually like big time gemology. I don't 455 00:26:06,600 --> 00:26:12,120 Speaker 1: know this. I mean, our next guy covers absolutely everything, FX, commodities, medals, uh, 456 00:26:12,160 --> 00:26:15,200 Speaker 1: you name it. She covers the Georgette Boulet uh, senior 457 00:26:15,240 --> 00:26:18,040 Speaker 1: effets and precious metal strategist at a bien Amro, joining 458 00:26:18,080 --> 00:26:20,960 Speaker 1: us on the phone from Amsterdam. I believe, Georgette, thanks 459 00:26:20,960 --> 00:26:23,320 Speaker 1: so much for joining us this morning. Let's start with 460 00:26:23,720 --> 00:26:27,440 Speaker 1: the medals. You know, just looking you know at gold. Um, 461 00:26:27,520 --> 00:26:29,920 Speaker 1: you know a lot of people's I'm just not sure 462 00:26:30,000 --> 00:26:31,880 Speaker 1: what to do with gold here? What is your thought? 463 00:26:33,400 --> 00:26:35,800 Speaker 1: Thank you very much for having me. Yeah, the gold 464 00:26:35,840 --> 00:26:38,440 Speaker 1: market is looking a bit for direction. And the thing 465 00:26:38,520 --> 00:26:40,840 Speaker 1: as well is is that we are currently close to 466 00:26:41,680 --> 00:26:45,680 Speaker 1: an important support and that's around fourteen fifty UM. We 467 00:26:45,800 --> 00:26:48,560 Speaker 1: have been much higher. And the thing now in the 468 00:26:48,560 --> 00:26:51,439 Speaker 1: gold market is that investors are very very long gold. 469 00:26:51,840 --> 00:26:56,919 Speaker 1: They hold already gold from speculators to other investors and 470 00:26:57,000 --> 00:27:00,560 Speaker 1: expecting higher prices UM. And yeah, they still hope to 471 00:27:00,560 --> 00:27:03,359 Speaker 1: see it further this year. The only thing is is 472 00:27:03,400 --> 00:27:06,560 Speaker 1: that we had some here and there's some new supportive 473 00:27:06,560 --> 00:27:10,639 Speaker 1: news on gold prices, but as everyone is already positions 474 00:27:10,640 --> 00:27:14,920 Speaker 1: for it, the problem is that it's not pushing prices 475 00:27:15,040 --> 00:27:18,000 Speaker 1: much higher. So the biggest risk we have in the 476 00:27:18,119 --> 00:27:21,159 Speaker 1: near term is that we get some price correction further 477 00:27:21,720 --> 00:27:25,320 Speaker 1: on gold prices, meaning lower towards at least fourteen hundreds, 478 00:27:26,040 --> 00:27:29,760 Speaker 1: and then you you only need a very small amount 479 00:27:30,320 --> 00:27:35,359 Speaker 1: of position liquidation of all the big positions we currently 480 00:27:35,359 --> 00:27:38,640 Speaker 1: have in the market. So so I would say near 481 00:27:38,800 --> 00:27:42,479 Speaker 1: term there's quite some correction risk and then fourteen hundreds 482 00:27:42,600 --> 00:27:45,919 Speaker 1: is probably then easily reached and then um, yeah for 483 00:27:46,040 --> 00:27:50,080 Speaker 1: next year, I'm more positive again, expecting sixteen hundreds in 484 00:27:50,119 --> 00:27:54,200 Speaker 1: the end of next year. So it's interesting. The one 485 00:27:54,200 --> 00:27:56,280 Speaker 1: of the things about commodities is people are trying to 486 00:27:56,280 --> 00:27:58,720 Speaker 1: get a sense of where the dollars. Is there any 487 00:27:59,600 --> 00:28:05,640 Speaker 1: bare case out there for the US dollar? Um. Now, 488 00:28:05,720 --> 00:28:08,600 Speaker 1: for commotities, especially for precious matters, the direction on the 489 00:28:08,680 --> 00:28:12,280 Speaker 1: dollar is very important. It's in a way, yeah, a 490 00:28:12,800 --> 00:28:17,119 Speaker 1: kind of currency. Most of the of the gold market 491 00:28:17,119 --> 00:28:20,040 Speaker 1: is trading as a proxy currency so far. By the 492 00:28:20,080 --> 00:28:24,160 Speaker 1: way as well, UM and yeah, to see a very 493 00:28:24,240 --> 00:28:27,719 Speaker 1: big move in coal prices higher allow della will be 494 00:28:27,800 --> 00:28:31,040 Speaker 1: very welcome. Uh, this is not something we have seen 495 00:28:31,160 --> 00:28:34,200 Speaker 1: this year. Dollar has done relatively well. Gold prices as well, 496 00:28:34,640 --> 00:28:37,159 Speaker 1: So there are more drivers than only the dollar, but 497 00:28:37,200 --> 00:28:40,840 Speaker 1: the dollar is a crucial one. The other one is um, Yeah, 498 00:28:40,840 --> 00:28:44,640 Speaker 1: what the expectasies are in the monetary policy for UM 499 00:28:44,720 --> 00:28:49,360 Speaker 1: and as well as how many government bonds are yeah 500 00:28:49,520 --> 00:28:54,040 Speaker 1: below zero and currently, especially this year, gold got quite 501 00:28:54,040 --> 00:28:57,640 Speaker 1: a boost on the fact that yeah, monetary policy moved 502 00:28:57,640 --> 00:29:00,480 Speaker 1: towards easing. We talk about fat but also easy being 503 00:29:00,480 --> 00:29:02,960 Speaker 1: in other central backs. At the same time, you've quite 504 00:29:02,960 --> 00:29:07,080 Speaker 1: a lot of government bonds yielding negative rates, and then 505 00:29:07,200 --> 00:29:11,560 Speaker 1: gold with er rate is attractive. So then it's not 506 00:29:11,680 --> 00:29:15,440 Speaker 1: really the save haveing story, but more the urn which 507 00:29:15,480 --> 00:29:18,720 Speaker 1: is which is playing out here George plus Sweeney asking 508 00:29:18,760 --> 00:29:22,240 Speaker 1: all those responsible adult questions. I'm just going to weigh 509 00:29:22,240 --> 00:29:26,000 Speaker 1: in here before the holiday season. When you see like 510 00:29:26,120 --> 00:29:30,000 Speaker 1: fancy gold ear rings like the Tiffany Schlumbers a rope 511 00:29:30,040 --> 00:29:33,320 Speaker 1: six row ear clips for six thousand, eight hundred dollars, 512 00:29:34,280 --> 00:29:36,520 Speaker 1: what's the markup of the gold there? I mean you're 513 00:29:36,520 --> 00:29:39,239 Speaker 1: a gemalogist plus doing gold at a b N m row. 514 00:29:39,840 --> 00:29:45,200 Speaker 1: What's the markup on jewelry and gold? Um, that very 515 00:29:45,240 --> 00:29:48,120 Speaker 1: much depends on how much what kind of two repeace 516 00:29:48,160 --> 00:29:51,560 Speaker 1: it is, But overall I would say, you know, there 517 00:29:51,680 --> 00:29:54,640 Speaker 1: is quite a markup on that as well. If you 518 00:29:55,240 --> 00:29:57,800 Speaker 1: if you look at and to Repeace and you calculate 519 00:29:57,840 --> 00:30:01,760 Speaker 1: how much grams or I'm there, you know the market 520 00:30:01,800 --> 00:30:06,760 Speaker 1: press shouldn't roughly know how much is also designed because 521 00:30:07,000 --> 00:30:08,920 Speaker 1: a lot on the Jewish side, there's also a lot 522 00:30:08,960 --> 00:30:13,400 Speaker 1: of designing which yeah, yeah, consumers also pay for you 523 00:30:13,480 --> 00:30:17,240 Speaker 1: see that Paul's news you can use exactly. I just 524 00:30:17,280 --> 00:30:20,720 Speaker 1: sorry did by the way, Georgia, I think Tom just 525 00:30:20,800 --> 00:30:24,160 Speaker 1: clicked and that's now in his cart here, so it's 526 00:30:24,280 --> 00:30:28,000 Speaker 1: not in my all right. So, um energy one of 527 00:30:28,000 --> 00:30:31,440 Speaker 1: the things just looking at oil, um, looking at Brent 528 00:30:31,560 --> 00:30:34,520 Speaker 1: at sixty two barrel. You know, there's a lot of 529 00:30:34,600 --> 00:30:38,320 Speaker 1: questions here about demand, global demand. What is your view 530 00:30:38,360 --> 00:30:43,520 Speaker 1: on global oil at this point? Um, we expect that. Yeah, 531 00:30:43,560 --> 00:30:45,760 Speaker 1: you have two major forces currently going on on the 532 00:30:45,800 --> 00:30:49,040 Speaker 1: old market. On the one end, Yeah, people are getting 533 00:30:49,040 --> 00:30:52,320 Speaker 1: more concerned about the global outlook and therefore did an 534 00:30:52,360 --> 00:30:57,400 Speaker 1: amount expectations for oil are more towards the downside. At 535 00:30:57,400 --> 00:31:00,800 Speaker 1: the same time, we have experienced quite monsortity in the 536 00:31:00,800 --> 00:31:03,840 Speaker 1: Middle East and also there you get a bit more 537 00:31:03,920 --> 00:31:08,680 Speaker 1: risking on old price. So and these two main factors, Yeah, 538 00:31:08,800 --> 00:31:13,160 Speaker 1: keeping all prices a bit yeah, relatively stable. No, no 539 00:31:13,360 --> 00:31:17,280 Speaker 1: strong directional move so and and and we don't have 540 00:31:17,320 --> 00:31:22,239 Speaker 1: a strong directional movie either on on all prices. Um. 541 00:31:22,280 --> 00:31:25,440 Speaker 1: So I would say around these levels and a bit higher. 542 00:31:25,760 --> 00:31:28,040 Speaker 1: George app A, thank you so much for joining us. 543 00:31:28,080 --> 00:31:31,720 Speaker 1: We really appreciate your thoughts on across the whole wide 544 00:31:31,800 --> 00:31:35,000 Speaker 1: array of wide A. Right, we didn't get the coffee 545 00:31:35,080 --> 00:31:37,200 Speaker 1: or sugar or aning that kind of fun stuff. George Apple, A, 546 00:31:37,280 --> 00:31:42,120 Speaker 1: B and M R. Seniors and metal strategists. Thanks for 547 00:31:42,200 --> 00:31:46,600 Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to 548 00:31:46,760 --> 00:31:52,520 Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 549 00:31:53,040 --> 00:31:56,400 Speaker 1: I'm on Twitter at Tom Keane before the podcast. You 550 00:31:56,400 --> 00:32:07,240 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio