Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. We're
Speaker 1: pricing at extrets, We're pricing out a recession. I don't
Speaker 1: think we're pricing in an acceleration of growth, and that
Speaker 1: distinction maybe explains that huge sentiment shifts over the last
Speaker 1: couple of weeks. I want to bring it down on
Speaker 1: BMP Para, our chief US economist and head of Markets
Speaker 1: three sixty North America. Good morning, tit down morning. Let's
Speaker 1: talk about it, shall we. We've had a massive sentiment
Speaker 1: shift in global markets over the last couple of months.
Speaker 1: We've had the bears over the weekend finally starting to capitulate.
Speaker 1: What's your message at the moment. So I don't think
Speaker 1: we're out of the woods here here. Um As as
Speaker 1: Tom just mentioned, both the various fair now casts on
Speaker 1: our own now casts are suggesting that this quarter is
Speaker 1: going to shape up to be a pretty ugly one.
Speaker 1: Uh And it's my view that the weakness that we're
Speaker 1: going to see this quarter is actually going to spill
Speaker 1: over into next How does it spill over? Because that's
Speaker 1: the distinction of the bulls and the bears here on
Speaker 1: GDP growth is the spillover effect? How does it spill
Speaker 1: over into the next quarter? Um? It Basically the consumer
Speaker 1: um is, while it's going to be resilient, it cannot
Speaker 1: remain immune from this big a synchronized global manufacturing downturn.
Speaker 1: We saw this back in two thousand fifteen sixteen, where
Speaker 1: we saw two quarters of very subpar growth. I think
Speaker 1: we're going to see it again. What about export import dynamics?
Speaker 1: Um So, Yeah, with x US global growth the weakest
Speaker 1: we have seen in five years. Uh um, we think
Speaker 1: that exports are going to get a and John, this
Speaker 1: is killing Forget about imports and trade war export of
Speaker 1: American product? What do you export to? You know that
Speaker 1: that just that partial difference Menchel in the next year.
Speaker 1: So what does it mean for the FED view? I'm
Speaker 1: going to quote your research and our view FED policy
Speaker 1: will shift from mid cycle adjustment to an extended the
Speaker 1: patient easing cycle of one hundred and fifty basis points.
Speaker 1: Put some meat on those bonds. What does that mean
Speaker 1: so precisely, What that means is we see another round
Speaker 1: um of insurance cuts sort of coming something along the
Speaker 1: lines of basis points. Once the FED realizes, uh, that
Speaker 1: it's not going to be just one quarter isolated quarter
Speaker 1: of weakness but against bill, when do we stop? When
Speaker 1: do we stop calling them insurance cuts? When we're back
Speaker 1: down to zero? I have to wonder, you know, at
Speaker 1: this point we're entering into accommodative. Major central banks increase
Speaker 1: the balance, She's by the most in October since December.
Speaker 1: Why isn't that going to fuel perhaps a bookcase. So
Speaker 1: I think it actually is supporting sentiment right now, but
Speaker 1: we have to remember that Marthy policy works with a
Speaker 1: lag uh and uh. While I think the markets are
Speaker 1: very happy that the previous sort of cycle of insurance
Speaker 1: cuts has been successful in reducing the downside risk of
Speaker 1: a recession, we think of that again. The weakness that's
Speaker 1: spilling over into services into consumers will mean that the
Speaker 1: FED is going to have to um enter another um
Speaker 1: short and and patient, yes, but still never less another
Speaker 1: easing cycle. Is it back to ston Fisher's ultra accommodative
Speaker 1: because the chart would suggest so. If you get the
Speaker 1: number of right cuts you're talking about, right, and that's
Speaker 1: exactly the context that we're working here. We are over
Speaker 1: reliant upon central banks to do everything, um and every
Speaker 1: single time the markets could so then what was that? Well,
Speaker 1: this is important. What was the headline last week? One
Speaker 1: of the FED speakers, maybe it was Powell, you were
Speaker 1: doing a John in one headline talked about asset bubbles.
Speaker 1: You know they didn't use that language, but is now
Speaker 1: twenty eight asset bubble. I think we'll no hindsight whether
Speaker 1: it needed is a bubble or not. Um. I do
Speaker 1: think that there is some underlying strengths within trend growth
Speaker 1: in the economy that suggests that, you know, maybe in
Speaker 1: the long term of these equity levels are justified, but
Speaker 1: certainly in the shorter term data. I sort of see
Speaker 1: a lot of people, uh, you know, breathing size of
Speaker 1: relief that the trade deal is almost there, and I'm
Speaker 1: frankly sort of switching my head here saying you're starting
Speaker 1: I'm on a triple. Ever, did you see how he
Speaker 1: answered that question? That was like BMP message very pause pause,
Speaker 1: He's got his look in the future. Ever, Crater will
Speaker 1: know in this can I get to the take from UBS. Okay,
Speaker 1: UBS of one of the banks, one of the group
Speaker 1: over the last couple of weeks, over the last week,
Speaker 1: that has raised that global equity upgrade. They've lifted things.
Speaker 1: So I'm Morgan Stanley, JP, Morgan and UBS. This is
Speaker 1: the UBS take, and I want you to pick out
Speaker 1: the bit that you would push back hardest. Done. UBS
Speaker 1: c IO Mark Hafully saying the following, we upgrade on one.
Speaker 1: The US China trade negotiations have made progress to Central
Speaker 1: Bank accommodation has increased. Three earnings expectations of fallen, and
Speaker 1: four there are tentative signs of economic stabilization. Of those
Speaker 1: four points, what are you pushing back on the most
Speaker 1: at the moment? Probably number one and number four. Um,
Speaker 1: I think that first on the US trying to trade talks, yes, uh,
Speaker 1: the prognosis looks reasonably good for there to be a
Speaker 1: phase one deal. But that's because Phase one contained all
Speaker 1: of the easy stuff and all the harder stuff has
Speaker 1: been kicked off to to phase two. And speaking with
Speaker 1: my former colleagues both at State and at US TRUM,
Speaker 1: I don't I don't see a reason why we should
Speaker 1: be any more confident about a phase two than we
Speaker 1: were on the competencive deal six months earlier. What are
Speaker 1: they saying? How that? How how that ended? Those conversations
Speaker 1: with the former colleagues. What are they saying. So they're saying,
Speaker 1: UM that Uh, you know, of course the boilerplate language
Speaker 1: that you know, negotiations continue, and they can't specify any
Speaker 1: any details. But they did emphasize how important it was,
Speaker 1: both to Ambassador Lightheiser and to the U S general
Speaker 1: negotiating stance, that there be an enforcement mechanism to ensure
Speaker 1: that the commitments of the Chinese make are indeed actually executed. UM.
Speaker 1: And that remember had tripped up the deal before. UM. Again,
Speaker 1: I don't see why we should be more optimist. So
Speaker 1: these are officials working in the administration right now. They're
Speaker 1: essentially telling you that if we don't have an enforcement mechanism,
Speaker 1: we don't have a deal. That's right, UM. And an
Speaker 1: Ambassador Lighthiser has been very public about that, both in
Speaker 1: testimony before Congress as well as in general. UM. It's understandable, UM,
Speaker 1: given the context. But that sort of means that they're
Speaker 1: going to really have to wrestle out this very difficult
Speaker 1: sort of aspect to the negotiations before we can really
Speaker 1: see an end to US China trade policy concertainty. And
Speaker 1: that is not including all the other aspects around geopolitics
Speaker 1: and rountic oology around you know, Hong Kong, Roan Shinjong
Speaker 1: that is also heating up the temperature drum. Thank you
Speaker 1: so much, Daniel, and thanks to this morning the Interview
Speaker 1: of the day on a RAMCO and you can do
Speaker 1: this with Ellen Wald the Atlantic Council Global Energy Center.
Speaker 1: Her book Saudi Inc. Is definitive. I take it back
Speaker 1: to Robert Lacey and his book on the Kingdom of
Speaker 1: Saud of years ago. Saudi Inc. Is just absolutely superb Ellen.
Speaker 1: This deal is not working out the headline this morning
Speaker 1: they're going to cancel the London road show, They're not
Speaker 1: going to do a New York road show. What do
Speaker 1: institutions know that the retail in Saudi having this force
Speaker 1: down their throats don't know? What do we know where
Speaker 1: we're saying we're not doing this transaction? Well, I think
Speaker 1: that the institutions, at least outside Saudi Arabia know that
Speaker 1: this is a an I p O that's being forced
Speaker 1: for um in many ways political reasons and that it's
Speaker 1: a company that's controlled by an absolute monarch who may not,
Speaker 1: in fact probably will not, given its history, make decisions
Speaker 1: about the company that are in the best interests of
Speaker 1: the company. And these institutional investors, these foreign funds, know
Speaker 1: that if they're invested in this, they will have absolutely
Speaker 1: no legal recourse when when the government decides to use
Speaker 1: the company for its own own purposes. You know when
Speaker 1: Ali Baba came out, I remember the up war over
Speaker 1: Grand came An Island accounting. Um, your epilogue is for
Speaker 1: their sons. Do the sons of the Kingdom of Saud
Speaker 1: have legit accounting for a Ramco or can you suggest
Speaker 1: that we actually don't even know what the balance sheet is.
Speaker 1: I think the balance sheet is probably I think that
Speaker 1: the accounting is probably pretty solid going here. I mean
Speaker 1: we we we knew going into this that Saudi Aramco
Speaker 1: was the most profitable company in the world. We didn't
Speaker 1: know quite how much. I think the accounting is pretty solid.
Speaker 1: It's really the decision making that's the issue. And the
Speaker 1: biggest question is the reason that Saudi Aramco has been
Speaker 1: so profitable over the years is precisely because the sons
Speaker 1: of avdilosis. Even so, left the company alone, They let
Speaker 1: it do its sting. They left the oil men make
Speaker 1: the best decisions for the long term profitability of the company,
Speaker 1: and that helped the country. Now that's not necessarily the case.
Speaker 1: In fact, the spines are increasingly clear that this isn't
Speaker 1: going to be the case. And that really what this
Speaker 1: next generation of sons, the grandsons want to do is
Speaker 1: they want to gut the company for their own purposes.
Speaker 1: Want That isn't a good sign for investors who want
Speaker 1: to make money on this, Helen, Why is a Ramco
Speaker 1: going ahead with this I p O if we can
Speaker 1: call it that to raise billion dollars They targeted a
Speaker 1: hundred billion dollars. They're getting it from their local investors
Speaker 1: with leveraged cash. Apparently, why not just call it a
Speaker 1: day and and do it another time? Yeah, And and
Speaker 1: I really I've been saying that they should do this,
Speaker 1: particularly after the attacks on on Upkake and whole racism,
Speaker 1: and you know, this is a really good opportunity to
Speaker 1: take a step back, take a breather, and reevaluate the
Speaker 1: merits of this, because it's not going to bring in
Speaker 1: the kind of foreign cash they were looking for. And
Speaker 1: so what the i p O has essentially become is
Speaker 1: a transfer of wealth from Saudi financial institutions, wealthy Saudis,
Speaker 1: Saudi businesses, and Saudi just just general Saudi citizens. It's
Speaker 1: become a transfer of wealth from them to the government
Speaker 1: and that's going to tie up a lot of capital
Speaker 1: in this i p O. They couldn't be used for
Speaker 1: all sorts of other actual economic diversification in the country.
Speaker 1: And then can we call this Saudi Arabia's version of
Speaker 1: a billionaires wealth tax? M um, except that it's not
Speaker 1: all for billionaires. You've also got regular Saudis who are
Speaker 1: taking out mortgages on their homes, they're selling other stocks,
Speaker 1: they're they're borrowing money to invest in this. So it's
Speaker 1: not it's not just a billionaire wealth sex it's it's
Speaker 1: basically attack. Now they will get equity in this company,
Speaker 1: but it's going to be locked up for at least
Speaker 1: six months, and that's gonna mean there's very little liquidity
Speaker 1: after the shares start trading, and um, it could we
Speaker 1: could see the creation of a bubble. And then if
Speaker 1: other investors say they do end up getting these Russian
Speaker 1: or Chinese cornerstone investors. Those people might start selling within
Speaker 1: these six months, whereas regular Saudias can't or are incentivized
Speaker 1: not to. And we could find that after an initial
Speaker 1: bump up in price, it could drop like a stone.
Speaker 1: Could this be a threat to social stability and explore
Speaker 1: that a little bit further. Yeah, that's that's the next
Speaker 1: question to ask is what's going to happen with political
Speaker 1: and social stability in Saudi Arabia Because this i p
Speaker 1: O was promised to them politically, was promised to them
Speaker 1: as both something good for them and good for the economy,
Speaker 1: good for their their future prospects, and if that doesn't
Speaker 1: pan out, there could be issues, especially in a region
Speaker 1: that is now basically on fire with UH with protesters
Speaker 1: who are protesting the lack of economic opportunity, and this
Speaker 1: could really bring this to the fourth Saudi Arabia has
Speaker 1: traditionally been you know, very very stable. People have really
Speaker 1: not been interested in protesting. I mean, I think during
Speaker 1: the Arab Spring they had a protest with maybe five protesters.
Speaker 1: But when you're talking about people's livelihoods, different different issues
Speaker 1: arise and and we could definitely see some social instability
Speaker 1: as a result. What is a Ramco do with the
Speaker 1: billion dollars? Well, Ramco is not actually getting the twenty
Speaker 1: five billion dollars, which is which which is the irony
Speaker 1: of it all. Ramco doesn't need twenty five billion dollars.
Speaker 1: They're spending forty billion dollars on Capex. You know, they
Speaker 1: don't need this money. It's the Saudi government that's getting it. Uh.
Speaker 1: And what is it the day think they're going to
Speaker 1: do with billion dollars? I don't think this is really
Speaker 1: about the billion dollars. This is about the fact that
Speaker 1: they want to sell shares and more shares of Ramco,
Speaker 1: put more shares on the market later to generate cash
Speaker 1: when they need it for their interesting and somewhat bizarre
Speaker 1: uh project megaprojects. And so it's not necessarily about the
Speaker 1: billion they're going to get now. It's about the shares
Speaker 1: that they're going to sell and the money they hope
Speaker 1: to make on it later. Self. Bank gets on the
Speaker 1: phone straight after the I p O gives him a call,
Speaker 1: said you've got some spare money, can we invest it
Speaker 1: for you? Is that where this is going to Well? No,
Speaker 1: I think it's very and I think that's a really
Speaker 1: important point, particularly after the zaniness of Off Bank in
Speaker 1: their combo with Yahoo Japan and I think it's called
Speaker 1: live z company whatever this weekend, I mean this this
Speaker 1: this a Ramco, which was so prestigious when we were kids,
Speaker 1: like to have a job with a Ramco, was this
Speaker 1: huge deal, etcetera. To consult with them whatever? I mean,
Speaker 1: do they understand there's a rule book out there institutionally
Speaker 1: you have to go by. Do do you have any
Speaker 1: research within Saudi inc That they understand their rules of
Speaker 1: the road in bringing a transaction public? Well, this is
Speaker 1: a really good question, and it seems that a Ramco.
Speaker 1: Ramco was pretty well well versed in these issues. I mean,
Speaker 1: they got their books in order. It's really I think
Speaker 1: from from what I hear from courses and inside, is
Speaker 1: that the political that the monarchy who's pushing this, whose
Speaker 1: idea this was, it was not getting good advice, is
Speaker 1: being advised by people who are not specialists or experts
Speaker 1: in I p O s. And that that's one of
Speaker 1: the reasons that it really was bungled and kind of
Speaker 1: done in a very backwards, non traditional way, that that
Speaker 1: frankly foreign investors really aren't interested in this could have
Speaker 1: been great. This company is great. This I Peo could
Speaker 1: have been great had they had they done the right way.
Speaker 1: Ellen will thank you so much. I can't say enough.
Speaker 1: Saudi inc. The Arabian Kingdom, pursuit of oil. I'm just extraordinary,
Speaker 1: extraordinary book. Have you ever been to the O two
Speaker 1: out in Greenwich? What do you see that actually went
Speaker 1: there for the Olympics And they do like big concerts
Speaker 1: and all that there out there's the Intercontinental which is
Speaker 1: where they held this conference today where the elite meat
Speaker 1: degree eaten, the Kennedy show up, labor parties. Jeremy Corbyn
Speaker 1: was over there. He caught up with Bloomberg's and Edwards
Speaker 1: in London in the last hour or so. I'm pleased
Speaker 1: to say that Ann Edwards joined us on the phone
Speaker 1: to talk about that interview. Anna, great to have you
Speaker 1: with us on the program. So let's discuss it. Jeremy
Speaker 1: Corbyn according to the polls over the weekend, falling further
Speaker 1: behind the Conservative Party led by Boris Johnson. What did
Speaker 1: he say about closing that gap? Yeah, he says he
Speaker 1: can close the gap. He says he's enjoying and trying
Speaker 1: to close that gap. And that's best done by getting
Speaker 1: out there in campaigning, which is no small feet when
Speaker 1: it's getting colder and darker and wester the closer we
Speaker 1: get to election on December the twelve here in the UK,
Speaker 1: and so just that, yeah, just catch up on the polling.
Speaker 1: There were three over the weekends that gave the Conservative
Speaker 1: Party in Boris Johnson a double digit percentage point league
Speaker 1: over Jeremy Corbyn, although the Labor Party are also always
Speaker 1: quick to remind us how much damage they did for
Speaker 1: threason aids lead back in two thousands and seventeen. Other
Speaker 1: parallels here Anna before between now and he's seventeen, and
Speaker 1: the gap, the distance between the two parties coming into
Speaker 1: the election. Well, the similarity is that we started with
Speaker 1: a situation where the Conservative Party has a big leave
Speaker 1: and that's why both leaders to Evenate and Boris Johnson
Speaker 1: feel that they can take these gambles of getting us
Speaker 1: into early election situations. But that's maybe where the parallels end.
Speaker 1: I mean, Boris john a very different campaigners. Certainly the
Speaker 1: Conservative Party believe Boris Johnson is a very different campaigner
Speaker 1: and he certainly hasn't been losing right up to this point.
Speaker 1: You know, you're our best student of this. Okay, it's CBI.
Speaker 1: Everybody trots up to you know, get the corporate message
Speaker 1: and all that, and they're preaching to the business community.
Speaker 1: Is the nation transfixed by this election? I mean, compared
Speaker 1: to all the other elections you've covered, how does this
Speaker 1: one line up so far? Yeah, there's been a lot
Speaker 1: of talk about how this has This campaign hasn't really
Speaker 1: taken off yet. And to be honest with you, after
Speaker 1: the intensity and the drama around Brexit and the deadline
Speaker 1: at the end of October, it almost felt like the
Speaker 1: country needed to take a break at the beginning of November.
Speaker 1: Those things have had a slow start. But last week
Speaker 1: with the announcement that we got of the intention to
Speaker 1: provide free broadband from the Labor parties, that's something that
Speaker 1: did capture the country's imagination. If you like it, you'd start.
Speaker 1: We also haven't had the manifesto yet. We wait till
Speaker 1: Thursday to get the Labor Party manifesto and the Story manifesto.
Speaker 1: He's coming in sort of drips and drabs, if you like.
Speaker 1: It's slowly being released. I think they're trying to maximize
Speaker 1: media coverage. So yeah, things are slow. Well, Brexit is
Speaker 1: one issue and it's definitely dominated the headlines, but the
Speaker 1: spending plan that Jeremy Corbyn put out possibly having a
Speaker 1: bigger effect on confidence. How is that reading and what
Speaker 1: did you have to say about that? Yeah, I mean
Speaker 1: that he refers you back to the extent of their
Speaker 1: spending colleges and the numbers that they put out there.
Speaker 1: He says that's very trumps sparent. Everybody can see what
Speaker 1: they plan, and he says that we're going to see
Speaker 1: a scale of investment never seen before in the UK, if,
Speaker 1: of course he's Prime minister. The other thing to bear
Speaker 1: in mind is even if he does manage to somehow
Speaker 1: become against the polling evidence become Prime minister, that might
Speaker 1: have to be in some sort of confidence as the
Speaker 1: Blay arrangement with other parties who have their own criteria
Speaker 1: around spending in their own manifesto pledges. So it isn't
Speaker 1: necessarily as simple as taking his manifesto and turning down
Speaker 1: into into a reality if he is in down in
Speaker 1: the Street. But certainly the guilt markets have all been
Speaker 1: pretty transfixed by this idea that whoever we get as
Speaker 1: Prime minister, we're going to end up with a lot
Speaker 1: more physical stimulus in the UK, which is a real
Speaker 1: about face from over the last ten years or so
Speaker 1: talking about austerity, austerity, austerity and belt tightening and the
Speaker 1: virtue of all of that. And now we do seem
Speaker 1: to be in a very different era. And let's wrap
Speaker 1: things up by talking about monetary policy shown we Governor
Speaker 1: Carney is said to leave at the start of Did
Speaker 1: you speak to Mr Corbyn about the future of the
Speaker 1: Bank of England? I did, and I said, you know,
Speaker 1: you'll have a lot to decide if you are Prime
Speaker 1: Minister on December the thirteenth, you have a lot to
Speaker 1: decide that one of the things will be whether you
Speaker 1: ask Mark Arne to stay for another term. Remember he's
Speaker 1: supposed to leave on the steady one to January. And
Speaker 1: he said all he could tell me was that they
Speaker 1: have a very good relationship the Labor Party with Mark Arney.
Speaker 1: I asked him again and he told me again, all
Speaker 1: I can say is you have a very good relationship.
Speaker 1: As if that's perhaps holds some deeper meaning to judge
Speaker 1: for yourself when you see the exchange. He then did
Speaker 1: say he's made no commitment to anybody posts them of
Speaker 1: the twelve very good and Edwards, thank you so much
Speaker 1: on the campaign travel driving forward our television coverage in
Speaker 1: the London early morning in her wonderful work on the
Speaker 1: politics of Europe and the United Kingdom. Right now, Julia
Speaker 1: Carnado joins us from macro policy perspective. Julia, we don't
Speaker 1: usually talk to you about generations of the market across
Speaker 1: the three minute span, but we'll go there this morning. Um, Julia,
Speaker 1: I'm kidding folks. We're gonna get a huge disparity between
Speaker 1: a FED patient and pausing and others really stepping up
Speaker 1: a slower g d P and the FED that will
Speaker 1: still remain active even towards ultra accommodative. How do you
Speaker 1: fit into that mix? Well, I think the FED is
Speaker 1: is justified in taking a pause right now. It was
Speaker 1: a little surprising how strongly they signaled that their on hold.
Speaker 1: I think that what we'll see in the minutes this
Speaker 1: week that reflects some dissension on the committee, some divergence
Speaker 1: of views, but the data do show some stabilization. I think.
Speaker 1: I agree that the optimism has gone a little far
Speaker 1: to hang a lot on these first round trade talks,
Speaker 1: which are really in substance pretty cosmetic uh and and
Speaker 1: the global growth picture. Sure, we might be stabilizing, but
Speaker 1: that's far from saying that we're heading into a new
Speaker 1: renewal of growth. So I think there's a lot of
Speaker 1: uncertainty about the growth outlook. I was struck by a
Speaker 1: Bloomberg Economics projection about the effects of the trade wars
Speaker 1: on the US and the global economy. The biggest drag
Speaker 1: comes from the uncertainty does that go away even if
Speaker 1: we get a trade truth. So yeah, I think you're
Speaker 1: right that that's that's exactly where where we need to
Speaker 1: focus right now, because we see it in the investment data.
Speaker 1: Right there's a there's a divergence between the market sentiment
Speaker 1: that has really taken signal from every sort of hint
Speaker 1: of progress in the in the phase one trade talk
Speaker 1: and what actual businesses are dealing with on the ground,
Speaker 1: which is a tremendous amount of uncertainty that they're judging
Speaker 1: to be sort of a semi permanent feature of the landscape,
Speaker 1: that they're going to have to reorganize global supply chains,
Speaker 1: they're going to have to manage these political risks, and
Speaker 1: that's not something that's you know, conducive to productivity and profitability.
Speaker 1: So I think that there is a divergence between what's
Speaker 1: happening on the ground and the mood swings in the market. Judy,
Speaker 1: just to get the audience on top of the lettuce
Speaker 1: reporting worldwide around the trade story. This is coming from
Speaker 1: the Beijing bureau chief over at CNBC see I quota
Speaker 1: on Twitter. At the moment, the mood in Beijing about
Speaker 1: trade and the deal is pessimistic. A government source tells
Speaker 1: me China troubled after the President said no tariff roll back,
Speaker 1: and she goes on to explain just a little bit
Speaker 1: more just how important is tariff roll back to ultimately
Speaker 1: get some kind of truth between the United States and China. Ja.
Speaker 1: I mean, to be honest, it's hard for me to
Speaker 1: see a very meaningful and enduring truth because the issues
Speaker 1: that divide the US and China are not easily resolved.
Speaker 1: So again, this phase one promised to be mainly cosmetic
Speaker 1: um and it's hard for me even to see how
Speaker 1: the Trump administration is going to really concede to rolling
Speaker 1: back existing tariffs and giving up that leverage, and how
Speaker 1: Beijing is going to give up on any kind of
Speaker 1: meaningful assurances on intellectual property. So I really don't see
Speaker 1: how we can make a meaningful progress that eliminates that
Speaker 1: really lifts of this uncertainty. What is your GDP called
Speaker 1: twelve months forward? Well, I think we've got well, so
Speaker 1: we've got trend growth in in the US, so we're
Speaker 1: right now tracking below trend on Q four, we're around
Speaker 1: one and a quarter percent, reflecting some of the drag
Speaker 1: from on investment um. But and we've got trend growth
Speaker 1: in in now. That's presuming that some of this monetary
Speaker 1: accommodation is able to do that. The uncertainty tax and
Speaker 1: the rubber really hits the road with with the global
Speaker 1: stabilization that Jonathan alluded to at the top of the
Speaker 1: broadcast Julie over the weekend with a beverage of May
Speaker 1: and somebody asked me, if we have one percent GDP
Speaker 1: growth a year one and a quarter percent, what portion
Speaker 1: of America is in recession? I mean, if it's not
Speaker 1: distributed equally, what percentage of Americans are enjoying recession with
Speaker 1: a sub two percent GDP statistics? The answer is a lot. Well, yeah,
Speaker 1: I mean, I think what we've seen the the good
Speaker 1: thing that we've seen as the resiliency in the labor
Speaker 1: market and even the sort of lower tear of the
Speaker 1: wage earners really enjoying some wage gains in a strong
Speaker 1: job market, and that's held up despite what has been
Speaker 1: a recession in the manufacturing sector. So I think if
Speaker 1: you are in the manufacturing sector, you are seeing layoffs,
Speaker 1: you are seeing a tougher environment. But if you're in
Speaker 1: the service sector, things have still been pretty good and
Speaker 1: that rebiliency has been very encouraging. Julia, Thank you so much.
Speaker 1: Julia Carne out of Macro Policy Perspectives this morning, Paul,
Speaker 1: this is great. It's always good to talk precious metals.
Speaker 1: I mean, all that's going on there, but particularly if
Speaker 1: they can gaze at the two carrots special from Tiffany's
Speaker 1: and as a gemologist, tell you if you did hope. Okay,
Speaker 1: how often do we talk to somebody on the South
Speaker 1: Side that's in actually like big time gemology. I don't
Speaker 1: know this. I mean, our next guy covers absolutely everything, FX, commodities, medals, uh,
Speaker 1: you name it. She covers the Georgette Boulet uh, senior
Speaker 1: effets and precious metal strategist at a bien Amro, joining
Speaker 1: us on the phone from Amsterdam. I believe, Georgette, thanks
Speaker 1: so much for joining us this morning. Let's start with
Speaker 1: the medals. You know, just looking you know at gold. Um,
Speaker 1: you know a lot of people's I'm just not sure
Speaker 1: what to do with gold here? What is your thought?
Speaker 1: Thank you very much for having me. Yeah, the gold
Speaker 1: market is looking a bit for direction. And the thing
Speaker 1: as well is is that we are currently close to
Speaker 1: an important support and that's around fourteen fifty UM. We
Speaker 1: have been much higher. And the thing now in the
Speaker 1: gold market is that investors are very very long gold.
Speaker 1: They hold already gold from speculators to other investors and
Speaker 1: expecting higher prices UM. And yeah, they still hope to
Speaker 1: see it further this year. The only thing is is
Speaker 1: that we had some here and there's some new supportive
Speaker 1: news on gold prices, but as everyone is already positions
Speaker 1: for it, the problem is that it's not pushing prices
Speaker 1: much higher. So the biggest risk we have in the
Speaker 1: near term is that we get some price correction further
Speaker 1: on gold prices, meaning lower towards at least fourteen hundreds,
Speaker 1: and then you you only need a very small amount
Speaker 1: of position liquidation of all the big positions we currently
Speaker 1: have in the market. So so I would say near
Speaker 1: term there's quite some correction risk and then fourteen hundreds
Speaker 1: is probably then easily reached and then um, yeah for
Speaker 1: next year, I'm more positive again, expecting sixteen hundreds in
Speaker 1: the end of next year. So it's interesting. The one
Speaker 1: of the things about commodities is people are trying to
Speaker 1: get a sense of where the dollars. Is there any
Speaker 1: bare case out there for the US dollar? Um. Now,
Speaker 1: for commotities, especially for precious matters, the direction on the
Speaker 1: dollar is very important. It's in a way, yeah, a
Speaker 1: kind of currency. Most of the of the gold market
Speaker 1: is trading as a proxy currency so far. By the
Speaker 1: way as well, UM and yeah, to see a very
Speaker 1: big move in coal prices higher allow della will be
Speaker 1: very welcome. Uh, this is not something we have seen
Speaker 1: this year. Dollar has done relatively well. Gold prices as well,
Speaker 1: So there are more drivers than only the dollar, but
Speaker 1: the dollar is a crucial one. The other one is um, Yeah,
Speaker 1: what the expectasies are in the monetary policy for UM
Speaker 1: and as well as how many government bonds are yeah
Speaker 1: below zero and currently, especially this year, gold got quite
Speaker 1: a boost on the fact that yeah, monetary policy moved
Speaker 1: towards easing. We talk about fat but also easy being
Speaker 1: in other central backs. At the same time, you've quite
Speaker 1: a lot of government bonds yielding negative rates, and then
Speaker 1: gold with er rate is attractive. So then it's not
Speaker 1: really the save haveing story, but more the urn which
Speaker 1: is which is playing out here George plus Sweeney asking
Speaker 1: all those responsible adult questions. I'm just going to weigh
Speaker 1: in here before the holiday season. When you see like
Speaker 1: fancy gold ear rings like the Tiffany Schlumbers a rope
Speaker 1: six row ear clips for six thousand, eight hundred dollars,
Speaker 1: what's the markup of the gold there? I mean you're
Speaker 1: a gemalogist plus doing gold at a b N m row.
Speaker 1: What's the markup on jewelry and gold? Um, that very
Speaker 1: much depends on how much what kind of two repeace
Speaker 1: it is, But overall I would say, you know, there
Speaker 1: is quite a markup on that as well. If you
Speaker 1: if you look at and to Repeace and you calculate
Speaker 1: how much grams or I'm there, you know the market
Speaker 1: press shouldn't roughly know how much is also designed because
Speaker 1: a lot on the Jewish side, there's also a lot
Speaker 1: of designing which yeah, yeah, consumers also pay for you
Speaker 1: see that Paul's news you can use exactly. I just
Speaker 1: sorry did by the way, Georgia, I think Tom just
Speaker 1: clicked and that's now in his cart here, so it's
Speaker 1: not in my all right. So, um energy one of
Speaker 1: the things just looking at oil, um, looking at Brent
Speaker 1: at sixty two barrel. You know, there's a lot of
Speaker 1: questions here about demand, global demand. What is your view
Speaker 1: on global oil at this point? Um, we expect that. Yeah,
Speaker 1: you have two major forces currently going on on the
Speaker 1: old market. On the one end, Yeah, people are getting
Speaker 1: more concerned about the global outlook and therefore did an
Speaker 1: amount expectations for oil are more towards the downside. At
Speaker 1: the same time, we have experienced quite monsortity in the
Speaker 1: Middle East and also there you get a bit more
Speaker 1: risking on old price. So and these two main factors, Yeah,
Speaker 1: keeping all prices a bit yeah, relatively stable. No, no
Speaker 1: strong directional move so and and and we don't have
Speaker 1: a strong directional movie either on on all prices. Um.
Speaker 1: So I would say around these levels and a bit higher.
Speaker 1: George app A, thank you so much for joining us.
Speaker 1: We really appreciate your thoughts on across the whole wide
Speaker 1: array of wide A. Right, we didn't get the coffee
Speaker 1: or sugar or aning that kind of fun stuff. George Apple, A,
Speaker 1: B and M R. Seniors and metal strategists. Thanks for
Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to
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