WEBVTT - Surveillance: H.K.'s Special Status At Stake, Fenby Says 0:00:09.880 --> 0:00:13.040 Welcome to the Bloomberg Surveillance Podcast and I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jai Ley. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.520 Bloomberg dot Com, and of course on the Bloomberg Say 0:00:27.520 --> 0:00:30.240 what you will. But there was a moment where Prince 0:00:30.400 --> 0:00:33.199 Charles in the United Kingdom showed the flag. It was 0:00:33.200 --> 0:00:37.440 twenty three years ago as the Britannia slipped out of 0:00:37.479 --> 0:00:40.400 the harbor of Hong Kong and into the Pacific Ocean. 0:00:40.920 --> 0:00:45.839 This after Christopher Patton said very simply that key phrase 0:00:46.200 --> 0:00:50.320 that we knew at the time, again twenty three years ago, Uh, 0:00:50.360 --> 0:00:53.479 the idea of moving on. I'll get the phrase for 0:00:53.520 --> 0:00:56.080 you in a moment. We are honored that on this 0:00:56.240 --> 0:00:59.920 important day for Hong Kong, Lord Patton can join us. 0:01:00.320 --> 0:01:04.560 Lord Patton, Who do you blame for this moment? It 0:01:04.640 --> 0:01:08.280 was to wait at least fifty years we didn't get there. 0:01:08.800 --> 0:01:13.399 Who do you blame? Chi Jin Ping? Chi Jinping is 0:01:13.720 --> 0:01:17.880 a new sort of Chinese dictator. Well, when I say new, 0:01:18.360 --> 0:01:22.480 different from his immediate predecessors. Um certainly is in the 0:01:22.560 --> 0:01:27.280 nineteen nineties and since nineteen while they have been far 0:01:27.400 --> 0:01:32.639 from open in Wong or in China, on the whole, 0:01:33.400 --> 0:01:36.720 Chinese leaders kept to their agreement on one country two 0:01:36.800 --> 0:01:39.400 systems that Hong Kong could continue with a high degree 0:01:39.440 --> 0:01:42.600 of autonomy with its own freedoms. What we've seen with 0:01:42.760 --> 0:01:47.920 Jijijijiinping is a determination to strengthen the party's hold over everything. 0:01:48.280 --> 0:01:51.440 He's been throwing China's weight around in a way which 0:01:51.480 --> 0:01:55.040 is in a danger to all democracies around the world, 0:01:55.520 --> 0:01:57.760 and I think he needs to be called out. And 0:01:57.840 --> 0:02:02.240 he's taken advantage of this coronavirus, which of course has 0:02:02.280 --> 0:02:04.680 been more difficult to deal with the way it was 0:02:04.960 --> 0:02:08.880 covered up in the initially by secretive communist officials. He's 0:02:08.880 --> 0:02:11.480 trying to take advantage of that. Not only in Hong Kong, 0:02:11.800 --> 0:02:16.720 but there are incursions by Chinese troops into India. They've 0:02:16.760 --> 0:02:20.919 been throwing their weight around in around Taiwan. They've been 0:02:20.960 --> 0:02:24.280 throwing their weight around in the South China Sea, despite 0:02:24.280 --> 0:02:27.800 the promises they made to President Obama. So this is 0:02:27.840 --> 0:02:31.160 down to shijin Ping, who is terrified of having to 0:02:31.240 --> 0:02:34.680 deliver in Hong Kong. The promises that people were made 0:02:34.720 --> 0:02:37.160 that they could live under the rule of law. In 0:02:37.240 --> 0:02:42.840 relatively we see this, Lord Patton on a week where 0:02:42.880 --> 0:02:46.720 Stanley hodis, there are the merchants of Hong Kong going 0:02:46.760 --> 0:02:51.000 back centuries. How would you suggest the business leaders of 0:02:51.120 --> 0:02:54.240 Hong Kong will react to this? What would be the 0:02:54.280 --> 0:02:59.840 best patent path? Well, I want to say this very clear. 0:03:01.080 --> 0:03:04.480 When I was Governor of Hong Kong, and there was 0:03:04.560 --> 0:03:08.280 great support from the American Chamber of Commerce, from the 0:03:08.360 --> 0:03:10.720 United States in general for what we were trying to 0:03:10.760 --> 0:03:14.880 secure in Hong Kong. And even though I had worries 0:03:14.919 --> 0:03:18.919 about China, as we've all did, worries about a communist system, 0:03:18.960 --> 0:03:23.040 not about Chinese people, but about about communism. And I 0:03:23.120 --> 0:03:27.400 used to lobby every year Congress to give their China 0:03:27.480 --> 0:03:32.760 Most Favored Nation status verdictively open trade, although then outside 0:03:32.800 --> 0:03:35.200 the w t O rules. And I used to also 0:03:35.360 --> 0:03:38.960 argue that whatever happened, we shouldn't danger the well being 0:03:39.600 --> 0:03:43.000 in Hong Kong. And that's still my my feeling. I 0:03:43.040 --> 0:03:47.160 think that what should happen, I hope I am following 0:03:47.240 --> 0:03:53.880 President the Secretary of States Pompeo's understandable reaction is that 0:03:53.960 --> 0:03:59.480 we should form together countries which will make a Hong 0:03:59.560 --> 0:04:04.040 Kong will make China pay for what it's doing in home. 0:04:04.760 --> 0:04:06.920 And I hope that we will stand up for Hong 0:04:07.000 --> 0:04:11.080 Kong as over five hundred political leaders and church leaders 0:04:11.080 --> 0:04:13.560 and others around the world have already done. I hope 0:04:13.560 --> 0:04:17.320 will together and I hope that business will welcome that, 0:04:17.360 --> 0:04:20.000 because there's no question at all that if you undermine 0:04:20.040 --> 0:04:22.520 the rule of law in Hong Kong, then you start 0:04:22.600 --> 0:04:26.839 to make Hong Kong a less important financial hub in Asia. 0:04:27.520 --> 0:04:31.200 It's already responsible for maybe two thirds or more of 0:04:31.240 --> 0:04:35.360 the direct investment which goes into an out of China. 0:04:35.800 --> 0:04:38.360 And I just think that a lot of people will 0:04:39.160 --> 0:04:43.200 but running their businesses from Hong Kong or about recruiting 0:04:43.240 --> 0:04:46.039 people to work in Hong Kong. So I hope business 0:04:46.040 --> 0:04:52.279 will put without without too nervousness, and fairly to China 0:04:52.600 --> 0:04:57.360 what they actually think. Um, Chris Patton, good morning from 0:04:57.360 --> 0:04:59.479 London as well as Francene, So are you saying that 0:04:59.520 --> 0:05:03.400 actually the steps taken by the US so far could 0:05:03.400 --> 0:05:06.200 could actually backfire and just hurt businesses and people that 0:05:06.320 --> 0:05:09.840 have already been through a lot in the law. Let 0:05:09.880 --> 0:05:13.159 me be absolutely clear about this and what President, what 0:05:13.600 --> 0:05:16.360 Secretary of State said, and what I imagine the President 0:05:16.400 --> 0:05:20.159 will saying course is pretty accurate. I mean he's he's 0:05:20.200 --> 0:05:25.120 defined described what everybody is saying. That this is coach 0:05:25.160 --> 0:05:28.680 and horse bol of law in Hong Kong and through 0:05:28.720 --> 0:05:32.680 the promises made to Hong Kong of one country, two systems, 0:05:32.760 --> 0:05:37.080 and that throws out overboard. And I'm very pleased that 0:05:37.160 --> 0:05:40.919 the Secretary of State made that. And so you can't 0:05:41.120 --> 0:05:44.320 argue that what's happened leaves Hong Kong with a high 0:05:44.400 --> 0:05:47.839 degree of autonomy. It doesn't. But what I hope is 0:05:47.880 --> 0:05:52.000 that the American legislature, that Senator and Congress won't move 0:05:52.040 --> 0:05:55.200 on from that and impose some sort of sanctions on 0:05:55.360 --> 0:06:00.440 Hong Kong if you want to impose sanctions on China time, 0:06:00.560 --> 0:06:04.239 but please don't heard Hong Kong at the moment, because 0:06:04.240 --> 0:06:07.279 it's been heard badly enough by what China has done. 0:06:08.400 --> 0:06:11.200 So we would you not say that that the UK 0:06:11.600 --> 0:06:13.960 and the U should actually treat Hong Kong right now 0:06:14.120 --> 0:06:18.039 as a rest of China. I hope that we will 0:06:18.080 --> 0:06:22.360 still try to work to restore some degree of autonomy, 0:06:22.560 --> 0:06:25.359 a greater degree of autonomy in Hong Kong, and that 0:06:25.440 --> 0:06:28.719 we will make China understand that there is a price 0:06:28.800 --> 0:06:31.720 to be paid for what it's been doing, not just 0:06:31.839 --> 0:06:35.720 in Hong Kong, but elsewhere too. There is next month 0:06:35.800 --> 0:06:38.960 or upcoming meeting of the G seven, and I've argued 0:06:39.160 --> 0:06:42.560 that and should make sure that Hong Kong is on 0:06:42.600 --> 0:06:46.400 the agenda there, and that President Trump, who I think 0:06:46.400 --> 0:06:48.680 will be in the chair at that meeting, and others 0:06:49.920 --> 0:06:54.320 together a common position on Hong Kong and on China. 0:06:54.640 --> 0:06:58.359 We all have the same interests, whether commercial or otherwise, 0:06:58.400 --> 0:07:02.279 in relation to China. Where you look at the annual 0:07:02.320 --> 0:07:08.720 reports of the international Chambers of commerce in Beijing, Japanese, American, European, 0:07:09.000 --> 0:07:11.600 they all do the same thing. They all make the 0:07:11.640 --> 0:07:15.320 same complaints about the way that China does business. And 0:07:15.400 --> 0:07:18.200 what we need to do is not work separately in 0:07:18.280 --> 0:07:21.600 relations to China. We need to have a common position 0:07:22.000 --> 0:07:28.840 that will terrify China's picking us off one of the 0:07:28.880 --> 0:07:32.480 Lord Patton, your comment from twenty three years ago, your 0:07:32.560 --> 0:07:37.360 historic single sentence, I have relinquished the administration of this government. 0:07:37.800 --> 0:07:42.000 God saved the Queen. Pattent, What is your advice this 0:07:42.080 --> 0:07:45.440 morning to the Secretary of State of the United States, 0:07:45.800 --> 0:07:51.880 As you call for an allied response, a developed, developed 0:07:51.920 --> 0:07:56.400 economy response. What would be your counsel to Mr Pompeio. 0:07:57.800 --> 0:08:00.320 My counsel to Mr Pompey would be first of all, 0:08:00.400 --> 0:08:02.680 to thank him for the interest he has taken in 0:08:03.080 --> 0:08:07.280 Hong Kong, which I think is widely, widely and enthusiastically 0:08:07.320 --> 0:08:11.360 accepted in Hong Kong. He's not interfering in Hong Kong. 0:08:11.600 --> 0:08:15.720 He's expressing the sentiments of the democratic politician about the 0:08:15.880 --> 0:08:21.640 possible fate of a what was UH community under the 0:08:21.720 --> 0:08:24.920 rule of law. So I thank him for that. And 0:08:25.120 --> 0:08:27.560 the Chinese don't understand that the problems in Hong Kong 0:08:27.720 --> 0:08:30.760 because of them, not because from people from outside. But 0:08:30.800 --> 0:08:34.880 I would also ask him to remember that liberal democracies 0:08:34.920 --> 0:08:37.440 around the world, and I mean the word liberal not 0:08:37.520 --> 0:08:40.199 in a particularly American sense, but in the classical sense. 0:08:40.280 --> 0:08:44.480 Open societies around the world are always strongest when they 0:08:44.520 --> 0:08:47.600 worked together. The world did so well for fifty or 0:08:47.640 --> 0:08:54.120 sixty years because under American leadership, Europe, Japan, Canada, Australia, 0:08:54.520 --> 0:08:58.040 United States, all of us worked together under American leadership. 0:08:58.600 --> 0:09:01.480 And I hope that that's what this administration or a 0:09:01.600 --> 0:09:07.720 future administration will do. Because oh, that China is an 0:09:07.840 --> 0:09:10.120 enemy to us. Now, I'm sorry to say that, but 0:09:10.200 --> 0:09:13.720 that's how it behaves not Chinese people that the Chinese 0:09:13.720 --> 0:09:17.560 Communist Party loo patnant. You started off by saying that, 0:09:17.800 --> 0:09:20.160 you know, President she is going to beyond what any 0:09:20.160 --> 0:09:22.040 other leader has done so far, and you called him 0:09:22.040 --> 0:09:25.600 a dictator. Why do you think he feels emboldened enough 0:09:25.640 --> 0:09:29.560 to do that now when when predecessors hadn't. But he 0:09:29.640 --> 0:09:34.480 feels emboldened to do it. But first of all because 0:09:34.640 --> 0:09:37.440 he reckons that the rest of the world, and it's true, 0:09:38.240 --> 0:09:43.040 are very preoccupied with with fighting the pandemic, which got 0:09:43.080 --> 0:09:46.360 as bad as it has been, partly because of the 0:09:46.400 --> 0:09:49.920 secrecy and mendacity of the Communist Party in the early 0:09:50.000 --> 0:09:53.319 stages when they're very brave Chinese doctors would find that 0:09:53.400 --> 0:09:56.320 blow the whistle on what was happening in Wuhan. But 0:09:56.400 --> 0:09:58.800 I also think that he's probably under a great deal 0:09:58.840 --> 0:10:04.400 more pressure and reacting with some nervousness because, first of all, 0:10:05.000 --> 0:10:09.520 is the party of the way the pandemic was handled. 0:10:09.920 --> 0:10:13.120 And I think it's also true that the impact on 0:10:13.160 --> 0:10:17.439 the economy in China is going to see unemployment rising 0:10:17.600 --> 0:10:21.760 and all sorts of economic and social tensions are related 0:10:21.800 --> 0:10:23.960 to that, and what I think he is trying to 0:10:24.000 --> 0:10:27.880 do is to whip up as much nationalist sentiment as possible, 0:10:28.240 --> 0:10:31.760 claiming that everything that's going wrong is because of black hands, 0:10:31.840 --> 0:10:35.240 because of the United States, because of the outside world. 0:10:36.320 --> 0:10:39.800 I wanted to deflect attention from the fact that the 0:10:39.840 --> 0:10:43.920 real problem is how the Chinese Communist Party behaved, and 0:10:44.120 --> 0:10:48.240 China and communist parties are always ultimately the same. They're 0:10:48.280 --> 0:10:54.079 brutal and their liars should should how should you deal 0:10:54.120 --> 0:10:55.760 with them? So we were from Anglomroke. I mean, it's 0:10:55.760 --> 0:11:00.199 pretty big accusations that you're saying. If if you get 0:11:00.240 --> 0:11:02.880 Europe and how what Angela Merkel was saying. She she 0:11:02.920 --> 0:11:06.160 seems to intimate that actually the EU should should get 0:11:06.200 --> 0:11:10.000 closer to to China because of economic ties. Would that 0:11:10.080 --> 0:11:13.520 be a mistake? I think I can't believe she actually 0:11:13.559 --> 0:11:15.520 said that. I think it would be a terrible mistake. 0:11:15.840 --> 0:11:18.480 What we should try to do is to make sure 0:11:18.559 --> 0:11:23.480 that China behaves by the rules, that China keeps the 0:11:24.120 --> 0:11:26.520 agreements it makes, which he doesn't do at the moment. 0:11:27.000 --> 0:11:30.160 I don't believe in cutting off all ties with but 0:11:30.240 --> 0:11:33.040 I do believe in standing up to China when it 0:11:33.120 --> 0:11:35.920 breaks its word to it to us and it does over. 0:11:38.040 --> 0:11:40.479 But we will need to have some sort of relationship 0:11:40.559 --> 0:11:44.600 with China if we're going to deal with future pandemics, 0:11:44.640 --> 0:11:47.760 and in the years ahead, for example, there are going 0:11:47.800 --> 0:11:52.520 to be big problems about anti microbial resistance, given not 0:11:52.720 --> 0:11:57.160 least that of the antibiotics in the world are made 0:11:57.240 --> 0:11:59.400 in China, So we will need to have some sort 0:11:59.440 --> 0:12:03.560 of agreement. Will need to find agreements, which they on 0:12:03.640 --> 0:12:06.280 the environment, we need to do that on trade. But 0:12:06.400 --> 0:12:08.880 when they break them, when they kind of bully, as 0:12:08.920 --> 0:12:11.760 they've been doing recently in Australia, and as they've done 0:12:11.760 --> 0:12:14.240 in Sweden, as they've done in Norway and elsewhere, we 0:12:14.360 --> 0:12:17.200 need to step up to them. These new wolf borrior 0:12:17.320 --> 0:12:20.480 diplomats who give a bad name need to be told 0:12:20.480 --> 0:12:26.640 to get out of place. Chris Patton, how do we 0:12:26.720 --> 0:12:29.800 find a new show and lay? I mean after Mao, 0:12:30.559 --> 0:12:34.160 a gentleman came along who allowed for a handshake with 0:12:34.280 --> 0:12:38.480 Richard Nixon. If China is in search of a way 0:12:38.520 --> 0:12:43.400 to calm things down, can you identify that person or 0:12:43.440 --> 0:12:49.040 can you identify the process within their totalitarian regime or 0:12:49.080 --> 0:12:52.439 you get to the next show and lay now. I 0:12:53.000 --> 0:12:55.559 can't and nobody from the outside can. What you can 0:12:55.600 --> 0:13:00.800 depend on is it even it looks completely united against 0:13:00.800 --> 0:13:02.680 the world. You can depend on the fact that there's 0:13:02.760 --> 0:13:06.920 politics going on in there like nobody's business. But you know, 0:13:07.360 --> 0:13:10.000 how did how do you manage to express a country 0:13:10.120 --> 0:13:13.840 view in China? If when you do so, your or 0:13:13.920 --> 0:13:16.800 does disappear straight away? I noticed that in the vote 0:13:16.840 --> 0:13:20.640 in the in the rubber stamp parliament today there was 0:13:20.720 --> 0:13:26.000 one dissenting vote on the Hong Kong resolution and six 0:13:26.800 --> 0:13:30.320 I think who who abstained? I imagine that they're already 0:13:31.000 --> 0:13:34.480 in re education camps and learning the right things to do. 0:13:34.840 --> 0:13:37.920 So it's very difficult to be a dissident in China, 0:13:38.360 --> 0:13:43.880 and this president Ji jinpingalist dictator has don't forget and 0:13:44.120 --> 0:13:48.840 closed down any dissident activity that he's seen. Um he's 0:13:48.920 --> 0:13:51.960 locked up human rights lawyers, one or two people who 0:13:51.960 --> 0:13:55.600 were critical of him, UM the way he handled the 0:13:55.640 --> 0:14:00.679 coronavirus have simply disappeared. And those who tried to on 0:14:00.720 --> 0:14:03.640 the social media try to set out what was happening, 0:14:03.840 --> 0:14:06.640 they've been closed down. This is this is not some 0:14:07.200 --> 0:14:09.920 it's done a good Guy, and he is intent on 0:14:10.080 --> 0:14:13.840 sending his Ministry of State Security into Hong Kong, which 0:14:13.880 --> 0:14:17.240 is the sort of equivalent of the Chinese KGB. And 0:14:17.240 --> 0:14:19.800 they're not being sent to Hong Kong in order to 0:14:19.800 --> 0:14:25.760 sell dim Sum. Actually try to shut up anybody who 0:14:25.760 --> 0:14:33.200 objects to what China lord pattern. Across from Alexandra House 0:14:33.520 --> 0:14:37.200 and down from the Mandarin Hotel and Central Square are 0:14:37.240 --> 0:14:41.000 the offices of the JP Morgan Company. I want you 0:14:41.040 --> 0:14:45.560 to advise American banking right now on what their approach 0:14:45.560 --> 0:14:49.640 should be after this historic day. How should James Diamond 0:14:49.680 --> 0:14:55.080 and others sustain and project in Hong Kong. Well, I 0:14:55.120 --> 0:14:57.880 think they should be a very cautious, which I imagine 0:14:57.920 --> 0:15:00.200 they will be. I hope they went pull out of 0:15:00.280 --> 0:15:03.520 Hong Kong. What's actually been happening as China has been 0:15:03.560 --> 0:15:06.720 trying to tighten its grip on Hong Kong. What's been 0:15:06.760 --> 0:15:10.560 happening is unfortunately quite a lot of I think, particularly 0:15:10.600 --> 0:15:14.440 younger executives, who have been wanting to move elsewhere. But 0:15:14.560 --> 0:15:17.280 I'm good, delight, I'm pleased that the main banks and 0:15:17.320 --> 0:15:19.880 others are still there in Hong Kong, and I hope 0:15:19.880 --> 0:15:23.000 that they will continue to support the American Chamber of 0:15:23.040 --> 0:15:26.680 Commerce and the American Chamber of Commerce will continue to 0:15:26.720 --> 0:15:29.600 stand up for the rule book, will continue to stand 0:15:29.680 --> 0:15:32.560 up of law, will continue to stand up for all 0:15:32.640 --> 0:15:36.400 those things which have helped Hong Kong and American business 0:15:36.400 --> 0:15:39.320 in Hong Kong, an American business around the world to 0:15:39.520 --> 0:15:43.880 prosper because American business is so successful, because it's helped 0:15:43.880 --> 0:15:48.400 to create an environment markets can operate in a fair 0:15:48.440 --> 0:15:51.000 on a fair basis, and I think that's the way 0:15:51.040 --> 0:15:55.360 that the best banks have behaved, not occasionally without without 0:15:55.400 --> 0:15:57.640 getting things wrong. But we won't go back over all 0:15:57.680 --> 0:16:00.040 that there's still better than an alternative. I can in 0:16:00.160 --> 0:16:03.680 gole Chris Patton, thanks so much for joining us. We'll 0:16:03.720 --> 0:16:05.360 have to get you back on also to address some 0:16:05.400 --> 0:16:08.000 of the issues out there on the South China Sea 0:16:08.040 --> 0:16:10.720 and whether that's where the first confersation between the US 0:16:10.760 --> 0:16:13.640 and China will actually happen. Christopher Patton, their former governor 0:16:13.920 --> 0:16:19.120 of Hong Kong. Let's start the program this morning show 0:16:19.160 --> 0:16:22.080 where we can do that with Evan Brown of UVSS Management. 0:16:22.080 --> 0:16:24.360 Evan Fancaster to catch up with you, sir. Let's just 0:16:24.360 --> 0:16:25.760 start with a question that I think is on a 0:16:25.760 --> 0:16:28.120 lot of people's minds at the moment, it is clear 0:16:28.440 --> 0:16:31.480 that the relationship between China and the United States is 0:16:31.520 --> 0:16:34.800 breaking down again. What's less clear is why this market 0:16:34.840 --> 0:16:37.160 is not picking up on it outside of the hank saying, 0:16:37.280 --> 0:16:39.920 outside of the Chinese currency, what's your read on things 0:16:40.000 --> 0:16:42.280 right now? Evan, Yeah, I think I think the market 0:16:42.480 --> 0:16:47.640 is taking a lot of these broader issues on Hong Kong, 0:16:48.240 --> 0:16:53.480 on technology, on capital flows and separating them from trade. 0:16:53.880 --> 0:16:57.760 They see the Hong Kong issues as more as more 0:16:57.800 --> 0:17:01.640 regional and drawn out and view from the over rightly 0:17:01.720 --> 0:17:04.399 or wrongly, the view from the overall market is that 0:17:04.440 --> 0:17:07.760 as long as this Phase one trade deal stays in place, 0:17:08.280 --> 0:17:11.560 then it's not so much a global market issue. And 0:17:11.600 --> 0:17:15.240 I think, uh it was actually on that on that point. 0:17:15.760 --> 0:17:19.520 Very interesting that on Friday the U S Trade Representative 0:17:19.600 --> 0:17:22.720 and U S Department of Agriculture coming out with a 0:17:22.800 --> 0:17:27.520 joint statement and saying that the trade the trade agreement 0:17:27.680 --> 0:17:30.760 is still going well, and if even in the context 0:17:30.760 --> 0:17:34.480 of obviously China purchasing a lot fewer agricultural goods than 0:17:34.720 --> 0:17:37.760 than was agreed, and so the administrations are really trying 0:17:37.800 --> 0:17:41.520 to separate trade from technology in Hong Kong and the lake. 0:17:41.960 --> 0:17:44.840 And as long as that happens, I think the market 0:17:44.840 --> 0:17:47.960 will be able to to hold that. Yeahvin, let me 0:17:48.000 --> 0:17:51.919 ask a sixty question your multi asset. Where is the 0:17:52.000 --> 0:17:55.960 gain right now in the multi of multi asset? Which 0:17:56.040 --> 0:17:59.720 part is where I can be comfortable being if a 0:17:59.760 --> 0:18:01.680 man actually trying to make a gain over the next 0:18:01.680 --> 0:18:05.240 twelve months. Yeah, so I think, um, Well, if you're 0:18:05.240 --> 0:18:08.760 really trying to make a gain, I think it's uh, 0:18:09.040 --> 0:18:12.199 it's buying some of the laggards here, buying some of 0:18:12.200 --> 0:18:15.560 the things where we're seeing a genuine policy change and 0:18:15.600 --> 0:18:18.360 where they're deep valuations. So I was starting in Europe 0:18:18.400 --> 0:18:21.320 right We everyone's hated European banks forever, but I do 0:18:21.440 --> 0:18:25.919 think we are seeing some meaningful, meaningful policy changes happening 0:18:25.920 --> 0:18:29.840 out of Europe with with the recovery plan announced yesterday. 0:18:29.880 --> 0:18:31.679 Obviously we know this is going to take time to 0:18:31.720 --> 0:18:35.639 get agreed upon, but the direction of travel is is clear, 0:18:35.760 --> 0:18:39.320 and the signals for Merkel from Germany, the leader of 0:18:39.359 --> 0:18:43.240 the facto leader of Europe going forward towards a fiscal 0:18:43.359 --> 0:18:46.359 union is really important. So I could see some rerating there. 0:18:46.600 --> 0:18:50.920 And also people should start paying attention to Japan massive 0:18:51.000 --> 0:18:54.960 fiscal stimulus coming out of Japan right now. Um, and uh, 0:18:55.119 --> 0:18:57.680 you know, if we're looking at monetary and fiscal combination 0:18:57.800 --> 0:19:00.639 and the power that that that can create for an economy, 0:19:00.840 --> 0:19:03.359 we're not finally getting it from Japan. We've had it 0:19:03.359 --> 0:19:06.320 on the monetary side, but not this strong on the 0:19:06.400 --> 0:19:10.159 fiscal side. So, um, the deep value opportunities there to 0:19:10.240 --> 0:19:12.240 pick up. Evan, I want to pick up on what 0:19:12.280 --> 0:19:15.280 you were talking about, the e use fiscal response that 0:19:15.320 --> 0:19:19.320 we saw proposed not yet past, still facing some resistance, 0:19:19.320 --> 0:19:22.200 probably from the frugal four. You wrote that the distribution 0:19:22.320 --> 0:19:24.800 of risks right now for Europe are poised to the 0:19:24.920 --> 0:19:28.560 upside from being to the downside earlier. Where do you 0:19:28.600 --> 0:19:32.080 see this not priced into risk assets in Europe? The 0:19:32.119 --> 0:19:35.520 idea that the EU proposal will get past in its 0:19:35.600 --> 0:19:38.720 current form and will bleed into the region. Yeah, so 0:19:38.800 --> 0:19:41.440 all right, And and and in terms of the distribution 0:19:41.440 --> 0:19:43.960 of risk, I mean, I'll tell you I was concerned 0:19:44.000 --> 0:19:48.000 myself about about Europe when that German court ruled against 0:19:48.040 --> 0:19:50.360 against the e c B. And and I think it's 0:19:50.359 --> 0:19:52.560 scared Mercle too. And I think that's why we're seeing 0:19:52.560 --> 0:19:55.640 this change on the fiscal side. But I think where 0:19:55.640 --> 0:19:59.920 it's it's not so much price. UH is European Bank 0:20:00.359 --> 0:20:03.520 that's definitely one of them. Italian equity is extremely cheap. 0:20:03.560 --> 0:20:05.879 But I really think this is going to go a 0:20:05.920 --> 0:20:09.960 long way in people looking at the at the fiscal 0:20:10.000 --> 0:20:13.480 trajectory of Italy. Obviously it's ugly, but just the signal 0:20:13.520 --> 0:20:16.120 that Europe is moving the direction saying we have your back. 0:20:16.160 --> 0:20:19.240 And to be honest, these frugal floor um, you know 0:20:19.240 --> 0:20:22.119 they're putting up a fight, but honestly they don't have 0:20:22.160 --> 0:20:24.960 that much leverage when you have the four main leading 0:20:25.040 --> 0:20:28.679 countries of Europe, uh, you know, Germany, France, Italy, Spain 0:20:29.119 --> 0:20:32.439 behind this and UH and and so I think that 0:20:32.640 --> 0:20:36.000 their their their power in in driving or slowing down. 0:20:36.040 --> 0:20:40.639 This debate is probably exaggerated. Evan. You'll have to forgive me. 0:20:40.680 --> 0:20:42.520 Maybe I'm a glass half empty kind of guy, in 0:20:42.560 --> 0:20:45.440 which case I'm sorry. But Tom, how long have we 0:20:45.520 --> 0:20:47.800 been talking about this? And maybe I've just been conditioned 0:20:47.840 --> 0:20:50.520 by much of the last ten years. There are still holdouts. 0:20:50.760 --> 0:20:54.720 Let's even say that they capitulate the Netherlands, Australia, Austria 0:20:54.840 --> 0:20:57.080 come along with this whole plan. You've still got to 0:20:57.119 --> 0:21:00.680 wait until early next year for that capital to be deployed. 0:21:01.080 --> 0:21:03.480 Just think about that. Every month matters. Right now, we're 0:21:03.520 --> 0:21:05.919 sitting here in the United States arguing about whether d 0:21:06.040 --> 0:21:08.720 C whites a month or two. Europe, even if it 0:21:08.760 --> 0:21:11.119 gets his act together, won't be able to deploy this 0:21:11.280 --> 0:21:14.679 until the start of next year. There's no question to 0:21:14.760 --> 0:21:18.520 the timeline here, folks, is really really, really quite something. Heaven. 0:21:18.560 --> 0:21:20.920 One of your thoughts on that, how fast can Europe move? 0:21:22.280 --> 0:21:26.199 Not fast? Unfortunately, nothing, Nothing is easy in Europe, and 0:21:26.240 --> 0:21:29.440 that's why you know, we crucially are going to rely 0:21:29.520 --> 0:21:31.880 on the e c B to form a bridge over 0:21:31.920 --> 0:21:34.400 the course of this time before we can really get 0:21:34.440 --> 0:21:36.840 things going. I think I think that's why we're not 0:21:36.880 --> 0:21:40.320 necessarily saying jump all in on on European equities in 0:21:40.600 --> 0:21:43.560 European assets right now, because it's you're not going to 0:21:43.640 --> 0:21:45.920 see the speed that you're seeing in Japan right now. 0:21:45.920 --> 0:21:48.000 I mean, we are nervous about the the US not 0:21:48.080 --> 0:21:51.480 acting quickly enough. At least in Europe, you have some 0:21:51.600 --> 0:21:55.720 better automatic stabilizers in the background than you do, say 0:21:55.720 --> 0:21:57.920 in the in the US or perhaps some other regions. 0:21:58.200 --> 0:22:01.919 But the burden will definitely at Lee, Uh depend on 0:22:01.960 --> 0:22:05.399 the ECB ramping up its QE program and finding ways 0:22:05.440 --> 0:22:10.320 around these ongoing core challenges from U coming out of Germany. Ivan, 0:22:10.359 --> 0:22:12.160 I love it. Nothing is easy in Europe. I will 0:22:12.160 --> 0:22:14.440 say nothing is particularly easy in the US right now 0:22:14.440 --> 0:22:16.720 when it comes to reopening the economy, and that's been 0:22:17.000 --> 0:22:20.520 one of the driving issues that it's been pushing stocks higher. 0:22:20.840 --> 0:22:24.280 How complicated is it when we talk about reopening at 0:22:24.280 --> 0:22:26.640 a time when people still don't know that much about 0:22:26.640 --> 0:22:30.160 the virus, the path, the spread. Where are you looking 0:22:30.200 --> 0:22:33.439 to find value amid this sort of risk on tilt 0:22:33.680 --> 0:22:38.240 with reopening still very much unproven. It's it's really tricky, Lisa. 0:22:38.359 --> 0:22:41.720 I mean we we have the same kind of uncertainty 0:22:41.840 --> 0:22:45.240 that that everyone does. I think, Um, you know, we're 0:22:45.280 --> 0:22:49.840 we're obviously looking at all the high frequency data that 0:22:49.840 --> 0:22:53.399 that Google and Apple and others are providing showing activity 0:22:53.640 --> 0:22:57.760 of gradually picking up. I think the market is liking that. 0:22:57.800 --> 0:23:00.800 They like to see things getting less add but clearly 0:23:00.840 --> 0:23:04.520 on a year over year basis, overall levels of activity 0:23:04.960 --> 0:23:09.240 are still quite quite depressed. So we're tracking it. We're 0:23:09.280 --> 0:23:12.919 not trying to make big predictions about it. So clearly 0:23:12.920 --> 0:23:15.920 we're seeing some improvement right here, it could stall out 0:23:15.960 --> 0:23:19.399 because reopening or not, it comes down to whether people 0:23:19.400 --> 0:23:22.600 feel comfortable, do they feel safegoing out um and I 0:23:22.640 --> 0:23:25.320 think that's that psychological barrier is going to take a 0:23:25.320 --> 0:23:27.600 while to get through, and that's why it's so crucial 0:23:28.080 --> 0:23:31.959 that we get a new fiscal plan coming through so 0:23:32.040 --> 0:23:35.040 that you know, as the private sector has this caution. 0:23:35.080 --> 0:23:37.359 The private sector always has caution after a recession, but 0:23:37.480 --> 0:23:41.080 especially dealing with an uncertain virus that you're going to 0:23:41.200 --> 0:23:43.359 need to see on the fiscal side, you know, consumers 0:23:43.359 --> 0:23:47.800 made whole businesses, uh, you know, continued lenning and support 0:23:47.880 --> 0:23:50.480 there and and most importantly, I think at state and 0:23:50.520 --> 0:23:52.359 local governments which have been on the front line of 0:23:52.359 --> 0:23:54.520 this crisis. Evan, great to catch up with you. So 0:23:54.600 --> 0:23:57.000 we've got to continue that European conversation at a light 0:23:57.040 --> 0:24:03.640 to day Evan Brown, that of UBS asset management. It's 0:24:03.680 --> 0:24:06.119 really going to be interesting to see how Mr Pompeo 0:24:06.280 --> 0:24:10.040 and the President adapt and adjust to the reality that 0:24:10.200 --> 0:24:13.400 two thousand forty seven is here. There have been many 0:24:13.440 --> 0:24:16.399 good thinkers on this over the years. One of the 0:24:16.400 --> 0:24:19.480 greats has been Jonathan Fenby of T S Lombard. He's 0:24:19.480 --> 0:24:22.960 put out not one but a series of books on China, 0:24:23.000 --> 0:24:25.520