1 00:00:01,400 --> 00:00:04,120 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 2 00:00:04,160 --> 00:00:06,240 Speaker 1: with my co host of Bonnie Quinn. Every business day 3 00:00:06,240 --> 00:00:10,400 Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts, 4 00:00:10,440 --> 00:00:13,600 Speaker 1: along with essential market moving news. Kind the Bloomberg Markets 5 00:00:13,600 --> 00:00:17,000 Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts, 6 00:00:17,000 --> 00:00:21,040 Speaker 1: and on Bloomberg dot com. Well, for the longest time, 7 00:00:21,040 --> 00:00:24,720 Speaker 1: when we talk foreign currencies, I've always asked our learned guests, 8 00:00:24,960 --> 00:00:27,360 Speaker 1: give me a bear case for the U s dollar, 9 00:00:27,440 --> 00:00:31,000 Speaker 1: because for the longest time, Uh, there was no bearer 10 00:00:31,000 --> 00:00:33,600 Speaker 1: case for the US dollar, it seemed like. But again, 11 00:00:33,640 --> 00:00:36,400 Speaker 1: all it takes is a global pandemic and a FED 12 00:00:36,520 --> 00:00:39,040 Speaker 1: coming to the rescue, and there you go. Kid Jukes, 13 00:00:39,080 --> 00:00:43,360 Speaker 1: global fex Strategist, Chief Global effect Strategist for Society General 14 00:00:43,400 --> 00:00:46,280 Speaker 1: and one of our go to folks on all things currency, 15 00:00:46,400 --> 00:00:49,280 Speaker 1: joins us. Uh, Kid, thanks so much for joining us here. 16 00:00:49,920 --> 00:00:52,599 Speaker 1: Give us a sense here of what you think has 17 00:00:52,640 --> 00:00:55,160 Speaker 1: been driving this dollar again down almost nine percent from 18 00:00:55,160 --> 00:00:57,440 Speaker 1: its March twenty high. Give us your sense of what's 19 00:00:57,440 --> 00:01:00,240 Speaker 1: happened to the dollar, how the market's treating the hour, 20 00:01:00,560 --> 00:01:02,360 Speaker 1: and kind of how you think it proceeds from here. 21 00:01:03,560 --> 00:01:05,759 Speaker 1: And I think the first thing that happened is if 22 00:01:05,800 --> 00:01:07,920 Speaker 1: you looked back at that, that that sort of week 23 00:01:07,959 --> 00:01:10,920 Speaker 1: in March, when the FED saved the market, fixed, the 24 00:01:10,959 --> 00:01:15,120 Speaker 1: repo market, fixed the international swamp market, came up with 25 00:01:15,160 --> 00:01:18,000 Speaker 1: the main Street program. I mean that that was a 26 00:01:18,040 --> 00:01:20,760 Speaker 1: spectacular week for the FED, even by the history of 27 00:01:20,800 --> 00:01:23,600 Speaker 1: central banks in the last decade and a bit um 28 00:01:23,880 --> 00:01:25,600 Speaker 1: And you could you could write all of that down 29 00:01:25,640 --> 00:01:28,679 Speaker 1: and say, what what makes the dollar go shooting up 30 00:01:28,680 --> 00:01:32,440 Speaker 1: in times of crisis. It's that all the world needs dollars, 31 00:01:32,480 --> 00:01:34,920 Speaker 1: because that's if you know, if you borrow money, you 32 00:01:34,920 --> 00:01:38,000 Speaker 1: you have debts. You need to get hold of dollars 33 00:01:38,040 --> 00:01:40,479 Speaker 1: to make the system work. And that's what caused that 34 00:01:41,400 --> 00:01:44,800 Speaker 1: spike higher in March, and the FED effectively said, we 35 00:01:44,840 --> 00:01:46,200 Speaker 1: are going to make sure that the rest of the 36 00:01:46,200 --> 00:01:48,160 Speaker 1: world can have as many dollars as they need at 37 00:01:48,160 --> 00:01:51,320 Speaker 1: a fair price. You know, we're standing by. And if 38 00:01:51,360 --> 00:01:54,200 Speaker 1: you just took that face value, you'd say, right, I 39 00:01:54,240 --> 00:01:56,640 Speaker 1: have a barish case for the dollar. What I don't 40 00:01:56,680 --> 00:01:59,400 Speaker 1: have today, and very much the sense then is a 41 00:01:59,440 --> 00:02:02,600 Speaker 1: bullish cave for anything else, because um, you know, at 42 00:02:02,640 --> 00:02:04,960 Speaker 1: that point, very much the sense was this is going 43 00:02:05,000 --> 00:02:08,280 Speaker 1: to be a terrible pandemic for emerging market economies. It 44 00:02:08,320 --> 00:02:10,560 Speaker 1: will be worse in Europe than in the United States, 45 00:02:10,560 --> 00:02:13,440 Speaker 1: and so on and so forth. And I think so 46 00:02:13,440 --> 00:02:15,600 Speaker 1: so that that piece was was easy in a sense. 47 00:02:16,280 --> 00:02:19,480 Speaker 1: That's why gold, gold did well straightaway, and the currencies 48 00:02:19,480 --> 00:02:22,000 Speaker 1: that have been the most beaten up in the first 49 00:02:22,040 --> 00:02:24,919 Speaker 1: half of March bounced back some of their last ground. 50 00:02:25,400 --> 00:02:29,880 Speaker 1: I think that's evolved now in two ways in recent weeks. 51 00:02:30,639 --> 00:02:33,959 Speaker 1: One has been that the European Recovery Fund announcement has 52 00:02:34,040 --> 00:02:36,600 Speaker 1: given I think it's given the market permission to sell 53 00:02:36,680 --> 00:02:39,359 Speaker 1: the dollar because the second biggest currency in the world, 54 00:02:39,760 --> 00:02:44,360 Speaker 1: the euro now has actually at least an agreement for 55 00:02:44,480 --> 00:02:48,400 Speaker 1: proactive fiscal policy, which is a big step forwards on 56 00:02:48,480 --> 00:02:52,400 Speaker 1: the part of Europe's politicians, and that helps UM. And 57 00:02:52,440 --> 00:02:55,239 Speaker 1: then I think there's also this sense, you know, studying 58 00:02:55,280 --> 00:02:58,080 Speaker 1: more negatively for the US, that the FED is isn't 59 00:02:58,120 --> 00:03:02,800 Speaker 1: necessarily done because the US economy he's fighting fighting the pandemic, 60 00:03:03,639 --> 00:03:06,760 Speaker 1: perhaps less successfully at the moment than some of the 61 00:03:06,760 --> 00:03:12,040 Speaker 1: other economies. Now, the announcement about the UM unemployment insurance 62 00:03:12,040 --> 00:03:15,640 Speaker 1: transition will will help the US in that regard. But 63 00:03:15,680 --> 00:03:18,080 Speaker 1: this there's this sense that maybe the US isn't going 64 00:03:18,120 --> 00:03:20,880 Speaker 1: to come out of this best economically, and the growth 65 00:03:20,919 --> 00:03:22,720 Speaker 1: differentials are going to be tighter as well as the 66 00:03:22,760 --> 00:03:26,200 Speaker 1: interest rate differentials. But but I think the European thing, 67 00:03:26,280 --> 00:03:29,160 Speaker 1: it just gave permission to the market to say, yep, 68 00:03:29,400 --> 00:03:31,520 Speaker 1: if I'm allowed to buy other currencies, now I can 69 00:03:31,520 --> 00:03:35,840 Speaker 1: sell the dollar. Because that was straightforward. So kid, where 70 00:03:35,880 --> 00:03:37,760 Speaker 1: in the world are we going to see serious long 71 00:03:37,880 --> 00:03:41,200 Speaker 1: term problems because of a weaker dollar and because of 72 00:03:41,280 --> 00:03:44,760 Speaker 1: obviously the coronavirus impact. Are their currencies that are going 73 00:03:44,800 --> 00:03:49,560 Speaker 1: to be in real trouble? Um? Not not wells? Okay? 74 00:03:49,600 --> 00:03:52,280 Speaker 1: So there are coveries. One is, you know, historically a 75 00:03:52,280 --> 00:03:54,400 Speaker 1: weaker dollar is usually a symptom that the world's in 76 00:03:54,440 --> 00:03:56,720 Speaker 1: good shape because money is flowing out of the United 77 00:03:56,720 --> 00:04:00,640 Speaker 1: States looking for opportunities. So usually I put a week 78 00:04:00,680 --> 00:04:02,600 Speaker 1: of dollar down as being a good thing because the 79 00:04:02,640 --> 00:04:07,440 Speaker 1: things that make it a good thing are encouraging. Now, economically, 80 00:04:07,440 --> 00:04:10,080 Speaker 1: I'm still worried about emerging markets at the moment, because 81 00:04:10,480 --> 00:04:12,800 Speaker 1: economically they're not in a good shape the kind of 82 00:04:12,840 --> 00:04:15,120 Speaker 1: the the ability to do the kind of things the 83 00:04:15,160 --> 00:04:17,160 Speaker 1: FED did. But you know, if you can help your 84 00:04:17,160 --> 00:04:20,200 Speaker 1: economy with quantitative easing, if you can help your economy 85 00:04:20,720 --> 00:04:23,760 Speaker 1: with with your central bank buying debt straight off the 86 00:04:23,760 --> 00:04:25,960 Speaker 1: government or out of the market to keep interest rates 87 00:04:25,960 --> 00:04:28,920 Speaker 1: super low while you come up with with fiscal help 88 00:04:28,960 --> 00:04:32,240 Speaker 1: for your economy. All all of that's good. If you're 89 00:04:32,240 --> 00:04:35,360 Speaker 1: an emerging market economy, you don't have anything like that 90 00:04:35,480 --> 00:04:39,360 Speaker 1: degree of leeway in terms of policy, so you're you're 91 00:04:39,440 --> 00:04:43,080 Speaker 1: left with fewer defenses against the pandemic. And your main 92 00:04:43,120 --> 00:04:46,800 Speaker 1: markets are developed markets. So so I worry that the 93 00:04:46,839 --> 00:04:51,839 Speaker 1: dollars weakening earlier than you know that the necessarily helps 94 00:04:51,920 --> 00:04:54,440 Speaker 1: for for some of those and I think August could 95 00:04:54,480 --> 00:04:56,880 Speaker 1: be a tricky month for some of those currencies. And 96 00:04:56,920 --> 00:04:59,159 Speaker 1: then you've got the ones that have just moved very fast. 97 00:04:59,320 --> 00:05:01,720 Speaker 1: You look at um, you look at the euro in 98 00:05:01,720 --> 00:05:05,360 Speaker 1: in trade weighted terms, the euro is already significantly stronger 99 00:05:05,680 --> 00:05:07,919 Speaker 1: than it was at the best level it reached at 100 00:05:07,960 --> 00:05:11,239 Speaker 1: the beginning of eighteen when we saw a big ranny 101 00:05:11,240 --> 00:05:13,919 Speaker 1: in seventeen, when the ECB said it was planning to 102 00:05:14,000 --> 00:05:17,440 Speaker 1: taper its bond purchases. They've got growth over two We 103 00:05:17,480 --> 00:05:21,320 Speaker 1: are all terribly excited with ourselves. Um, and that fizzled 104 00:05:21,320 --> 00:05:25,760 Speaker 1: out spectacularly. For now. I you know, the Euro can't 105 00:05:25,839 --> 00:05:30,480 Speaker 1: keep on going up at this pace without without having 106 00:05:30,520 --> 00:05:32,920 Speaker 1: some economic impact. The economy is not in good enough shape. 107 00:05:32,920 --> 00:05:35,400 Speaker 1: It's so much more open economy than the United States. 108 00:05:35,920 --> 00:05:41,040 Speaker 1: So UM, I'm desperately hoping. I'm not wrong to be thinking. 109 00:05:41,160 --> 00:05:43,479 Speaker 1: You know, I wish I could buy the Euro here 110 00:05:43,600 --> 00:05:45,520 Speaker 1: or cheaper in a few months time. This is going 111 00:05:45,560 --> 00:05:48,920 Speaker 1: too fast for me. On seventeen sixty nine. That roles 112 00:05:48,960 --> 00:05:51,240 Speaker 1: pretty quickly, very briefly. We're out of time, kid, but 113 00:05:51,440 --> 00:05:56,760 Speaker 1: a target for the British plans Sterling. The British pans Sterling, 114 00:05:56,800 --> 00:05:58,040 Speaker 1: I think is going to run out because I think 115 00:05:58,040 --> 00:05:59,760 Speaker 1: you're going to going to run out of momentum here 116 00:05:59,800 --> 00:06:01,760 Speaker 1: the and just going to go on weakening against the Euro. 117 00:06:02,200 --> 00:06:04,160 Speaker 1: And if the Euro tops out because it's going up 118 00:06:04,160 --> 00:06:07,400 Speaker 1: too fast, I think we'll be back at us from 119 00:06:08,440 --> 00:06:11,320 Speaker 1: eight right now, Kid Jukes, thank you always, such a 120 00:06:11,320 --> 00:06:14,560 Speaker 1: pleasure to speak with you. Kitchen Jukes is chief Strategists 121 00:06:14,560 --> 00:06:19,159 Speaker 1: Associated General but of course many decades following currencies and 122 00:06:19,240 --> 00:06:22,440 Speaker 1: has a huge amount of insight into both develop markets 123 00:06:22,520 --> 00:06:25,640 Speaker 1: and emerging market currencies and of course you mentioned the Fed, Paul, 124 00:06:25,720 --> 00:06:28,279 Speaker 1: and you know we're waiting on what we hear from 125 00:06:28,279 --> 00:06:31,520 Speaker 1: the Fed this week. Unlikely to be too much to celebrate, 126 00:06:31,520 --> 00:06:34,680 Speaker 1: I imagine. No, I think we're gonna see lower for longer. 127 00:06:35,000 --> 00:06:37,800 Speaker 1: I think the Fed's comfortably here and uh, and we're 128 00:06:37,800 --> 00:06:39,800 Speaker 1: seeing that in the dollar, We've seen that in gold. 129 00:06:41,760 --> 00:06:44,400 Speaker 1: Our next guest wrote a recent column saying Republicans have 130 00:06:44,400 --> 00:06:46,200 Speaker 1: had four months to figure out their position on the 131 00:06:46,240 --> 00:06:49,320 Speaker 1: next big pandemic relief bill. It sounds like today finally 132 00:06:49,360 --> 00:06:53,080 Speaker 1: we're getting some proposals on that next big bill, although 133 00:06:53,240 --> 00:06:56,360 Speaker 1: it's far from what most people would like. Let's check 134 00:06:56,360 --> 00:07:00,520 Speaker 1: in now on our Bloomberg opinion columnist Jonathan Bernstein. Jonathan, 135 00:07:00,520 --> 00:07:03,600 Speaker 1: we're just getting worried that Senate Republicans proposed cutting supplemental 136 00:07:03,680 --> 00:07:07,400 Speaker 1: unemployment benefits to two dollars a week for a transitional 137 00:07:07,440 --> 00:07:10,400 Speaker 1: period which would last two months. Of course, we know 138 00:07:10,520 --> 00:07:13,280 Speaker 1: that Democrats do not agree with this. What do you 139 00:07:13,280 --> 00:07:17,560 Speaker 1: make of a transitional period? Will it work well? They're 140 00:07:17,600 --> 00:07:20,360 Speaker 1: also saying that they want to eventually get to this 141 00:07:22,000 --> 00:07:25,760 Speaker 1: level um that the White House has been pushing, and 142 00:07:25,800 --> 00:07:28,800 Speaker 1: that the states don't actually have the capacity to be 143 00:07:28,920 --> 00:07:32,080 Speaker 1: able to administer. So that's a problem in their own proposal. 144 00:07:32,200 --> 00:07:36,360 Speaker 1: And you know, it's apparently an internal problem within Republicans 145 00:07:36,400 --> 00:07:39,560 Speaker 1: that some want to give nothing, some want to give more, 146 00:07:39,840 --> 00:07:43,320 Speaker 1: and so they're sort of trying to find a way 147 00:07:43,360 --> 00:07:46,800 Speaker 1: to negotiate. You know, again, this is something that they've 148 00:07:46,800 --> 00:07:49,080 Speaker 1: had four months to figure out. They've had two months 149 00:07:49,120 --> 00:07:52,400 Speaker 1: since the Democrats passed their bill, and they are only now, 150 00:07:52,760 --> 00:07:57,200 Speaker 1: you know, essentially after the deadlines are passing, coming up 151 00:07:57,200 --> 00:07:59,360 Speaker 1: with a proposal. But it's a proposal that the Democrats 152 00:07:59,400 --> 00:08:02,559 Speaker 1: aren't going to have very much interested in at all. So, 153 00:08:03,200 --> 00:08:05,280 Speaker 1: you know, we don't think that they're going to come 154 00:08:05,360 --> 00:08:09,480 Speaker 1: up with a compromise by by August first. Are they 155 00:08:09,480 --> 00:08:11,400 Speaker 1: going to come up with a compromise within one week, 156 00:08:11,440 --> 00:08:14,440 Speaker 1: two weeks, three weeks? We don't know, Jonathan. Is there 157 00:08:14,440 --> 00:08:16,640 Speaker 1: any sense of why it took the Republicans so long 158 00:08:16,680 --> 00:08:19,840 Speaker 1: to come up with this package again, months after the 159 00:08:19,920 --> 00:08:22,800 Speaker 1: Democrats came up with There is this simply a political 160 00:08:22,920 --> 00:08:25,920 Speaker 1: negotiating tactics by the Republicans. If it is, it's a 161 00:08:25,960 --> 00:08:29,360 Speaker 1: stupid one, um, But I think is that that you know, 162 00:08:29,760 --> 00:08:33,520 Speaker 1: it's a the this functional party. There's Lindsay Graham said 163 00:08:33,520 --> 00:08:38,720 Speaker 1: over the weekend that Republican senators are going to vote no, uh, no, 164 00:08:38,720 --> 00:08:41,960 Speaker 1: matter what the package is. They essentially think, you know, 165 00:08:41,960 --> 00:08:46,920 Speaker 1: there are Republicans who believe that unemployment benefits are the 166 00:08:46,960 --> 00:08:51,400 Speaker 1: thing that is causing the recession. Now everybody here in 167 00:08:51,440 --> 00:08:54,480 Speaker 1: the real world thinks that the coronavirus is the thing 168 00:08:54,520 --> 00:08:58,440 Speaker 1: causing the recession. And you know, mainstream economists think the 169 00:08:58,440 --> 00:09:02,079 Speaker 1: best thing the government can do is to give relief 170 00:09:02,160 --> 00:09:04,520 Speaker 1: and give stimulus. But there's a lot of Republicans who 171 00:09:04,559 --> 00:09:06,640 Speaker 1: don't believe that, and they think that, you know, money 172 00:09:06,640 --> 00:09:10,840 Speaker 1: going to people is a problem. And so, you know, 173 00:09:10,920 --> 00:09:13,760 Speaker 1: and Republicans over the last few years have been just 174 00:09:14,000 --> 00:09:17,640 Speaker 1: terrified of their most conservative members, even if it's a 175 00:09:17,679 --> 00:09:21,079 Speaker 1: minority within the party and a minority uh in a 176 00:09:21,200 --> 00:09:23,560 Speaker 1: larger population. They just don't want to get on the 177 00:09:23,600 --> 00:09:27,920 Speaker 1: wrong side of the conservatives, and that causes a lot 178 00:09:27,920 --> 00:09:30,680 Speaker 1: of problems. So, Jonathan, what's the idea here? How will 179 00:09:30,720 --> 00:09:33,400 Speaker 1: this work? People who were getting an extra six hundred 180 00:09:33,960 --> 00:09:38,360 Speaker 1: maximum will now get two hundred extra and what some 181 00:09:38,440 --> 00:09:39,880 Speaker 1: of them will be forced back to work? Is that 182 00:09:39,920 --> 00:09:43,040 Speaker 1: the idea? That's the idea. But of course the jobs 183 00:09:43,040 --> 00:09:47,240 Speaker 1: aren't there. You know, there's there's there aren't tons of 184 00:09:47,240 --> 00:09:50,960 Speaker 1: people advertising jobs that can't find anybody. There's some anecdotal 185 00:09:51,040 --> 00:09:54,679 Speaker 1: evidence that individual people here and there are saying, well, 186 00:09:54,679 --> 00:09:56,280 Speaker 1: I'm not going to go back to work yet because 187 00:09:56,320 --> 00:10:00,240 Speaker 1: of the six hundred dollar supplement. That probably is that 188 00:10:00,280 --> 00:10:03,880 Speaker 1: there are occasional people out there. But so somebody also 189 00:10:03,960 --> 00:10:06,400 Speaker 1: jump in and grabbed that job. So it's not, you know, 190 00:10:06,440 --> 00:10:11,000 Speaker 1: a problem for the economy, a problem for jobs that. Um, 191 00:10:11,040 --> 00:10:13,800 Speaker 1: you know that the benefits are generous and in fact 192 00:10:13,840 --> 00:10:19,920 Speaker 1: what it has been, it's been very successful. Um you know, uh, 193 00:10:20,040 --> 00:10:24,600 Speaker 1: the numbers on um retail spending and things like that 194 00:10:24,679 --> 00:10:29,320 Speaker 1: have been surprisingly good, despite uh, the shutdown in April. 195 00:10:29,440 --> 00:10:32,360 Speaker 1: So you know, it's been a successful program. But Republicans 196 00:10:32,440 --> 00:10:36,360 Speaker 1: just don't like it, John, And remember this is only 197 00:10:36,400 --> 00:10:39,720 Speaker 1: a piece of it. The Democrats are also pushing another 198 00:10:39,800 --> 00:10:43,840 Speaker 1: two trillion dollars of a to state and local governments 199 00:10:43,840 --> 00:10:45,600 Speaker 1: and a bunch of other things that are not in 200 00:10:45,600 --> 00:10:48,480 Speaker 1: the Republican package. That's kinda where I want to go, Jonathan. 201 00:10:48,480 --> 00:10:50,080 Speaker 1: I mean, as a former trader, I look at the 202 00:10:50,080 --> 00:10:52,000 Speaker 1: bid Esque spread and I see a bit of a 203 00:10:52,040 --> 00:10:55,080 Speaker 1: billion dollars here from the Republicans and ask on the 204 00:10:55,120 --> 00:10:58,400 Speaker 1: other side of three three and a half trillion from 205 00:10:58,440 --> 00:11:02,880 Speaker 1: the Democrats. That's a big, big gap. There's any realistic 206 00:11:02,920 --> 00:11:06,480 Speaker 1: expectation that they can bridge that gap this week? I 207 00:11:06,520 --> 00:11:09,520 Speaker 1: don't think so. Um, you know, Republicans are going to 208 00:11:09,640 --> 00:11:12,160 Speaker 1: talk about, well, let's just do one thing to tie 209 00:11:12,200 --> 00:11:17,160 Speaker 1: us over. But the Republican partial idea was to, oh, 210 00:11:17,240 --> 00:11:20,320 Speaker 1: let's give us all the Republican preferences. Um, you know, 211 00:11:20,360 --> 00:11:24,040 Speaker 1: they want a liability shield for employers. That's something Democrats 212 00:11:24,080 --> 00:11:27,319 Speaker 1: don't want. It might be something that can be compromised, 213 00:11:27,520 --> 00:11:30,079 Speaker 1: but it certainly isn't going to go into an additional 214 00:11:30,120 --> 00:11:34,360 Speaker 1: tied us over plan. Nor is the Republican idea of 215 00:11:34,520 --> 00:11:37,520 Speaker 1: unemployment insurance going to go into a you know, a 216 00:11:37,640 --> 00:11:42,240 Speaker 1: short term extension. So no, I think that, um, you know, 217 00:11:42,520 --> 00:11:45,400 Speaker 1: we're going to go to zero is what's going to happen. 218 00:11:46,000 --> 00:11:47,719 Speaker 1: And then maybe they'll come up with something and it 219 00:11:47,760 --> 00:11:51,240 Speaker 1: will take a few weeks. Yeah, it's pretty stunning. I mean, 220 00:11:51,840 --> 00:11:54,640 Speaker 1: what if the data starts changing pretty quickly on consumer 221 00:11:54,679 --> 00:11:58,600 Speaker 1: confidence starts tanking again, consumer spending starts tanking, and you know, 222 00:11:58,640 --> 00:12:04,479 Speaker 1: the savings race start stanking, will Republicans change their mind? Possibly? 223 00:12:04,600 --> 00:12:06,880 Speaker 1: You know, the crazy thing about this all is that 224 00:12:06,920 --> 00:12:09,960 Speaker 1: there's an election coming up. Republicans in the incoming party 225 00:12:10,400 --> 00:12:12,960 Speaker 1: they should be the ones who are desperate to douse 226 00:12:13,040 --> 00:12:17,200 Speaker 1: the economy doing anything possible short term, you know, in 227 00:12:17,240 --> 00:12:19,600 Speaker 1: advance of the election. And they you know, there are 228 00:12:19,640 --> 00:12:22,320 Speaker 1: just some Republicans who, as far as I can tell, 229 00:12:22,440 --> 00:12:25,000 Speaker 1: honestly believe that the best thing that the government can 230 00:12:25,000 --> 00:12:30,040 Speaker 1: do is cut off funding. So it appears that Speaker 231 00:12:30,080 --> 00:12:34,520 Speaker 1: Pelosi and Senator Schumern's and others are really leading a 232 00:12:34,679 --> 00:12:37,760 Speaker 1: fairly unified effort on the part of the Democrats. Who's 233 00:12:37,840 --> 00:12:41,840 Speaker 1: leading the Republican side? Is is it the President? Is it, um, 234 00:12:41,960 --> 00:12:46,120 Speaker 1: Mitch McConnell, Who's really leading the Republican response here? That's 235 00:12:46,120 --> 00:12:49,719 Speaker 1: an excellent question. Um. What it seems like is that 236 00:12:49,800 --> 00:12:55,200 Speaker 1: the ah Republican senators are sort of in control of 237 00:12:55,240 --> 00:12:58,440 Speaker 1: what they can ask what, but that the White House 238 00:12:58,559 --> 00:13:01,320 Speaker 1: or um secret Erry Newton. I guess so not the 239 00:13:01,320 --> 00:13:03,960 Speaker 1: White House is going to be the lead negotiator. But 240 00:13:04,960 --> 00:13:07,760 Speaker 1: you know that's what that worked out last time in March. 241 00:13:07,880 --> 00:13:11,280 Speaker 1: It was very successful, Um, but this time with a 242 00:13:11,320 --> 00:13:14,679 Speaker 1: new White House, chief of staff, and with more Republican 243 00:13:14,720 --> 00:13:18,240 Speaker 1: senators who are holding back, it's not clear how much 244 00:13:18,280 --> 00:13:21,600 Speaker 1: authority manution is going to have to do the negotiations. 245 00:13:22,559 --> 00:13:26,640 Speaker 1: You know. That's if there was a clear um you know, 246 00:13:26,720 --> 00:13:30,160 Speaker 1: negotiating plan with a clear unified Republican party, well then 247 00:13:30,200 --> 00:13:33,199 Speaker 1: maybe they could bridge that huge gap. But right now 248 00:13:33,240 --> 00:13:37,160 Speaker 1: it doesn't really look like that's the case. So we 249 00:13:37,240 --> 00:13:41,520 Speaker 1: have all these people, million unemployed people facing it back 250 00:13:41,520 --> 00:13:44,800 Speaker 1: to school season with an extra two hundred dollars in 251 00:13:44,840 --> 00:13:47,680 Speaker 1: their pockets. Is that is that going to work? Jonathan? 252 00:13:47,679 --> 00:13:52,080 Speaker 1: Are we going to see you know, panic and mayhan Um? 253 00:13:52,120 --> 00:13:56,320 Speaker 1: You know, that's a good question. Um, And I don't 254 00:13:56,320 --> 00:13:58,080 Speaker 1: think they're gonna you know, there's not gonna be this 255 00:13:58,080 --> 00:14:02,080 Speaker 1: two h because they're not gonna settle on anything, at 256 00:14:02,120 --> 00:14:05,000 Speaker 1: least short term. You know, possibly maybe what they can 257 00:14:05,040 --> 00:14:08,520 Speaker 1: do is do a quick bill with they're talking about 258 00:14:08,520 --> 00:14:12,160 Speaker 1: a twelve another round of tw direct checks. That might 259 00:14:12,200 --> 00:14:14,439 Speaker 1: be something they could do short term as a compromise. 260 00:14:14,840 --> 00:14:18,680 Speaker 1: It's possible that, you know, once Republicans come to the 261 00:14:18,679 --> 00:14:20,880 Speaker 1: table and realize that they're nowhere close to a deal, 262 00:14:21,400 --> 00:14:24,960 Speaker 1: maybe they'll agree to extend the six hundred for longer, 263 00:14:25,800 --> 00:14:27,680 Speaker 1: you know, it's it's just hard to see exactly how 264 00:14:27,680 --> 00:14:30,640 Speaker 1: that happens. Hey, Jonathan, thanks for joining us. We'll be 265 00:14:30,640 --> 00:14:32,280 Speaker 1: talking to you, i know, in the future here because 266 00:14:32,280 --> 00:14:35,440 Speaker 1: this story is going to remain front and center. Johnthan Bernstein, 267 00:14:35,440 --> 00:14:39,640 Speaker 1: Bloomberg Opinion, Politics Calumnist joining us. You can hear and 268 00:14:39,680 --> 00:14:41,360 Speaker 1: read all of you can read all of Jonathan's work 269 00:14:41,360 --> 00:14:44,800 Speaker 1: as well as the others at Bloomberg dot com slash Opinion. 270 00:14:47,560 --> 00:14:50,680 Speaker 1: Well do you have political issues continue to have significant 271 00:14:50,720 --> 00:14:53,720 Speaker 1: impacts on these markets as we trade day to day. 272 00:14:53,800 --> 00:14:56,880 Speaker 1: Jack Devine, founding partner and president of the ARC Group, 273 00:14:57,200 --> 00:15:00,120 Speaker 1: joins us. He's also former chief of the CIA's world 274 00:15:00,120 --> 00:15:04,640 Speaker 1: wide Operations. We always appreciate getting his perspective on global geopolitics. 275 00:15:04,840 --> 00:15:07,280 Speaker 1: Jack to so many areas to go here, I'd like 276 00:15:07,320 --> 00:15:08,960 Speaker 1: to start with the topic that I thought at the 277 00:15:08,960 --> 00:15:11,640 Speaker 1: time was hugely critical, but it feels like it's faded 278 00:15:11,680 --> 00:15:14,880 Speaker 1: a little bit, And that's the Russian bounties. What's the 279 00:15:14,960 --> 00:15:18,960 Speaker 1: latest there on what many people felt like was a big, 280 00:15:19,000 --> 00:15:23,160 Speaker 1: big issue for our military. Right, Well, I do think 281 00:15:23,160 --> 00:15:27,360 Speaker 1: it's faded. I mean, I think what what we're looking 282 00:15:27,400 --> 00:15:32,480 Speaker 1: at here is um it shouldn't be surprising. In other words, 283 00:15:32,520 --> 00:15:37,240 Speaker 1: the Russians are supporting the Taliban UH, and that they 284 00:15:37,280 --> 00:15:43,000 Speaker 1: would be supporting the overall effort to undermine your forces. 285 00:15:43,040 --> 00:15:46,320 Speaker 1: There is not a surprise. What was a surprise is 286 00:15:46,360 --> 00:15:51,560 Speaker 1: a specific bounty. UH. The old days were you know, 287 00:15:51,600 --> 00:15:55,560 Speaker 1: talking about taking scouts, right. So I think as they 288 00:15:55,600 --> 00:15:59,720 Speaker 1: got into it, right, I think listening to the commander 289 00:15:59,760 --> 00:16:03,720 Speaker 1: and forces out there that you know, there was no 290 00:16:03,760 --> 00:16:07,600 Speaker 1: doubt that the Russians are aggressive, not only in Afghanistan 291 00:16:07,640 --> 00:16:11,320 Speaker 1: but around the world, but they could actually tag it 292 00:16:11,400 --> 00:16:15,800 Speaker 1: to a specific you know, so much for her head 293 00:16:16,480 --> 00:16:18,760 Speaker 1: seemed to be a little bit more tenuous. It's not 294 00:16:18,880 --> 00:16:20,840 Speaker 1: that I don't think it happened. I think the question 295 00:16:20,880 --> 00:16:22,920 Speaker 1: also was how far up to change did it go 296 00:16:23,040 --> 00:16:26,240 Speaker 1: all I did it take place? Was a local thing 297 00:16:26,320 --> 00:16:28,960 Speaker 1: or was it approved by the Kremlin? So I think 298 00:16:29,000 --> 00:16:32,400 Speaker 1: that sort of ordered it down, and I think it 299 00:16:32,480 --> 00:16:36,160 Speaker 1: lost lost on steam. How much resentment is being built 300 00:16:36,280 --> 00:16:39,320 Speaker 1: up in the armed forces because there is going to 301 00:16:39,360 --> 00:16:43,280 Speaker 1: be no retaliation on things like this, and just Russian 302 00:16:43,440 --> 00:16:49,360 Speaker 1: and in general the involvement in US politics, whether it's 303 00:16:49,360 --> 00:16:53,760 Speaker 1: solicited or very unsolicited. But I think this is a 304 00:16:53,800 --> 00:16:56,920 Speaker 1: really good question, and it's difficult one for us to 305 00:16:57,000 --> 00:17:00,720 Speaker 1: grapple with. I'm just stunned. I mean, I'm a cold warrior, 306 00:17:00,760 --> 00:17:06,400 Speaker 1: if you will. And the aggressive behavior of Russia used 307 00:17:06,440 --> 00:17:09,160 Speaker 1: to be the United States and how it uses cyber 308 00:17:09,840 --> 00:17:14,760 Speaker 1: and it's aggressive use of paramilitary forces, whether it's a Ukraine, 309 00:17:14,800 --> 00:17:19,960 Speaker 1: Libia today, I mean, it is amazingly aggressive. And I 310 00:17:20,040 --> 00:17:25,600 Speaker 1: think it's a surprise. The fact that people collect intelligence 311 00:17:26,200 --> 00:17:28,480 Speaker 1: by all means there's no country around the world that 312 00:17:28,600 --> 00:17:33,399 Speaker 1: isn't using its collection capabilities to become wiser that it 313 00:17:33,440 --> 00:17:35,880 Speaker 1: becomes aggressive in the use of it, such as an 314 00:17:35,880 --> 00:17:39,760 Speaker 1: elections or in going in and trying to co opt 315 00:17:40,000 --> 00:17:46,600 Speaker 1: our science we should be. The virus disrupting elections and 316 00:17:46,720 --> 00:17:50,720 Speaker 1: starring up and the stabilizing democracy in the West is 317 00:17:50,800 --> 00:17:53,160 Speaker 1: really a very aggressive thing. Now, how do you respond? 318 00:17:53,280 --> 00:17:58,480 Speaker 1: That's that's your question. I think we've we've moved to sanctions, right, 319 00:17:59,160 --> 00:18:01,800 Speaker 1: but where does it stop? I mean, I actually was 320 00:18:01,920 --> 00:18:04,199 Speaker 1: very surprised at the beginning, and the Russians went in 321 00:18:04,200 --> 00:18:06,800 Speaker 1: in the sixteen if this doesn't make any sense, so 322 00:18:07,280 --> 00:18:09,640 Speaker 1: how how does this help? How does it really help 323 00:18:09,680 --> 00:18:12,800 Speaker 1: them that they would do it again in this election? 324 00:18:13,280 --> 00:18:16,320 Speaker 1: Is surprising, but there was a notice put out yesterday 325 00:18:16,320 --> 00:18:18,600 Speaker 1: saying they're going to They and others are doing it. 326 00:18:18,720 --> 00:18:20,600 Speaker 1: So can I just jump in though? I mean, it's 327 00:18:20,680 --> 00:18:24,320 Speaker 1: it's not just how do you respond, it's that the 328 00:18:24,440 --> 00:18:27,439 Speaker 1: armed forces who are serving under a commander in chief 329 00:18:27,760 --> 00:18:30,199 Speaker 1: in the president Donald Trump, know that there isn't going 330 00:18:30,240 --> 00:18:35,639 Speaker 1: to be a response. Therefore, you know how much resentment 331 00:18:35,720 --> 00:18:37,320 Speaker 1: is being built up? And what are the long term 332 00:18:37,359 --> 00:18:41,600 Speaker 1: effects of resentment in you know, an army in what's 333 00:18:41,600 --> 00:18:47,399 Speaker 1: purported to be very open democracy. Well, I think the 334 00:18:47,560 --> 00:18:51,760 Speaker 1: question responds. Uh. I said, in order for you to 335 00:18:51,920 --> 00:18:54,840 Speaker 1: react with force, to use force, you have to have 336 00:18:55,240 --> 00:19:00,159 Speaker 1: at least, by my standard, concrete evidence that's just us 337 00:19:00,280 --> 00:19:03,280 Speaker 1: that this is a Kremlin directed thing. Otherwise, when you 338 00:19:03,359 --> 00:19:07,040 Speaker 1: respond with force, you're forcing you're responding government to government. 339 00:19:07,760 --> 00:19:10,800 Speaker 1: So where I think there has been no pushback is 340 00:19:10,840 --> 00:19:13,440 Speaker 1: and they hunt entire Well, the pit that I think 341 00:19:13,560 --> 00:19:16,240 Speaker 1: is may be warranted now and that is a pushback 342 00:19:16,240 --> 00:19:21,479 Speaker 1: in the cyber area. And uh, it's rather rather shocking. Again, 343 00:19:21,720 --> 00:19:26,600 Speaker 1: And I would add the aggressive paramilitary thing. So do 344 00:19:26,720 --> 00:19:29,400 Speaker 1: our forces are our forces agrieved by it? I mean, 345 00:19:29,480 --> 00:19:33,639 Speaker 1: I think our forces are still as dedicated and loyal 346 00:19:33,640 --> 00:19:37,840 Speaker 1: and well a polished as any army that ever existed. 347 00:19:37,920 --> 00:19:41,000 Speaker 1: So I'm not sure it's having an impact on the morale. 348 00:19:41,200 --> 00:19:45,560 Speaker 1: I just think it's, you know, a really egregious transgression 349 00:19:45,600 --> 00:19:48,720 Speaker 1: of the rules of the game. And but what I 350 00:19:48,760 --> 00:19:52,080 Speaker 1: think happened here is there wasn't enough to use force 351 00:19:52,160 --> 00:19:54,639 Speaker 1: to go to go back, to go back on it. 352 00:19:55,840 --> 00:19:58,840 Speaker 1: Often these responses need to be near real time, and 353 00:19:58,880 --> 00:20:03,560 Speaker 1: it's really hard to get that type of evidence quick enough. 354 00:20:04,040 --> 00:20:06,359 Speaker 1: But what about the elections, I mean, that's what's crossing 355 00:20:06,440 --> 00:20:11,399 Speaker 1: my mind. I mean, or the egregious attempt both the 356 00:20:11,520 --> 00:20:13,920 Speaker 1: Chinese and the Russians to get the virus. I mean, 357 00:20:13,920 --> 00:20:17,040 Speaker 1: how are we going to respond to that? Now? I think, 358 00:20:17,200 --> 00:20:19,640 Speaker 1: you know, the Russians have a different game plan, which 359 00:20:19,720 --> 00:20:22,560 Speaker 1: is they don't really have they don't really abide by 360 00:20:22,600 --> 00:20:24,800 Speaker 1: the rules anymore, and they are pressing the button in 361 00:20:24,840 --> 00:20:29,440 Speaker 1: despite saying nice things in public, they're extremely aggressive. Will 362 00:20:29,520 --> 00:20:33,199 Speaker 1: we become aggressive in terms of their internal affairs? I 363 00:20:33,240 --> 00:20:36,200 Speaker 1: don't think we've gone down that bath, and I think 364 00:20:36,240 --> 00:20:38,919 Speaker 1: if it continues, we're going to be pushed into it. 365 00:20:39,000 --> 00:20:42,400 Speaker 1: And I think is a much more high risk aggressive 366 00:20:42,960 --> 00:20:47,399 Speaker 1: leader than is generally recognized, Jack, Are you surprised at 367 00:20:47,440 --> 00:20:51,680 Speaker 1: all or should we be surprised that our own intel 368 00:20:52,560 --> 00:20:56,520 Speaker 1: technical intel people haven't been able to better defend our network. 369 00:20:56,600 --> 00:20:58,520 Speaker 1: Something about the N s A and the c i 370 00:20:58,680 --> 00:21:01,639 Speaker 1: A and maybe even the B I that you know, 371 00:21:01,680 --> 00:21:04,960 Speaker 1: I'd rather depend upon them, I think than some kids 372 00:21:05,000 --> 00:21:08,720 Speaker 1: out in Silicon Valley. Well, you know, we also have 373 00:21:08,800 --> 00:21:11,840 Speaker 1: the Cyber Command and the armed forces as well. I mean, 374 00:21:11,880 --> 00:21:15,200 Speaker 1: I honestly, I don't. I think where you get compromises 375 00:21:15,320 --> 00:21:18,840 Speaker 1: are not are usually not technical compromises. It starts with 376 00:21:18,840 --> 00:21:22,359 Speaker 1: the human being that that changes side, so to speak, 377 00:21:22,840 --> 00:21:26,600 Speaker 1: usually for commercial reasons, and this encampment with the system 378 00:21:26,640 --> 00:21:29,679 Speaker 1: because they didn't get promoted. So when you see a 379 00:21:29,760 --> 00:21:32,359 Speaker 1: breach in N s A, it's usually because it's a 380 00:21:32,440 --> 00:21:36,960 Speaker 1: human agent in the process. Right, And this famous case 381 00:21:37,000 --> 00:21:40,360 Speaker 1: of a Walker who gave up all of our military 382 00:21:40,800 --> 00:21:44,400 Speaker 1: communication system back in the eighties. I mean, that's how 383 00:21:44,440 --> 00:21:46,720 Speaker 1: it gets done. I don't think. I don't think they're 384 00:21:46,760 --> 00:21:49,840 Speaker 1: breaking into the c i AS communication system. I've ever 385 00:21:49,960 --> 00:21:53,480 Speaker 1: seen anything that showed that the Russians had that capability 386 00:21:53,960 --> 00:21:56,719 Speaker 1: where the N s A. Is there a leg up 387 00:21:56,760 --> 00:21:58,199 Speaker 1: with the N s A. I still think we have 388 00:21:58,240 --> 00:22:01,720 Speaker 1: a world criss capability that no one can match in 389 00:22:01,800 --> 00:22:06,000 Speaker 1: this field. Having said that, will we use it offensively? 390 00:22:07,520 --> 00:22:09,879 Speaker 1: And I don't know, And I think that's that's a 391 00:22:10,040 --> 00:22:13,760 Speaker 1: question that in the democracy is obvious saying you're a democracy. 392 00:22:13,760 --> 00:22:16,359 Speaker 1: How do you work your way through this? It's insensis 393 00:22:16,400 --> 00:22:18,639 Speaker 1: down on the hill about read about it in the 394 00:22:18,720 --> 00:22:21,560 Speaker 1: Washington Post the next day. It's a question for the 395 00:22:21,560 --> 00:22:23,800 Speaker 1: next time you speak, which hopefully will be very soon. 396 00:22:23,960 --> 00:22:26,760 Speaker 1: If Jack, thank you. That is Jack Divine, President of 397 00:22:26,880 --> 00:22:31,560 Speaker 1: Arkan Group, former chief of c i a OPS. The 398 00:22:31,640 --> 00:22:35,800 Speaker 1: consulate wars continue between the US and China. It is 399 00:22:35,840 --> 00:22:39,200 Speaker 1: a situation that bears watching very closely. So we thought 400 00:22:39,200 --> 00:22:41,760 Speaker 1: we'd speak with somebody who knows China inside out. Leland 401 00:22:41,800 --> 00:22:44,040 Speaker 1: Miller is CEO of China Beije book and me and 402 00:22:44,040 --> 00:22:47,520 Speaker 1: speak to Leland about China data, how transparent it is, 403 00:22:47,560 --> 00:22:50,119 Speaker 1: how truthful it is. We'll get to the data in 404 00:22:50,160 --> 00:22:54,720 Speaker 1: a moment, but Leland, welcome and thanks for joining my pleasure. 405 00:22:55,680 --> 00:22:58,840 Speaker 1: What do you make of this tidfritat on consulates? Is 406 00:22:58,880 --> 00:23:03,639 Speaker 1: it a distraction? Is it a deterioration in relations between 407 00:23:03,680 --> 00:23:08,440 Speaker 1: the US and China that we really need to watch. Yeah. 408 00:23:08,480 --> 00:23:10,080 Speaker 1: You know, I think the best way to look at 409 00:23:10,119 --> 00:23:12,720 Speaker 1: this is as the calm before the storm. And when 410 00:23:12,760 --> 00:23:16,480 Speaker 1: people saw shutdowns of consulates and and all these other 411 00:23:17,040 --> 00:23:21,160 Speaker 1: very aggressive rhetoric being used lately, they think, wow, things 412 00:23:21,160 --> 00:23:23,720 Speaker 1: are getting really nasty, But we really haven't seen anything yet. 413 00:23:23,760 --> 00:23:27,840 Speaker 1: This there's a reason that we shut down uh, that 414 00:23:27,880 --> 00:23:31,119 Speaker 1: we shut down one consulate and and not another. And 415 00:23:31,160 --> 00:23:33,679 Speaker 1: that's the reason the Chinese shut down chang Do instead 416 00:23:33,720 --> 00:23:36,480 Speaker 1: of shutting down Shanghai. So this is really the two 417 00:23:36,520 --> 00:23:38,600 Speaker 1: sides starting to starting to get angry at each other, 418 00:23:38,800 --> 00:23:41,880 Speaker 1: but not wanting to push the needle past a certain point. 419 00:23:42,160 --> 00:23:44,920 Speaker 1: There's not a decision yet to truly escalate, but I 420 00:23:44,960 --> 00:23:48,159 Speaker 1: think escalation is exactly where we're heading this fall, and 421 00:23:48,200 --> 00:23:51,000 Speaker 1: maybe as suit his next month. Actually, what would escalation 422 00:23:51,080 --> 00:23:54,399 Speaker 1: look like Leland in your mind? Well, again, you know, 423 00:23:54,480 --> 00:23:57,120 Speaker 1: the thing that holds everything together is the trade deal, 424 00:23:57,240 --> 00:23:59,280 Speaker 1: because you know, you've got a lot of anger in 425 00:23:59,800 --> 00:24:02,280 Speaker 1: you Nied States, whether it's for COVID or trade and 426 00:24:02,359 --> 00:24:05,840 Speaker 1: other things uh related to China. You've got the election 427 00:24:05,920 --> 00:24:08,359 Speaker 1: coming up and and China be a major issue. But 428 00:24:08,400 --> 00:24:11,760 Speaker 1: what's been holding everyone back thus far has been the 429 00:24:11,760 --> 00:24:14,719 Speaker 1: fact that the President wants his purchases, and as a result, 430 00:24:15,200 --> 00:24:17,920 Speaker 1: uh you know, there has been less aggressive stance in 431 00:24:18,000 --> 00:24:21,160 Speaker 1: Republicans in Congress, and the Democrats haven't gotten going yet 432 00:24:21,160 --> 00:24:22,800 Speaker 1: either because they don't know what to react to. To 433 00:24:22,880 --> 00:24:25,359 Speaker 1: the extent that the Phase one trade deal fails, I 434 00:24:25,400 --> 00:24:28,280 Speaker 1: think that this is wallace symbolic step, will really be 435 00:24:28,359 --> 00:24:31,360 Speaker 1: sort of letting the gate open in terms of much 436 00:24:31,400 --> 00:24:35,119 Speaker 1: more uh toxic environment between the two sides. Leland, what 437 00:24:35,160 --> 00:24:37,479 Speaker 1: makes you so convinced that we are definitely headed for 438 00:24:37,600 --> 00:24:41,720 Speaker 1: escalation and possibly even as soon as next month. Well, 439 00:24:41,760 --> 00:24:44,480 Speaker 1: I think the timing wise, I look at the like 440 00:24:44,520 --> 00:24:47,880 Speaker 1: how long can the presidents stand behind the trade deal? Now? 441 00:24:47,920 --> 00:24:49,560 Speaker 1: It was a very set of a set of a 442 00:24:49,600 --> 00:24:52,480 Speaker 1: very aggressive target to start with, but then you're at 443 00:24:52,480 --> 00:24:55,480 Speaker 1: COVID and now because of the backlog and in in 444 00:24:55,480 --> 00:24:58,240 Speaker 1: and the problems with supply chains and uh, you know 445 00:24:58,320 --> 00:25:01,240 Speaker 1: you are you're guaranteed to have some shoo choose misses 446 00:25:01,560 --> 00:25:04,480 Speaker 1: when first half data come out next month. So I 447 00:25:04,480 --> 00:25:06,679 Speaker 1: think it's gonna be very hard to stand behind the 448 00:25:06,720 --> 00:25:10,640 Speaker 1: trade deal when the Chinese haven't been hitting the targets 449 00:25:10,680 --> 00:25:13,320 Speaker 1: that the president, the President Trump expects them to Uh. 450 00:25:13,440 --> 00:25:15,960 Speaker 1: In addition, you have a a China is a very 451 00:25:16,080 --> 00:25:19,520 Speaker 1: very big issue in in the November election. And while uh, 452 00:25:19,760 --> 00:25:22,960 Speaker 1: Joe Biden hasn't been attacking Trump yet on on China, 453 00:25:23,119 --> 00:25:25,280 Speaker 1: they're both gonna be going at each other saying you're 454 00:25:25,320 --> 00:25:27,920 Speaker 1: weaker than I am, and as a result, policy is 455 00:25:27,920 --> 00:25:31,639 Speaker 1: gonna be drifting to a much more hawkers direction. So, Leland, 456 00:25:31,680 --> 00:25:34,280 Speaker 1: what do we know about the China economy right now? 457 00:25:34,320 --> 00:25:37,359 Speaker 1: And I know there is obviously they reopened before we did. 458 00:25:38,080 --> 00:25:39,639 Speaker 1: Just give us a kind of update on kind of 459 00:25:39,640 --> 00:25:43,040 Speaker 1: what you're hearing about the reopening and its impact on 460 00:25:43,440 --> 00:25:47,760 Speaker 1: their economy. Yeah. Again, the most difficult word to use 461 00:25:47,840 --> 00:25:50,000 Speaker 1: is recovery, because of course you're seeing a recovery. You 462 00:25:50,040 --> 00:25:53,359 Speaker 1: saw a recovery from a standstill economy earlier this year. 463 00:25:53,600 --> 00:25:55,200 Speaker 1: But what there has band has been sort of month 464 00:25:55,240 --> 00:25:58,520 Speaker 1: to month improvement, quarter to quarter improvement. Where I think 465 00:25:58,520 --> 00:26:01,080 Speaker 1: people have really gotten as wrong by looking at official data, 466 00:26:01,119 --> 00:26:03,199 Speaker 1: which is already claiming that year on year things have 467 00:26:03,240 --> 00:26:07,080 Speaker 1: gotten better. In our data, nowhere is there any year 468 00:26:07,080 --> 00:26:09,800 Speaker 1: on your expansion everything is still worse than last year. 469 00:26:10,000 --> 00:26:11,520 Speaker 1: Now that's not an indictment. I mean, you've got it 470 00:26:11,560 --> 00:26:15,480 Speaker 1: you've got some serious difficulties with with you know, the 471 00:26:15,480 --> 00:26:18,680 Speaker 1: economy getting back on its feet after a very serious pandemic. 472 00:26:18,960 --> 00:26:20,600 Speaker 1: But I think that the claims that there's a year 473 00:26:20,600 --> 00:26:23,040 Speaker 1: and your improvement, we're already back to some level of normalcy, 474 00:26:23,359 --> 00:26:25,720 Speaker 1: that's totally flawed. And I think the more that people 475 00:26:25,760 --> 00:26:29,040 Speaker 1: from abroader looking at China's experience and thinking, hey, we 476 00:26:29,080 --> 00:26:31,880 Speaker 1: can duplicate that. Uh, they're they're, they're they're they're really 477 00:26:31,880 --> 00:26:34,000 Speaker 1: gonna have a school kicked out from under them. What 478 00:26:34,080 --> 00:26:36,639 Speaker 1: did you make of Bridgewater? Is Ray Dalio warning that 479 00:26:36,680 --> 00:26:39,120 Speaker 1: the conflict between the US and China could expand into 480 00:26:39,119 --> 00:26:44,199 Speaker 1: a capital war? What would a capital war look like? Right? Well, 481 00:26:44,320 --> 00:26:46,159 Speaker 1: the important part of that is could. So it is 482 00:26:46,160 --> 00:26:49,080 Speaker 1: in the realm of the possible that we expand into 483 00:26:49,200 --> 00:26:52,040 Speaker 1: yet another direction where say the United States cuts off 484 00:26:52,080 --> 00:26:56,320 Speaker 1: capital flows, uh to China. There's even talk about abrogating 485 00:26:56,320 --> 00:27:00,280 Speaker 1: dead obligations, Oh to the Chinese. These are extraordinary acts 486 00:27:00,480 --> 00:27:02,919 Speaker 1: of financial warfare. I can tell you they are not 487 00:27:03,040 --> 00:27:05,280 Speaker 1: being considered right now by the White House. I wouldn't 488 00:27:05,320 --> 00:27:08,000 Speaker 1: think of Joe Biden presidency would have them in store either. Uh, 489 00:27:08,119 --> 00:27:10,440 Speaker 1: They're not impossible because again, we're we're in a new 490 00:27:10,560 --> 00:27:14,200 Speaker 1: environment where both sides are grasping for for for tools 491 00:27:14,240 --> 00:27:16,639 Speaker 1: that they've never thought they would use before. But I 492 00:27:16,680 --> 00:27:18,560 Speaker 1: think this is something to keep your eye on. You 493 00:27:18,600 --> 00:27:20,880 Speaker 1: have to be aware of the risks. But we're nowhere 494 00:27:20,920 --> 00:27:23,960 Speaker 1: near right now a situation where we're going to be 495 00:27:24,000 --> 00:27:27,440 Speaker 1: doing a broad sort of capital war against China. What 496 00:27:27,480 --> 00:27:31,400 Speaker 1: do we know, Leland, if anything about Vice President Joe 497 00:27:31,440 --> 00:27:36,840 Speaker 1: Biden's view and potential policy towards China, Well, we don't 498 00:27:36,880 --> 00:27:39,880 Speaker 1: know much because the Biden presidency, of the Biden campaign, 499 00:27:39,880 --> 00:27:42,920 Speaker 1: I'm sorry, Biden campaign has been very very quiet behind 500 00:27:42,960 --> 00:27:45,600 Speaker 1: the scenes, uh, thinking it's advantageous for them to sort 501 00:27:45,600 --> 00:27:47,800 Speaker 1: of let the let the president gets you need to 502 00:27:47,840 --> 00:27:49,960 Speaker 1: do what he's doing. And and you know, as as 503 00:27:49,960 --> 00:27:52,000 Speaker 1: Biden keeps going up the polls, I think as we 504 00:27:52,040 --> 00:27:54,359 Speaker 1: get closer to the debates, we're gonna start seeing a 505 00:27:54,520 --> 00:27:59,600 Speaker 1: much more hawkish type China policy coming out of the campaign. 506 00:27:59,680 --> 00:28:02,919 Speaker 1: For the reason that Biden is vulnerable based on what 507 00:28:03,000 --> 00:28:04,600 Speaker 1: he's done in the past in his association with the 508 00:28:04,680 --> 00:28:07,160 Speaker 1: last administration on being weak on China, and I think 509 00:28:07,160 --> 00:28:09,399 Speaker 1: that's something the President will want to hit. So what 510 00:28:09,400 --> 00:28:12,200 Speaker 1: what what Biden the campaign is gonna have to do 511 00:28:12,240 --> 00:28:15,560 Speaker 1: is show the world that he's tough on China. He's 512 00:28:15,600 --> 00:28:17,399 Speaker 1: even tough for the President Trump. And I think the 513 00:28:17,440 --> 00:28:19,280 Speaker 1: two of them are gonna be going into a boxing 514 00:28:19,280 --> 00:28:21,200 Speaker 1: match where everyone, you know, each is gonna be calling 515 00:28:21,240 --> 00:28:23,800 Speaker 1: the other week on China, and of course means China 516 00:28:23,840 --> 00:28:26,040 Speaker 1: policy is gonna be driven in only one direction, right, 517 00:28:26,119 --> 00:28:29,320 Speaker 1: exactly to the right. Leland Miller, CEO China Basebook International 518 00:28:29,400 --> 00:28:31,760 Speaker 1: Art go to expert on all things China. Lots of 519 00:28:31,800 --> 00:28:35,679 Speaker 1: moving pieces as are typically are and as Leland points 520 00:28:35,680 --> 00:28:37,560 Speaker 1: out to us, and make sure that we focus on, 521 00:28:37,680 --> 00:28:40,840 Speaker 1: is election is coming up and likely that's going to 522 00:28:40,920 --> 00:28:43,440 Speaker 1: push the rhetoric to China rhetoric more to the forefront. 523 00:28:43,840 --> 00:28:46,360 Speaker 1: Uh and as Leland suggested, perhaps more to the right, 524 00:28:46,400 --> 00:28:49,840 Speaker 1: as each candidate tries to U uh, you know, assess 525 00:28:50,000 --> 00:28:55,040 Speaker 1: who is stronger on against China. Thanks for listening to 526 00:28:55,040 --> 00:28:58,320 Speaker 1: the Boomberg Markets podcast. You can subscribe and listen to 527 00:28:58,440 --> 00:29:02,200 Speaker 1: interviews at Apple Podcast or whatever podcast platform you prefer. 528 00:29:02,440 --> 00:29:05,400 Speaker 1: I'm Bonnie Quinn. I'm on Twitter at Bonnie Quinn. And 529 00:29:05,480 --> 00:29:08,080 Speaker 1: I'm Paul Sweeney. I'm on Twitter at pt Sweeney. Before 530 00:29:08,080 --> 00:29:10,920 Speaker 1: the podcast. You can always catch us worldwide at Bloomberg 531 00:29:11,000 --> 00:29:11,280 Speaker 1: Radio