1
00:00:02,600 --> 00:00:05,320
Speaker 1: Welcome to the Bloomberg Penl podcast. I'm Paul swing you,

2
00:00:05,360 --> 00:00:07,680
Speaker 1: along with my co host Lisa Brahma wits. Each day

3
00:00:07,720 --> 00:00:10,240
Speaker 1: we bring you the most noteworthy and useful interviews for

4
00:00:10,280 --> 00:00:12,520
Speaker 1: you and your money, whether at the grocery store or

5
00:00:12,560 --> 00:00:15,480
Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple

6
00:00:15,520 --> 00:00:17,960
Speaker 1: Podcast or wherever you listen to podcasts, as well as

7
00:00:17,960 --> 00:00:22,120
Speaker 1: at Bloomberg dot com. There is another deal in the

8
00:00:22,120 --> 00:00:25,320
Speaker 1: payments industry. Global Payments today agreed to buy Total System

9
00:00:25,360 --> 00:00:28,240
Speaker 1: Services in a deal valued at twenty one point five

10
00:00:28,280 --> 00:00:31,800
Speaker 1: billion dollar, the payment industries third mega merger. Of the deal,

11
00:00:32,360 --> 00:00:35,080
Speaker 1: we can get the details from the person himself, Jeff Sloan,

12
00:00:35,240 --> 00:00:37,879
Speaker 1: CEO of Global Payments. He joints is here in our

13
00:00:37,880 --> 00:00:40,839
Speaker 1: Bloomberg Interactive Broker studio. Jeff, thanks so much for joining us.

14
00:00:40,880 --> 00:00:43,400
Speaker 1: I know it's a busy, exciting day for you guys

15
00:00:43,479 --> 00:00:46,440
Speaker 1: at your company. I know you and t ss I've

16
00:00:46,479 --> 00:00:48,879
Speaker 1: been looking at each other for a while. Why do

17
00:00:48,960 --> 00:00:52,800
Speaker 1: the deal now? Well, I think the rate of innovation

18
00:00:52,840 --> 00:00:55,720
Speaker 1: and payments is only accelerated if you look. For example,

19
00:00:55,800 --> 00:00:57,840
Speaker 1: here in New York as well as the United States.

20
00:00:58,200 --> 00:01:00,560
Speaker 1: Contact lists. The announcement you've seen from He's in JP.

21
00:01:00,640 --> 00:01:03,640
Speaker 1: Morgan coming to the subways in Manhattan, UH in the

22
00:01:03,640 --> 00:01:06,320
Speaker 1: next month or two is just one example of the

23
00:01:06,440 --> 00:01:10,520
Speaker 1: rate of continued innovation and acceleration of change and payments. Therefore,

24
00:01:10,520 --> 00:01:12,759
Speaker 1: it's important that you have scale. It's hard to make

25
00:01:12,800 --> 00:01:15,680
Speaker 1: those investments and all the new products and services that

26
00:01:15,720 --> 00:01:17,760
Speaker 1: are the most attractive to our merchant base without having

27
00:01:17,840 --> 00:01:19,480
Speaker 1: enough scale to fund those in the first place. So

28
00:01:19,760 --> 00:01:22,039
Speaker 1: it's pretty clear over the last few months that the

29
00:01:22,120 --> 00:01:25,360
Speaker 1: bar for scale is ever higher. So is scale with

30
00:01:25,440 --> 00:01:29,120
Speaker 1: respect to which business Because it's interesting that there is

31
00:01:29,280 --> 00:01:32,480
Speaker 1: overlap with you in Total System Services TSS when it

32
00:01:32,520 --> 00:01:36,440
Speaker 1: comes to catering to smaller businesses. They do, though, have

33
00:01:36,800 --> 00:01:42,399
Speaker 1: a business processing payments for larger financial firms. How do

34
00:01:42,440 --> 00:01:46,000
Speaker 1: you get scale with that versus just diversification At that point,

35
00:01:46,319 --> 00:01:48,160
Speaker 1: the servers don't know the difference. It's kind of the

36
00:01:48,160 --> 00:01:49,800
Speaker 1: answer at the end of the day. So we're gonna

37
00:01:49,800 --> 00:01:52,680
Speaker 1: be making the same kind of investments capital wise as

38
00:01:52,680 --> 00:01:55,480
Speaker 1: a technology matter, into the same kind of environments, whether

39
00:01:55,480 --> 00:01:57,520
Speaker 1: it's on the cardish who are side or the merchant side.

40
00:01:57,560 --> 00:01:59,960
Speaker 1: Global Payments does this already today, so there's a lot

41
00:02:00,000 --> 00:02:03,280
Speaker 1: of similarities between our two business. For example, we have

42
00:02:03,320 --> 00:02:06,960
Speaker 1: about five fies financial institutions that are customers of Global

43
00:02:06,960 --> 00:02:10,920
Speaker 1: Payments to stay globally, TEASES has about nine hundred, So

44
00:02:10,960 --> 00:02:12,920
Speaker 1: there's a lot of overlap in terms of the products

45
00:02:12,919 --> 00:02:16,360
Speaker 1: and services that we provide those large complicated financial institutions

46
00:02:16,400 --> 00:02:19,320
Speaker 1: that TEASES does as well. Number one. Number two, there's

47
00:02:19,360 --> 00:02:22,440
Speaker 1: obvious overlap between the issuer business that you're asking about

48
00:02:22,480 --> 00:02:24,920
Speaker 1: at t S two and what we do a global payments. So,

49
00:02:24,960 --> 00:02:27,840
Speaker 1: for example, the same folks, the same financial institutions who

50
00:02:27,880 --> 00:02:31,079
Speaker 1: are buying the issuing business are also providing referrals to

51
00:02:31,160 --> 00:02:33,760
Speaker 1: the merchant business. The same types of technologies that we

52
00:02:33,840 --> 00:02:36,000
Speaker 1: deploy the merchant business are also being deployed in the

53
00:02:36,040 --> 00:02:39,560
Speaker 1: issuing business. That's particularly true overseas, but increasingly if you

54
00:02:39,560 --> 00:02:42,120
Speaker 1: look at these other deals, also true in the United States.

55
00:02:42,120 --> 00:02:45,600
Speaker 1: Why five Serve and why Fidelity, but Debbi Gateways is

56
00:02:45,639 --> 00:02:48,079
Speaker 1: part of what they do is to emulate what we'll

57
00:02:48,080 --> 00:02:50,800
Speaker 1: be able to do on the issuing side, combining issuer

58
00:02:51,320 --> 00:02:54,320
Speaker 1: processing with acquire processing, so that means if you use

59
00:02:54,320 --> 00:02:56,799
Speaker 1: your credit card or merchant I know it's you from

60
00:02:56,800 --> 00:02:58,560
Speaker 1: the issue are side, and then I know where you're

61
00:02:58,560 --> 00:03:00,919
Speaker 1: spending it from the acquire ring side. That's what those

62
00:03:00,960 --> 00:03:03,880
Speaker 1: debic gateways do and that's what a combined global payments

63
00:03:03,880 --> 00:03:06,680
Speaker 1: and tiesis will do. So if I'm a fintech M

64
00:03:06,680 --> 00:03:08,200
Speaker 1: and a banker, this is a great year for me.

65
00:03:08,400 --> 00:03:11,280
Speaker 1: Three three deals so far give our Just give us

66
00:03:11,280 --> 00:03:14,440
Speaker 1: a sense of how the structure of your industry, how

67
00:03:14,440 --> 00:03:17,600
Speaker 1: fragment is it still? Do you envision more consolidation? Is

68
00:03:17,639 --> 00:03:20,239
Speaker 1: this a global consolidation play? Just give us a sense

69
00:03:20,240 --> 00:03:22,600
Speaker 1: of how the industry structured. So the nice thing about

70
00:03:22,600 --> 00:03:25,160
Speaker 1: the industry is it consistently reinvents itself. So it's a

71
00:03:25,200 --> 00:03:27,560
Speaker 1: scale business. So there's always going to be more consolidation.

72
00:03:27,680 --> 00:03:29,720
Speaker 1: But part of what striving change. To go back to

73
00:03:29,720 --> 00:03:33,040
Speaker 1: your first question is the rate of techno technological innovation.

74
00:03:33,080 --> 00:03:35,080
Speaker 1: So think about it. Apple was not out there with

75
00:03:35,120 --> 00:03:37,960
Speaker 1: Apple Pay five years ago. Square didn't exist, ten years ago.

76
00:03:38,360 --> 00:03:41,960
Speaker 1: Google didn't have Android Pay, Samsung didn't have Samsung Pay.

77
00:03:42,000 --> 00:03:43,880
Speaker 1: So think about the folks who have come into the business.

78
00:03:43,880 --> 00:03:46,920
Speaker 1: So today, for example, you have Stripe for startups and

79
00:03:46,960 --> 00:03:49,920
Speaker 1: small merchants. You have Square, which is a public company

80
00:03:50,280 --> 00:03:52,680
Speaker 1: as well. You've got plenty of examples adding in which

81
00:03:52,680 --> 00:03:54,920
Speaker 1: is a public company in a coom in Ireland, but

82
00:03:54,960 --> 00:03:57,560
Speaker 1: it's worldwide in scope. You have plenty of examples of

83
00:03:57,600 --> 00:04:00,240
Speaker 1: companies say that either didn't exist five or ten years

84
00:04:00,240 --> 00:04:03,120
Speaker 1: ago or didn't remotely look like what they look today.

85
00:04:03,160 --> 00:04:05,360
Speaker 1: So the future is very bright for the industry. There's

86
00:04:05,400 --> 00:04:08,160
Speaker 1: going to be continued consolidation because of scale functions that

87
00:04:08,160 --> 00:04:11,160
Speaker 1: we've been describing, but there's always gonna be continued new entrants.

88
00:04:11,200 --> 00:04:12,920
Speaker 1: I think at the end of the day, the ability

89
00:04:12,920 --> 00:04:16,280
Speaker 1: to provide banking like services through open API s, the

90
00:04:16,400 --> 00:04:19,120
Speaker 1: scale you get in cloud based and SAS computing, which

91
00:04:19,120 --> 00:04:22,080
Speaker 1: we're very focused on at Global Payments and Teasis, that's

92
00:04:22,080 --> 00:04:24,400
Speaker 1: what's driving the rate of innovation you're seeing today. So

93
00:04:24,440 --> 00:04:28,080
Speaker 1: do you expect to eventually expand out into banking like

94
00:04:28,240 --> 00:04:30,720
Speaker 1: services for some of your clients, lending to some of

95
00:04:30,760 --> 00:04:33,320
Speaker 1: your smaller merchants. Now, where we draw a line, and

96
00:04:33,320 --> 00:04:35,320
Speaker 1: some people like Square actually don't draw this line. But

97
00:04:35,520 --> 00:04:37,839
Speaker 1: where we draw the line is we're independent. We're not

98
00:04:37,880 --> 00:04:40,280
Speaker 1: a bank by ourselves um at Global Payments, and neither

99
00:04:40,360 --> 00:04:42,000
Speaker 1: is TASiS. In fact, we don't want to compete with

100
00:04:42,040 --> 00:04:44,240
Speaker 1: our customer base, so it's very important for us to

101
00:04:44,279 --> 00:04:47,279
Speaker 1: stay out of functions in banking. That's not true for

102
00:04:47,320 --> 00:04:49,599
Speaker 1: some of our competitors, like a Square, which provides direct

103
00:04:49,680 --> 00:04:53,839
Speaker 1: lending in conjunction with their parties. We actually provide referrals

104
00:04:53,880 --> 00:04:56,120
Speaker 1: of merchants who are looking for loans out to f

105
00:04:56,120 --> 00:04:59,280
Speaker 1: eyes our partners. That's our job, rather than provide that

106
00:04:59,279 --> 00:05:01,240
Speaker 1: are directly ourselves. So then how do you respond to

107
00:05:01,279 --> 00:05:04,880
Speaker 1: people who say, right now, smaller midsized merchants, they just

108
00:05:04,920 --> 00:05:07,599
Speaker 1: want to simplify what they do. They don't want to

109
00:05:07,640 --> 00:05:11,040
Speaker 1: have to figure out uh sort of bespoke of financial

110
00:05:11,080 --> 00:05:14,240
Speaker 1: payments processing system and then figuring out their relationship with

111
00:05:14,240 --> 00:05:16,520
Speaker 1: a banker. And so we'll just go to square. What

112
00:05:16,560 --> 00:05:18,119
Speaker 1: do you say to people who are who are wondering

113
00:05:18,120 --> 00:05:20,480
Speaker 1: about that. So we have the same complete ecosystem that

114
00:05:20,560 --> 00:05:22,240
Speaker 1: Square has. The difference with us is we have it

115
00:05:22,320 --> 00:05:23,800
Speaker 1: from the small guy to the big guy, and we

116
00:05:23,839 --> 00:05:26,760
Speaker 1: have it in a hundred countries where squares predominantly as

117
00:05:26,800 --> 00:05:29,080
Speaker 1: a pure revenue matter, proviently in the United States. So

118
00:05:29,120 --> 00:05:31,080
Speaker 1: we have all that. So today a Heartland, which is

119
00:05:31,080 --> 00:05:33,919
Speaker 1: one of our businesses sales representative can walk into a

120
00:05:33,920 --> 00:05:37,120
Speaker 1: small merchant here in Manhattan and on your phone, on

121
00:05:37,160 --> 00:05:39,599
Speaker 1: that person's phone, can underwrite that merchant, get that merchant

122
00:05:39,680 --> 00:05:43,080
Speaker 1: up and running, provide a loan, provide payroll, you name it,

123
00:05:43,480 --> 00:05:46,440
Speaker 1: we have it. So we have the ecosystem that they have.

124
00:05:46,839 --> 00:05:49,359
Speaker 1: The difference with us is we're more multinational in scope.

125
00:05:49,400 --> 00:05:51,240
Speaker 1: We can go from the really small guy we call

126
00:05:51,279 --> 00:05:53,920
Speaker 1: it the taco truck up to Taco Bell, which is

127
00:05:53,960 --> 00:05:55,800
Speaker 1: one of our customers. So we can do at the

128
00:05:55,839 --> 00:05:58,240
Speaker 1: small level as well as the enterprise level, really in

129
00:05:58,279 --> 00:06:01,240
Speaker 1: a hundred countries. Jeff Slan, CEO of Global Payments, joining

130
00:06:01,279 --> 00:06:03,440
Speaker 1: us in a Bloomberg in Actor broker studio talking about

131
00:06:03,480 --> 00:06:06,040
Speaker 1: his a big deal today. So, Jeff, you know, twenty

132
00:06:06,080 --> 00:06:08,840
Speaker 1: one and a half billion dollar all stock deal. Your

133
00:06:08,839 --> 00:06:10,320
Speaker 1: stock is kind of hanging in there, only down to

134
00:06:10,440 --> 00:06:12,800
Speaker 1: two percent today, So that's a pretty good sign that

135
00:06:12,880 --> 00:06:16,120
Speaker 1: the market likes what they're hearing. What kind of synergies

136
00:06:16,160 --> 00:06:19,000
Speaker 1: did you promise the market revenue and cost synergies, because

137
00:06:19,000 --> 00:06:22,240
Speaker 1: I'm assuming you've got to deliver some creative EPs. Yeah,

138
00:06:22,240 --> 00:06:24,000
Speaker 1: so it is a creative at the boxer, right, we

139
00:06:24,040 --> 00:06:26,919
Speaker 1: said it's mid single digits a creative to the combined

140
00:06:26,920 --> 00:06:30,320
Speaker 1: company in and double digits a creative thereafter. So we

141
00:06:30,320 --> 00:06:33,520
Speaker 1: think it's a very attractive financial profile, very similar to

142
00:06:33,520 --> 00:06:35,359
Speaker 1: what we announced in Heartland. Actually when we did that

143
00:06:35,360 --> 00:06:37,400
Speaker 1: deal in two thousand and fifteen, what we said on

144
00:06:37,400 --> 00:06:39,640
Speaker 1: our call this morning was at least three hundred million

145
00:06:40,000 --> 00:06:42,279
Speaker 1: of expense synergies and at least a hundred million of

146
00:06:42,320 --> 00:06:45,400
Speaker 1: revenue synergies within three years, and we really do plan

147
00:06:45,480 --> 00:06:48,039
Speaker 1: to get most of the expense integration done in the

148
00:06:48,120 --> 00:06:50,760
Speaker 1: first eighteen months, so we do expect a pretty good

149
00:06:50,839 --> 00:06:54,400
Speaker 1: ramp on the synergy expectation. And to give you a sense,

150
00:06:54,400 --> 00:06:57,040
Speaker 1: when we did the Hartland transaction, UM, we talked about

151
00:06:57,040 --> 00:06:58,960
Speaker 1: a hundred twenty five million in synergies and we ended

152
00:06:59,000 --> 00:07:00,720
Speaker 1: up producing foreign x US of that. So a very

153
00:07:00,720 --> 00:07:04,440
Speaker 1: good track record, UH in delivering those energies. Thank you

154
00:07:04,480 --> 00:07:06,960
Speaker 1: so much for being here in congratulations on the deal.

155
00:07:07,440 --> 00:07:10,600
Speaker 1: Jeff Sloan is chief executive Officer of Global Payments, joining

156
00:07:10,680 --> 00:07:14,960
Speaker 1: us here in our Blue Reactor Interactive broker's studios. His

157
00:07:15,000 --> 00:07:18,200
Speaker 1: company agreed to buy Total System Services in a deal

158
00:07:18,240 --> 00:07:23,600
Speaker 1: valued at twenty one and a half billion dollars looking

159
00:07:23,600 --> 00:07:26,600
Speaker 1: at the ten year up ten thirty seconds today, pushing

160
00:07:26,600 --> 00:07:29,440
Speaker 1: that yield down to two point to eight percent. How

161
00:07:29,520 --> 00:07:31,920
Speaker 1: much lower can yields go? We go to our next guest,

162
00:07:32,040 --> 00:07:35,040
Speaker 1: Eric Stein. Eric is a portfolio manager and co director

163
00:07:35,080 --> 00:07:37,720
Speaker 1: of Global fixed income at Eaton Vance et Van says

164
00:07:37,720 --> 00:07:40,800
Speaker 1: about four D sixty billion dollars under management. They're located

165
00:07:40,800 --> 00:07:44,520
Speaker 1: in Boston. Eric, thanks so much for joining us. How

166
00:07:44,600 --> 00:07:46,600
Speaker 1: much you know what's also you know been in the

167
00:07:47,280 --> 00:07:49,240
Speaker 1: front pages over the last several weeks have been the

168
00:07:49,560 --> 00:07:52,480
Speaker 1: escalating trade tensions with China. How much of the action

169
00:07:52,520 --> 00:07:55,120
Speaker 1: we're seeing in the treasury market is kind of reflecting

170
00:07:55,160 --> 00:07:58,320
Speaker 1: that uncertainty. Well, first off, thanks for having me on.

171
00:07:58,360 --> 00:07:59,640
Speaker 1: I mean, I think if you look at all of

172
00:07:59,680 --> 00:08:02,600
Speaker 1: two I was in nineteen, which also includes you know,

173
00:08:02,640 --> 00:08:04,720
Speaker 1: the first quarter where risk markets were doing well and

174
00:08:04,720 --> 00:08:06,800
Speaker 1: people thought were going to have at least a decent

175
00:08:06,840 --> 00:08:09,000
Speaker 1: settlement with the China trade war in the short term,

176
00:08:09,360 --> 00:08:12,680
Speaker 1: treasure yields continued that this grind lower. So certainly, you

177
00:08:12,680 --> 00:08:15,160
Speaker 1: know some of the action we've seen with yields continuing

178
00:08:15,200 --> 00:08:16,960
Speaker 1: to decline over the past couple of weeks, I would

179
00:08:17,000 --> 00:08:19,200
Speaker 1: say there are fears of global growth as well as

180
00:08:19,240 --> 00:08:22,440
Speaker 1: the re escalation of the US China trade warm But

181
00:08:22,560 --> 00:08:25,040
Speaker 1: for all of two thousand nineteen. You know, we have

182
00:08:25,160 --> 00:08:28,480
Speaker 1: seen this very significant rally in the U S Treasury market.

183
00:08:28,840 --> 00:08:31,680
Speaker 1: So we were just talking earlier about the inversion of

184
00:08:31,760 --> 00:08:34,720
Speaker 1: the yield curve. The fact that the gap between tenure

185
00:08:34,800 --> 00:08:37,520
Speaker 1: and three month treasury yields is now inverted by the

186
00:08:37,559 --> 00:08:40,600
Speaker 1: most since two thousand and seven, exceeding the lows reached

187
00:08:40,640 --> 00:08:44,080
Speaker 1: back in March. Does this send a barish signal to you?

188
00:08:45,040 --> 00:08:46,880
Speaker 1: So you know, look, it's something that you know, we

189
00:08:47,200 --> 00:08:48,719
Speaker 1: and Vans have a big debate on, you know, does

190
00:08:48,760 --> 00:08:51,800
Speaker 1: the yield curve matter or not. I certainly put myself

191
00:08:51,880 --> 00:08:54,760
Speaker 1: in the camp that the yield curve does matter. I

192
00:08:54,760 --> 00:08:57,440
Speaker 1: think it's a market signal. I think people that dismiss

193
00:08:57,480 --> 00:09:00,160
Speaker 1: it kind of do so at their own peril, uh know.

194
00:09:00,280 --> 00:09:02,839
Speaker 1: That being said, I think sometimes there's an obsession about,

195
00:09:03,000 --> 00:09:04,880
Speaker 1: you know, particular parts of the front end of the

196
00:09:04,920 --> 00:09:06,680
Speaker 1: yield curve. So I'd look more at kind of you know,

197
00:09:06,760 --> 00:09:10,120
Speaker 1: twos tens, twos thirties, things like that. At least the

198
00:09:10,160 --> 00:09:13,800
Speaker 1: two thirties hasn't continued to invert, which to me is

199
00:09:13,600 --> 00:09:16,319
Speaker 1: a is a good sign. Uh It's still relatively flat,

200
00:09:16,360 --> 00:09:18,760
Speaker 1: but it hasn't kind of continued on the flattening that

201
00:09:18,800 --> 00:09:20,679
Speaker 1: we saw last year. But certainly, as you mentioned at

202
00:09:20,679 --> 00:09:23,319
Speaker 1: the front end, you do see some inversion. So I think,

203
00:09:23,360 --> 00:09:25,800
Speaker 1: you know, it's like any market signal, I would not

204
00:09:25,920 --> 00:09:27,839
Speaker 1: ignore it. If I were the Fed, if I were

205
00:09:27,880 --> 00:09:29,960
Speaker 1: someone looking at the economy, I would certainly, you know,

206
00:09:30,000 --> 00:09:33,079
Speaker 1: take it seriously. So Eric, given where we are with

207
00:09:33,200 --> 00:09:36,120
Speaker 1: these historically low rates, what are you doing with your

208
00:09:36,240 --> 00:09:39,840
Speaker 1: portfolio right here? Yes? So, Look, I think first off,

209
00:09:39,880 --> 00:09:42,920
Speaker 1: from a you know, a treasury perspective, look to me

210
00:09:43,000 --> 00:09:44,920
Speaker 1: that you know, the value in the treasury market is

211
00:09:44,920 --> 00:09:46,480
Speaker 1: if you think that things are going to get worse

212
00:09:46,600 --> 00:09:48,480
Speaker 1: from here, And I said, the treasure markets pricing in

213
00:09:48,520 --> 00:09:51,000
Speaker 1: a pretty bad outcome. Maybe things do get worse, so

214
00:09:51,040 --> 00:09:53,400
Speaker 1: maybe there's some safety value. But to me, the the

215
00:09:53,440 --> 00:09:55,880
Speaker 1: only really sector of the treasure market I really like

216
00:09:56,280 --> 00:10:00,560
Speaker 1: would be tips on a kind of nominal treasury edge basis.

217
00:10:00,600 --> 00:10:03,000
Speaker 1: I think there's a lot of policies by the Fed

218
00:10:03,200 --> 00:10:05,160
Speaker 1: as well as the trade war, a lot of policies

219
00:10:05,160 --> 00:10:07,600
Speaker 1: that should lead to somewhat higher inflation, so I think

220
00:10:07,679 --> 00:10:10,559
Speaker 1: duration hedge tips could be attractive. Look, I also think

221
00:10:10,559 --> 00:10:13,520
Speaker 1: parts of the emerging market bond complex look attractive as

222
00:10:13,640 --> 00:10:16,800
Speaker 1: yields are so low, not only in the US, but

223
00:10:16,800 --> 00:10:19,240
Speaker 1: but in you know, Germany, UK, Japan, really all the

224
00:10:19,280 --> 00:10:23,000
Speaker 1: whole developed market world. Uh. It makes places like emerging

225
00:10:23,040 --> 00:10:25,960
Speaker 1: markets that, yes, there's volatility, but if you look at,

226
00:10:26,000 --> 00:10:28,600
Speaker 1: you know, what yields you're getting on emerging market assets

227
00:10:28,720 --> 00:10:32,280
Speaker 1: versus treasuries or their developed market bond markets, I think

228
00:10:32,280 --> 00:10:34,560
Speaker 1: those are attractive. And I think if we're back, you know,

229
00:10:34,720 --> 00:10:37,000
Speaker 1: if we're still in this goldilocks not too hot, not

230
00:10:37,080 --> 00:10:40,120
Speaker 1: too cold world, it's actually a pretty good environment for

231
00:10:40,280 --> 00:10:42,760
Speaker 1: carrying and some of the riskier parts of the fixed

232
00:10:42,800 --> 00:10:46,480
Speaker 1: income markets. So Eric, how much is this thesis predicated

233
00:10:46,520 --> 00:10:49,160
Speaker 1: on the idea that the Federals will cut rates again

234
00:10:49,640 --> 00:10:52,600
Speaker 1: in the near term. So I don't think you need

235
00:10:52,640 --> 00:10:55,960
Speaker 1: to cut for emerging markets assets to do well. I

236
00:10:56,000 --> 00:10:57,640
Speaker 1: certainly think if the Fed ward had turned, you know,

237
00:10:57,720 --> 00:10:59,960
Speaker 1: very hawkish and and people are talking about rate high,

238
00:11:00,240 --> 00:11:03,240
Speaker 1: that would be that that would be negative for sure.

239
00:11:03,880 --> 00:11:05,800
Speaker 1: But I think if if rates just kind of stay

240
00:11:05,800 --> 00:11:08,800
Speaker 1: where they are, uh in in the U S that's

241
00:11:08,920 --> 00:11:11,240
Speaker 1: you know, whether it's front end um you know, or

242
00:11:11,280 --> 00:11:13,280
Speaker 1: back into the curve, kind of stay where they are,

243
00:11:13,840 --> 00:11:16,520
Speaker 1: I think a lot of these assets and emerging markets.

244
00:11:16,559 --> 00:11:19,559
Speaker 1: You know, investors will once again be searching for yield,

245
00:11:20,080 --> 00:11:22,360
Speaker 1: and they'll need to invest in, you know, somewhere else

246
00:11:22,400 --> 00:11:24,280
Speaker 1: other than U S. Treasuries. I guess another way to

247
00:11:24,320 --> 00:11:26,600
Speaker 1: ask this is, you know, if the Federal, if the

248
00:11:26,640 --> 00:11:29,040
Speaker 1: vessors are does cut rates as the market expects it

249
00:11:29,080 --> 00:11:31,760
Speaker 1: to do within the next nine months, do you think

250
00:11:31,800 --> 00:11:35,120
Speaker 1: that will be an additional support to risk assets or

251
00:11:35,160 --> 00:11:36,920
Speaker 1: that it will harm them because it will send a

252
00:11:37,040 --> 00:11:41,360
Speaker 1: message that is somewhat barish on the U S economy.

253
00:11:41,520 --> 00:11:43,719
Speaker 1: Very good question. Look, I've you know, I've never been

254
00:11:43,760 --> 00:11:45,320
Speaker 1: in the school thought, and I used to work at

255
00:11:45,360 --> 00:11:47,319
Speaker 1: the New York FED that the Fed knows something that

256
00:11:47,480 --> 00:11:50,280
Speaker 1: let's say, the markets don't, and so, you know, sometimes

257
00:11:50,280 --> 00:11:52,720
Speaker 1: I think there could be confusion in policy statements, which

258
00:11:52,760 --> 00:11:55,200
Speaker 1: which can lead to markets, you know, not behaving as

259
00:11:55,440 --> 00:11:57,960
Speaker 1: you would expect them to. I you know, US rates

260
00:11:58,000 --> 00:12:00,360
Speaker 1: going down, a risk assets not doing well. Maybe market

261
00:12:00,400 --> 00:12:03,000
Speaker 1: was expecting more. Maybe the statement, um, you know, it

262
00:12:03,120 --> 00:12:06,040
Speaker 1: wasn't as as devilish as people were expecting. So you know,

263
00:12:06,080 --> 00:12:08,160
Speaker 1: I can see that I'm not you know, as I said,

264
00:12:08,160 --> 00:12:10,400
Speaker 1: of the view that the FED really knows more than

265
00:12:10,600 --> 00:12:13,800
Speaker 1: than other than you know, other market participants. UM, you know,

266
00:12:13,880 --> 00:12:16,040
Speaker 1: I do think that. UM, you know, if there are

267
00:12:16,080 --> 00:12:18,240
Speaker 1: lower rates, you know, certainly that helps. I also think

268
00:12:18,240 --> 00:12:19,920
Speaker 1: something else is going to start to get talked about,

269
00:12:19,960 --> 00:12:23,079
Speaker 1: as the US dollar. I've actually been surprised with with

270
00:12:23,160 --> 00:12:24,839
Speaker 1: the strength of the US dollar that we started to

271
00:12:24,880 --> 00:12:27,600
Speaker 1: see some weakness last week. Uh you know, we've seen

272
00:12:27,640 --> 00:12:29,960
Speaker 1: lots of tweets from President Trump about the Fed. I've

273
00:12:29,960 --> 00:12:32,280
Speaker 1: actually been surprised we haven't seen more tweets about the

274
00:12:32,360 --> 00:12:35,040
Speaker 1: US dollar. And so if the Fed gets more debblished,

275
00:12:35,080 --> 00:12:37,560
Speaker 1: that would be another uh you know, reason for the

276
00:12:37,640 --> 00:12:40,360
Speaker 1: US dollar to start the weekend, which should help emerging

277
00:12:40,440 --> 00:12:43,120
Speaker 1: market assets. Eric Stein, thank you so much for being

278
00:12:43,160 --> 00:12:45,679
Speaker 1: with us. Eric Stein's portfolio manager and co director of

279
00:12:45,720 --> 00:12:52,080
Speaker 1: Global Fixed Income and EAT Advanced. For a few days now,

280
00:12:52,160 --> 00:12:54,480
Speaker 1: a growing number of Wall Street analysts are coming out

281
00:12:54,480 --> 00:12:58,160
Speaker 1: with predictions for how much profits could drop at some

282
00:12:58,200 --> 00:13:00,679
Speaker 1: of the big U S. Tech companies in the case

283
00:13:00,760 --> 00:13:03,360
Speaker 1: of an escalation in the U. S. China trade war.

284
00:13:03,960 --> 00:13:06,640
Speaker 1: Joining US now to talk about how realistic this is,

285
00:13:06,679 --> 00:13:09,720
Speaker 1: how significant the losses could be. David Garretty, chief market

286
00:13:09,720 --> 00:13:13,640
Speaker 1: strategist for leid Long Co, also a partner at bt block.

287
00:13:14,040 --> 00:13:16,800
Speaker 1: So first, let's just start with are we entering a

288
00:13:16,880 --> 00:13:19,440
Speaker 1: tech war, and if so, what does that mean. No,

289
00:13:19,640 --> 00:13:24,000
Speaker 1: certainly we're rendering into widening an era of widening tariffs,

290
00:13:24,160 --> 00:13:27,360
Speaker 1: and certainly they're not just widening, but they're also growing greater.

291
00:13:27,880 --> 00:13:32,000
Speaker 1: And while tariffs are paid by the US consumers here

292
00:13:32,120 --> 00:13:35,240
Speaker 1: relative to Chinese goods, the fact of the matter is

293
00:13:35,280 --> 00:13:38,160
Speaker 1: that you are most likely are going to see US

294
00:13:38,240 --> 00:13:42,080
Speaker 1: products that are available in China think Apple iPhones as

295
00:13:42,120 --> 00:13:45,600
Speaker 1: being potentially priced out of the market. But also at

296
00:13:45,640 --> 00:13:49,360
Speaker 1: the same time, we're already operating in an environment between

297
00:13:49,440 --> 00:13:52,719
Speaker 1: the US and China where China announced back in two

298
00:13:52,800 --> 00:13:56,920
Speaker 1: thousand and fifteen a ten year plan. Communist countries like

299
00:13:57,040 --> 00:13:59,760
Speaker 1: to do these things ten year plans, but there's was

300
00:14:00,200 --> 00:14:04,640
Speaker 1: made in China, and in that they laid out goals

301
00:14:04,679 --> 00:14:08,000
Speaker 1: to be leaders in ten tech categories all the way

302
00:14:08,040 --> 00:14:12,000
Speaker 1: from artificial intelligence through aviation. How they were going to

303
00:14:12,000 --> 00:14:16,000
Speaker 1: get there obviously has been unfolding over time. These tariffs

304
00:14:16,040 --> 00:14:18,440
Speaker 1: that we're seeing right now in some respects as a

305
00:14:18,480 --> 00:14:22,040
Speaker 1: reaction to that. But tariffs or no, I would still

306
00:14:22,080 --> 00:14:25,440
Speaker 1: say that we're in a tech cold war between the

307
00:14:25,520 --> 00:14:29,320
Speaker 1: United States and China, or more broadly, between China and

308
00:14:29,560 --> 00:14:32,440
Speaker 1: the US and its allies. So in terms of a

309
00:14:32,520 --> 00:14:35,080
Speaker 1: tech cold war, I think it really ratcheted up for

310
00:14:35,120 --> 00:14:38,800
Speaker 1: a lot of investors when the US government puts, you know,

311
00:14:38,880 --> 00:14:41,360
Speaker 1: announce some sanctions on the Huahwei and you think about

312
00:14:41,360 --> 00:14:43,440
Speaker 1: the global supply chain and what that means for Huahwei

313
00:14:43,480 --> 00:14:45,840
Speaker 1: and what that means for US tech industries. The implications

314
00:14:45,840 --> 00:14:48,720
Speaker 1: are just extremely broad. What is the risk you think

315
00:14:48,760 --> 00:14:51,320
Speaker 1: if if these sanctions do go through on Huahwei, that

316
00:14:51,800 --> 00:14:55,200
Speaker 1: China will retaliate, say on an Apple, and do something

317
00:14:55,240 --> 00:14:58,600
Speaker 1: similar there. Well, I mean, China, certainly, just to save face,

318
00:14:59,080 --> 00:15:01,800
Speaker 1: is going to have to taliate. And and certainly you

319
00:15:01,800 --> 00:15:04,840
Speaker 1: know that they've been beating the drums in this regard

320
00:15:05,200 --> 00:15:08,680
Speaker 1: directly and indirectly. Um. But if China were to go

321
00:15:08,840 --> 00:15:12,240
Speaker 1: through and actually you know, take extreme action against you know,

322
00:15:12,400 --> 00:15:14,880
Speaker 1: a household brand name like Apple, um, you know, the

323
00:15:14,920 --> 00:15:17,200
Speaker 1: fact remains is that China is still very, very heavily

324
00:15:17,200 --> 00:15:21,840
Speaker 1: dependent upon US suppliers of semiconductors, and for the time being,

325
00:15:21,920 --> 00:15:26,240
Speaker 1: semiconductors are a fundamental or foundation technology as far as

326
00:15:26,240 --> 00:15:30,120
Speaker 1: technology is concerned across a wide range of applications. So

327
00:15:30,320 --> 00:15:34,479
Speaker 1: China would do this obviously to their own detriment. But nevertheless,

328
00:15:34,520 --> 00:15:38,160
Speaker 1: I fully expect that because of the kabuki theater that

329
00:15:38,200 --> 00:15:41,120
Speaker 1: gets involved in terms of tariffs UH and the need

330
00:15:41,200 --> 00:15:44,480
Speaker 1: to save face. UM. Not to say that Trump doesn't

331
00:15:44,600 --> 00:15:47,400
Speaker 1: engage in face saving moves himself, but I think very

332
00:15:47,480 --> 00:15:49,120
Speaker 1: much so that we're likely to see some sort of

333
00:15:49,160 --> 00:15:52,680
Speaker 1: major response and reaction. Clearly, we've seen in terms of

334
00:15:52,720 --> 00:15:55,320
Speaker 1: technology stocks after they came out with first quarter results

335
00:15:55,320 --> 00:15:57,280
Speaker 1: back in April, you know, they pretty much kind of

336
00:15:57,360 --> 00:15:59,880
Speaker 1: rolled over, and we've already seen a pullback UH in

337
00:16:00,160 --> 00:16:03,000
Speaker 1: terms of the Chinese tech names as well. So the

338
00:16:03,080 --> 00:16:07,320
Speaker 1: prospect of a non global market or a bifurcated market

339
00:16:07,400 --> 00:16:10,800
Speaker 1: certainly is working to the detriment of the valuation of

340
00:16:10,960 --> 00:16:14,440
Speaker 1: both US as well as Chinese technology stocks. Who is

341
00:16:14,480 --> 00:16:19,240
Speaker 1: going to suffer more, the US or Chinese tech companies? UM.

342
00:16:19,280 --> 00:16:21,640
Speaker 1: I would make the argument that, you know, at the

343
00:16:21,720 --> 00:16:23,480
Speaker 1: end of the day, it's likely to be China to

344
00:16:23,520 --> 00:16:26,160
Speaker 1: the extent that they're not going to have a larger

345
00:16:26,320 --> 00:16:29,000
Speaker 1: end market available to them. Granted, you know, one point

346
00:16:29,040 --> 00:16:31,680
Speaker 1: three billion people in China are a fair number of

347
00:16:31,680 --> 00:16:34,440
Speaker 1: people to sell to. In the first place. But clearly,

348
00:16:34,480 --> 00:16:37,440
Speaker 1: if you're trying to make the investments necessary to scale up,

349
00:16:37,760 --> 00:16:40,960
Speaker 1: far better if you had an integrated global market of

350
00:16:41,400 --> 00:16:44,680
Speaker 1: you know, seven trillion of seven you know, seven trillion consumers,

351
00:16:44,680 --> 00:16:48,120
Speaker 1: seven billion consumers to sell into UH than than a

352
00:16:48,200 --> 00:16:51,640
Speaker 1: smaller Chinese market. So, David, one of the big big

353
00:16:51,680 --> 00:16:55,600
Speaker 1: global growth areas and technology is five G UM. And

354
00:16:55,640 --> 00:16:58,120
Speaker 1: I think when this Huahwei news came out and trade

355
00:16:58,120 --> 00:17:02,600
Speaker 1: tech wars started getting discuss us, the concern is any

356
00:17:02,640 --> 00:17:05,879
Speaker 1: trade tech war could really impact the global development of

357
00:17:05,880 --> 00:17:08,120
Speaker 1: five G. Do you think that's a valid concern? Now,

358
00:17:08,119 --> 00:17:09,960
Speaker 1: it's very much of a valid concern. And when we

359
00:17:10,000 --> 00:17:12,720
Speaker 1: look at five G, you know, we're we're looking at

360
00:17:12,720 --> 00:17:17,120
Speaker 1: a platform technology. I mean, certainly the US and US

361
00:17:17,200 --> 00:17:20,320
Speaker 1: technology companies were very successful in the four G environment.

362
00:17:20,359 --> 00:17:22,840
Speaker 1: Witnessed the rise of Apple UH in terms of the

363
00:17:22,880 --> 00:17:26,000
Speaker 1: services they offer. Now five G prominence is a twenty

364
00:17:26,040 --> 00:17:29,439
Speaker 1: times speed increase over four G. And now what this

365
00:17:29,520 --> 00:17:32,680
Speaker 1: is going to enable is a wide range of possibilities.

366
00:17:32,920 --> 00:17:36,719
Speaker 1: Huawei has been already deemed by the Defense Innovation Board

367
00:17:37,000 --> 00:17:40,160
Speaker 1: and an advisory council to the US Department of Defense

368
00:17:40,480 --> 00:17:44,159
Speaker 1: to potentially have a first mover advantage in five G.

369
00:17:44,720 --> 00:17:47,919
Speaker 1: Five G sets the rules by which the game is

370
00:17:47,960 --> 00:17:50,800
Speaker 1: going to be played going forward. So what's happening with

371
00:17:50,840 --> 00:17:54,560
Speaker 1: five G is critical to the prospects not just of

372
00:17:54,600 --> 00:17:57,200
Speaker 1: the U S economy, of the U S technology companies,

373
00:17:57,520 --> 00:18:00,320
Speaker 1: but the global economy. And from that stay and point,

374
00:18:00,359 --> 00:18:03,840
Speaker 1: you're already seeing, you know, concessions being made by American

375
00:18:03,880 --> 00:18:07,520
Speaker 1: intelligence officials and telecoms executives saying that they think in

376
00:18:07,560 --> 00:18:13,159
Speaker 1: the future, forty of networks over which businesses, diplomat, spies,

377
00:18:13,160 --> 00:18:17,040
Speaker 1: and citizens do business are going to be Chinese five G.

378
00:18:18,160 --> 00:18:21,040
Speaker 1: They're deeming these to be dirty networks, to the extent

379
00:18:21,119 --> 00:18:25,360
Speaker 1: that in China it's a state controlled economy and businesses

380
00:18:25,440 --> 00:18:29,040
Speaker 1: do what the state wants. Just real quick here twenty seconds.

381
00:18:29,040 --> 00:18:31,639
Speaker 1: Are there any U S tech companies immune to the

382
00:18:31,680 --> 00:18:35,320
Speaker 1: ongoing or more immune to the ongoing trade tensions? I think,

383
00:18:35,320 --> 00:18:39,040
Speaker 1: you know, in terms of companies who are developing cybersecurity initiatives,

384
00:18:39,240 --> 00:18:42,640
Speaker 1: I mean, certainly that's an evergreen business, always has been.

385
00:18:42,880 --> 00:18:46,200
Speaker 1: But I think the case for owning cybersecurity names only

386
00:18:46,240 --> 00:18:50,080
Speaker 1: gets stronger in this type of an environment. UH names

387
00:18:50,119 --> 00:18:54,360
Speaker 1: that have been competing directly albeit they're not US technology names,

388
00:18:54,400 --> 00:18:56,680
Speaker 1: but if you look at Ericson and Nokia, they traditionally

389
00:18:56,680 --> 00:19:01,600
Speaker 1: had been very strong telecommunications infrastructure equip suppliers. They two

390
00:19:01,640 --> 00:19:03,679
Speaker 1: are gonna be playing in five GEO would expect them

391
00:19:03,680 --> 00:19:06,560
Speaker 1: to see a benefit from this interesting trade. Tech wars

392
00:19:06,560 --> 00:19:08,159
Speaker 1: will certainly keep our eyes on that that is not

393
00:19:08,200 --> 00:19:11,639
Speaker 1: anybody's best interest. David Garretty, chief market strategist from Laidlaw

394
00:19:11,680 --> 00:19:16,520
Speaker 1: and Company, also a partner at bt Block. There were

395
00:19:16,520 --> 00:19:19,480
Speaker 1: elections in the European Union and if you read three

396
00:19:19,480 --> 00:19:22,280
Speaker 1: different publications about what the outcome was, you will get

397
00:19:22,320 --> 00:19:26,320
Speaker 1: three different stories. Either the Centrists held steady, there was

398
00:19:26,680 --> 00:19:30,639
Speaker 1: there were gains made by the populists, or it is

399
00:19:30,680 --> 00:19:33,919
Speaker 1: just a muddle. That is par for the course. Right now,

400
00:19:34,000 --> 00:19:36,280
Speaker 1: let's bring in Clive Crook to sort of pass through

401
00:19:36,359 --> 00:19:37,800
Speaker 1: all of this and give us a sense of what

402
00:19:37,880 --> 00:19:40,800
Speaker 1: the big takeaway is. He is an editor for Bloomberg Opinion. Clive,

403
00:19:41,520 --> 00:19:43,840
Speaker 1: so come on in here. What's your big takeaway? Which

404
00:19:43,960 --> 00:19:48,040
Speaker 1: narrative is right when you know you're right? Is a muddle,

405
00:19:48,200 --> 00:19:50,840
Speaker 1: and I think it's because the outcome is pretty complicated.

406
00:19:50,920 --> 00:19:54,600
Speaker 1: You know, on the one hand, people are relieved that

407
00:19:55,440 --> 00:19:59,720
Speaker 1: you know, the far right euroskeptic parties didn't do better

408
00:19:59,760 --> 00:20:02,200
Speaker 1: than they did. I mean, ahead of the elections, there

409
00:20:02,240 --> 00:20:05,120
Speaker 1: was a lot of anxiety that those groups would see

410
00:20:05,119 --> 00:20:09,240
Speaker 1: a real breakthrough and that didn't happen. They did actually

411
00:20:09,320 --> 00:20:13,080
Speaker 1: did it quite well. I mean, they gained representation in

412
00:20:13,119 --> 00:20:16,119
Speaker 1: the European Parliament, but it wasn't the sort of overthrow

413
00:20:16,760 --> 00:20:19,960
Speaker 1: of the center that some people were fearing. So that

414
00:20:20,080 --> 00:20:22,959
Speaker 1: was the good news, and that's it were one headline.

415
00:20:23,440 --> 00:20:27,040
Speaker 1: But the other thing is that the thing that prevented

416
00:20:27,920 --> 00:20:31,200
Speaker 1: the far right eurosceptic parties from doing better than they

417
00:20:31,240 --> 00:20:36,000
Speaker 1: did was a very strong showing from as it were, centrists,

418
00:20:36,160 --> 00:20:40,600
Speaker 1: insurgents and talking about liberals and Greens. They did very

419
00:20:40,600 --> 00:20:47,040
Speaker 1: well at the expense of the traditional center left and

420
00:20:47,160 --> 00:20:50,160
Speaker 1: center right group things. So the way I would sum

421
00:20:50,200 --> 00:20:52,080
Speaker 1: that up is to say, what you've seen is a

422
00:20:52,160 --> 00:20:56,679
Speaker 1: sort of surprising sort of fragmentation of the center. It

423
00:20:56,800 --> 00:21:00,640
Speaker 1: isn't that the center has been defeated by the far right,

424
00:21:00,760 --> 00:21:02,680
Speaker 1: which is what I think a lot of people were

425
00:21:02,680 --> 00:21:06,479
Speaker 1: worried about. The far right has made limited progress and

426
00:21:06,520 --> 00:21:10,520
Speaker 1: the center has divided. And I think this matters because

427
00:21:10,720 --> 00:21:12,320
Speaker 1: you know, when you look at what's going to happen

428
00:21:12,320 --> 00:21:15,399
Speaker 1: in the European Parliament now when you have all the

429
00:21:15,520 --> 00:21:19,840
Speaker 1: jocking for position for top jobs in the commission Um,

430
00:21:19,960 --> 00:21:23,520
Speaker 1: the old rules about who's in charge aren't going to apply,

431
00:21:23,680 --> 00:21:26,840
Speaker 1: And I think you're going to see this fragmented center

432
00:21:26,880 --> 00:21:29,720
Speaker 1: with these new guys, you know, lots of new Liberals,

433
00:21:29,760 --> 00:21:35,040
Speaker 1: lots of gleans. That process of getting to a new

434
00:21:35,119 --> 00:21:39,000
Speaker 1: leadership structure in Brussels is going to be very difficult.

435
00:21:39,400 --> 00:21:42,040
Speaker 1: So my take on the whole thing is that this

436
00:21:42,119 --> 00:21:45,960
Speaker 1: is not such a great result for the European project.

437
00:21:46,160 --> 00:21:50,520
Speaker 1: Even though the euroskeptics didn't try it, this fragmentation of

438
00:21:50,560 --> 00:21:53,840
Speaker 1: the center is bad news. I think for people who want,

439
00:21:54,160 --> 00:21:58,200
Speaker 1: you know, Europe to recognize problems, set priorities and start

440
00:21:58,280 --> 00:22:00,760
Speaker 1: working on solutions, I think that's to be harder now

441
00:22:00,800 --> 00:22:03,120
Speaker 1: than it was before. So Cloud, let's take a look

442
00:22:03,119 --> 00:22:05,920
Speaker 1: at the UK. It looks like the Brexit Party had

443
00:22:06,160 --> 00:22:09,440
Speaker 1: strong performance. What are some of the takeaways as from

444
00:22:09,480 --> 00:22:11,359
Speaker 1: what we saw in the UK elections? Maybe what that

445
00:22:11,400 --> 00:22:15,560
Speaker 1: means for the Brexit process overall? Well, you're not kidding,

446
00:22:15,560 --> 00:22:21,200
Speaker 1: I mean, the Brexit Party didn't sensationally well in these elections. Now, obviously.

447
00:22:21,280 --> 00:22:24,320
Speaker 1: You know, Britain is is a special case because Britain

448
00:22:24,400 --> 00:22:27,840
Speaker 1: is in the throes of this Brexit process. I mean,

449
00:22:27,880 --> 00:22:30,040
Speaker 1: in many ways it shouldn't have even been voting in

450
00:22:30,080 --> 00:22:33,520
Speaker 1: these elections. So what that result means for Europe is

451
00:22:33,520 --> 00:22:36,960
Speaker 1: a sort of second order question. I think the main

452
00:22:37,080 --> 00:22:39,679
Speaker 1: thing is what the main question is what does a

453
00:22:39,720 --> 00:22:43,320
Speaker 1: triumph for the Brexit Party means for British politics? And

454
00:22:43,520 --> 00:22:47,000
Speaker 1: it really was a triumph. I mean, labor was killed

455
00:22:47,040 --> 00:22:50,359
Speaker 1: in these elections and the Tories were just annihilated. This

456
00:22:50,920 --> 00:22:55,720
Speaker 1: was the worst national election result the Tory Party has suffered,

457
00:22:55,760 --> 00:22:57,679
Speaker 1: I believe in its history. I mean it was as

458
00:22:57,720 --> 00:23:01,960
Speaker 1: bad as that they came fifth in this in these elections.

459
00:23:01,960 --> 00:23:06,159
Speaker 1: This is the ruling party. Um, this shed no like

460
00:23:06,520 --> 00:23:09,560
Speaker 1: what you know on how the Brexit met is going

461
00:23:09,600 --> 00:23:13,080
Speaker 1: to be resolved. I mean, terrace, the mas or Essential's resigning.

462
00:23:13,720 --> 00:23:17,960
Speaker 1: The leadership contest the Tories is now underway, but nothing

463
00:23:18,000 --> 00:23:20,960
Speaker 1: has changed. You know, there's no majority in the British

464
00:23:21,000 --> 00:23:25,480
Speaker 1: Parliament to do anything. Um, the sort of steady majorities

465
00:23:25,640 --> 00:23:30,280
Speaker 1: against everything. So that kind of paralysis is not going

466
00:23:30,320 --> 00:23:33,080
Speaker 1: to be resolved one way or the other by this

467
00:23:33,240 --> 00:23:37,200
Speaker 1: Brexit Party. Performance in the European elections. I mean that

468
00:23:37,240 --> 00:23:41,480
Speaker 1: has in effect no direct implications for what's going on

469
00:23:41,520 --> 00:23:44,560
Speaker 1: in the House of Commons. I think the situation in

470
00:23:44,640 --> 00:23:48,280
Speaker 1: Britain is still as unpredictable as it was before. I mean,

471
00:23:48,320 --> 00:23:50,639
Speaker 1: I can you know, you could make a case that

472
00:23:50,920 --> 00:23:56,200
Speaker 1: any any outcome, you know, Brexit is tenseled, a hard

473
00:23:56,320 --> 00:23:59,879
Speaker 1: Brexit with no deal and everything in between, all the

474
00:24:00,160 --> 00:24:02,560
Speaker 1: things still on the table, I believe. Yeah, so the

475
00:24:02,600 --> 00:24:05,080
Speaker 1: model continues in but I feel like there's a takeaway

476
00:24:05,119 --> 00:24:09,080
Speaker 1: you can actually unify European Union elections more broadly as

477
00:24:09,080 --> 00:24:11,919
Speaker 1: well as the Brexit specific results to sort of go

478
00:24:11,960 --> 00:24:14,080
Speaker 1: back to exactly what you were saying, Clive, which is

479
00:24:14,280 --> 00:24:19,040
Speaker 1: fragmentation within the middle and a hardening on the more

480
00:24:19,160 --> 00:24:22,280
Speaker 1: extreme ends of it. And I'm just wondering how much

481
00:24:22,320 --> 00:24:25,800
Speaker 1: that's going to push the center toward a more extreme view.

482
00:24:25,840 --> 00:24:27,560
Speaker 1: I mean, we're sort of seeing that with respect to

483
00:24:27,600 --> 00:24:30,720
Speaker 1: Brexit discussions as well, where there seems to be growing

484
00:24:30,760 --> 00:24:33,919
Speaker 1: momentum for a second referendum or hard Brexit. It's sort

485
00:24:33,960 --> 00:24:37,600
Speaker 1: of the two polar opposite kind of gaining steam. And

486
00:24:37,640 --> 00:24:40,199
Speaker 1: I'm just wondering what you're seeing with that type of

487
00:24:40,240 --> 00:24:43,919
Speaker 1: attitude within the European Union. More broadly, well, you know,

488
00:24:44,000 --> 00:24:45,720
Speaker 1: I don't really look at it that way. I mean,

489
00:24:45,760 --> 00:24:49,120
Speaker 1: I don't really look at it in terms of this

490
00:24:49,280 --> 00:24:52,960
Speaker 1: grouping um in the European Parliament. Is it were this

491
00:24:53,160 --> 00:24:57,160
Speaker 1: broad center that includes you know, the traditional center left

492
00:24:57,200 --> 00:25:00,600
Speaker 1: and the traditional center right that's got hammered and elections

493
00:25:00,640 --> 00:25:03,120
Speaker 1: and the new as it were, these insurgents, these new

494
00:25:03,160 --> 00:25:07,119
Speaker 1: parties like you know, Macron's movement, that they will be

495
00:25:07,160 --> 00:25:10,119
Speaker 1: part of the liberal grouping um, and the Greens of

496
00:25:10,160 --> 00:25:12,960
Speaker 1: course they did very well also, But I don't see

497
00:25:13,040 --> 00:25:19,120
Speaker 1: that that points you towards a single coherent ideology which

498
00:25:19,160 --> 00:25:22,840
Speaker 1: is either more or less extremes. The theme I neither

499
00:25:22,920 --> 00:25:27,200
Speaker 1: takeaway is that there isn't going to be a single

500
00:25:27,560 --> 00:25:31,879
Speaker 1: theme or uh, you know, coherent set of policy. But

501
00:25:32,080 --> 00:25:36,359
Speaker 1: this is something the European parliaments has always struggled to

502
00:25:36,520 --> 00:25:41,320
Speaker 1: come up with, you know, a coherent argument of the

503
00:25:41,400 --> 00:25:45,359
Speaker 1: kind that you see in typical national elections. You know,

504
00:25:45,440 --> 00:25:49,960
Speaker 1: there's a ruling party arguing acts and a principal opposition

505
00:25:50,040 --> 00:25:54,560
Speaker 1: party arguing why, and the elections organized themselves around those

506
00:25:54,640 --> 00:25:57,520
Speaker 1: d dates. Well, you aren't going to see that in Europe.

507
00:25:58,000 --> 00:26:00,600
Speaker 1: You haven't seen it before, and now now it's going

508
00:26:00,640 --> 00:26:04,800
Speaker 1: to be even harder to imagine because of this fragmentation.

509
00:26:05,280 --> 00:26:08,080
Speaker 1: So I think, you know what European voters are going

510
00:26:08,119 --> 00:26:10,520
Speaker 1: to see when they look at what's going on in

511
00:26:10,560 --> 00:26:14,159
Speaker 1: the European Parliament is you know, a mess, you know,

512
00:26:14,240 --> 00:26:20,520
Speaker 1: an inconclusive mess. And the competition over who gets which

513
00:26:20,640 --> 00:26:24,440
Speaker 1: job is going to really demonstrate that, I mean, really

514
00:26:24,560 --> 00:26:30,160
Speaker 1: underlined this problem that there is no coherent political character

515
00:26:30,359 --> 00:26:33,680
Speaker 1: in this in this assembly. Uh this you know, the

516
00:26:33,680 --> 00:26:36,800
Speaker 1: the old coalition between the center LA and the center

517
00:26:36,880 --> 00:26:40,720
Speaker 1: right try to provide that kind of you know, organizing theme.

518
00:26:41,080 --> 00:26:43,240
Speaker 1: That's going to be harder now than it was before.

519
00:26:43,440 --> 00:26:45,320
Speaker 1: So I think the so I think the takeaway Clive

520
00:26:45,560 --> 00:26:47,720
Speaker 1: is for me at least a mess. That's what we

521
00:26:47,840 --> 00:26:51,240
Speaker 1: got from these elections. So anyway, Yeah, Clive Crook, thank

522
00:26:51,240 --> 00:26:53,800
Speaker 1: you so much, Editor Bloomberg Opinion based in Washington, d C.

523
00:26:55,080 --> 00:26:57,600
Speaker 1: Thanks for listening to the Bloomberg p m L podcast.

524
00:26:57,960 --> 00:27:01,120
Speaker 1: You can subscribe and listen to interviews that Apple Podcasts,

525
00:27:01,240 --> 00:27:05,159
Speaker 1: SoundCloud or whatever podcast platform you prefer. I'm Pim Fox.

526
00:27:05,240 --> 00:27:08,560
Speaker 1: I'm on Twitter at pim Fox. I'm on Twitter at

527
00:27:08,680 --> 00:27:11,720
Speaker 1: Lisa Abramo wits one before the podcast. You can always

528
00:27:11,760 --> 00:27:13,800
Speaker 1: catch us worldwide on Bloomberg Radio