Speaker 1: Welcome to the Bloomberg Penl podcast. I'm Paul swing you,
Speaker 1: along with my co host Lisa Brahma wits. Each day
Speaker 1: we bring you the most noteworthy and useful interviews for
Speaker 1: you and your money, whether at the grocery store or
Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
Speaker 1: Podcast or wherever you listen to podcasts, as well as
Speaker 1: at Bloomberg dot com. There is another deal in the
Speaker 1: payments industry. Global Payments today agreed to buy Total System
Speaker 1: Services in a deal valued at twenty one point five
Speaker 1: billion dollar, the payment industries third mega merger. Of the deal,
Speaker 1: we can get the details from the person himself, Jeff Sloan,
Speaker 1: CEO of Global Payments. He joints is here in our
Speaker 1: Bloomberg Interactive Broker studio. Jeff, thanks so much for joining us.
Speaker 1: I know it's a busy, exciting day for you guys
Speaker 1: at your company. I know you and t ss I've
Speaker 1: been looking at each other for a while. Why do
Speaker 1: the deal now? Well, I think the rate of innovation
Speaker 1: and payments is only accelerated if you look. For example,
Speaker 1: here in New York as well as the United States.
Speaker 1: Contact lists. The announcement you've seen from He's in JP.
Speaker 1: Morgan coming to the subways in Manhattan, UH in the
Speaker 1: next month or two is just one example of the
Speaker 1: rate of continued innovation and acceleration of change and payments. Therefore,
Speaker 1: it's important that you have scale. It's hard to make
Speaker 1: those investments and all the new products and services that
Speaker 1: are the most attractive to our merchant base without having
Speaker 1: enough scale to fund those in the first place. So
Speaker 1: it's pretty clear over the last few months that the
Speaker 1: bar for scale is ever higher. So is scale with
Speaker 1: respect to which business Because it's interesting that there is
Speaker 1: overlap with you in Total System Services TSS when it
Speaker 1: comes to catering to smaller businesses. They do, though, have
Speaker 1: a business processing payments for larger financial firms. How do
Speaker 1: you get scale with that versus just diversification At that point,
Speaker 1: the servers don't know the difference. It's kind of the
Speaker 1: answer at the end of the day. So we're gonna
Speaker 1: be making the same kind of investments capital wise as
Speaker 1: a technology matter, into the same kind of environments, whether
Speaker 1: it's on the cardish who are side or the merchant side.
Speaker 1: Global Payments does this already today, so there's a lot
Speaker 1: of similarities between our two business. For example, we have
Speaker 1: about five fies financial institutions that are customers of Global
Speaker 1: Payments to stay globally, TEASES has about nine hundred, So
Speaker 1: there's a lot of overlap in terms of the products
Speaker 1: and services that we provide those large complicated financial institutions
Speaker 1: that TEASES does as well. Number one. Number two, there's
Speaker 1: obvious overlap between the issuer business that you're asking about
Speaker 1: at t S two and what we do a global payments. So,
Speaker 1: for example, the same folks, the same financial institutions who
Speaker 1: are buying the issuing business are also providing referrals to
Speaker 1: the merchant business. The same types of technologies that we
Speaker 1: deploy the merchant business are also being deployed in the
Speaker 1: issuing business. That's particularly true overseas, but increasingly if you
Speaker 1: look at these other deals, also true in the United States.
Speaker 1: Why five Serve and why Fidelity, but Debbi Gateways is
Speaker 1: part of what they do is to emulate what we'll
Speaker 1: be able to do on the issuing side, combining issuer
Speaker 1: processing with acquire processing, so that means if you use
Speaker 1: your credit card or merchant I know it's you from
Speaker 1: the issue are side, and then I know where you're
Speaker 1: spending it from the acquire ring side. That's what those
Speaker 1: debic gateways do and that's what a combined global payments
Speaker 1: and tiesis will do. So if I'm a fintech M
Speaker 1: and a banker, this is a great year for me.
Speaker 1: Three three deals so far give our Just give us
Speaker 1: a sense of how the structure of your industry, how
Speaker 1: fragment is it still? Do you envision more consolidation? Is
Speaker 1: this a global consolidation play? Just give us a sense
Speaker 1: of how the industry structured. So the nice thing about
Speaker 1: the industry is it consistently reinvents itself. So it's a
Speaker 1: scale business. So there's always going to be more consolidation.
Speaker 1: But part of what striving change. To go back to
Speaker 1: your first question is the rate of techno technological innovation.
Speaker 1: So think about it. Apple was not out there with
Speaker 1: Apple Pay five years ago. Square didn't exist, ten years ago.
Speaker 1: Google didn't have Android Pay, Samsung didn't have Samsung Pay.
Speaker 1: So think about the folks who have come into the business.
Speaker 1: So today, for example, you have Stripe for startups and
Speaker 1: small merchants. You have Square, which is a public company
Speaker 1: as well. You've got plenty of examples adding in which
Speaker 1: is a public company in a coom in Ireland, but
Speaker 1: it's worldwide in scope. You have plenty of examples of
Speaker 1: companies say that either didn't exist five or ten years
Speaker 1: ago or didn't remotely look like what they look today.
Speaker 1: So the future is very bright for the industry. There's
Speaker 1: going to be continued consolidation because of scale functions that
Speaker 1: we've been describing, but there's always gonna be continued new entrants.
Speaker 1: I think at the end of the day, the ability
Speaker 1: to provide banking like services through open API s, the
Speaker 1: scale you get in cloud based and SAS computing, which
Speaker 1: we're very focused on at Global Payments and Teasis, that's
Speaker 1: what's driving the rate of innovation you're seeing today. So
Speaker 1: do you expect to eventually expand out into banking like
Speaker 1: services for some of your clients, lending to some of
Speaker 1: your smaller merchants. Now, where we draw a line, and
Speaker 1: some people like Square actually don't draw this line. But
Speaker 1: where we draw the line is we're independent. We're not
Speaker 1: a bank by ourselves um at Global Payments, and neither
Speaker 1: is TASiS. In fact, we don't want to compete with
Speaker 1: our customer base, so it's very important for us to
Speaker 1: stay out of functions in banking. That's not true for
Speaker 1: some of our competitors, like a Square, which provides direct
Speaker 1: lending in conjunction with their parties. We actually provide referrals
Speaker 1: of merchants who are looking for loans out to f
Speaker 1: eyes our partners. That's our job, rather than provide that
Speaker 1: are directly ourselves. So then how do you respond to
Speaker 1: people who say, right now, smaller midsized merchants, they just
Speaker 1: want to simplify what they do. They don't want to
Speaker 1: have to figure out uh sort of bespoke of financial
Speaker 1: payments processing system and then figuring out their relationship with
Speaker 1: a banker. And so we'll just go to square. What
Speaker 1: do you say to people who are who are wondering
Speaker 1: about that. So we have the same complete ecosystem that
Speaker 1: Square has. The difference with us is we have it
Speaker 1: from the small guy to the big guy, and we
Speaker 1: have it in a hundred countries where squares predominantly as
Speaker 1: a pure revenue matter, proviently in the United States. So
Speaker 1: we have all that. So today a Heartland, which is
Speaker 1: one of our businesses sales representative can walk into a
Speaker 1: small merchant here in Manhattan and on your phone, on
Speaker 1: that person's phone, can underwrite that merchant, get that merchant
Speaker 1: up and running, provide a loan, provide payroll, you name it,
Speaker 1: we have it. So we have the ecosystem that they have.
Speaker 1: The difference with us is we're more multinational in scope.
Speaker 1: We can go from the really small guy we call
Speaker 1: it the taco truck up to Taco Bell, which is
Speaker 1: one of our customers. So we can do at the
Speaker 1: small level as well as the enterprise level, really in
Speaker 1: a hundred countries. Jeff Slan, CEO of Global Payments, joining
Speaker 1: us in a Bloomberg in Actor broker studio talking about
Speaker 1: his a big deal today. So, Jeff, you know, twenty
Speaker 1: one and a half billion dollar all stock deal. Your
Speaker 1: stock is kind of hanging in there, only down to
Speaker 1: two percent today, So that's a pretty good sign that
Speaker 1: the market likes what they're hearing. What kind of synergies
Speaker 1: did you promise the market revenue and cost synergies, because
Speaker 1: I'm assuming you've got to deliver some creative EPs. Yeah,
Speaker 1: so it is a creative at the boxer, right, we
Speaker 1: said it's mid single digits a creative to the combined
Speaker 1: company in and double digits a creative thereafter. So we
Speaker 1: think it's a very attractive financial profile, very similar to
Speaker 1: what we announced in Heartland. Actually when we did that
Speaker 1: deal in two thousand and fifteen, what we said on
Speaker 1: our call this morning was at least three hundred million
Speaker 1: of expense synergies and at least a hundred million of
Speaker 1: revenue synergies within three years, and we really do plan
Speaker 1: to get most of the expense integration done in the
Speaker 1: first eighteen months, so we do expect a pretty good
Speaker 1: ramp on the synergy expectation. And to give you a sense,
Speaker 1: when we did the Hartland transaction, UM, we talked about
Speaker 1: a hundred twenty five million in synergies and we ended
Speaker 1: up producing foreign x US of that. So a very
Speaker 1: good track record, UH in delivering those energies. Thank you
Speaker 1: so much for being here in congratulations on the deal.
Speaker 1: Jeff Sloan is chief executive Officer of Global Payments, joining
Speaker 1: us here in our Blue Reactor Interactive broker's studios. His
Speaker 1: company agreed to buy Total System Services in a deal
Speaker 1: valued at twenty one and a half billion dollars looking
Speaker 1: at the ten year up ten thirty seconds today, pushing
Speaker 1: that yield down to two point to eight percent. How
Speaker 1: much lower can yields go? We go to our next guest,
Speaker 1: Eric Stein. Eric is a portfolio manager and co director
Speaker 1: of Global fixed income at Eaton Vance et Van says
Speaker 1: about four D sixty billion dollars under management. They're located
Speaker 1: in Boston. Eric, thanks so much for joining us. How
Speaker 1: much you know what's also you know been in the
Speaker 1: front pages over the last several weeks have been the
Speaker 1: escalating trade tensions with China. How much of the action
Speaker 1: we're seeing in the treasury market is kind of reflecting
Speaker 1: that uncertainty. Well, first off, thanks for having me on.
Speaker 1: I mean, I think if you look at all of
Speaker 1: two I was in nineteen, which also includes you know,
Speaker 1: the first quarter where risk markets were doing well and
Speaker 1: people thought were going to have at least a decent
Speaker 1: settlement with the China trade war in the short term,
Speaker 1: treasure yields continued that this grind lower. So certainly, you
Speaker 1: know some of the action we've seen with yields continuing
Speaker 1: to decline over the past couple of weeks, I would
Speaker 1: say there are fears of global growth as well as
Speaker 1: the re escalation of the US China trade warm But
Speaker 1: for all of two thousand nineteen. You know, we have
Speaker 1: seen this very significant rally in the U S Treasury market.
Speaker 1: So we were just talking earlier about the inversion of
Speaker 1: the yield curve. The fact that the gap between tenure
Speaker 1: and three month treasury yields is now inverted by the
Speaker 1: most since two thousand and seven, exceeding the lows reached
Speaker 1: back in March. Does this send a barish signal to you?
Speaker 1: So you know, look, it's something that you know, we
Speaker 1: and Vans have a big debate on, you know, does
Speaker 1: the yield curve matter or not. I certainly put myself
Speaker 1: in the camp that the yield curve does matter. I
Speaker 1: think it's a market signal. I think people that dismiss
Speaker 1: it kind of do so at their own peril, uh know.
Speaker 1: That being said, I think sometimes there's an obsession about,
Speaker 1: you know, particular parts of the front end of the
Speaker 1: yield curve. So I'd look more at kind of you know,
Speaker 1: twos tens, twos thirties, things like that. At least the
Speaker 1: two thirties hasn't continued to invert, which to me is
Speaker 1: a is a good sign. Uh It's still relatively flat,
Speaker 1: but it hasn't kind of continued on the flattening that
Speaker 1: we saw last year. But certainly, as you mentioned at
Speaker 1: the front end, you do see some inversion. So I think,
Speaker 1: you know, it's like any market signal, I would not
Speaker 1: ignore it. If I were the Fed, if I were
Speaker 1: someone looking at the economy, I would certainly, you know,
Speaker 1: take it seriously. So Eric, given where we are with
Speaker 1: these historically low rates, what are you doing with your
Speaker 1: portfolio right here? Yes? So, Look, I think first off,
Speaker 1: from a you know, a treasury perspective, look to me
Speaker 1: that you know, the value in the treasury market is
Speaker 1: if you think that things are going to get worse
Speaker 1: from here, And I said, the treasure markets pricing in
Speaker 1: a pretty bad outcome. Maybe things do get worse, so
Speaker 1: maybe there's some safety value. But to me, the the
Speaker 1: only really sector of the treasure market I really like
Speaker 1: would be tips on a kind of nominal treasury edge basis.
Speaker 1: I think there's a lot of policies by the Fed
Speaker 1: as well as the trade war, a lot of policies
Speaker 1: that should lead to somewhat higher inflation, so I think
Speaker 1: duration hedge tips could be attractive. Look, I also think
Speaker 1: parts of the emerging market bond complex look attractive as
Speaker 1: yields are so low, not only in the US, but
Speaker 1: but in you know, Germany, UK, Japan, really all the
Speaker 1: whole developed market world. Uh. It makes places like emerging
Speaker 1: markets that, yes, there's volatility, but if you look at,
Speaker 1: you know, what yields you're getting on emerging market assets
Speaker 1: versus treasuries or their developed market bond markets, I think
Speaker 1: those are attractive. And I think if we're back, you know,
Speaker 1: if we're still in this goldilocks not too hot, not
Speaker 1: too cold world, it's actually a pretty good environment for
Speaker 1: carrying and some of the riskier parts of the fixed
Speaker 1: income markets. So Eric, how much is this thesis predicated
Speaker 1: on the idea that the Federals will cut rates again
Speaker 1: in the near term. So I don't think you need
Speaker 1: to cut for emerging markets assets to do well. I
Speaker 1: certainly think if the Fed ward had turned, you know,
Speaker 1: very hawkish and and people are talking about rate high,
Speaker 1: that would be that that would be negative for sure.
Speaker 1: But I think if if rates just kind of stay
Speaker 1: where they are, uh in in the U S that's
Speaker 1: you know, whether it's front end um you know, or
Speaker 1: back into the curve, kind of stay where they are,
Speaker 1: I think a lot of these assets and emerging markets.
Speaker 1: You know, investors will once again be searching for yield,
Speaker 1: and they'll need to invest in, you know, somewhere else
Speaker 1: other than U S. Treasuries. I guess another way to
Speaker 1: ask this is, you know, if the Federal, if the
Speaker 1: vessors are does cut rates as the market expects it
Speaker 1: to do within the next nine months, do you think
Speaker 1: that will be an additional support to risk assets or
Speaker 1: that it will harm them because it will send a
Speaker 1: message that is somewhat barish on the U S economy.
Speaker 1: Very good question. Look, I've you know, I've never been
Speaker 1: in the school thought, and I used to work at
Speaker 1: the New York FED that the Fed knows something that
Speaker 1: let's say, the markets don't, and so, you know, sometimes
Speaker 1: I think there could be confusion in policy statements, which
Speaker 1: which can lead to markets, you know, not behaving as
Speaker 1: you would expect them to. I you know, US rates
Speaker 1: going down, a risk assets not doing well. Maybe market
Speaker 1: was expecting more. Maybe the statement, um, you know, it
Speaker 1: wasn't as as devilish as people were expecting. So you know,
Speaker 1: I can see that I'm not you know, as I said,
Speaker 1: of the view that the FED really knows more than
Speaker 1: than other than you know, other market participants. UM, you know,
Speaker 1: I do think that. UM, you know, if there are
Speaker 1: lower rates, you know, certainly that helps. I also think
Speaker 1: something else is going to start to get talked about,
Speaker 1: as the US dollar. I've actually been surprised with with
Speaker 1: the strength of the US dollar that we started to
Speaker 1: see some weakness last week. Uh you know, we've seen
Speaker 1: lots of tweets from President Trump about the Fed. I've
Speaker 1: actually been surprised we haven't seen more tweets about the
Speaker 1: US dollar. And so if the Fed gets more debblished,
Speaker 1: that would be another uh you know, reason for the
Speaker 1: US dollar to start the weekend, which should help emerging
Speaker 1: market assets. Eric Stein, thank you so much for being
Speaker 1: with us. Eric Stein's portfolio manager and co director of
Speaker 1: Global Fixed Income and EAT Advanced. For a few days now,
Speaker 1: a growing number of Wall Street analysts are coming out
Speaker 1: with predictions for how much profits could drop at some
Speaker 1: of the big U S. Tech companies in the case
Speaker 1: of an escalation in the U. S. China trade war.
Speaker 1: Joining US now to talk about how realistic this is,
Speaker 1: how significant the losses could be. David Garretty, chief market
Speaker 1: strategist for leid Long Co, also a partner at bt block.
Speaker 1: So first, let's just start with are we entering a
Speaker 1: tech war, and if so, what does that mean. No,
Speaker 1: certainly we're rendering into widening an era of widening tariffs,
Speaker 1: and certainly they're not just widening, but they're also growing greater.
Speaker 1: And while tariffs are paid by the US consumers here
Speaker 1: relative to Chinese goods, the fact of the matter is
Speaker 1: that you are most likely are going to see US
Speaker 1: products that are available in China think Apple iPhones as
Speaker 1: being potentially priced out of the market. But also at
Speaker 1: the same time, we're already operating in an environment between
Speaker 1: the US and China where China announced back in two
Speaker 1: thousand and fifteen a ten year plan. Communist countries like
Speaker 1: to do these things ten year plans, but there's was
Speaker 1: made in China, and in that they laid out goals
Speaker 1: to be leaders in ten tech categories all the way
Speaker 1: from artificial intelligence through aviation. How they were going to
Speaker 1: get there obviously has been unfolding over time. These tariffs
Speaker 1: that we're seeing right now in some respects as a
Speaker 1: reaction to that. But tariffs or no, I would still
Speaker 1: say that we're in a tech cold war between the
Speaker 1: United States and China, or more broadly, between China and
Speaker 1: the US and its allies. So in terms of a
Speaker 1: tech cold war, I think it really ratcheted up for
Speaker 1: a lot of investors when the US government puts, you know,
Speaker 1: announce some sanctions on the Huahwei and you think about
Speaker 1: the global supply chain and what that means for Huahwei
Speaker 1: and what that means for US tech industries. The implications
Speaker 1: are just extremely broad. What is the risk you think
Speaker 1: if if these sanctions do go through on Huahwei, that
Speaker 1: China will retaliate, say on an Apple, and do something
Speaker 1: similar there. Well, I mean, China, certainly, just to save face,
Speaker 1: is going to have to taliate. And and certainly you
Speaker 1: know that they've been beating the drums in this regard
Speaker 1: directly and indirectly. Um. But if China were to go
Speaker 1: through and actually you know, take extreme action against you know,
Speaker 1: a household brand name like Apple, um, you know, the
Speaker 1: fact remains is that China is still very, very heavily
Speaker 1: dependent upon US suppliers of semiconductors, and for the time being,
Speaker 1: semiconductors are a fundamental or foundation technology as far as
Speaker 1: technology is concerned across a wide range of applications. So
Speaker 1: China would do this obviously to their own detriment. But nevertheless,
Speaker 1: I fully expect that because of the kabuki theater that
Speaker 1: gets involved in terms of tariffs UH and the need
Speaker 1: to save face. UM. Not to say that Trump doesn't
Speaker 1: engage in face saving moves himself, but I think very
Speaker 1: much so that we're likely to see some sort of
Speaker 1: major response and reaction. Clearly, we've seen in terms of
Speaker 1: technology stocks after they came out with first quarter results
Speaker 1: back in April, you know, they pretty much kind of
Speaker 1: rolled over, and we've already seen a pullback UH in
Speaker 1: terms of the Chinese tech names as well. So the
Speaker 1: prospect of a non global market or a bifurcated market
Speaker 1: certainly is working to the detriment of the valuation of
Speaker 1: both US as well as Chinese technology stocks. Who is
Speaker 1: going to suffer more, the US or Chinese tech companies? UM.
Speaker 1: I would make the argument that, you know, at the
Speaker 1: end of the day, it's likely to be China to
Speaker 1: the extent that they're not going to have a larger
Speaker 1: end market available to them. Granted, you know, one point
Speaker 1: three billion people in China are a fair number of
Speaker 1: people to sell to. In the first place. But clearly,
Speaker 1: if you're trying to make the investments necessary to scale up,
Speaker 1: far better if you had an integrated global market of
Speaker 1: you know, seven trillion of seven you know, seven trillion consumers,
Speaker 1: seven billion consumers to sell into UH than than a
Speaker 1: smaller Chinese market. So, David, one of the big big
Speaker 1: global growth areas and technology is five G UM. And
Speaker 1: I think when this Huahwei news came out and trade
Speaker 1: tech wars started getting discuss us, the concern is any
Speaker 1: trade tech war could really impact the global development of
Speaker 1: five G. Do you think that's a valid concern? Now,
Speaker 1: it's very much of a valid concern. And when we
Speaker 1: look at five G, you know, we're we're looking at
Speaker 1: a platform technology. I mean, certainly the US and US
Speaker 1: technology companies were very successful in the four G environment.
Speaker 1: Witnessed the rise of Apple UH in terms of the
Speaker 1: services they offer. Now five G prominence is a twenty
Speaker 1: times speed increase over four G. And now what this
Speaker 1: is going to enable is a wide range of possibilities.
Speaker 1: Huawei has been already deemed by the Defense Innovation Board
Speaker 1: and an advisory council to the US Department of Defense
Speaker 1: to potentially have a first mover advantage in five G.
Speaker 1: Five G sets the rules by which the game is
Speaker 1: going to be played going forward. So what's happening with
Speaker 1: five G is critical to the prospects not just of
Speaker 1: the U S economy, of the U S technology companies,
Speaker 1: but the global economy. And from that stay and point,
Speaker 1: you're already seeing, you know, concessions being made by American
Speaker 1: intelligence officials and telecoms executives saying that they think in
Speaker 1: the future, forty of networks over which businesses, diplomat, spies,
Speaker 1: and citizens do business are going to be Chinese five G.
Speaker 1: They're deeming these to be dirty networks, to the extent
Speaker 1: that in China it's a state controlled economy and businesses
Speaker 1: do what the state wants. Just real quick here twenty seconds.
Speaker 1: Are there any U S tech companies immune to the
Speaker 1: ongoing or more immune to the ongoing trade tensions? I think,
Speaker 1: you know, in terms of companies who are developing cybersecurity initiatives,
Speaker 1: I mean, certainly that's an evergreen business, always has been.
Speaker 1: But I think the case for owning cybersecurity names only
Speaker 1: gets stronger in this type of an environment. UH names
Speaker 1: that have been competing directly albeit they're not US technology names,
Speaker 1: but if you look at Ericson and Nokia, they traditionally
Speaker 1: had been very strong telecommunications infrastructure equip suppliers. They two
Speaker 1: are gonna be playing in five GEO would expect them
Speaker 1: to see a benefit from this interesting trade. Tech wars
Speaker 1: will certainly keep our eyes on that that is not
Speaker 1: anybody's best interest. David Garretty, chief market strategist from Laidlaw
Speaker 1: and Company, also a partner at bt Block. There were
Speaker 1: elections in the European Union and if you read three
Speaker 1: different publications about what the outcome was, you will get
Speaker 1: three different stories. Either the Centrists held steady, there was
Speaker 1: there were gains made by the populists, or it is
Speaker 1: just a muddle. That is par for the course. Right now,
Speaker 1: let's bring in Clive Crook to sort of pass through
Speaker 1: all of this and give us a sense of what
Speaker 1: the big takeaway is. He is an editor for Bloomberg Opinion. Clive,
Speaker 1: so come on in here. What's your big takeaway? Which
Speaker 1: narrative is right when you know you're right? Is a muddle,
Speaker 1: and I think it's because the outcome is pretty complicated.
Speaker 1: You know, on the one hand, people are relieved that
Speaker 1: you know, the far right euroskeptic parties didn't do better
Speaker 1: than they did. I mean, ahead of the elections, there
Speaker 1: was a lot of anxiety that those groups would see
Speaker 1: a real breakthrough and that didn't happen. They did actually
Speaker 1: did it quite well. I mean, they gained representation in
Speaker 1: the European Parliament, but it wasn't the sort of overthrow
Speaker 1: of the center that some people were fearing. So that
Speaker 1: was the good news, and that's it were one headline.
Speaker 1: But the other thing is that the thing that prevented
Speaker 1: the far right eurosceptic parties from doing better than they
Speaker 1: did was a very strong showing from as it were, centrists,
Speaker 1: insurgents and talking about liberals and Greens. They did very
Speaker 1: well at the expense of the traditional center left and
Speaker 1: center right group things. So the way I would sum
Speaker 1: that up is to say, what you've seen is a
Speaker 1: sort of surprising sort of fragmentation of the center. It
Speaker 1: isn't that the center has been defeated by the far right,
Speaker 1: which is what I think a lot of people were
Speaker 1: worried about. The far right has made limited progress and
Speaker 1: the center has divided. And I think this matters because
Speaker 1: you know, when you look at what's going to happen
Speaker 1: in the European Parliament now when you have all the
Speaker 1: jocking for position for top jobs in the commission Um,
Speaker 1: the old rules about who's in charge aren't going to apply,
Speaker 1: And I think you're going to see this fragmented center
Speaker 1: with these new guys, you know, lots of new Liberals,
Speaker 1: lots of gleans. That process of getting to a new
Speaker 1: leadership structure in Brussels is going to be very difficult.
Speaker 1: So my take on the whole thing is that this
Speaker 1: is not such a great result for the European project.
Speaker 1: Even though the euroskeptics didn't try it, this fragmentation of
Speaker 1: the center is bad news. I think for people who want,
Speaker 1: you know, Europe to recognize problems, set priorities and start
Speaker 1: working on solutions, I think that's to be harder now
Speaker 1: than it was before. So Cloud, let's take a look
Speaker 1: at the UK. It looks like the Brexit Party had
Speaker 1: strong performance. What are some of the takeaways as from
Speaker 1: what we saw in the UK elections? Maybe what that
Speaker 1: means for the Brexit process overall? Well, you're not kidding,
Speaker 1: I mean, the Brexit Party didn't sensationally well in these elections. Now, obviously.
Speaker 1: You know, Britain is is a special case because Britain
Speaker 1: is in the throes of this Brexit process. I mean,
Speaker 1: in many ways it shouldn't have even been voting in
Speaker 1: these elections. So what that result means for Europe is
Speaker 1: a sort of second order question. I think the main
Speaker 1: thing is what the main question is what does a
Speaker 1: triumph for the Brexit Party means for British politics? And
Speaker 1: it really was a triumph. I mean, labor was killed
Speaker 1: in these elections and the Tories were just annihilated. This
Speaker 1: was the worst national election result the Tory Party has suffered,
Speaker 1: I believe in its history. I mean it was as
Speaker 1: bad as that they came fifth in this in these elections.
Speaker 1: This is the ruling party. Um, this shed no like
Speaker 1: what you know on how the Brexit met is going
Speaker 1: to be resolved. I mean, terrace, the mas or Essential's resigning.
Speaker 1: The leadership contest the Tories is now underway, but nothing
Speaker 1: has changed. You know, there's no majority in the British
Speaker 1: Parliament to do anything. Um, the sort of steady majorities
Speaker 1: against everything. So that kind of paralysis is not going
Speaker 1: to be resolved one way or the other by this
Speaker 1: Brexit Party. Performance in the European elections. I mean that
Speaker 1: has in effect no direct implications for what's going on
Speaker 1: in the House of Commons. I think the situation in
Speaker 1: Britain is still as unpredictable as it was before. I mean,
Speaker 1: I can you know, you could make a case that
Speaker 1: any any outcome, you know, Brexit is tenseled, a hard
Speaker 1: Brexit with no deal and everything in between, all the
Speaker 1: things still on the table, I believe. Yeah, so the
Speaker 1: model continues in but I feel like there's a takeaway
Speaker 1: you can actually unify European Union elections more broadly as
Speaker 1: well as the Brexit specific results to sort of go
Speaker 1: back to exactly what you were saying, Clive, which is
Speaker 1: fragmentation within the middle and a hardening on the more
Speaker 1: extreme ends of it. And I'm just wondering how much
Speaker 1: that's going to push the center toward a more extreme view.
Speaker 1: I mean, we're sort of seeing that with respect to
Speaker 1: Brexit discussions as well, where there seems to be growing
Speaker 1: momentum for a second referendum or hard Brexit. It's sort
Speaker 1: of the two polar opposite kind of gaining steam. And
Speaker 1: I'm just wondering what you're seeing with that type of
Speaker 1: attitude within the European Union. More broadly, well, you know,
Speaker 1: I don't really look at it that way. I mean,
Speaker 1: I don't really look at it in terms of this
Speaker 1: grouping um in the European Parliament. Is it were this
Speaker 1: broad center that includes you know, the traditional center left
Speaker 1: and the traditional center right that's got hammered and elections
Speaker 1: and the new as it were, these insurgents, these new
Speaker 1: parties like you know, Macron's movement, that they will be
Speaker 1: part of the liberal grouping um, and the Greens of
Speaker 1: course they did very well also, But I don't see
Speaker 1: that that points you towards a single coherent ideology which
Speaker 1: is either more or less extremes. The theme I neither
Speaker 1: takeaway is that there isn't going to be a single
Speaker 1: theme or uh, you know, coherent set of policy. But
Speaker 1: this is something the European parliaments has always struggled to
Speaker 1: come up with, you know, a coherent argument of the
Speaker 1: kind that you see in typical national elections. You know,
Speaker 1: there's a ruling party arguing acts and a principal opposition
Speaker 1: party arguing why, and the elections organized themselves around those
Speaker 1: d dates. Well, you aren't going to see that in Europe.
Speaker 1: You haven't seen it before, and now now it's going
Speaker 1: to be even harder to imagine because of this fragmentation.
Speaker 1: So I think, you know what European voters are going
Speaker 1: to see when they look at what's going on in
Speaker 1: the European Parliament is you know, a mess, you know,
Speaker 1: an inconclusive mess. And the competition over who gets which
Speaker 1: job is going to really demonstrate that, I mean, really
Speaker 1: underlined this problem that there is no coherent political character
Speaker 1: in this in this assembly. Uh this you know, the
Speaker 1: the old coalition between the center LA and the center
Speaker 1: right try to provide that kind of you know, organizing theme.
Speaker 1: That's going to be harder now than it was before.
Speaker 1: So I think the so I think the takeaway Clive
Speaker 1: is for me at least a mess. That's what we
Speaker 1: got from these elections. So anyway, Yeah, Clive Crook, thank
Speaker 1: you so much, Editor Bloomberg Opinion based in Washington, d C.
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