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Speaker 1: Welcome to the Bloomberg Penel podcast. I'm Paul swing you,

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Speaker 1: along with my co host Lisa Brahma wits. Each day

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Speaker 1: we bring you the most noteworthy and useful interviews for

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Speaker 1: you and your money. Whether at the grocery store or

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Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple

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Speaker 1: podcast or wherever you listen to podcasts, as well as

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Speaker 1: at Bloomberg dot com. At least, I'm not sure if

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Speaker 1: you're aware, but there is a chicken war taking place

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Speaker 1: out there in the marketplace. Popeyees is going up against

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Speaker 1: Chick fil A in a Twitter war over which chain

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Speaker 1: has the best chicken sandwich. I wasn't aware of it

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Speaker 1: until just a day or two ago, but I'll tell you,

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Speaker 1: I know it's pretty Who is aware of it. That

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Speaker 1: is Mike Klin, Mike's senior restaurant analyst for Bloomberg Intelligence.

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Speaker 1: He joins us on the phone. So, Mike, um, again,

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Speaker 1: I'm not a big fan of the fried chicken sandwich.

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Speaker 1: Tell us what's going on out there? Uh? Yeah, so

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Speaker 1: so Popeye's debut, Uh their version of the chicken sandwich.

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Speaker 1: You know, it's it's been the kind of a long

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Speaker 1: time coming. I mean, they're really knowing for their bone

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Speaker 1: and chicken, you know, so I guess this is kind

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Speaker 1: of low hanging fruit for relatively new owner restaurant brands.

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Speaker 1: And uh, you know, it came out and had some

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Speaker 1: spectacular reviews and um. Surely after the sandwich debut, Chick

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Speaker 1: fil A posted a tweet about their um their chicken sandwich,

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Speaker 1: and Popeyes responded with y'all good, and it just sparked

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Speaker 1: this massive Twitter war with you know, Wendy's jumping in

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Speaker 1: the fray and Mike before which sandwich was better? Yeah, Mike,

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Speaker 1: before you going further. I mean the idea that this

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Speaker 1: is innovation is sort of amazing to me. It's you know,

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Speaker 1: it's basically this company that focuses on chicken sitting around

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Speaker 1: a boardroom and saying, I have a brilliant idea. Why

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Speaker 1: don't we put it between bread? I mean, what's the

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Speaker 1: big deal? What is so special about these chicken sandwiches? Well,

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Speaker 1: listen for I mean, chicken sandwiches have just continued to

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Speaker 1: grow in popularity, right, it continues to take kind of

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Speaker 1: share from from burgers, you know, I mean, will look

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Speaker 1: at it, you know, obviously fried chicken sandwiches aren't that

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Speaker 1: healthy for you, but they look at it as a

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Speaker 1: healthier alternative to burgers, and people are into chicken, right,

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Speaker 1: and um, you know, Popeyes has a lot of fanboys,

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Speaker 1: you know, I mean myself included. I absolutely love Popeyes.

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Speaker 1: So I think when one did come out, there was uh,

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Speaker 1: you know, I think Popeyes knew there was going to

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Speaker 1: be a lot of buzz about it, right because, like

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Speaker 1: I said, this is kind of a long time coming.

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Speaker 1: You know, I don't think they saw this level though

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Speaker 1: of of you know, like this this fever pitch obviously

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Speaker 1: about about the sandwich. You know, it's it's interesting, like

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Speaker 1: I've been reading and there's been apparently a shortage of

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Speaker 1: chicken sandwiches for Popeyes. I've actually run out and as

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Speaker 1: a so what's that say about the supply chain? Like

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Speaker 1: where all the chickens going? Yeah, so that's interesting. So

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Speaker 1: what I'm hearing it was that it was the buns. Um,

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Speaker 1: I wouldn't be surprised if it's chicken as well, right,

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Speaker 1: because these chicken sandwiches have to be made made to

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Speaker 1: specifications by the supplies, And what Popeyes are saying is,

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Speaker 1: you know, we already burned through. You know, in two weeks,

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Speaker 1: we burned through all the supply we had pegged for

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Speaker 1: um August and September. UM. So I won't be surprised

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Speaker 1: if they did run out in some stores. You know,

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Speaker 1: I don't think all stores are have run out, but

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Speaker 1: I think what they're trying to do is kind of uh,

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Speaker 1: you know, uh stop themselves from disappointing customers. You know, so,

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Speaker 1: but they have it sounds like they have run out

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Speaker 1: the supply chain. Um. You know, the supplier has to

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Speaker 1: start making chickens and getting their hands on some buns

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Speaker 1: because you know, obviously the demand is there. I mean

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Speaker 1: also there's some speculation that they've deliberately restricted the supply

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Speaker 1: um to kind of create even more hype, right, so

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Speaker 1: like you have a sandwich now that everybody wants, but

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Speaker 1: not everybody can get, so they can kind of um,

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Speaker 1: you know extend you know, then the marketing behind this. Yet. Yeah,

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Speaker 1: just to give you a sense of of the flip side,

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Speaker 1: the dark underbelly of the craze, I was working like

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Speaker 1: a slave. This according to one exhausted Papaye's employee, who

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Speaker 1: is describing the harrowing experience of trying to uh serve

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Speaker 1: this incredible craze. I'm wondering if you want to take

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Speaker 1: a broader kind of take on this, what this says

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Speaker 1: about Twitter and the use of it in terms of

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Speaker 1: marketing for some of these fast food companies. Because we've

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Speaker 1: seen this increasingly sort of burger King versus McDonald's or

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Speaker 1: you know, just the rivals kind of going back and

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Speaker 1: forth and trying to be pithy it. How much increasingly

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Speaker 1: is that a mainstay of the advertising tool for some

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Speaker 1: of these fast food chains. Yeah, that's a great question.

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Speaker 1: Then there's a couple of pieces to that question. But

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Speaker 1: the first thing I'll addresses them the you know, the

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Speaker 1: marketing piece. I mean, listen, this is it's very low

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Speaker 1: cost for you to hire, you know, a few marketing

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Speaker 1: interns and have them tweet on your account all day.

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Speaker 1: It's a lot cheaper than buying um television, which still

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Speaker 1: has an R o I on it, but or buying

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Speaker 1: radio time, or or putting ads in magazines very very

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Speaker 1: high r o EYES associated with social media marketing. Um,

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Speaker 1: you know, you're advertising directly where your customers are. Right, Like,

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Speaker 1: my son doesn't watch TV anymore, but he has his

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Speaker 1: phone in his hand all the time he's basically walking

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Speaker 1: around with a billboard in his hand. You know. So, uh,

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Speaker 1: this is gonna continue. Um, we we think it's just

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Speaker 1: gonna Social media marketing is just going to continue to

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Speaker 1: be a larger percentage of the AD budgets of these companies.

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Speaker 1: You know. The other thing you mentioned about the employees, Um,

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Speaker 1: that was kind of interesting. Yeah, there was an article

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Speaker 1: out last week about a few a few Popey's employees

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Speaker 1: that were talking about a horrible experience. They were so

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Speaker 1: busy they quit mid shift. You know. But um, you know,

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Speaker 1: I'd caution about believing everything you read in that article.

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Speaker 1: I mean they only you know, Popeyes has thousands of

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Speaker 1: stores and there was only there was only five employees interviewed. Um.

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Speaker 1: You know, I know growing up working in a car

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Speaker 1: wash when the day was busy, it went a lot

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Speaker 1: faster and I kind preferred preferred it that way. So, uh,

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Speaker 1: you know that that there's been a lot of hype

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Speaker 1: and a lot of politicizing I guess of of this situation.

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Speaker 1: You know, Mike Calin, thank you so much for being

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Speaker 1: with us. Mike Calin, senior restaurant analyst and car wash

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Speaker 1: expert for us here at Bloomberg Intelligence joining us on

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Speaker 1: the phone. Have you had one, Paul? I have not,

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Speaker 1: but now I have to go. I mean there's a

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Speaker 1: line out the Chick fil A on electionson Avenue every day.

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Speaker 1: I know, but it's it's really just chicken on bread, right,

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Speaker 1: I mean, what what I'm just, I'm sort of my

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Speaker 1: mind is boggled. People are getting older and they need

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Speaker 1: health insurance and they want to get it less expensive

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Speaker 1: than it is in most places. Enter e Health, which

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Speaker 1: is a company who shares have returned more than two

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Speaker 1: d P over the past twelve months. Joining us right now.

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Speaker 1: Scott Flanders, chief executive officer of the Health U from

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Speaker 1: Mountain View, California. Scott, thank you so much for joining us.

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Speaker 1: So just tell us a little bit about, uh, the

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Speaker 1: provenance of the health dot com. Well, we started over

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Speaker 1: twenty years ago helping individuals and families compare insurance plans,

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Speaker 1: and then we evolved to help them enroll. We're a

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Speaker 1: broker and we get paid by the health insurance companies,

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Speaker 1: but we're neutral on behalf of the consumer. So we

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Speaker 1: are consumer centric company and our single mission is to

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Speaker 1: make sure Americans have the best and right insurance for them.

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Speaker 1: So Scotts, as Lisa mentioned, your stock is up over

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Speaker 1: two over the trailing twelve months. What's really been the

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Speaker 1: driver there for behind the stocks? Now, that's great, Um,

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Speaker 1: it's at the result of the explosive growth in Medicare

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Speaker 1: private Medicare plans better known as Medicare advantage or Medicare

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Speaker 1: supplement plans. They're about sixty million eligible Americans for Medicare

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Speaker 1: right now, and of those, about thirty six million have

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Speaker 1: opted to buy private insurance plans, many of which millions

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Speaker 1: and millions of which can get zero premium products through

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Speaker 1: Medicare Advantage. And we've been growing because we are gaining

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Speaker 1: share of that growing market. So it's got you basically

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Speaker 1: are like an Expedia for health insurance plans, right it

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Speaker 1: is that a fair way to sort of roughly characterized. No,

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Speaker 1: it's the perfect description. And just as Expedia carries all

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Speaker 1: the airlines and has all of the flight of plans

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Speaker 1: and prices as well as all hotels, we have all

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Speaker 1: the plans and all the carriers, every doctor, every hospital,

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Speaker 1: every pharmacy, and so we are able to help seniors

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Speaker 1: get into the right Medicare plan. And that real consequence

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Speaker 1: for seniors. It's a it's a stressful decision for them

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Speaker 1: because you know, they use a lot of healthcare at

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Speaker 1: their age, and what we do is we're that neutral

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Speaker 1: guide to get them into the right plan. And so

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Speaker 1: we've been growing six seven times the growth of the

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Speaker 1: industry because we're on the side of the consumer. Why

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Speaker 1: would companies health insurance companies pay you if you are

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Speaker 1: ultimately trying to make the premiums lower for the end consumer, right, Well,

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Speaker 1: they their challenges. They also try to enroll seniors in

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Speaker 1: their own plans, and they do a good job of that,

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Speaker 1: but they can only offer the best plan for the

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Speaker 1: senior that is that their company offers, whereas we offer

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Speaker 1: all of the company's plans. And so the reason that

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Speaker 1: they use brokers, and broker's account for half of all

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Speaker 1: enrollments in Medicare is because we reach into millions of

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Speaker 1: seniors that they don't reach, and so they're willing to

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Speaker 1: pay us. It's an offset to cost they would have anyway,

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Speaker 1: because it's expensive for the health insurance carriers to go

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Speaker 1: out and find seniors and explain to them the benefits

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Speaker 1: and get them enrolled, and so paying a broker is

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Speaker 1: really an offset to a cost that the carrier would

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Speaker 1: have anyway. So, Scott, what you know, as we approached

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Speaker 1: the two presidential election, certainly a lot of Democratic candidates

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Speaker 1: are talking about changes in healthcare laws and maybe even

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Speaker 1: Medicare for all. How how would that impact your business? Yeah,

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Speaker 1: Medicare for all is a great sound bye, and you know,

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Speaker 1: it's great for a political debate where you're limited to

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Speaker 1: thirty seconds. You know, the challenge of it is what

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Speaker 1: is your definition of Medicare for all. The reason that

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Speaker 1: it's popular when it's not explained is because Medicare working

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Speaker 1: and seniors are happy with it. The twenty plus million

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Speaker 1: Americans that are on a Medicare advantaged plan today, Our

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Speaker 1: polling shows very high user satisfaction with Medicare advantage and

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Speaker 1: it's been the Trump's administration's plan and objective to get

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Speaker 1: more seniors on Medicare advantage plans because it's cheaper for

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Speaker 1: the government, and colitical studies show it's better health care

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Speaker 1: for seniors, and so seniors like it, and so of

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Speaker 1: course it would be popular to say let's have Medicare

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Speaker 1: for all. The first thing I point out is seniors

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Speaker 1: don't want Medicare for All. They feel like they've paid

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Speaker 1: into this for their entire working lives and they do

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Speaker 1: not want the system flooded by a hundred and fifty

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Speaker 1: million non seniors. They know that would cause their benefits

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Speaker 1: to be reduced. That's one big obstacle to Medicare for

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Speaker 1: All and seniors vote, as we all know. The second

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Speaker 1: obstacle is we have a hundred and fifty two hundred

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Speaker 1: and sixty million Americans covered by employer sponsored healthcare and

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Speaker 1: they don't want to give that up. And so I

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Speaker 1: believe the political reality of this as we get deeper

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Speaker 1: into the cycle, it will become more clear. And you're

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Speaker 1: already seeing many candidates like Kamala Harris backing off of

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Speaker 1: Medicare for All, even though she had signed on to

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Speaker 1: the original Bernie Sanders bill. As she's dug deeper into it,

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Speaker 1: her view has evolved, and I think wisely so. Scott Flanders,

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Speaker 1: thank you so much for joining us. Scott is a

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Speaker 1: chief executive officer of Healthy Trains on the NASTAC under

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Speaker 1: the symbol h TH Companies based in Mountain View, California.

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Speaker 1: We appreciate Scott coming on giving some thoughts about his

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Speaker 1: company and the state of the US healthcare industry. It's

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Speaker 1: getting to be pretty predictable. When we do get some

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Speaker 1: sort of softening and trade talks, the place to look

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Speaker 1: at is the socks, the semiconductor index, which will inevitably

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Speaker 1: pop vice versa if you have some sort of hardening

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Speaker 1: and trade tensions. That's the one that falls out of BED.

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Speaker 1: Joining us down to discuss what the outlook is for

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Speaker 1: some of these se conductor shares, as well as tech

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Speaker 1: in general. David Garretty, chief market strategist at laid Law

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Speaker 1: and Company, also a partner at bt block. He's joining

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Speaker 1: us here in our Bloomberg Interactive Broker studios. So we

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Speaker 1: are seeing today popping socks stocks. Micron is up two

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Speaker 1: point six percent, for example, the Socks Index of Philadelphia

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Speaker 1: Sock Exchange Semiconductor Index up two point one per cent.

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Speaker 1: How much more could you see this index and these

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Speaker 1: stocks rally if there was a protracted softening in trade

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Speaker 1: discussions between the US and China. Yeah, if we were

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Speaker 1: to end up with the situation where we saw maybe

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Speaker 1: a call for six month truce in terms of trade discussions,

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Speaker 1: pushing things out into you know, it might be possible

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Speaker 1: to see you know, if I do a ten percent

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Speaker 1: rally in these names. But bear in mind that a

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Speaker 1: lot of what's been going on in terms of the

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Speaker 1: equity markets to date have been predicated primarily upon the

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Speaker 1: fact that the Federal Reserve was gonna be accommodative in

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Speaker 1: terms of monetary policy against any economic softening that would

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Speaker 1: occur as a result of these artificially induced trade wars

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Speaker 1: between the US and China. Uh So, certainly we might

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Speaker 1: say that equities to begin with anyway, including the semiconductor shares,

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Speaker 1: are probably trading at elevated levels, especially when you look

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Speaker 1: at a backdrop where corporate profits already down ten percent

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Speaker 1: year over year from the third quarter of two thousand eighteen.

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Speaker 1: So you know, clearly it's not gonna be profits that

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Speaker 1: are driving the stock market higher. It was either the

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Speaker 1: expectation of one or two things. Either one of them

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Speaker 1: is going to be monetary policy easing, which we think

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Speaker 1: we saw the Federal Reserve potentially back away a bit

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Speaker 1: from at least against expectations is shown by the futures market,

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Speaker 1: or you know, obviously we need to see a softening

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Speaker 1: here with respected trade negotiations, and clearly, you know there's

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Speaker 1: some positive noises being made here. But the question really

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Speaker 1: boils down to are you going to see enough maturity

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Speaker 1: on the US side to say, Okay, we're going to

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Speaker 1: back down and stop beating our chest. So and again,

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Speaker 1: it seems that you kind of highlighted what it seems

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Speaker 1: to be kind of the drivers of this market, the

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Speaker 1: push and pull between trade uncertainty and the FEDS ability

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Speaker 1: to perhaps you know, ameliorate some of the downside from

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Speaker 1: trade uncertainty. Assuming you know the market is pricing in

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Speaker 1: three four, gosh, maybe five rate cuts over the next

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Speaker 1: eighteen months, do you think that would be Do you

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Speaker 1: think the FED will be successful in continuing to drive

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Speaker 1: the economy for it even if there is this uncertainty

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Speaker 1: from trade. Well, I would say that trying to overcome

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Speaker 1: the uncertainty not just from trade, but trying to overcome

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Speaker 1: the uncertainty that's coming from the current administration is going

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Speaker 1: to be something that the FEDS to be able to offset.

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Speaker 1: Me A lot of what has been coming out in

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Speaker 1: terms of, if we can call it policy volatility for

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Speaker 1: the administration clearly has made it very very difficult for

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Speaker 1: anybody running a business to plan over you know, a

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Speaker 1: two to a five year horizon for fear of the

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Speaker 1: fact that you know, someone could turn right around in

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Speaker 1: twenty four hours and say something completely opposite of what

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Speaker 1: had been said before. Difficult to plan in an uncertain environment,

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Speaker 1: and unless the administration we're able to move to a

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Speaker 1: stance where they could give consistent, stable policy views that

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Speaker 1: people could actually plan around, most likely you're going to

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Speaker 1: find that people who are going to be make committing

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Speaker 1: capital not just to the stock market but to the

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Speaker 1: real economy here are going to say, look, we'll just

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Speaker 1: take a glow go slow approach until we've got somebody

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Speaker 1: more stable that we can deal with. Which tech company

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Speaker 1: big tech do you think has most immunized itself from

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Speaker 1: some of the push pull that we're seeing in the

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Speaker 1: trade talks. I mean, the view around technology g is

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Speaker 1: um Certainly if we look at the ongoing strength that

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Speaker 1: there is around online search, Google still remains a fairly

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Speaker 1: strong factor. Google on their own had pulled out from China.

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Speaker 1: Not granted, there have been issues where Google has been

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Speaker 1: seen doing some development work, potentially in collaboration with China,

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Speaker 1: but I would argue that on balance it's a fairly

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Speaker 1: small part other overall business. Uh, you might also say

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Speaker 1: that at the same time, Amazon, uh, you know, it

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Speaker 1: certainly has some strength in terms of just being able

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Speaker 1: to displace retail. Granted, this is all happening against a

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Speaker 1: consumer environment where the impact of tariffs could have a

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Speaker 1: major effect on holiday shopping in two thousand nineteen. This

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Speaker 1: is not necessarily something from which Amazon would be immune.

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Speaker 1: But one would argue if you look at other participants

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Speaker 1: in the retail channel, probably Amazon is still in a

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Speaker 1: position to gain greater share against that. So one might

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Speaker 1: argue that if you want to get away from semiconductors

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Speaker 1: where clearly they're directly exposed relative to trade negotiations, Apple

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Speaker 1: to some extent, also the impact that it's had on

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Speaker 1: the iPhone in the overseas markets. But looking in terms

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Speaker 1: of some of the tech names, Google, Amazon would be

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Speaker 1: some major names that we would look at as being

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Speaker 1: somewhat insulated, you know, staying with tech stocks. One of

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Speaker 1: the risks that seems so faded a little bit is

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Speaker 1: the regulator the regulation risk for a tech I mean,

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Speaker 1: you know, it seems like it's been a you know,

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Speaker 1: a lifetime ago when we had to tech CEOs in

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Speaker 1: front of Congress and so on and so forth. How

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Speaker 1: much of a risk do you think that is an

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Speaker 1: overhang for technology stocks. I'm looking at just the NASDACS

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Speaker 1: down two percent from on a trailing twelve month basis.

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Speaker 1: How much of regulatory risk is still out there for

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Speaker 1: the tech sector. I would say the regulatory risk continues

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Speaker 1: to be a concern. I mean, we obviously have a

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Speaker 1: situation situation right now where Congress is adjourned, but obviously

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Speaker 1: wait until September and hearings are reconvened. Also in the meanwhile,

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Speaker 1: it's been interesting to see that tech companies such as

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Speaker 1: Facebook in the area of digital currencies. Facebook, as we know,

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Speaker 1: would come out back in June two thousand nineteen discussed

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Speaker 1: their effort at developing a digital currency libra um. There

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Speaker 1: was universal pushback from regulators in this regard, but their

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Speaker 1: indications now that Facebook is still planning on pushing forward

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Speaker 1: to have an early launch. So you know, the fact

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Speaker 1: that a company like Facebook would essentially act against regulators

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Speaker 1: in this case not work collaboratively with them, I would

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Speaker 1: think just argues for further attention to be paid to

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Speaker 1: this area. So further attention just to follow up on

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Speaker 1: the libra Have we determined that it actually is a

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Speaker 1: cryptocurrency at this point. Uh, it probably is whatever Mark

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Speaker 1: Zuckerberg says it is um, but we would argue that

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Speaker 1: I would But in terms of companies developing digital currencies,

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Speaker 1: I'd much rather look at what JP Morgan is doing

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Speaker 1: with the jpm coin and the fact of seeing that

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Speaker 1: actually developed and deployed, uh, than than putting any great

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Speaker 1: expectations on my part with respect to what Facebook and

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Speaker 1: Libra may do. So touch about that jpm coin, what

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Speaker 1: is that? Essentially? It was announced back in February of

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Speaker 1: two thousand nineteen. The initial intention was this was a

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Speaker 1: way of trying to put in place a blockchain platform

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Speaker 1: UM with a settlement token, the jpm coin that would

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Speaker 1: be used to speed transfers reduced costs of being able

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Speaker 1: to move money. First, it was targeted mostly in terms

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Speaker 1: of other inter bank transactions, but over time as it

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Speaker 1: started to expand, it has the potential of going out

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Speaker 1: to more enterprise or corporate clients, not just of JP

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Speaker 1: Morgan Chase, but also it's network of correspondent banks worldwide. Interesting.

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Speaker 1: David Garretty, thanks so much for joining us. David's a

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Speaker 1: chief market strategist at lay Lad Company, also a partner

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Speaker 1: at bt Block, joining us as he's wanted to do

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Speaker 1: in our Bloomberg Interactive Broker studio. We appreciate your thoughts

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Speaker 1: on the market and on technology and on cryptocurrencies. Well,

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Speaker 1: last night, China indicated that it would not immediately retaliate

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Speaker 1: against the latest U s tariff increases announced by President

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Speaker 1: Trump last week, emphasizing the need to discuss ways to

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Speaker 1: de escalate the trade war between the world's two largest economies.

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Speaker 1: To get the latest on the US China trade discussions,

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Speaker 1: we go to Christopher Balding, Associate professor at Fulbright University

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Speaker 1: in Vietnam. He's also a Bloomberg opinion columnist. Usually he's

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Speaker 1: based in Saigon, but today he is in Los Angeles, California. Christopher,

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Speaker 1: thank you so much for joining us. So what do

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Speaker 1: you make of the move by China last night to say, hey,

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Speaker 1: let's maybe de escalate this a little bit. I wouldn't

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Speaker 1: read too much into it. At the same time, yesterday,

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Speaker 1: for instance, they were criticizing the US for freedom of

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Speaker 1: navigation patrols in the South China See. They were also

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Speaker 1: calling for uh um an ending of the embargo against Huawei.

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Speaker 1: Excuse me, um so I I'd be a little cautious

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Speaker 1: reading too much into that one particular statement. So I

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Speaker 1: want to read you something that Jim Bianco of Bianco

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Speaker 1: Research said in an interview with the Market n z

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Speaker 1: Z it's a German UH newspaper. He was talking about

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Speaker 1: President Trump's tactics UH in the trade war, and he

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Speaker 1: referred Spinal Tap, the sort of cult film from the

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Speaker 1: nine eighties, saying, I think Trump is going to eleven

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Speaker 1: on trade. He's going to turn it up so high

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Speaker 1: that there is going to have to be a deal.

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Speaker 1: That's the way he wants to do this. He will

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Speaker 1: just make it intolerable so everybody has to sit down

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Speaker 1: and cut a deal. Do you agree. I think there's

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Speaker 1: some truth to that with with with a caveat, And

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Speaker 1: what I mean by that is is if you if

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Speaker 1: you actually go back and look over the past eighteen months, UM,

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Speaker 1: there has been some back and forth, and there have

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Speaker 1: been some stops and starts, but in reality, the trendline

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Speaker 1: has been slow and steady escalation for the past eighteen months,

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Speaker 1: which is where we're at today. UM. So if we

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Speaker 1: stripped the rhetoric out, UM, it's actually been pretty pretty steady. UM. However,

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Speaker 1: I think what's always important to remember is that UM, domestically,

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Speaker 1: China has a lot more control over its economy, especially

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Speaker 1: with the credit flows UM and how they're working to

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Speaker 1: keep the economy going UM. So I think their their

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Speaker 1: threshold for pain is quite high, and so they seem

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Speaker 1: intent on essentially making Trump uh bring the pain for

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Speaker 1: lack of a better term, and so I think it's

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Speaker 1: going to be very interesting to see who blinks first

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Speaker 1: in how much pain each side is willing to sustain.

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Speaker 1: So on that front, UM, you know, it appears that,

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Speaker 1: you know, President Trump and the administration are prepared to

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Speaker 1: take the long road here. There's really hasn't been any

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Speaker 1: indication that they are not. So is your expectation that

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Speaker 1: these these trade discussions or impasse, if you will, uh,

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Speaker 1: we kind of go beyond the election. I'm kind of

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Speaker 1: I'm kind of looking at is the real the election?

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Speaker 1: Is the real indicator about what's going to happen, because

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Speaker 1: it's very you know, even though China might release an

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Speaker 1: overnight statement, I don't think there's a whole lot of

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Speaker 1: evidence that there's going to be any type of significant

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Speaker 1: movement uh any any time soon. And so I think

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Speaker 1: you really have to expect that Beijing is really hoping

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Speaker 1: for uh, for a much more compliant president, It is

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Speaker 1: willing to make a deal than President Trump. So I

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Speaker 1: guess I'm looking right now at market reaction, which is

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Speaker 1: that people buy it, I mean right now. And I

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Speaker 1: was thinking, perhaps you're seeing a rally on this sort

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Speaker 1: of de escalation or a parental de escalation by China. Uh,

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Speaker 1: perhaps it's on light volume, but no, we learned it's

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Speaker 1: actually on more value volume in terms of stock trading

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Speaker 1: than we've seen in recent weeks. And I'm just wondering,

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Speaker 1: do you think that traders are wrong, that they just

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Speaker 1: keep getting fooled again and again that there's some sort

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Speaker 1: of progress when it is just sort of a steady

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Speaker 1: escalation and that's what it's going to be until UM,

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Speaker 1: I do think it's going to be a much more

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Speaker 1: steady escalation. And UM it is a little surprising to

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00:24:45,400 --> 00:24:47,800
Speaker 1: me that every time there is this, you know, um

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Speaker 1: overnight negative comment or a Trump tweet, that the market

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00:24:51,920 --> 00:24:54,320
Speaker 1: jumps in reaction. And it would seem by now that

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00:24:54,400 --> 00:24:58,040
Speaker 1: the algorithms could figure out that to essentially moderate their

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00:24:58,080 --> 00:25:02,199
Speaker 1: expectation of a specific statement or tweet so Chris, I

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00:25:02,200 --> 00:25:04,760
Speaker 1: know you have a lot of expense experience in the

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00:25:04,880 --> 00:25:08,720
Speaker 1: UH in the Asian region gives your sense of kind

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00:25:08,720 --> 00:25:12,199
Speaker 1: of the pressure that President g is under to get

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00:25:12,280 --> 00:25:15,879
Speaker 1: not only a deal but the right deal. Well. I

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00:25:15,920 --> 00:25:20,119
Speaker 1: think the big issue for him economically is if he

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00:25:20,200 --> 00:25:25,960
Speaker 1: were to actually make significant material concessions on economic policy. UM.

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Speaker 1: There's two specific issues. First of all, he's built himself

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00:25:28,760 --> 00:25:31,840
Speaker 1: up as the rejuvenator of China, you know, making China

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Speaker 1: great again, and so that would be politically suicidal for

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00:25:35,240 --> 00:25:38,040
Speaker 1: him to to really back down to Trump. The other

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00:25:38,080 --> 00:25:40,480
Speaker 1: thing is is that if he was to really open

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Speaker 1: up Chinese markets to competition and reduce subsidies to heavy

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00:25:44,520 --> 00:25:47,880
Speaker 1: industry and things like that, UM, there are very serious

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00:25:47,960 --> 00:25:51,040
Speaker 1: questions about the stability that that would bring or or

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00:25:51,119 --> 00:25:54,679
Speaker 1: the volatility that would bring to unemployment UH, to a

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00:25:54,720 --> 00:25:58,600
Speaker 1: lot of industries, UM, potential bank failures, things like that.

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00:25:58,920 --> 00:26:01,800
Speaker 1: So it's questionable even economically if he can do that

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Speaker 1: without being willing to bear a significant amount of pain

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00:26:05,480 --> 00:26:08,080
Speaker 1: in the Chinese economy. There was a story today on

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00:26:08,080 --> 00:26:11,560
Speaker 1: the Bloomberg looking at how most US companies are planning

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00:26:11,600 --> 00:26:14,640
Speaker 1: to stay in China and simply ride out any unrest

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00:26:15,160 --> 00:26:18,320
Speaker 1: with respect to trade negotiations. And you have seen certain

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00:26:18,359 --> 00:26:23,199
Speaker 1: banks expand their operations overseas, and I'm wondering, you know,

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Speaker 1: whether they're right in in betting that China won't retaliate

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Speaker 1: against them as part of their effort against the US

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Speaker 1: when they run out of goods to tariff. Well, I

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00:26:33,040 --> 00:26:35,880
Speaker 1: think it is a very serious question. And we've seen

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00:26:35,920 --> 00:26:38,840
Speaker 1: this with the Canadians, We've seen this with Brits um,

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00:26:38,880 --> 00:26:42,320
Speaker 1: we've seen this with Australians. That China has no qualms

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Speaker 1: about using either business operations or foreign personnel as bargaining chips.

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Speaker 1: And this is dating back many years. This is not

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00:26:50,119 --> 00:26:52,800
Speaker 1: just trade war related. Um, So I think it's I

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00:26:52,840 --> 00:26:55,840
Speaker 1: think it's a significant risk that those companies are absorbing

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Speaker 1: deciding to stay in there and say China is not

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00:26:58,720 --> 00:27:01,719
Speaker 1: going to retaliate against US because they clearly have a

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00:27:01,760 --> 00:27:04,639
Speaker 1: long term pattern of doing so. So, Chris, there seems

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00:27:04,640 --> 00:27:07,360
Speaker 1: to be bipartisan support in the US for a meaningful

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00:27:07,359 --> 00:27:11,320
Speaker 1: trade deal with China. Is the same thing true in China. Well,

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00:27:11,520 --> 00:27:13,520
Speaker 1: the rumors that you hear, and I think there's there's

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00:27:13,560 --> 00:27:16,000
Speaker 1: solid evidence to back this up, is that there's a

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00:27:16,000 --> 00:27:18,760
Speaker 1: lot of in there's a not insignificant amount of infighting

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00:27:18,800 --> 00:27:22,640
Speaker 1: within China about what is how is best to proceed um.

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00:27:22,680 --> 00:27:25,520
Speaker 1: It's not lost on even you know, let's say Party

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00:27:25,560 --> 00:27:29,000
Speaker 1: supporters that China is becoming increasingly closed off from the

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00:27:29,040 --> 00:27:33,280
Speaker 1: global economy UM. Whether it's being able to vacation abroad

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00:27:33,640 --> 00:27:37,280
Speaker 1: as they put currency limits on people, UM, or whether

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00:27:37,320 --> 00:27:41,760
Speaker 1: it's invest abroad, all access to information overseas. It's not

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Speaker 1: lost on anyone, even the Party supporters what is happening.

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Speaker 1: So I think there is a not insignificant amount of

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Speaker 1: infighting even within China. Christopher Balding, thank you so much

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00:27:51,640 --> 00:27:54,720
Speaker 1: for spending time with us. Christopher Balding is Associate professor

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00:27:55,040 --> 00:27:58,440
Speaker 1: at Fulbright University of Vietnam. He is also a Bloomberg

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Speaker 1: Opinion Calmness. Thanks for listening to the Bloomberg P and

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00:28:01,520 --> 00:28:04,080
Speaker 1: L podcast. You can subscribe and listen to interviews at

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00:28:04,080 --> 00:28:07,800
Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Paul Sweeney,

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Speaker 1: I'm on Twitter at pt Sweeney. I'm Lisa abram Woyds.

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Speaker 1: I'm on Twitter at Lisa A. Bramloits one before the podcast,

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Speaker 1: you can always catch us worldwide. I'm Bloomberg radio