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Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene.

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Speaker 1: Daily we bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg. We

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Speaker 1: are provis this morning to have with us for a

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Speaker 1: few chosen minutes, A Dare Turner, of course, known for regulation,

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Speaker 1: but far more a greater curiosity about his United Kingdom,

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Speaker 1: a greater curiosity about the global economy, Lord Turner with

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Speaker 1: f s A and regulation, and far more now with

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Speaker 1: his Institute for New Economic Thinking. Uh. The myth did

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Speaker 1: we have of China, Lord Turner, are remarkable. They go

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Speaker 1: back to the Opium Wars and back before that. We

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Speaker 1: take museum tours, but I would suggest that so many

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Speaker 1: of us don't understand the present China. Why are you

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Speaker 1: a China optimist given what you see of the present China. Well,

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Speaker 1: I'd go to China four or five times a year.

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Speaker 1: I was there just two weeks ago for the China

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Speaker 1: Development Forum. I've been following it very carefully. I think

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Speaker 1: they followed a very very successful strategy to get to

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Speaker 1: middle income level. They're no longer a sort of emerging

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Speaker 1: developing economy. They're they're at middle income level. And what

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Speaker 1: they're setting out now is a very clear strategy to

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Speaker 1: go up the value chain of manufacturing to become a

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Speaker 1: high tech country. And I think they're going to do

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Speaker 1: it because if you look across a whole load of

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Speaker 1: different technologies, if you look across a new energy technologies

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Speaker 1: like batteries, like electric vehicles, if you look at artificial

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Speaker 1: intelligence at Ali Baba at ten cents, these guys are

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Speaker 1: no longer reliant on finding and transferring Western technology. They

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Speaker 1: are going to become technology developers at the frontier. And

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Speaker 1: I think they've got a sweet spot combination at the

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Speaker 1: moment of the willingness to use the state to drive

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Speaker 1: high investment and high R and D while still having

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Speaker 1: a very vibrant entrepreneurial sector private sector. And I think

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Speaker 1: that combination at least for another five or ten years.

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Speaker 1: There are risks out there, and there are risks from

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Speaker 1: the political dominance of j PING, but I think overall

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Speaker 1: they're in a pretty sweet spot at the moment, and

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Speaker 1: I think they are going to continue to grow well

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Speaker 1: and surprise us by their increasing technological leadership. So there

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Speaker 1: things are that good. How do they continue to justify

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Speaker 1: the significant barriers to entry for others trying to get

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Speaker 1: into the market. Well, I think that's right. I mean,

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Speaker 1: they are still categorized by the w t O as

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Speaker 1: a developing nation with some of the special treatments that

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Speaker 1: come from that, and there's a perfectly good case for

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Speaker 1: saying those shouldn't apply any longer. They are coming a

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Speaker 1: middle income and soon they will be an upper middle

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Speaker 1: income country. So you know, there's a legitimate case to

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Speaker 1: put pressure on them to open up to equalize the

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Speaker 1: tariff treatments, etcetera. But I suspect that even if that occurs,

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Speaker 1: we are going to continue to see the continuation of

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Speaker 1: this growth story. The big story for China, of course,

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Speaker 1: is that they're now so big that they can't just

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Speaker 1: rely on exports. I mean, they're in a different position

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Speaker 1: from a career or Japan in terms of how far

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Speaker 1: they can take the export driven model a China. A

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Speaker 1: career in Japan could take it pretty much all the

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Speaker 1: way to advanced economy standards of living. These guys are

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Speaker 1: so big that they've got to start switching the focus

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Speaker 1: of demand through to the domestic consumer that is happening

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Speaker 1: to a degree, there is a significant rebalancing occurring. So

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Speaker 1: this administration in the United States is quite accurately, accurately

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Speaker 1: identified a problem and a problem that needs addressing. For

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Speaker 1: the first time, we do have some leadership in the

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Speaker 1: Added States that is really pushing aggressively to get the

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Speaker 1: Chinese to drop those barriers to entry. How hopefully you

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Speaker 1: that the China's the Chinese policy actually turns around and

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Speaker 1: that the Chinese administration responds in a positive way. Well, look,

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Speaker 1: I think there's a case for them to equalize the

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Speaker 1: tariff barris over time. Let's be clear, this isn't going

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Speaker 1: to make a dime of a difference to the US

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Speaker 1: trade deficit. The U s trade deficit is going to

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Speaker 1: increase this year because of the tax cuts and expenditure increases.

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Speaker 1: Trade deficits are a natural result of the balance between

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Speaker 1: your local savings rate, your domestic savings rate, and your

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Speaker 1: domestic investment. And there is in the Trump administration some

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Speaker 1: people who don't seem to understand the fundamental mathematics of that.

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Speaker 1: So let's be clear, there is nothing about China changing

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Speaker 1: the balance of its policies which is gonna eliminate this

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Speaker 1: deficit as long as the US is doing these large

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Speaker 1: fiscal deficits, Lord Turner on one wred question, I've been

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Speaker 1: waiting for April nights because in April nine in America,

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Speaker 1: the Congressional Budget Office we'll do their first score, the

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Speaker 1: budget outlook. I believe we see it this afternoon to

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Speaker 1: three ish pm. What's your experience in the United Kingdom

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Speaker 1: when the nonpartisan pros step in on fiscal analysis, does

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Speaker 1: it really change the political dialogue? Well, I think we

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Speaker 1: have a pretty strong external check at the moment. Is

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Speaker 1: this thing called the Office of Budget Responsibility, which each

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Speaker 1: time that the chompser ex jecot produces a budget, they

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Speaker 1: come in and make an analysis. They do it simultaneously.

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Speaker 1: It comes out on the same day Jack gives his

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Speaker 1: speech in Parliament and that afternoon there was something from

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Speaker 1: the Treasury. But there is something as a Budget Responsibility,

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Speaker 1: and I think that has actually been quite a strong

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Speaker 1: discipline in making sure that you can't pretend that everything

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Speaker 1: is okay by just plugging in a high growth rate.

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Speaker 1: I learned every time he's on, John, I learned something.

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Speaker 1: I mean there it is the British to it better

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Speaker 1: than we do well on this on this specific instance,

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Speaker 1: I do think it's very helpful what they do to

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Speaker 1: have a nonpart of branch that cover right away time

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Speaker 1: with their own forecasts. Yes, almost the media. It's it's

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Speaker 1: a similar tenuity which is the past, I think, because

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Speaker 1: it means that by the evening news, the evening news

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Speaker 1: is reporting what the Chancellor said and is reporting what

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Speaker 1: the obi are said as well. Well. A dear Turner,

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Speaker 1: thank you so much. It's a lot like Bloomberg surveillance John,

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Speaker 1: where you know, they come out and they say immediately

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Speaker 1: John Ferroll did well and I didn't you know? And

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Speaker 1: I think basis that's a daily basis, Lord of Dead Turner.

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Speaker 1: Great to have him in New York City the most

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Speaker 1: Sullivan with USh frequency Economics, which is a good and

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Speaker 1: beautiful thing. After the jobs report, what did you learn

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Speaker 1: from the jobs report? I mean, Mouldy, I took the

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Speaker 1: re vision, I subtracted it grim but inside the report

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Speaker 1: it actually looked pretty good and well. Certainly if you

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Speaker 1: if you average things out over the last couple of months,

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Speaker 1: it's pretty clear that employment growth is still pretty strong.

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Speaker 1: I mean, obviously the first headline is pay rolls, and

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Speaker 1: even though March was relatively weak, just over a hundred thousand,

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Speaker 1: first quarter average was just over two hundred thousand a month,

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Speaker 1: which is up from a hundred eighty two thousand last month. Now,

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Speaker 1: I was a little surprised the uneployment rate didn't fall

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Speaker 1: this month. I mean, it almost did if you look

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Speaker 1: at the second decimal place. But ultimately, if we keep

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Speaker 1: getting anything close to two d thousand a month, I

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Speaker 1: think it's pretty clear unemployment's going to keep on falling.

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Speaker 1: And in your view, is a pretty good economy. What

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Speaker 1: does the president need to get the Trump economy to

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Speaker 1: sustain two point eight two point nine three g d P. Well,

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Speaker 1: when you talk about sustained growth, of course you're talking

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Speaker 1: about kind of potential growth in in economists speak, and

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Speaker 1: ultimately that comes down to labor force growth and productivity growth.

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Speaker 1: And frankly, at this point, while we have seen close

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Speaker 1: to three percent growth in each of the last three quarters,

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Speaker 1: it's not clear that there's been a real change in

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Speaker 1: terms of potential growth. That yes, the unemployment rate has

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Speaker 1: been flattish in the last four or five months, but

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Speaker 1: I mean on a year of a year basis, it's

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Speaker 1: still falling. So I mean, ultimately, I mean, what what

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Speaker 1: they would like to see is three percent growth without

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Speaker 1: driving down the unemployment rate, and it's not clear that

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Speaker 1: we've got to that yet. Jim, what do you make

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Speaker 1: of the volatility in the data that's coming out in

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Speaker 1: the United States. I mean, he's just look at the

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Speaker 1: three months. The three payrolls reports so far have been

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Speaker 1: three really different payrolls reports. Yeah, I mean that's not

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Speaker 1: that unusual. I mean, especially in the winter months when

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Speaker 1: there's all kinds of challenges with seasonal adjustment, with with

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Speaker 1: weather fluctuations in particular. So I think when you when

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Speaker 1: you smooth out the numbers, it's it's pretty clear the

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Speaker 1: trend is still strong. And again, I mean, I think

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Speaker 1: this is not that unusual to get this sort of

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Speaker 1: volatility month to month. For some of our listeners who

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Speaker 1: might not be familiar with Jim's work, Jim is actually

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Speaker 1: one of the most accurate forecasters of payrolls on the street. Um, Jim,

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Speaker 1: just lift the lid on what you do for It's

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Speaker 1: just a little bit. You don't have to give it

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Speaker 1: all away, but just a little bit. How do you

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Speaker 1: gauge a payrolls figure that it's for so many people

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Speaker 1: just really volatile, and for so many people they just

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Speaker 1: sit there and think everyone just guesses the number before

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Speaker 1: the number comes out. What do you do month on month? Well,

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Speaker 1: I mean, I mean certainly you start with the question

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Speaker 1: what's the trend? And then you think, is there anything

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Speaker 1: special this month which will put you a bit above

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Speaker 1: trend or a bit below trend? I mean, over the

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Speaker 1: last twelve months, pay rolls of average a hundred and

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Speaker 1: eighty nine thousand per month. I mean, I think that's

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Speaker 1: probably a reasonable representation of the trend. And then you

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Speaker 1: have to ask is the trend suddenly changing? So you

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Speaker 1: look to things like jobless claims, is there a big

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Speaker 1: up or down and jobless claims which would tell you

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Speaker 1: that the trend is suddenly changing, or even if the

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Speaker 1: trend is not suddenly changing, are there kind of special

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Speaker 1: factors this month such as the weather? When you talk

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Speaker 1: about the volatility in the last couple of months, I mean,

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Speaker 1: it's probably true that some of the strength at the

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Speaker 1: beginning of the year was milder than usual weather, and

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Speaker 1: maybe you just got some catch up and payback then

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Speaker 1: come March. So if it runs ahead of the trend,

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Speaker 1: you look for it to come back a bit. I mean,

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Speaker 1: so certainly in the winter months, weather fluctuations can be

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Speaker 1: very important. So how reliable is a high frequency data

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Speaker 1: point like initial jobless claims, Because some people might say

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Speaker 1: statistically that just could be a lot of noise and

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Speaker 1: just to put it to one side, but you think

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Speaker 1: it's really reliable, just to to take a look at that,

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Speaker 1: it's just a general gauge to take the temperature of

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Speaker 1: the labor market in the United States. Well, I mean,

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Speaker 1: as with a single monthly payroll reading, I mean a

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Speaker 1: single weekly claims reading can be very volatile as well.

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Speaker 1: I mean we saw that last week, the big jump

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Speaker 1: too from to eighteen, and I mean the challenge in

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Speaker 1: the last couple of weeks and maybe this week as well,

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Speaker 1: is seasonally adjusting for the timing of Easter, which varies

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Speaker 1: from year to year. So weekly claims numbers jump all around.

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Speaker 1: But again if you smooth and smooth them out, look

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Speaker 1: at the four week average, and I think they're they're

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Speaker 1: an excellent indicator. And when you get big moves and

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Speaker 1: claims one way or the other, it's usually telling you something.

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Speaker 1: What's the investment looked like his investment actually begun to

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Speaker 1: click in and I mean, certainly, Yeah, the last three

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Speaker 1: quarters have been pretty good. We've got close to double

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Speaker 1: digit growth and quarters. You look at non defense capital

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Speaker 1: core none defense capital goods orders in the report, they're

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Speaker 1: up eight percent year over year, And I mean, is

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Speaker 1: it spectacular growth, No, but there are a lot better

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Speaker 1: it's not. I mean, that's how you get to a

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Speaker 1: three percent number. Yes, And I think we are going

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Speaker 1: to get three percent growth this year. And I mean, again,

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Speaker 1: the first quarter looks like it's going to be weakerl

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Speaker 1: that we've had this pattern in recent years where first

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Speaker 1: quarters have fairly consistently been on the weak side. So

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Speaker 1: I think you get a weaker Q one and then

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Speaker 1: catch up in Q two, similar to the pattern last year.

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Speaker 1: So it is very plausible that we get a three

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Speaker 1: percent a year for GDP. But again, is that with

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Speaker 1: the uneployment rate stabilizing or continuing to fall, And that's

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Speaker 1: the key gauge of whether this is a sustainable pick

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Speaker 1: up or not. So let's move the conversation to inflation

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Speaker 1: and spend a little bit of time talking about that.

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Speaker 1: There are some important base effects over the next couple

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Speaker 1: of months. That might surprise a few people that don't

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Speaker 1: follow this very carefully. Jim just sort of lay out

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Speaker 1: what's about to happen with the dates as far as

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Speaker 1: inflation is concerned in the United States. Well, yeah, we

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Speaker 1: get the CPI of course this week from March, and

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Speaker 1: it was Marched last year that we saw the big

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Speaker 1: plunge in cell phone service prices which held down the

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Speaker 1: core numbers. So the core CPI was down a tenth

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Speaker 1: of a percentage point in March of last year. So

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Speaker 1: if you get up two tenths this week month over month,

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Speaker 1: which I think is the most likely outcome, then the

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Speaker 1: year of ear change for the core c p I

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Speaker 1: will go from one point eight up to two point one.

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Speaker 1: And likewise, when we get the core pc number, which

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Speaker 1: is currently one point six percent year over a year,

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Speaker 1: there's a pretty good chance that that actually goes to

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Speaker 1: one nine when we get the March number in a

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Speaker 1: couple of weeks time, and of course that's virtually at

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Speaker 1: the two goal. I mean, May second is a non meeting.

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Speaker 1: There's no press conference, right and right, so I think

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Speaker 1: they pretty much stick with the script they have right now,

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Speaker 1: and I mean the message from Fed officials on Friday,

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Speaker 1: including the chair as well as uh the the the

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Speaker 1: incoming New York FED President. I mean it was a

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Speaker 1: pretty clear message. I mean right now the track there

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Speaker 1: on is continued quote gradual tightening. So I mean right

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Speaker 1: now the messages they come back in June with another tightening,

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Speaker 1: and I think that's the most likely scenario. Well, and

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Speaker 1: this goes to something we brought up any times focus.

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Speaker 1: It's not original, but I just don't get this on

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Speaker 1: meeting off meeting on meeting thing. It's the silliest thing

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Speaker 1: I've ever heard of in my life. I mean, right now,

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Speaker 1: the the the the idea of gradual tightening is is

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Speaker 1: moving no more than once a quarter. I mean, obviously

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Speaker 1: go back to oh four oh six when the measured

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Speaker 1: pace consisted of moving at every single meeting in their

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Speaker 1: eight meetings a year. So I mean that's the message

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Speaker 1: right now. When I when I listened to Powell at

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Speaker 1: the last and press briefing, when he was asked about

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Speaker 1: potentially doing a press briefing after every meeting, he potentially

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Speaker 1: sounded open to it. He didn't want to jump into

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Speaker 1: it immediately, but I think ultimately that probably is what

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Speaker 1: will happen, in which case pretty much all meetings will

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Speaker 1: have the equal billing. But we're not there at this point. Well,

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Speaker 1: that's the problem, isn't it. Tom. Before the era of

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Speaker 1: news conferences, every meeting was then for a live meeting,

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Speaker 1: and in the era of what radical transparency in central

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Speaker 1: bank guidance, people have just assumed that it's a dead

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Speaker 1: mating Tom. I I just think assumption goes until it doesn't,

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Speaker 1: and there'll be some exogenous event where they'll be like,

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Speaker 1: what do we do? I mean they could move. I mean,

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Speaker 1: if they felt they needed to move more than once

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Speaker 1: a quarter, they can do it. I mean, they've made

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Speaker 1: very clear they can always set up a quick on

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Speaker 1: the phone press briefing if necessary. They've done it. I

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Speaker 1: mean they've done a test case of it already on

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Speaker 1: their own. Jim. Just as a question, I think a

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Speaker 1: lot of people listen to this conversation will be very

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Speaker 1: well prepared for the inflation tick hard they were expected

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Speaker 1: to get this week. But when you speak to market participants,

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Speaker 1: how many of them are sort of actively positioning for

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Speaker 1: a drift tier inflation in inflation over the next couple

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Speaker 1: of months because of the bise effects and I mean,

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Speaker 1: I think the question is ultimately where you go. I mean,

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Speaker 1: it's one thing, you get a base effects this month,

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Speaker 1: But does it go from say the core PC goes

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Speaker 1: from one six to one nine on the way to

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Speaker 1: two and a half or is it just hang around

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Speaker 1: one watching the same basis? And I mean, I've got

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Speaker 1: two percent for this year, so up a little bit more,

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Speaker 1: but continuing to edge up in two thousand and nineteen,

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Speaker 1: so I've got two point four percent next year. I mean,

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Speaker 1: I do think the unployer it is already low enough

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Speaker 1: to put at least some upward pressure on inflation here.

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Speaker 1: And what sort of right shame do we have at

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Speaker 1: the Fed in terms of its reaction functions respond to that?

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Speaker 1: Because in the tree sha years over at the e

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Speaker 1: c B, it was clear that they had an inflation

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Speaker 1: target of below but close to two percent, but the

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Speaker 1: emphasis was on below two percent. Where's the emphasis at

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Speaker 1: the Federal Reserve? And I mean, ultimately, I think they've

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Speaker 1: they've got their two percent goal. I mean they keep emphasizing,

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Speaker 1: of course recently that symmetric, So if inflation goes a

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Speaker 1: bit above two percent, it doesn't mean they have to

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Speaker 1: crush the economy and throw through the economy back into recession.

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Speaker 1: But nonetheless, I think that is if the inflation does

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Speaker 1: keep drifting up unemployment keeps falling, that's a recipe for

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Speaker 1: the FED moving a pretty much every quarterly meeting. Yeah.

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Speaker 1: But but again we're not there. And what's so important

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Speaker 1: about this discussion, folks, is Jim O'Sullivan pushes completely against

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Speaker 1: what we heard from Bill Gross on Friday. How do

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Speaker 1: you respond to people saying three four rate increases is

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Speaker 1: not the way to go? Um? I mean, we'll see

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Speaker 1: what the data show. I mean, of course, on on

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Speaker 1: the one side, you've got all the the threat of

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Speaker 1: of tariffs and protectionism, and if that becomes big enough

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Speaker 1: and it blows up enough and the equity market tumble,

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Speaker 1: that's a different story. Assuming that doesn't happen. If unemployment

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Speaker 1: keeps edging down and cor inflation is moving up and

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Speaker 1: wages are going up, even very slowly, then I think

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Speaker 1: the Fed keeps on. Jemal Sullivan, thank you so much.

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Speaker 1: With high frequency economics. As Mr Farrell mentioned, Mr Sullivan

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Speaker 1: has done better than good at the non firm payrolls

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Speaker 1: dart board. As it would seem Carson Rescue with US

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Speaker 1: with I n G Germany as we look at Europe

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Speaker 1: and John bringing Carston. But John, I think the backdrop

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Speaker 1: here is a general statement saggy economic data for Europe.

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Speaker 1: All of a sudden, it's like, hello, it has been really,

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Speaker 1: really disappointing. I should stressed the expectations were incredibly elevated,

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Speaker 1: but the direction of travel certainly won't be pleasing too

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Speaker 1: many people. Cast and Brewski, the I n G Chief

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Speaker 1: economist for Germany. Casting always great to get your insight

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Speaker 1: what on earth is going on? UM, someone hit the brakes.

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Speaker 1: I don't know, honestly, the especially when we had German

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Speaker 1: data out this morning horrible. UM. The year I think

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Speaker 1: for the worst year in terms of the first two

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Speaker 1: months since two thousand nine. Industrial production, trade data all disappointing. UM.

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Speaker 1: I would still blame temporary factors snow flu vacation, because

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Speaker 1: when you talk to people, when you talk to companies,

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Speaker 1: they all they all tell the stories that order books

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Speaker 1: are still feeled, that they are very very positive. So

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Speaker 1: a global synchronized growth story and then an export powerhouse

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Speaker 1: like Germany and their exports are down. Three that shouldn't

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Speaker 1: be happening. Should have Cousten it shouldn't um and that

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Speaker 1: is all before the entire trade war. So therefore, um,

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Speaker 1: I think, really let's let's first blame it on the

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Speaker 1: pre factors. And we've seen this in the past in

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Speaker 1: Germany as well, that there could be there could be

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Speaker 1: outlier months. There sometimes are even two outlying month and

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Speaker 1: then the month following we get this big rebound. And

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Speaker 1: when when you look at the indicators, capacity of tradition

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Speaker 1: is extremely high, imatories are extremely low, or the books

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Speaker 1: are filter, it still looks as if, at least in

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Speaker 1: the short run, we should see this rebound in March

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Speaker 1: and April. So is the the important question I guess,

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Speaker 1: is this relative to very high expectations casting was something

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Speaker 1: more sinister happening with the European economy. It's a combination

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Speaker 1: of both. John To be honest, it's um excaptations were

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Speaker 1: extremely high, so it was very easy to disappoint. We

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Speaker 1: do see a leveling off. We do see this leveling

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Speaker 1: off and sentiment indicators. Um I think fundamentally the Eurozone,

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Speaker 1: the entire Eurozone is still um looking into a strong

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Speaker 1: year two thousand eighteen, but the momentum, the momentum is

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Speaker 1: fading Kurston, You've been a real student of the behavioral

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Speaker 1: of the cultural demographics behind all this. What do you

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Speaker 1: observe in Germany right now? The hungry vote over the

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Speaker 1: weekend was stunning in its land slidishness. It was amazing

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Speaker 1: how the gentleman Mr Orbant politically just destroyed the competition.

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Speaker 1: There's no other way to put it as a rigorous

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Speaker 1: populist voice. And I'm going to assume anti immigrant. Where

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Speaker 1: is that trend right now across Europe? And is a

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Speaker 1: trend which goes across the entire continent. It's a trend

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Speaker 1: which shows that, let's say, conservative populism is growing, that

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Speaker 1: more nationalistic voices are gaining more and more momentum. At

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Speaker 1: the same time, the left wing parties do not get

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Speaker 1: there act together, and they don't find an answer to

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Speaker 1: the populist of voices. Well within that then, as France

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Speaker 1: with Mr McCraw visible today with Syria and Mr Trump

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Speaker 1: and the Crown Princess Saudi Arabia visiting I believe really

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Speaker 1: in the US to half hour visiting in Paris and

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Speaker 1: being greeted by Mr McCall, can you bring that immigration

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Speaker 1: conservative tone over to France or does France stands separate

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Speaker 1: from others? No, I think France does not stand separate

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Speaker 1: from from others. I think that we look at the

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Speaker 1: still the big games that Mrs Lupin had had last

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Speaker 1: year in France, that there there still is a big

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Speaker 1: support for UH for for right wing parties also in France,

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Speaker 1: and I think we see that the immigration laws will

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Speaker 1: become stricter. I think that could be a normal answer

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Speaker 1: the things. We are in the middle of globalization, off

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Speaker 1: of digitalization, and people are afraid and what do they

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Speaker 1: do that they vote for parties which promise um to

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Speaker 1: the same turn back to the time. You look at

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Speaker 1: what happened in the UK, the same story. If a

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Speaker 1: party stands up with promises that the good old days

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Speaker 1: will return, many people are still inclined to vote for them.

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Speaker 1: What does it mean thoecasting to say the good old days?

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Speaker 1: Because what's clear is that many people reach for an

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Speaker 1: economic explanation of the rise of populism and in eur

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Speaker 1: opposed the last two half months, the economy has really improved,

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Speaker 1: but we haven't seen populism fade away. For the UK,

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Speaker 1: for instance, with the Brexit vote. At the time of

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Speaker 1: the Brexit vote. The UK economy was really doing very

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Speaker 1: well compared to the developed world. In fact, it was

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Speaker 1: out performing. The economics alone don't really explain it. Um No, no,

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Speaker 1: they don't, but you do see. No, I think the

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Speaker 1: UK is a different story, as you know when when

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Speaker 1: it comes to their relationship with the view. But look

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Speaker 1: at the other continental European countries. There you do see

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Speaker 1: that with the strong economic recovery, with the dropping unemployment rates,

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Speaker 1: there was at least less support to the extreme right parties.

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Speaker 1: I think that that that was the headline of the

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Speaker 1: last twelve months. It doesn't take away um that also

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Speaker 1: due to the Internet, that's much easier to to to

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Speaker 1: voice your review of views, to to get a momentum

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Speaker 1: that we do. We see a splintering of the political landscapes.

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Speaker 1: Germany used to be one of the exemptions, but we

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Speaker 1: see more and more smaller parties emerging. We do see

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Speaker 1: more swing voters across Europe, which makes it extremely hard

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Speaker 1: for um, let's say, the mainstream politicians to come up

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Speaker 1: with the clear, clear the guidance for where EU is

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Speaker 1: heading to the Carson. We just had a discussing the

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Speaker 1: gym O Sullivan and high frequency economics. I'm going to

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Speaker 1: call a measured optimistic looking for three g d P

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Speaker 1: until the trends are upset four quarters out of five

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Speaker 1: quarters out and maybe it pulls back a little bit.

432
00:22:37,000 --> 00:22:40,240
Speaker 1: Is Europe anywhere near two and a half percent real

433
00:22:40,440 --> 00:22:45,000
Speaker 1: economic growth? We're getting close to two and a half percent.

434
00:22:45,040 --> 00:22:48,040
Speaker 1: That could still happen this day, in the first half

435
00:22:48,080 --> 00:22:50,919
Speaker 1: of this year. I think that that is realistic. Um

436
00:22:51,200 --> 00:22:53,399
Speaker 1: That The thing is, as we discussed at the beginning

437
00:22:53,400 --> 00:22:57,159
Speaker 1: of these first two months, we are really surprisingly disappointing.

438
00:22:57,800 --> 00:22:59,800
Speaker 1: Um and and we've seen it so often in the EU.

439
00:23:00,119 --> 00:23:02,720
Speaker 1: This is why I think I'm a bit more cautious.

440
00:23:02,960 --> 00:23:06,480
Speaker 1: But it is possible. We we do still momentum going on,

441
00:23:06,720 --> 00:23:11,440
Speaker 1: and two and a half percent is possible. Three I think. Okay,

442
00:23:11,600 --> 00:23:14,000
Speaker 1: But John, I just to mention two and a half

443
00:23:14,000 --> 00:23:17,480
Speaker 1: percent is within the rhetoric of Europe is extraordinary. Yeah,

444
00:23:17,480 --> 00:23:18,919
Speaker 1: it's fantastic, But do you know what? Do you know

445
00:23:18,920 --> 00:23:21,359
Speaker 1: what's important though for ECB that you can have that

446
00:23:21,440 --> 00:23:23,679
Speaker 1: kind of level of growth similar to the United States

447
00:23:23,920 --> 00:23:26,879
Speaker 1: after the last couple of years, get inflation core inflation

448
00:23:26,920 --> 00:23:30,560
Speaker 1: still half of the target. I think that's remarkable too. Carstin,

449
00:23:31,040 --> 00:23:34,600
Speaker 1: Thank you so much. Carsten Brescie with Germany. Great. I

450
00:23:34,720 --> 00:23:51,959
Speaker 1: really enjoyed the right now. Paul Sweeney with us from

451
00:23:52,000 --> 00:23:57,360
Speaker 1: Bloomberg Intelligence Pump. Uh. Mr Mr Zuckerberg was made fun

452
00:23:57,400 --> 00:23:59,840
Speaker 1: of on Saturday Night Live with a black T shirt

453
00:23:59,840 --> 00:24:01,240
Speaker 1: and I don't know if he's going to show up

454
00:24:01,240 --> 00:24:04,400
Speaker 1: in a black T shirt or a suit. And then

455
00:24:04,720 --> 00:24:09,919
Speaker 1: his colleague, Chief Operating Officer Sandberg. Uh, this tone I'm

456
00:24:09,960 --> 00:24:11,720
Speaker 1: getting in the rudder because they still don't want to

457
00:24:11,760 --> 00:24:14,919
Speaker 1: be a real corporation. How is that going to be

458
00:24:15,000 --> 00:24:19,120
Speaker 1: taken on Capitol Hill? Uh? Not very well? So I think, Um,

459
00:24:19,160 --> 00:24:21,199
Speaker 1: you know, this is arguably going to be the two

460
00:24:21,240 --> 00:24:25,320
Speaker 1: of the most important days of Mark Zuckerberg's tenure CEO

461
00:24:25,359 --> 00:24:27,360
Speaker 1: of Facebook. I mean, he has to go to Washington

462
00:24:27,440 --> 00:24:31,440
Speaker 1: tomorrow Wednesday, Uh and really convinced lawmakers that they've got

463
00:24:31,440 --> 00:24:33,600
Speaker 1: to handle they being Facebook. You know, I have a

464
00:24:33,920 --> 00:24:37,720
Speaker 1: handle on the data issues affecting the company on the

465
00:24:38,240 --> 00:24:41,640
Speaker 1: you know how third parties are using the platform um,

466
00:24:41,960 --> 00:24:44,600
Speaker 1: and they have to show that they have They've recognized it,

467
00:24:44,680 --> 00:24:46,520
Speaker 1: turned over new leaf, They've recognized that this is a

468
00:24:46,560 --> 00:24:49,440
Speaker 1: major long term issue for them and and for the industry,

469
00:24:50,040 --> 00:24:51,919
Speaker 1: because up until this point, I don't think they've run,

470
00:24:52,000 --> 00:24:55,040
Speaker 1: not at all. I mean our Shira Overday writing brilliantly

471
00:24:55,080 --> 00:24:58,520
Speaker 1: and the folks best in class work on Spotify over

472
00:24:58,520 --> 00:25:01,560
Speaker 1: the last days, you know, stunning article this weekend Paul

473
00:25:01,720 --> 00:25:05,760
Speaker 1: on how minority the public ownership is a Spotify Basically,

474
00:25:05,880 --> 00:25:09,600
Speaker 1: Mr Zuckerberg can tell our good politicians, excuse me, we're

475
00:25:09,640 --> 00:25:13,000
Speaker 1: basically a private company with some public shares. I mean,

476
00:25:13,160 --> 00:25:15,879
Speaker 1: is that a fallback position? No, it's not, and that

477
00:25:15,920 --> 00:25:18,479
Speaker 1: would be a huge mistake on his part and one

478
00:25:18,800 --> 00:25:21,399
Speaker 1: which I don't think he will make. You know, you're correct.

479
00:25:21,520 --> 00:25:24,840
Speaker 1: He controls through his supervoting stock, he can effectively controls

480
00:25:24,840 --> 00:25:27,480
Speaker 1: the company. But um, this is a large public company,

481
00:25:27,520 --> 00:25:30,720
Speaker 1: a lot of public shareholders. Um. And this is Congress.

482
00:25:30,840 --> 00:25:32,679
Speaker 1: So this is not just going to a bunch of

483
00:25:32,680 --> 00:25:35,320
Speaker 1: investors or to some local regulators. This is Congress. And

484
00:25:35,400 --> 00:25:38,639
Speaker 1: so um, you know, the job in front of him

485
00:25:38,760 --> 00:25:43,200
Speaker 1: is to convince uh Congress that Facebook can take care

486
00:25:43,200 --> 00:25:46,320
Speaker 1: of this issue itself. What they they absolutely have to

487
00:25:46,359 --> 00:25:49,760
Speaker 1: avoid is any um, you know, any growth in in

488
00:25:49,840 --> 00:25:53,280
Speaker 1: a spectation that there could be government regulation of some

489
00:25:53,400 --> 00:25:56,199
Speaker 1: of these in industry. That's that's what they have. What

490
00:25:56,359 --> 00:25:58,600
Speaker 1: what's important here, Paul is you and I aren't on

491
00:25:58,640 --> 00:26:04,440
Speaker 1: Facebook much. Pimazon the book I don't know about all

492
00:26:04,440 --> 00:26:07,000
Speaker 1: the time, but I will ask you, Paul Sweeney, this

493
00:26:07,080 --> 00:26:09,840
Speaker 1: doesn't seem like an issue just for Facebook. Even though

494
00:26:09,880 --> 00:26:12,400
Speaker 1: Mark Zuckerberg is going to be the one testifying before

495
00:26:12,440 --> 00:26:16,440
Speaker 1: the Senate Judiciary and Commerce Committee. Doesn't this mean other

496
00:26:16,560 --> 00:26:19,320
Speaker 1: companies have a stake in how he performs? And is

497
00:26:19,320 --> 00:26:21,600
Speaker 1: there a rich irony in the fact that Jack Ma

498
00:26:22,240 --> 00:26:28,520
Speaker 1: of Ali Baba is adding to the woes of Facebook

499
00:26:28,560 --> 00:26:31,160
Speaker 1: by telling Mark Zuckerberg that he really needs to take

500
00:26:31,200 --> 00:26:33,880
Speaker 1: this seriously. I mean, can't you come back to Jack

501
00:26:33,960 --> 00:26:38,760
Speaker 1: mon say seriously that ahead of a company in China

502
00:26:38,800 --> 00:26:42,440
Speaker 1: which I last I checked UH is pretty strict in

503
00:26:42,520 --> 00:26:44,680
Speaker 1: the kind of information that it lets out. And it's

504
00:26:44,720 --> 00:26:49,239
Speaker 1: not because they're watching for trolls or foreign actors, right,

505
00:26:49,359 --> 00:26:51,959
Speaker 1: And even Tim cook Is from Apple has piped up

506
00:26:51,960 --> 00:26:55,080
Speaker 1: and and told Facebook and it's executive that they need

507
00:26:55,119 --> 00:26:57,320
Speaker 1: to take this more seriously and be more out front

508
00:26:57,320 --> 00:26:59,240
Speaker 1: of it. So, but I think you know, this is

509
00:26:59,240 --> 00:27:01,399
Speaker 1: not just a face book issue. With the social media

510
00:27:01,640 --> 00:27:04,439
Speaker 1: issue in general, it's a glow. It's an online data

511
00:27:04,520 --> 00:27:07,439
Speaker 1: security integrity issue, and in the broadest sense, so that

512
00:27:07,520 --> 00:27:10,360
Speaker 1: of course affects the Googles of the world and snaps

513
00:27:10,359 --> 00:27:13,920
Speaker 1: and twitters and and all the others, including Apple. UM

514
00:27:14,280 --> 00:27:17,560
Speaker 1: so I think, but clearly Mark Zuckerberg is representing the

515
00:27:17,600 --> 00:27:20,480
Speaker 1: industry writ large. Over the next couple of days, as

516
00:27:20,800 --> 00:27:22,879
Speaker 1: again I think he goes in front of front of

517
00:27:22,920 --> 00:27:25,320
Speaker 1: Congress and says, listen, we in Silicon Valley. You know,

518
00:27:25,400 --> 00:27:28,240
Speaker 1: we have a handle on this data issue, this integrity issue.

519
00:27:28,640 --> 00:27:31,159
Speaker 1: And that's very debatable, I mean, and so um, but

520
00:27:31,280 --> 00:27:33,400
Speaker 1: that's the kind of claim he has to be able

521
00:27:33,440 --> 00:27:36,040
Speaker 1: to make, and they're going to be able to say

522
00:27:36,040 --> 00:27:38,120
Speaker 1: that they're spending tremendous amount of money, they will spend

523
00:27:38,119 --> 00:27:40,159
Speaker 1: whatever it takes to get a handle on this um.

524
00:27:40,160 --> 00:27:42,320
Speaker 1: They've effectively said that the shareholders, and I think that's

525
00:27:42,359 --> 00:27:45,680
Speaker 1: kind of what stabilized the stock a little bit. Paul Sweeney,

526
00:27:45,720 --> 00:27:48,679
Speaker 1: do you believe the reviews that are posted online for

527
00:27:48,760 --> 00:27:51,880
Speaker 1: products for companies that are sold such as the ones

528
00:27:51,960 --> 00:27:55,960
Speaker 1: from Amazon. Um No. I generally, you know, maybe a

529
00:27:56,000 --> 00:27:58,000
Speaker 1: little old school, but I tend to focus on the

530
00:27:58,080 --> 00:28:00,199
Speaker 1: on the brands and the sources of information that I

531
00:28:00,240 --> 00:28:04,160
Speaker 1: know and trust. Um, but that's you know, you know everybody,

532
00:28:04,600 --> 00:28:08,600
Speaker 1: there's so much sources of intern on the Internet that, um,

533
00:28:08,640 --> 00:28:11,040
Speaker 1: that's the problem. It's very hard to police what is

534
00:28:11,080 --> 00:28:15,480
Speaker 1: effected unstructured data across many many platforms. You know, Paul,

535
00:28:15,560 --> 00:28:18,720
Speaker 1: I could probably keep talking about Facebook and their management,

536
00:28:18,720 --> 00:28:20,560
Speaker 1: but you know, folks, to be honest, I'm gonna get

537
00:28:20,560 --> 00:28:24,320
Speaker 1: myself in real trouble. Let's talk about something more stable,

538
00:28:24,760 --> 00:28:28,760
Speaker 1: that's not a soap opera. How about that CBS Viacom.

539
00:28:29,400 --> 00:28:33,120
Speaker 1: I mean, CBS is one of the giant financial success

540
00:28:33,160 --> 00:28:36,639
Speaker 1: stories of the last couple of years. What's going on

541
00:28:36,720 --> 00:28:39,160
Speaker 1: in the back room as they try to take Viacom

542
00:28:39,240 --> 00:28:42,040
Speaker 1: out of their misery? Mr Sweeney, I think it's all

543
00:28:42,080 --> 00:28:44,600
Speaker 1: down to price. Right now, we've had um, you know,

544
00:28:44,680 --> 00:28:47,600
Speaker 1: CBS try to lowball it with a price and and

545
00:28:47,720 --> 00:28:51,240
Speaker 1: Viacom came back today with their uh, the price that

546
00:28:51,320 --> 00:28:53,120
Speaker 1: they think is is worth it. So now we have

547
00:28:53,160 --> 00:28:54,760
Speaker 1: a bid in an ask and I think all it

548
00:28:54,800 --> 00:28:57,160
Speaker 1: takes is time to find that price for this with

549
00:28:57,280 --> 00:28:59,960
Speaker 1: the asset will trade. And then I think they've kind

550
00:29:00,080 --> 00:29:02,720
Speaker 1: concluded that less Moonvious will run this combinedentity for some

551
00:29:02,800 --> 00:29:05,880
Speaker 1: period of time. So I think we're getting very transaction here.

552
00:29:05,880 --> 00:29:08,040
Speaker 1: I mean, I need to go to the gossip thing, folks,

553
00:29:08,040 --> 00:29:09,520
Speaker 1: but that's what this left to him, and I don't

554
00:29:09,520 --> 00:29:11,960
Speaker 1: need to go into the redstones and all that is

555
00:29:12,080 --> 00:29:15,440
Speaker 1: Mr Moons is engaged in this transaction or is he

556
00:29:15,520 --> 00:29:19,040
Speaker 1: deputized it to those under him? Is he migrates to

557
00:29:19,120 --> 00:29:22,600
Speaker 1: a successful retirement. No, I think he's very much engaged here.

558
00:29:22,640 --> 00:29:24,800
Speaker 1: And I think initially, you know, he doesn't he you

559
00:29:24,840 --> 00:29:26,520
Speaker 1: know the reports with that he does not want to

560
00:29:26,560 --> 00:29:28,160
Speaker 1: do this trade. And the reason I don't want to

561
00:29:28,200 --> 00:29:30,800
Speaker 1: do the deals because he's got a good thing at TBS.

562
00:29:30,840 --> 00:29:33,760
Speaker 1: He just got paid sixty nine million dollars for the

563
00:29:34,080 --> 00:29:36,239
Speaker 1: last year, so he's got a thing going here. Why

564
00:29:36,280 --> 00:29:38,840
Speaker 1: does he want to take on a lot of turnaround

565
00:29:38,840 --> 00:29:41,560
Speaker 1: businesses of Vitacom? And the only reason he is engaging

566
00:29:41,640 --> 00:29:44,320
Speaker 1: is because his control shareholder is making him engaged. So

567
00:29:44,840 --> 00:29:46,680
Speaker 1: to make the best out of a you know, not

568
00:29:46,800 --> 00:29:50,400
Speaker 1: an ideal situation for him is um buying Viacom at

569
00:29:50,400 --> 00:29:53,320
Speaker 1: the price he wants and getting the top job and

570
00:29:53,760 --> 00:29:55,360
Speaker 1: for the time that he wants, and that will make

571
00:29:55,400 --> 00:29:57,040
Speaker 1: it palatable for him. And I'm not sure there's going

572
00:29:57,080 --> 00:29:59,720
Speaker 1: to be a nice compensation package tied to it as well,

573
00:30:00,400 --> 00:30:03,600
Speaker 1: Paul Sweeney, in the context of a seventy million dollar

574
00:30:03,760 --> 00:30:08,320
Speaker 1: annual pay package which Mr Moonves is going to receive

575
00:30:08,440 --> 00:30:11,000
Speaker 1: for his work last year on top of the previous

576
00:30:11,120 --> 00:30:14,800
Speaker 1: multimillion dollar pay packages that he has received, the shares

577
00:30:14,840 --> 00:30:17,920
Speaker 1: of CBS are down more than ten percent. How come

578
00:30:17,960 --> 00:30:23,720
Speaker 1: there's no agitation for any kind of responsibility or any

579
00:30:23,760 --> 00:30:27,000
Speaker 1: kind of accountability when it comes to seventy million dollars

580
00:30:27,080 --> 00:30:30,040
Speaker 1: for his pay packet. Yeah, he's been, uh, you know,

581
00:30:30,080 --> 00:30:33,320
Speaker 1: among the highest paid media executives over the last decade.

582
00:30:33,320 --> 00:30:36,760
Speaker 1: And I'd think something because the whole industry is extremely overpaid. Um.

583
00:30:36,760 --> 00:30:40,800
Speaker 1: But I think the company has absolutely performed and given

584
00:30:40,880 --> 00:30:42,800
Speaker 1: some great results over the last six, seven, eight years.

585
00:30:42,840 --> 00:30:44,560
Speaker 1: And the reason the stock is under performing now is

586
00:30:44,600 --> 00:30:46,920
Speaker 1: because of the speculation that they're going to take some

587
00:30:46,960 --> 00:30:50,600
Speaker 1: earning solution to buy via come, Paul Sweeney, thank you

588
00:30:50,640 --> 00:30:53,000
Speaker 1: so much. Blumber Intelligence a short notice with a good

589
00:30:53,040 --> 00:30:58,320
Speaker 1: briefing there on Facebook is Mr Zuckerberg a tens, Washington,

590
00:30:58,400 --> 00:31:02,280
Speaker 1: where I believe it is a huge staff supporting him,

591
00:31:02,280 --> 00:31:06,960
Speaker 1: giving advice and wisdom as they speak to Republicans and

592
00:31:07,080 --> 00:31:10,480
Speaker 1: democrats all on Facebook and all their constituents on Facebook.

593
00:31:19,000 --> 00:31:23,200
Speaker 1: Thanks for listening to the Bloomberg Surveillance Podcast. Subscribe and

594
00:31:23,280 --> 00:31:28,600
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast

595
00:31:28,640 --> 00:31:32,880
Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before

596
00:31:32,880 --> 00:31:36,720
Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg

597
00:31:36,840 --> 00:31:37,120
Speaker 1: Radio