1 00:00:05,120 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene, along 2 00:00:09,240 --> 00:00:13,200 Speaker 1: with Jonathan Ferroll and Lisa Brownwitz Jaylie. We bring you 3 00:00:13,320 --> 00:00:18,640 Speaker 1: insight from the best and economics, finance, investment and international relations. 4 00:00:18,960 --> 00:00:23,840 Speaker 1: Find Bloomberg Surveillance and Apple Podcast SoundCloud, Bloomberg dot Com 5 00:00:23,920 --> 00:00:29,080 Speaker 1: and of course on the Bloomberg terminal. We need to 6 00:00:29,120 --> 00:00:32,000 Speaker 1: talk about this pandemic and the great effort around vaccines 7 00:00:32,120 --> 00:00:34,800 Speaker 1: in America and around the world. And the latest trial 8 00:00:34,880 --> 00:00:37,800 Speaker 1: data for Phase three trials for the Astrosennica vaccine in 9 00:00:37,840 --> 00:00:41,600 Speaker 1: the United States seventy percent efficacy. And here's the most 10 00:00:41,600 --> 00:00:46,360 Speaker 1: important number, I think efficacy against severe or critical disease 11 00:00:46,600 --> 00:00:49,239 Speaker 1: and hospitalization. I'm pleased to say that joining us now 12 00:00:49,640 --> 00:00:52,040 Speaker 1: is Rude Dabba. He is the executive vice president of 13 00:00:52,080 --> 00:00:54,520 Speaker 1: astros ancas by, a farmer business unit here in the 14 00:00:54,600 --> 00:00:56,800 Speaker 1: United States, where it is great to catch up with you. Sir. 15 00:00:57,120 --> 00:01:00,640 Speaker 1: Let's start here. You are a company undersea each for 16 00:01:00,680 --> 00:01:03,560 Speaker 1: a vaccine that you're not looking to profit that much from. 17 00:01:03,560 --> 00:01:05,440 Speaker 1: What's your message to the rest of the world right now? 18 00:01:05,800 --> 00:01:08,840 Speaker 1: The message is relatively quick clear. First of all, thank 19 00:01:08,840 --> 00:01:11,319 Speaker 1: you so much for being in the show. But it's 20 00:01:11,400 --> 00:01:14,320 Speaker 1: it's clear that we have a vaccine which is highly effective, 21 00:01:15,200 --> 00:01:20,440 Speaker 1: is showing an unprecedented high efficacy against severe disease and hospitalization. 22 00:01:20,720 --> 00:01:23,520 Speaker 1: And that's important of course for the United States, for Europe. 23 00:01:23,720 --> 00:01:26,360 Speaker 1: But let's not forget that this virus is everywhere in 24 00:01:26,400 --> 00:01:29,240 Speaker 1: the world. So we are we are thrilled with the 25 00:01:29,319 --> 00:01:32,520 Speaker 1: data and and hopefully it's the next step for all 26 00:01:32,560 --> 00:01:34,560 Speaker 1: of us, you know, in order to combat against this 27 00:01:34,680 --> 00:01:37,880 Speaker 1: terrible pandemic in in the world. You mentioned Europe. Some 28 00:01:38,040 --> 00:01:40,600 Speaker 1: doubts were raised around the advocacy of this vaccine at 29 00:01:40,680 --> 00:01:43,520 Speaker 1: risk around it too in Europe over the last several months, 30 00:01:43,520 --> 00:01:46,240 Speaker 1: specifically on the risk around blood clotting. What if you 31 00:01:46,319 --> 00:01:48,440 Speaker 1: learn to phase three trouts here in America about that 32 00:01:48,480 --> 00:01:51,880 Speaker 1: specific issue route, Yeah, as you can imagine, the data 33 00:01:51,920 --> 00:01:55,840 Speaker 1: safety monitoring boards went literally with a magnifying class through 34 00:01:55,840 --> 00:01:58,120 Speaker 1: every case. And the very good news, and it was 35 00:01:58,160 --> 00:02:00,640 Speaker 1: also in our press release, is that they didn't see 36 00:02:00,640 --> 00:02:06,120 Speaker 1: any imbalance regarding thrombolic events in both the vaccinated group 37 00:02:06,240 --> 00:02:08,960 Speaker 1: and the non vaccinated group. So that's a that's a 38 00:02:09,000 --> 00:02:13,680 Speaker 1: great a signal, and that's built on the very strong 39 00:02:14,000 --> 00:02:16,240 Speaker 1: feedback we got last week from the mh r A 40 00:02:16,400 --> 00:02:20,160 Speaker 1: in the UK and EMMA saying that the vaccine is 41 00:02:20,240 --> 00:02:23,639 Speaker 1: highly effective and safe for for use. It doesn't mean, 42 00:02:23,720 --> 00:02:26,360 Speaker 1: of course, that's as always for for every product, for 43 00:02:26,400 --> 00:02:30,720 Speaker 1: every vaccine. We will clearly monitor every case we will get. 44 00:02:31,440 --> 00:02:33,600 Speaker 1: But but it's fair to say that's based on the 45 00:02:33,639 --> 00:02:37,639 Speaker 1: current data, the vaccine is highly effective and very safe. 46 00:02:37,960 --> 00:02:40,920 Speaker 1: I think that there's been a difficult time recovering after 47 00:02:40,960 --> 00:02:43,320 Speaker 1: In December there is that study result out of the 48 00:02:43,320 --> 00:02:46,040 Speaker 1: astrois Ethica vaccine. There was someone confusing there were two 49 00:02:46,040 --> 00:02:48,160 Speaker 1: different groups. In one it showed there was a ninetent 50 00:02:48,200 --> 00:02:51,360 Speaker 1: advocacy rate and in another it was sixty something percent 51 00:02:51,520 --> 00:02:54,639 Speaker 1: efficacy rate. How much do you think that's colored the 52 00:02:54,760 --> 00:02:58,760 Speaker 1: view of people versus some other policy error, perhaps on 53 00:02:58,800 --> 00:03:02,200 Speaker 1: the part of politicians who haven't come out and endorsed 54 00:03:02,200 --> 00:03:04,919 Speaker 1: the vaccine, perhaps as much as you would have liked. Yeah, 55 00:03:05,000 --> 00:03:08,359 Speaker 1: I think that that that's always the case. The speed 56 00:03:08,440 --> 00:03:13,480 Speaker 1: in which we are developing vaccines is unprecedented. We're not 57 00:03:13,520 --> 00:03:16,760 Speaker 1: cutting corners in any way or form, but we are learning, learning, 58 00:03:17,000 --> 00:03:19,880 Speaker 1: like we're doing for for our other products as well. 59 00:03:20,160 --> 00:03:23,600 Speaker 1: I think the the importance of today is that this 60 00:03:23,720 --> 00:03:26,760 Speaker 1: trial has been done in a in a phenomenal way, 61 00:03:26,800 --> 00:03:30,959 Speaker 1: more than thirty thousand participants in the United States, at 62 00:03:31,000 --> 00:03:36,720 Speaker 1: Peru and Chile, showing an unprecedented efficacy, while the safety 63 00:03:36,720 --> 00:03:40,920 Speaker 1: profile is is extremely strong. So I think hopefully what 64 00:03:41,040 --> 00:03:42,720 Speaker 1: happened in the in the in the in the past 65 00:03:43,000 --> 00:03:46,000 Speaker 1: is is gone that this will further boost to the 66 00:03:46,080 --> 00:03:48,960 Speaker 1: confidence in the in the vaccine. We are very confident, 67 00:03:49,560 --> 00:03:52,760 Speaker 1: many regulators are very confident that the vaccine has been 68 00:03:52,800 --> 00:03:55,600 Speaker 1: approved in more than seventy countries in the world. And 69 00:03:55,600 --> 00:03:58,400 Speaker 1: our next priority, of course is also to get this 70 00:03:58,560 --> 00:04:03,360 Speaker 1: vaccine approved an emergency use authorization in the United States 71 00:04:03,400 --> 00:04:06,360 Speaker 1: and we're going to apply that in in the first 72 00:04:06,400 --> 00:04:08,480 Speaker 1: half of April, and then of course it's in the 73 00:04:08,520 --> 00:04:12,040 Speaker 1: hands of the FDA to make their final decision. Do 74 00:04:12,080 --> 00:04:14,440 Speaker 1: you have a censored of how widespread this sort of 75 00:04:14,560 --> 00:04:18,720 Speaker 1: rare blood clotting development has become in the European Union? 76 00:04:18,760 --> 00:04:20,800 Speaker 1: There have been a number of cases that have been reported. 77 00:04:21,000 --> 00:04:24,200 Speaker 1: Do we have a handle on the scope of that. Yeah, 78 00:04:24,200 --> 00:04:26,960 Speaker 1: what we know is that it's a very rare, very 79 00:04:27,080 --> 00:04:30,840 Speaker 1: rare events. Of course, we're looking into it. The email 80 00:04:30,880 --> 00:04:33,960 Speaker 1: the mh r A is looking into it at this stage, 81 00:04:34,800 --> 00:04:39,320 Speaker 1: it's very clear that there is no clear relationship between 82 00:04:39,320 --> 00:04:44,320 Speaker 1: the vaccine and the events, that those events are also 83 00:04:44,440 --> 00:04:48,320 Speaker 1: there in in in people without any vaccination. Having said that, 84 00:04:48,640 --> 00:04:52,120 Speaker 1: patient safety is always the number one priority for us, 85 00:04:52,160 --> 00:04:54,560 Speaker 1: like it is for other manufactors, so we take it 86 00:04:55,080 --> 00:04:58,680 Speaker 1: very seriously. But let's not speculate. Let's let's wait for 87 00:04:58,680 --> 00:05:01,280 Speaker 1: the data where we will do a lot of studies 88 00:05:01,279 --> 00:05:04,479 Speaker 1: in order to get a better view on it, as 89 00:05:04,520 --> 00:05:07,360 Speaker 1: well as the EMA and other regulators in the in 90 00:05:07,480 --> 00:05:09,480 Speaker 1: the world. And of course we need to see the 91 00:05:09,560 --> 00:05:14,039 Speaker 1: data from the other vaccines to get a very balanced view, 92 00:05:14,120 --> 00:05:16,840 Speaker 1: but it is far too early to speculate about how 93 00:05:16,839 --> 00:05:20,800 Speaker 1: many times it's occurring in the normal population. I don't 94 00:05:20,800 --> 00:05:22,960 Speaker 1: want to get into speculation right now on an important issue, 95 00:05:23,000 --> 00:05:26,479 Speaker 1: so route let's focus on reliable supply of this vaccine 96 00:05:26,800 --> 00:05:28,880 Speaker 1: and the issue around what is happening in Leiden right 97 00:05:28,880 --> 00:05:31,240 Speaker 1: now and your Netherlands. There is a plant there, as 98 00:05:31,320 --> 00:05:33,560 Speaker 1: you know, that still has not been approved to supply 99 00:05:33,640 --> 00:05:36,680 Speaker 1: Europe yet. The Europeans are fighting over the vaccines that 100 00:05:36,720 --> 00:05:40,080 Speaker 1: are being produced there. We've heard from several EU officials 101 00:05:40,080 --> 00:05:42,839 Speaker 1: over the weekend. Many publications printing the same thing that 102 00:05:42,880 --> 00:05:46,359 Speaker 1: the brit Brits are insisting that the plant there in 103 00:05:46,400 --> 00:05:49,159 Speaker 1: the Netherlands must deliver the drug substance produce there to them. 104 00:05:49,200 --> 00:05:52,040 Speaker 1: That does not work. What is produced in that plant 105 00:05:52,040 --> 00:05:54,240 Speaker 1: has to go to the EU. We've heard that repeatedly 106 00:05:54,279 --> 00:05:58,080 Speaker 1: from several publications. What's your interpretation of where supply from 107 00:05:58,080 --> 00:06:01,840 Speaker 1: that particular plant can go and needs to go. Yeah, So, 108 00:06:01,839 --> 00:06:03,960 Speaker 1: so first of all, let's let's put it in perspective. 109 00:06:04,720 --> 00:06:09,279 Speaker 1: The the Europeans supply UH chain is highly dependent on 110 00:06:09,440 --> 00:06:12,360 Speaker 1: very two large side. One is in is based out 111 00:06:12,360 --> 00:06:15,360 Speaker 1: of the United States, and the other one is in indulgient. 112 00:06:15,720 --> 00:06:19,200 Speaker 1: So this is a relatively small side. And and so 113 00:06:19,279 --> 00:06:21,920 Speaker 1: I I don't want to do politics, That's not my job. 114 00:06:22,320 --> 00:06:24,880 Speaker 1: My job is together with my collegues, in order to 115 00:06:24,880 --> 00:06:28,360 Speaker 1: provide the defects into as many Europeans and as soon 116 00:06:28,400 --> 00:06:32,320 Speaker 1: as possible. UH the side is playing a role. Of course, 117 00:06:32,320 --> 00:06:35,520 Speaker 1: that will play a role for the Europeans supply moving forward. 118 00:06:35,760 --> 00:06:38,200 Speaker 1: But so far, for for all the viewers, it's absolutely 119 00:06:38,200 --> 00:06:41,400 Speaker 1: clear that we haven't used the side neither in the 120 00:06:41,520 --> 00:06:44,840 Speaker 1: UK as well as in in in in in Europe 121 00:06:44,839 --> 00:06:47,680 Speaker 1: both sides. Most countries still need to approve this side. 122 00:06:47,760 --> 00:06:51,720 Speaker 1: The signe was originally meant to supply clinical trial material, 123 00:06:52,120 --> 00:06:55,719 Speaker 1: so it hasn't been used yet for commercial supply. The 124 00:06:55,760 --> 00:06:58,560 Speaker 1: EMAIL still needs to approve this this side, so I 125 00:06:58,560 --> 00:07:00,760 Speaker 1: think there's a lot of confusion and there's no needs 126 00:07:00,760 --> 00:07:03,120 Speaker 1: for dead rude. I understand you don't want to play politics, 127 00:07:03,120 --> 00:07:05,280 Speaker 1: but you've certainly been dragged into the politics over the 128 00:07:05,360 --> 00:07:06,680 Speaker 1: last year and you and I need to talk again. 129 00:07:06,680 --> 00:07:08,800 Speaker 1: Astro Cennika's route Dobin Ruthe thank you for catching up, 130 00:07:08,800 --> 00:07:17,240 Speaker 1: Sir Bob Michael joins us now JP Morgan sid Management, 131 00:07:17,280 --> 00:07:20,640 Speaker 1: Chief investment Officer. He joins us right now, Bob, here's 132 00:07:20,680 --> 00:07:23,760 Speaker 1: your line fed to the bond market drop dead. Is 133 00:07:23,760 --> 00:07:28,240 Speaker 1: it that bad? Well, it is. If you own long bonds, 134 00:07:28,280 --> 00:07:32,160 Speaker 1: you're feeling a little bit unanchored out there. And if 135 00:07:32,200 --> 00:07:34,640 Speaker 1: you think about Leaguard and the e c B, they 136 00:07:34,680 --> 00:07:37,360 Speaker 1: said they're going to support the bond market. They're going 137 00:07:37,400 --> 00:07:40,000 Speaker 1: to increase purchases. Same thing with the Reserve Bank of 138 00:07:40,040 --> 00:07:45,200 Speaker 1: Australia from the Fed. Nothing zilch zero, no wham extension, 139 00:07:45,480 --> 00:07:51,200 Speaker 1: no operation twist, no increase in long UH purchases. Nothing. 140 00:07:51,840 --> 00:07:54,800 Speaker 1: So they'll support the front end, which will help with growth, 141 00:07:54,840 --> 00:07:58,080 Speaker 1: and that just leaves the long end unanchored. So, Bob, 142 00:07:58,120 --> 00:07:59,880 Speaker 1: you and I have talked about this both online and 143 00:08:00,040 --> 00:08:02,280 Speaker 1: flying about how much oxygen is left up here and 144 00:08:02,360 --> 00:08:06,000 Speaker 1: when they self becomes self limiting. Tens north of one 145 00:08:06,120 --> 00:08:08,960 Speaker 1: seventy last week right now on seventy five, how much 146 00:08:08,960 --> 00:08:13,160 Speaker 1: oxygen is left up here, Well, not a whole lot. 147 00:08:13,200 --> 00:08:15,600 Speaker 1: I think you have to look at it in terms 148 00:08:15,640 --> 00:08:18,520 Speaker 1: of real yields, and when you get to about a 149 00:08:18,640 --> 00:08:23,080 Speaker 1: zero percent real yield on their target of two, so 150 00:08:23,160 --> 00:08:26,800 Speaker 1: around two ten year treasury, I think the bond market 151 00:08:26,800 --> 00:08:29,200 Speaker 1: will mark time there for a bit and see which 152 00:08:29,240 --> 00:08:32,360 Speaker 1: way the economy and inflation are breaking. I think you'll 153 00:08:32,400 --> 00:08:35,400 Speaker 1: have a pause. If really you'll start to go much 154 00:08:35,520 --> 00:08:40,160 Speaker 1: higher into positive territory, then you better have strong growth 155 00:08:40,400 --> 00:08:44,240 Speaker 1: and you better have the inflationary pressure. Otherwise it's going 156 00:08:44,320 --> 00:08:48,880 Speaker 1: to have an impact across all asset classes. But there 157 00:08:48,960 --> 00:08:51,120 Speaker 1: was another move that the Federal Reserve made last week 158 00:08:51,160 --> 00:08:53,200 Speaker 1: which was perhaps a little bit more under the radar. 159 00:08:53,520 --> 00:08:57,400 Speaker 1: They did not extend this exemption for the supplementary leverage ratio, 160 00:08:57,440 --> 00:08:59,400 Speaker 1: and the idea here is that banks were holding a 161 00:08:59,480 --> 00:09:01,880 Speaker 1: lot more basuries of their books and they didn't have 162 00:09:01,960 --> 00:09:05,679 Speaker 1: to hold additional capital to offset the potential risk. A 163 00:09:05,760 --> 00:09:07,800 Speaker 1: lot of people said that made sense. The fact that 164 00:09:07,840 --> 00:09:10,440 Speaker 1: it wasn't extended may prompt banks to have to sell 165 00:09:10,480 --> 00:09:13,079 Speaker 1: some of these treasuries. Yet we're not seeing that reflected 166 00:09:13,360 --> 00:09:16,400 Speaker 1: necessarily just yet in the yields. Do you think this 167 00:09:16,480 --> 00:09:18,560 Speaker 1: will become more of a problem for the auctions this 168 00:09:18,600 --> 00:09:21,040 Speaker 1: week as the US prepares to sell two hundreds and 169 00:09:21,080 --> 00:09:25,760 Speaker 1: six billion dollars of debt. Yeah, and I know there's 170 00:09:25,840 --> 00:09:29,040 Speaker 1: a bit of a two way argument that that's that's 171 00:09:29,080 --> 00:09:33,280 Speaker 1: been created on the supplementary leverage ratio. I don't understand 172 00:09:33,320 --> 00:09:38,320 Speaker 1: the two way argument. If if the supplementary leverage ratio 173 00:09:38,440 --> 00:09:43,640 Speaker 1: giving the exemption didn't help the system absorbed deposits and treasuries, 174 00:09:43,880 --> 00:09:46,240 Speaker 1: then what was the point in the first place. So 175 00:09:46,520 --> 00:09:49,600 Speaker 1: if it did absorb deposits and treasuries, and now the 176 00:09:49,640 --> 00:09:52,480 Speaker 1: exemption has gone away, it stands to reason that you're 177 00:09:52,520 --> 00:09:58,880 Speaker 1: going to have more deposits and treasuries floating around the system. Okay, 178 00:09:58,880 --> 00:10:01,120 Speaker 1: So can you extrapolate out what that means for yields? 179 00:10:01,120 --> 00:10:03,280 Speaker 1: I mean, could this lead to yields that do not 180 00:10:03,640 --> 00:10:06,960 Speaker 1: lead to just loose financial conditions. Could it be a 181 00:10:07,080 --> 00:10:11,200 Speaker 1: tightening and financial conditions because it's not stemming from growth expectations, 182 00:10:11,240 --> 00:10:14,839 Speaker 1: but rather from a misbalance for a perhaps or a 183 00:10:14,920 --> 00:10:18,480 Speaker 1: change in the balance of supply and demand. Well, that's 184 00:10:18,800 --> 00:10:22,439 Speaker 1: a really good question, and I think for sure you're 185 00:10:22,480 --> 00:10:25,679 Speaker 1: going to see obviously a lot more supply. We've got 186 00:10:25,720 --> 00:10:29,319 Speaker 1: a one point nine trillion dollars stimulus working its way 187 00:10:29,360 --> 00:10:31,960 Speaker 1: through the system that's got to be funded. Now you 188 00:10:32,000 --> 00:10:34,880 Speaker 1: don't have these big balance sheets there to absorb it 189 00:10:34,920 --> 00:10:38,000 Speaker 1: the way they might have last month. And on top 190 00:10:38,040 --> 00:10:40,600 Speaker 1: of that, um, I think the other thing you hinted at, 191 00:10:40,720 --> 00:10:43,200 Speaker 1: I think this is the first step of the FED 192 00:10:43,320 --> 00:10:47,400 Speaker 1: tightening monetary policy. It's gradual, and I think we've just 193 00:10:47,520 --> 00:10:51,840 Speaker 1: seen that without ostensibly coming out and supporting the long 194 00:10:52,000 --> 00:10:56,280 Speaker 1: end and then letting the exemption on sl R expire. 195 00:10:56,720 --> 00:10:59,920 Speaker 1: I think that's the first stage in in the normalization 196 00:11:00,080 --> 00:11:02,440 Speaker 1: or tightening process. But let's finish up on this and 197 00:11:02,520 --> 00:11:04,000 Speaker 1: what you do day to day that we don't talk 198 00:11:04,040 --> 00:11:05,800 Speaker 1: about enough. People come across to you, and I'll make 199 00:11:05,840 --> 00:11:07,720 Speaker 1: this sound simple, and I know it's much more complex 200 00:11:07,720 --> 00:11:09,680 Speaker 1: than that, but they come across to you with big 201 00:11:09,679 --> 00:11:11,719 Speaker 1: amounts of money, huge mandates, and you have to put 202 00:11:11,760 --> 00:11:14,400 Speaker 1: that money to work. As you put that money to work. 203 00:11:14,440 --> 00:11:16,160 Speaker 1: Now and look at treasuries, when do they start to 204 00:11:16,160 --> 00:11:18,960 Speaker 1: get interesting again for you and compete for capital with 205 00:11:19,000 --> 00:11:24,280 Speaker 1: our swear? Well, uh, in the tenure not until you 206 00:11:24,360 --> 00:11:27,680 Speaker 1: get above two. I don't see the reason to buy 207 00:11:28,000 --> 00:11:30,720 Speaker 1: tenure treasuries at a negative real yield. So that's the 208 00:11:30,760 --> 00:11:34,320 Speaker 1: first thing. The second thing is there is some opportunity 209 00:11:34,400 --> 00:11:36,439 Speaker 1: in the front end of the curve as long as 210 00:11:36,480 --> 00:11:39,199 Speaker 1: the FED is continuing to support that market. You can 211 00:11:39,200 --> 00:11:41,679 Speaker 1: buy credit there. You can buy high yield, you can 212 00:11:41,720 --> 00:11:45,160 Speaker 1: buy securitize credit, and and yes, you can even buy 213 00:11:45,240 --> 00:11:47,480 Speaker 1: some of the emerging markets that are out there. Well, 214 00:11:47,559 --> 00:11:49,480 Speaker 1: let's talk about em and finish their shall we, Bob, 215 00:11:49,480 --> 00:11:51,120 Speaker 1: Since you brought it up. It looks like a mess 216 00:11:51,200 --> 00:11:53,880 Speaker 1: right now in select parts of emerging markets. We've seen 217 00:11:53,920 --> 00:11:56,480 Speaker 1: several central banks need to hike over the last week 218 00:11:56,600 --> 00:11:59,840 Speaker 1: still to come where do you like and why? Well, yeah, 219 00:12:00,040 --> 00:12:04,200 Speaker 1: I mean exactly, And they're reflecting the term emerging markets. 220 00:12:04,280 --> 00:12:07,800 Speaker 1: They will come with some problems. It looks like it 221 00:12:07,840 --> 00:12:09,679 Speaker 1: was a little bit early at the start of the 222 00:12:09,760 --> 00:12:15,000 Speaker 1: year to go into emerging market debt markets and currencies, 223 00:12:15,440 --> 00:12:18,920 Speaker 1: and the theory was that as the developed markets recovery, 224 00:12:19,320 --> 00:12:22,320 Speaker 1: the emerging markets would draft off of that. And it 225 00:12:22,360 --> 00:12:24,760 Speaker 1: looks like they're a little bit further behind. So the 226 00:12:24,760 --> 00:12:28,000 Speaker 1: dollar probably holds in here. It doesn't mean that you 227 00:12:28,040 --> 00:12:31,440 Speaker 1: can't go into some of the higher yielding emerging markets 228 00:12:31,760 --> 00:12:34,760 Speaker 1: and start buying that debt with high real yields. Maybe 229 00:12:34,760 --> 00:12:39,400 Speaker 1: this time you'll fund it out of euros instead of dollars. Well, 230 00:12:39,400 --> 00:12:41,440 Speaker 1: but John Rais is a really good point, and it 231 00:12:41,440 --> 00:12:44,200 Speaker 1: has to do with emerging markets, which is is it 232 00:12:44,360 --> 00:12:47,120 Speaker 1: a time to reach for yield if the FED is 233 00:12:47,280 --> 00:12:52,199 Speaker 1: beginning to hint at their normalization process as you said, Um, 234 00:12:52,520 --> 00:12:54,840 Speaker 1: I think it is. I think you you have to 235 00:12:54,880 --> 00:12:57,800 Speaker 1: still go where there are high real yields. You still 236 00:12:57,880 --> 00:13:00,880 Speaker 1: have to go where there's opportunity to make some return 237 00:13:00,920 --> 00:13:05,800 Speaker 1: on currencies. Every emerging market isn't exactly the same. Turkey 238 00:13:05,920 --> 00:13:08,600 Speaker 1: this week is clearly different than a lot of the 239 00:13:08,760 --> 00:13:13,120 Speaker 1: other emerging markets, particularly the Asian emerging markets. Um So 240 00:13:13,440 --> 00:13:15,000 Speaker 1: I think you've got to roll up your sleeves and 241 00:13:15,040 --> 00:13:18,200 Speaker 1: get in there. Yeah, yields aren't as high as we 242 00:13:18,240 --> 00:13:20,120 Speaker 1: would like them to be. The story is not as 243 00:13:20,240 --> 00:13:23,800 Speaker 1: clean as we might like it to be, but you 244 00:13:23,880 --> 00:13:26,839 Speaker 1: still have capital to put to work. It never is, Bob, 245 00:13:26,920 --> 00:13:28,920 Speaker 1: And isn't that a story. We talked about this so 246 00:13:29,000 --> 00:13:31,400 Speaker 1: much that all the nes says in fixed income, whether 247 00:13:31,400 --> 00:13:34,240 Speaker 1: it's credit, wherever it is, everything they say was true 248 00:13:34,320 --> 00:13:36,839 Speaker 1: six months ago, nine months ago, and here we are. 249 00:13:37,080 --> 00:13:40,119 Speaker 1: What do you say back to them, Bob, I say, 250 00:13:40,240 --> 00:13:44,600 Speaker 1: I'm sympathetic. I don't really like buying high yield debt 251 00:13:45,000 --> 00:13:48,240 Speaker 1: at four and a half percent or bank loans at 252 00:13:48,480 --> 00:13:52,360 Speaker 1: discount margins of just over four percent. But I know 253 00:13:52,480 --> 00:13:55,920 Speaker 1: default rates are coming down a lot from where they are, 254 00:13:56,280 --> 00:13:59,840 Speaker 1: and when we look back at high yield credit spreads, 255 00:14:00,160 --> 00:14:04,360 Speaker 1: they don't widen when default rates come down. So I 256 00:14:04,360 --> 00:14:06,320 Speaker 1: think credit spreads are going to come in. They'll come 257 00:14:06,320 --> 00:14:12,560 Speaker 1: in from fifty basis points towards two D seventy five 258 00:14:12,600 --> 00:14:15,400 Speaker 1: basis points. That will absorb a lot of the backup 259 00:14:15,480 --> 00:14:19,040 Speaker 1: in the government bond market. But Michael sends you his sympathies, Bob, 260 00:14:19,120 --> 00:14:21,440 Speaker 1: it's going to catch up, Bub Michael, that jap Mulgan 261 00:14:21,480 --> 00:14:30,560 Speaker 1: Acid Management Chief investment officers right now. This is a 262 00:14:30,640 --> 00:14:33,160 Speaker 1: joy to quote Tom Keene to channel his energy, his 263 00:14:33,240 --> 00:14:36,400 Speaker 1: spirit Animal this week when he is off. Heather Bouchet 264 00:14:36,480 --> 00:14:39,240 Speaker 1: joining us right now, one of the key people as 265 00:14:39,320 --> 00:14:42,920 Speaker 1: part of President Joe Biden's Economic Council, helping to shape 266 00:14:42,920 --> 00:14:46,600 Speaker 1: policy in the now and what will come later this year. Heather, 267 00:14:46,720 --> 00:14:48,960 Speaker 1: thank you so much for being with us. I want 268 00:14:49,000 --> 00:14:53,480 Speaker 1: to start with messaging around the stimulus that has been passed. 269 00:14:53,840 --> 00:14:56,160 Speaker 1: Do you feel like the amount of money that has 270 00:14:56,160 --> 00:14:59,040 Speaker 1: been passed has already trickled into the system, that people 271 00:14:59,080 --> 00:15:02,680 Speaker 1: are aware of what the benefits they could potentially get 272 00:15:03,280 --> 00:15:06,520 Speaker 1: will be and have been. Well, that's a great place 273 00:15:06,560 --> 00:15:09,280 Speaker 1: to start, Lisa, And certainly I think everybody is aware 274 00:15:09,320 --> 00:15:12,480 Speaker 1: of the checks, right We know that over a hundred 275 00:15:12,480 --> 00:15:14,800 Speaker 1: million checks have gone out to the American people already, 276 00:15:15,160 --> 00:15:17,720 Speaker 1: and I think people understand that that money is coming. 277 00:15:18,040 --> 00:15:19,840 Speaker 1: You know, there's so much more in the package to 278 00:15:19,880 --> 00:15:23,160 Speaker 1: help people and businesses and communities all across this country 279 00:15:23,240 --> 00:15:25,720 Speaker 1: deal with the pandemic and deal with the economic crisis. 280 00:15:26,200 --> 00:15:29,560 Speaker 1: You know, there's an increase in nutrition aid for the 281 00:15:29,600 --> 00:15:34,840 Speaker 1: Women Infinite Children's Program and the Supplemental Nutrition program. There's 282 00:15:34,840 --> 00:15:37,680 Speaker 1: actually also money out there, about four billion dollars to 283 00:15:37,760 --> 00:15:40,480 Speaker 1: help farmers of color who are in debt because of 284 00:15:40,480 --> 00:15:43,000 Speaker 1: the pandemic and are struggling. So there's a lot of 285 00:15:43,040 --> 00:15:45,960 Speaker 1: different pieces out there for different communities that have been 286 00:15:46,000 --> 00:15:50,080 Speaker 1: greatly impacted by the pandemic. There are a lot of 287 00:15:50,080 --> 00:15:53,960 Speaker 1: people are looking at the stimulus past for uh tea 288 00:15:54,040 --> 00:15:56,640 Speaker 1: leaves as to what to come. And John Farrow is 289 00:15:56,680 --> 00:15:58,840 Speaker 1: actually raised us in a number of occasions this idea 290 00:15:59,160 --> 00:16:02,160 Speaker 1: that a hundred and a thousand dollars is an annual 291 00:16:02,200 --> 00:16:06,560 Speaker 1: income that's being defined increasingly, is heavily a middle income 292 00:16:06,640 --> 00:16:09,680 Speaker 1: the idea that that is actually a justification to get 293 00:16:09,760 --> 00:16:12,760 Speaker 1: some assistance. Can you talk a little bit about whether 294 00:16:12,840 --> 00:16:16,760 Speaker 1: that's significant number, that that is middle class middle income 295 00:16:16,800 --> 00:16:21,160 Speaker 1: whereas four hundred thousand dollars is upper class. That's a 296 00:16:21,200 --> 00:16:23,920 Speaker 1: great question. And you know, as an economist, I've I've 297 00:16:24,080 --> 00:16:25,760 Speaker 1: spent a lot of my career with folks trying to 298 00:16:25,800 --> 00:16:28,360 Speaker 1: define what is middle class and what's at the bottom. 299 00:16:28,440 --> 00:16:30,440 Speaker 1: And what we've seen over the past year during this 300 00:16:30,640 --> 00:16:32,960 Speaker 1: crisis is, you know, we've talked a lot about this 301 00:16:33,080 --> 00:16:36,280 Speaker 1: K shaped economy and we've seen that for folks that 302 00:16:36,560 --> 00:16:40,120 Speaker 1: you know earn you know, individually about fifty thou dollars 303 00:16:40,160 --> 00:16:42,880 Speaker 1: a year or less, that that really is the dividing 304 00:16:42,920 --> 00:16:45,840 Speaker 1: line between the kinds of jobs, the experiences people have had, 305 00:16:45,880 --> 00:16:48,600 Speaker 1: the experiences with hunger and food insecurity, and so you 306 00:16:48,680 --> 00:16:50,720 Speaker 1: double that and that that gets to a family income 307 00:16:50,760 --> 00:16:53,160 Speaker 1: that gets closer to about a hundred thousand. Looking across 308 00:16:53,160 --> 00:16:55,200 Speaker 1: the country, in some parts of the country, that's a 309 00:16:55,280 --> 00:16:57,680 Speaker 1: lot of money, and other parts that's not so much. 310 00:16:58,160 --> 00:17:01,400 Speaker 1: I think what's important here is that we really recognize 311 00:17:01,440 --> 00:17:04,320 Speaker 1: that folks at the top have done been able to 312 00:17:04,560 --> 00:17:07,080 Speaker 1: maintain their incomes for the most part of their jobs 313 00:17:07,680 --> 00:17:10,679 Speaker 1: assets have been okay, so um so they have been 314 00:17:10,760 --> 00:17:13,040 Speaker 1: less hurt. And really it's those folks in the bottom 315 00:17:13,080 --> 00:17:15,440 Speaker 1: third um that bottom part of the k that have 316 00:17:15,560 --> 00:17:18,000 Speaker 1: been hardest hit by the pandemic and are struggling the 317 00:17:18,000 --> 00:17:20,520 Speaker 1: most in this recovery. So I think it's it's right 318 00:17:20,560 --> 00:17:23,560 Speaker 1: to focus on that. What matters less is the exact 319 00:17:23,880 --> 00:17:27,159 Speaker 1: you know, cut off in that matters for each and 320 00:17:27,160 --> 00:17:29,760 Speaker 1: every program. We don't need one in the same cut 321 00:17:29,760 --> 00:17:31,680 Speaker 1: off for everything, but we do need to keep our 322 00:17:31,880 --> 00:17:34,920 Speaker 1: focus on how the economy looks different and different parts 323 00:17:34,960 --> 00:17:39,680 Speaker 1: of the income distribution. And definitely from an economic perspective, 324 00:17:39,720 --> 00:17:42,080 Speaker 1: it's important to have this sort of holistic look at 325 00:17:42,119 --> 00:17:45,919 Speaker 1: which areas got hit hardest. From a numerical standpoint, certainly 326 00:17:45,960 --> 00:17:48,880 Speaker 1: when crafting taxes, that is what matters to a lot 327 00:17:48,920 --> 00:17:50,920 Speaker 1: of people because it determines whether they will be paying 328 00:17:51,000 --> 00:17:54,400 Speaker 1: higher or lower taxes. Four hundred thousand dollars a year 329 00:17:54,440 --> 00:17:57,840 Speaker 1: at annual income has been pegged as the number where 330 00:17:57,840 --> 00:18:00,600 Speaker 1: taxes start to go up more significantly. And there's a 331 00:18:00,680 --> 00:18:03,080 Speaker 1: question of whether this is for an entire household or 332 00:18:03,119 --> 00:18:06,280 Speaker 1: whether it's for an individual. Do you have clarity on 333 00:18:06,320 --> 00:18:09,520 Speaker 1: which it is well at this point, you know, the 334 00:18:09,560 --> 00:18:12,560 Speaker 1: President made clear time and time again on the campaign 335 00:18:12,560 --> 00:18:15,320 Speaker 1: trail and through governing that you know, if you make 336 00:18:15,400 --> 00:18:18,639 Speaker 1: less than four dollars a year, your taxes won't go up. Now, 337 00:18:18,760 --> 00:18:21,320 Speaker 1: all the details are still to be worked out. This 338 00:18:21,400 --> 00:18:24,560 Speaker 1: is an ongoing conversation, so I cannot speak to specifics 339 00:18:24,560 --> 00:18:26,480 Speaker 1: at this point, but what I can tell you is 340 00:18:26,520 --> 00:18:28,639 Speaker 1: that he's been cleared on that commitment and that that 341 00:18:28,760 --> 00:18:32,359 Speaker 1: number is incredibly far up the income distribution. We are 342 00:18:32,400 --> 00:18:35,280 Speaker 1: looking at folks just at the very very top of 343 00:18:35,320 --> 00:18:39,679 Speaker 1: the spectrum. There's also a question, more generally on the 344 00:18:39,720 --> 00:18:43,280 Speaker 1: lower part of the spectrum of whether we just experienced 345 00:18:43,359 --> 00:18:47,120 Speaker 1: modern monetary theory in practice, this idea that you send 346 00:18:47,240 --> 00:18:50,639 Speaker 1: checks out to the bottom quartile, the bottom third, and 347 00:18:50,680 --> 00:18:52,480 Speaker 1: that actually is the money that gets spent and that 348 00:18:52,560 --> 00:18:56,080 Speaker 1: goes into the economy and generates growth and inflation. That's positive. 349 00:18:56,520 --> 00:18:59,000 Speaker 1: Is there something or any proposal about some sort of 350 00:18:59,080 --> 00:19:02,760 Speaker 1: universal inc home or universal checks to be sent out 351 00:19:02,800 --> 00:19:06,720 Speaker 1: for that purpose in an ongoing basis? Well, you know, 352 00:19:06,920 --> 00:19:09,240 Speaker 1: it's interesting you would ask that question. You know, already, 353 00:19:09,240 --> 00:19:11,680 Speaker 1: prior to the pandemic, we had programs like the Earned 354 00:19:11,680 --> 00:19:16,360 Speaker 1: Income Tax Credit that provided a tax credit to families 355 00:19:16,359 --> 00:19:18,919 Speaker 1: at the very bottom of the of the income distribution, 356 00:19:18,960 --> 00:19:21,119 Speaker 1: families with children. What happened is a part of the 357 00:19:21,160 --> 00:19:23,639 Speaker 1: American rescue plan is we expanded at two folks that 358 00:19:23,680 --> 00:19:26,679 Speaker 1: didn't have children, and we expanded the child tax Credit, 359 00:19:27,000 --> 00:19:32,000 Speaker 1: giving money to to families with children. You know, uh, significantly, 360 00:19:32,160 --> 00:19:34,200 Speaker 1: ramping that up file is at the very very bottom. 361 00:19:34,560 --> 00:19:37,560 Speaker 1: Think those kinds of policies that are focused on those 362 00:19:37,600 --> 00:19:40,439 Speaker 1: who need it most certainly are ones that we have 363 00:19:40,520 --> 00:19:42,760 Speaker 1: a track record of doing in the past and seemed 364 00:19:42,840 --> 00:19:47,439 Speaker 1: very popular, uh to the American people. There there have 365 00:19:47,480 --> 00:19:50,400 Speaker 1: been a number of people have criticized the one point 366 00:19:50,440 --> 00:19:53,920 Speaker 1: nine trillion dollar stimulus as being too big given where 367 00:19:53,920 --> 00:19:57,120 Speaker 1: we are in the pandemic and the economic cycle. What's 368 00:19:57,160 --> 00:20:00,639 Speaker 1: your response to that. Well, you know, we've built that 369 00:20:00,720 --> 00:20:03,920 Speaker 1: plan from the ground up to focus on the challenges 370 00:20:04,000 --> 00:20:07,159 Speaker 1: facing our society and our economy right now. We know 371 00:20:07,240 --> 00:20:09,919 Speaker 1: that this pandemic is still raging across the country, across 372 00:20:09,960 --> 00:20:13,040 Speaker 1: the world, and that families and businesses and state and 373 00:20:13,080 --> 00:20:16,160 Speaker 1: local governments needed the resources to be able to address 374 00:20:16,240 --> 00:20:19,280 Speaker 1: this pandemic. And whether this crisis get us to the 375 00:20:19,320 --> 00:20:22,600 Speaker 1: other side, make sure that um, those businesses because could 376 00:20:22,640 --> 00:20:24,920 Speaker 1: hold out, those families could hold out until those jobs 377 00:20:24,960 --> 00:20:27,159 Speaker 1: come back. I mean, I think sometimes we forget that 378 00:20:27,200 --> 00:20:31,159 Speaker 1: we've actually seen fifty two weeks fifty two weeks of 379 00:20:31,320 --> 00:20:36,080 Speaker 1: record high claims for unemployment benefits. Um, this economic crisis 380 00:20:36,160 --> 00:20:38,920 Speaker 1: isn't over. And because you know, while we're doing everything 381 00:20:38,920 --> 00:20:42,240 Speaker 1: we can to contain the pandemic, get vaccines out, um, 382 00:20:42,280 --> 00:20:45,480 Speaker 1: you know, the shape of the virus is still uncertain. 383 00:20:45,680 --> 00:20:47,360 Speaker 1: We don't know if new strains are going to come 384 00:20:47,440 --> 00:20:49,320 Speaker 1: up or you know, how that's going to play out. 385 00:20:49,440 --> 00:20:51,560 Speaker 1: So we need to make sure that families are prepared, 386 00:20:51,640 --> 00:20:54,280 Speaker 1: the communities are prepared, and so that is why this 387 00:20:54,359 --> 00:20:59,080 Speaker 1: package was the size that it was. Heather Bouche, thank 388 00:20:59,080 --> 00:21:01,280 Speaker 1: you so much for being with Heather Bouche is a 389 00:21:01,280 --> 00:21:05,480 Speaker 1: member of President Biden's Economic Council discussing some of the 390 00:21:05,520 --> 00:21:08,159 Speaker 1: plans coming up, and also she is the former president 391 00:21:08,280 --> 00:21:17,199 Speaker 1: CEO of the Washington Center for Equitable Growth. Was stunning 392 00:21:17,240 --> 00:21:19,800 Speaker 1: to see two delegations, the United States and China face 393 00:21:19,840 --> 00:21:22,560 Speaker 1: off in Alaska in the past week. You know how 394 00:21:22,560 --> 00:21:24,680 Speaker 1: it was meant to go. One party gets two minutes, 395 00:21:24,720 --> 00:21:26,520 Speaker 1: the other party gets two minutes. They closed the door 396 00:21:26,760 --> 00:21:28,159 Speaker 1: to how people like me to get out of the 397 00:21:28,200 --> 00:21:31,200 Speaker 1: room and then the conversation start. That is not what happened. 398 00:21:31,520 --> 00:21:34,000 Speaker 1: The United States kept the press in, they snapped back, 399 00:21:34,320 --> 00:21:36,280 Speaker 1: and things weren't looking good even after that either. So 400 00:21:36,359 --> 00:21:38,159 Speaker 1: let's talk to a man that has seen this a 401 00:21:38,200 --> 00:21:41,160 Speaker 1: million times over the last few decades. It's Ambassador Robert 402 00:21:41,160 --> 00:21:42,880 Speaker 1: Horman so and he joined us now. So, Bob, let's 403 00:21:42,880 --> 00:21:45,840 Speaker 1: start there. How many times you've seen this in your 404 00:21:45,880 --> 00:21:48,879 Speaker 1: career in various parts of the world, and how original 405 00:21:49,000 --> 00:21:52,560 Speaker 1: that moment might still have been in Alaska last week. Well, 406 00:21:52,600 --> 00:21:55,840 Speaker 1: this was a bit unusual. Normally, these things are very 407 00:21:55,960 --> 00:21:59,000 Speaker 1: well set up two minutes for one, two minutes for 408 00:21:59,080 --> 00:22:01,840 Speaker 1: the other, and then a the pool or the press 409 00:22:01,880 --> 00:22:04,359 Speaker 1: spray as they called it, leaves, and then they get 410 00:22:04,400 --> 00:22:07,840 Speaker 1: down to work. I think this meeting was designed to 411 00:22:07,920 --> 00:22:11,359 Speaker 1: do several things. They were a little different than in 412 00:22:11,400 --> 00:22:14,280 Speaker 1: the past. One, it was the first high level meeting 413 00:22:14,280 --> 00:22:18,760 Speaker 1: between China and the US. Second, the audience was at 414 00:22:18,840 --> 00:22:23,440 Speaker 1: least half domestic. China wanted to demonstrate to its own 415 00:22:23,440 --> 00:22:28,240 Speaker 1: people that it was taking tough positions on difficult issues, 416 00:22:29,200 --> 00:22:32,359 Speaker 1: particularly bottom line or what they call redline issues. But 417 00:22:32,480 --> 00:22:35,600 Speaker 1: the US was also conveying a message too that we 418 00:22:35,600 --> 00:22:39,480 Speaker 1: weren't going back five or or ten years ago. This 419 00:22:39,640 --> 00:22:43,919 Speaker 1: was going to be an American relationship with China that 420 00:22:44,000 --> 00:22:47,480 Speaker 1: was much more assertive. And when China took more time 421 00:22:47,520 --> 00:22:52,000 Speaker 1: than was anticipated, UM Secretary blancoln decided that he was 422 00:22:52,080 --> 00:22:55,760 Speaker 1: going to assert the desire of the United States to 423 00:22:56,680 --> 00:22:59,960 Speaker 1: go back and identify some of the issues that China raised. 424 00:23:00,080 --> 00:23:02,840 Speaker 1: Ton talked about them while the press was still there, 425 00:23:02,880 --> 00:23:06,159 Speaker 1: which was somewhat unusual, But so it got off to 426 00:23:06,240 --> 00:23:11,159 Speaker 1: an unusual start. But the fundamentals, I think we're more 427 00:23:11,240 --> 00:23:15,920 Speaker 1: or less predictable that the Chinese wanted to assert themselves uh, 428 00:23:15,920 --> 00:23:18,119 Speaker 1: and the US wanted to show that it was going 429 00:23:18,119 --> 00:23:21,120 Speaker 1: to be a tougher US than the Chinese had seen 430 00:23:21,160 --> 00:23:24,199 Speaker 1: in the past, and that it was pushing China to 431 00:23:24,280 --> 00:23:27,600 Speaker 1: take actions that the US had not necessarily pushed them 432 00:23:27,680 --> 00:23:31,960 Speaker 1: very hard for for the Trump administration, obviously, the tone 433 00:23:32,040 --> 00:23:35,440 Speaker 1: was very different from the Trump administration, but the strong 434 00:23:35,600 --> 00:23:40,600 Speaker 1: line in many ways really was a continuation of much 435 00:23:40,600 --> 00:23:44,080 Speaker 1: of what the Trump administration was saying. We'll see what 436 00:23:44,160 --> 00:23:45,760 Speaker 1: it does well if I can push you a little 437 00:23:45,760 --> 00:23:48,800 Speaker 1: bit harder on that particular issue, on the new approach, 438 00:23:48,840 --> 00:23:52,159 Speaker 1: so to speak, and the results it might generate. Are 439 00:23:52,160 --> 00:23:54,040 Speaker 1: we doing anything different to what we've tried over the 440 00:23:54,119 --> 00:23:56,520 Speaker 1: last several decades, And if the automate goal of diplomacy 441 00:23:56,560 --> 00:23:59,120 Speaker 1: is to try and adapt shape change behavior of Beijing 442 00:23:59,640 --> 00:24:04,080 Speaker 1: deuced any change on the horizon from this approach, I 443 00:24:04,119 --> 00:24:06,600 Speaker 1: think it's going to be very difficult. I think that 444 00:24:06,520 --> 00:24:10,320 Speaker 1: the Chinese have made First of all, the Chinese at 445 00:24:10,800 --> 00:24:15,320 Speaker 1: the bottom line is that they believe in what they 446 00:24:15,359 --> 00:24:20,000 Speaker 1: call dung chung shi Ja, which is that the East 447 00:24:20,119 --> 00:24:23,920 Speaker 1: is rising and the West is declining. They come into 448 00:24:23,960 --> 00:24:27,800 Speaker 1: this period with a high level of confidence in the 449 00:24:27,840 --> 00:24:31,960 Speaker 1: way they've dealt with the pandemic internally in China since 450 00:24:32,000 --> 00:24:36,159 Speaker 1: the outbreak, UM their economy is growing, They're playing a 451 00:24:36,240 --> 00:24:40,439 Speaker 1: much stronger role in the global economy. President she is 452 00:24:40,600 --> 00:24:45,399 Speaker 1: becoming a major leader of motilateral and regional events. So 453 00:24:45,440 --> 00:24:48,840 Speaker 1: they have a level of confidence UM and and the 454 00:24:49,000 --> 00:24:53,240 Speaker 1: Chinese wanted to project that President Biden's team, which is 455 00:24:53,280 --> 00:24:56,000 Speaker 1: a terrific team. I mean, Tony B. Lincoln and Jake 456 00:24:56,040 --> 00:24:59,119 Speaker 1: Sullivan are really people I've worked with. Their their first 457 00:24:59,119 --> 00:25:02,399 Speaker 1: class UH and the United States is now saying, look, 458 00:25:03,480 --> 00:25:06,320 Speaker 1: this is going to be the issue of the of 459 00:25:06,400 --> 00:25:11,080 Speaker 1: the decade and several decades in the future, and we're 460 00:25:11,200 --> 00:25:13,680 Speaker 1: going to be very persistent. We're going to say what's 461 00:25:13,720 --> 00:25:17,520 Speaker 1: on our mind, and we're going to uh take actions. 462 00:25:17,600 --> 00:25:20,119 Speaker 1: The question is what are they going to do? And 463 00:25:20,359 --> 00:25:25,680 Speaker 1: and this meeting was more about statements and positioning rather 464 00:25:25,720 --> 00:25:28,880 Speaker 1: than specific sets of actions at the United States plans 465 00:25:28,920 --> 00:25:31,480 Speaker 1: to take in and say the South China see, the 466 00:25:31,520 --> 00:25:34,119 Speaker 1: United States has has been active in the South China. 467 00:25:34,160 --> 00:25:39,040 Speaker 1: See the President has taken tougher actions on technology. President 468 00:25:39,119 --> 00:25:42,600 Speaker 1: Biden has So I think we're gonna see a ramping 469 00:25:42,680 --> 00:25:46,600 Speaker 1: up of pressure UM by the United states on China 470 00:25:47,040 --> 00:25:49,600 Speaker 1: in some areas, what they will be and how far 471 00:25:49,680 --> 00:25:51,760 Speaker 1: the US is going to go. The US is still 472 00:25:51,800 --> 00:25:55,959 Speaker 1: reviewing that. That was a very polite way, Bob of 473 00:25:56,000 --> 00:25:58,800 Speaker 1: saying that this meeting was entirely for the press and 474 00:25:58,960 --> 00:26:01,560 Speaker 1: for sort of the image and not for any substance. 475 00:26:01,560 --> 00:26:04,800 Speaker 1: There is a question about whether this push to collaborate 476 00:26:04,840 --> 00:26:07,160 Speaker 1: when it comes to global warming is real or whether 477 00:26:07,200 --> 00:26:09,760 Speaker 1: this also is a statement for the press and to 478 00:26:09,800 --> 00:26:12,560 Speaker 1: try to appeal frankly to the sort of more left 479 00:26:12,680 --> 00:26:17,000 Speaker 1: leaning Western media that back President Biden. Is that your 480 00:26:17,000 --> 00:26:20,359 Speaker 1: sense of this, well, that would be the one issue 481 00:26:20,400 --> 00:26:24,320 Speaker 1: where I think there is a prospect of some level 482 00:26:24,359 --> 00:26:28,280 Speaker 1: of conversions, and that is because the environmental issue in 483 00:26:28,400 --> 00:26:31,760 Speaker 1: China is a very important domestic political issue as well. 484 00:26:32,320 --> 00:26:35,399 Speaker 1: China's you doubtless know, has had a big pollution problem 485 00:26:35,440 --> 00:26:38,480 Speaker 1: in the past, and there's a lot of support among 486 00:26:38,600 --> 00:26:44,159 Speaker 1: Chinese for a more proactive policy on climate change and 487 00:26:44,240 --> 00:26:48,200 Speaker 1: environmental issues. And for the Chinese it's a way of 488 00:26:48,240 --> 00:26:51,880 Speaker 1: their showing uh that they want to be part of 489 00:26:52,000 --> 00:26:56,600 Speaker 1: a global leadership, global cooperative efforts. So I think, and 490 00:26:56,920 --> 00:26:59,760 Speaker 1: of course President Biden this is a big issue for 491 00:26:59,840 --> 00:27:03,160 Speaker 1: him politically and certainly a big issue for Americans at home. 492 00:27:03,760 --> 00:27:07,000 Speaker 1: It's certainly a very important part of the Democratic Party's 493 00:27:07,880 --> 00:27:10,800 Speaker 1: platform and the campaign and and and the support of 494 00:27:10,840 --> 00:27:14,040 Speaker 1: the Democratic Party for the president. So I would say 495 00:27:14,080 --> 00:27:18,320 Speaker 1: in this area, um along with I would think down 496 00:27:18,320 --> 00:27:23,480 Speaker 1: the road cooperational and healthcare issues, on cooperation, on on 497 00:27:23,720 --> 00:27:27,960 Speaker 1: trying to deal with future void future pandemics. I would 498 00:27:28,000 --> 00:27:30,840 Speaker 1: say those would be the two areas where there is 499 00:27:30,880 --> 00:27:33,560 Speaker 1: a chance of a high level, higher level of a 500 00:27:33,600 --> 00:27:37,440 Speaker 1: convergence uh than than many other areas. So that this 501 00:27:37,520 --> 00:27:41,520 Speaker 1: was I think good, good public relations. But I will 502 00:27:41,560 --> 00:27:44,040 Speaker 1: also I think there's some substance behind it. Well, we're 503 00:27:44,080 --> 00:27:45,800 Speaker 1: not going to catch up with you, sir as always. 504 00:27:45,840 --> 00:27:48,080 Speaker 1: That's catch up soon, Robert Holm. That's that see them advice. 505 00:27:48,119 --> 00:27:56,720 Speaker 1: It's managing director Lara Rank joins us FS Investments chief 506 00:27:57,040 --> 00:28:00,040 Speaker 1: US Economists Lara. Over the last month, the Chairman of 507 00:28:00,040 --> 00:28:02,359 Speaker 1: the Federal Reserve has sounded like the chairman of the 508 00:28:02,400 --> 00:28:05,080 Speaker 1: US Central Bank, not the global central bank. Do you 509 00:28:05,119 --> 00:28:07,479 Speaker 1: start to see issues emerging on the global stage as 510 00:28:07,480 --> 00:28:10,000 Speaker 1: a result of that, Well, I think there is this 511 00:28:10,080 --> 00:28:14,919 Speaker 1: idea that the dollars now that the interest rates, you know, 512 00:28:14,960 --> 00:28:17,439 Speaker 1: a lot maybe think of the taller your prior conversation 513 00:28:18,119 --> 00:28:20,520 Speaker 1: is starting to really rise in the US more than 514 00:28:20,560 --> 00:28:23,120 Speaker 1: it is in the rest of the developed world, and 515 00:28:23,400 --> 00:28:25,240 Speaker 1: you know, that's something that I think will continue to 516 00:28:25,280 --> 00:28:27,119 Speaker 1: get a lot of attention. And to your point, a 517 00:28:27,200 --> 00:28:31,120 Speaker 1: stronger dollar inherently slows down the US economy. I think 518 00:28:31,119 --> 00:28:32,880 Speaker 1: the real question is the fend going to be able 519 00:28:32,920 --> 00:28:35,119 Speaker 1: to have its take and needed too. You know, it 520 00:28:35,320 --> 00:28:37,679 Speaker 1: wants to be positive on the economy. All that's pushing 521 00:28:37,760 --> 00:28:39,720 Speaker 1: up grades and then at the same time, when does 522 00:28:39,720 --> 00:28:43,440 Speaker 1: it start to circle back and actually hinder US economic growth? 523 00:28:43,640 --> 00:28:45,880 Speaker 1: Right now, no one's talking about growth in America, that's 524 00:28:45,920 --> 00:28:48,000 Speaker 1: for sure. The consensus for you and our survey five 525 00:28:48,040 --> 00:28:50,040 Speaker 1: point six percent. I think the federal reserves is six 526 00:28:50,080 --> 00:28:52,440 Speaker 1: and a half percent for this year, Laura, let's start 527 00:28:52,440 --> 00:28:53,920 Speaker 1: there and then we'll get into it. What are your 528 00:28:53,960 --> 00:28:57,880 Speaker 1: expectations for this year and perhaps increasingly of importance over 529 00:28:57,920 --> 00:29:00,400 Speaker 1: the last couple of weeks, looking out that dec eleration 530 00:29:00,400 --> 00:29:02,240 Speaker 1: from twenty one to twenty two, Can you put some 531 00:29:02,320 --> 00:29:05,840 Speaker 1: numbers on that? Yeah, absolutely, I think we're looking at 532 00:29:06,000 --> 00:29:08,960 Speaker 1: six percent or more for this year and then for 533 00:29:09,120 --> 00:29:12,680 Speaker 1: next year back down to two point eight percent because 534 00:29:12,880 --> 00:29:15,760 Speaker 1: to me, you know all of these uh you know, 535 00:29:15,800 --> 00:29:19,560 Speaker 1: the bigger bump that we get in services as part 536 00:29:19,560 --> 00:29:22,320 Speaker 1: of the economy catching up, hopefully getting that labor market 537 00:29:22,720 --> 00:29:26,320 Speaker 1: back to full employment. All of that's going to cause 538 00:29:26,400 --> 00:29:29,920 Speaker 1: a really strong growth profile this year. But beyond that, 539 00:29:30,040 --> 00:29:32,560 Speaker 1: I see a couple of tail ones building, one of 540 00:29:32,600 --> 00:29:35,560 Speaker 1: which could be the government needing to put in more 541 00:29:35,640 --> 00:29:37,640 Speaker 1: up there, and you need to find a way to 542 00:29:37,800 --> 00:29:40,440 Speaker 1: pay for all of this spending. I think the pendulum 543 00:29:40,480 --> 00:29:42,280 Speaker 1: could see the other way, and that's just one thing 544 00:29:42,320 --> 00:29:45,920 Speaker 1: that could bring growth crashing back to trend. I say 545 00:29:45,960 --> 00:29:48,360 Speaker 1: crashing now because we would in any way go negative, 546 00:29:48,400 --> 00:29:51,280 Speaker 1: but growth of two point persent that would still feel 547 00:29:51,360 --> 00:29:54,600 Speaker 1: very strong for our economy. This is really important learn. 548 00:29:54,720 --> 00:29:57,320 Speaker 1: There's a question about those tax hikes that we've heard 549 00:29:57,320 --> 00:30:00,320 Speaker 1: and of Biden's administration. Is they talk about in aditional 550 00:30:00,400 --> 00:30:04,160 Speaker 1: round of stimulus, particularly for infrastructure spending, how much our 551 00:30:04,200 --> 00:30:08,920 Speaker 1: current estimates of economic growth factoring in some of those aspects, 552 00:30:08,960 --> 00:30:12,440 Speaker 1: those tax hikes, those other sort of measures to curb 553 00:30:12,560 --> 00:30:17,800 Speaker 1: the deficit going to hamper growth. I mean, I, Lisa, 554 00:30:17,800 --> 00:30:19,760 Speaker 1: I go out with my forecasts and people say that 555 00:30:19,800 --> 00:30:23,120 Speaker 1: I'm pessimistic. I think right now, there's so much euphoria, 556 00:30:23,160 --> 00:30:26,920 Speaker 1: there's so much optimism. The economy has done so well 557 00:30:26,960 --> 00:30:30,480 Speaker 1: through this you know, epic downturn that when you sort 558 00:30:30,520 --> 00:30:35,880 Speaker 1: of talk about structurally low growth or demographics or you know, 559 00:30:35,920 --> 00:30:38,120 Speaker 1: any of the boring stuff that we were all talking 560 00:30:38,120 --> 00:30:41,040 Speaker 1: about before COVID, and then you you know, layer on 561 00:30:41,120 --> 00:30:45,280 Speaker 1: the fact that you know, the pendulum could very well 562 00:30:45,400 --> 00:30:51,840 Speaker 1: swing back from being so uh fisically accommodative anything like that. 563 00:30:51,920 --> 00:30:54,240 Speaker 1: I think, could you know, I don't know, I don't 564 00:30:54,240 --> 00:30:55,800 Speaker 1: hear a lot of other people talking about it, but 565 00:30:55,840 --> 00:30:58,440 Speaker 1: I think it would be a mistake to assume that 566 00:30:58,720 --> 00:31:02,600 Speaker 1: the US is now ida and consistain growth at these 567 00:31:02,640 --> 00:31:06,440 Speaker 1: astronomic levels. Really good final point. Thank you lou to 568 00:31:06,520 --> 00:31:09,400 Speaker 1: Rhyme that FS Investments chief US economists on the US 569 00:31:09,840 --> 00:31:13,720 Speaker 1: and unshine it. This is the Bloomberg Surveillance Podcast. Thanks 570 00:31:13,720 --> 00:31:17,040 Speaker 1: for listening. Join us live weekdays from seven to ten 571 00:31:17,120 --> 00:31:21,560 Speaker 1: am Eastern on Bloomberg Radio and on Bloomberg Television each 572 00:31:21,680 --> 00:31:25,400 Speaker 1: day from six to nine am for insight from the 573 00:31:25,440 --> 00:31:30,640 Speaker 1: best in economics, finance, investment, and international relations. And subscribe 574 00:31:30,680 --> 00:31:35,600 Speaker 1: to the Surveillance Podcast on Apple Podcast SoundCloud, Bloomberg dot com, 575 00:31:35,680 --> 00:31:38,920 Speaker 1: and of course, on the terminal. I'm Tom Keene and 576 00:31:39,040 --> 00:31:40,920 Speaker 1: this is Bloomberg