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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee.

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Speaker 1: 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. Do

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Speaker 1: you want to us on this program here in New York,

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Speaker 1: Tompus say, obvious Capital Markets Chief US Economists, Good morning

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Speaker 1: to Tom. Hey, how are you guys doing? You and

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Speaker 1: I have talked before. Sorry, go on, go on. Sorry,

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Speaker 1: he's not still behind me right now, Dunkings Shadow literally lazy,

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Speaker 1: I can, I can have now checked the internal system.

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Speaker 1: He's walked out of the building. Sorry, I'm sorry. Confusing

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Speaker 1: a return to trent growth with a journey to somewhere

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Speaker 1: a whole lot more worrying. We've talked about this so

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Speaker 1: many times through much of now some people confusing full

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Speaker 1: employment with a cyclical peak in labor market conditions. You've

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Speaker 1: written about that, just explore it further for us. Yeah, So,

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Speaker 1: you know, I think one of the one of the

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Speaker 1: interesting things is I think people get caught up in

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Speaker 1: sort of headlines and and I don't mean news headlines,

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Speaker 1: I mean sort of you know, headline economic stuff. Uh.

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Speaker 1: And one of the things I think people get lost

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Speaker 1: in is particularly if you're looking at employment to population

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Speaker 1: ratios or if you're looking at on labor force participation rates.

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Speaker 1: And I think if you look at the headlines on

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Speaker 1: these things, um, you know, they're they have not really

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Speaker 1: done all that much, and I think it leads people

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Speaker 1: to sort of, you know, draw this conclusion that, um,

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Speaker 1: you know, we're we're still not even remotely close to

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Speaker 1: full employment. But what we've been saying to people is okay,

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Speaker 1: but you can't look at these those specific headlines. You

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Speaker 1: need to look at the cyclical part rate. You need

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Speaker 1: to look at the cyclical employment to population ratio. And

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Speaker 1: when you do that, um and and sorry just to

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Speaker 1: digress cyclically. What I mean is, you know, sort of

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Speaker 1: the prime working age cohort, so the fifty four year olds,

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Speaker 1: and when you do that, and when you do that,

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Speaker 1: what you see is that those measures have all improved dramatically, dramatically,

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Speaker 1: which from from our perspective, again, if you look at

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Speaker 1: you know, whether it's the part rate or the employment

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Speaker 1: population ratio, we're above where we were in even certainly

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Speaker 1: in the previous cycle. Um, and so it's really easy

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Speaker 1: to make the case that you're you know, if you're

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Speaker 1: not at full employment, you're really really close. I guess

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Speaker 1: when I see the headlines of of economic stuff, as

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Speaker 1: you put in, my big question is should I be

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Speaker 1: bullish or bearish today? Right? I mean, is that basically

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Speaker 1: what's the what's sort of the much so given the

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Speaker 1: fact that we are seeing better employment than expected? Is

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Speaker 1: that a bull argument or a bar argue? You know,

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Speaker 1: it's funny and and and Jonathan and I have certainly

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Speaker 1: had this conversation before. Um, it seems all of a

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Speaker 1: sudden now today, like literally over the last week or two,

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Speaker 1: that good is good again, which is which is sort

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Speaker 1: of perverse, because good was bad, bad was good. We

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Speaker 1: had all these like weird sort of iterations, right, which

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Speaker 1: is utterly ridiculous in every way. But now, all of

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Speaker 1: a sudden today good is good and um so, But

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Speaker 1: but again, I stress, this is over the last week

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Speaker 1: or two, and I'm defining that in terms of sort

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Speaker 1: of the many clients that I speak to on a

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Speaker 1: pretty regular basis. And and the thing I find utterly

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Speaker 1: amusing about that is nothing has changed, literally, nothing has

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Speaker 1: changed over the last week or two. You know, all

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Speaker 1: of a sudden, everyone is like feeling a little bit

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Speaker 1: better about the backdrop. So I don't know whether it is,

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Speaker 1: you know, maybe people are, you know, sort of coming

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Speaker 1: to grips with the reality that maybe something is going

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Speaker 1: to get done on trade, although I would hasten to

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Speaker 1: add that anytime anyone gave me like the bearer case

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Speaker 1: for things, it never started it off with trade. But

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Speaker 1: but again, maybe maybe that's fair. Um, you know, maybe

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Speaker 1: maybe it's the equity markets up year to day. I

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Speaker 1: don't know what it is, but all of a sudden,

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Speaker 1: people are feel a little bit better about the backdrop

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Speaker 1: in I think that's I think that's all well and good.

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Speaker 1: But I think I'm just waiting for the next shoe

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Speaker 1: to drop now, because I'm telling you, the vast majority

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Speaker 1: of people that I spoke to prior to the last

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Speaker 1: week or two have been overwhelmingly negative. Um, but now

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Speaker 1: all of a sudden, people are feeling a little bit

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Speaker 1: better about the stuff. I mean, which I find silly

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Speaker 1: because I'm not sure that they're basing on anything. Sound

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Speaker 1: So Tom, could that next? Sorry, I don't want to

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Speaker 1: make sure that point is not left out there, and ether.

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Speaker 1: I've never thought that people should be negative, um, but

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Speaker 1: they were so sorry. So would that next shoe to

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Speaker 1: drop be the consumer? The consumers arguably the only thing

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Speaker 1: holding up this economy, and maybe because of the adam

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Speaker 1: near full employment. Yeah, sure, I mean, I think there's

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Speaker 1: no question that the consumer is sort of, you know,

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Speaker 1: pulling a lot of weight, right, They're punching way above

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Speaker 1: of their weight. But I think if you want to

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Speaker 1: make the argument for the demise of the consumer, you

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Speaker 1: you gotta really you. I don't even know where to

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Speaker 1: where you'd go to find that. Um. I mean again,

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Speaker 1: let me be clear, I don't look through the world

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Speaker 1: with rose cover glasses, UM. But I think labor backdrops

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Speaker 1: incredibly tight wage pressures continue to build. UM. The level

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Speaker 1: of saving in the United States, whether it's sort of

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Speaker 1: just um consumer or total private saving, is incredibly elevated,

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Speaker 1: meaning that there's even some some cushion should should the

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Speaker 1: consumer sort of suffer through some about of of hesitation.

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Speaker 1: So I would say that it's really difficult to make

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Speaker 1: the case that the consumers about to roll over when

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Speaker 1: all evidence to the contrary, Right, the consumers and phenomenal

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Speaker 1: shape the division of the FED has turned into unity.

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Speaker 1: It saves for the last couple of weeks, which Mike

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Speaker 1: of that I just you know, and Tom and I

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Speaker 1: were talking about this on TV a little while ago.

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Speaker 1: I mean the fact that Evans, you know, wasn't one

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Speaker 1: of the folks looking for a cut after the not

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Speaker 1: after the most recently in the meeting prior. I mean

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Speaker 1: he he said he wasn't one of the folks looking

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Speaker 1: for a cut. I mean, I think for me that that,

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Speaker 1: I mean, we sort of had always thought that they

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Speaker 1: would have a hard time getting more cuts anyway, but

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Speaker 1: that really drove home for us. It's like, you know,

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Speaker 1: the hurdle for additional cuts right now is so significant, um,

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Speaker 1: when you have all these extreme doves basically on the

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Speaker 1: same page at this point. So I think it would

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Speaker 1: take real deterioration from here. By the way, let's not

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Speaker 1: forget next year is an election year. And while well,

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Speaker 1: while anyone who's done this for any lengthy period of time,

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Speaker 1: those that the FED has engaged in policy action during

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Speaker 1: election years, it usually takes a heck of a lot

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Speaker 1: for them to engage. So, um, I think FED on

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Speaker 1: hold is for for the for the coming year, is

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Speaker 1: absolutely the right call, which is the market seems to

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Speaker 1: be buying into So you're saying that you don't want

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Speaker 1: to be seen as having too too much of a

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Speaker 1: rose colored view of the world. But also you've never

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Speaker 1: been negative and this new line no, no, no no, that

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Speaker 1: you have never been negative. Yeah, you've been thankating, but

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Speaker 1: I'm saying you've been generally positive recently, absolutely, which has

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Speaker 1: been really easy. Okay, so you've generally been positive. You

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Speaker 1: also don't want to be too rosy. This nuance, I

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Speaker 1: think is getting lost in this market and difficult for

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Speaker 1: people to read because it has been so monolithic in

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Speaker 1: its story. Either the FED was backing it or trade

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Speaker 1: was going to torpedo it. What's the sort of trade

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Speaker 1: around this in terms of you know, does that mean

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Speaker 1: markets go up or down? Yeah? Yeah, So what I

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Speaker 1: would say is, I think, you know, one of the

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Speaker 1: things that we had built into our view was that

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Speaker 1: guilds would actually start to rise, uls will start to

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Speaker 1: rise only after we got a trade deal done. Now,

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Speaker 1: in fairness, we always thought a trade deal was going

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Speaker 1: to get done, but we've been thinking of it more

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Speaker 1: in terms of like, you know, sort of a first

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Speaker 1: half of event, like sort of you know, some sometime

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Speaker 1: early in the first half of the year you get

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Speaker 1: a trade deal done. So it's having a little bit

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Speaker 1: sooner than we thought. And so if you look at

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Speaker 1: our forecast, we had built in a rise and yields

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Speaker 1: in the second half of next year. Um, if you

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Speaker 1: they do sign this deal. Um, I think it's really

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Speaker 1: easy to make the case that yields continue to rise

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Speaker 1: from here. So I think it's it's not a good

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Speaker 1: backdrop from a from a yield perspective in the unit,

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Speaker 1: from a bond perspective in the United States, because yields

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Speaker 1: will rise. I think on the on the back of

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Speaker 1: this deal, I think the equity market and I think

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Speaker 1: our strategists are equity strategistm or listen in line with

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Speaker 1: this view as well. You know the equity market is

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Speaker 1: going to perform well again in the coming year too, right.

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Speaker 1: It's again if the fundamental pieces remaining place for that

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Speaker 1: to happen. It's really easy to make that case. Temple

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Speaker 1: Selly always great scay thoughts. Thanks to see your buddy

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Speaker 1: temple Selly obvious Capital Markets chief US Economists. We're fortunate

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Speaker 1: to have David Kirkpatrick in our Bloomberg Interactive broker fortunate

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Speaker 1: here there you go. David's a tech on me a

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Speaker 1: CEO and founders. So David, I know you you look

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Speaker 1: at all things tech, You've got it just a great

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Speaker 1: view of what's happening in Silicon Valley is what's going

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Speaker 1: on here with you know you look at Uber, you

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Speaker 1: look at if do you look at we work pulling

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Speaker 1: that deal, the Smile direct deal. There seems to be

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Speaker 1: a disconnect between private market valuations coming out of Silicon

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Speaker 1: Valley and soft Bank and public markets. What do you

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Speaker 1: what do you make of that? This year? Well, SoftBank

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Speaker 1: I think had a extreme impact on the market, the

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Speaker 1: private market's opinion about what a company could be worth

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Speaker 1: because but they believe massio Son believes he can be

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Speaker 1: a kingmaker. He can identify which CEOs can take a

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Speaker 1: company and make it into the next Facebook. I think

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Speaker 1: to some extent, the existence of Facebook in particular confused

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Speaker 1: a lot of people thinking that that could happen in

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Speaker 1: any industry. And that's sort of the logic behind investing

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Speaker 1: all that money in Uber or or we Work which

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Speaker 1: SoftBank did? I think we do now have something of

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Speaker 1: a bubble, which I think soft Bank is the single

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Speaker 1: biggest contributor to So in that sense, it's a problem.

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Speaker 1: It's a problem. So the the issue we need, we

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Speaker 1: need look at what massa Son is saying here is

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Speaker 1: full steam ahead, and where our vision is still very

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Speaker 1: much intact. We're gonna raise another hundred billion dollar fund.

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Speaker 1: We're gonna keep doing this. At what point, does you know,

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Speaker 1: Silicon Valley, maybe some of the more Sandhill Road folks

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Speaker 1: to venture capital folks in Silicon Valley push back a

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Speaker 1: little bit and say, listen, we have a voice at

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Speaker 1: this table. We think the valuations you're putting on some

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Speaker 1: of these companies is just too much. That's a good question,

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Speaker 1: I think in a lot of the companies. You know,

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Speaker 1: one of the things that's happened with soft Bank is

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Speaker 1: since they have been the lead investor on so many

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Speaker 1: subsequent rounds in specific companies, they keep raising the market

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Speaker 1: cap of companies that they so they're showing a paper

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Speaker 1: gain in their earlier investments, and a lot of other

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Speaker 1: Silicon Valley venture capitals are coming along with that. It's

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Speaker 1: hard for them to complain because if soft Bank is

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Speaker 1: willing to put in money into you know, we work

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Speaker 1: at forty seven billion and you're another VC to put

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Speaker 1: money in at five billion, you like that, right until

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Speaker 1: it's worth eight billion. Now, in many of these cases

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Speaker 1: that that deflation hasn't yet occurred. So I think in

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Speaker 1: general you're not see a massive reaction against SoftBank. People

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Speaker 1: just hope it continues to succeed. Well, here's my question.

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Speaker 1: If you are saying that there is something of a

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Speaker 1: bubble here, how does it burst? Well, I think it's

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Speaker 1: burst in Uber and we were cases already and that

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Speaker 1: has got a lot of people nervous. Do you think

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Speaker 1: that we've seen the extent of the pain there. Well,

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Speaker 1: here's one thing that I really think is going to

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Speaker 1: be closely followed, and that is what happens to the

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Speaker 1: money that that soft bank has thrown after bad in

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Speaker 1: the case of we Work, because they're putting even more

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Speaker 1: money in to save the company, right, they could have

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Speaker 1: sort of walked away. I think that's if if we

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Speaker 1: Work somehow stabilizes and finds a path to profitability, which

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Speaker 1: I can't see happening in any near term, but if

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Speaker 1: it were to happen, basically that stanches sort of a

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Speaker 1: whole flood of negative stuff that could otherwise happen. Um

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Speaker 1: also if uber could somehow figure out a way to

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Speaker 1: be profitable. Some people say their food delivery might be

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Speaker 1: the he it's a big part of their business, believe

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Speaker 1: it or not. But I don't see a big fundamental

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Speaker 1: shift happening in terms of the psychologys. Every time we

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Speaker 1: used to discuss these companies, we talk about how they've

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Speaker 1: disrupted the industry. To remember that disrupted was like the

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Speaker 1: buzz word of several years ago. Every conversation disruption, disruption.

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Speaker 1: They have destroyed industries, and I just wonder what happens

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Speaker 1: to these industries once these companies show they can't make

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Speaker 1: a profit. I don't fully buy that way of looking

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Speaker 1: at push back then place. I mean I think that

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Speaker 1: you know, well, I was saying this on TV before

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Speaker 1: you know. Masayoshi san has done something very positive in

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Speaker 1: the conviction he's had about the technology, the ability of

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Speaker 1: digital technology to transform global economies, and I believe that

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Speaker 1: is happening. And I think he has been ultimately the

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Speaker 1: one of the biggest cheerleaders for that and put his

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Speaker 1: money where his mouth was. And I think that's not bad. Um.

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Speaker 1: I think many of these industries needed a in the

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Speaker 1: pants um, and I don't think that you've seen I

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Speaker 1: don't worry as much as you seem to worry about

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Speaker 1: the value destruction that's happened, say in the taxi industry,

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Speaker 1: which was an industry largely controlled by the mafia in

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Speaker 1: many cities. Right, so hey, you know it took a

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Speaker 1: tough guy like like Travis Kolanic to come in and

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Speaker 1: shake it up. That wasn't all bad. Devid Kirkpatrick will

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Speaker 1: continue the conversation another time to Economy CEO and founder.

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Speaker 1: Time is up. It's not that I don't want to argue.

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Speaker 1: What promise you might do? Please to say that phone

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Speaker 1: again and joining us now, Jeff, you ubs Weath Management,

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Speaker 1: head of the UK Investment Office, joining us out of London.

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Speaker 1: Good monitor, Jeff. We remain underweight equities, that's the line

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Speaker 1: from you guys. Still why Jeff world? You know right now,

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Speaker 1: We just think there needs to be a distinction between

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Speaker 1: pricing out downside of pricing in the upside. I think

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Speaker 1: these two are separate things, and uh, we may have them.

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Speaker 1: You started to confuse the two a bit, you know

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Speaker 1: at this point, and I think it's important to make

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Speaker 1: her that extinction. Look at ware learnings, growth sending you

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Speaker 1: just look at what economic growth is heading. I think

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Speaker 1: it's a bit too early to pop the champagne bottle

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Speaker 1: corks and for now. So Jeff, we got some European

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Speaker 1: economic data today, a little bit better on the margin.

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Speaker 1: What do you take of that? Well, I think it's

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Speaker 1: important to to look at what's better. So on the

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Speaker 1: services side, it's all you're looking a bit better. But

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Speaker 1: can we say the same for me manufacturing UM and

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Speaker 1: UM and taking a step back, what actually is you know,

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Speaker 1: driving Europe? You know what other drivers of Europe? If

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Speaker 1: you look at German factory orders, you now today UM

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Speaker 1: down your five point four percent year on their shore.

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Speaker 1: The month of meter number was better. But I still think,

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Speaker 1: you know, there's quite a few challenges up ahead and

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Speaker 1: UM that will only strengthen the conversation where the fiscal

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Speaker 1: is going to happen. Jeff, how much pushback do you

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Speaker 1: get from your clients? UM? Not not as much as

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Speaker 1: one would think. I think, you know, I think for

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Speaker 1: the last two or three years, UM, with the exception

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Speaker 1: of maybe you know, December, you know, last year, it

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Speaker 1: has been a case of owning this rally reluctantly. I

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Speaker 1: think the whole markets reluctant ball than right now US

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Speaker 1: equities into being a big overweighting, for example, because there's

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Speaker 1: simply a lack of alternatives. And I don't think that's

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Speaker 1: some change you know, too much. However, I would I

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Speaker 1: would say that this talk of late cycle probably you know,

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Speaker 1: has compared to even a year or two ago and

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Speaker 1: has really come off. So we're just taking a day

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Speaker 1: at a time. I don't think there's too much you know, pushback.

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Speaker 1: M there is a bit of an opportunity cost of

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Speaker 1: not being more aggressively in the market, and it's something

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Speaker 1: that will be cognizant of. Jeff, let's talk about the

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Speaker 1: trade negotiations. The so called negotiation gaps have closed. I

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Speaker 1: just wonder what's left. Is that a cause for concern

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Speaker 1: or hope it's for a course of confirm per se,

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Speaker 1: because I just still think there's a disconnect between what

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Speaker 1: the market's expecting and what realistically on the two sides,

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Speaker 1: and it can actually put forward, you know, for the

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Speaker 1: best part of the summer in your China has been stressed.

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Speaker 1: It's important to separate the structural issues. On the second

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Speaker 1: track of you know, I p of techno things like

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Speaker 1: that you know from the tariff side of things. You know,

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Speaker 1: tariff side was always going to be the easier one

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Speaker 1: in a polical window dressing un versus the long term

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Speaker 1: structural issues which will be a multi even a multi

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Speaker 1: decade in a process. So I don't think those gaps

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Speaker 1: are that wide at all our markets, and you're looking

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Speaker 1: for more at this point, and on balance, I would

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Speaker 1: say yes, So I think you know that's where the

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Speaker 1: risk coope is some disappointment that we have to bear

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Speaker 1: in mind. A shorter term relief that's always welcome and

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Speaker 1: it's something that we can look forward to. A lot

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Speaker 1: of people have been talking about how trade it has

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Speaker 1: the trade tensions have already impeded certain businesses. Are there

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Speaker 1: certain businesses that you stopped investing in because of the

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Speaker 1: effect of the ongoing trade skirmishes. I really think you're

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Speaker 1: seeing this across the board, and you know that's why

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Speaker 1: it's important to keep relatively conservative in a growth forecast

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Speaker 1: for the next year. On the one hand, you know,

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Speaker 1: for companies directly involved in trade on the online um,

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Speaker 1: you know these products will be hurt by terrorists. You

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Speaker 1: know clearly they need to hold back on investment. But

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Speaker 1: then that will faller down through the supply chain. Right. So, um,

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Speaker 1: if there's a general now slowed down in growth, take

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Speaker 1: Eurozone for example, that's being impacted and sot down the

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Speaker 1: supply chain, it will impact services or will impact manufacturing

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Speaker 1: as well. So the inputs into the company's being invested.

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Speaker 1: So I think that that's holding back investment in general

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Speaker 1: right now, it's holding back Ktex and it's something that

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Speaker 1: again governments may have to step in terms of fiscal

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Speaker 1: There's just a view that things have got better, that

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Speaker 1: the probability of escalation risk between the United States and

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Speaker 1: China has diminished, and Brexit risks have receded as well.

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Speaker 1: Jeff the Prime Minister, is speaking outside Number ten Downing Street.

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Speaker 1: At the moment the campaigning has already started. The government,

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Speaker 1: he says, has an oven ready Brexit deal. What's the

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Speaker 1: guidebook for the next five weeks in the UK and

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Speaker 1: the issues around Brexit for markets? Well, I think rule

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Speaker 1: number one is don't believe a thing that the Poles

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Speaker 1: are saying. Right, We've all been there before on both

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Speaker 1: sides of the Atlantic, so I think that's important to

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Speaker 1: take into account. And also, you know, manifesto promises you

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Speaker 1: know that whether you know that can be realized there's

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Speaker 1: a separate issue. But I do think we can see

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Speaker 1: some convergence in terms of everyone's going to be pledging

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Speaker 1: to actually just spend a bit more so you know,

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Speaker 1: that may make life a bit easier, you know, for um,

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Speaker 1: those word a bit about growth. Um, But I would

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Speaker 1: say to follow things that they go along, and just

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Speaker 1: in the bear in mind the steal right now, you

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Speaker 1: know that's be with it's it's a it's a withdrawal agreement.

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Speaker 1: You know, we're still some ways to go before establishing

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Speaker 1: the long term relationship between the European Union and the UK.

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Speaker 1: And of course you know when we get to the

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Speaker 1: twelfth the evening, they throw out some surprises and we'll

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Speaker 1: just go from there. So, Jeff, it's interesting. I think

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Speaker 1: it's one could argue, as you just mentioned, don't believe

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Speaker 1: the polls. Uh, and so I'm going to come down

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Speaker 1: to the election. That sounds to me like I'm just

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Speaker 1: sitting on the sidelines here. I mean, you just it's

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Speaker 1: way too close to call here. Lots of different things

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Speaker 1: could actually occur here. Is that kind of what you're

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Speaker 1: hearing from some of your clients? Totally. And if you

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Speaker 1: look at how we're positioning for this signatic effex. For example,

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Speaker 1: the move sterling we've seen is the pricing out of

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Speaker 1: no deal risk right for similar trade now you want

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Speaker 1: to price out the risk of a total breakdown or

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Speaker 1: further escalation. But to go beyond say one thirty two

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Speaker 1: and cable, you know, to make a dash through one

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Speaker 1: thirty five or two one forty, you know, that's going

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Speaker 1: to be a more medium term issue. We have to

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Speaker 1: establish you know, a you know what happens after the

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Speaker 1: election and being a what that long term relationship is

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Speaker 1: going to be as well. So for now it's a

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Speaker 1: holding pattern. You've taken off your underway to remove some

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Speaker 1: of your shorts, but that's again different from going long.

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Speaker 1: So if there is some sort of Brexit agreement in

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Speaker 1: the near term, are you going to flood into London

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Speaker 1: real estate? Well, um, now there have been plenty of

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Speaker 1: them questions on that, you know from our international clients.

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Speaker 1: You know that's a traditional um source of investment, you know,

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Speaker 1: waiting for John to send in his bids as well.

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Speaker 1: But at the same time, I do think you know

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Speaker 1: that will depend you know, on the overall in your

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Speaker 1: regulatory framework of tax frameworking along with you know what

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Speaker 1: the government policies and you know are as well, because

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Speaker 1: if you look at the market here, it really goes

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Speaker 1: well beyond Brexit. Clearly the uncertainly has more help you

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Speaker 1: know that than many moving parts to that side of things,

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Speaker 1: and inquiries certainly picking up this year compared to the

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Speaker 1: last two years. Just for the record, I'm not sure

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Speaker 1: I'm meeting the minimum requirements to open a UBS account well,

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Speaker 1: but but but I think I do. Anyway, what do

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Speaker 1: you think that you buy London real estate, John, or

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Speaker 1: do you think it would be countryside? Are you trying

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Speaker 1: to get me in trouble totally on this show. Look,

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Speaker 1: I think there's going to be a lot of appetite

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Speaker 1: for London real estate given that it's been held back

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Speaker 1: so much Jeff. But you've got to get over several obstacles. One,

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Speaker 1: it's not just the divorce agreement. The next is the agreement.

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Speaker 1: Beyond that, what does the future relationship look like? And

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Speaker 1: I just wanted Jeff to that degree. The wall of

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Speaker 1: capital that some people think exists that is waiting to

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Speaker 1: go into the UK. Does it wait for the election

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Speaker 1: to end, or does it wait for the next stage

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Speaker 1: of discussions with the European Union to close. I don't

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Speaker 1: think it will need to wait for the next European

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Speaker 1: discussion because if you look at some of the international interest,

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Speaker 1: very sort of that over the last decade or two,

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Speaker 1: you know, has been for the UK's relationship, you know,

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Speaker 1: for the EU. I think, you know, that's just an

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Speaker 1: asset allocation diversification. They see this as an attractive market.

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Speaker 1: So I think that side of things, unless you're an

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Speaker 1: entrepreneur that wants to invest in the business and let's say,

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Speaker 1: you know, there's a commercial element to it, perhaps the

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Speaker 1: negotiations will matter for private individuals. I think that's secondary.

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Speaker 1: Just before we let you go, Jeff, let's get a

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Speaker 1: conviction call from you. What's the big call from you

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00:20:26,240 --> 00:20:29,680
Speaker 1: guys at the moment? So still, I would say we

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00:20:29,760 --> 00:20:33,360
Speaker 1: will push back against the notion of adding aggressively to risk.

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00:20:33,640 --> 00:20:36,800
Speaker 1: We prefer to be somewhat underway. Clip the coupon and

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00:20:36,840 --> 00:20:38,879
Speaker 1: you clip the dividend and then just focus on the

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Speaker 1: growth outlook and see, you know, where the next catalystmer

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00:20:41,280 --> 00:20:43,840
Speaker 1: comes from. But saying underway for now, hey, Jeff, always

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00:20:43,840 --> 00:20:45,320
Speaker 1: great to catch how with you if you changed the call,

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00:20:45,480 --> 00:20:47,240
Speaker 1: no doubt, give us a call and we'll catch you up.

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Speaker 1: Jeff you Ubs Wealth Management, head of the UK Investment

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00:20:50,440 --> 00:20:53,800
Speaker 1: Office joining us out of London. On trade talks, Brexit

441
00:20:53,880 --> 00:20:56,040
Speaker 1: and where to put your money or where not to

442
00:20:56,080 --> 00:21:13,680
Speaker 1: put it? Well, the on again, off again momentum behind

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00:21:13,800 --> 00:21:16,199
Speaker 1: the trade deal between the US and China seems to

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00:21:16,200 --> 00:21:18,720
Speaker 1: be on again. A momentum again seems to be building

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00:21:18,760 --> 00:21:20,800
Speaker 1: a little bit. Maybe even get a phase one type

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00:21:20,800 --> 00:21:23,960
Speaker 1: of deals signed next month that would be good for

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00:21:24,000 --> 00:21:27,320
Speaker 1: financial markets, including emerging markets to get the latest. We

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Speaker 1: welcome Esther Law. Esther is in emerging markets fixed and

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00:21:30,720 --> 00:21:35,479
Speaker 1: can putfolio manager for a Mundi asset management located in London. Esther,

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00:21:35,560 --> 00:21:37,879
Speaker 1: thanks so much for joining us. So give us your

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00:21:37,880 --> 00:21:40,719
Speaker 1: sense of kind of how you think this trade negotiation

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00:21:40,840 --> 00:21:42,919
Speaker 1: is going and and what might be in a in

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00:21:42,960 --> 00:21:45,880
Speaker 1: a trade one, a phase one type of deal, and

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Speaker 1: kind of what you think that would mean for merging markets. Yeah,

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00:21:49,640 --> 00:21:53,080
Speaker 1: good morning, Um, I think they do like a mini

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00:21:53,160 --> 00:21:56,240
Speaker 1: deal is somehow already priced team. But nonetheless, when we

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00:21:56,320 --> 00:22:00,000
Speaker 1: have a confirmed mini deal or phase mondeal comes through,

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00:22:00,400 --> 00:22:03,840
Speaker 1: there should be some relief in emerging market access, especially

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00:22:03,880 --> 00:22:07,359
Speaker 1: on near methas, which has been lagging the move in

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00:22:07,400 --> 00:22:11,040
Speaker 1: the hactornity bonds in particular. You know, I gotta say,

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00:22:11,080 --> 00:22:14,440
Speaker 1: we get these headlines every day, President Trump coming out

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00:22:14,600 --> 00:22:17,520
Speaker 1: neither indicating it's it's a go or it's not today

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00:22:17,520 --> 00:22:20,719
Speaker 1: it's a go. On the Chinese side, we have gotten

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00:22:20,760 --> 00:22:24,040
Speaker 1: a little bit of conflicting messages. Did overnight there was

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Speaker 1: a report saying that they were worried that they were

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00:22:27,400 --> 00:22:30,639
Speaker 1: giving in too much to Washington and not getting enough

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Speaker 1: in return. How concerned are you about that type of

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00:22:34,320 --> 00:22:37,240
Speaker 1: line out of the PBOC and out of out of Premier,

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00:22:38,280 --> 00:22:42,960
Speaker 1: out of I think I've seen so many back and forth.

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Speaker 1: Like you said, Um, the market is much more massaged

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00:22:46,440 --> 00:22:50,560
Speaker 1: and used to this uncertainty. UM. I am a bit

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00:22:50,600 --> 00:22:54,280
Speaker 1: worried more because of the price actually getting ahead of itself,

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00:22:54,720 --> 00:22:57,440
Speaker 1: thinking that there will be more than just like let's

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00:22:57,480 --> 00:23:01,439
Speaker 1: you opposing the teiant Um. But I really don't expect

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00:23:01,520 --> 00:23:05,720
Speaker 1: a very smooth and straight road on this trade war. UM.

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00:23:05,760 --> 00:23:07,960
Speaker 1: I do think that there will be constant back and

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00:23:08,000 --> 00:23:11,560
Speaker 1: forth and volatility which just become part of our lives.

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00:23:11,560 --> 00:23:14,080
Speaker 1: So esther as it relates to emerging markets. I mean,

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00:23:14,720 --> 00:23:17,840
Speaker 1: maybe I'm just too risk adverse, but it's awful difficult

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00:23:18,280 --> 00:23:22,119
Speaker 1: for the media envisioned investors taking any type of bullish

481
00:23:22,160 --> 00:23:27,320
Speaker 1: stance on inver emerging markets generally, given this trade uncertainty UM,

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00:23:27,400 --> 00:23:29,320
Speaker 1: which may or may not be resolved in the next

483
00:23:29,359 --> 00:23:34,600
Speaker 1: couple of months, I think, yes, the trade uncertainty has

484
00:23:34,680 --> 00:23:36,760
Speaker 1: you know, will not be a positive fine and it

485
00:23:36,800 --> 00:23:41,200
Speaker 1: will continue to weigh on more growth forecast going forward. However,

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00:23:41,320 --> 00:23:43,159
Speaker 1: we I think we are in the world that is

487
00:23:43,240 --> 00:23:47,680
Speaker 1: offset by the very loose monetary policy globally and that

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00:23:47,800 --> 00:23:54,720
Speaker 1: has really make them fixed income in particular looking very attractive. UM. Ultimately,

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00:23:54,760 --> 00:23:57,199
Speaker 1: I think the EM debt returns has a lot to

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00:23:57,320 --> 00:24:00,720
Speaker 1: do with the influence and should we have the negative

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00:24:01,119 --> 00:24:05,040
Speaker 1: real persistence in the you know, in the coming months,

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00:24:05,040 --> 00:24:08,679
Speaker 1: that would still be relatively supportive for EM fixed income,

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00:24:09,080 --> 00:24:12,840
Speaker 1: whereas for EM effects and e M the M equities

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00:24:13,119 --> 00:24:18,040
Speaker 1: that will be a bit more uncree uncertainty. Esther, what's

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00:24:18,080 --> 00:24:22,959
Speaker 1: your highest conviction that right now? I think, UM, we

496
00:24:23,320 --> 00:24:26,159
Speaker 1: have to go through our usual list UM to to

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00:24:26,359 --> 00:24:31,399
Speaker 1: select a good fundamentals and ideally which without as less

498
00:24:31,440 --> 00:24:34,959
Speaker 1: noise as possible. UM. I quite like Russia because I

499
00:24:35,000 --> 00:24:38,000
Speaker 1: believe the fundamentals are very strong, and they've gone through

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00:24:39,320 --> 00:24:43,200
Speaker 1: a lot of adjustments in terms of adjusting to sanctions,

501
00:24:43,240 --> 00:24:46,600
Speaker 1: so in a way they are already quite closed in

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00:24:46,680 --> 00:24:50,640
Speaker 1: many manners um and the execution of the fiscal rule

503
00:24:50,800 --> 00:24:55,040
Speaker 1: has been very very resilient and that's helping the fiscal

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00:24:55,119 --> 00:25:01,600
Speaker 1: matrix becoming very very sound. So of Latin America, I

505
00:25:01,720 --> 00:25:04,160
Speaker 1: know there's so much political uncertainty down there, it makes

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00:25:04,160 --> 00:25:07,639
Speaker 1: it very difficult for investors to look at that area

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00:25:07,680 --> 00:25:10,639
Speaker 1: with conviction. How are you approaching kind of Latin America

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00:25:10,760 --> 00:25:14,119
Speaker 1: broadly defined or there any areas that you find of interest.

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00:25:15,880 --> 00:25:18,919
Speaker 1: I think at the moment, with the reason new strokes,

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00:25:19,400 --> 00:25:22,280
Speaker 1: Brazil is coming out as a more positive on the

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00:25:22,320 --> 00:25:25,679
Speaker 1: margin um, the ethics is still going to be a

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00:25:25,720 --> 00:25:29,280
Speaker 1: big bonnatw um, but I think the passing of the

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00:25:29,440 --> 00:25:33,400
Speaker 1: pension reforms have removed a big uncertainty out of the way,

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00:25:33,960 --> 00:25:38,080
Speaker 1: and that should start to see external investors going back

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00:25:38,240 --> 00:25:42,159
Speaker 1: more into the income market. So you said the central

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00:25:42,200 --> 00:25:44,840
Speaker 1: banks sort of giving a bit of a tail wind

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00:25:45,040 --> 00:25:49,240
Speaker 1: to emerging markets, although today it does seem like the

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00:25:49,280 --> 00:25:52,320
Speaker 1: mood is that central banks are moving towards a holding

519
00:25:52,359 --> 00:25:55,760
Speaker 1: pattern rather than an easing pattern. Is that enough just

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00:25:55,800 --> 00:25:59,639
Speaker 1: a holding pattern here across the board to continue to

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00:25:59,680 --> 00:26:04,320
Speaker 1: supp or emerging markets. I think the holding patterns in

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00:26:04,320 --> 00:26:07,720
Speaker 1: a way actually positive for the currency. To to stop

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00:26:07,760 --> 00:26:11,919
Speaker 1: the new spread being narrower, we only need to hold

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00:26:12,160 --> 00:26:17,600
Speaker 1: plot of readatively positive breatuum externally. I think um, that

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00:26:17,840 --> 00:26:21,840
Speaker 1: is still occase for you in death Esther Law. Thank

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00:26:21,840 --> 00:26:24,760
Speaker 1: you so much for joining us. Esther is Emerging markets

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00:26:24,760 --> 00:26:28,600
Speaker 1: fixing comfort Polio manager for a Munday Asset Managers Management

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00:26:28,680 --> 00:26:31,920
Speaker 1: joining us from London. Thanks for listening to the Bloomberg

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00:26:31,960 --> 00:26:37,920
Speaker 1: Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,

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00:26:38,280 --> 00:26:42,480
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at

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00:26:42,520 --> 00:26:46,800
Speaker 1: Tom Keane before the podcast. You can always catch us worldwide.

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Speaker 1: I'm Bloomberg Radio