WEBVTT - Surveillance: Tech Disruption Wasn't All Bad, Kirkpatrick Says 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.160 Bloomberg dot Com, and of course, on the Bloomberg. Do 0:00:27.200 --> 0:00:29.320 you want to us on this program here in New York, 0:00:29.320 --> 0:00:32.880 Tompus say, obvious Capital Markets Chief US Economists, Good morning 0:00:32.920 --> 0:00:34.839 to Tom. Hey, how are you guys doing? You and 0:00:34.880 --> 0:00:38.000 I have talked before. Sorry, go on, go on. Sorry, 0:00:37.840 --> 0:00:43.840 he's not still behind me right now, Dunkings Shadow literally lazy, 0:00:45.200 --> 0:00:47.479 I can, I can have now checked the internal system. 0:00:47.479 --> 0:00:51.200 He's walked out of the building. Sorry, I'm sorry. Confusing 0:00:51.200 --> 0:00:53.680 a return to trent growth with a journey to somewhere 0:00:53.680 --> 0:00:55.640 a whole lot more worrying. We've talked about this so 0:00:55.680 --> 0:00:59.400 many times through much of now some people confusing full 0:00:59.440 --> 0:01:02.200 employment with a cyclical peak in labor market conditions. You've 0:01:02.200 --> 0:01:05.440 written about that, just explore it further for us. Yeah, So, 0:01:05.680 --> 0:01:06.880 you know, I think one of the one of the 0:01:06.880 --> 0:01:08.800 interesting things is I think people get caught up in 0:01:08.920 --> 0:01:11.480 sort of headlines and and I don't mean news headlines, 0:01:11.520 --> 0:01:14.640 I mean sort of you know, headline economic stuff. Uh. 0:01:14.760 --> 0:01:16.920 And one of the things I think people get lost 0:01:16.959 --> 0:01:20.680 in is particularly if you're looking at employment to population 0:01:20.760 --> 0:01:24.640 ratios or if you're looking at on labor force participation rates. 0:01:24.800 --> 0:01:26.120 And I think if you look at the headlines on 0:01:26.160 --> 0:01:28.200 these things, um, you know, they're they have not really 0:01:28.240 --> 0:01:30.000 done all that much, and I think it leads people 0:01:30.000 --> 0:01:32.120 to sort of, you know, draw this conclusion that, um, 0:01:32.160 --> 0:01:34.080 you know, we're we're still not even remotely close to 0:01:34.080 --> 0:01:36.559 full employment. But what we've been saying to people is okay, 0:01:36.560 --> 0:01:39.480 but you can't look at these those specific headlines. You 0:01:39.480 --> 0:01:42.120 need to look at the cyclical part rate. You need 0:01:42.160 --> 0:01:45.080 to look at the cyclical employment to population ratio. And 0:01:45.080 --> 0:01:47.160 when you do that, um and and sorry just to 0:01:47.240 --> 0:01:49.600 digress cyclically. What I mean is, you know, sort of 0:01:49.600 --> 0:01:52.560 the prime working age cohort, so the fifty four year olds, 0:01:52.600 --> 0:01:54.440 and when you do that, and when you do that, 0:01:54.480 --> 0:01:59.360 what you see is that those measures have all improved dramatically, dramatically, 0:01:59.600 --> 0:02:01.840 which from from our perspective, again, if you look at 0:02:02.040 --> 0:02:03.720 you know, whether it's the part rate or the employment 0:02:03.800 --> 0:02:07.320 population ratio, we're above where we were in even certainly 0:02:07.320 --> 0:02:09.799 in the previous cycle. Um, and so it's really easy 0:02:09.880 --> 0:02:11.359 to make the case that you're you know, if you're 0:02:11.360 --> 0:02:14.520 not at full employment, you're really really close. I guess 0:02:14.520 --> 0:02:18.880 when I see the headlines of of economic stuff, as 0:02:18.880 --> 0:02:21.080 you put in, my big question is should I be 0:02:21.240 --> 0:02:23.720 bullish or bearish today? Right? I mean, is that basically 0:02:23.800 --> 0:02:25.680 what's the what's sort of the much so given the 0:02:25.680 --> 0:02:28.760 fact that we are seeing better employment than expected? Is 0:02:28.760 --> 0:02:30.440 that a bull argument or a bar argue? You know, 0:02:30.639 --> 0:02:32.760 it's funny and and and Jonathan and I have certainly 0:02:32.800 --> 0:02:35.519 had this conversation before. Um, it seems all of a 0:02:35.560 --> 0:02:38.680 sudden now today, like literally over the last week or two, 0:02:38.919 --> 0:02:41.600 that good is good again, which is which is sort 0:02:41.600 --> 0:02:43.920 of perverse, because good was bad, bad was good. We 0:02:43.960 --> 0:02:46.160 had all these like weird sort of iterations, right, which 0:02:46.200 --> 0:02:48.639 is utterly ridiculous in every way. But now, all of 0:02:48.680 --> 0:02:52.079 a sudden today good is good and um so, But 0:02:52.080 --> 0:02:54.079 but again, I stress, this is over the last week 0:02:54.160 --> 0:02:55.880 or two, and I'm defining that in terms of sort 0:02:55.880 --> 0:02:57.440 of the many clients that I speak to on a 0:02:57.440 --> 0:03:01.000 pretty regular basis. And and the thing I find utterly 0:03:01.040 --> 0:03:04.400 amusing about that is nothing has changed, literally, nothing has 0:03:04.480 --> 0:03:05.960 changed over the last week or two. You know, all 0:03:05.960 --> 0:03:07.440 of a sudden, everyone is like feeling a little bit 0:03:07.480 --> 0:03:09.840 better about the backdrop. So I don't know whether it is, 0:03:09.919 --> 0:03:12.000 you know, maybe people are, you know, sort of coming 0:03:12.000 --> 0:03:14.200 to grips with the reality that maybe something is going 0:03:14.240 --> 0:03:16.679 to get done on trade, although I would hasten to 0:03:16.720 --> 0:03:19.440 add that anytime anyone gave me like the bearer case 0:03:19.480 --> 0:03:21.359 for things, it never started it off with trade. But 0:03:21.360 --> 0:03:24.320 but again, maybe maybe that's fair. Um, you know, maybe 0:03:24.639 --> 0:03:27.400 maybe it's the equity markets up year to day. I 0:03:27.480 --> 0:03:28.960 don't know what it is, but all of a sudden, 0:03:28.960 --> 0:03:30.720 people are feel a little bit better about the backdrop 0:03:30.760 --> 0:03:32.880 in I think that's I think that's all well and good. 0:03:32.880 --> 0:03:34.680 But I think I'm just waiting for the next shoe 0:03:34.680 --> 0:03:37.640 to drop now, because I'm telling you, the vast majority 0:03:37.680 --> 0:03:39.480 of people that I spoke to prior to the last 0:03:39.520 --> 0:03:42.640 week or two have been overwhelmingly negative. Um, but now 0:03:42.640 --> 0:03:44.120 all of a sudden, people are feeling a little bit 0:03:44.120 --> 0:03:46.640 better about the stuff. I mean, which I find silly 0:03:46.640 --> 0:03:48.760 because I'm not sure that they're basing on anything. Sound 0:03:48.840 --> 0:03:51.720 So Tom, could that next? Sorry, I don't want to 0:03:51.720 --> 0:03:53.920 make sure that point is not left out there, and ether. 0:03:54.240 --> 0:03:56.960 I've never thought that people should be negative, um, but 0:03:57.400 --> 0:03:59.920 they were so sorry. So would that next shoe to 0:04:00.040 --> 0:04:02.840 drop be the consumer? The consumers arguably the only thing 0:04:02.880 --> 0:04:05.880 holding up this economy, and maybe because of the adam 0:04:05.960 --> 0:04:09.160 near full employment. Yeah, sure, I mean, I think there's 0:04:09.160 --> 0:04:11.160 no question that the consumer is sort of, you know, 0:04:11.440 --> 0:04:14.040 pulling a lot of weight, right, They're punching way above 0:04:14.600 --> 0:04:17.279 of their weight. But I think if you want to 0:04:17.279 --> 0:04:20.200 make the argument for the demise of the consumer, you 0:04:20.760 --> 0:04:23.200 you gotta really you. I don't even know where to 0:04:23.279 --> 0:04:25.680 where you'd go to find that. Um. I mean again, 0:04:25.720 --> 0:04:27.440 let me be clear, I don't look through the world 0:04:27.440 --> 0:04:30.840 with rose cover glasses, UM. But I think labor backdrops 0:04:30.839 --> 0:04:34.280 incredibly tight wage pressures continue to build. UM. The level 0:04:34.279 --> 0:04:36.359 of saving in the United States, whether it's sort of 0:04:36.400 --> 0:04:40.560 just um consumer or total private saving, is incredibly elevated, 0:04:40.560 --> 0:04:42.600 meaning that there's even some some cushion should should the 0:04:42.600 --> 0:04:46.080 consumer sort of suffer through some about of of hesitation. 0:04:46.480 --> 0:04:49.040 So I would say that it's really difficult to make 0:04:49.040 --> 0:04:51.520 the case that the consumers about to roll over when 0:04:51.600 --> 0:04:55.160 all evidence to the contrary, Right, the consumers and phenomenal 0:04:55.200 --> 0:04:58.080 shape the division of the FED has turned into unity. 0:04:58.160 --> 0:05:00.200 It saves for the last couple of weeks, which Mike 0:05:00.240 --> 0:05:01.960 of that I just you know, and Tom and I 0:05:02.000 --> 0:05:03.560 were talking about this on TV a little while ago. 0:05:03.600 --> 0:05:06.400 I mean the fact that Evans, you know, wasn't one 0:05:06.400 --> 0:05:09.479 of the folks looking for a cut after the not 0:05:09.560 --> 0:05:11.360 after the most recently in the meeting prior. I mean 0:05:11.360 --> 0:05:14.040 he he said he wasn't one of the folks looking 0:05:14.080 --> 0:05:16.200 for a cut. I mean, I think for me that that, 0:05:16.440 --> 0:05:18.040 I mean, we sort of had always thought that they 0:05:18.040 --> 0:05:19.919 would have a hard time getting more cuts anyway, but 0:05:20.000 --> 0:05:21.960 that really drove home for us. It's like, you know, 0:05:22.000 --> 0:05:25.360 the hurdle for additional cuts right now is so significant, um, 0:05:25.680 --> 0:05:28.640 when you have all these extreme doves basically on the 0:05:28.680 --> 0:05:31.599 same page at this point. So I think it would 0:05:31.600 --> 0:05:33.960 take real deterioration from here. By the way, let's not 0:05:33.960 --> 0:05:36.840 forget next year is an election year. And while well, 0:05:36.880 --> 0:05:39.080 while anyone who's done this for any lengthy period of time, 0:05:39.120 --> 0:05:41.200 those that the FED has engaged in policy action during 0:05:41.240 --> 0:05:43.480 election years, it usually takes a heck of a lot 0:05:44.120 --> 0:05:46.680 for them to engage. So, um, I think FED on 0:05:46.720 --> 0:05:48.800 hold is for for the for the coming year, is 0:05:48.800 --> 0:05:50.520 absolutely the right call, which is the market seems to 0:05:50.520 --> 0:05:52.040 be buying into So you're saying that you don't want 0:05:52.040 --> 0:05:54.479 to be seen as having too too much of a 0:05:54.520 --> 0:05:57.360 rose colored view of the world. But also you've never 0:05:57.400 --> 0:06:00.960 been negative and this new line no, no, no no, that 0:06:01.000 --> 0:06:03.560 you have never been negative. Yeah, you've been thankating, but 0:06:03.800 --> 0:06:07.120 I'm saying you've been generally positive recently, absolutely, which has 0:06:07.120 --> 0:06:09.919 been really easy. Okay, so you've generally been positive. You 0:06:09.960 --> 0:06:12.920 also don't want to be too rosy. This nuance, I 0:06:12.960 --> 0:06:16.039 think is getting lost in this market and difficult for 0:06:16.080 --> 0:06:19.359 people to read because it has been so monolithic in 0:06:19.360 --> 0:06:21.479 its story. Either the FED was backing it or trade 0:06:21.480 --> 0:06:25.360 was going to torpedo it. What's the sort of trade 0:06:25.400 --> 0:06:27.920 around this in terms of you know, does that mean 0:06:27.960 --> 0:06:30.560 markets go up or down? Yeah? Yeah, So what I 0:06:30.560 --> 0:06:32.320 would say is, I think, you know, one of the 0:06:32.360 --> 0:06:34.280 things that we had built into our view was that 0:06:34.320 --> 0:06:36.720 guilds would actually start to rise, uls will start to 0:06:36.839 --> 0:06:38.640 rise only after we got a trade deal done. Now, 0:06:38.880 --> 0:06:40.760 in fairness, we always thought a trade deal was going 0:06:40.800 --> 0:06:42.360 to get done, but we've been thinking of it more 0:06:42.360 --> 0:06:43.720 in terms of like, you know, sort of a first 0:06:43.760 --> 0:06:46.159 half of event, like sort of you know, some sometime 0:06:46.240 --> 0:06:47.400 early in the first half of the year you get 0:06:47.440 --> 0:06:49.280 a trade deal done. So it's having a little bit 0:06:49.320 --> 0:06:50.960 sooner than we thought. And so if you look at 0:06:50.960 --> 0:06:53.600 our forecast, we had built in a rise and yields 0:06:53.720 --> 0:06:56.839 in the second half of next year. Um, if you 0:06:57.080 --> 0:06:59.320 they do sign this deal. Um, I think it's really 0:06:59.320 --> 0:07:01.200 easy to make the case that yields continue to rise 0:07:01.200 --> 0:07:02.920 from here. So I think it's it's not a good 0:07:02.920 --> 0:07:05.560 backdrop from a from a yield perspective in the unit, 0:07:05.680 --> 0:07:07.880 from a bond perspective in the United States, because yields 0:07:07.880 --> 0:07:10.240 will rise. I think on the on the back of 0:07:10.280 --> 0:07:12.600 this deal, I think the equity market and I think 0:07:12.600 --> 0:07:15.600 our strategists are equity strategistm or listen in line with 0:07:15.640 --> 0:07:17.320 this view as well. You know the equity market is 0:07:17.320 --> 0:07:19.320 going to perform well again in the coming year too, right. 0:07:19.360 --> 0:07:21.560 It's again if the fundamental pieces remaining place for that 0:07:21.600 --> 0:07:23.840 to happen. It's really easy to make that case. Temple 0:07:23.880 --> 0:07:26.120 Selly always great scay thoughts. Thanks to see your buddy 0:07:26.160 --> 0:07:43.440 temple Selly obvious Capital Markets chief US Economists. We're fortunate 0:07:43.440 --> 0:07:46.560 to have David Kirkpatrick in our Bloomberg Interactive broker fortunate 0:07:46.800 --> 0:07:48.880 here there you go. David's a tech on me a 0:07:48.920 --> 0:07:51.600 CEO and founders. So David, I know you you look 0:07:51.640 --> 0:07:53.840 at all things tech, You've got it just a great 0:07:53.920 --> 0:07:57.040 view of what's happening in Silicon Valley is what's going 0:07:57.120 --> 0:07:59.240 on here with you know you look at Uber, you 0:07:59.280 --> 0:08:01.320 look at if do you look at we work pulling 0:08:01.360 --> 0:08:04.120 that deal, the Smile direct deal. There seems to be 0:08:04.320 --> 0:08:07.840 a disconnect between private market valuations coming out of Silicon 0:08:07.920 --> 0:08:10.760 Valley and soft Bank and public markets. What do you 0:08:10.800 --> 0:08:12.720 what do you make of that? This year? Well, SoftBank 0:08:12.960 --> 0:08:17.960 I think had a extreme impact on the market, the 0:08:18.040 --> 0:08:21.600 private market's opinion about what a company could be worth 0:08:22.400 --> 0:08:26.040 because but they believe massio Son believes he can be 0:08:26.080 --> 0:08:29.760 a kingmaker. He can identify which CEOs can take a 0:08:29.800 --> 0:08:32.439 company and make it into the next Facebook. I think 0:08:32.480 --> 0:08:36.280 to some extent, the existence of Facebook in particular confused 0:08:36.280 --> 0:08:38.480 a lot of people thinking that that could happen in 0:08:38.520 --> 0:08:41.600 any industry. And that's sort of the logic behind investing 0:08:41.720 --> 0:08:43.840 all that money in Uber or or we Work which 0:08:43.960 --> 0:08:47.400 SoftBank did? I think we do now have something of 0:08:47.440 --> 0:08:50.280 a bubble, which I think soft Bank is the single 0:08:50.280 --> 0:08:54.599 biggest contributor to So in that sense, it's a problem. 0:08:54.600 --> 0:08:56.560 It's a problem. So the the issue we need, we 0:08:56.559 --> 0:08:59.200 need look at what massa Son is saying here is 0:09:00.320 --> 0:09:02.400 full steam ahead, and where our vision is still very 0:09:02.440 --> 0:09:04.840 much intact. We're gonna raise another hundred billion dollar fund. 0:09:04.880 --> 0:09:08.200 We're gonna keep doing this. At what point, does you know, 0:09:08.600 --> 0:09:11.720 Silicon Valley, maybe some of the more Sandhill Road folks 0:09:11.720 --> 0:09:14.680 to venture capital folks in Silicon Valley push back a 0:09:14.720 --> 0:09:17.400 little bit and say, listen, we have a voice at 0:09:17.440 --> 0:09:19.719 this table. We think the valuations you're putting on some 0:09:19.760 --> 0:09:22.880 of these companies is just too much. That's a good question, 0:09:22.920 --> 0:09:24.560 I think in a lot of the companies. You know, 0:09:24.679 --> 0:09:26.599 one of the things that's happened with soft Bank is 0:09:26.720 --> 0:09:29.160 since they have been the lead investor on so many 0:09:29.440 --> 0:09:33.840 subsequent rounds in specific companies, they keep raising the market 0:09:33.880 --> 0:09:36.680 cap of companies that they so they're showing a paper 0:09:36.840 --> 0:09:39.199 gain in their earlier investments, and a lot of other 0:09:39.200 --> 0:09:42.000 Silicon Valley venture capitals are coming along with that. It's 0:09:42.040 --> 0:09:44.360 hard for them to complain because if soft Bank is 0:09:44.360 --> 0:09:46.480 willing to put in money into you know, we work 0:09:46.520 --> 0:09:49.400 at forty seven billion and you're another VC to put 0:09:49.440 --> 0:09:52.360 money in at five billion, you like that, right until 0:09:52.600 --> 0:09:55.800 it's worth eight billion. Now, in many of these cases 0:09:55.840 --> 0:09:58.840 that that deflation hasn't yet occurred. So I think in 0:09:58.920 --> 0:10:02.480 general you're not see a massive reaction against SoftBank. People 0:10:02.520 --> 0:10:05.200 just hope it continues to succeed. Well, here's my question. 0:10:05.240 --> 0:10:07.600 If you are saying that there is something of a 0:10:07.640 --> 0:10:11.800 bubble here, how does it burst? Well, I think it's 0:10:11.840 --> 0:10:15.000 burst in Uber and we were cases already and that 0:10:15.040 --> 0:10:17.199 has got a lot of people nervous. Do you think 0:10:17.200 --> 0:10:19.880 that we've seen the extent of the pain there. Well, 0:10:19.920 --> 0:10:21.520 here's one thing that I really think is going to 0:10:21.600 --> 0:10:24.880 be closely followed, and that is what happens to the 0:10:24.960 --> 0:10:29.040 money that that soft bank has thrown after bad in 0:10:29.080 --> 0:10:31.560 the case of we Work, because they're putting even more 0:10:31.600 --> 0:10:33.760 money in to save the company, right, they could have 0:10:33.800 --> 0:10:37.080 sort of walked away. I think that's if if we 0:10:37.120 --> 0:10:41.280 Work somehow stabilizes and finds a path to profitability, which 0:10:41.600 --> 0:10:44.439 I can't see happening in any near term, but if 0:10:44.480 --> 0:10:48.680 it were to happen, basically that stanches sort of a 0:10:48.720 --> 0:10:53.520 whole flood of negative stuff that could otherwise happen. Um 0:10:53.720 --> 0:10:56.520 also if uber could somehow figure out a way to 0:10:56.559 --> 0:10:59.600 be profitable. Some people say their food delivery might be 0:10:59.720 --> 0:11:02.200 the he it's a big part of their business, believe 0:11:02.240 --> 0:11:06.320 it or not. But I don't see a big fundamental 0:11:06.360 --> 0:11:09.280 shift happening in terms of the psychologys. Every time we 0:11:09.360 --> 0:11:11.560 used to discuss these companies, we talk about how they've 0:11:11.559 --> 0:11:14.440 disrupted the industry. To remember that disrupted was like the 0:11:14.480 --> 0:11:18.239 buzz word of several years ago. Every conversation disruption, disruption. 0:11:18.800 --> 0:11:23.000 They have destroyed industries, and I just wonder what happens 0:11:23.000 --> 0:11:26.079 to these industries once these companies show they can't make 0:11:26.120 --> 0:11:28.720 a profit. I don't fully buy that way of looking 0:11:28.760 --> 0:11:30.920 at push back then place. I mean I think that 0:11:30.960 --> 0:11:34.800 you know, well, I was saying this on TV before 0:11:34.880 --> 0:11:40.160 you know. Masayoshi san has done something very positive in 0:11:40.240 --> 0:11:43.440 the conviction he's had about the technology, the ability of 0:11:43.559 --> 0:11:48.520 digital technology to transform global economies, and I believe that 0:11:48.679 --> 0:11:51.079 is happening. And I think he has been ultimately the 0:11:51.200 --> 0:11:53.840 one of the biggest cheerleaders for that and put his 0:11:53.920 --> 0:11:57.280 money where his mouth was. And I think that's not bad. Um. 0:11:57.400 --> 0:12:00.280 I think many of these industries needed a in the 0:12:00.320 --> 0:12:03.320 pants um, and I don't think that you've seen I 0:12:03.360 --> 0:12:05.640 don't worry as much as you seem to worry about 0:12:05.720 --> 0:12:09.040 the value destruction that's happened, say in the taxi industry, 0:12:09.080 --> 0:12:12.040 which was an industry largely controlled by the mafia in 0:12:12.120 --> 0:12:14.640 many cities. Right, so hey, you know it took a 0:12:14.640 --> 0:12:17.440 tough guy like like Travis Kolanic to come in and 0:12:17.480 --> 0:12:21.040 shake it up. That wasn't all bad. Devid Kirkpatrick will 0:12:21.040 --> 0:12:24.560 continue the conversation another time to Economy CEO and founder. 0:12:24.760 --> 0:12:26.400 Time is up. It's not that I don't want to argue. 0:12:26.480 --> 0:12:40.880 What promise you might do? Please to say that phone 0:12:40.920 --> 0:12:43.640 again and joining us now, Jeff, you ubs Weath Management, 0:12:43.679 --> 0:12:47.040 head of the UK Investment Office, joining us out of London. 0:12:47.040 --> 0:12:52.040 Good monitor, Jeff. We remain underweight equities, that's the line 0:12:52.040 --> 0:12:56.040 from you guys. Still why Jeff world? You know right now, 0:12:56.480 --> 0:12:58.840 We just think there needs to be a distinction between 0:12:59.120 --> 0:13:02.559 pricing out downside of pricing in the upside. I think 0:13:02.600 --> 0:13:06.000 these two are separate things, and uh, we may have them. 0:13:06.080 --> 0:13:07.800 You started to confuse the two a bit, you know 0:13:07.800 --> 0:13:09.640 at this point, and I think it's important to make 0:13:09.640 --> 0:13:12.360 her that extinction. Look at ware learnings, growth sending you 0:13:12.440 --> 0:13:14.400 just look at what economic growth is heading. I think 0:13:14.440 --> 0:13:16.440 it's a bit too early to pop the champagne bottle 0:13:17.000 --> 0:13:20.360 corks and for now. So Jeff, we got some European 0:13:20.360 --> 0:13:23.240 economic data today, a little bit better on the margin. 0:13:23.320 --> 0:13:26.280 What do you take of that? Well, I think it's 0:13:26.600 --> 0:13:29.600 important to to look at what's better. So on the 0:13:29.640 --> 0:13:32.120 services side, it's all you're looking a bit better. But 0:13:32.400 --> 0:13:35.600 can we say the same for me manufacturing UM and 0:13:35.320 --> 0:13:38.040 UM and taking a step back, what actually is you know, 0:13:38.120 --> 0:13:40.280 driving Europe? You know what other drivers of Europe? If 0:13:40.320 --> 0:13:42.920 you look at German factory orders, you now today UM 0:13:43.360 --> 0:13:45.360 down your five point four percent year on their shore. 0:13:45.400 --> 0:13:47.800 The month of meter number was better. But I still think, 0:13:47.800 --> 0:13:49.920 you know, there's quite a few challenges up ahead and 0:13:50.040 --> 0:13:52.720 UM that will only strengthen the conversation where the fiscal 0:13:52.800 --> 0:13:54.720 is going to happen. Jeff, how much pushback do you 0:13:54.760 --> 0:13:59.280 get from your clients? UM? Not not as much as 0:13:59.320 --> 0:14:01.240 one would think. I think, you know, I think for 0:14:01.240 --> 0:14:04.400 the last two or three years, UM, with the exception 0:14:04.400 --> 0:14:06.400 of maybe you know, December, you know, last year, it 0:14:06.400 --> 0:14:10.480 has been a case of owning this rally reluctantly. I 0:14:10.520 --> 0:14:14.040 think the whole markets reluctant ball than right now US 0:14:14.080 --> 0:14:17.280 equities into being a big overweighting, for example, because there's 0:14:17.280 --> 0:14:19.720 simply a lack of alternatives. And I don't think that's 0:14:19.760 --> 0:14:22.880 some change you know, too much. However, I would I 0:14:22.880 --> 0:14:25.080 would say that this talk of late cycle probably you know, 0:14:25.120 --> 0:14:27.160 has compared to even a year or two ago and 0:14:27.240 --> 0:14:29.560 has really come off. So we're just taking a day 0:14:29.600 --> 0:14:32.280 at a time. I don't think there's too much you know, pushback. 0:14:32.680 --> 0:14:35.240 M there is a bit of an opportunity cost of 0:14:35.560 --> 0:14:37.880 not being more aggressively in the market, and it's something 0:14:37.880 --> 0:14:40.240 that will be cognizant of. Jeff, let's talk about the 0:14:40.280 --> 0:14:44.360 trade negotiations. The so called negotiation gaps have closed. I 0:14:44.440 --> 0:14:46.800 just wonder what's left. Is that a cause for concern 0:14:46.880 --> 0:14:50.280 or hope it's for a course of confirm per se, 0:14:50.320 --> 0:14:52.640 because I just still think there's a disconnect between what 0:14:52.680 --> 0:14:55.880 the market's expecting and what realistically on the two sides, 0:14:55.920 --> 0:14:57.960 and it can actually put forward, you know, for the 0:14:58.000 --> 0:15:00.000 best part of the summer in your China has been stressed. 0:15:00.080 --> 0:15:03.200 It's important to separate the structural issues. On the second 0:15:03.240 --> 0:15:06.160 track of you know, I p of techno things like 0:15:06.200 --> 0:15:08.000 that you know from the tariff side of things. You know, 0:15:08.040 --> 0:15:09.800 tariff side was always going to be the easier one 0:15:10.200 --> 0:15:13.760 in a polical window dressing un versus the long term 0:15:13.800 --> 0:15:17.160 structural issues which will be a multi even a multi 0:15:17.200 --> 0:15:20.120 decade in a process. So I don't think those gaps 0:15:20.120 --> 0:15:24.360 are that wide at all our markets, and you're looking 0:15:24.400 --> 0:15:27.000 for more at this point, and on balance, I would 0:15:27.040 --> 0:15:28.400 say yes, So I think you know that's where the 0:15:28.520 --> 0:15:31.400 risk coope is some disappointment that we have to bear 0:15:31.400 --> 0:15:33.920 in mind. A shorter term relief that's always welcome and 0:15:33.960 --> 0:15:35.640 it's something that we can look forward to. A lot 0:15:35.640 --> 0:15:37.480 of people have been talking about how trade it has 0:15:37.760 --> 0:15:41.560 the trade tensions have already impeded certain businesses. Are there 0:15:41.560 --> 0:15:45.520 certain businesses that you stopped investing in because of the 0:15:45.560 --> 0:15:50.040 effect of the ongoing trade skirmishes. I really think you're 0:15:50.040 --> 0:15:52.560 seeing this across the board, and you know that's why 0:15:52.800 --> 0:15:55.640 it's important to keep relatively conservative in a growth forecast 0:15:55.640 --> 0:15:57.400 for the next year. On the one hand, you know, 0:15:57.440 --> 0:16:00.800 for companies directly involved in trade on the online um, 0:16:00.840 --> 0:16:03.480 you know these products will be hurt by terrorists. You 0:16:03.480 --> 0:16:06.080 know clearly they need to hold back on investment. But 0:16:06.160 --> 0:16:09.600 then that will faller down through the supply chain. Right. So, um, 0:16:09.640 --> 0:16:12.120 if there's a general now slowed down in growth, take 0:16:12.160 --> 0:16:15.200 Eurozone for example, that's being impacted and sot down the 0:16:15.200 --> 0:16:18.400 supply chain, it will impact services or will impact manufacturing 0:16:18.680 --> 0:16:21.360 as well. So the inputs into the company's being invested. 0:16:21.400 --> 0:16:23.920 So I think that that's holding back investment in general 0:16:24.000 --> 0:16:26.040 right now, it's holding back Ktex and it's something that 0:16:26.160 --> 0:16:28.400 again governments may have to step in terms of fiscal 0:16:28.880 --> 0:16:30.920 There's just a view that things have got better, that 0:16:30.960 --> 0:16:33.920 the probability of escalation risk between the United States and 0:16:34.000 --> 0:16:37.480 China has diminished, and Brexit risks have receded as well. 0:16:37.560 --> 0:16:40.600 Jeff the Prime Minister, is speaking outside Number ten Downing Street. 0:16:40.600 --> 0:16:43.640 At the moment the campaigning has already started. The government, 0:16:43.680 --> 0:16:47.280 he says, has an oven ready Brexit deal. What's the 0:16:47.400 --> 0:16:51.440 guidebook for the next five weeks in the UK and 0:16:51.480 --> 0:16:54.600 the issues around Brexit for markets? Well, I think rule 0:16:54.680 --> 0:16:56.400 number one is don't believe a thing that the Poles 0:16:56.400 --> 0:16:59.520 are saying. Right, We've all been there before on both 0:16:59.520 --> 0:17:02.400 sides of the Atlantic, so I think that's important to 0:17:02.440 --> 0:17:05.119 take into account. And also, you know, manifesto promises you 0:17:05.160 --> 0:17:08.840 know that whether you know that can be realized there's 0:17:08.840 --> 0:17:10.640 a separate issue. But I do think we can see 0:17:11.160 --> 0:17:13.720 some convergence in terms of everyone's going to be pledging 0:17:13.760 --> 0:17:15.320 to actually just spend a bit more so you know, 0:17:15.400 --> 0:17:18.200 that may make life a bit easier, you know, for um, 0:17:18.200 --> 0:17:21.359 those word a bit about growth. Um, But I would 0:17:21.359 --> 0:17:22.960 say to follow things that they go along, and just 0:17:23.040 --> 0:17:25.119 in the bear in mind the steal right now, you 0:17:25.119 --> 0:17:28.560 know that's be with it's it's a it's a withdrawal agreement. 0:17:28.640 --> 0:17:31.160 You know, we're still some ways to go before establishing 0:17:31.200 --> 0:17:33.960 the long term relationship between the European Union and the UK. 0:17:34.240 --> 0:17:36.119 And of course you know when we get to the 0:17:36.160 --> 0:17:38.600 twelfth the evening, they throw out some surprises and we'll 0:17:38.600 --> 0:17:40.800 just go from there. So, Jeff, it's interesting. I think 0:17:40.840 --> 0:17:43.080 it's one could argue, as you just mentioned, don't believe 0:17:43.080 --> 0:17:44.959 the polls. Uh, and so I'm going to come down 0:17:45.000 --> 0:17:46.960 to the election. That sounds to me like I'm just 0:17:46.960 --> 0:17:49.040 sitting on the sidelines here. I mean, you just it's 0:17:49.200 --> 0:17:51.720 way too close to call here. Lots of different things 0:17:51.720 --> 0:17:53.439 could actually occur here. Is that kind of what you're 0:17:53.480 --> 0:17:56.560 hearing from some of your clients? Totally. And if you 0:17:56.600 --> 0:17:59.440 look at how we're positioning for this signatic effex. For example, 0:17:59.520 --> 0:18:02.119 the move sterling we've seen is the pricing out of 0:18:02.160 --> 0:18:05.040 no deal risk right for similar trade now you want 0:18:05.040 --> 0:18:07.480 to price out the risk of a total breakdown or 0:18:07.680 --> 0:18:12.280 further escalation. But to go beyond say one thirty two 0:18:12.320 --> 0:18:14.560 and cable, you know, to make a dash through one 0:18:14.600 --> 0:18:16.919 thirty five or two one forty, you know, that's going 0:18:16.960 --> 0:18:18.560 to be a more medium term issue. We have to 0:18:18.640 --> 0:18:20.840 establish you know, a you know what happens after the 0:18:20.840 --> 0:18:23.520 election and being a what that long term relationship is 0:18:23.560 --> 0:18:25.280 going to be as well. So for now it's a 0:18:25.280 --> 0:18:27.720 holding pattern. You've taken off your underway to remove some 0:18:27.800 --> 0:18:30.240 of your shorts, but that's again different from going long. 0:18:30.520 --> 0:18:33.639 So if there is some sort of Brexit agreement in 0:18:33.680 --> 0:18:35.920 the near term, are you going to flood into London 0:18:36.000 --> 0:18:40.600 real estate? Well, um, now there have been plenty of 0:18:40.680 --> 0:18:45.000 them questions on that, you know from our international clients. 0:18:45.040 --> 0:18:48.080 You know that's a traditional um source of investment, you know, 0:18:48.119 --> 0:18:49.960 waiting for John to send in his bids as well. 0:18:50.359 --> 0:18:52.199 But at the same time, I do think you know 0:18:52.280 --> 0:18:54.719 that will depend you know, on the overall in your 0:18:54.720 --> 0:18:57.800 regulatory framework of tax frameworking along with you know what 0:18:57.840 --> 0:19:00.520 the government policies and you know are as well, because 0:19:00.520 --> 0:19:02.360 if you look at the market here, it really goes 0:19:02.400 --> 0:19:04.879 well beyond Brexit. Clearly the uncertainly has more help you 0:19:04.880 --> 0:19:08.440