WEBVTT - Surveillance: Not Optimistic For Trade Deal, Alden Says 0:00:09.880 --> 0:00:13.840 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Leye. 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 --> 0:00:28.200 Bloomberg dot Com, and of course on the Bloomberg. Joining 0:00:28.280 --> 0:00:30.480 us away in on the situation in Europe at the moment, 0:00:30.480 --> 0:00:32.760 I pleased to say, Jacob kurfect Art joins us now 0:00:32.840 --> 0:00:37.680 Petterson Institute for International Economics, Senior Fellow, Jacob, I want 0:00:37.720 --> 0:00:40.879 to begin with Italy just briefly, if we may the government, 0:00:40.920 --> 0:00:44.599 Just how sustainable do you think that new government is? Well? 0:00:44.640 --> 0:00:47.199 I think it all depends on the internal coherence of 0:00:47.240 --> 0:00:51.000 the new two coalition partners. It's very clear from there, 0:00:51.720 --> 0:00:54.920 with the gift shop of a governing program, that they 0:00:54.920 --> 0:00:57.640 want to run an extension eyotiscal policy and that this 0:00:57.720 --> 0:01:00.400 is going to run into trouble with the European Commission 0:01:00.440 --> 0:01:02.600 and the rest of the EU. So the question is 0:01:02.680 --> 0:01:07.520 can they among themselves agree to structural reform and thereby 0:01:07.840 --> 0:01:11.400 gets acquiescence from the rest of the EU for an 0:01:11.400 --> 0:01:14.840 expansionary budget. If they can do that, I suspect they 0:01:14.840 --> 0:01:18.480 will actually be able to muddle through, and then the 0:01:18.600 --> 0:01:23.360 question is how does their big rival, Matteo Salvini fair 0:01:23.400 --> 0:01:27.160 in opposition. I think that is a really big question. 0:01:27.200 --> 0:01:30.759 He's got financial scandals for the Russia. We will see 0:01:30.800 --> 0:01:34.839 what happens on the immigration front um and the economy. 0:01:34.920 --> 0:01:37.000 Might you know, they may be a positive surprise, you 0:01:37.040 --> 0:01:39.640 never know. One thing that I find interesting, Jacob, is 0:01:39.680 --> 0:01:42.240 that if I look at, for example, the Italian ten 0:01:42.319 --> 0:01:45.360 year bond yields have reached a record low of less 0:01:45.360 --> 0:01:47.880 than one percent, although up a little bit at zero 0:01:47.960 --> 0:01:51.080 point eight nine percent, uh, and it seems like an 0:01:51.080 --> 0:01:54.240 ideal time for Italy to borrow money to try to 0:01:54.280 --> 0:01:57.440 bolster its economy. Do you expect them to do that? 0:01:57.520 --> 0:02:00.280 I mean, given the fact that that probably would rank 0:02:00.320 --> 0:02:03.880 of the European Union. No, I certainly explained them to try. 0:02:04.200 --> 0:02:06.960 I mean, I think they are going to, uh, you know, 0:02:07.080 --> 0:02:10.520 come up with some sort of expansionary budget. I think 0:02:10.520 --> 0:02:13.239 you're going to be looking at a physical stimure, certainly 0:02:13.280 --> 0:02:17.520 not of one percent of gdp UM. But as you said, 0:02:17.919 --> 0:02:20.640 I think it's not it's not clear that you can 0:02:20.639 --> 0:02:24.239 claim that this is despite Italy's existing high levels of debt. 0:02:24.720 --> 0:02:28.160 Is really a huge issue for sustainability, even where youths 0:02:28.200 --> 0:02:31.200 are although we would also have to say that the 0:02:31.639 --> 0:02:34.720 recent decline in bonds is sort of pricing in expected 0:02:34.760 --> 0:02:38.919 more ECB TWI so if that doesn't materialize, maybe sentimental 0:02:39.000 --> 0:02:41.720 shift and also Jacob to some degree as well with 0:02:41.840 --> 0:02:44.320 pricing in the fact that Massa Salvenia is not getting 0:02:44.360 --> 0:02:47.160 the election he desires. So I think that's the key question. 0:02:47.240 --> 0:02:48.840 We go back to the one we asked at the start, 0:02:49.240 --> 0:02:52.720 just how sustainable is this government? What does Mattaw Salveni 0:02:52.840 --> 0:02:55.640 have to do to achieve in opposition? If he can 0:02:55.760 --> 0:02:57.799 Jacob to bring this government down? How does he go 0:02:57.919 --> 0:03:00.920 about doing that? But I think there are two There 0:03:00.960 --> 0:03:03.399 are two strategies for him. Either, he said a fit 0:03:03.520 --> 0:03:08.200 back and wait for the government's internal inconsistencies and friction 0:03:08.320 --> 0:03:12.480 to boil over UH and they basically have another divorce 0:03:12.600 --> 0:03:16.440 in the new comership. UH. That would basically UH sort 0:03:16.480 --> 0:03:19.440 of allow him to run a campaign and saying see, 0:03:19.480 --> 0:03:23.000 I'm the safe pair of hands, etcetera, etcetera. But I 0:03:23.040 --> 0:03:26.040 think that that's a risky strategy for him because uh, 0:03:26.440 --> 0:03:31.440 this government may actually last potentially several years UM. And 0:03:31.560 --> 0:03:34.960 then the joker for me is also uh, this big 0:03:35.360 --> 0:03:40.440 financial scandal that the League Party has with potential Russian funding. 0:03:41.320 --> 0:03:43.960 We I think it's there is it's taste to say 0:03:44.000 --> 0:03:47.680 that the new government is going to push this very aggressively. Uh, 0:03:47.760 --> 0:03:50.600 and who knows what is what is buried there and 0:03:50.920 --> 0:03:57.440 may come into fourth alternative. Salvini can go flat out euroskeptic, 0:03:58.280 --> 0:04:02.000 run as a pure populist against uh, you know, the 0:04:02.080 --> 0:04:05.360 European Union, the euro and everything like that. But again 0:04:05.680 --> 0:04:09.360 that's a very big risk for him because he needs, 0:04:09.800 --> 0:04:12.840 uh the support of more centrist orders if he's going 0:04:12.880 --> 0:04:16.440 to get anywhere near the thirty five the vote that 0:04:16.520 --> 0:04:19.320 he pulled before he pulled out of the government. So 0:04:19.400 --> 0:04:23.480 things look more positive in Italy maybe in in the 0:04:23.600 --> 0:04:26.600 United Kingdom. And I am pointing to the idea that 0:04:26.680 --> 0:04:29.240 perhaps the idea of a hard Brexit is less on 0:04:29.279 --> 0:04:32.440 the table because Boris Johnson has had his hands tied. 0:04:32.560 --> 0:04:36.159 As john Well put it well earlier today, I'm just wondering, 0:04:36.600 --> 0:04:39.040 how likely do you think it is that the United 0:04:39.120 --> 0:04:42.560 Kingdom is actually better poised right now to avoid not 0:04:42.640 --> 0:04:44.440 only a hard Brexit but come to some sort of 0:04:44.480 --> 0:04:48.000 resolution uh that keeps it at least somewhat aligned with 0:04:48.120 --> 0:04:51.760 the European Union. I already think the very short one. 0:04:51.920 --> 0:04:55.359 The chances of a no deal Brexit on October thirty 0:04:55.480 --> 0:05:01.440 first have declined very dramatically. Uh. What we are looking at, however, 0:05:01.560 --> 0:05:05.760 in my opinion in the UK, is another general election, 0:05:06.720 --> 0:05:13.760 either shortly before October thirty one or sometimes more likely 0:05:13.880 --> 0:05:19.000 sometime in November, being after a likely expansion of Articles 0:05:19.040 --> 0:05:22.560 fifty and postponement of Brexit. The key problem, however, in 0:05:22.640 --> 0:05:27.600 my opinion, is that that general election is entirely it 0:05:27.640 --> 0:05:30.200 is entirely possible, at least for someone in my pay 0:05:30.240 --> 0:05:34.920 grade to predict that election. You could have Boris Johnson 0:05:35.040 --> 0:05:38.400 winning that election. If he does, then there's no doubt 0:05:38.440 --> 0:05:42.280 that he will claim a mandate for a no deal Brexit, 0:05:42.400 --> 0:05:47.440 and this will happen probably in early twenty Alternatively, you 0:05:47.560 --> 0:05:52.440 could see the Labor Party with some coalition partners win, 0:05:52.680 --> 0:05:55.800 in which case you're almost certainly looking at a second 0:05:55.920 --> 0:06:00.200 referendum on Brexit and the potentially canceling on Brexit. Or 0:06:00.480 --> 0:06:03.760 you could have another Home Parliament like the one we 0:06:03.880 --> 0:06:07.520 have today with no clear a governing majority, and then 0:06:08.040 --> 0:06:10.760 the question is what will happen then at that point, 0:06:10.880 --> 0:06:14.840 I think a second referendum on Brexit is probably also likely, 0:06:14.960 --> 0:06:17.400 only the prot that is going to get messier. But 0:06:17.600 --> 0:06:19.280 what I will say is the bottom line is that 0:06:19.440 --> 0:06:22.919 the acute uncertainty concerning the UK has just been postponed 0:06:23.000 --> 0:06:25.320 by maybe a month or two. And Jacob, it guess 0:06:25.360 --> 0:06:28.560 even harder to protect the election because of course Brexit 0:06:28.680 --> 0:06:31.320 remained leave is not divided by party lines. On top 0:06:31.400 --> 0:06:33.680 of that, if the experience of twenty seventeen is anything 0:06:33.760 --> 0:06:35.800 to go by, the last time we had an election 0:06:35.880 --> 0:06:38.760 in the UK, Jeremy Corbyn didn't exactly run on a 0:06:38.800 --> 0:06:41.320 Brexit platform, did he remain or leave? He made it 0:06:41.360 --> 0:06:43.160 about other issues And I just wonder is that what 0:06:43.240 --> 0:06:46.320 we're in store forth we get another election, Jacob, Will 0:06:46.400 --> 0:06:48.560 it be a situation where it's not about Brexit, it's 0:06:48.560 --> 0:06:52.200 about almost everything else. I mean, that's certainly what Jeremy 0:06:52.279 --> 0:06:55.560 Corbyn were like. I think he's That's why he, I think, 0:06:55.920 --> 0:06:58.800 is likely to push for an election date after October 0:06:58.880 --> 0:07:02.480 thirty one, because one that undermines Boris Johnson sort of 0:07:02.560 --> 0:07:05.640 pledged to you know, leave the EU, do or die. 0:07:06.520 --> 0:07:09.920 But secondly it allows uh Corban, as you say, to 0:07:10.080 --> 0:07:16.160 run on other reversal of austerity, etcetera, etcetera. So he's 0:07:16.200 --> 0:07:19.000 gonna try to frame it that way. Alternatively, of both, 0:07:19.040 --> 0:07:22.080 Boris Johnson is gonna try to frame this election as somewhere, 0:07:22.080 --> 0:07:24.120 you know, you can choose between no deal of Brexit 0:07:24.240 --> 0:07:27.560 with him or perhaps the bigger evil, which would be 0:07:27.800 --> 0:07:31.360 Prime Minister Jeremy Corbyn. Um. So there's going to be 0:07:31.480 --> 0:07:34.320 a big fight over the narratives of this election. But 0:07:34.360 --> 0:07:37.240 the reality is that the to the traditional two party 0:07:37.320 --> 0:07:40.160 system in the U K. Is breaking down, and now 0:07:40.280 --> 0:07:44.120 you have this new emerging almost political identities that people 0:07:44.320 --> 0:07:48.080 vote on whether they are leavers or remainders, and that 0:07:48.240 --> 0:07:53.160 Trump's pretty much everything else, giving you an entirely unpredictable 0:07:53.200 --> 0:07:56.080 electoral situation. In my opinion, Jacob is great to catch 0:07:56.160 --> 0:07:58.200 Oboy to get your thoughts on range of topics, including 0:07:58.240 --> 0:08:01.520 Italy and Brexit. Jacob Okay count that Peterson Institute for 0:08:01.600 --> 0:08:20.560 International Economics, the senior fellow dollar strength the story up 0:08:20.640 --> 0:08:23.440 until yesterday. Let's bring in as the rykout, shall we, 0:08:23.560 --> 0:08:26.480 comments bank FX strategist. That's to walk me through your 0:08:26.520 --> 0:08:31.200 base case for the US dollar. Please, Well, the focus 0:08:31.360 --> 0:08:34.520 right now is of course, now that there is a 0:08:34.600 --> 0:08:37.480 better sentiment with respect to trade talks, focus will be 0:08:37.800 --> 0:08:40.920 um on the ECB meeting next week and the FAT 0:08:41.040 --> 0:08:44.640 meeting the week afterwards. So right now it's central banks 0:08:44.679 --> 0:08:47.240 back in to the forefront um, which means that we 0:08:47.320 --> 0:08:50.360 could see some further downside at least in the short term, 0:08:50.400 --> 0:08:53.640 as we expect quite as substantially than picketed by the ECB, 0:08:54.160 --> 0:08:57.480 while the raid cuts by the FAT should be priced in. 0:08:57.800 --> 0:09:00.640 And as already said, we had a suppositive surprised by 0:09:00.720 --> 0:09:04.760 the ADP employment um report, so UM there is no 0:09:04.880 --> 0:09:09.560 reason right now for the market to bet on substantially 0:09:09.640 --> 0:09:12.600 a weak careers dollar. So as soon as the sentiment 0:09:12.800 --> 0:09:16.160 um with respect to the trade conflict of price and um, 0:09:16.280 --> 0:09:19.120 I think it's back to back to the central bank. 0:09:19.480 --> 0:09:21.240 So if you if it's back to the central banks, 0:09:21.280 --> 0:09:22.920 we've got to talk about some of the hawk ish 0:09:23.040 --> 0:09:26.000 comments we've gotten out of ECB officials basically pushing back 0:09:26.040 --> 0:09:29.440 against the idea of a bazuka or more bond purchases 0:09:29.559 --> 0:09:32.120 or even cutting interest rates, are cutting the deposit rate. 0:09:32.480 --> 0:09:34.959 Do you think that they are the majority or do 0:09:35.040 --> 0:09:39.360 you think that they are just a very vocal minority. UM. Yeah, 0:09:39.400 --> 0:09:41.920 well that's little be actually the game changer with respect 0:09:41.960 --> 0:09:44.839 to the decision UM next Thursday, because interest rate cuts 0:09:44.880 --> 0:09:47.400 are largely priced in, so what's going to drive your 0:09:47.480 --> 0:09:51.760 dollar is the unconventional monetary policy measures. And it is 0:09:52.320 --> 0:09:55.319 interesting that we have such a vocal outcome of the 0:09:55.400 --> 0:09:59.719 hawks ahead of the meeting. UM. We still think that 0:09:59.840 --> 0:10:02.680 the chances higher for them to be actually a vocal minority, 0:10:02.720 --> 0:10:05.400 because that's not that that's surprising. We've heard that before, 0:10:06.280 --> 0:10:10.160 but in the end it was always UM my drug 0:10:10.600 --> 0:10:14.200 basically or my drugs a view that basically UM set 0:10:14.280 --> 0:10:19.000 the stage at the decision UM. So yes, it's surprising 0:10:19.040 --> 0:10:22.520 that they come out this number, but we've had that 0:10:22.640 --> 0:10:25.560 before and it didn't change anything. And in the end 0:10:25.640 --> 0:10:29.319 we already had also comments about that we need something 0:10:29.360 --> 0:10:33.800 substantial now that exceeds markets expectation UM to have a 0:10:33.840 --> 0:10:37.280 bigger market impact, and UM, I think that's also something 0:10:37.360 --> 0:10:40.840 they easy to be UH Council will consider next Thursday. 0:10:41.040 --> 0:10:42.920 I guess the question is when you say it's all 0:10:42.960 --> 0:10:45.960 about the central banks, Interestingly, it hasn't been so clear 0:10:46.040 --> 0:10:49.000 cut when it comes to f X trading that it 0:10:49.080 --> 0:10:51.320 has been all about the central banks recently. What makes 0:10:51.400 --> 0:10:53.760 you think going forward that's going to be the main 0:10:53.880 --> 0:10:57.880 driver rather than just economic strength. Well, it's the only 0:10:58.080 --> 0:11:01.120 going to be the big biggest driver or the bigger driver, 0:11:01.200 --> 0:11:05.000 I guess in the next two weeks UM, mainly because 0:11:05.600 --> 0:11:09.000 some attention has been taking off the trade talks. Everybody 0:11:09.080 --> 0:11:12.360 now expects basically calm with respect to this topic um 0:11:12.679 --> 0:11:17.440 ahead of the October talks UM. So now the focus 0:11:17.520 --> 0:11:19.840 has shifted a little bit. It will definitely go back 0:11:19.960 --> 0:11:23.440 to trade, to the trade conflict and hence the economic 0:11:23.520 --> 0:11:27.640 consequence and economic strength after the central banks. But I 0:11:27.679 --> 0:11:32.200 think that's not you know, like, what's the main focus 0:11:32.800 --> 0:11:35.120 in the in the very short term at least because 0:11:35.320 --> 0:11:38.400 this topic has been set aside at least overnight as 0:11:38.440 --> 0:11:40.240 the racle Thank you so much for being with us 0:11:40.520 --> 0:11:43.360 as your racle of a commerce bank a G the 0:11:43.480 --> 0:12:00.480 effect strategist. They're looking at the dollar today. Let's get 0:12:00.520 --> 0:12:03.160 some opinion on what's going on with the United Kingdom. 0:12:03.200 --> 0:12:05.160 We're looking right now at the pound having its best 0:12:05.200 --> 0:12:08.800 to day rally since November of last year. What has 0:12:08.920 --> 0:12:11.839 changed though? Really? Let's bring in John Author's Bloomberg Opinion 0:12:12.320 --> 0:12:15.400 calumnist and uh an executive editor as a senior writer 0:12:15.600 --> 0:12:19.280 at Bloomberg Market. So, John, we were talking yesterday about this, 0:12:19.480 --> 0:12:23.480 but what really has changed to make the outlook so 0:12:23.559 --> 0:12:27.600 much better for the United Kingdom right now? Well, nothing 0:12:27.760 --> 0:12:30.160 is great, but as far as the market is concerned, 0:12:30.520 --> 0:12:34.320 there is one catastrophic outcome that is much less likely, 0:12:34.400 --> 0:12:38.800 which is leaving the EU without a deal. All kinds 0:12:38.840 --> 0:12:42.240 of other horror stories that still remain very possible, but 0:12:42.400 --> 0:12:48.679 the possibilities of logistical delays, medicines not being people even 0:12:48.720 --> 0:12:52.920 suggesting Heathrow would close down, the kind of horrors that 0:12:53.080 --> 0:12:56.160 people talk about with no deal now do appear very 0:12:56.280 --> 0:12:59.840 much less likely. We've now established that Boris Johnson can't 0:12:59.840 --> 0:13:02.679 you and force of election, Okay, So the the idea 0:13:02.760 --> 0:13:06.400 here is that if Boris Johnson can't get either a 0:13:06.480 --> 0:13:09.199 new election, he can't get his own party to get 0:13:09.240 --> 0:13:12.319 on board with him. Uh And And basically Parliament is 0:13:12.440 --> 0:13:14.640 fighting back and saying we're going to take measures to 0:13:14.760 --> 0:13:18.240 not allow a hard Brexit. That that all is enough 0:13:18.559 --> 0:13:21.839 to make the chances of a no deal Brexit incredibly low. 0:13:22.080 --> 0:13:26.000 Is that the idea here, that is the market assumption, 0:13:26.200 --> 0:13:29.319 and I think on balance it's correct, it's certainly not 0:13:29.520 --> 0:13:32.800 out of the question. You Nigel Forage hasn't gone away. 0:13:33.320 --> 0:13:36.400 He could yet make great gains in an an election. 0:13:36.720 --> 0:13:40.439 The chances of no deal on October thirty one are 0:13:40.760 --> 0:13:43.760 now very slim. So I guess that the question is, 0:13:43.800 --> 0:13:46.680 what then, actually does happen? You know? If no deal 0:13:46.720 --> 0:13:50.440 Brexit doesn't happen, you know what, how do we How 0:13:50.440 --> 0:13:55.120 do we resolve this thing? Uh? My own personal opinion 0:13:55.320 --> 0:13:58.000 is that it requires Britain and Island to have very 0:13:58.440 --> 0:14:03.320 direct discussions with the other because the sticking points yet 0:14:03.400 --> 0:14:07.400 another example of Britain's past history coming back to haunt it. 0:14:07.480 --> 0:14:10.360 The sticking point is the is the Irish border issue, 0:14:10.440 --> 0:14:13.679 and as far as I can see, Brexit is unresolvable 0:14:13.840 --> 0:14:17.160 without coming to some resolution between those two countries and 0:14:17.160 --> 0:14:20.720 the communities in Northern Ireland over how to fix fix 0:14:20.840 --> 0:14:24.840 that very intractable problem that probably isn't going to happen. Well, 0:14:24.920 --> 0:14:28.000 but that that's that's, in my opinion, is the only 0:14:28.040 --> 0:14:31.440 way we solve it. All right. So here's here's a 0:14:31.480 --> 0:14:36.400 sort of a logistic question. Let's say Ireland gets together 0:14:36.720 --> 0:14:40.120 with the UK to talk about this. Who gets together 0:14:40.600 --> 0:14:46.080 from the UK with Ireland, who represents the UK's view Again, 0:14:46.120 --> 0:14:49.720 I don't see, and we've heard this from the negotiators 0:14:49.760 --> 0:14:54.000 earlier today. Boris at this point is unable to negotiate 0:14:54.160 --> 0:14:59.200 for the UK. We can't realistically have a further negotiation 0:14:59.320 --> 0:15:03.760 until to an election when somebody has some kind of 0:15:03.880 --> 0:15:07.640 a mandate. So, as far as I can see, the 0:15:07.800 --> 0:15:14.200 ampass cannot be lifted for quite a while yet. Well, okay, 0:15:14.240 --> 0:15:17.920 so let's say, um, there is no negotiation with Ireland. 0:15:18.120 --> 0:15:20.760 What we know so far is that the UK has 0:15:20.760 --> 0:15:23.680 also voted to push back to delay the hard brecks 0:15:23.960 --> 0:15:28.000 for the brexit. Excuse me, the actual UK and acting 0:15:28.040 --> 0:15:30.360 of the UK leaving the European Union in October one. 0:15:30.440 --> 0:15:34.880 They've pushed it back I believe three months, is that right? Yes? Okay, 0:15:34.920 --> 0:15:39.560 so there's past parliament, Parliament that it will do it 0:15:39.640 --> 0:15:42.280 will okay, So they'll have three more extra months. What 0:15:42.440 --> 0:15:44.720 do they do in those three extra months? And will 0:15:44.760 --> 0:15:49.440 Boris Johnson still be leading the discussions? I think we 0:15:49.520 --> 0:15:52.520 have to get together to have an election early in 0:15:52.600 --> 0:15:56.520 those three months. Probably. Sometimes the opposition parties are saying 0:15:56.560 --> 0:15:59.840 that once no deals over the thirty verse has been 0:16:00.000 --> 0:16:03.360 called out, which can't happen before Monday, but should happen, 0:16:03.440 --> 0:16:05.680 then then they would go for an election. I think 0:16:05.720 --> 0:16:07.440 it would be politically necessary for them to do so, 0:16:08.360 --> 0:16:11.680 so you would then have a new focus on on 0:16:12.240 --> 0:16:18.440 on negotiations starting on Halloween, and presumably the Irish issue 0:16:18.520 --> 0:16:22.240 has to come up. It's always possible that Nigel Farage 0:16:22.320 --> 0:16:25.080 becomes Prime Minister of the United Kingdom. I'm not sure 0:16:25.120 --> 0:16:28.600 I would buy too many UK assets if that happens. 0:16:28.840 --> 0:16:31.200 If it does, then we're we're leaving without a deal. 0:16:31.600 --> 0:16:35.200 It's always faintly possible that the Liberal Democrats somehow or 0:16:35.240 --> 0:16:38.160 other get into governments and they would regard a vote 0:16:38.160 --> 0:16:40.200 for them as a mandate to cancel Brexit all together, 0:16:40.720 --> 0:16:45.200 so that the panoply of possibilities is still very, very wide, 0:16:45.360 --> 0:16:49.200 but it starts after an election. Let's talk about the election. 0:16:49.880 --> 0:16:52.720 Could Boris Johnson win? I mean, who who would potentially 0:16:53.200 --> 0:16:58.440 beat him? Boris Johnson could very easily win. The first 0:16:58.560 --> 0:17:02.160 question is whether the people who wants Brexit will go 0:17:02.800 --> 0:17:07.000 with Boris or with Nigel Farage, who has the rival 0:17:07.440 --> 0:17:12.200 Brexit Party. Certainly a big part of Boris's strategy of 0:17:12.520 --> 0:17:17.639 going so aggressively forcing through her um h the notion 0:17:17.680 --> 0:17:21.840 of a of an ordeal was to neutralize Nigel Farage 0:17:22.040 --> 0:17:25.720 as a threat. It's unclear yet and it will depend 0:17:25.760 --> 0:17:28.399 on how good a politician he is, whether he gets 0:17:28.440 --> 0:17:31.280 those passionate Brexiteers out in the country and they're not 0:17:31.359 --> 0:17:34.280 quite half the population, but they're a large changel of population, 0:17:34.760 --> 0:17:37.840 to believe that Boris is the good guy, or to 0:17:37.960 --> 0:17:41.240 believe that Boris has messed this whole thing up, and 0:17:41.320 --> 0:17:44.040 then they ought to go with Forage. That's the first question. 0:17:44.560 --> 0:17:47.480 Then Jeremy Corbyn has to decide what he actually wants 0:17:47.520 --> 0:17:49.840 to do. He has always himself personally been an anti 0:17:49.880 --> 0:17:53.640 European all his most wild, most strong horse as young 0:17:53.760 --> 0:17:57.040 Left Britain tends to be very pro European. If he 0:17:57.119 --> 0:18:00.560 decides he's actually going to say actually we're staying, that 0:18:00.960 --> 0:18:04.080 will make a very big difference. And then and then 0:18:04.200 --> 0:18:06.680 we need to see how coherently that the Liberal Democrats 0:18:06.720 --> 0:18:09.320 at the moment to the you know, the traditional centrist 0:18:09.400 --> 0:18:13.919 party taking in MPs from both the two major parties 0:18:13.960 --> 0:18:20.200 because they are the ambiguously um anti Brexit party. We 0:18:20.359 --> 0:18:22.200 have a first past the post system in the UK, 0:18:22.400 --> 0:18:24.520 just like in the states whoever gets the most votes 0:18:25.359 --> 0:18:29.280 in anyone constituency gets to send People's Parliament. Very weird 0:18:29.359 --> 0:18:33.160 things can happen. Tony Blair won in an overall majority 0:18:33.200 --> 0:18:35.960 with thirty five a view of all votes. Clement actually 0:18:36.000 --> 0:18:38.640 lost to Winston Churchill even though he won forty eight 0:18:38.960 --> 0:18:41.080 per cent of the votes and Churchill and got forty 0:18:41.119 --> 0:18:46.720 four very very strange things can happen. And given given 0:18:46.800 --> 0:18:49.240 that you know that there there are at least four 0:18:50.200 --> 0:18:52.440 I haven't even mentioned the Nationalists in Scotland and Wales. 0:18:53.000 --> 0:18:55.200 Given given that there are at least four parties with 0:18:55.280 --> 0:18:59.880 a viable shots in every constituency, literally anything could happen. 0:19:00.359 --> 0:19:02.600 John Authors, thank you so much for being with us. 0:19:02.680 --> 0:19:05.600 John Author's Bloomberg Opinion columnists. You can find all his columns, 0:19:05.840 --> 0:19:09.000 as well as all the columns written by the columnists 0:19:09.359 --> 0:19:11.800 at O P I N GO on the Bloomberg or 0:19:11.800 --> 0:19:29.640 Bloomberg dot com slash Opinion. We are hearing a little 0:19:29.640 --> 0:19:32.440 bit more of a positive tone from China and the 0:19:32.600 --> 0:19:35.040 US in terms of possibly coming together to talk about 0:19:35.080 --> 0:19:38.040 talking about talking about talks. But there is a question 0:19:38.320 --> 0:19:41.280 of just how much damage the tariffs have already implemented 0:19:41.320 --> 0:19:44.439 and frankly, how much closer the United States has gotten 0:19:44.760 --> 0:19:47.960 to solving the problem that President Trump identified, which is 0:19:48.080 --> 0:19:51.080 that there are vast tracks of the population that have 0:19:51.160 --> 0:19:53.920 been left behind by globalization. So joining us down to 0:19:53.960 --> 0:19:57.879 discuss Ted Alden, who is a senior Fellow at cf 0:19:58.240 --> 0:20:00.840 R Council on Foreign Relations. It is also the author 0:20:01.040 --> 0:20:04.520 of a new book that's Failure to Adjust how Americans 0:20:04.600 --> 0:20:07.639 got left behind in the global economy. So Ted, I 0:20:07.720 --> 0:20:09.800 want to start there. I mean, we're talking about how 0:20:09.840 --> 0:20:11.320 there seems to be a little bit of an easy 0:20:11.320 --> 0:20:13.640 and the tensions. But the US did put more tariffs 0:20:13.960 --> 0:20:17.520 on China over the weekend. I'm wondering, have the tariffs 0:20:17.560 --> 0:20:21.440 that have been implemented so far gotten closer to bringing 0:20:21.600 --> 0:20:24.560 parts of the US population back into the folds that 0:20:24.680 --> 0:20:28.960 might have gotten left behind by globalization. Um, thanks for 0:20:28.960 --> 0:20:30.879 a question, Lisa, No, I mean, unfortunately, I think the 0:20:30.920 --> 0:20:33.280 evidence is pretty clear that they have not. I mean, 0:20:33.400 --> 0:20:37.200 the segments of the country that we're hit particularly hard 0:20:37.320 --> 0:20:43.600 in the two thousands and after, we're manufacturing dependent states Ohio, Michigan, Wisconsin, Pennsylvania, 0:20:44.240 --> 0:20:47.159 and we've seen no real recovery of manufacturing as a 0:20:47.240 --> 0:20:49.360 result of the tariffs on China. In fact, most recently 0:20:49.800 --> 0:20:53.159 what we're seeing is a slump in manufacturing. So so 0:20:53.359 --> 0:20:56.200 that generally strong economy has been good in these places. 0:20:56.280 --> 0:20:59.920 Low unemployment is great even in places that have have struggled. 0:21:00.280 --> 0:21:02.200 But the trade war I think has harmed these places 0:21:02.280 --> 0:21:05.520 rather than helping them. So just in terms of you know, 0:21:05.680 --> 0:21:09.879 the inequality, uh, income inequality in the US and the 0:21:10.080 --> 0:21:12.920 divide and you know, uh sections of the economy that 0:21:13.000 --> 0:21:15.359 have been left behind. What do you what do you 0:21:15.400 --> 0:21:17.720 think is a solution there? You know, we've seen again 0:21:17.840 --> 0:21:21.080 the shift from manufacturing to services and so on been 0:21:21.520 --> 0:21:25.160 clearly certain segments of the population have done much better 0:21:25.320 --> 0:21:28.879 at the expense of certain other segments. Yeah, I mean 0:21:28.960 --> 0:21:30.680 this is a huge challenge. I think in some ways 0:21:30.720 --> 0:21:35.600 it's the biggest challenge facing the United States right now. Geographically, Uh, 0:21:35.720 --> 0:21:38.080 the places that have done very well in a world 0:21:38.119 --> 0:21:41.520 of globalization and technology are the big cities, particularly the 0:21:41.560 --> 0:21:45.040 big coastal cities, and the manufacturing heartland, which had done 0:21:45.760 --> 0:21:49.000 very well in the sixties, seventies, even into the eighties, 0:21:49.119 --> 0:21:51.960 has has really suffered. I think there's a lot of 0:21:52.040 --> 0:21:54.040 things that can be done in terms of trying to 0:21:54.080 --> 0:21:58.639 attract business. I think infrastructure development these places, broadband across 0:21:58.680 --> 0:22:02.119 the country is way way overdue. I think there's a 0:22:02.200 --> 0:22:05.679 lot that can be done in terms of education and retraining. 0:22:06.119 --> 0:22:08.560 If you actually, if you look at the platforms of 0:22:08.720 --> 0:22:10.760 of a number of the Democratic Canada that this issue 0:22:10.880 --> 0:22:13.320 is very high on the agenda. There are some serious 0:22:13.359 --> 0:22:15.720 efforts out there, but it's a big problem and one 0:22:15.800 --> 0:22:19.080 we have not addressed seriously as a country. And blaming 0:22:19.119 --> 0:22:21.919 it on China, even though China is part of the problem, 0:22:22.040 --> 0:22:23.440 is not going to get you very far. This is 0:22:23.560 --> 0:22:25.560 largely a domestic problem that we've got to start out 0:22:25.600 --> 0:22:29.639 here in the United States. So you coordinated a task 0:22:29.760 --> 0:22:33.359 force that worked with the US Trade and Investment Policy Department, 0:22:33.440 --> 0:22:36.600 And I'm wondering, given your experience with government officials and 0:22:36.680 --> 0:22:40.239 sort of how trade policy gets created, do you can 0:22:40.280 --> 0:22:43.720 you give us any insight into how much we could 0:22:43.760 --> 0:22:46.480 glean from these talks about talks about talks about maybe 0:22:46.520 --> 0:22:48.880 talking between the US and China maybe the first week 0:22:48.920 --> 0:22:51.919 of October. I think you're putting that very well. By 0:22:51.960 --> 0:22:54.760 the way, I I am certainly not as optimistic as 0:22:54.840 --> 0:22:57.840 the markets are. I mean, what's happened here is that 0:22:58.040 --> 0:23:00.600 you did have a strategy that was being run largely 0:23:00.640 --> 0:23:03.359 out of the U. S. Trade Representatives Office by Bob Leightheiser, 0:23:03.359 --> 0:23:07.280 who's an experienced negotiator. But since the talks fell apart 0:23:07.359 --> 0:23:11.359 in May, President Trump has really taken over and and 0:23:11.800 --> 0:23:14.040 and his Twitter feed is running a lot of the policy, 0:23:14.080 --> 0:23:16.280 and that that leaves it very unpredictable. I mean, we 0:23:16.359 --> 0:23:18.760 simply don't know from day to day in the markets, 0:23:18.840 --> 0:23:21.639 don't know whether he might ease things off because he 0:23:21.680 --> 0:23:24.160 wants a deal that would help reinforce the strong economy 0:23:24.200 --> 0:23:27.600 going into or whether he's going to escalate because he's 0:23:27.680 --> 0:23:30.760 upset with the Chinese and and he wants to try 0:23:30.800 --> 0:23:33.440 to raise the pressure. So so it's gone from being 0:23:33.880 --> 0:23:38.040 a reasonably understandable strategy put pressure on China through tariffs 0:23:38.080 --> 0:23:40.440 to try to achieve a specific set of ends having 0:23:40.480 --> 0:23:44.359 to with technology transfer and intellectual property production and subsidies, 0:23:44.720 --> 0:23:46.920 to really a kind of open end to tit for TAD. 0:23:46.960 --> 0:23:48.760 I think we're in a much more dangerous phase of 0:23:48.800 --> 0:23:51.960 the trade war right now, so Ted you which you know, 0:23:52.000 --> 0:23:54.159 it seems like the US, in terms of its trade negotiations, 0:23:54.240 --> 0:23:57.639