WEBVTT - Trade is About Win-Win, Sachs Says 0:00:00.080 --> 0:00:12.960 Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jay Leye. 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 --> 0:00:33.520 Bloomberg dot Com, and of course on the Bloomberg Front 0:00:33.560 --> 0:00:36.280 and center. Though, are those terrorists that are set to 0:00:36.320 --> 0:00:39.959 come from the United States of America? President Trump deciding 0:00:40.000 --> 0:00:44.680 to impose new terrorists of on imports of steel elsewhere 0:00:44.760 --> 0:00:48.239 you may see ten percent on imports of aluminum. The 0:00:48.320 --> 0:00:52.120 President out this morning swinging when a country is losing 0:00:52.159 --> 0:00:55.080 many billions of dollars on trade with virtually every country 0:00:55.080 --> 0:00:58.600 it does business with. Trade wars are good and easy 0:00:58.640 --> 0:01:00.760 to win. That's the message coming from the President of 0:01:00.760 --> 0:01:04.000 the United States of a twitter this morning to discuss 0:01:04.120 --> 0:01:08.360 Chad bound Peterson Institute for International Economics, a senior fellow there, 0:01:08.640 --> 0:01:10.520 and and the current I'm police to say staying up 0:01:10.600 --> 0:01:15.360 late in Asia four US. So Bloomberg Chief Asia Economics correspondent, Chad, 0:01:15.440 --> 0:01:18.839 let's just begin with this and begin with a story 0:01:18.840 --> 0:01:20.959 that you've written on the Washington Post and pointing out 0:01:21.040 --> 0:01:23.920 quite rightly what the common Secretary Wilbert Ross has concluded, 0:01:24.240 --> 0:01:28.000 it's that imports of steel and aluminum threats in America's 0:01:28.200 --> 0:01:33.559 national security. How do they threaten America's national security? Chat Well, 0:01:33.720 --> 0:01:35.560 I think it's a really big argument that they do 0:01:35.600 --> 0:01:38.800 actually pose a threat to American national security. Most of 0:01:38.800 --> 0:01:42.200 the steel in the aluminum that the United States imports 0:01:42.520 --> 0:01:48.640 are from key ally countries, Canada, Europe, Mexico. There's still 0:01:48.800 --> 0:01:53.360 considerable domestic steel production, especially in the United States. So 0:01:53.440 --> 0:01:55.240 this is very much looked upon as a as a 0:01:55.280 --> 0:01:59.000 relatively bogus argument for implementing import protection. And you really 0:01:59.040 --> 0:02:01.400 only go down this half when you run out of 0:02:01.440 --> 0:02:05.040 all other potential explanations for why you would want to 0:02:05.080 --> 0:02:07.600 impose tariffs and the current what's the response in China 0:02:07.720 --> 0:02:10.160 so far? Actually the response has been a little bit 0:02:10.160 --> 0:02:12.120 more subdued in it would have thought, Jonathan, that's your 0:02:12.160 --> 0:02:14.920 speaker's previous point. There's a sense and age that it 0:02:14.960 --> 0:02:17.120 hurts the U S allies more than China. We've had 0:02:17.240 --> 0:02:20.560 complained from South Korea, Japan, Australia. Japan in fact had 0:02:20.560 --> 0:02:22.160 to remind the US that they are not a threat 0:02:22.200 --> 0:02:25.600 to American national security. China's Foreign Ministry in Beijing did 0:02:25.600 --> 0:02:28.279 say they want America to play by the rules. But interestingly, 0:02:28.760 --> 0:02:31.160 our colleagues in Beijing have reported that Lou her who 0:02:31.200 --> 0:02:34.040 is the top Chinese economic emissary who's in Washington, has 0:02:34.120 --> 0:02:36.800 presented the US officials with a said of demands, and 0:02:36.800 --> 0:02:38.799 one of which includes, give me a list in terms 0:02:38.840 --> 0:02:41.080 of what you want. So the Chinese are seeking clarity 0:02:41.120 --> 0:02:42.640 from the US in terms of what kind of trade 0:02:42.639 --> 0:02:45.080 concessions they want. I think that's why the response has 0:02:45.120 --> 0:02:47.400 been relatively muted so far. They're probably trying to see 0:02:47.440 --> 0:02:49.519 how these talks in Washington play out Chad, and that 0:02:49.560 --> 0:02:51.480 brings up a brilliant point. It's a point that a 0:02:51.480 --> 0:02:54.240 lot of people are making. If this is to address China, 0:02:55.040 --> 0:02:57.160 then it doesn't really do that in isolation at all, 0:02:57.280 --> 0:02:59.960 does it. It hurts allies probably more than it hurts China. 0:03:00.040 --> 0:03:02.760 What would be the best way of really recalibrating this 0:03:02.840 --> 0:03:06.280 policy to direct this specifically at the problem, at least 0:03:06.520 --> 0:03:10.960 for what the administration sees as the problem. Well, it's 0:03:10.960 --> 0:03:14.040 exactly right. So the United States already has tremendous import 0:03:14.080 --> 0:03:17.160 restrictions already in place on steel and aluminium from China, 0:03:17.639 --> 0:03:19.560 and what that means is most of what we import 0:03:19.639 --> 0:03:23.359 comes from allies, and therefore, if we're going to impose Paris, 0:03:24.040 --> 0:03:25.880 the allies are the ones that are going to get hit. 0:03:26.800 --> 0:03:28.960 To my mind, what you need to do to address 0:03:29.040 --> 0:03:33.160 the underlying problem of the story, which is over capacity 0:03:33.200 --> 0:03:35.680 in steel in aluminum coming out of China, you need 0:03:35.760 --> 0:03:38.600 to engage with the American allies that are suffering the 0:03:38.640 --> 0:03:42.680 same sorts of problems we've already seen. The Europeans announced 0:03:43.000 --> 0:03:45.200 that they're probably going to have to impose the same 0:03:45.200 --> 0:03:48.200 set of import restrictions the United States is, but under 0:03:48.240 --> 0:03:51.680 a conventional law, not this bogus national security argument, but 0:03:51.720 --> 0:03:55.200 on a standard safeguard law. For imposing trade barriers, you 0:03:55.280 --> 0:03:57.880 need the kind of cooperation between these countries, and that's 0:03:57.880 --> 0:04:00.840 what the Trump administration is really under mining by choosing 0:04:00.880 --> 0:04:02.760 this sort of path. And I just wonder how this 0:04:02.800 --> 0:04:04.880 has been taken in Asia at the moment. You've said 0:04:04.880 --> 0:04:07.480 that the reaction from China is actually being quite subdued. 0:04:07.840 --> 0:04:09.880 I wonder how this is being seen because many people 0:04:09.920 --> 0:04:11.920 are asking whether this is the first shot at the 0:04:11.920 --> 0:04:14.280 beginning of a trade war. Well, is that how you 0:04:14.320 --> 0:04:16.520 see things in Asia looking into the United States? At 0:04:16.520 --> 0:04:18.839 the moment, Jonathan, if you think about it, there's a 0:04:18.839 --> 0:04:20.839 bit of a trend emerging here. It appears that Mr 0:04:20.839 --> 0:04:23.080 Trump is hurting his allies more than China. We had 0:04:23.279 --> 0:04:26.839 the US exiting from TPP that bolster China's position in 0:04:26.839 --> 0:04:29.760 the region. We had the US slapping tariffs and washing 0:04:29.800 --> 0:04:32.760 machines that hurt allies such as South Korea. And now 0:04:32.760 --> 0:04:34.800 we have this move on steel which has people from 0:04:34.839 --> 0:04:37.159 Australia to Tokyo asking, hang on a second, this is 0:04:37.160 --> 0:04:40.400 not about US. So there's a real sense of unpredictability, 0:04:40.440 --> 0:04:43.080 but unpredictability about where this is heading. And I think 0:04:43.080 --> 0:04:46.720 the real danger is who starts to retaliate when and how, 0:04:47.120 --> 0:04:49.679 And in particular, the next step is if Mr Trump 0:04:49.720 --> 0:04:53.400 goes after much broader merchandise goods out of China, like electronics, goods, 0:04:53.480 --> 0:04:56.960 textiles and shoes, footwear and the like, then we're starting 0:04:56.960 --> 0:04:58.880 to head down a very difficult road where you likely 0:04:58.880 --> 0:05:02.120 would see China retalia it retaliate hard. Chad I was 0:05:02.200 --> 0:05:06.000 thunderstruck by the President's follow on tweet this morning. To 0:05:06.120 --> 0:05:09.680 be clear, folks, it's a zero sum America and Chad bound, 0:05:09.720 --> 0:05:12.000 I would say out of your studies at Wisconsin and 0:05:12.040 --> 0:05:15.520 your work at Bucknell and Peterson Institute. He wants a 0:05:15.680 --> 0:05:20.320 mercantil list America. Am I off the mark. No, you're 0:05:20.440 --> 0:05:24.320 You're exactly right, Tom. What President Trump still unfortunately does 0:05:24.360 --> 0:05:28.560 not understand is that international trade is not derosum. It's 0:05:28.600 --> 0:05:32.840 a win win situation if you keep markets open. And 0:05:32.960 --> 0:05:35.760 but this path that he's heading us down, UH is 0:05:35.800 --> 0:05:39.080 really taking us away from what the American experience. American 0:05:39.160 --> 0:05:43.400 leadership in developing an international system of cooperation of open 0:05:43.480 --> 0:05:47.160 markets is now going to potentially result in US exporters 0:05:47.200 --> 0:05:49.880 in areas that have nothing to do with stealing aluminum 0:05:49.920 --> 0:05:52.240 getting caught up in this and getting retaliated again. You 0:05:52.320 --> 0:05:55.880 and I staggered through Jacob Viner, who folks invented the 0:05:56.040 --> 0:05:59.719 courage to not be mercantil list coming out of World 0:05:59.720 --> 0:06:03.200 War Two, studies in the theory of international trade was 0:06:03.279 --> 0:06:08.160 something everybody had to read a gunpoint. Is trump mercantilism 0:06:08.800 --> 0:06:12.719 different than the mercantilism that Jacob Wiiner fought against in 0:06:12.720 --> 0:06:18.000 the nineteen thirties. I'm not sure how different it is. 0:06:18.279 --> 0:06:22.320 It is equally worrisome. You know, he seems solely focused 0:06:22.440 --> 0:06:26.360 on bilateral trade deficits and and seeming that he can 0:06:26.560 --> 0:06:29.159 and seemingly thinking that he can use trade policy to 0:06:29.640 --> 0:06:33.840 tackle those. The administration has recognized that steel and aluminum 0:06:33.839 --> 0:06:36.880 over capacity is a problem. It's really just the approach 0:06:36.920 --> 0:06:40.080 that they're choosing to tackle it. By inflaming tensions with 0:06:40.160 --> 0:06:42.599 all of our key allies and trading partners with which 0:06:42.640 --> 0:06:45.640 we need to have a partnership to engage with China 0:06:45.680 --> 0:06:49.480 on this issue, he's really undercutting his own effort trying 0:06:49.480 --> 0:06:52.080 to get something done. Chat. As you've mentioned, another's have 0:06:52.160 --> 0:06:55.240 touched on downstream. The Nited States of America, in terms 0:06:55.279 --> 0:06:57.920 of end usage of steel is a whole lot bigger 0:06:58.240 --> 0:07:01.360 in this economy than upstream. The still produces the steel, 0:07:01.520 --> 0:07:05.200 uses the auder makers, the likes of the brewery companies 0:07:05.240 --> 0:07:09.000 as well. It's massive. Whether you save some jobs in steel, 0:07:09.080 --> 0:07:13.480 how much damage could be done downstream. That is another 0:07:13.560 --> 0:07:17.480 really really big concern. There are so many more, uh, 0:07:17.920 --> 0:07:21.600 you know, consuming industry jobs, whether you're talking about automobiles 0:07:21.920 --> 0:07:24.920 or infrastructure construction, that are all going to be hurt 0:07:24.960 --> 0:07:28.160 by the fact that input costs are now gonna be 0:07:28.200 --> 0:07:31.680 so much higher with these steal and and aluminum tariffs. 0:07:32.000 --> 0:07:34.200 That's going to be lost jobs as well, and so 0:07:34.400 --> 0:07:37.520 you know to the extent that that's an additional source 0:07:37.600 --> 0:07:40.720 of political concern for the president. You would hope that 0:07:40.760 --> 0:07:43.120 this would weigh in on on his decision making, but 0:07:43.160 --> 0:07:45.400 it doesn't seem to have resonated with him so far. Chad, 0:07:45.720 --> 0:07:48.760 thank you for the early morning conversation with the Peterson Institute. 0:07:49.120 --> 0:07:51.560 No doubt Adam Posing and company will be writing up 0:07:51.560 --> 0:08:08.920 a storm on this. We continue now with our coverage 0:08:08.920 --> 0:08:14.600 of these momentous times of a mercantilis policy of Pennsylvania Avenue, 0:08:15.040 --> 0:08:17.720 and to give us perspective and a gentleman who understands 0:08:17.760 --> 0:08:23.000 the astronomy of our political economics, Mark Chandler, not only 0:08:23.040 --> 0:08:26.640 at Brown Brothers Harriman, where he puts out important notes 0:08:26.720 --> 0:08:31.280 on currency dynamics, but he also writes books that fill 0:08:31.320 --> 0:08:36.120 in our political economics and our economic history. Mark Chandler, 0:08:36.160 --> 0:08:38.800 can the President of the United States see the stars 0:08:39.000 --> 0:08:43.760 of our greater political economy? Good question, I'm not so sure. 0:08:43.800 --> 0:08:45.440 But I'm not so sure that I would go with it. 0:08:45.520 --> 0:08:48.560 This is a necessarily a little break from the past. 0:08:48.600 --> 0:08:50.719 Remember we had a president Georgie bus who put a 0:08:51.600 --> 0:08:55.320 terrify and so I think that almost every US president 0:08:56.000 --> 0:08:58.000 that I could think of has put on some kind 0:08:58.040 --> 0:09:01.720 of protectionism, some kind of heariffs that can get challenged. 0:09:01.720 --> 0:09:03.360 And this is I think them pointing. But I don't 0:09:03.360 --> 0:09:06.520 think that we're really at the necessarily headed for a 0:09:06.559 --> 0:09:15.000 trade war. How did countries respond to bushes paraf on steel? Right, Nope, 0:09:15.040 --> 0:09:17.280 they didn't. They didn't go for for tech strategy that 0:09:17.400 --> 0:09:19.199 is a current that is a trade war. What they 0:09:19.200 --> 0:09:21.640 did was they appealed. They took the U s to 0:09:21.720 --> 0:09:24.000 the w t O. The US lost the cases of 0:09:24.160 --> 0:09:26.360 w t O. It had to resend the tariffs. This 0:09:26.400 --> 0:09:27.760 is what I think countries are going to do that 0:09:27.840 --> 0:09:31.520 Okay for tech strategy, but support the multilateral trading system. 0:09:31.600 --> 0:09:35.240 The distinction mark Chandlers starting last evening into the morning 0:09:35.280 --> 0:09:38.080 and met Paul Krugman Laureate mentioning it as well, but 0:09:38.280 --> 0:09:44.640 conservatives as well. Is this national security distinction that that 0:09:44.800 --> 0:09:49.520 as Secretary uh Maddest so upset as well. George Bush 0:09:49.559 --> 0:09:53.880 didn't make this anatural national security issue, did he? Now? 0:09:54.080 --> 0:09:55.600 I think that's a very important pot that's in a 0:09:55.600 --> 0:09:57.840 point distinction here. But what happens I think is that 0:09:57.960 --> 0:09:59.640 so we make we the U s makes his claim 0:09:59.679 --> 0:10:03.000 we're gonn protect these industries for national security grounds. This 0:10:03.120 --> 0:10:05.240 has to be tested in the court of law, and 0:10:05.280 --> 0:10:06.959 that is in the w t O. And with a 0:10:07.120 --> 0:10:08.720 w t O, I think if I was going to 0:10:08.880 --> 0:10:11.920 be on the side of Canada and Europe and Japan 0:10:12.000 --> 0:10:14.920 and Korea, what I would say would be my first 0:10:14.920 --> 0:10:17.640 piece of evidence would be exactly what you say. That is, 0:10:17.640 --> 0:10:20.559 the Defense Department in the US says that they do 0:10:20.679 --> 0:10:23.080 not want these tariffs. So they the Defense Department either 0:10:23.160 --> 0:10:26.599 being therelected their duties or it's not for national security. 0:10:26.880 --> 0:10:29.440 Here's a question for you. Does this administration respect the 0:10:29.559 --> 0:10:33.440 w C Well, I think that's an interesting question, and 0:10:33.480 --> 0:10:39.280 of course these Trump administrations has been come on they don't, right, No, 0:10:39.360 --> 0:10:41.080 But I'd say I'd say this though, that the present 0:10:41.080 --> 0:10:44.200 the US cannot President cannot unilaterally withdraw from the w 0:10:44.360 --> 0:10:46.360 t O. This is a commiss and this is the 0:10:46.360 --> 0:10:49.120 next step that's going to happen. Just like Congress has 0:10:49.320 --> 0:10:53.200 limited the president's power to repeal sanctions on Russia and Iran, 0:10:53.720 --> 0:10:56.679 Congress is talk Commers can take some actions to reduce 0:10:56.720 --> 0:10:59.640 the president's unilateral power on trade. Are they going to 0:10:59.640 --> 0:11:02.640 do that? Well, I think it's I think it depends 0:11:02.679 --> 0:11:04.640 on what happens. But I think that give me, let 0:11:04.640 --> 0:11:07.320 me tell me the outcome of November's elections, and I 0:11:07.360 --> 0:11:10.400 think that let's just take a stand back. Secretary Matts 0:11:10.480 --> 0:11:12.840 has made it pretty clear. I understand from within the 0:11:12.840 --> 0:11:16.600 White House, likewise for Secretary Tillison, likewise with Gary Cohan, 0:11:16.880 --> 0:11:19.440 they didn't want to see this. We're seeing it. So 0:11:19.480 --> 0:11:23.079 what's stopping is from seeing the next things play out? Well, 0:11:23.080 --> 0:11:24.880 I think yes, So what's the next step of playoff? 0:11:24.920 --> 0:11:27.880 Some people talking about some resignations coming, which would seem 0:11:27.880 --> 0:11:30.320 to me to surrender the leverage of power to exactly 0:11:30.320 --> 0:11:33.520 the protectionists that are also in the White House and 0:11:33.559 --> 0:11:36.040 in the administrations. So I'm not sure how it's gonna 0:11:36.040 --> 0:11:37.959 play out. It could be some resignations, but also the 0:11:38.000 --> 0:11:41.599 shift of power with the administration. Uh. But again, my 0:11:41.840 --> 0:11:44.040 point is that this does not necessarily have to trigger 0:11:44.080 --> 0:11:46.360 a trade war. If it's not for Ted, it's not 0:11:46.400 --> 0:11:48.120 necessarily going to stand up at the w t O. 0:11:48.520 --> 0:11:50.680 And I'm not convinced that the inflationary nature of it. 0:11:50.720 --> 0:11:52.400 You know, people are talking about this, we're could be 0:11:52.440 --> 0:11:54.600 boosting inflation. But I think what happened if we if 0:11:54.640 --> 0:11:57.400 we do get writing prices, which there's a quote from 0:11:57.440 --> 0:12:00.000 General Motors, a guy who is one of the buyers 0:12:00.040 --> 0:12:03.719 saying that GM at Ford Stores is stealing illumin in 0:12:03.760 --> 0:12:06.760 the US. Okay, but Mark, I think the literature in 0:12:06.800 --> 0:12:10.480 the last eighteen hours clearly agrees with Mark Chandler that 0:12:10.600 --> 0:12:14.839 inflation delta is not the big issue here. But within 0:12:14.880 --> 0:12:18.800 the model, our international Mondel Fleming blah blah blah model, 0:12:19.320 --> 0:12:22.680 it goes over to economic growth. Can you suggest that 0:12:22.720 --> 0:12:26.000 if we don't see the impulse in inflation, we will 0:12:26.040 --> 0:12:29.959 see it over two in five years in diminished economic 0:12:30.040 --> 0:12:35.800 growth because of retaliation. Well, yeah, again, I'm not convinced 0:12:35.880 --> 0:12:38.640 it's gonna be retaliation like there wasn't for against George Bush. 0:12:38.640 --> 0:12:41.480 But I do agree with you that this isn't. To me, 0:12:41.559 --> 0:12:44.439 the biggest challenge that world trading system is not just 0:12:44.559 --> 0:12:47.200 these tarraffs. The biggest challenge that the US has really 0:12:47.280 --> 0:12:49.599 have it to the global trading system is not is 0:12:49.600 --> 0:12:54.120 really blocking the appointment of judges to these conflict resolution 0:12:54.160 --> 0:12:57.120 mechanisms at the w t O. That to me is 0:12:57.120 --> 0:12:59.320 a much more serious case of that country. You know, 0:12:59.400 --> 0:13:01.719 the US the biggest trading partners in the world, and 0:13:01.840 --> 0:13:04.920 there's always little dispute ave frictions. This is part of trade, 0:13:05.240 --> 0:13:08.880 but we wanted a strong conflict resolution mechanism. As long 0:13:08.920 --> 0:13:12.080 as that's strong, the global free traits that can be resilient, 0:13:12.679 --> 0:13:14.640 flows are going to slow down. Mark. I think that's 0:13:14.679 --> 0:13:16.720 the opinion of a lot of people. And and we 0:13:16.760 --> 0:13:18.959 can look beneath the service away from these headline things 0:13:19.000 --> 0:13:21.680 about tariffs, and just look at CERFIUS, the Committee on 0:13:21.760 --> 0:13:24.680 Foreign Investment in the United States. They are looking at 0:13:24.760 --> 0:13:27.920 inbound investment coming from places like China. They may well 0:13:28.120 --> 0:13:30.440 change this and develop the role of Cyphius to actually 0:13:30.440 --> 0:13:33.480 look at outbound investments. So companies in the United States 0:13:33.480 --> 0:13:36.560 looking to invest in China may well have to get 0:13:36.559 --> 0:13:39.280 things approved by Cyphius as well. There are things happening 0:13:39.280 --> 0:13:42.160 in the background here beyond just tariffs that make this 0:13:42.200 --> 0:13:46.360 a more protectionist administration, oh for sure. And I don't 0:13:46.360 --> 0:13:47.920 I don't like saying this. It's not I'm just thinking 0:13:47.960 --> 0:13:51.440 that the system of checks and balances and resiliency, other 0:13:51.559 --> 0:13:53.920 global system and of our own checks and balances within 0:13:53.960 --> 0:13:57.280 the US are more resilient than than what a president 0:13:57.320 --> 0:14:00.760 can do in the first eighteen months in office. Big 0:14:00.840 --> 0:14:04.600 question emerging Marcus effects when President Donald Trump was elected, 0:14:04.679 --> 0:14:07.680 got battered, then it ripped. Do we need to actually 0:14:07.720 --> 0:14:09.920 have another look at this? Is this an inflection point 0:14:10.000 --> 0:14:13.600 or not marked for you for emerging market currencies? I 0:14:13.600 --> 0:14:16.040 don't think it is. I think they're more important for 0:14:16.120 --> 0:14:18.800 the for the emerging market currencies. It doesn't seem like 0:14:18.800 --> 0:14:21.520 FED policies the key. Feel like global growth is the key, 0:14:21.560 --> 0:14:23.760 and I think for me that's a concern. Latest data, 0:14:23.800 --> 0:14:26.920 and not only from the US, but from Europe, from Japan, 0:14:27.600 --> 0:14:30.880 is showing that maybe the strong core strong momentum we 0:14:31.000 --> 0:14:34.120 had and the synchronized global upturn might have peaked at 0:14:34.120 --> 0:14:36.360 the end of last year. Okay, Mark, this is all 0:14:36.400 --> 0:14:39.880 a bunch of fancy eco babble. Should I initiate strong 0:14:40.080 --> 0:14:43.080 end trades this morning? I think it's a bit late 0:14:43.080 --> 0:14:44.920 to the party, but I'd be watching this one oh 0:14:44.960 --> 0:14:47.120 five level. I mean we've come down, right, we come 0:14:47.120 --> 0:14:48.760 down to almost one oh eight. I think we're one 0:14:48.760 --> 0:14:52.360 of seven seventy at Monday. We'll be missing the point. Mark, 0:14:52.480 --> 0:14:55.400 Tom and I sal bottoms. We buy tops. That's what 0:14:55.480 --> 0:14:59.400 we do Mark, You've got to understand, you know how 0:14:59.440 --> 0:15:02.560 you know, like John Farrell has a grand Big I've 0:15:02.600 --> 0:15:05.200 got a grand Big sixteen. It's a dinghy and the 0:15:05.280 --> 0:15:08.680 name of the boat is called late to the party, 0:15:09.320 --> 0:15:12.280 my chandler. If it's not the haven fit that drives 0:15:12.320 --> 0:15:14.960 the Japanese the end story forward from here. How important 0:15:14.960 --> 0:15:17.360 were the comments from Governor Kuroda about an exit from 0:15:17.360 --> 0:15:20.960 stimulus next year? Yeah, I think I don't surprise me, right, 0:15:21.000 --> 0:15:23.920 So Corota says, we're not changing policy now, even though 0:15:23.920 --> 0:15:27.000 we've stopped, we've slowed down our acid purchases, and we're 0:15:27.000 --> 0:15:29.400 not even to talk about an exit until next April. 0:15:29.520 --> 0:15:31.320 And the market was spotted almost like it was in 0:15:31.400 --> 0:15:35.560 this April. I think that the market is getting ahead 0:15:35.560 --> 0:15:37.360 of itself. And I think that the reason that the 0:15:37.360 --> 0:15:39.680 boj might talk about it next April but probably won't 0:15:39.680 --> 0:15:44.600 do anything, is because next October October, the Japanese gonna 0:15:44.600 --> 0:15:48.000 put in a high retail sales tax from eight and 0:15:48.040 --> 0:15:50.560 whenever Japan has played around with the retail saling given 0:15:50.560 --> 0:15:53.640 the economy down, I mean, that's a really important insight. 0:15:53.800 --> 0:15:57.280 What are the ramifications if even if you don't think 0:15:57.280 --> 0:15:59.680 we'll get there. If we get to a nine point 0:15:59.800 --> 0:16:04.800 nine nine strong end print, I mean that's five figures away. Yeah, 0:16:04.880 --> 0:16:07.320 I think that. I mean, which isn't not completely like 0:16:07.440 --> 0:16:09.680 lost right, I mean it's not completely impossible to see that. 0:16:10.040 --> 0:16:12.680 And I think that they have people really adjust head issues. 0:16:13.120 --> 0:16:16.360 And another question happened is that the dollar is falling 0:16:16.360 --> 0:16:20.000 like this, We've got this protectionist sentiment growing where people 0:16:20.000 --> 0:16:23.760 still fund the US, growing current account deficit. Mark Chander, 0:16:23.960 --> 0:16:26.280 stay with us, please, Mark Chander. Wilson, the Brown Brothers 0:16:26.320 --> 0:16:29.640 Harriman really important depth. I can't say enough about Mr 0:16:29.760 --> 0:16:34.440 Chandler's books, particularly on the template of the astronomy of 0:16:34.480 --> 0:16:50.480 our global political economy. We bring in now Francie mccoi, 0:16:50.600 --> 0:16:54.560 who is in Rome on a Roman holiday through the weekend, 0:16:55.000 --> 0:16:59.520 but then France seeing a very very important Sunday morning. 0:17:00.040 --> 0:17:03.600 How do they vote in Italy? Is it? Is it 0:17:03.720 --> 0:17:08.000 by paper ballot? Is it a modern digital system? What's 0:17:08.080 --> 0:17:13.320 the process? It begins Sunday morning? Good morning Tom. It 0:17:13.400 --> 0:17:16.199 is definitely by paper ballot. It's actually very old school. 0:17:16.359 --> 0:17:19.080 You're you find yourself in a booth and this time 0:17:19.080 --> 0:17:21.639 you have between seven and eight parties that you have 0:17:21.760 --> 0:17:24.480 to choose. Now, remember John, this is also the electoral law, 0:17:24.600 --> 0:17:26.720 so you could argue that this is the first time 0:17:27.280 --> 0:17:30.760 that the Italian economy test its engine. So you don't 0:17:30.760 --> 0:17:33.520 really know how will plan out. Part of the electoral 0:17:33.600 --> 0:17:37.520 laws a proportionate system, part of it is direct. So 0:17:37.720 --> 0:17:40.200 it actually makes think a little bit more complicated because 0:17:40.200 --> 0:17:42.439 it's very difficult to look at the polls, which, by 0:17:42.440 --> 0:17:45.280 the way, we can't talk about, but it's very kind 0:17:45.280 --> 0:17:47.280 of difficult at this point to see whether, you know, 0:17:47.440 --> 0:17:50.840 the coalisition could actually perform depending on how much the 0:17:51.080 --> 0:17:54.919 parties get. Will weather play into the election. I'm watching 0:17:54.920 --> 0:17:58.639 a plane actually land in the heavy winds of Washington 0:17:58.680 --> 0:18:02.440 Air Force one as often the distance and really from 0:18:02.440 --> 0:18:06.479 Washington to Maine, we have extraordinary weather. You saw that 0:18:06.520 --> 0:18:12.360 in London. How is the weather across Italy? Um, it's 0:18:12.359 --> 0:18:14.879 a little bit better then we had very high winds today. 0:18:15.040 --> 0:18:18.280 And you're right. Weather always plays a part in the turnouts. 0:18:18.440 --> 0:18:21.679 But even before the weather concerns and east from the Beast, 0:18:22.040 --> 0:18:24.920 which has touched it to about five six days ago, 0:18:25.480 --> 0:18:28.600 there was a lot of concern about very low voter 0:18:28.960 --> 0:18:31.680 turnouts and Tom, to put it very simply, there is 0:18:31.720 --> 0:18:36.479 a concern that basically, although the European economy bringing Italy 0:18:36.520 --> 0:18:40.360 with it, is getting better, Italians are just not benefiting 0:18:40.440 --> 0:18:43.200 from this broadening recovery France in Lacroix in Rome. I 0:18:43.200 --> 0:18:45.520 don't know, Francine, if you're able to hear Prime Minister 0:18:45.600 --> 0:18:49.359 May's important comments at Mansion House, I would not Francine 0:18:49.400 --> 0:18:53.200 that she has garbed in black today. What is Prime 0:18:53.200 --> 0:18:56.280 Minister May morning? Is she gives us an update on 0:18:56.400 --> 0:19:01.720 Brexit theory. I mean, you know, she may be morning 0:19:02.160 --> 0:19:05.560 rebels on both sides, has a very tough task. On 0:19:05.640 --> 0:19:08.919 the one hand, she needs to deal with the Commissioner 0:19:09.040 --> 0:19:11.920 Yunker and Commissioner Barney. At the other hand, she has 0:19:11.960 --> 0:19:14.639 to placate her rebels that are pro Brexit and the 0:19:14.640 --> 0:19:17.600 ones that are pro remain. So I think maybe, you know, 0:19:17.720 --> 0:19:20.640 all black all around makes sense for a top prime 0:19:20.680 --> 0:19:23.280 minister going to the multiple times. What have you heard 0:19:23.280 --> 0:19:25.879 in Italy about the discussion of the President the United 0:19:25.960 --> 0:19:29.879 States on mercantilist theory. I know it's to talk everywhere worldwide. 0:19:30.040 --> 0:19:34.600 The Prime Minister actually making comments two hours ago or so, 0:19:34.720 --> 0:19:37.560 future is improving. Folks who are negative to seventy were 0:19:37.560 --> 0:19:41.359 now negative one better tape in the last twenty minutes. 0:19:41.359 --> 0:19:44.320 But Francine, what have you heard from your guests and 0:19:44.480 --> 0:19:51.040 off Mike in Italy on mercantilism and American trade. Well, 0:19:51.080 --> 0:19:53.920 tom ad is worried. A lot of Italian politicians are worried, 0:19:53.960 --> 0:19:56.720 a lot of Italian CEOs are worried. Remember, this is 0:19:56.760 --> 0:19:59.320 an economy that grew one point five percent last year, 0:19:59.760 --> 0:20:02.679 but it's mainly thanks to exports, and a lot of 0:20:02.680 --> 0:20:06.200 these exports go to the US. Now the most percentage 0:20:06.200 --> 0:20:09.440 wise actually goes within the European Union. So a lot 0:20:09.440 --> 0:20:11.119 of the chief executives that I was speaking to you 0:20:11.119 --> 0:20:13.719 who are saying, look, it's not good for world trade 0:20:13.840 --> 0:20:16.160 because if it has an impact on GDP, it will 0:20:16.200 --> 0:20:19.520 also bring back to acting of it. They're concerned about 0:20:19.520 --> 0:20:22.000 exports to the US. But you know, as long as 0:20:22.160 --> 0:20:25.280 the European block stays together, it's the will you know 0:20:25.320 --> 0:20:28.960 whether the trade war storm for instance, quote thank you 0:20:29.000 --> 0:20:31.639 so much. Of course, safe travels have a great Roman 0:20:31.760 --> 0:20:49.280 holiday in Rome for the elections. Uh, this is what 0:20:49.400 --> 0:20:52.560 gives us goose bumps here at Bloomberg Surveillance. Why don't 0:20:52.560 --> 0:20:56.240 we have guests of esteem and always of controversy. Who 0:20:56.359 --> 0:20:59.000 really make an effort to join us on historic days 0:20:59.040 --> 0:21:03.160 like today. Jeffrey Sachs is a Columbia University. He has 0:21:03.240 --> 0:21:06.560 been way out front on the dumbing down of America. 0:21:06.880 --> 0:21:09.680 He has been way out front on any debate of 0:21:09.760 --> 0:21:13.919 climate change, whether you agree or disagree with him. But 0:21:14.080 --> 0:21:19.240 far more is his foundation of international economics. He is 0:21:19.280 --> 0:21:23.520 again at Columbia University and joins us from Bogata, Columbia 0:21:24.040 --> 0:21:26.919 UH this morning. Professor Sas, thank you so much for 0:21:26.960 --> 0:21:30.320 the effort to join us UM this morning. Twenty years 0:21:30.359 --> 0:21:33.960 ago you wrote two essays for Foreign Policy. One was 0:21:34.000 --> 0:21:37.280 a brief history of panic and the other was Unlocking 0:21:37.320 --> 0:21:43.360 the mysteries of globalization. Is President Trump's trade action his 0:21:43.440 --> 0:21:49.760 effort and a good effort against the new globalization. This 0:21:49.920 --> 0:21:54.480 is one of the most reckless policies tom one can imagine, 0:21:54.720 --> 0:21:59.840 and he is going to have major at first reverberation 0:22:00.240 --> 0:22:04.200 as it is around the world. We've probably shed maybe 0:22:04.280 --> 0:22:08.320 it's a trillion dollars of the stock market capitalization in 0:22:08.359 --> 0:22:11.640 the last twenty four hours. That is a pretty good 0:22:11.880 --> 0:22:16.840 sign of UH market sentiment and the view of what 0:22:17.000 --> 0:22:21.160 Trump has done. He's smashing the global trade rules, and 0:22:21.720 --> 0:22:24.240 it's very, very dangerous. We have done a little bit 0:22:24.280 --> 0:22:27.320 of the history, Professor Sachs, the history that you're expert 0:22:27.359 --> 0:22:29.960 in this morning, going back to the courage of Sir 0:22:30.080 --> 0:22:33.520 Robert Peel in the corn Laws of eighteen forty two, 0:22:33.640 --> 0:22:37.760 call it Nixon's effort in nineteen seventy one on a 0:22:37.880 --> 0:22:41.439