WEBVTT - Single Best Idea with Tom Keene: Thierry Wizman & Michael Darda (Podcast)

0:00:02.400 --> 0:00:11.160
<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

0:00:14.360 --> 0:00:16.480
<v Speaker 2>The single best idea, which is to do it one

0:00:16.520 --> 0:00:18.720
<v Speaker 2>hour podcast. We're not going to do that. We're going

0:00:18.760 --> 0:00:21.800
<v Speaker 2>to keep it six minutes. We like doing a short podcast.

0:00:21.840 --> 0:00:23.880
<v Speaker 2>I think it really fits in with what everybody else

0:00:23.960 --> 0:00:28.240
<v Speaker 2>is doing out in global podcast world and all that.

0:00:28.600 --> 0:00:32.239
<v Speaker 2>But what a day. We had endless conversations that were

0:00:32.320 --> 0:00:35.840
<v Speaker 2>very rich about the mystery of what we're living in now,

0:00:35.920 --> 0:00:41.080
<v Speaker 2>linking economics to finance, linking finance to investment, with an

0:00:41.120 --> 0:00:44.479
<v Speaker 2>overview of international relations. Joe Matthew was on from balance

0:00:44.479 --> 0:00:49.760
<v Speaker 2>of power with a real understanding of the mystery of

0:00:49.800 --> 0:00:51.920
<v Speaker 2>the next thirty days for the White House, so many

0:00:51.960 --> 0:00:55.240
<v Speaker 2>moving parts. There is a president gears up a campaign,

0:00:55.360 --> 0:00:58.600
<v Speaker 2>and the candidate for the other side gears up endless

0:00:58.680 --> 0:01:02.200
<v Speaker 2>days in a courtroom in New York. We'll move on

0:01:02.280 --> 0:01:05.360
<v Speaker 2>from that to good conversations. One of them today was

0:01:05.440 --> 0:01:08.720
<v Speaker 2>Terry Weisman. As I mentioned in the interview, the heritage

0:01:08.880 --> 0:01:12.200
<v Speaker 2>here is back to bear Stearns and back to the

0:01:12.280 --> 0:01:17.800
<v Speaker 2>development there. Larry Cudlow was the chief economist there, and

0:01:17.840 --> 0:01:22.600
<v Speaker 2>then in came David Malpass and John Writing and Terry Weisman,

0:01:23.360 --> 0:01:26.760
<v Speaker 2>and it was just really just an outstanding, always thought

0:01:26.800 --> 0:01:30.320
<v Speaker 2>provoking discussion out of bear Stearns. This is ancient history.

0:01:30.319 --> 0:01:34.240
<v Speaker 2>He's now Macquarie, the Australian Shop and Terry Weisman was

0:01:34.280 --> 0:01:38.520
<v Speaker 2>just on fire and it was the why of the hope,

0:01:38.640 --> 0:01:43.360
<v Speaker 2>the prayer or the consequences of a weaker dollar.

0:01:43.680 --> 0:01:46.360
<v Speaker 1>The bear case for the dollar, if there's a structural one,

0:01:46.560 --> 0:01:49.040
<v Speaker 1>is that the dollar will no longer be at some point,

0:01:49.120 --> 0:01:52.760
<v Speaker 1>and no one knows when the world's reserve currency. Now,

0:01:52.880 --> 0:01:57.040
<v Speaker 1>we are already seeing signs that this is manifest. We see,

0:01:57.200 --> 0:02:01.240
<v Speaker 1>of course, we see China accumuly gold. Well, that's telling

0:02:01.240 --> 0:02:03.480
<v Speaker 1>you that they may not like the dollar anymore. We

0:02:03.520 --> 0:02:06.720
<v Speaker 1>certainly see the Russians moving away from dollar reserves. We've

0:02:06.720 --> 0:02:09.720
<v Speaker 1>seen the Venezuelans do that now the Bowld case for

0:02:09.760 --> 0:02:12.040
<v Speaker 1>the dollar as well. You can dismiss these countries because

0:02:12.040 --> 0:02:14.560
<v Speaker 1>they're you know, part of this, I don't want to

0:02:14.560 --> 0:02:16.760
<v Speaker 1>say access of evil obviously, but they're not on the

0:02:16.800 --> 0:02:19.600
<v Speaker 1>same side of the fence as the US. But to

0:02:19.639 --> 0:02:22.399
<v Speaker 1>the extent that we get a bipolarity in this world

0:02:22.400 --> 0:02:25.360
<v Speaker 1>and we really get a true a new Berlin Wall

0:02:25.360 --> 0:02:28.040
<v Speaker 1>that goes up between the West and the rest, you

0:02:28.120 --> 0:02:29.959
<v Speaker 1>have to imagine that that's going to be bad for

0:02:30.040 --> 0:02:32.720
<v Speaker 1>the dollar, because the dollar has benefited in this era

0:02:32.840 --> 0:02:36.359
<v Speaker 1>of globalization. Anything that tends to reduce the amount of

0:02:36.360 --> 0:02:38.680
<v Speaker 1>globalization tends to be bad for the dollar, and that

0:02:38.760 --> 0:02:40.320
<v Speaker 1>new Berlin Wall would be bad for the.

0:02:40.280 --> 0:02:43.639
<v Speaker 2>Dollar, Doctor Weisman from Acquarie. They're really thought provoking, and

0:02:43.800 --> 0:02:46.880
<v Speaker 2>a lot of people are worried about this of losing

0:02:46.960 --> 0:02:50.320
<v Speaker 2>our exorbitant privilege. Thank you to Berry chen Green of

0:02:50.360 --> 0:02:53.520
<v Speaker 2>Berkeley over de velor as you started to staying in

0:02:53.520 --> 0:02:57.799
<v Speaker 2>France decades ago for this idea of the exorbitant privilege

0:02:57.840 --> 0:03:00.960
<v Speaker 2>we have in that so much of global business is

0:03:01.040 --> 0:03:04.360
<v Speaker 2>done in US dollars. I should point out the IMF

0:03:04.400 --> 0:03:09.040
<v Speaker 2>doing some world class work on dollar ascendancy and resiliency.

0:03:09.160 --> 0:03:11.320
<v Speaker 2>Another conversation with it. First of all, Jeff Hugh was

0:03:11.360 --> 0:03:15.320
<v Speaker 2>just lights out from BNY Mellon on the international sense

0:03:15.320 --> 0:03:19.720
<v Speaker 2>and particularly on Weekyen. Meghan Robson was wonderful from BMP

0:03:19.760 --> 0:03:23.320
<v Speaker 2>Perry Bob parsing through the different credit and particularly what

0:03:23.440 --> 0:03:27.480
<v Speaker 2>big tech would do in tech issuance. Here. She didn't

0:03:27.520 --> 0:03:29.960
<v Speaker 2>really think Apple or Microsoft would issue a lot of

0:03:30.000 --> 0:03:32.400
<v Speaker 2>debt because of where the coupon is right now, but

0:03:32.440 --> 0:03:37.560
<v Speaker 2>that was thought provoking. Excuse me, that's the single best idea. Gasp.

0:03:38.240 --> 0:03:43.760
<v Speaker 2>Michael Darta with Roth Capital Markets was just on fire

0:03:43.920 --> 0:03:47.160
<v Speaker 2>today about something he's champion for years, going back to

0:03:47.200 --> 0:03:51.200
<v Speaker 2>his work with Judewininski a lifetime ago, and that was

0:03:51.240 --> 0:03:55.600
<v Speaker 2>the idea of how you get to nominal GDP above

0:03:55.640 --> 0:03:58.560
<v Speaker 2>four percent. Let's do the math with Michael Darta.

0:03:58.760 --> 0:04:01.760
<v Speaker 3>If the underlying trend for the productive potential of the

0:04:01.840 --> 0:04:05.600
<v Speaker 3>US economy is still around two in the FED has

0:04:05.640 --> 0:04:09.400
<v Speaker 3>an inflation target of two that they're serious about, then

0:04:09.440 --> 0:04:12.000
<v Speaker 3>top line growth is going to have to be curtailed

0:04:12.040 --> 0:04:16.680
<v Speaker 3>and constrained to about a four percent pace. If productive

0:04:16.720 --> 0:04:19.680
<v Speaker 3>potential is faster than that, you know, then we're we

0:04:19.720 --> 0:04:23.279
<v Speaker 3>can enjoy faster nominal GDP growth. But that's that's very

0:04:23.360 --> 0:04:26.360
<v Speaker 3>uncertain at this point in time. If you look at

0:04:26.360 --> 0:04:31.400
<v Speaker 3>the tracking estimates or Q one GDP, you know, the

0:04:31.480 --> 0:04:34.880
<v Speaker 3>expectation is two and a half to three real and

0:04:34.960 --> 0:04:38.720
<v Speaker 3>a three percent GDP price deflator, so five and a

0:04:38.760 --> 0:04:43.440
<v Speaker 3>half to six nominal. If four percent is sort of

0:04:43.920 --> 0:04:45.520
<v Speaker 3>that's going to be too that's going to be too

0:04:45.600 --> 0:04:46.400
<v Speaker 3>hot for the FED.

0:04:47.040 --> 0:04:49.520
<v Speaker 2>Taed to that piece to your brain, go back and

0:04:49.560 --> 0:04:51.880
<v Speaker 2>re listen to it here on single best idea and

0:04:52.640 --> 0:04:55.840
<v Speaker 2>understand that this is pretty much foreign. We live in

0:04:55.880 --> 0:05:00.240
<v Speaker 2>a real GDP environment, even though business and all of

0:05:00.320 --> 0:05:04.040
<v Speaker 2>you live in a nominal environment of how much does

0:05:04.080 --> 0:05:07.040
<v Speaker 2>that Hamburg cost this week at the meat counter. That's

0:05:07.080 --> 0:05:12.200
<v Speaker 2>a nominal world. Fascinating conversation with Michael Darta of where

0:05:12.200 --> 0:05:14.480
<v Speaker 2>we are now at five and six percent, some would

0:05:14.480 --> 0:05:18.719
<v Speaker 2>say that's a boom economy, and any number of different opinions.

0:05:19.000 --> 0:05:22.000
<v Speaker 2>One final shout out today Stephen Stanley at Santander was

0:05:22.120 --> 0:05:27.400
<v Speaker 2>just absolutely fabulous about the heritage of the Richmond Fed

0:05:27.560 --> 0:05:32.800
<v Speaker 2>in his work at Chicago. And William and Lee Washington

0:05:32.880 --> 0:05:35.520
<v Speaker 2>and Lee I should say as well, get William and

0:05:35.560 --> 0:05:37.280
<v Speaker 2>Mary in Washington. They're like, you know, they're in the

0:05:37.279 --> 0:05:41.560
<v Speaker 2>same zip code. William and Mary and Washington Lee mixed up.

0:05:41.640 --> 0:05:44.000
<v Speaker 2>We're on an Apple car Play Android play. I've got

0:05:44.040 --> 0:05:47.400
<v Speaker 2>some nasty notes. We're on Android. We're not an Apple

0:05:47.440 --> 0:05:50.120
<v Speaker 2>car play. Okay, Well, all we cares. You use the

0:05:50.120 --> 0:05:53.800
<v Speaker 2>Bloomberg Business app. Download it's free and listen to us

0:05:53.839 --> 0:05:56.520
<v Speaker 2>on Apple car Play or at Android humble by that

0:05:56.600 --> 0:06:00.760
<v Speaker 2>build out on YouTube search Bloomberg Podcast look for Lisa Matail.

0:06:01.240 --> 0:06:05.159
<v Speaker 2>That's the easiest and most lovely way to get to

0:06:05.440 --> 0:06:09.400
<v Speaker 2>S and of course on Apple on our podcast. It

0:06:09.640 --> 0:06:21.400
<v Speaker 2>is single best idea