1 00:00:00,080 --> 00:00:12,960 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jay Leye. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:34,200 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg YEA. Treasuries. 5 00:00:34,280 --> 00:00:36,199 Speaker 1: The story of the last couple of months is just 6 00:00:36,320 --> 00:00:39,720 Speaker 1: yields bleeding lower. This morning, yields unchanged tenure yields to 7 00:00:39,880 --> 00:00:42,720 Speaker 1: eighty three on a US two year note were unchanged 8 00:00:42,720 --> 00:00:46,280 Speaker 1: at two fifty. Sort of story sentiment just whip storic, 9 00:00:46,720 --> 00:00:49,600 Speaker 1: first by Treasury Secretary Steve Manuchin, who for some set 10 00:00:49,600 --> 00:00:52,800 Speaker 1: the States race softer approach towards China, and then by 11 00:00:52,840 --> 00:00:57,120 Speaker 1: economic advisor Larry Cundlow, who suggested the US wasn't backing down. 12 00:00:57,400 --> 00:00:59,560 Speaker 1: Joining me here in New York is Kate Moore blank Rock, 13 00:00:59,640 --> 00:01:02,800 Speaker 1: chief equity strategist. Good morning to k Good morning, So 14 00:01:02,840 --> 00:01:04,840 Speaker 1: what do you site to clients? What on earth is 15 00:01:04,880 --> 00:01:07,600 Speaker 1: going gone? Well, look, I think it's very difficult for 16 00:01:07,640 --> 00:01:09,399 Speaker 1: any of us to predict what's going on in the 17 00:01:09,440 --> 00:01:11,880 Speaker 1: White House. The White House has difficult predicting what's going 18 00:01:11,880 --> 00:01:15,440 Speaker 1: on in the White House. So outside people can't really 19 00:01:15,480 --> 00:01:19,600 Speaker 1: forecast exactly how trade will evolve. Here's what we do 20 00:01:19,720 --> 00:01:22,480 Speaker 1: know is that this back and forth in this uncertainty 21 00:01:22,560 --> 00:01:24,720 Speaker 1: is starting to have an impact on how companies are 22 00:01:24,760 --> 00:01:27,800 Speaker 1: talking about taking risk. And that's something we're really focused on, 23 00:01:27,959 --> 00:01:32,080 Speaker 1: especially because the expectations for spending and investing we're very 24 00:01:32,120 --> 00:01:34,560 Speaker 1: strong going into the beginning of this year and then 25 00:01:34,600 --> 00:01:37,800 Speaker 1: got supercharged after the tax cuts. So any kind of 26 00:01:37,880 --> 00:01:39,960 Speaker 1: change in tone we get from companies as the reporting 27 00:01:39,959 --> 00:01:43,320 Speaker 1: second quarter earnings, particularly around guiding for investment and if 28 00:01:43,319 --> 00:01:46,160 Speaker 1: they're sighting trade issues, which we've heard a couple very 29 00:01:46,240 --> 00:01:50,600 Speaker 1: high profile ceo s do over recent days. UM I 30 00:01:50,600 --> 00:01:52,880 Speaker 1: would hope that would have an influence on the way 31 00:01:52,920 --> 00:01:56,040 Speaker 1: that the trade discussions evolved. So tell me how you 32 00:01:56,080 --> 00:01:59,120 Speaker 1: see the balance of risks around CAPEX improving. Is the 33 00:01:59,160 --> 00:02:01,360 Speaker 1: balance of risk now tilted to the downside or to 34 00:02:01,400 --> 00:02:04,520 Speaker 1: the upside? Look, I was always in the camp that 35 00:02:04,600 --> 00:02:06,720 Speaker 1: Capex was going to be a little bit more conservative 36 00:02:06,880 --> 00:02:09,680 Speaker 1: than some of the initial surveys suggested. You know, you 37 00:02:09,720 --> 00:02:12,720 Speaker 1: had a lot of companies either because they felt explicit 38 00:02:12,720 --> 00:02:16,040 Speaker 1: political pressure or implicit or because things were finally feeling 39 00:02:16,080 --> 00:02:17,839 Speaker 1: a little bit better on the regulatory environment. They felt 40 00:02:17,840 --> 00:02:19,400 Speaker 1: like they had to say they were going to spend 41 00:02:19,440 --> 00:02:23,040 Speaker 1: more money. It's not a bad thing, but you know, 42 00:02:23,080 --> 00:02:27,040 Speaker 1: the follow through has been you know, um, you know, 43 00:02:27,200 --> 00:02:30,720 Speaker 1: not necessarily as strong as some of these surveys would suggest, 44 00:02:30,760 --> 00:02:33,120 Speaker 1: and in fact, looking back at the historic data, it 45 00:02:33,160 --> 00:02:36,400 Speaker 1: almost never is. There's not a great relationship there. But 46 00:02:36,560 --> 00:02:39,919 Speaker 1: very importantly, the companies that are spending today or those 47 00:02:39,960 --> 00:02:42,440 Speaker 1: that already have had a lot of free cash, Yes, sir, 48 00:02:42,639 --> 00:02:45,160 Speaker 1: some of them are getting benefiting from the tax cuts 49 00:02:45,160 --> 00:02:48,880 Speaker 1: and repatriating money um back to the US, But we're 50 00:02:48,880 --> 00:02:52,160 Speaker 1: not getting a lot of the riskier companies all of 51 00:02:52,200 --> 00:02:56,560 Speaker 1: a sudden changing their investment plans. And I certainly you know, 52 00:02:56,639 --> 00:03:00,200 Speaker 1: see the policy environment and the trade environment make not 53 00:03:00,560 --> 00:03:02,880 Speaker 1: a difficult switch right now. It's funny, it's hard to 54 00:03:02,919 --> 00:03:05,480 Speaker 1: reconcile west sentiment is at the moment on Wall Street 55 00:03:05,520 --> 00:03:07,600 Speaker 1: with the numbers that were expected to get from the 56 00:03:07,600 --> 00:03:10,680 Speaker 1: second quarter in the US economy. We're expecting a big 57 00:03:10,760 --> 00:03:14,440 Speaker 1: second quarter GDP figure. Yeah, Kate, how do you reconcile 58 00:03:14,480 --> 00:03:17,000 Speaker 1: those two things, sentiment and the fundamentals on the ground 59 00:03:17,000 --> 00:03:18,840 Speaker 1: in the United States at the moment, I know, it's 60 00:03:18,840 --> 00:03:21,359 Speaker 1: a little bit difficult radio, John, but for the I 61 00:03:21,400 --> 00:03:23,240 Speaker 1: was just nodding my head as you were speaking. It's 62 00:03:23,280 --> 00:03:25,840 Speaker 1: not just the GDP figures for the second quarter, but 63 00:03:25,919 --> 00:03:28,720 Speaker 1: it's also second quarter earnings. I think we're going to 64 00:03:28,840 --> 00:03:31,680 Speaker 1: have a big bucket of strong data in the US 65 00:03:32,320 --> 00:03:34,679 Speaker 1: over the next couple of weeks, that we're going to 66 00:03:34,760 --> 00:03:38,880 Speaker 1: have not only strong consumption and strong overall economic growth, 67 00:03:39,200 --> 00:03:44,040 Speaker 1: but actually quite strong earnings across a huge variety of sectors. 68 00:03:44,120 --> 00:03:47,000 Speaker 1: And you know that doesn't seem to be playing itself 69 00:03:47,000 --> 00:03:51,640 Speaker 1: out in prices across risk asses at this moment. Within 70 00:03:51,840 --> 00:03:56,119 Speaker 1: all this is new cash. Cash has a yield. Now 71 00:03:57,000 --> 00:03:59,960 Speaker 1: is cash a new asset class for cape more? Cash 72 00:04:00,040 --> 00:04:02,560 Speaker 1: is definitely an asset class that it hasn't been for 73 00:04:02,600 --> 00:04:05,160 Speaker 1: a very long time. I don't see it as a 74 00:04:05,200 --> 00:04:09,000 Speaker 1: great substitute for overall equity risk, but it certainly does 75 00:04:09,080 --> 00:04:11,880 Speaker 1: change the calculation on the fixed income side, and across 76 00:04:11,880 --> 00:04:14,080 Speaker 1: a lot of the fixed income portfolios within black Rock, 77 00:04:14,120 --> 00:04:19,040 Speaker 1: we've seen a rotation towards holding a shorter duration instruments 78 00:04:19,240 --> 00:04:22,280 Speaker 1: and more cash. You know, it's a prudent thing to do, 79 00:04:22,880 --> 00:04:26,520 Speaker 1: even for you know, a multi asset investor. Who's thinking 80 00:04:26,520 --> 00:04:29,480 Speaker 1: about waiting for even a further pullback or looking for 81 00:04:29,520 --> 00:04:32,800 Speaker 1: opportunities and with a slightly higher risk premium. Here's a 82 00:04:32,839 --> 00:04:37,240 Speaker 1: headline out just perfectly time for ms more Walgreens Dow 83 00:04:37,360 --> 00:04:42,640 Speaker 1: component third quarter beats estimates make America ready again, and 84 00:04:42,680 --> 00:04:46,600 Speaker 1: they announced a ten billion dollar share buy back. The 85 00:04:48,480 --> 00:04:52,360 Speaker 1: thousand employees they got free cash flow the generating per 86 00:04:52,440 --> 00:04:56,839 Speaker 1: year of six billion dollars. So they're gonna buy back 87 00:04:57,720 --> 00:05:02,360 Speaker 1: off the top of my head twenty months. Yeah, free. Look. 88 00:05:02,400 --> 00:05:05,000 Speaker 1: I would be very surprised if we didn't see a 89 00:05:05,080 --> 00:05:09,479 Speaker 1: whole swath of new buyback announcements coming after earnings. It 90 00:05:09,560 --> 00:05:12,920 Speaker 1: makes sense for companies if they don't have perfect visibility 91 00:05:12,960 --> 00:05:14,919 Speaker 1: into future demand. I mean, this is one of the 92 00:05:14,920 --> 00:05:16,960 Speaker 1: other things with challenging. As we talked about the Quebec 93 00:05:17,000 --> 00:05:19,320 Speaker 1: story as well, you need to if you're gonna engage 94 00:05:19,320 --> 00:05:21,880 Speaker 1: in a multi year investment plan. I feel like you 95 00:05:21,920 --> 00:05:24,159 Speaker 1: can predict the cycle. But this is critical. And this 96 00:05:24,240 --> 00:05:26,960 Speaker 1: goes frankly back to Mario Dragging and Chairman Poule and 97 00:05:26,960 --> 00:05:30,360 Speaker 1: the rest companies that you look at every day are 98 00:05:30,480 --> 00:05:35,680 Speaker 1: managing for a low nominal GDP, low revenue growth environment. 99 00:05:36,120 --> 00:05:38,920 Speaker 1: That's they're they're going out there buying revenue growth. Good 100 00:05:39,000 --> 00:05:42,800 Speaker 1: morning everyone with Pinnacle. They're going out there buying revenue growth, 101 00:05:42,880 --> 00:05:44,520 Speaker 1: and they're buying back stock because they don't know what 102 00:05:44,560 --> 00:05:46,440 Speaker 1: to do with the money. I don't even think it's 103 00:05:46,440 --> 00:05:48,320 Speaker 1: just they don't know what to do with the money. 104 00:05:48,120 --> 00:05:50,800 Speaker 1: I would just suggest that you know, companies are at 105 00:05:51,240 --> 00:05:54,240 Speaker 1: especially US companies, record level of profits. They've had this 106 00:05:54,360 --> 00:05:57,640 Speaker 1: boost from the tax cuts, and what they're doing today 107 00:05:57,839 --> 00:06:00,520 Speaker 1: is saying, I will make some investments for the future, 108 00:06:00,680 --> 00:06:04,840 Speaker 1: but realistically, this is a very long cycle. And they 109 00:06:04,880 --> 00:06:07,120 Speaker 1: are the same people who are kind of cautious about 110 00:06:07,720 --> 00:06:09,920 Speaker 1: whether or not the bull market can continue, who are 111 00:06:09,920 --> 00:06:12,760 Speaker 1: also managing these companies and saying, I don't want to 112 00:06:12,800 --> 00:06:15,680 Speaker 1: spend too far, too much, too far into the cycle. 113 00:06:16,040 --> 00:06:18,680 Speaker 1: I want to have some dry powder, and buying back 114 00:06:18,720 --> 00:06:22,200 Speaker 1: shares also provides them with a little support and dry 115 00:06:22,200 --> 00:06:24,440 Speaker 1: powder as well. Okay, speaking of a sector that buying 116 00:06:24,480 --> 00:06:27,320 Speaker 1: bank shares the banks. Now, I don't want to let 117 00:06:27,320 --> 00:06:29,919 Speaker 1: you go without talking about the financials in the United States. 118 00:06:30,000 --> 00:06:34,200 Speaker 1: We're on a thirteen day losing streak. We just did that. 119 00:06:34,279 --> 00:06:36,200 Speaker 1: I'm glad you're doing it again. It's worth doing. It's 120 00:06:36,240 --> 00:06:39,719 Speaker 1: a record losing streak on a daily record forever. It 121 00:06:39,800 --> 00:06:44,000 Speaker 1: is a record daily losing streak on financials. Doesn't amount 122 00:06:44,040 --> 00:06:47,120 Speaker 1: to a big, big slide, but it's a record daily 123 00:06:47,120 --> 00:06:49,400 Speaker 1: losing streak. Okay, what do you think of that? What's 124 00:06:49,440 --> 00:06:52,000 Speaker 1: behind it? Going into stress test results that should reveal 125 00:06:52,120 --> 00:06:53,799 Speaker 1: the banks have got the green light to go ahead 126 00:06:53,800 --> 00:06:56,200 Speaker 1: with buying back a lot of stock. I find it 127 00:06:56,240 --> 00:06:58,159 Speaker 1: a little bit puzzling. I can come up with us 128 00:06:58,440 --> 00:07:02,280 Speaker 1: a bunch of micro explanations for why the banks have underperformed, 129 00:07:02,880 --> 00:07:05,920 Speaker 1: but you know, in this environment where we're expecting more 130 00:07:06,000 --> 00:07:10,080 Speaker 1: cash return and we're expecting very good results today, where 131 00:07:10,120 --> 00:07:13,440 Speaker 1: the regulatory environment is easing, where rates are going up, 132 00:07:13,600 --> 00:07:17,400 Speaker 1: with the macro backdrops strong, and you know, I think 133 00:07:17,440 --> 00:07:20,560 Speaker 1: some of these micro explanations shouldn't hold a lot of 134 00:07:20,560 --> 00:07:24,200 Speaker 1: water after today. Why did Denmark beat the Republic of 135 00:07:24,240 --> 00:07:30,120 Speaker 1: Ireland five to one last fall? What happened that? Tom? 136 00:07:30,560 --> 00:07:32,480 Speaker 1: You know, we'll have to take that offline because I'm 137 00:07:32,520 --> 00:07:34,520 Speaker 1: afraid the viewers are not ready for my explanation. The 138 00:07:34,720 --> 00:07:39,440 Speaker 1: listeners on radio as listeners, John again, I'm surprised Anie 139 00:07:39,440 --> 00:07:41,680 Speaker 1: took you white minutes to bring up the World comp Well, 140 00:07:41,720 --> 00:07:43,480 Speaker 1: we're gonna get to it a minute here. You know, 141 00:07:43,640 --> 00:07:46,280 Speaker 1: the England Belgium today is like a big deal. Is 142 00:07:46,360 --> 00:07:49,280 Speaker 1: Ireland a soccer force? John like at a decent same 143 00:07:49,360 --> 00:07:51,920 Speaker 1: that just didn't mike it. They didn't. I wouldn't call 144 00:07:51,960 --> 00:07:54,679 Speaker 1: it false, but it's a decent tang. They beat whales 145 00:07:55,360 --> 00:07:58,840 Speaker 1: what nothing in October. You're fascinated by this, I am. 146 00:07:58,960 --> 00:08:02,320 Speaker 1: I it's the highlights. Last night I was almost interested 147 00:08:02,360 --> 00:08:05,520 Speaker 1: in Germany losing. I mean it was like really exciting. Yeah, 148 00:08:05,520 --> 00:08:07,240 Speaker 1: I mean I was. I was doing my radio show 149 00:08:07,240 --> 00:08:10,800 Speaker 1: in London. It started at mid day Eastern time, and 150 00:08:10,920 --> 00:08:14,320 Speaker 1: the game was literally bumping right up against the start 151 00:08:14,360 --> 00:08:16,000 Speaker 1: of the radio show. So I watched the game at 152 00:08:16,000 --> 00:08:19,640 Speaker 1: my desk, then sprinted to the radio show for London. Yeah, 153 00:08:19,680 --> 00:08:22,000 Speaker 1: and just made the start of the program. I think 154 00:08:22,680 --> 00:08:26,280 Speaker 1: the last time I sprinted Nixon was London listeners. They 155 00:08:26,320 --> 00:08:29,559 Speaker 1: take some satisfaction from Germany's exit from the World Cup. 156 00:08:29,920 --> 00:08:33,800 Speaker 1: Yeah yeah, okay, well very good, Kate, Kate more, thank you, 157 00:08:34,040 --> 00:08:36,680 Speaker 1: thank you, Kate, thank you for tolerating this. I feel 158 00:08:36,720 --> 00:08:38,480 Speaker 1: like Tom at the moment, I'm thanking all our guests 159 00:08:38,520 --> 00:08:40,760 Speaker 1: and saying thank you for tolerating. Well, that's true, but 160 00:08:40,800 --> 00:08:44,640 Speaker 1: she's optimistic view of the market. I have an optimistic view, 161 00:08:44,679 --> 00:08:47,280 Speaker 1: but I think a fairly balanced view in terms of 162 00:08:47,320 --> 00:08:50,440 Speaker 1: corporate activity. And actually that's why I'm more optimistic. Look, 163 00:08:50,480 --> 00:08:53,560 Speaker 1: I'm just one last point on when you look at 164 00:08:53,640 --> 00:08:57,280 Speaker 1: the performance of World Cup. Okay, when you look at 165 00:08:57,280 --> 00:09:00,440 Speaker 1: the performance of companies that have done, you know, the 166 00:09:00,480 --> 00:09:04,040 Speaker 1: highest levels of cat bas not just since the financial crisis, 167 00:09:04,120 --> 00:09:07,120 Speaker 1: but over kind of a thirty year period, they've underperformed 168 00:09:07,160 --> 00:09:09,720 Speaker 1: those companies that have been more conservative and have returned 169 00:09:09,760 --> 00:09:12,960 Speaker 1: cash to shareholders. So you know, this this big hope 170 00:09:13,000 --> 00:09:14,679 Speaker 1: that we were going to get a spending wave that's 171 00:09:14,679 --> 00:09:16,559 Speaker 1: going to lead to our performance of all these companies, 172 00:09:16,880 --> 00:09:20,000 Speaker 1: I think it's overdone. We don't have the same veterinarian. 173 00:09:20,240 --> 00:09:22,680 Speaker 1: But I take vet bill to the vet and I write. 174 00:09:22,679 --> 00:09:24,400 Speaker 1: When I write a checkout to the vetinary, and I 175 00:09:24,440 --> 00:09:26,360 Speaker 1: just write it out to a prep school. I don't 176 00:09:26,360 --> 00:09:27,880 Speaker 1: even write it out to the damn VET. I write 177 00:09:27,880 --> 00:09:30,439 Speaker 1: it out, just make it out to this prep school. 178 00:09:30,720 --> 00:09:32,640 Speaker 1: I just write it directly. It's amazing. I could fund 179 00:09:32,640 --> 00:09:35,040 Speaker 1: a small country with my vet bill. You could, you know, 180 00:09:35,120 --> 00:09:37,160 Speaker 1: we could fund an island nation. Tom, we're still on 181 00:09:37,240 --> 00:09:39,439 Speaker 1: live radio. You know when what you can do this 182 00:09:39,520 --> 00:09:41,880 Speaker 1: in a commercial break? Oh no, this is people care 183 00:09:41,960 --> 00:09:44,679 Speaker 1: about vet build. They can about the vet bill. No, 184 00:09:45,240 --> 00:09:48,360 Speaker 1: that builds the name of the dog. Yeah, like your family. 185 00:10:02,559 --> 00:10:04,600 Speaker 1: Foreign exchange has been a tough place to live over 186 00:10:04,600 --> 00:10:07,080 Speaker 1: the last couple of years. Seventeen people called for a 187 00:10:07,080 --> 00:10:10,040 Speaker 1: stronger dollar, We got a weaker one. Eighteen people called 188 00:10:10,080 --> 00:10:12,160 Speaker 1: for eight weeker dollar. We got a stronger one. And 189 00:10:12,200 --> 00:10:16,240 Speaker 1: I still haven't heard the dollar bears capitulate. Well, I 190 00:10:16,240 --> 00:10:17,600 Speaker 1: can tell you we've got a bit of a dollar 191 00:10:17,640 --> 00:10:19,959 Speaker 1: ball here. David Wood joins US now of Bank of 192 00:10:20,000 --> 00:10:23,319 Speaker 1: America Meryl Lynch, head of Global Rates Effects and e 193 00:10:23,559 --> 00:10:26,719 Speaker 1: M Fixed Income Strategy and Economics Research. David, when did 194 00:10:26,720 --> 00:10:32,240 Speaker 1: your title get so long? I know, it's crazy, absolutely crazy. Well, 195 00:10:32,320 --> 00:10:34,200 Speaker 1: welcome to the program. Helped me out with the US 196 00:10:34,280 --> 00:10:36,800 Speaker 1: dollar call because I keep talking to dollar bear after 197 00:10:36,840 --> 00:10:39,360 Speaker 1: dollar bear that refuses to capitulate and believe in what 198 00:10:39,400 --> 00:10:42,480 Speaker 1: we're seeing on the screen. So far this year, you know, 199 00:10:42,520 --> 00:10:44,920 Speaker 1: it's amazing. You know, I've been traveling on the West 200 00:10:44,920 --> 00:10:47,839 Speaker 1: Coast in the last two or three days. L and 201 00:10:48,000 --> 00:10:51,600 Speaker 1: Cisco Seattle's decramental. I'm telling you, I could not find 202 00:10:51,600 --> 00:10:55,360 Speaker 1: a single claim that was long the dollar. And it's 203 00:10:55,360 --> 00:10:59,280 Speaker 1: amazing because this probably must be of a record of 204 00:10:59,360 --> 00:11:02,160 Speaker 1: some sort because we've just had a total person dollar rally. 205 00:11:02,600 --> 00:11:05,400 Speaker 1: It's amazing. I cannot find a single person or either 206 00:11:05,840 --> 00:11:07,880 Speaker 1: professor to be longer dollar for that might have been 207 00:11:07,920 --> 00:11:11,000 Speaker 1: bullish per dollar. It's pretty crazy. This also leads me 208 00:11:11,040 --> 00:11:12,840 Speaker 1: to think that, you know, there's no question of this dollar, 209 00:11:12,920 --> 00:11:14,920 Speaker 1: Railly is probably gonna keep going. So David, that's what 210 00:11:14,960 --> 00:11:16,400 Speaker 1: I've been looking at this morning as well, and I 211 00:11:16,480 --> 00:11:19,200 Speaker 1: fold em into this too. You know, despite the price action, 212 00:11:19,320 --> 00:11:22,679 Speaker 1: I really haven't heard that much capitulation from e M 213 00:11:22,800 --> 00:11:25,720 Speaker 1: bulls or dollar bears, and at least me just concluding 214 00:11:26,080 --> 00:11:28,040 Speaker 1: that I just don't have any conviction that this trade 215 00:11:28,080 --> 00:11:30,000 Speaker 1: is totally exhausted. And it is that pretty much where 216 00:11:30,040 --> 00:11:32,760 Speaker 1: you are as well, David, just folding the forces. They 217 00:11:32,760 --> 00:11:34,559 Speaker 1: are really going to drive this dollar through the back 218 00:11:34,640 --> 00:11:37,240 Speaker 1: end of the year. I think so, because you know, 219 00:11:37,920 --> 00:11:39,920 Speaker 1: especially when it comes to e M, because a big 220 00:11:39,920 --> 00:11:42,240 Speaker 1: difference between this game self off. First of all, we 221 00:11:42,280 --> 00:11:45,199 Speaker 1: saw that in two thirteen, the two dozen thirteens, you 222 00:11:45,240 --> 00:11:47,880 Speaker 1: saw a big correction in prices, but we also saw 223 00:11:47,920 --> 00:11:51,560 Speaker 1: a very significant positional adjustment. This time we've seen a 224 00:11:51,559 --> 00:11:54,320 Speaker 1: big correction of prices. We haven't seen anything like what 225 00:11:54,360 --> 00:11:57,280 Speaker 1: we saw in terms of positional adjustment. Tells me there's 226 00:11:57,280 --> 00:12:00,320 Speaker 1: not aquidity for one thing. I mean, certainly, the average 227 00:12:00,360 --> 00:12:02,840 Speaker 1: age of market makers in e M on Walster right 228 00:12:02,880 --> 00:12:04,920 Speaker 1: now is probably ten years younger than they were five 229 00:12:05,000 --> 00:12:08,040 Speaker 1: six years ago. There is absolutely north door to even 230 00:12:08,040 --> 00:12:10,320 Speaker 1: get out. So from that point of view, this, this 231 00:12:10,400 --> 00:12:12,880 Speaker 1: is a very very worrying thing to me, David, this 232 00:12:12,920 --> 00:12:14,440 Speaker 1: is right where I wanted to go. I'm glad you 233 00:12:14,440 --> 00:12:17,640 Speaker 1: brought this up and that I would suggest into this cycle, 234 00:12:17,679 --> 00:12:22,720 Speaker 1: whatever happens, we're dealing with a wildly a historical street 235 00:12:22,840 --> 00:12:27,080 Speaker 1: and that they really don't know the history. How close 236 00:12:27,200 --> 00:12:31,199 Speaker 1: are we to the correlations and the behavior the emotions 237 00:12:31,679 --> 00:12:36,959 Speaker 1: that you get with strong dollar weaker e M. I mean, Tommy, 238 00:12:37,000 --> 00:12:39,000 Speaker 1: I think jobs right, I mean this is why in 239 00:12:39,040 --> 00:12:42,199 Speaker 1: any ways I mean this, this, this is why e 240 00:12:42,360 --> 00:12:45,480 Speaker 1: M gets very dangerous when cross over investors start to 241 00:12:45,520 --> 00:12:49,280 Speaker 1: basically give up. I'll give an example. Incredibly right now, 242 00:12:49,920 --> 00:12:52,400 Speaker 1: not that incredible. Do you know right now you can 243 00:12:52,480 --> 00:12:56,200 Speaker 1: buy a one year JP Morgan paper or Bank American 244 00:12:56,240 --> 00:12:59,960 Speaker 1: paper that pays you three percent and more. In other word, 245 00:13:00,080 --> 00:13:02,560 Speaker 1: is the first time in at least ten years you 246 00:13:02,559 --> 00:13:06,280 Speaker 1: can earn three percent without thinking a duration risk, without 247 00:13:06,320 --> 00:13:10,400 Speaker 1: taking any credit risk, just being lone the US dollar? 248 00:13:10,640 --> 00:13:12,520 Speaker 1: And why if you can earn three person by jating 249 00:13:12,559 --> 00:13:14,160 Speaker 1: working paper, why the hell would you want to buy 250 00:13:14,160 --> 00:13:17,040 Speaker 1: Brazil six percent? This is what I think a lot 251 00:13:17,080 --> 00:13:20,440 Speaker 1: of crossover investors started to ask themselves. And this is 252 00:13:20,440 --> 00:13:23,360 Speaker 1: the reason why I think if we just get ten percent, 253 00:13:23,400 --> 00:13:26,360 Speaker 1: a crossover investors mean investors were not bench points EM 254 00:13:26,360 --> 00:13:28,640 Speaker 1: started basically pulled out. I think you're gonna see a 255 00:13:28,640 --> 00:13:31,880 Speaker 1: shock wave three EM that we haven't begun to see yet, David. 256 00:13:31,880 --> 00:13:33,600 Speaker 1: In the limited time that we have with you, I've 257 00:13:33,600 --> 00:13:35,600 Speaker 1: already got to get your thoughts on on China as well. 258 00:13:35,640 --> 00:13:37,040 Speaker 1: If we're going to see a shock in am, what 259 00:13:37,080 --> 00:13:38,600 Speaker 1: are we about to see in China? And just what 260 00:13:38,760 --> 00:13:42,120 Speaker 1: is going on with the Chinese currency? Unpack? What is 261 00:13:42,200 --> 00:13:46,400 Speaker 1: driving this currency lawa waka? I think you know what 262 00:13:46,800 --> 00:13:49,320 Speaker 1: last year my worst call was that I thought Chinese 263 00:13:49,360 --> 00:13:51,959 Speaker 1: commun was gonna slow because of the de leveraging. But 264 00:13:51,960 --> 00:13:54,400 Speaker 1: a gains what last year, global growth was so strong, 265 00:13:54,720 --> 00:13:56,600 Speaker 1: you know, Chinese textbook growth is so strong and more 266 00:13:56,600 --> 00:14:00,199 Speaker 1: than offset of deal leveraging. This time around toy first, boy, 267 00:14:00,520 --> 00:14:03,240 Speaker 1: they're confused. The leverage. Global growth was definitely not as 268 00:14:03,320 --> 00:14:06,240 Speaker 1: quite as strong. So basically there's no question Chinese group 269 00:14:06,320 --> 00:14:10,199 Speaker 1: this swimming, which means that they need easier credit conditions 270 00:14:10,440 --> 00:14:12,839 Speaker 1: and monster conditions which I'm killing now they have to 271 00:14:13,040 --> 00:14:15,600 Speaker 1: will I'm willing to give because they were under pressure 272 00:14:15,600 --> 00:14:17,679 Speaker 1: to prop up the R and B. Now I think 273 00:14:17,720 --> 00:14:20,280 Speaker 1: it's very clear they have now a gun pointing at 274 00:14:20,320 --> 00:14:22,600 Speaker 1: their head and they have no choice. They're now starting 275 00:14:22,640 --> 00:14:24,720 Speaker 1: to let the R and B go. Notwith getting the 276 00:14:24,800 --> 00:14:26,880 Speaker 1: fact that the under pressure from the US to basically 277 00:14:26,880 --> 00:14:28,840 Speaker 1: reach your agreement on trade, but I think you know, 278 00:14:28,920 --> 00:14:32,840 Speaker 1: in some sense the arm by weakness is actually very concerning. David, 279 00:14:33,080 --> 00:14:34,720 Speaker 1: what is your calling yen? I just want to frame 280 00:14:34,760 --> 00:14:36,760 Speaker 1: how big a move you see? What's your twelve months? 281 00:14:36,760 --> 00:14:41,000 Speaker 1: I'll call in dollar yen dollar again? You mean dolling 282 00:14:41,360 --> 00:14:43,520 Speaker 1: dollar again? I think yeah, I think we're going to 283 00:14:43,560 --> 00:14:46,480 Speaker 1: one fifteen, one seventeen. Just because I'm so incredibly bullish 284 00:14:46,560 --> 00:14:49,560 Speaker 1: about the US. Isn't so much move isn't that like 285 00:14:49,600 --> 00:14:53,880 Speaker 1: a disruptive move to see seven big figures? You know what? 286 00:14:55,000 --> 00:14:56,920 Speaker 1: You know, I've been doing this for twenty years, then 287 00:14:57,000 --> 00:15:00,240 Speaker 1: you know me. I've been a doom and gloom guy far, 288 00:15:00,680 --> 00:15:03,760 Speaker 1: but I've never been this bullish the US economy in 289 00:15:03,840 --> 00:15:06,560 Speaker 1: twenty years. I've been doing this well, I am absolutely 290 00:15:06,560 --> 00:15:09,600 Speaker 1: It's a liberating, basically feeling every morning I wake up, 291 00:15:10,080 --> 00:15:14,600 Speaker 1: you know what? And that's that's the fundamental story here, 292 00:15:14,920 --> 00:15:18,280 Speaker 1: which is that this economy is growing gangbuster and for 293 00:15:18,360 --> 00:15:21,440 Speaker 1: all the reasons in the market remains in denial that 294 00:15:21,600 --> 00:15:24,960 Speaker 1: because this times reform, it is absolutely changing the way 295 00:15:25,000 --> 00:15:28,160 Speaker 1: people think about the economy. In my new special in 296 00:15:28,200 --> 00:15:30,760 Speaker 1: Corporate America, David really emphatic, and we have a real 297 00:15:30,840 --> 00:15:33,560 Speaker 1: limited time left. So just one quick final question. I 298 00:15:33,600 --> 00:15:36,280 Speaker 1: just wonder whether Dolly and is the cleaner rates play 299 00:15:36,320 --> 00:15:38,000 Speaker 1: in G ten at the moment. And the reason I 300 00:15:38,040 --> 00:15:39,960 Speaker 1: asked this is what is the global dividend of a 301 00:15:40,000 --> 00:15:42,240 Speaker 1: really strong U S economy? And if we get the 302 00:15:42,280 --> 00:15:44,000 Speaker 1: dollar that really starts to rip in the way you 303 00:15:44,040 --> 00:15:45,880 Speaker 1: think it will, aren't we gonna need to buy a 304 00:15:45,920 --> 00:15:47,560 Speaker 1: little bit of Japanese? Yeah? Aren't we going to see 305 00:15:47,560 --> 00:15:51,040 Speaker 1: a bit of risk aversion internationally. So that's why I 306 00:15:51,120 --> 00:15:54,040 Speaker 1: still like selling euro dollar as my favorite based. The 307 00:15:54,160 --> 00:15:58,520 Speaker 1: dollar interesting because I'm telling you, whether there's there's no 308 00:15:58,600 --> 00:16:02,400 Speaker 1: tree war, the economy is gonna go crazy, and I'm 309 00:16:02,440 --> 00:16:05,080 Speaker 1: telling you the dollar is going to search because we're 310 00:16:05,080 --> 00:16:07,640 Speaker 1: gonna see a massive reproaching of the terminal five months. 311 00:16:07,680 --> 00:16:11,480 Speaker 1: Rade's going to go down. The toilet in Europe is 312 00:16:11,600 --> 00:16:14,200 Speaker 1: much more dependent on Ian than is the US. So 313 00:16:14,200 --> 00:16:17,360 Speaker 1: it was very simple, David, We're going to leave it there. 314 00:16:17,400 --> 00:16:19,120 Speaker 1: David would thank you so much on the West coast 315 00:16:19,280 --> 00:16:21,280 Speaker 1: greatly appreciate what a trooper to get up this early. 316 00:16:32,960 --> 00:16:36,000 Speaker 1: This is, without question, our interview of the day. Travis 317 00:16:36,080 --> 00:16:38,960 Speaker 1: Langner is in Chicago. He is out of the academic 318 00:16:39,000 --> 00:16:43,760 Speaker 1: combine of Kansas, but he is a person of immense uniqueness. 319 00:16:43,840 --> 00:16:47,440 Speaker 1: He has clerked both for Justice Kennedy and also for 320 00:16:47,560 --> 00:16:50,800 Speaker 1: Justice Brett Kavanaugh, who is on the short short list 321 00:16:50,880 --> 00:16:54,520 Speaker 1: to replace h Mr Kennedy. We are joined now by 322 00:16:54,640 --> 00:16:58,160 Speaker 1: Mr Langner in Washington. Travis, wonderful to have you with us, 323 00:16:58,160 --> 00:17:01,400 Speaker 1: no effelments with us yesterday from Harvard Law and spoke 324 00:17:01,440 --> 00:17:04,280 Speaker 1: of the moment of Justice Kennedy help our audience with 325 00:17:04,400 --> 00:17:08,560 Speaker 1: how Justice Kennedy practice Supreme Court law? What was he 326 00:17:08,680 --> 00:17:12,760 Speaker 1: like in the chambers? While in chambers and with his colleagues, 327 00:17:13,119 --> 00:17:17,720 Speaker 1: he was just incredibly collegial. You know, the Court presents 328 00:17:18,080 --> 00:17:21,879 Speaker 1: in its written work as sometimes fairly a combative place 329 00:17:21,920 --> 00:17:24,760 Speaker 1: among the justices. In fact, many of them have very 330 00:17:24,760 --> 00:17:27,880 Speaker 1: close relationships, and Justice Kennedy really was a part of 331 00:17:27,920 --> 00:17:31,520 Speaker 1: that fabric friends on both sides of the aisle, as 332 00:17:31,600 --> 00:17:33,879 Speaker 1: as we would would think of it from outside the court. 333 00:17:34,080 --> 00:17:35,680 Speaker 1: And I think you saw that in the statements from 334 00:17:35,720 --> 00:17:39,360 Speaker 1: his colleagues yesterday. Who really will miss his personal presence 335 00:17:39,680 --> 00:17:42,159 Speaker 1: on the court and in chambers as well as his 336 00:17:42,280 --> 00:17:45,000 Speaker 1: legal mind and his work critically as we move to 337 00:17:45,119 --> 00:17:48,280 Speaker 1: Brett Kevanaugh and the other candidates. To me, it seems 338 00:17:48,320 --> 00:17:52,240 Speaker 1: like a generational shift. Noah and others, Cass Sunstein and 339 00:17:52,320 --> 00:17:56,200 Speaker 1: others speak of Justice Kennedy's interpretation of dignity is his 340 00:17:56,440 --> 00:18:00,399 Speaker 1: broader view of making law. Is that a generational shift 341 00:18:00,440 --> 00:18:03,440 Speaker 1: of the past, And what will the new law be, 342 00:18:03,720 --> 00:18:07,720 Speaker 1: whether it's Justice Kavanaugh or someone else, Well, I think 343 00:18:08,119 --> 00:18:10,720 Speaker 1: I'm not sure if it's a generational shift in legal thinking, 344 00:18:10,720 --> 00:18:13,800 Speaker 1: it's certainly anytime there's an opportunity for a president to 345 00:18:14,040 --> 00:18:17,280 Speaker 1: make an appointment, a nomination to the Supreme Court. It's 346 00:18:17,359 --> 00:18:20,240 Speaker 1: usually a generational shift, just in the sense that Justice 347 00:18:20,280 --> 00:18:23,119 Speaker 1: Kennedy will be eighty two this summer, and all of 348 00:18:23,119 --> 00:18:25,760 Speaker 1: the folks who are mentioned as possible replacements are in 349 00:18:25,800 --> 00:18:29,080 Speaker 1: their their early fifties or maybe they're late forties. In 350 00:18:29,160 --> 00:18:31,600 Speaker 1: terms of his jurisprudence and what the future of the 351 00:18:31,600 --> 00:18:34,560 Speaker 1: Court looks like. If Justice Kennedy really is at heart 352 00:18:34,840 --> 00:18:37,800 Speaker 1: a conservative, but someone uh, you know, if you trace 353 00:18:37,880 --> 00:18:40,720 Speaker 1: his roots to California and maybe think of a of 354 00:18:40,760 --> 00:18:45,600 Speaker 1: a western a US Western libertarianism, and that's really a 355 00:18:45,640 --> 00:18:47,920 Speaker 1: streak that runs through all of his opinions, and there 356 00:18:48,000 --> 00:18:51,159 Speaker 1: is a there is probably a new type of conservatism 357 00:18:51,920 --> 00:18:55,240 Speaker 1: whoever is nominated to replace him. From where you sit, 358 00:18:55,680 --> 00:18:59,800 Speaker 1: what is the distinction between the present Justice Gorsuch in 359 00:18:59,840 --> 00:19:03,080 Speaker 1: a candidates such as Kavanaugh or is it almost a 360 00:19:03,119 --> 00:19:08,440 Speaker 1: cookie cutter modern conservatism? Well, I think to contrast Justice 361 00:19:08,480 --> 00:19:12,320 Speaker 1: Corset and and Judge Kavanaugh, Uh, there are probably some 362 00:19:12,400 --> 00:19:14,560 Speaker 1: differences on the margins and the way they would approach 363 00:19:14,840 --> 00:19:17,600 Speaker 1: certain issues, and certainly in the types of experience that 364 00:19:17,640 --> 00:19:20,720 Speaker 1: they've had. Uh. Judge gorse It's now Justice scor Such 365 00:19:20,760 --> 00:19:23,200 Speaker 1: sat on the Tent Circuit Court of Appeals in Denver, 366 00:19:23,600 --> 00:19:26,160 Speaker 1: which is a circuit that is a little different from 367 00:19:26,200 --> 00:19:28,600 Speaker 1: Judge Kavanaugh's Cortner in d C. For the types of 368 00:19:28,680 --> 00:19:31,400 Speaker 1: issues where they have expertise, but in terms of their 369 00:19:31,440 --> 00:19:35,760 Speaker 1: legal thinking, uh, their their work as a mainstream conservative 370 00:19:35,760 --> 00:19:38,040 Speaker 1: in the law today, those are two very similar. Name 371 00:19:38,119 --> 00:19:41,119 Speaker 1: your voice and the heritage, and Professor Felbon at Harvard 372 00:19:41,160 --> 00:19:44,920 Speaker 1: captured this and Scorpions beautifully. Your voice and heritage out 373 00:19:44,960 --> 00:19:47,840 Speaker 1: of Kansas and Chicago is critical, and that it's a 374 00:19:47,920 --> 00:19:50,560 Speaker 1: Midwest voice in whether it's Wizard White from the past 375 00:19:50,880 --> 00:19:53,280 Speaker 1: and the rest of them. There is an American view 376 00:19:53,800 --> 00:19:56,679 Speaker 1: that the Supreme Court is controlled by the elites of 377 00:19:56,720 --> 00:19:59,520 Speaker 1: the East and a few selected liberals that got lost 378 00:19:59,560 --> 00:20:04,200 Speaker 1: on the West coast. How mid continent will this Supreme 379 00:20:04,240 --> 00:20:08,560 Speaker 1: Court become? How Kansas like will this Supreme Court be? 380 00:20:09,880 --> 00:20:12,280 Speaker 1: I'm not sure it will be terribly Kansas like. But 381 00:20:12,320 --> 00:20:15,520 Speaker 1: I would say that of of the potential nominees that 382 00:20:15,560 --> 00:20:20,280 Speaker 1: are listed now, all of them, regardless of their current geography, 383 00:20:20,600 --> 00:20:23,320 Speaker 1: share an academic background and a background in the law 384 00:20:23,560 --> 00:20:26,840 Speaker 1: that looks very similar and is fairly elite, and UH 385 00:20:27,040 --> 00:20:29,880 Speaker 1: Professor Feltman and others have have rightly pointed out that 386 00:20:30,200 --> 00:20:33,520 Speaker 1: this is not a court made up of Byron Whites 387 00:20:33,560 --> 00:20:38,520 Speaker 1: and Tony Kennedy's and UH folks from Minnesota, California, all 388 00:20:38,560 --> 00:20:42,760 Speaker 1: across the country. This is an East Coast court, regardless 389 00:20:42,760 --> 00:20:44,840 Speaker 1: of who is nominated and even if that person happens 390 00:20:44,880 --> 00:20:48,560 Speaker 1: to sit now in the Midwest, Travis. We often talk 391 00:20:48,640 --> 00:20:53,160 Speaker 1: about politicians getting into power and changing a little bit 392 00:20:53,200 --> 00:20:55,560 Speaker 1: in how they view things and trying to find either 393 00:20:55,600 --> 00:20:58,520 Speaker 1: more consensus or being more belligerent. Is it the same 394 00:20:58,560 --> 00:21:01,400 Speaker 1: for justices to do p People change when they get 395 00:21:01,400 --> 00:21:05,080 Speaker 1: appointed to the Supreme Court in their beliefs. I don't 396 00:21:05,119 --> 00:21:08,520 Speaker 1: know if they change immediately upon appointment to the Supreme Court, 397 00:21:08,600 --> 00:21:13,000 Speaker 1: but we've seen historically changes while justices serve on the Court, 398 00:21:13,240 --> 00:21:16,080 Speaker 1: and of course the Court is a legal institution, but 399 00:21:16,080 --> 00:21:19,840 Speaker 1: but also in many ways of political institution. Justices read 400 00:21:19,880 --> 00:21:23,440 Speaker 1: the newspaper. They know the issues of our time, and 401 00:21:23,560 --> 00:21:26,880 Speaker 1: as the balance of courts shifts and as members come 402 00:21:26,920 --> 00:21:30,520 Speaker 1: and go, you do see changes among the remaining members. 403 00:21:30,560 --> 00:21:34,880 Speaker 1: That certainly happened with Justice O'Connor, particularly when Justice Scalia 404 00:21:35,000 --> 00:21:38,080 Speaker 1: joined the court. Some would say that it happened a 405 00:21:38,119 --> 00:21:41,560 Speaker 1: bit with Justice Kennedy after Justice O'Connor departed the court 406 00:21:41,600 --> 00:21:44,560 Speaker 1: in two thousand six, And it could be something that 407 00:21:44,640 --> 00:21:48,200 Speaker 1: happens that we see potentially with Chief Justice Roberts, who 408 00:21:48,240 --> 00:21:50,879 Speaker 1: many are saying now becomes the center of the court, 409 00:21:51,280 --> 00:21:54,080 Speaker 1: regardless of who is confirmed. But you know that center 410 00:21:54,119 --> 00:21:56,240 Speaker 1: will have moved slightly to the right if it is 411 00:21:56,280 --> 00:21:59,879 Speaker 1: the Chief Justice now who occupies that middle position. I 412 00:22:00,200 --> 00:22:03,080 Speaker 1: What exact effect will this have on social issues facing 413 00:22:03,080 --> 00:22:05,960 Speaker 1: the court? Is there one social issue that that will 414 00:22:06,800 --> 00:22:10,120 Speaker 1: really be in the limelight. Well, you know, there's discussion 415 00:22:10,200 --> 00:22:14,000 Speaker 1: about several social issues, abortion probably being the leading one, 416 00:22:14,080 --> 00:22:18,000 Speaker 1: but it's not clear what exact effect a new justice 417 00:22:18,040 --> 00:22:21,960 Speaker 1: will have. You know, many of the justices, or all 418 00:22:22,000 --> 00:22:23,920 Speaker 1: of them really on the shortlist, of course, come from 419 00:22:24,440 --> 00:22:28,160 Speaker 1: the more conservative school of legal thought. That doesn't necessarily 420 00:22:28,200 --> 00:22:33,440 Speaker 1: mean that all abortion decisions are potentially overturned or or reversed. 421 00:22:33,840 --> 00:22:36,240 Speaker 1: There could be some narrowing, but frankly, we've seen that 422 00:22:36,320 --> 00:22:39,919 Speaker 1: over the last ten or twenty years, narrowing of the 423 00:22:39,920 --> 00:22:42,640 Speaker 1: abortion opinions, even with Justice Kennedy frankly at the center 424 00:22:42,720 --> 00:22:45,680 Speaker 1: of the court, Mr Leonard, what is the difference between 425 00:22:45,680 --> 00:22:49,040 Speaker 1: a five four in a six three court? If we 426 00:22:49,119 --> 00:22:50,840 Speaker 1: get to a six three, I mean I can't even 427 00:22:50,880 --> 00:22:54,560 Speaker 1: fathom getting to seven two. But what's the difference between 428 00:22:54,600 --> 00:22:58,600 Speaker 1: five four and six three? Well, I think internally at 429 00:22:58,640 --> 00:23:01,639 Speaker 1: the court as well as x sternally just from a 430 00:23:01,800 --> 00:23:05,520 Speaker 1: public awareness and uh trust in the court as an 431 00:23:05,560 --> 00:23:09,679 Speaker 1: institution standpoint. There certainly, you know, for all of us 432 00:23:09,680 --> 00:23:12,400 Speaker 1: externally watching the court, when you see a six three 433 00:23:12,480 --> 00:23:15,280 Speaker 1: or seven too, and you see broad consensus around an 434 00:23:15,280 --> 00:23:18,560 Speaker 1: opinion on a controversial issue, that probably means it's a 435 00:23:18,560 --> 00:23:21,800 Speaker 1: more narrow opinion, uh, And for many people that's a 436 00:23:21,880 --> 00:23:25,400 Speaker 1: comforting sign that the Court is being more incrementalist as 437 00:23:25,400 --> 00:23:28,240 Speaker 1: opposed to taking some broader steps. I don't know that 438 00:23:28,480 --> 00:23:31,919 Speaker 1: replacement for Justice Kennedy changes the number of five to 439 00:23:32,000 --> 00:23:34,600 Speaker 1: four decisions on this Court. And it's interesting actually, in 440 00:23:34,600 --> 00:23:38,920 Speaker 1: the term just concluded, Justice Kennedy never joined the four 441 00:23:38,960 --> 00:23:42,080 Speaker 1: more liberal justices to create that classic five to four 442 00:23:42,119 --> 00:23:44,480 Speaker 1: that we've seen in previous terms. So it could be 443 00:23:44,520 --> 00:23:47,359 Speaker 1: that next term with a replacement for Justice Kennedy looks 444 00:23:47,400 --> 00:23:49,480 Speaker 1: a lot like this term in terms of how the 445 00:23:49,560 --> 00:23:52,560 Speaker 1: vote stack stack up, excuse me among the nine of them. 446 00:23:52,920 --> 00:23:55,000 Speaker 1: Mr Langner, thank you so much for joining us today 447 00:23:55,000 --> 00:24:15,280 Speaker 1: with Keller Langner in Washington, Travis Legner. This is beyond 448 00:24:15,320 --> 00:24:19,760 Speaker 1: well timed with bearings yes of olden time and Bearings 449 00:24:19,760 --> 00:24:23,080 Speaker 1: asset management joining us now. It's Christopher Smart and that 450 00:24:23,200 --> 00:24:25,800 Speaker 1: is a name some of you in international relations will do. Oh, 451 00:24:25,880 --> 00:24:30,480 Speaker 1: there's literally no one in international relations who was linked 452 00:24:30,480 --> 00:24:34,159 Speaker 1: to finance as Christopher Smart has his work at the 453 00:24:34,200 --> 00:24:37,399 Speaker 1: Kennedy School, among other places, as public service to the nation, 454 00:24:37,840 --> 00:24:41,120 Speaker 1: but also as a c f A and working within finance, 455 00:24:41,119 --> 00:24:45,639 Speaker 1: including with Pioneer Investments of Boston years ago. Christopher Smart, 456 00:24:45,720 --> 00:24:47,920 Speaker 1: it is an opportune time to rip up the script 457 00:24:48,440 --> 00:24:51,080 Speaker 1: and speak to you of the Helsinki's of the past 458 00:24:51,680 --> 00:24:54,160 Speaker 1: and the idea that Mr Putin will meet with Mr 459 00:24:54,240 --> 00:24:59,040 Speaker 1: Trump in a new Helsinki. Our Eli Lake this morning 460 00:24:59,240 --> 00:25:02,520 Speaker 1: is scar you think about the idea of an uncontrolled 461 00:25:03,000 --> 00:25:07,040 Speaker 1: Mr Trump meeting with Mr Putin? What should the administration 462 00:25:07,200 --> 00:25:11,400 Speaker 1: fear with the president one on one with Mr Putin? Well, 463 00:25:11,440 --> 00:25:14,199 Speaker 1: I think these things, as you say, are normally very 464 00:25:14,240 --> 00:25:18,359 Speaker 1: well scripted, very well prepared, and the meeting outcomes are 465 00:25:18,440 --> 00:25:22,280 Speaker 1: usually well determined and planned in advance. Having two leaders 466 00:25:22,280 --> 00:25:25,080 Speaker 1: go into a room together is something through history I 467 00:25:25,080 --> 00:25:28,440 Speaker 1: think we have seen as not a formula for success, 468 00:25:28,840 --> 00:25:31,200 Speaker 1: partly because when they come out of the room, it's 469 00:25:31,200 --> 00:25:36,480 Speaker 1: never clear what has happened. Um. We had a similar example, 470 00:25:36,560 --> 00:25:40,880 Speaker 1: I think when President Kennedy with Chairman Kristoff, and they 471 00:25:40,920 --> 00:25:43,560 Speaker 1: both came out with very different reports of that meeting. 472 00:25:43,600 --> 00:25:45,959 Speaker 1: So that's at least one thing to fear. The second 473 00:25:45,960 --> 00:25:48,240 Speaker 1: thing is that it's very hard to know what the 474 00:25:48,280 --> 00:25:50,719 Speaker 1: next step is in the US Russia relationship. As important 475 00:25:50,720 --> 00:25:52,919 Speaker 1: as it is, we are at a point where we 476 00:25:53,000 --> 00:25:55,400 Speaker 1: just don't like talking to each other about anything, and 477 00:25:55,520 --> 00:25:57,240 Speaker 1: for a lot of reasons that I think on our 478 00:25:57,280 --> 00:26:01,960 Speaker 1: side are very well founded. But the Russian reject the facts. 479 00:26:02,160 --> 00:26:05,280 Speaker 1: The old Daniel Patrick moynihan line about you have the 480 00:26:05,359 --> 00:26:07,119 Speaker 1: right to your own opinion, but not your own facts. 481 00:26:07,520 --> 00:26:09,480 Speaker 1: The Russians are working from a different set of facts, 482 00:26:09,680 --> 00:26:12,520 Speaker 1: even though they're wrong. Within this is this template of 483 00:26:12,600 --> 00:26:15,760 Speaker 1: international investment. John Farrell and I have spent days and 484 00:26:15,840 --> 00:26:20,120 Speaker 1: weeks were the new international politics. How does that fall 485 00:26:20,240 --> 00:26:25,240 Speaker 1: into international investment? I think for an investor, as much 486 00:26:25,320 --> 00:26:27,800 Speaker 1: time as we spend looking at the politics, and as 487 00:26:27,840 --> 00:26:30,520 Speaker 1: important as those things are, when at the end of 488 00:26:30,520 --> 00:26:32,520 Speaker 1: the day you're buying a stock or you're buying a bond, 489 00:26:32,560 --> 00:26:34,560 Speaker 1: you're looking to discount the cash flows you're going to 490 00:26:34,640 --> 00:26:38,080 Speaker 1: get back, and while you wonder and wring your hands 491 00:26:38,119 --> 00:26:40,840 Speaker 1: over the future of the Korean peninsula, it's very hard 492 00:26:40,880 --> 00:26:44,120 Speaker 1: to price that back into an investment. So I think 493 00:26:44,560 --> 00:26:47,960 Speaker 1: investors up until now and for the last several years 494 00:26:47,960 --> 00:26:49,920 Speaker 1: and for years to come, will focus on the economic 495 00:26:50,000 --> 00:26:53,040 Speaker 1: data more than anything else. Um. But I think they 496 00:26:53,080 --> 00:26:56,520 Speaker 1: have to start pricing in things like trade wars, where 497 00:26:56,560 --> 00:26:59,160 Speaker 1: the flow of goods and services across borders will become 498 00:26:59,160 --> 00:27:01,919 Speaker 1: more expensive, and that will have an impact on markets. 499 00:27:02,040 --> 00:27:06,159 Speaker 1: Does that diminish global nominal GDP, diminishing damp in the 500 00:27:06,200 --> 00:27:09,239 Speaker 1: animal spirit, and does that lead to the mergers like 501 00:27:09,320 --> 00:27:12,560 Speaker 1: we saw yesterday with Pinnacle and Cannagra. We're basically the 502 00:27:12,560 --> 00:27:13,879 Speaker 1: only way you can grow is to grow out and 503 00:27:13,920 --> 00:27:16,560 Speaker 1: acquire revenue. I mean, we end up with a new 504 00:27:16,680 --> 00:27:18,600 Speaker 1: m and a well. I think that will drive the 505 00:27:18,640 --> 00:27:22,040 Speaker 1: economics and the technology. I think you're driving you towards globalization, 506 00:27:22,200 --> 00:27:26,200 Speaker 1: larger firms, more cross order scale at the same time 507 00:27:26,280 --> 00:27:28,720 Speaker 1: as you see the politics are working in the other direction, 508 00:27:29,200 --> 00:27:33,320 Speaker 1: where where populist uh elected officials around the world they're 509 00:27:33,320 --> 00:27:36,240 Speaker 1: trying to take more control of their borders and um 510 00:27:36,760 --> 00:27:40,040 Speaker 1: make you know, throw up walls that weren't there before. Christopher, 511 00:27:40,080 --> 00:27:42,520 Speaker 1: is this going to force the mainstream to to wake 512 00:27:42,560 --> 00:27:45,240 Speaker 1: out to what the electra ultimately would like to see, 513 00:27:46,040 --> 00:27:48,560 Speaker 1: Because what I see from many guests that come on 514 00:27:48,560 --> 00:27:51,440 Speaker 1: this program on trade, it's a very sort of china 515 00:27:51,520 --> 00:27:54,040 Speaker 1: apologist stance from a lot of people on the trade issue. 516 00:27:54,400 --> 00:27:57,679 Speaker 1: On immigration, they're like several years behind what the election 517 00:27:57,760 --> 00:28:00,920 Speaker 1: has been calling for. UM. So the rise a populism 518 00:28:01,000 --> 00:28:03,840 Speaker 1: is only going to get a whole lot worse. UM, 519 00:28:04,000 --> 00:28:06,800 Speaker 1: so long as the mainstream political parties don't wake up 520 00:28:06,840 --> 00:28:09,560 Speaker 1: to what is actually happening. Well, I think it depends 521 00:28:09,560 --> 00:28:11,439 Speaker 1: on which mainstream parties you're talking about, But I think 522 00:28:11,440 --> 00:28:13,880 Speaker 1: you're absolutely right. You know, there is change of foot 523 00:28:14,000 --> 00:28:17,080 Speaker 1: and we have seen that in elections that have shocked, um, 524 00:28:17,160 --> 00:28:19,800 Speaker 1: the establishments in the United States and Europe and elsewhere. 525 00:28:20,240 --> 00:28:22,960 Speaker 1: And I think there is an important set of lessons 526 00:28:22,960 --> 00:28:25,520 Speaker 1: that new politicians and new political leaders need to draw 527 00:28:25,960 --> 00:28:30,040 Speaker 1: on China. I think you know what is absolutely right 528 00:28:30,359 --> 00:28:33,439 Speaker 1: is that China has been a very difficult and um 529 00:28:33,640 --> 00:28:36,600 Speaker 1: bad actor in many ways in the global trade system. 530 00:28:36,640 --> 00:28:39,000 Speaker 1: I think the question is how do you best deal 531 00:28:39,040 --> 00:28:42,080 Speaker 1: with China? Because it is going to continue to grow 532 00:28:42,120 --> 00:28:45,040 Speaker 1: and become bigger and more influential in not just the 533 00:28:45,080 --> 00:28:48,400 Speaker 1: trading system but the global financial system. Uh, and that 534 00:28:48,600 --> 00:28:51,640 Speaker 1: takes much more than slapping tarots on one side or 535 00:28:51,640 --> 00:28:53,640 Speaker 1: the other. So what is the best approach? I mean, 536 00:28:53,680 --> 00:28:56,920 Speaker 1: we continually have this conversation on Bloomberg Radio, and I 537 00:28:56,920 --> 00:29:00,800 Speaker 1: don't necessarily subscribe to one approach. My question continually always 538 00:29:00,880 --> 00:29:03,120 Speaker 1: the approach of the last ten years hasn't worked, So 539 00:29:03,120 --> 00:29:05,720 Speaker 1: why should we carry on doing the same thing. Well, 540 00:29:05,760 --> 00:29:07,400 Speaker 1: I think you just have to keep at it is 541 00:29:07,800 --> 00:29:10,840 Speaker 1: my short and not very dramatic answer, But I think 542 00:29:10,920 --> 00:29:14,080 Speaker 1: it's one of those things where these are not transactions, 543 00:29:14,120 --> 00:29:16,880 Speaker 1: These are not one offs or deals that we need 544 00:29:16,920 --> 00:29:18,600 Speaker 1: to be focusing on. We need to be focusing on 545 00:29:18,600 --> 00:29:20,680 Speaker 1: building a relationship because China will be here for a 546 00:29:20,760 --> 00:29:23,240 Speaker 1: long time. We just talked to David Woo, a Bank 547 00:29:23,280 --> 00:29:25,440 Speaker 1: of America, Maryland, and he's on the cell side and 548 00:29:25,440 --> 00:29:29,240 Speaker 1: he's out pushing a research agenda, which is a wonderful thing. 549 00:29:29,640 --> 00:29:31,960 Speaker 1: You're on the bi side. Does the by side you 550 00:29:31,960 --> 00:29:34,680 Speaker 1: have a dollar call? I mean, do you guys sit 551 00:29:34,720 --> 00:29:38,880 Speaker 1: around the shop trying to bet the dollar? No? I 552 00:29:38,880 --> 00:29:40,680 Speaker 1: think we look at the dollar is a very important 553 00:29:40,720 --> 00:29:43,080 Speaker 1: determinant of value and markets around the world, and so 554 00:29:43,120 --> 00:29:45,800 Speaker 1: we're always thinking, are you framing for a strong dollar? New? 555 00:29:46,440 --> 00:29:47,840 Speaker 1: I think if you look at the way things have 556 00:29:47,880 --> 00:29:51,200 Speaker 1: been headed and the you know, we are raising rates here, 557 00:29:51,280 --> 00:29:53,400 Speaker 1: the rest of the world seems to be moving in 558 00:29:53,400 --> 00:29:56,040 Speaker 1: a different direction that, as you know, has been moving 559 00:29:56,120 --> 00:29:59,720 Speaker 1: the dollar lately, and that seems like a continued direction. 560 00:30:00,120 --> 00:30:03,960 Speaker 1: But I think, um uh, it's a very confusing time 561 00:30:04,000 --> 00:30:06,600 Speaker 1: in many ways because we don't have the synchronized growth 562 00:30:06,680 --> 00:30:08,400 Speaker 1: that we've had anymore, just because of the time that 563 00:30:08,440 --> 00:30:10,360 Speaker 1: we've got left with you in the news flow and 564 00:30:10,480 --> 00:30:12,880 Speaker 1: with your unique focus on when did you first go 565 00:30:12,920 --> 00:30:18,920 Speaker 1: to Moscow? Uh? Well, Peter the Great? Who was I mean? 566 00:30:19,440 --> 00:30:23,000 Speaker 1: Within that? Is this the myth and the mystery? John? 567 00:30:23,000 --> 00:30:25,360 Speaker 1: You may be better at this than me of what 568 00:30:25,520 --> 00:30:29,000 Speaker 1: is our What do we get wrong about Russian capitalism 569 00:30:29,120 --> 00:30:32,280 Speaker 1: right now? When you talk to people in the West 570 00:30:32,400 --> 00:30:35,160 Speaker 1: about Russia? What do we get wrong when we try 571 00:30:35,200 --> 00:30:39,160 Speaker 1: to interpret it well? I think Russia is a very 572 00:30:39,160 --> 00:30:41,720 Speaker 1: big and very complicated country that often we get wrong 573 00:30:41,760 --> 00:30:45,840 Speaker 1: because we ascribe everything to Putin and to a single 574 00:30:46,000 --> 00:30:49,080 Speaker 1: leader and to a single It is more complex than that. 575 00:30:49,200 --> 00:30:51,400 Speaker 1: It is far more complex than that. It is a group. 576 00:30:51,440 --> 00:30:53,480 Speaker 1: It is a country of a hundred and fifty million people. 577 00:30:53,800 --> 00:30:56,280 Speaker 1: It's not just oil, it's not just commodities, even though 578 00:30:56,320 --> 00:30:59,080 Speaker 1: they dominate the economy. Uh. It is also a new 579 00:30:59,120 --> 00:31:02,040 Speaker 1: generation that is come of age long since the Soviet 580 00:31:02,120 --> 00:31:05,880 Speaker 1: Union fell apart. Uh. And I think we do ourselves 581 00:31:05,920 --> 00:31:09,920 Speaker 1: a disservice to think of it in in monolithic terms. 582 00:31:10,040 --> 00:31:14,080 Speaker 1: Dr Smart. Do we over emphasize oligarchs? I mean, John 583 00:31:14,120 --> 00:31:15,720 Speaker 1: looks at them because they end up buying all the 584 00:31:15,760 --> 00:31:19,960 Speaker 1: English soccer teams, but that's true. But do we overlook 585 00:31:20,000 --> 00:31:22,600 Speaker 1: the oligarcs. Well, I think they're they're an important part 586 00:31:22,600 --> 00:31:24,400 Speaker 1: of the picture as well, but they're also not the 587 00:31:24,440 --> 00:31:29,720 Speaker 1: only part of the picture. Um um. But that's uh 588 00:31:30,160 --> 00:31:34,240 Speaker 1: something that we can you know. I think, just to 589 00:31:34,280 --> 00:31:36,959 Speaker 1: get the World Cup in here for a second and Russia, 590 00:31:37,240 --> 00:31:41,560 Speaker 1: I just wanted to put it for team Russia. They've 591 00:31:41,600 --> 00:31:43,479 Speaker 1: moved on and there they look. I think I think 592 00:31:43,520 --> 00:31:44,959 Speaker 1: we're going to have them in the finals, and then 593 00:31:44,960 --> 00:31:47,200 Speaker 1: there'll be a huge investigation over whether or not they 594 00:31:47,200 --> 00:31:53,640 Speaker 1: were driving referes. Just Christopher Smart, I'm so glad you're 595 00:31:53,680 --> 00:31:56,480 Speaker 1: here because we're gonna pick on Ferroll right now. Amphony 596 00:31:56,560 --> 00:32:00,960 Speaker 1: from Sparta emails in and says, and they say American 597 00:32:01,120 --> 00:32:04,920 Speaker 1: sports are hard to follow. John he insists that you 598 00:32:05,160 --> 00:32:09,920 Speaker 1: recap why England and Belgium want to lose today, because 599 00:32:11,360 --> 00:32:14,840 Speaker 1: want to lose because they want to avoid the better 600 00:32:14,880 --> 00:32:17,960 Speaker 1: team in the next round. No, Columbia is who they're 601 00:32:17,960 --> 00:32:21,440 Speaker 1: going to play. Why is Colombia one of the better teams. Well, 602 00:32:21,480 --> 00:32:23,960 Speaker 1: Columbia are one of the better teams compared to say, 603 00:32:23,960 --> 00:32:27,680 Speaker 1: Senegalo Japan. Who would you rather play? Okay, you'd rather 604 00:32:27,720 --> 00:32:32,440 Speaker 1: play keeping Sac No, I imagine you'd rather play Senegalo 605 00:32:32,560 --> 00:32:36,200 Speaker 1: Japan the Colombia. I would have thought. So when we 606 00:32:36,240 --> 00:32:38,960 Speaker 1: get a barn Burner zero zero tie in the eighty 607 00:32:39,080 --> 00:32:41,840 Speaker 1: ninth minute and they add on all those and they 608 00:32:42,640 --> 00:32:44,720 Speaker 1: might just play Columbia, what do do they all go? 609 00:32:45,040 --> 00:32:47,280 Speaker 1: They all go to the don't they all go to 610 00:32:47,360 --> 00:32:50,080 Speaker 1: the just don't think the middle of the field cannon. 611 00:32:50,160 --> 00:32:57,960 Speaker 1: They go halfback. No, no, trying to play it. Stop 612 00:32:58,000 --> 00:32:59,880 Speaker 1: trying to get him to play it. I don't want 613 00:32:59,880 --> 00:33:02,160 Speaker 1: to to play it. I don't want him to play it. 614 00:33:02,200 --> 00:33:04,720 Speaker 1: What are you controlling the control? I'm fighting you and 615 00:33:04,760 --> 00:33:07,040 Speaker 1: I really don't want Ken to play it, and he's 616 00:33:07,080 --> 00:33:09,320 Speaker 1: gone with you. It's great to know where I stand 617 00:33:09,320 --> 00:33:12,480 Speaker 1: on this program in the hierarchy of things. Isn't all 618 00:33:14,040 --> 00:33:17,080 Speaker 1: We're playing the Simpsons here once again. I've got to 619 00:33:17,120 --> 00:33:21,920 Speaker 1: thank you, Chris. Thank you so much for the wisdom 620 00:33:21,960 --> 00:33:26,440 Speaker 1: on Russian world coaps. It's with bearings, we should say, 621 00:33:26,480 --> 00:33:29,479 Speaker 1: and on the international investment, of course, on the stronger 622 00:33:29,520 --> 00:33:41,200 Speaker 1: dollar as well. Thanks for listening to the Bloomberg Surveillance podcast. 623 00:33:41,560 --> 00:33:46,560 Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or 624 00:33:46,640 --> 00:33:50,960 Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom 625 00:33:51,040 --> 00:33:54,960 Speaker 1: Keane before the podcast. You can always catch us worldwide. 626 00:33:55,400 --> 00:34:03,880 Speaker 1: I'm Bloomberg Radio.