WEBVTT - Surveillance: Recession Risk with Dutta 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane, along 0:00:09.240 --> 0:00:13.200 with Jonathan Ferrell and Lisa Brownwitz Jaily. We bring you 0:00:13.280 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.960 --> 0:00:23.840 Find Bloomberg Surveillance on Apple Podcasts, sun Cloud, Bloomberg dot com, 0:00:23.920 --> 0:00:30.880 and of course on the Bloomberg Terminal. Neil Data with 0:00:30.960 --> 0:00:34.320 Economic Forecast out one hundred years joined us now head 0:00:34.320 --> 0:00:37.880 of US economic Research at Renaissance Macro, and he has 0:00:37.920 --> 0:00:42.040 been a strident optimist through gloomy times. Neil, what does 0:00:42.040 --> 0:00:47.479 the gloom coup get wrong on this Monday morning? Well, first, 0:00:47.520 --> 0:00:49.640 I mean, I think it's important to recognize that the 0:00:49.760 --> 0:00:53.320 recession chatter is ubiquitous. I mean it's everywhere. I think. 0:00:53.320 --> 0:00:55.680 I was reading an article in The Economist talking about 0:00:55.680 --> 0:00:58.640 recession risk rising. Obviously, we're seeing a number of major 0:00:59.160 --> 0:01:03.000 cuth side research houses, um, you know, mark up their 0:01:03.040 --> 0:01:07.679 expectations or probabilities for recession. Um. But you know, my 0:01:07.800 --> 0:01:10.240 view is at the risk of recession is really no 0:01:10.440 --> 0:01:13.200 higher right now than it normally is. I mean, I 0:01:13.240 --> 0:01:16.119 still think we're more or less in this inflationary boom 0:01:16.120 --> 0:01:18.880 type of economy, and I think that's more or less 0:01:18.880 --> 0:01:23.800 going to persist, um, you know, for the next twelve months. Um, 0:01:23.840 --> 0:01:25.760 you know, when I look at you know, what's going 0:01:25.840 --> 0:01:27.959 to drive the recession right now? I mean we're talking 0:01:28.000 --> 0:01:30.320 about how homes aren't being built and how cars are 0:01:30.319 --> 0:01:33.520 not getting built. So I mean what's really stretched I 0:01:33.520 --> 0:01:36.640 mean potentially durable goods consumption. But it's hard to see 0:01:36.640 --> 0:01:38.560 how that in and of itself is going to drive 0:01:38.600 --> 0:01:42.000 a recession, particularly the time when consumers are still sort 0:01:42.000 --> 0:01:44.959 of flush with cash and seeing a very strong labor market. Um, 0:01:45.000 --> 0:01:46.800 you know, outlook, So Neil, we see a lot of 0:01:46.840 --> 0:01:49.800 calls for recession, but is that really what's being priced in? 0:01:49.840 --> 0:01:51.520 I mean, yes, we have seen some declines that we 0:01:51.560 --> 0:01:53.720 have seen some areas that have gotten really hit, but 0:01:53.800 --> 0:01:56.600 also read just as many to report saying lean into cyclicals, 0:01:56.600 --> 0:01:59.400 go into retail. You know, by the dip. How much 0:01:59.440 --> 0:02:02.880 have we actu priced and pessimism. I mean, if you 0:02:02.920 --> 0:02:06.960 look at most surveys of investor you know, sentiment, it's 0:02:07.000 --> 0:02:10.600 not exactly in a bullish so I mean consumers, for example, 0:02:10.639 --> 0:02:12.960 the Conference Board does data on you know, do you 0:02:12.960 --> 0:02:14.600 think stock prices are going to go up over the 0:02:14.680 --> 0:02:17.280 next twelve months or down, and you know, more consumers 0:02:17.280 --> 0:02:19.400 are saying they're gonna go down. So you know, I 0:02:19.400 --> 0:02:22.000 wouldn't say that there's optimism in the markets. Um, I 0:02:22.040 --> 0:02:25.120 think that, you know, uh, I think a sentiment around 0:02:25.200 --> 0:02:28.880 around equities over the next year are pretty are pretty negative. Frankly, 0:02:29.280 --> 0:02:31.280 So how would you say, how would you position this? 0:02:31.320 --> 0:02:32.840 I mean the other way of looking at this is 0:02:32.880 --> 0:02:35.200 how aggressive should you get leaning into risk? And I 0:02:35.240 --> 0:02:36.760 know that we were you know, frame this, how to 0:02:36.840 --> 0:02:38.520 frame this? And rightly? So is that you've been a 0:02:38.520 --> 0:02:41.600 bull and frankly you've been right. Uh, but then how 0:02:41.680 --> 0:02:43.400 much do you say, Okay, well then you need to 0:02:43.440 --> 0:02:45.440 buy everything that's beaten up. You need to go into 0:02:45.440 --> 0:02:47.480 the Russell two thousand, you need to buy banks. I mean, 0:02:47.520 --> 0:02:51.320 where are you where are you taking that optimism right now? Well, 0:02:51.360 --> 0:02:54.320 I mean it's a it's a difficult situation because right now, 0:02:55.360 --> 0:02:56.960 you know, I mean interest rate We're in a rising 0:02:56.960 --> 0:03:00.520 interest rate environment and that's going to have a a 0:03:00.600 --> 0:03:05.760 negative impact on you know, certain industries that constituted very 0:03:05.840 --> 0:03:08.079 large waiting in the equity markets, like tech, right, I mean, 0:03:08.160 --> 0:03:10.920 so we're seeing that, I guess the way way, the 0:03:10.919 --> 0:03:13.480 way I'm thinking about it right now, is really how 0:03:13.560 --> 0:03:16.240 much more room is there for the markets to price 0:03:16.280 --> 0:03:19.720 in a more aggressive FED for this year? And I 0:03:19.760 --> 0:03:22.280 don't really think there's much more the markets can do. 0:03:22.400 --> 0:03:25.399 We're basically pricing in neutral by year end. It's hard 0:03:25.440 --> 0:03:27.720 to see the FED getting more hawkish than that. They've 0:03:27.760 --> 0:03:30.280 signaled that they want to get up to neutral um, 0:03:30.680 --> 0:03:32.440 and I think they'll do that, but you know, the 0:03:32.480 --> 0:03:35.560 markets are already there. So perhaps that brings some reprieve 0:03:35.640 --> 0:03:38.000 in terms of the interest rate backdrop for the back 0:03:38.000 --> 0:03:40.280 half of the year, and maybe that provides some catalyst 0:03:40.720 --> 0:03:43.360 for some of these cyclical areas of the market. But 0:03:43.400 --> 0:03:46.320 I think looking beyond that, you know, it's I still 0:03:46.320 --> 0:03:48.360 think that would probably be a trade you'd want to 0:03:48.400 --> 0:03:50.760 rent as opposed to own, because I do think that 0:03:50.800 --> 0:03:54.600 the markets fundamentally are haven't gotten their heads around just 0:03:54.720 --> 0:03:58.880 how far the FED is likely to go in this cycle. UM. 0:03:58.920 --> 0:04:02.760 I don't think the term no rate is gonna be um, 0:04:02.800 --> 0:04:04.760 you know, two and three quarters per cent. I think 0:04:04.760 --> 0:04:08.800 it's gonna be higher than that. Why do you know 0:04:08.840 --> 0:04:10.440 how high? How high do you think it's going to go? 0:04:11.840 --> 0:04:14.520 I mean, right now, I'll say higher it's you know, 0:04:14.560 --> 0:04:16.440 you're I mean, this is one of these classic questions 0:04:16.480 --> 0:04:17.840 where you're like, what do you think the tenure is 0:04:17.880 --> 0:04:19.320 gonna do? I mean, I have no idea, but I 0:04:19.360 --> 0:04:21.719 think it's like we haven't stopped. I mean, to the 0:04:21.720 --> 0:04:25.160 accept the markets are pricing and cuts in twenty four 0:04:25.200 --> 0:04:27.720 because of some sort of recession risk. I think those 0:04:27.760 --> 0:04:29.720 cuts are gonna get priced out. So I do think 0:04:29.720 --> 0:04:31.880 that there's probably some upside to the longer end of 0:04:31.880 --> 0:04:35.000 the yield curfew. UM. I don't see why the terminal 0:04:35.080 --> 0:04:37.359 rate can't be three and a half or four. UM. 0:04:37.400 --> 0:04:40.760 You know, nominal GDP. We're in a very strong nominal 0:04:40.800 --> 0:04:45.040 GDP environment, and consumers are flush with cash. They're sitting 0:04:45.080 --> 0:04:47.400 on a large pile of excess savings, and they have 0:04:47.480 --> 0:04:51.240 substantial rooms, substantial room to absorb more normal levels of 0:04:51.240 --> 0:04:54.880 credit appetite. At the same time, we've seen basically China 0:04:55.080 --> 0:04:59.599 and potentially Europe slip in to economic weakness this year. 0:04:59.680 --> 0:05:02.159 Do we really think that's gonna be with US and 0:05:02.200 --> 0:05:04.240 twenty four? The U S economy is unlikely to go 0:05:04.279 --> 0:05:08.000 into a recession with China, and you're probably re accelerating 0:05:08.000 --> 0:05:11.000 in those years. Neil I gotta interrupt the show. I 0:05:11.000 --> 0:05:13.200 think this is so important. You've just framed out, as 0:05:13.279 --> 0:05:15.960 Lisa notes, a terminal rate of three and a half 0:05:16.000 --> 0:05:21.960 to four percent of radio and TV listeners worldwide, was 0:05:22.080 --> 0:05:28.320 suggest that throws America into some form of stagflation, growth 0:05:28.360 --> 0:05:32.760 recession or outright n b er recession. Are you saying 0:05:32.880 --> 0:05:36.320 it won't Well, I mean, I think what you're seeing 0:05:37.400 --> 0:05:40.520 that may. But but I think the issue is where 0:05:40.520 --> 0:05:43.760 does the consensus think the terminal ratings? And you know 0:05:43.839 --> 0:05:46.000 to me that the consensus thinks the terminal rate is 0:05:46.000 --> 0:05:48.039 basically what like two and a half percent, right, I 0:05:48.080 --> 0:05:50.560 mean that's why, uh, you know some of these parts 0:05:50.560 --> 0:05:53.479 of the curves are are already inverted. Um. I think 0:05:53.520 --> 0:05:57.360 that's frankly too low. So I think the markets underestimate 0:05:57.480 --> 0:05:59.760 the extent to which the FED can go without breaking 0:05:59.760 --> 0:06:05.040 being economy productivities slowly rising, the labor force participation rate 0:06:05.120 --> 0:06:08.560 is continuing to climb. That all means that the FED 0:06:08.600 --> 0:06:13.039 can go longer without breaking the economy. Neils speaking of 0:06:13.080 --> 0:06:15.520 why the FED will go as far as it goes, 0:06:15.720 --> 0:06:18.760 CPI data tomorrow doesn't have any real bearing on the 0:06:18.800 --> 0:06:22.720 decisions that policymakers will make at least come may no, 0:06:22.960 --> 0:06:25.920 the DIACE cast, the DIACE cast. So then when does 0:06:25.960 --> 0:06:30.040 the data start to matter again? What would it take? Well, 0:06:30.080 --> 0:06:32.440 I mean I think that for me, I primarily view 0:06:32.480 --> 0:06:36.479 these questions around the labor market. And you know, to me, 0:06:36.600 --> 0:06:40.320 it's about jobs, hours, and earnings. And when you look 0:06:40.360 --> 0:06:42.920 at the some product of those three things, it's growing, 0:06:44.200 --> 0:06:47.000 you know, eight nine at an annual rate um, you know, 0:06:47.080 --> 0:06:52.160 so far this year, and eventually that should slow. I mean, 0:06:52.200 --> 0:06:55.680 as you know, participation rates climb, we just start to moderate. 0:06:55.760 --> 0:06:59.720 He won't say strong jobs growth at low rates of unemployment. 0:07:00.400 --> 0:07:03.800 So maybe that starts to cool off somewhe um. And 0:07:03.839 --> 0:07:06.279 that could take some pressure off of inflation, because obviously 0:07:06.279 --> 0:07:09.240 whatever doesn't go into uh, into quantity, whatever is not real, 0:07:09.320 --> 0:07:12.720 we'll just the remaining will be inflation. Um. So we 0:07:12.800 --> 0:07:14.200 have to see. But to me, it's really about the 0:07:14.240 --> 0:07:17.360 labor market. I don't think that's gonna happen anytime soon, 0:07:17.440 --> 0:07:20.200 because I do think there's probably additional downside to the 0:07:20.240 --> 0:07:22.680 unemployment rate over the next several months. I mean, you're 0:07:22.680 --> 0:07:24.920 going to be in a situation where, uh, you know, 0:07:24.960 --> 0:07:27.280 the feed is probably gonna mark down their estimates for 0:07:27.280 --> 0:07:31.080 for unemployment UM, but I do think it's primarily about 0:07:31.080 --> 0:07:34.520 the labor markets. On the subject of unemployment, the Fed 0:07:34.560 --> 0:07:36.440 thinks three and a half percent is going to stay 0:07:36.440 --> 0:07:40.560 the case through three even if it moves aggressively. Do 0:07:40.640 --> 0:07:44.320 you buy that argument? No, No, I think they would 0:07:44.360 --> 0:07:46.560 have to go much more aggressively in order to keep 0:07:46.560 --> 0:07:48.800 the unemployment rate at that rate. At at three and 0:07:48.840 --> 0:07:51.800 a half percent, will probably be in the low threes 0:07:51.880 --> 0:07:54.920 by the end of the year. So you know, either 0:07:54.960 --> 0:07:56.520 one of two things can happen, right, I mean, the 0:07:56.560 --> 0:08:02.080 Fed can basically UM pencil in more rate hikes UM 0:08:02.120 --> 0:08:05.760 in future years to make sure that the unemployment rate 0:08:06.320 --> 0:08:12.080 UM stays at three and a half percent or UM. 0:08:12.120 --> 0:08:15.120 They don't change their estimates for rates, and the unemployment 0:08:15.160 --> 0:08:18.360 rate continues to punch you a primer. Thank you so much, 0:08:18.440 --> 0:08:27.680 Really appreciate that. Really important comments there. Our interview O 0:08:27.680 --> 0:08:30.560 the day on yield and it is yield up and 0:08:30.600 --> 0:08:34.480 it is decidedly priced down. Marilyn Watson is head of 0:08:34.480 --> 0:08:37.920 Global Fundamental fixed Income Strategy at black Rock and has 0:08:37.960 --> 0:08:41.480 a wonderful view of this strange idea. If it's not 0:08:41.559 --> 0:08:45.680 just about yield, it's about price as well. Maryland. I 0:08:45.760 --> 0:08:48.440 just took the Age fifteen ten ure series back to 0:08:48.480 --> 0:08:51.559 the time of bocre and we had lower yields and 0:08:51.720 --> 0:08:56.120 higher prices of five standard deviations. In the pandemic scared 0:08:56.200 --> 0:09:00.200 a low low yields, we reversed and we are up, 0:09:00.280 --> 0:09:04.600 but up only one standard deviation off that long term 0:09:04.679 --> 0:09:08.400 create moderation. Can you and black Rocks say that the 0:09:08.480 --> 0:09:14.160 Great Moderation is over? I don't think that yet we 0:09:14.240 --> 0:09:16.720 can say that the Great Moderation is necessarily over. I 0:09:16.760 --> 0:09:19.240 think what we're seeing now is we are in this 0:09:19.600 --> 0:09:25.559 period of correction having had incredibly suppressed yields for going 0:09:25.559 --> 0:09:29.719 back several years now and then exacerbated during obviously the pandemic. 0:09:30.240 --> 0:09:33.520 So I think what we're really seeing now is an 0:09:33.520 --> 0:09:37.040 increase in volatility as the market really is positioning itself 0:09:37.120 --> 0:09:39.920 for the FED to be more aggressive in terms of 0:09:39.960 --> 0:09:43.760 quantitative tightening, both in terms of raising interest rates and 0:09:43.800 --> 0:09:46.360 also the runoff in the balance sheet that potentially will 0:09:46.400 --> 0:09:48.840 come maybe in May or in June um And I 0:09:48.880 --> 0:09:51.520 think as we do start to see the FED really 0:09:51.520 --> 0:09:53.679 start to shift away and try to move towards a 0:09:53.760 --> 0:09:58.000 neutral point, then it's you know, it's understandable that we're 0:09:58.000 --> 0:09:59.839 seeing a lot more volatility in the market. I think 0:09:59.840 --> 0:10:02.840 it's also incredibly important when we continue to look at 0:10:02.840 --> 0:10:06.040 inflation just how high it is in the US and 0:10:06.120 --> 0:10:08.800 elsewhere around the world. Um, And as you mentioned before, 0:10:08.800 --> 0:10:10.960 there are a number of factors that are really exacerbating this, 0:10:11.400 --> 0:10:14.760 whether it be the lockdown in China and Changhai due 0:10:14.800 --> 0:10:18.640 to COVID restrictions, whether it's energy and the massive impact 0:10:18.760 --> 0:10:22.280 that that's having in Europe in particular for example. So 0:10:22.320 --> 0:10:25.400 I think the whole confluence of factors are really you know, 0:10:25.480 --> 0:10:29.480 exacerbating the volatility and yields and the market's expectation of 0:10:29.480 --> 0:10:31.920 what we can see from interest rates from the FED 0:10:32.120 --> 0:10:33.920 and also from the ECB as well as you go 0:10:34.000 --> 0:10:37.080 forward this year. Merilyan Maryland. Earlier this morning, Tom Kennedy 0:10:37.120 --> 0:10:39.640 of JP Morgan at a private bank asked a really 0:10:39.640 --> 0:10:42.560 good question, how high do yields have to go to 0:10:42.640 --> 0:10:48.040 restrain inflation? What's your view on that? Yeah, and so 0:10:48.040 --> 0:10:50.199 so at the moment, we do think that rates could 0:10:50.240 --> 0:10:53.400 go definitely a bit higher from here. It is our 0:10:53.480 --> 0:10:56.920 view that inflation will probably start to roll over pretty soon. 0:10:57.000 --> 0:10:59.760 It is obviously at very high levels, but given base effects, 0:11:00.320 --> 0:11:02.160 UM and other things that will sort of come into play. 0:11:02.200 --> 0:11:04.560 We do think that inflation will start to tack down, 0:11:04.920 --> 0:11:08.240 but obviously from very incredibly high levels. I think that's 0:11:08.280 --> 0:11:10.280 why you know, the FED has indicated it it will 0:11:10.320 --> 0:11:12.680 be more aggressive. I think that's also why the ECB 0:11:12.880 --> 0:11:15.440 has started to signal that, you know, it's maybe potentially 0:11:15.559 --> 0:11:18.480 ending its asset purchase program maybe you know, in the July, 0:11:18.679 --> 0:11:20.920 the third quarter of this year, and it's too itself 0:11:21.000 --> 0:11:23.080 up to potentially raise rates as well by the end 0:11:23.080 --> 0:11:25.240 of this year. So I do think that rates could 0:11:25.280 --> 0:11:27.480 go higher. UM. I think could definitely go higher from here, 0:11:28.000 --> 0:11:30.760 but we also do need to keep a firm iron inflation, 0:11:30.960 --> 0:11:33.560 and I think they're the risks are huge. As I mentioned, 0:11:33.600 --> 0:11:36.079 there are risks in terms of you know, pushing inflation 0:11:36.160 --> 0:11:39.120 higher if we start to see issues around you know, 0:11:39.600 --> 0:11:43.360 the restrictions in China, energy elsewhere, or we could start 0:11:43.400 --> 0:11:46.640 to see inflation actually roll over UM and the and 0:11:46.679 --> 0:11:49.640 the part of the equation of course is growth. You know, 0:11:49.800 --> 0:11:52.440 there's a large risks route now around the growth in 0:11:52.559 --> 0:11:54.840 the Eurozone. I think that's certainly a factor that was 0:11:55.280 --> 0:11:56.839 coming to play as we look at what the e 0:11:56.880 --> 0:11:58.960 C B may do later in this year. But also 0:11:59.000 --> 0:12:01.200 when you look at the U US as well, I 0:12:01.200 --> 0:12:04.080 think growth, you know, remains relatively strong. The labor market 0:12:04.120 --> 0:12:07.120 is incredibly type um, you know, and will also you know, 0:12:07.200 --> 0:12:10.400 continue to see the consumer um and the high level 0:12:10.400 --> 0:12:13.000 of houssle savings that they still have the stud to 0:12:13.080 --> 0:12:15.360 run those down as they still continue to purchase when 0:12:15.400 --> 0:12:18.120 see vitail sales and other things. And it really depends 0:12:18.200 --> 0:12:20.839 whether we see a shift in sentiments like how much 0:12:20.840 --> 0:12:22.640 further that has to go. But for the time being, 0:12:23.120 --> 0:12:26.160 I think growth remains relatively solid in the US, and 0:12:26.280 --> 0:12:29.880 really inflation and inflation data is absolutely crysical. Now, So 0:12:29.960 --> 0:12:32.320 in the Wall of Warrior Maryland that you talked about 0:12:32.320 --> 0:12:36.079 the potential potential increase in inflation, potential slow down in growth, 0:12:36.559 --> 0:12:38.800 what do you do? How much do you lean into 0:12:38.880 --> 0:12:42.360 a risk at a time when people already are somewhat bearish. 0:12:42.559 --> 0:12:46.360 I would just say people, I'm not gonna specify. So 0:12:46.400 --> 0:12:48.839 at the moment that we have been short duration, now 0:12:48.880 --> 0:12:51.199 we're relatively i would say neutral, and we still have 0:12:51.760 --> 0:12:55.319 relatively low duration. But I think now given that the 0:12:55.440 --> 0:12:57.520 risks are two sided, you know, we are being very 0:12:57.559 --> 0:12:59.960 flexible we now are starting to get a little bit 0:13:00.000 --> 0:13:02.880 will carry um in you know, front hand rates um, 0:13:02.960 --> 0:13:05.000 So we're starting to you know, just invess a little 0:13:05.040 --> 0:13:08.880 bit more there. We do like some mosment's securitized investment grade, 0:13:09.280 --> 0:13:12.320 and we are looking to be very, very diversified. That 0:13:12.440 --> 0:13:15.520 being said, of course, we are still relatively conservative at 0:13:15.520 --> 0:13:18.120 the moment. I think the next two months when we 0:13:18.200 --> 0:13:23.040 see you know, the further inflation data, further data around growth, 0:13:23.440 --> 0:13:28.120 we see developments ongoing around you know, the situation in Ukraine, 0:13:28.480 --> 0:13:30.880 the impact of sanctions. So I think there's a lot 0:13:31.040 --> 0:13:32.800 that still needs to be factors in and that we 0:13:32.840 --> 0:13:36.000 really need to see evidence either way of how things 0:13:36.040 --> 0:13:37.880 are starting to shape out. But I think there are 0:13:38.000 --> 0:13:40.559 areas now where we can see value, where we are 0:13:40.559 --> 0:13:44.040 starting to get some yield um, and I think diversification 0:13:44.160 --> 0:13:46.080 is really the name of the game, but also really 0:13:46.120 --> 0:13:50.800 really understanding liquidity and the risk reward and the liquidity 0:13:50.960 --> 0:13:54.000 around each position that we currently hold. Maryland, you talked 0:13:54.000 --> 0:13:56.480 to her about some geopolitical risk factors that need to 0:13:56.520 --> 0:13:59.319 be put into the equation. What about domestic politics. I'm 0:13:59.320 --> 0:14:01.840 thinking specifically of France here and looking at a ten 0:14:01.920 --> 0:14:04.439 year yield that started marched around forty basis points were 0:14:04.480 --> 0:14:07.720 now in and around one what would happen to the 0:14:07.720 --> 0:14:10.400 French bond market if Marine Lapin were to win the 0:14:10.440 --> 0:14:15.600 runoff on April. So we have seen, as you mentioned, 0:14:16.240 --> 0:14:19.040 a lot of politility also around around France around the 0:14:19.080 --> 0:14:23.840 potential election, and the market is clearly signaling that's positioning 0:14:23.880 --> 0:14:27.600 itself for it has a preference for in the market, 0:14:27.760 --> 0:14:30.680 in the euro in terms of keeping much of the same, 0:14:30.720 --> 0:14:33.840 so lacrowd obviously staying in power. It does remain to 0:14:33.840 --> 0:14:36.000 be seen. And we have this run off on the April, 0:14:36.040 --> 0:14:37.200 and I think we will start to see a lot 0:14:37.240 --> 0:14:42.560 of volitility around that event. Um. If le pen does win, 0:14:42.720 --> 0:14:44.760 I think it's too hard to say at the moment. 0:14:44.840 --> 0:14:47.400 I mean, she has really been quite clear I think 0:14:47.400 --> 0:14:50.880 around some of her economic policies, um, and I think 0:14:51.240 --> 0:14:52.880 it really remains to be seen if she were to 0:14:52.880 --> 0:14:55.200 get into power, what her you know, the policies that 0:14:55.240 --> 0:14:59.160 she actually implements would be. I do think it's maybe 0:14:59.160 --> 0:15:01.000 a little case of sort of as well, sort of 0:15:01.040 --> 0:15:04.160 just trading around this volatility, sort of like you know, 0:15:04.640 --> 0:15:06.840 buying the room with all the fact potentially as well. 0:15:06.920 --> 0:15:10.600 So I think for the time being it's more around 0:15:10.840 --> 0:15:14.360 the potential trade off between the two candidates, but in 0:15:14.400 --> 0:15:17.680 either scenario it really remains to be seen what policies 0:15:17.720 --> 0:15:21.160 would be implemented. Marilyn, Thank you so much. Marilan Watson 0:15:21.200 --> 0:15:28.480 there of black Rock, This is a true joy. He 0:15:28.600 --> 0:15:31.440 is a prolific writer on Shankai check. He is a 0:15:31.520 --> 0:15:34.840 writer on Frances definitive. The History of modern France is 0:15:34.880 --> 0:15:37.560 an important read. I've read it cover to cover, but 0:15:37.720 --> 0:15:41.920 also a one volume on what there was before McCraw, 0:15:42.480 --> 0:15:46.560 before lepan and that is, of course his magisterial book 0:15:47.040 --> 0:15:51.440 on General de gall It can only be Jonathan Fenby. Jonathan, 0:15:51.480 --> 0:15:54.320 thank you so much for joining us. Can you explain 0:15:54.920 --> 0:15:58.080 the collapse of the center in the right around the 0:15:58.120 --> 0:16:02.600 thirty nine year old maverick Mr McCraw in his second term? 0:16:02.640 --> 0:16:10.360 What degall rot seems to be politically destroyed? Is it? Well? 0:16:10.440 --> 0:16:16.640 The conventional left center, left, center right division on which 0:16:16.680 --> 0:16:19.960 the Fifth Republic has rested really for the last and 0:16:20.080 --> 0:16:25.000 fifty years or more, is now destroyed. Makon took away 0:16:25.200 --> 0:16:27.800 a lot of the support from the socialist last time around, 0:16:28.160 --> 0:16:29.880 and this time he seems to have taken away a 0:16:29.880 --> 0:16:34.240 lot of support from the center right Republicans. Add to that, 0:16:35.080 --> 0:16:38.440 the rise of le Pen and other extremists on both 0:16:38.520 --> 0:16:43.200 left and right, and Francis politics have become completely fragmented 0:16:43.440 --> 0:16:46.680 in the in the tumult of America. There was a 0:16:46.760 --> 0:16:50.240 massive turnout in the last election, Mr Trump, of course, 0:16:50.560 --> 0:16:53.680 note seventy four million people chose to vote for Trump. 0:16:54.120 --> 0:17:00.080 Tell us the mystery of this turnout, April Well, The 0:17:00.400 --> 0:17:03.680 question and now is how many of the people who 0:17:03.800 --> 0:17:08.200 voted for the hard left wing candidate Jean Luc Millen 0:17:08.280 --> 0:17:11.160 sew and there were twenty two percent went for him, 0:17:11.160 --> 0:17:14.840 which was an unusually high and unexpectedly high number. How 0:17:14.880 --> 0:17:19.040 many of those will who don't like Macon will still 0:17:19.080 --> 0:17:21.840 hold their noses and vote for him, or how many 0:17:21.840 --> 0:17:27.200 will abstain? And it's really in that uh equation that 0:17:27.400 --> 0:17:32.160 probably the outcome of the runoff on will be decided. Jonathan, 0:17:32.160 --> 0:17:35.320 how much is the move toward marine le Pen indicative 0:17:35.480 --> 0:17:37.800 of this shift away from the Western order, something that 0:17:37.840 --> 0:17:40.280 we saw with the Trump presidency and certainly that we've 0:17:40.280 --> 0:17:43.800 seen on the margins in a number of nations. It 0:17:44.040 --> 0:17:49.160 is in part that, but the even harder right candidate 0:17:49.400 --> 0:17:54.159 Eric Zamore, who played the values card much more strongly 0:17:54.240 --> 0:17:57.000 than the PEN. He didn't do as well as many 0:17:57.040 --> 0:17:59.840 people thought he might have done. And the PEN really 0:18:00.040 --> 0:18:04.040 picked up a lot of votes yesterday on cost of 0:18:04.119 --> 0:18:08.639 living issues, security, law and order, all these kind of 0:18:08.640 --> 0:18:12.400 grassroots issues which she made the center of her campaign. 0:18:13.240 --> 0:18:15.399 And what does Emmanuel mcral need to do as he 0:18:15.480 --> 0:18:19.560 campaigns between now in April? What is his largest task? 0:18:20.760 --> 0:18:23.040 His largest task is to show that he cares for 0:18:23.080 --> 0:18:29.520 the French people. His opponents made the argument going into 0:18:29.520 --> 0:18:32.240 the first round that he was to obsess with his 0:18:32.400 --> 0:18:37.080 position as an international statesman, having once described the president 0:18:37.080 --> 0:18:41.159 as Jupiter like, that he floated above everyday concerns and 0:18:41.160 --> 0:18:44.080 he's got to get show the French that he cares 0:18:44.160 --> 0:18:46.760 for them. John, I'm absolutely fascinating by this and that 0:18:46.920 --> 0:18:50.000 in folks, this is very different than America. Paris is 0:18:50.119 --> 0:18:54.040 roughly thirty of the GDP of France. I mean, it's 0:18:54.119 --> 0:18:57.960 Paris centric. Is this John? Just simply you know, as 0:18:57.960 --> 0:19:02.040 a generalization Paris and mc krow against the nation of 0:19:02.160 --> 0:19:05.639 the rest of France. That is certainly the way Lapin 0:19:05.760 --> 0:19:08.560 will try to pitch it. I think for the second 0:19:08.720 --> 0:19:14.120 round you're a metropolitan elitist who cares for the rest 0:19:14.160 --> 0:19:19.520 of the world, the the upper elite class looking after them, 0:19:19.600 --> 0:19:22.120 the president of the rich, and you've got the rest 0:19:22.119 --> 0:19:24.720 of France which is being left in the doldrums. And 0:19:24.800 --> 0:19:29.760 that's really been her main campaign theme. Okay, but John, 0:19:29.880 --> 0:19:32.800 here here's the issue to our viewers in radio and TV. 0:19:33.400 --> 0:19:36.840 Their view of France, as you well know, is table twelve, 0:19:37.000 --> 0:19:42.160 table dues at oh petite France or petite sweets overlooking 0:19:42.520 --> 0:19:44.679 the Luxembourg Garden. I mean, you sit there in the 0:19:44.760 --> 0:19:49.159 sun and everything's great. That's not France. Is that what 0:19:49.240 --> 0:19:54.600 Frances saying to McCrow. You're not France. Absolutely, Tom, You've 0:19:54.640 --> 0:19:57.680 got it absolutely right there. The rest of France, those 0:19:57.720 --> 0:20:01.080 who voted for La penn and fer melon Chan and 0:20:01.160 --> 0:20:04.000 I emphasized again that he got twenty two percent of 0:20:04.080 --> 0:20:09.280 the vote, althoughy finished third. They're basically telling Macon, Look, 0:20:10.000 --> 0:20:12.880 France doesn't just exist in the smart parts of Paris. 0:20:13.200 --> 0:20:17.720 It exists in run down towns and suburbs and deserted 0:20:17.800 --> 0:20:20.960 farm lands. And you've got to start paying some attention 0:20:21.000 --> 0:20:24.000 to us how much popular support is there within France. 0:20:24.080 --> 0:20:31.480 Jonathan for France's approach to Russia towards going on in Ukraine. Well, 0:20:32.320 --> 0:20:35.880 Ukraine in a sense has been It's been there all 0:20:35.920 --> 0:20:43.240 through the campaign. But Macon's conversations with Putin I don't 0:20:43.240 --> 0:20:45.800 think did him any harm because he was seen as 0:20:45.800 --> 0:20:48.639 putting France on the world stage. On the other hand, 0:20:48.920 --> 0:20:52.920 the far left and far right candidates who paled up 0:20:53.000 --> 0:20:57.720 to Putin earlier on are somewhat embarrassed by this, and 0:20:57.760 --> 0:21:01.880 Macrawl will make a lot of their those panels big 0:21:01.960 --> 0:21:04.600 loan for a Russian bank, for instance, A lot of 0:21:04.600 --> 0:21:07.000 that will come up in the campaign for the second round. 0:21:07.160 --> 0:21:10.119 Jonathan Fenby, thank you so much, greatly appreciate it. Wonderful 0:21:10.160 --> 0:21:12.400 to catch up with you again in folks. I can't 0:21:12.440 --> 0:21:16.200 say enough about Mr Fenby's commitment to writing of France 0:21:16.280 --> 0:21:18.639 or been other great books on France, great one volumes 0:21:18.720 --> 0:21:21.159 under go. But Fenby is the one who over the 0:21:21.240 --> 0:21:25.080 years has just put together truly thousands of pages on 0:21:25.200 --> 0:21:35.080 this interesting, interesting nation. I know all right now ellen 0:21:35.119 --> 0:21:38.560 Will joined senior fellow in Atlantic Council and definitive as 0:21:38.600 --> 0:21:43.200 well on the Saudis ellen Wald. With the oil issues 0:21:43.359 --> 0:21:46.840 and with demand in China, what did the Saudis do 0:21:48.720 --> 0:21:51.520 The saudia Is I think are actually in a somewhat 0:21:51.960 --> 0:21:56.120 difficult position at the moment with problems and in terms 0:21:56.119 --> 0:22:01.359 of these lockdowns and potentially really could into demand in China, 0:22:01.560 --> 0:22:06.600 especially with Russian crewde being available at a discount for 0:22:07.119 --> 0:22:11.720 the Chinese. They may really need to make their products 0:22:11.760 --> 0:22:15.560 more competitive. So they do have long term contracts with 0:22:15.840 --> 0:22:20.760 certain Chinese refineries, particularly the petrochemical and refinaries that they 0:22:20.880 --> 0:22:24.199 themselves that that a Ramco has stakes in, so they 0:22:24.200 --> 0:22:27.840 don't need to worry about that supply. But it's basically 0:22:27.840 --> 0:22:31.080 everything else on the margins that they're used to selling 0:22:31.200 --> 0:22:35.040 to the Chinese that they may need to make their 0:22:35.080 --> 0:22:38.560 products a little bit more competitive to uh, you know, 0:22:39.040 --> 0:22:41.400 keep with this too, breac and oil and you could 0:22:41.400 --> 0:22:45.200