1
00:00:05,120 --> 00:00:08,480
Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keane, along

2
00:00:08,520 --> 00:00:12,360
Speaker 1: with Jonathan Farrow and Lisa Abramowitz. Join us each day

3
00:00:12,400 --> 00:00:16,880
Speaker 1: for insight from the best an economics, geopolitics, finance and investment.

4
00:00:17,280 --> 00:00:22,119
Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and

5
00:00:22,320 --> 00:00:26,600
Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot Com,

6
00:00:26,640 --> 00:00:30,520
Speaker 1: the Bloomberg Terminal, and the Bloomberg Business app. Joining us now,

7
00:00:30,560 --> 00:00:32,720
Speaker 1: we're thrilled to every usually for big events, So today's

8
00:00:32,720 --> 00:00:34,960
Speaker 1: a big event. It's always a big event. When Ellen

9
00:00:35,080 --> 00:00:40,080
Speaker 1: Zenner joins his chief US economist, Morgan Stanley Ellen on claims,

10
00:00:40,120 --> 00:00:42,400
Speaker 1: I go to the four week moving average. How do

11
00:00:42,440 --> 00:00:46,960
Speaker 1: you interpret claims with this two hundred thirty one thousand statistic?

12
00:00:47,280 --> 00:00:50,120
Speaker 1: And can you say there's finally a vector in place

13
00:00:50,600 --> 00:00:53,640
Speaker 1: of higher claims more pain.

14
00:00:54,280 --> 00:00:57,200
Speaker 2: So I hope that there's a higher vector in place.

15
00:00:57,920 --> 00:01:01,480
Speaker 2: I disagree that higher claims will be more pain. We're

16
00:01:01,520 --> 00:01:04,959
Speaker 2: coming off of extraordinarily low levels. As you said, we

17
00:01:05,000 --> 00:01:07,600
Speaker 2: look at the four week moving average to smooth through volatility,

18
00:01:07,680 --> 00:01:11,120
Speaker 2: and it has been lifting, but it is still very low.

19
00:01:11,160 --> 00:01:12,240
Speaker 3: And so what does that tell me?

20
00:01:12,640 --> 00:01:16,120
Speaker 2: Something that Mike and Lisa alluded to as well, normalization

21
00:01:16,840 --> 00:01:20,600
Speaker 2: slowing in normalization, good god man, that's what we've been needing,

22
00:01:20,880 --> 00:01:23,920
Speaker 2: and I don't see this accelerating at an extreme pace.

23
00:01:24,319 --> 00:01:26,160
Speaker 2: I've been on the road the last few days in

24
00:01:26,240 --> 00:01:31,040
Speaker 2: several states meeting with corporate clients. They are finally seeing

25
00:01:31,080 --> 00:01:33,680
Speaker 2: some relief in terms of how tight the labor market

26
00:01:33,800 --> 00:01:37,800
Speaker 2: has been in terms of the availability of the kinds

27
00:01:37,840 --> 00:01:41,480
Speaker 2: of employees that they need. We're seeing not just claims

28
00:01:41,640 --> 00:01:45,280
Speaker 2: rising a bit here, but I focus on continuing claims.

29
00:01:45,319 --> 00:01:48,640
Speaker 2: People that have been losing their jobs are staying unemployed

30
00:01:48,680 --> 00:01:51,880
Speaker 2: for a bit longer, and that's been rising since October,

31
00:01:51,920 --> 00:01:54,360
Speaker 2: so it's getting more difficult to just get re employed

32
00:01:54,440 --> 00:01:56,840
Speaker 2: right away. This is the kind of softness in the

33
00:01:56,920 --> 00:01:59,720
Speaker 2: labor market that we have needed, and of course it

34
00:01:59,760 --> 00:02:03,400
Speaker 2: takes pressure off the FED to raise rates again. Right

35
00:02:03,560 --> 00:02:05,160
Speaker 2: going on extended.

36
00:02:04,680 --> 00:02:09,079
Speaker 4: Hold, what is the distance between normalization and an outright downturn?

37
00:02:09,520 --> 00:02:13,359
Speaker 2: So well, the difference is jobs stay positive, So normalization

38
00:02:13,520 --> 00:02:16,320
Speaker 2: is you've got more supply coming back into the labor market,

39
00:02:16,400 --> 00:02:18,840
Speaker 2: so you see participation rates rising, which we have.

40
00:02:19,680 --> 00:02:22,799
Speaker 3: That is what puts upward pressure on the unemployment rate.

41
00:02:23,200 --> 00:02:26,440
Speaker 2: And we've been seeing that, and if people are having

42
00:02:26,600 --> 00:02:28,720
Speaker 2: taken longer to be able to get re employed, then

43
00:02:28,720 --> 00:02:31,359
Speaker 2: that should produce further upward pressure on the unemployment rate.

44
00:02:31,720 --> 00:02:35,280
Speaker 2: But that just takes pressure off the labor market, pressure

45
00:02:35,320 --> 00:02:36,960
Speaker 2: off of businesses, off of margins.

46
00:02:37,000 --> 00:02:39,320
Speaker 3: You see wages grow more.

47
00:02:39,160 --> 00:02:43,480
Speaker 2: Slowly, and you'll see confidence build among FED policy makers

48
00:02:43,720 --> 00:02:47,040
Speaker 2: that they have done enough here. I don't think we're

49
00:02:47,080 --> 00:02:51,120
Speaker 2: anywhere near getting to negative job gains. I think negative

50
00:02:51,160 --> 00:02:55,120
Speaker 2: jobs would mean that companies have stopped hiring. What I

51
00:02:55,160 --> 00:02:58,120
Speaker 2: hear is that they're doing selective hiring, that they stop hiring,

52
00:02:58,360 --> 00:03:02,440
Speaker 2: and that they start firing, and I mean firing up broadly.

53
00:03:02,600 --> 00:03:05,760
Speaker 2: And that's just not what we're seeing. But I'm ever watchful,

54
00:03:06,080 --> 00:03:09,160
Speaker 2: especially reading earnings transcripts, to see if that's something that's

55
00:03:09,200 --> 00:03:10,639
Speaker 2: around the around the corner.

56
00:03:10,680 --> 00:03:13,560
Speaker 4: I'm glad you mentioned earnings because we were talking about Walmart,

57
00:03:13,560 --> 00:03:16,600
Speaker 4: and I understand their idiosyncrasies here, but they talked about

58
00:03:16,680 --> 00:03:21,240
Speaker 4: potentially seeing outright deflation over the next year with consumers

59
00:03:21,240 --> 00:03:24,480
Speaker 4: clearly pushing back. You do see margin pressure, you do

60
00:03:24,600 --> 00:03:28,320
Speaker 4: see a market deterioration and consumer appetite over the past

61
00:03:28,440 --> 00:03:31,760
Speaker 4: ninety days. How concerning is that to you about the

62
00:03:31,800 --> 00:03:33,560
Speaker 4: nonlinearity of where things could be.

63
00:03:34,000 --> 00:03:35,360
Speaker 3: So, Lisa, we.

64
00:03:35,400 --> 00:03:37,480
Speaker 2: Put out a consumer survey that goes out into the

65
00:03:37,480 --> 00:03:40,480
Speaker 2: field every two weeks, and one of the biggest areas

66
00:03:40,520 --> 00:03:43,520
Speaker 2: of trade down that households have been doing is within

67
00:03:43,680 --> 00:03:47,400
Speaker 2: stores themselves, say, going from a high priced branded good

68
00:03:47,720 --> 00:03:51,160
Speaker 2: to the generic good within the store. And that means

69
00:03:51,160 --> 00:03:54,400
Speaker 2: that those retailers are going to see some deflation. And

70
00:03:54,440 --> 00:03:57,920
Speaker 2: we've been hearing from businesses that input costs are falling,

71
00:03:58,560 --> 00:04:02,080
Speaker 2: but prices that they're charged or falling faster. And that's

72
00:04:02,120 --> 00:04:05,720
Speaker 2: important because we all started to think we the economics

73
00:04:05,720 --> 00:04:09,800
Speaker 2: community at large, not myself though an exception, started to

74
00:04:09,840 --> 00:04:13,360
Speaker 2: think that households just have unlimited price tolerance, and that

75
00:04:13,440 --> 00:04:16,280
Speaker 2: is not the case. Finances start to slow, we run

76
00:04:16,320 --> 00:04:19,719
Speaker 2: through that excess savings, and you will start to trade down.

77
00:04:20,000 --> 00:04:24,359
Speaker 2: The lower income groups that Walmart serves are the groups

78
00:04:24,400 --> 00:04:28,600
Speaker 2: that have been standing the greatest pressure. Look at delinquency

79
00:04:28,680 --> 00:04:31,800
Speaker 2: rates for the lowest income groups on credit cards on

80
00:04:31,880 --> 00:04:34,600
Speaker 2: auto loans, that points to stress.

81
00:04:35,360 --> 00:04:39,320
Speaker 1: Ellen Molly Smith and Alice Atkins for Bloomberg made a

82
00:04:39,320 --> 00:04:42,120
Speaker 1: big splash the other day using your research, the Morgan

83
00:04:42,160 --> 00:04:45,679
Speaker 1: Stanley View and the key distinction is a four point

84
00:04:45,720 --> 00:04:49,479
Speaker 1: three percent unemployment rate. I hereby dubb at the Zentner

85
00:04:49,560 --> 00:04:53,039
Speaker 1: four point three percent statistic. How do we get to

86
00:04:53,160 --> 00:04:57,560
Speaker 1: a four point three percent unemployment rate that radically shifts

87
00:04:57,760 --> 00:04:58,640
Speaker 1: Fed policy?

88
00:04:58,800 --> 00:05:01,799
Speaker 3: I'm not expecting right close them from the Fed.

89
00:05:02,839 --> 00:05:06,040
Speaker 2: The unemployment rate at four point three percent, we think

90
00:05:06,200 --> 00:05:09,159
Speaker 2: is a soft landing unemployment rate in that it is

91
00:05:09,240 --> 00:05:14,120
Speaker 2: driven by slower job gains and higher labor force participation.

92
00:05:14,240 --> 00:05:17,880
Speaker 2: Now I understand that is a beautiful scenario for the FED.

93
00:05:18,320 --> 00:05:21,520
Speaker 2: And we have them cutting next year by one hundred.

94
00:05:21,240 --> 00:05:23,680
Speaker 3: Basis points because of normalization.

95
00:05:23,800 --> 00:05:27,000
Speaker 2: That's very different than cutting because the FED thinks there's

96
00:05:27,000 --> 00:05:29,680
Speaker 2: a recession. If the FED thinks that there's recession, they're

97
00:05:29,720 --> 00:05:32,720
Speaker 2: starting big and they're doing a lot, and that's very

98
00:05:32,720 --> 00:05:34,520
Speaker 2: different than the normalization scenario.

99
00:05:34,680 --> 00:05:37,640
Speaker 1: And then overlay with that, what we're hearing Julia Coronatto

100
00:05:37,720 --> 00:05:41,920
Speaker 1: leading the way on this, doctor Coronado suggesting productivity is underestimated.

101
00:05:42,240 --> 00:05:45,359
Speaker 1: Do you believe that we have an underestimation of the

102
00:05:45,360 --> 00:05:48,359
Speaker 1: efficiency of the American economy and that gets you to

103
00:05:48,520 --> 00:05:51,560
Speaker 1: a benevolent four point three percent unemployment rate?

104
00:05:51,800 --> 00:05:55,719
Speaker 2: Yees, So I do think that productivity is being underestimated.

105
00:05:56,040 --> 00:05:59,480
Speaker 2: I would add, though, that productivity has not been well estimated,

106
00:06:00,560 --> 00:06:02,799
Speaker 2: and so you'd have to say, well, it's.

107
00:06:02,640 --> 00:06:06,880
Speaker 3: Being estimated you worse than before.

108
00:06:07,040 --> 00:06:08,960
Speaker 2: And I'm not sure we can say that, but I

109
00:06:08,960 --> 00:06:11,960
Speaker 2: think there are a lot of new ways that productivity

110
00:06:12,839 --> 00:06:15,280
Speaker 2: exhibits itself in the economy that we're just not able

111
00:06:15,320 --> 00:06:19,159
Speaker 2: to capture. Government data is not able to capture. But absolutely,

112
00:06:19,160 --> 00:06:24,040
Speaker 2: if productivity is higher, then you can withstand higher wage

113
00:06:24,040 --> 00:06:27,840
Speaker 2: growth without it being inflationary. It gives the FED more

114
00:06:27,920 --> 00:06:31,320
Speaker 2: runway because it keeps it lid on inflation. And so

115
00:06:31,360 --> 00:06:35,600
Speaker 2: it's really it lifts all boats. It's productivity and infrastructure

116
00:06:35,640 --> 00:06:39,120
Speaker 2: or what economists go to sleep at night dreaming about, Tom.

117
00:06:39,000 --> 00:06:41,440
Speaker 4: Which is the reason why I think people are sort

118
00:06:41,440 --> 00:06:43,600
Speaker 4: of hopeful that we're going to get that and we're

119
00:06:43,640 --> 00:06:47,839
Speaker 4: going to create this soft landing and avoid something more challenging.

120
00:06:48,080 --> 00:06:50,360
Speaker 4: I guess to wrap it all up, we've been talking

121
00:06:50,360 --> 00:06:53,719
Speaker 4: all morning about the potential for deflation. Tom was talking

122
00:06:53,720 --> 00:06:56,360
Speaker 4: about how difficult that is for any economy to handle.

123
00:06:56,400 --> 00:06:59,320
Speaker 4: This was the word that Walmart used. But you're talking

124
00:06:59,320 --> 00:07:03,440
Speaker 4: about normallyation. How concerned would you be to see some

125
00:07:03,480 --> 00:07:07,760
Speaker 4: sort of material deflation, not disinflation. Deflation, and certain good

126
00:07:07,880 --> 00:07:10,600
Speaker 4: sectors that we have been seeing on the margins over

127
00:07:10,600 --> 00:07:11,760
Speaker 4: the past couple of months.

128
00:07:12,160 --> 00:07:14,680
Speaker 3: Yeah, so, Lisa, good sectors. I'm not worried about it

129
00:07:14,680 --> 00:07:14,960
Speaker 3: at all.

130
00:07:15,000 --> 00:07:18,320
Speaker 2: We've goods prices in the US have been in deflation

131
00:07:18,680 --> 00:07:21,920
Speaker 2: for a decade leading up to COVID. That's normal, right,

132
00:07:21,960 --> 00:07:25,840
Speaker 2: we were importing a lot of deflation, but that's externally determined.

133
00:07:26,560 --> 00:07:29,280
Speaker 3: I would be very, very concerned about a.

134
00:07:29,360 --> 00:07:34,840
Speaker 2: Deflation scenario in the US for services, for domestically determined prices.

135
00:07:35,040 --> 00:07:38,000
Speaker 2: For US to get to that broadly, you're talking about

136
00:07:38,080 --> 00:07:42,600
Speaker 2: an extraordinary downturn on the magnitude of the financial crisis

137
00:07:42,880 --> 00:07:45,800
Speaker 2: in two thousand and eight that would get that kind

138
00:07:45,800 --> 00:07:49,600
Speaker 2: of price declines, declines in the level of prices instead.

139
00:07:50,040 --> 00:07:52,840
Speaker 2: I think deceleration is in train. I think it's going

140
00:07:52,880 --> 00:07:55,520
Speaker 2: to be faster than the FED is expecting. And I

141
00:07:55,560 --> 00:07:57,800
Speaker 2: think I've been really pleased, and I think they should

142
00:07:57,800 --> 00:08:00,080
Speaker 2: be pleased too with the progress that we see.

143
00:08:00,520 --> 00:08:03,840
Speaker 1: The Newtonian mechanics of Ellen Zentner, of Morgan Stanley there

144
00:08:03,840 --> 00:08:06,840
Speaker 1: and the dynamics of price change. Ellen, thank you so

145
00:08:06,920 --> 00:08:13,880
Speaker 1: much for the brief. William Dudley joins us now former

146
00:08:13,920 --> 00:08:17,200
Speaker 1: New York Fed president of Bloomberg opinion columnist Bill Ewan,

147
00:08:17,280 --> 00:08:21,120
Speaker 1: I'm going to suggest Professor williams now holding Court in

148
00:08:21,160 --> 00:08:25,520
Speaker 1: the former Dudley chair, have a unique perspective on our flows,

149
00:08:25,960 --> 00:08:29,840
Speaker 1: our liquidity, our trust Sitting at the New York Fed.

150
00:08:30,480 --> 00:08:35,600
Speaker 1: What is the confidence or trust deterioration you've observed.

151
00:08:36,679 --> 00:08:38,840
Speaker 5: I think there is a complete trust in the New

152
00:08:38,920 --> 00:08:42,520
Speaker 5: York Fed because that the Fed basically understands the plumbing

153
00:08:42,520 --> 00:08:44,840
Speaker 5: of the financial system and understands what needs to be

154
00:08:44,920 --> 00:08:48,840
Speaker 5: done to make sure that plumbing works always, even under

155
00:08:48,840 --> 00:08:51,400
Speaker 5: times is pressed. One area of vulnerability where the Fed

156
00:08:51,440 --> 00:08:53,160
Speaker 5: and the treasure you're looking at right now is the

157
00:08:53,200 --> 00:08:56,520
Speaker 5: treasure market itself, because the buying of treasury borrowing has

158
00:08:56,520 --> 00:08:59,880
Speaker 5: gone up dramatically and the capacity of the primary dealers

159
00:09:00,080 --> 00:09:04,000
Speaker 5: to take on that uh that burden has diminished because

160
00:09:04,000 --> 00:09:08,240
Speaker 5: of all the regulation on capital and leverage. So there

161
00:09:08,280 --> 00:09:10,680
Speaker 5: do need to be some significant changes, I think, to

162
00:09:10,760 --> 00:09:15,280
Speaker 5: the treasury market to make it more strong and resilient.

163
00:09:15,360 --> 00:09:17,200
Speaker 5: And what I propose is a couple of things. One

164
00:09:17,240 --> 00:09:19,720
Speaker 5: central characteringum of treasuries, so they all go through a

165
00:09:19,720 --> 00:09:21,720
Speaker 5: central current party, so your risk is just to the

166
00:09:21,760 --> 00:09:24,040
Speaker 5: central current party. Allows you to net out a lot

167
00:09:24,080 --> 00:09:26,360
Speaker 5: of bilateral risk to a single risk to one.

168
00:09:26,720 --> 00:09:27,840
Speaker 6: Uh end person.

169
00:09:28,360 --> 00:09:34,400
Speaker 5: Second, increase the leverage the haircuts a bit so that

170
00:09:34,440 --> 00:09:36,520
Speaker 5: they don't need to be increased during time to stress.

171
00:09:36,760 --> 00:09:39,040
Speaker 5: Right now, you have low haircuts, and then there's there's stress,

172
00:09:39,040 --> 00:09:41,079
Speaker 5: and the haircuts go up, which force people to sell.

173
00:09:41,440 --> 00:09:44,400
Speaker 5: And the last thing which Mike was talking about is

174
00:09:45,320 --> 00:09:48,680
Speaker 5: opening up the fens repo facility more broadly, making it

175
00:09:48,720 --> 00:09:51,040
Speaker 5: so that people can take treasures and turn them into

176
00:09:51,080 --> 00:09:53,559
Speaker 5: cash at any time. And if they know that, then

177
00:09:53,559 --> 00:09:56,280
Speaker 5: they don't actually have to sell the treasures, you know,

178
00:09:56,440 --> 00:09:58,040
Speaker 5: in anticipation of a problem.

179
00:09:58,400 --> 00:10:00,880
Speaker 6: They can wait to see if they actually need the care.

180
00:10:00,600 --> 00:10:03,480
Speaker 7: Bill if none of that gets done. Do you think

181
00:10:03,760 --> 00:10:07,040
Speaker 7: the action we've seen and what you expect compromises the

182
00:10:07,120 --> 00:10:09,240
Speaker 7: QT program coming out of the FED.

183
00:10:10,240 --> 00:10:11,040
Speaker 6: No, I don't think so.

184
00:10:11,080 --> 00:10:13,120
Speaker 5: I mean, I think the QT program basically is on

185
00:10:13,120 --> 00:10:16,359
Speaker 5: autopilot as long as there isn't a lot of market disruptions.

186
00:10:16,400 --> 00:10:19,560
Speaker 5: So if the market performs reasonably well, then QT keeps going.

187
00:10:19,920 --> 00:10:21,680
Speaker 5: Only if we have the kind of events like we

188
00:10:21,760 --> 00:10:25,000
Speaker 5: had in September twenty nineteen or market twenty twenty, we

189
00:10:25,000 --> 00:10:27,920
Speaker 5: can see QT is suspended because if the market isn't

190
00:10:27,920 --> 00:10:29,840
Speaker 5: working right, the last thing the Fed wants to do

191
00:10:29,920 --> 00:10:31,760
Speaker 5: is done more securities in the marketplace.

192
00:10:32,160 --> 00:10:35,120
Speaker 4: What's as take here, Bill, If there isn't this sort

193
00:10:35,160 --> 00:10:38,400
Speaker 4: of fix that you propose or this three pronged proposal,

194
00:10:38,880 --> 00:10:41,319
Speaker 4: how much are we seeing what sort of the new

195
00:10:41,320 --> 00:10:44,240
Speaker 4: normal looks like with bouncing around twenty basis points on

196
00:10:44,280 --> 00:10:47,520
Speaker 4: a ten year yield from day to day versus something

197
00:10:47,800 --> 00:10:51,160
Speaker 4: more significant that creates a real crisis in the world's

198
00:10:51,160 --> 00:10:53,120
Speaker 4: deepest and most liquid market.

199
00:10:53,559 --> 00:10:55,480
Speaker 5: I think the volatility we've seen this year is not

200
00:10:55,640 --> 00:10:58,520
Speaker 5: a treasure market function problem. I think the volatility we've

201
00:10:58,520 --> 00:11:00,000
Speaker 5: seen this year is people trying to figure out what

202
00:11:00,200 --> 00:11:03,400
Speaker 5: what's the trajectory of short term rates over the next

203
00:11:03,640 --> 00:11:06,360
Speaker 5: six to twelve months, and there's been lots of changes

204
00:11:06,360 --> 00:11:09,160
Speaker 5: in view as the economic data has come out. I

205
00:11:09,160 --> 00:11:12,280
Speaker 5: think the problem is more when all sudden people want

206
00:11:12,280 --> 00:11:14,480
Speaker 5: it dump treasuries and there's not enough capacity on their

207
00:11:14,559 --> 00:11:17,680
Speaker 5: side to absorb that. That has happened a few times,

208
00:11:18,360 --> 00:11:21,160
Speaker 5: and obviously it needs it needs a catalyst, and it's

209
00:11:21,160 --> 00:11:23,440
Speaker 5: hard to predict what that catalyst could be, But what

210
00:11:23,480 --> 00:11:25,439
Speaker 5: I want is a treasury market that can handle those

211
00:11:25,480 --> 00:11:27,240
Speaker 5: kind of shocks if and when they occur.

212
00:11:27,600 --> 00:11:30,080
Speaker 4: Are you saying that right now there is an inability.

213
00:11:30,320 --> 00:11:32,520
Speaker 4: What do you expect will happen if there is some

214
00:11:32,559 --> 00:11:33,880
Speaker 4: sort of catalyst.

215
00:11:34,800 --> 00:11:37,320
Speaker 5: Well, if there's sometimes are cast One of the problems

216
00:11:37,360 --> 00:11:40,560
Speaker 5: we allowed the treasury trading is handled by algorithmic traders

217
00:11:40,559 --> 00:11:43,960
Speaker 5: who basically don't really provide long term liquity to the market.

218
00:11:44,040 --> 00:11:47,960
Speaker 5: They just provide liquidity for a microsecond and then they

219
00:11:48,640 --> 00:11:51,760
Speaker 5: move it security off to someone else, and when things

220
00:11:51,840 --> 00:11:56,000
Speaker 5: get scary, they completely withdraw from the market, and then

221
00:11:56,080 --> 00:11:57,800
Speaker 5: the market is really now then has to go to

222
00:11:57,800 --> 00:11:58,920
Speaker 5: the primary dealer community.

223
00:11:59,080 --> 00:12:00,280
Speaker 6: But the primary dealer commun.

224
00:12:00,160 --> 00:12:02,880
Speaker 5: Has an allocated capital to this business because most of

225
00:12:02,880 --> 00:12:05,120
Speaker 5: the time they're actually not doing it, so there's no

226
00:12:05,160 --> 00:12:10,240
Speaker 5: one there sort of an extremist provide balance sheet capacity

227
00:12:10,280 --> 00:12:12,080
Speaker 5: to sort of come the market. And that's one reason

228
00:12:12,120 --> 00:12:14,720
Speaker 5: why you'd like to have the ability to take your

229
00:12:15,080 --> 00:12:17,800
Speaker 5: treasury security to the FED and turn them into cash

230
00:12:18,080 --> 00:12:21,040
Speaker 5: without actually having to sell them. So the Treasury is

231
00:12:21,080 --> 00:12:22,760
Speaker 5: only one the FED is the only one that has

232
00:12:22,760 --> 00:12:25,520
Speaker 5: a balance sheet that is actually elastic, So why not

233
00:12:25,559 --> 00:12:28,560
Speaker 5: make it clear that that elastic balance sheet available on

234
00:12:28,600 --> 00:12:31,640
Speaker 5: an ex anti basis as opposed to only exposts after

235
00:12:31,720 --> 00:12:32,960
Speaker 5: the vice she had the problem?

236
00:12:33,360 --> 00:12:37,120
Speaker 1: Bill, how does our data dependency look next year? I

237
00:12:37,120 --> 00:12:41,000
Speaker 1: think we've had a celebration of disinflation in place. Is

238
00:12:41,040 --> 00:12:45,200
Speaker 1: the nature or character of the Fed's data dependency different

239
00:12:45,280 --> 00:12:46,360
Speaker 1: now and forward?

240
00:12:47,240 --> 00:12:50,760
Speaker 5: Well, I think they're more confident that they've moved monetary

241
00:12:50,760 --> 00:12:53,400
Speaker 5: policy to a restrictive level and it's actually working to

242
00:12:53,520 --> 00:12:56,560
Speaker 5: bring down inflation. But we still don't know a lot

243
00:12:56,600 --> 00:12:59,440
Speaker 5: of things. We don't really know if how tight monetary

244
00:12:59,440 --> 00:13:01,400
Speaker 5: policy is. We don't know how long it's going to

245
00:13:01,400 --> 00:13:03,560
Speaker 5: take to get inflation down to two percent. So I

246
00:13:03,559 --> 00:13:06,360
Speaker 5: think the degree of uncertainty risk is a lot less

247
00:13:06,440 --> 00:13:09,720
Speaker 5: less today than it was, say, eighteen months ago, when

248
00:13:09,760 --> 00:13:11,920
Speaker 5: the Fed started the tightening process. But there's still a

249
00:13:11,960 --> 00:13:14,120
Speaker 5: lot of uncertainty about how strong the economics can being,

250
00:13:14,120 --> 00:13:15,240
Speaker 5: whether the Fed is done.

251
00:13:15,480 --> 00:13:17,360
Speaker 7: What a roller coaster write this bond market has been

252
00:13:17,400 --> 00:13:19,160
Speaker 7: on over the last few months.

253
00:13:19,000 --> 00:13:19,599
Speaker 6: Bell, what if for?

254
00:13:19,679 --> 00:13:21,520
Speaker 7: To catch up with you? SA always is former New

255
00:13:21,600 --> 00:13:25,120
Speaker 7: York Fed President Bill Dutley. There an interesting thought provoking

256
00:13:25,160 --> 00:13:27,800
Speaker 7: piece from Bill on the future of this treasury market.

257
00:13:37,920 --> 00:13:39,760
Speaker 1: We talked to a lot of experts on this, and

258
00:13:39,800 --> 00:13:41,360
Speaker 1: this is what you get if you get a double

259
00:13:41,360 --> 00:13:44,200
Speaker 1: degree at the you claimed holy Cross, the College of

260
00:13:44,200 --> 00:13:51,280
Speaker 1: the Holy Cross, and economics in accounting, the hyper detail, mathematics, ratios,

261
00:13:51,840 --> 00:13:56,160
Speaker 1: the financial analysis of retail that Chuck Rahm has acclaimed for.

262
00:13:56,240 --> 00:13:58,600
Speaker 1: He's a Gordon Haskett. I'm not going to mince words.

263
00:13:58,600 --> 00:14:01,520
Speaker 1: We protect the copyright of all of our guests. Get

264
00:14:01,760 --> 00:14:05,120
Speaker 1: his brilliance from Gordon A Hausket. How do you go

265
00:14:05,160 --> 00:14:10,040
Speaker 1: and outperform on Walmart with a thirty pe? Explain why

266
00:14:10,080 --> 00:14:14,559
Speaker 1: Walmart has a pe like a luxury goods pervader.

267
00:14:15,600 --> 00:14:19,720
Speaker 8: And Walmart's been executing lawlessly for several quarters and even

268
00:14:19,800 --> 00:14:23,520
Speaker 8: maybe the past couple of years, and the business mixshift

269
00:14:23,560 --> 00:14:26,080
Speaker 8: and the gross market visibility. I mean, there's never been

270
00:14:26,120 --> 00:14:28,360
Speaker 8: a time in the twenty years I've covered Walmart where

271
00:14:28,720 --> 00:14:32,360
Speaker 8: I've been this bullish on the long term outlook. Clearly

272
00:14:32,440 --> 00:14:36,120
Speaker 8: today it's interesting. It's a little bit about positioning. You

273
00:14:36,160 --> 00:14:39,880
Speaker 8: guys talked in your remarks about valuation. That's a factor

274
00:14:40,840 --> 00:14:43,280
Speaker 8: if you really dig it underneath the covers here, it's

275
00:14:43,320 --> 00:14:45,640
Speaker 8: really less about the top line. And I think less

276
00:14:45,640 --> 00:14:48,640
Speaker 8: about the back half of October commentary that the CFO

277
00:14:48,760 --> 00:14:51,440
Speaker 8: recently made. I think it's more about the margin flow

278
00:14:51,480 --> 00:14:54,920
Speaker 8: through that was disappointing. The US margins were disappointing. So

279
00:14:55,160 --> 00:14:57,480
Speaker 8: when you have a stock at an all time high,

280
00:14:57,520 --> 00:14:59,960
Speaker 8: at very rich valuations and you get a little bit

281
00:15:00,080 --> 00:15:02,720
Speaker 8: but disconnect, you get this negative reaction. I think the

282
00:15:02,760 --> 00:15:04,520
Speaker 8: stock will come back throughout the day and over the

283
00:15:04,520 --> 00:15:07,440
Speaker 8: next couple of weeks, but today could be difficult for

284
00:15:07,480 --> 00:15:07,840
Speaker 8: the stock.

285
00:15:08,240 --> 00:15:11,760
Speaker 1: Can they compete with Amazon or Darra I never said

286
00:15:11,800 --> 00:15:15,160
Speaker 1: this before, Chuck Grum, But can they beat Amazon?

287
00:15:16,440 --> 00:15:18,160
Speaker 8: I don't know if they can beat Amazon, but they

288
00:15:18,160 --> 00:15:21,600
Speaker 8: can definitely compete. And I think the physical assets of

289
00:15:21,640 --> 00:15:24,280
Speaker 8: their four thousand plus stores in the country really provide

290
00:15:24,280 --> 00:15:27,280
Speaker 8: them with being really close and being able to connect

291
00:15:27,280 --> 00:15:30,120
Speaker 8: with their customers. So Walmart plus there's a lot of

292
00:15:30,200 --> 00:15:33,400
Speaker 8: opportunity there. So can they beat Probably not, but can

293
00:15:33,440 --> 00:15:34,640
Speaker 8: they compete one hundred percent?

294
00:15:34,840 --> 00:15:37,800
Speaker 4: Chuck, you said that margins disappointed, and that's really interesting

295
00:15:37,840 --> 00:15:39,800
Speaker 4: At a time where people are wondering when are consumers

296
00:15:39,800 --> 00:15:42,880
Speaker 4: is going to start pushing back on price increases? Is

297
00:15:42,920 --> 00:15:46,280
Speaker 4: this an indication that Walmart is seeing that that time

298
00:15:46,400 --> 00:15:48,520
Speaker 4: is now and then order for them to compete, they've

299
00:15:48,520 --> 00:15:49,960
Speaker 4: got to take a hit on the margins.

300
00:15:50,360 --> 00:15:53,120
Speaker 8: Well, I think almost uniformly, you know, consumers are pushing

301
00:15:53,160 --> 00:15:55,000
Speaker 8: back on price and that's why prices are coming down

302
00:15:55,000 --> 00:15:57,840
Speaker 8: almost across the board. And can we cover Home Depot,

303
00:15:57,840 --> 00:16:01,520
Speaker 8: we cover TJ, we cover you know Hard, you know, Macy's, Walmart,

304
00:16:01,520 --> 00:16:04,880
Speaker 8: They're all talking about prices starting to flatten out and retreat.

305
00:16:05,200 --> 00:16:07,480
Speaker 8: I think the US margins were softer because of the

306
00:16:07,520 --> 00:16:11,760
Speaker 8: GLP influence on the on the margins because of the drug.

307
00:16:11,840 --> 00:16:14,440
Speaker 8: It's a lower margin product. It was a higher sales

308
00:16:14,440 --> 00:16:17,040
Speaker 8: in here in the quarter. And when you have discretionary

309
00:16:17,080 --> 00:16:20,240
Speaker 8: sales be softer, those are higher margin categories for Walmart.

310
00:16:20,280 --> 00:16:23,480
Speaker 8: So it's really a mixed factor. It looks like obviously

311
00:16:23,520 --> 00:16:25,480
Speaker 8: the calls at eight o'clock and the callbacks are later

312
00:16:25,520 --> 00:16:27,200
Speaker 8: in the day, so we'll get more clarity later in

313
00:16:27,200 --> 00:16:29,040
Speaker 8: the day. But looking at what it looks like now,

314
00:16:29,080 --> 00:16:30,400
Speaker 8: I think it's more of a mixed factor.

315
00:16:30,800 --> 00:16:33,120
Speaker 4: You know, we were talking earlier about what's good news

316
00:16:33,200 --> 00:16:35,480
Speaker 4: or bad news for the broader economy. When Walmart does

317
00:16:35,560 --> 00:16:38,640
Speaker 4: headly or well in terms of which consumers are shopping,

318
00:16:38,640 --> 00:16:41,240
Speaker 4: there is there any read through based on the earnings

319
00:16:41,240 --> 00:16:43,520
Speaker 4: that we've gotten from retailers about whether we're seeing a

320
00:16:43,560 --> 00:16:46,120
Speaker 4: division between haves and have nots, about whether we are

321
00:16:46,200 --> 00:16:49,800
Speaker 4: seeing any broader trends in terms of how the consumer

322
00:16:49,920 --> 00:16:52,280
Speaker 4: is evolving, Which areas are going to be bright spots

323
00:16:52,320 --> 00:16:52,880
Speaker 4: and which won't.

324
00:16:54,040 --> 00:16:56,040
Speaker 6: That's a great question. I think it's really too early

325
00:16:56,080 --> 00:16:56,360
Speaker 6: to tell.

326
00:16:56,400 --> 00:16:58,440
Speaker 8: I mean, you look at Walmart's numbers, they're up, you know,

327
00:16:58,560 --> 00:17:01,960
Speaker 8: comp up five, Target yesterday down five. You know, you

328
00:17:02,000 --> 00:17:06,240
Speaker 8: look at Macy's down six or seven. Here, it looks

329
00:17:06,280 --> 00:17:09,360
Speaker 8: pretty uniform. I think there's pressures across the board. It's

330
00:17:09,359 --> 00:17:11,320
Speaker 8: not really like the high end doing well. You guys

331
00:17:11,320 --> 00:17:15,200
Speaker 8: talked about Berbery earlier. We'll get more color from Nordstrom

332
00:17:15,240 --> 00:17:18,480
Speaker 8: next week. I think it's pretty uniform across the board.

333
00:17:18,480 --> 00:17:20,640
Speaker 8: And you know, we've been talking about our consumer surveys

334
00:17:20,680 --> 00:17:24,200
Speaker 8: being weak, traffic being weak. Today's numbers and the reactions

335
00:17:24,200 --> 00:17:26,320
Speaker 8: here over the past forty eight hours have really nothing

336
00:17:26,320 --> 00:17:28,560
Speaker 8: to do with the top line. The top line and

337
00:17:28,640 --> 00:17:31,440
Speaker 8: the sales are pretty much in line with where people thought.

338
00:17:31,520 --> 00:17:34,639
Speaker 8: It's a positioning and it's the margin flow throughs for

339
00:17:34,680 --> 00:17:35,480
Speaker 8: certain companies.

340
00:17:36,000 --> 00:17:40,600
Speaker 1: What's the future of Nordstrom's the family dynamic and also

341
00:17:40,680 --> 00:17:43,680
Speaker 1: the attempt to be luxury. I guess what I is

342
00:17:43,680 --> 00:17:47,960
Speaker 1: an amateur, I'd say is accessible luxury. Is nord Strum

343
00:17:48,080 --> 00:17:50,040
Speaker 1: a sleeper for five years out?

344
00:17:51,400 --> 00:17:53,200
Speaker 6: I think it's a great concept.

345
00:17:53,800 --> 00:17:57,120
Speaker 8: I think the rack has really been their achilles heel

346
00:17:57,240 --> 00:17:59,200
Speaker 8: over the past several years. So if they could get

347
00:17:59,200 --> 00:18:02,320
Speaker 8: the rack fix. I think the fact that they all

348
00:18:02,359 --> 00:18:05,199
Speaker 8: have a huge presence of full line stores across the

349
00:18:05,280 --> 00:18:08,560
Speaker 8: country is actually a tremendous asset piece of v Coals

350
00:18:08,600 --> 00:18:11,720
Speaker 8: or Macy's, which have got hundreds of stores. So I

351
00:18:11,760 --> 00:18:14,040
Speaker 8: think it's I think it's a viable concept. They need

352
00:18:14,080 --> 00:18:16,000
Speaker 8: to get the rack fixed, and that's what people and

353
00:18:16,040 --> 00:18:17,240
Speaker 8: investors have been waiting for.

354
00:18:17,480 --> 00:18:18,320
Speaker 7: Chuck, what's the rack?

355
00:18:19,680 --> 00:18:21,120
Speaker 6: It's a ro off price division.

356
00:18:21,280 --> 00:18:23,399
Speaker 7: And what do you mean by fixed? What's wrong with it?

357
00:18:24,680 --> 00:18:26,040
Speaker 8: Well, when you look at you know, you look at

358
00:18:26,240 --> 00:18:28,920
Speaker 8: TJ and Ross comping up, you know, load of mid

359
00:18:28,920 --> 00:18:31,760
Speaker 8: single digits, and you see the rack comping down. It's

360
00:18:31,760 --> 00:18:33,960
Speaker 8: just it's been broken. I mean it's their business hasn't

361
00:18:33,960 --> 00:18:36,959
Speaker 8: been good. It seems like there's been some cannibalization across

362
00:18:36,960 --> 00:18:39,639
Speaker 8: the store base. We're not exactly. Sure, there's been some

363
00:18:39,680 --> 00:18:42,240
Speaker 8: merchandise issues. They've tried to price up when when the

364
00:18:42,240 --> 00:18:46,480
Speaker 8: consumer wanted to be priced down. But yeah, the North

365
00:18:46,520 --> 00:18:49,520
Speaker 8: From viable for sure. But the rack division, the off

366
00:18:49,520 --> 00:18:51,399
Speaker 8: price division, I'm sorry, we're not clarifying earlier.

367
00:18:51,440 --> 00:18:53,120
Speaker 7: Is really the No, It's okay now, I know, I'm

368
00:18:53,160 --> 00:18:54,800
Speaker 7: just just for people who are trying to follow. Have

369
00:18:54,840 --> 00:18:58,040
Speaker 7: you noticed, Chuck that the off rack the rack is

370
00:18:58,080 --> 00:19:00,840
Speaker 7: actually close to the Nord from stores. Have you noticed that,

371
00:19:01,119 --> 00:19:02,000
Speaker 7: which is kind of odd.

372
00:19:02,760 --> 00:19:04,919
Speaker 8: Yeah, I mean I could tell you my wife, We'll

373
00:19:05,240 --> 00:19:06,679
Speaker 8: tend to go to the rack now a lot more

374
00:19:06,760 --> 00:19:07,400
Speaker 8: than a bowl line.

375
00:19:07,440 --> 00:19:08,400
Speaker 6: So that's what I'm talking about.

376
00:19:08,440 --> 00:19:13,640
Speaker 8: The cannibalization factor of that is probably maybe the issue here,

377
00:19:13,720 --> 00:19:15,560
Speaker 8: and maybe they need to close more rack stores, but

378
00:19:15,640 --> 00:19:17,800
Speaker 8: you know, ironically, they're trying to grow more right now.

379
00:19:17,840 --> 00:19:20,199
Speaker 8: So we're old rated, we're kind of we're kind of

380
00:19:20,320 --> 00:19:22,240
Speaker 8: perplexed on some of the strategies there.

381
00:19:22,280 --> 00:19:24,560
Speaker 7: For the time being, it's trying to be TJX and

382
00:19:24,720 --> 00:19:27,000
Speaker 7: knowst them at the same time with the same grand

383
00:19:27,520 --> 00:19:30,840
Speaker 7: it's hot to do, Chuck, Thank you, Chuck Goldenske, thank

384
00:19:30,840 --> 00:19:33,640
Speaker 7: you mate.

385
00:19:35,359 --> 00:19:38,280
Speaker 1: Right now and these important meets we're making jokes about it.

386
00:19:38,320 --> 00:19:41,280
Speaker 1: Come on, this is important. Michael Hurston joins and I

387
00:19:41,359 --> 00:19:45,600
Speaker 1: had a China research a twenty two v AT research. Michael,

388
00:19:45,600 --> 00:19:48,200
Speaker 1: thank you so much for briefing us this morning. What

389
00:19:48,280 --> 00:19:51,520
Speaker 1: did you What was the unexpected that you saw last night?

390
00:19:51,880 --> 00:19:55,240
Speaker 1: Besides a dictator faux pap by the president late? What

391
00:19:55,320 --> 00:19:56,800
Speaker 1: was the unexpected of the meeting?

392
00:19:58,320 --> 00:20:03,639
Speaker 9: Nothing too unexpected, frank, which I think is good. Maybe

393
00:20:03,640 --> 00:20:07,040
Speaker 9: the Chinese readout perhaps was a bit more positive than

394
00:20:07,080 --> 00:20:09,840
Speaker 9: I was expecting, and that really reflects what has been

395
00:20:09,880 --> 00:20:13,400
Speaker 9: a bit of a excuse me, a recalibration in China's

396
00:20:13,440 --> 00:20:16,840
Speaker 9: official tone towards the US over the last few weeks.

397
00:20:16,880 --> 00:20:19,479
Speaker 9: But other than that, I would say, no big surprises.

398
00:20:20,000 --> 00:20:21,680
Speaker 1: Okay, no big surprise is great.

399
00:20:21,720 --> 00:20:22,520
Speaker 6: What's next?

400
00:20:22,680 --> 00:20:26,040
Speaker 1: When's the next meeting? Is the President travel to China

401
00:20:26,200 --> 00:20:29,680
Speaker 1: to make it too well?

402
00:20:29,720 --> 00:20:33,040
Speaker 9: I think that's actually a really important point, Tom, because

403
00:20:33,359 --> 00:20:36,480
Speaker 9: this is basically the last high profile meeting that the

404
00:20:36,480 --> 00:20:39,200
Speaker 9: two leaders are going to have before the next US

405
00:20:39,320 --> 00:20:43,000
Speaker 9: presidential election. So this kind of sets the parameters for

406
00:20:43,080 --> 00:20:47,359
Speaker 9: the next year, and those parameters really are trying to

407
00:20:47,920 --> 00:20:51,440
Speaker 9: find stability, not allowing a crisis to take place over

408
00:20:51,560 --> 00:20:55,719
Speaker 9: something like Timewan and then just making incremental progress on

409
00:20:55,760 --> 00:20:58,119
Speaker 9: some of the key issues in the relationship. But if

410
00:20:58,160 --> 00:21:00,320
Speaker 9: you think about it, the closer we got to the

411
00:21:00,400 --> 00:21:03,400
Speaker 9: US presidential election, the harder it will be for Biden

412
00:21:03,640 --> 00:21:06,520
Speaker 9: to do anything that's seen as being soft on China.

413
00:21:06,600 --> 00:21:10,320
Speaker 9: And of course, why would chi Jinpang make concessions to

414
00:21:10,400 --> 00:21:12,920
Speaker 9: the US when he doesn't know who the next president

415
00:21:12,960 --> 00:21:14,760
Speaker 9: will be. So I think that's where we are. That's

416
00:21:14,800 --> 00:21:16,760
Speaker 9: why this was kind of an important window for the

417
00:21:16,760 --> 00:21:17,640
Speaker 9: two leaders to meet.

418
00:21:17,960 --> 00:21:19,840
Speaker 4: Did the dictator comment mean anything to you?

419
00:21:20,880 --> 00:21:21,560
Speaker 6: Not really.

420
00:21:21,680 --> 00:21:23,760
Speaker 9: I don't want to dismiss it entirely. I think it

421
00:21:24,040 --> 00:21:29,000
Speaker 9: probably was perhaps not the positive tone to go out on,

422
00:21:29,119 --> 00:21:31,800
Speaker 9: But I think in the grand scheme, given how much

423
00:21:31,840 --> 00:21:35,359
Speaker 9: work both sides did to try to make this meeting happen,

424
00:21:35,960 --> 00:21:37,760
Speaker 9: I don't think it's going to color too much on

425
00:21:37,800 --> 00:21:38,679
Speaker 9: the Chinese side.

426
00:21:38,880 --> 00:21:42,240
Speaker 4: What did you make of the meetings that Xijimpang had

427
00:21:42,440 --> 00:21:46,080
Speaker 4: with US executives apples, Tim Cook for example, a whole

428
00:21:46,080 --> 00:21:48,879
Speaker 4: host of others, and then a private meeting with Elon Musk.

429
00:21:49,240 --> 00:21:51,200
Speaker 3: What's your takeaway of how.

430
00:21:51,200 --> 00:21:54,120
Speaker 4: Different the business view on China is from the US

431
00:21:54,200 --> 00:21:56,000
Speaker 4: government's view on that country.

432
00:21:56,920 --> 00:22:00,560
Speaker 9: I think there are a few very prominent US firms

433
00:22:00,880 --> 00:22:04,640
Speaker 9: that have this special position in China where and that

434
00:22:04,720 --> 00:22:08,520
Speaker 9: would put Apple and Tesla very much as the two

435
00:22:08,600 --> 00:22:12,720
Speaker 9: bell Weathers in that category. They have managed this straddle

436
00:22:12,880 --> 00:22:14,600
Speaker 9: between the US and China.

437
00:22:14,680 --> 00:22:15,320
Speaker 6: It's not an.

438
00:22:15,240 --> 00:22:18,480
Speaker 9: Easy straddle on either side, but they're kind of a

439
00:22:18,520 --> 00:22:22,960
Speaker 9: special category. If you look at the broader set of

440
00:22:23,119 --> 00:22:26,480
Speaker 9: US firms in China, it's really a mix between those

441
00:22:26,520 --> 00:22:28,840
Speaker 9: who feel like they have a decent market in China

442
00:22:28,880 --> 00:22:34,000
Speaker 9: and those who are really upset about China's policies. And

443
00:22:34,080 --> 00:22:37,240
Speaker 9: so I would put Tesla and Apple in this kind

444
00:22:37,280 --> 00:22:40,119
Speaker 9: of special category, and so it's no surprise that they

445
00:22:40,200 --> 00:22:42,280
Speaker 9: got some special attention from CHICHIPI do.

446
00:22:42,280 --> 00:22:43,960
Speaker 3: You have a sense of who needs who more?

447
00:22:44,400 --> 00:22:47,600
Speaker 4: Of whether Tesla and Apple need China more than China

448
00:22:47,800 --> 00:22:50,439
Speaker 4: needs them and the jobs that they provide.

449
00:22:51,160 --> 00:22:54,240
Speaker 9: It's an interesting question. I would say for the companies

450
00:22:54,800 --> 00:22:57,960
Speaker 9: they need app they need China more. But if we're

451
00:22:58,000 --> 00:23:01,800
Speaker 9: talking about Apple and Tesla, they are very important bell

452
00:23:01,840 --> 00:23:05,199
Speaker 9: Weathers for how the business community looks at the playing

453
00:23:05,240 --> 00:23:07,840
Speaker 9: field in China, and not just the US business community,

454
00:23:07,920 --> 00:23:13,880
Speaker 9: that's Europeans, Japanese, you know, global companies in China, which

455
00:23:13,920 --> 00:23:16,160
Speaker 9: is why I think Beijing actually has to tread very

456
00:23:16,200 --> 00:23:20,439
Speaker 9: carefully with things like, for example, potential retaliation against Apple.

457
00:23:20,560 --> 00:23:23,679
Speaker 9: So yeah, the companies need China work, but these are

458
00:23:23,840 --> 00:23:26,960
Speaker 9: quite important that Chi Jinping looks to try to revive

459
00:23:27,119 --> 00:23:30,040
Speaker 9: confidence in China's economy and China's investment environment.

460
00:23:30,200 --> 00:23:32,160
Speaker 1: Michael, A question we haven't brought up yet. I've been

461
00:23:32,160 --> 00:23:36,840
Speaker 1: remiss on this is Hong Kong. Is Hong Kong going

462
00:23:36,880 --> 00:23:41,679
Speaker 1: to evolve into something that we don't see right now?

463
00:23:41,840 --> 00:23:44,959
Speaker 1: Is there a Hearson Hong Kong out there that's going

464
00:23:45,000 --> 00:23:45,560
Speaker 1: to be different.

465
00:23:46,800 --> 00:23:49,960
Speaker 9: I think Hong Kong, really, and I was just there

466
00:23:50,080 --> 00:23:54,639
Speaker 9: last week, is in this somewhat gradual transition from a

467
00:23:54,720 --> 00:23:58,640
Speaker 9: global hub to really more of a pure capital gateway

468
00:23:58,680 --> 00:24:02,119
Speaker 9: to China and is increasing becoming more of a Chinese city.

469
00:24:02,760 --> 00:24:06,119
Speaker 9: That is still an interesting position for it to play.

470
00:24:06,640 --> 00:24:09,080
Speaker 9: And a number of China watchers that I've had discussions

471
00:24:09,119 --> 00:24:11,040
Speaker 9: with recently have made the point that they think Hong

472
00:24:11,119 --> 00:24:14,600
Speaker 9: Kong is going to remain an interesting city as the

473
00:24:14,600 --> 00:24:17,399
Speaker 9: political environment in China states very tight and in some

474
00:24:17,480 --> 00:24:21,000
Speaker 9: cases even titans further so, Hong Kong losing its status

475
00:24:21,200 --> 00:24:24,119
Speaker 9: as a global financial center, but still quite an important

476
00:24:24,680 --> 00:24:28,320
Speaker 9: city in the context of in particular context of China.

477
00:24:28,359 --> 00:24:31,200
Speaker 1: So what's the alternative for those people whining and dining

478
00:24:31,240 --> 00:24:34,560
Speaker 1: with mister g last night. What city do they go to?

479
00:24:36,400 --> 00:24:39,000
Speaker 9: I think if we're talking about the financial sector, you know,

480
00:24:39,040 --> 00:24:42,240
Speaker 9: it's a number of places. Singapore obviously has has gained

481
00:24:42,240 --> 00:24:45,240
Speaker 9: a step, even Tokyo has become more important as a

482
00:24:45,280 --> 00:24:49,240
Speaker 9: regional financial center. If we're talking about the multinationals there,

483
00:24:49,440 --> 00:24:51,760
Speaker 9: you know, it's wherever they can get capacity and wherever

484
00:24:51,760 --> 00:24:54,080
Speaker 9: they can get the logistics right. So in many cases

485
00:24:54,160 --> 00:24:58,600
Speaker 9: is you know, you mentioned Vietnam earlier, Vietnam, Fishary, but

486
00:24:58,600 --> 00:25:00,520
Speaker 9: it's also Mexico. It's a lot of countries.

487
00:25:00,920 --> 00:25:02,960
Speaker 7: Michael, we got to leave you that. Thanks for Aminus, Michael

488
00:25:02,960 --> 00:25:05,760
Speaker 7: Hesson that have twenty two vave research. Thank you very much.

489
00:25:05,800 --> 00:25:09,600
Speaker 1: Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and

490
00:25:09,720 --> 00:25:13,920
Speaker 1: anywhere else you get your podcasts. Listen live every weekday

491
00:25:14,200 --> 00:25:17,679
Speaker 1: starting at seven am Easter. I'm Bloomberg dot Com, the

492
00:25:17,800 --> 00:25:22,320
Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You

493
00:25:22,359 --> 00:25:26,440
Speaker 1: can watch us live on Bloomberg Television and always I'm

494
00:25:26,440 --> 00:25:30,479
Speaker 1: the Bloomberg Terminal. Thanks for listening. I'm Tom Keen, and

495
00:25:30,560 --> 00:25:32,119
Speaker 1: this is Bloomberg