WEBVTT - Surveillance: Dollar Dominance With Rahbari 0:00:09.840 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.240 Bloomberg dot Com, and of course on the Bloomberg Just 0:00:27.320 --> 0:00:29.920 the Cold Stephan Trillion, I've run the fat balance sheet 0:00:30.000 --> 0:00:32.479 joining us OUs away into the situation. Jared would at 0:00:32.640 --> 0:00:35.280 a bank for America. Jared, fantastic to catch up with you, sir. 0:00:35.440 --> 0:00:38.400 It's a delicate moment. Risk appetite and the sixth clarities 0:00:38.400 --> 0:00:39.960 of the market just done it to build over the 0:00:40.000 --> 0:00:42.920 last few weeks, and at the same time, the relationship 0:00:42.960 --> 0:00:45.400 between China and the United States breaking down. What's the 0:00:45.400 --> 0:00:48.000 message to clients at the moment, Jared, Well, yeah, it's 0:00:48.000 --> 0:00:49.240 great to be with you all. I think that the 0:00:49.280 --> 0:00:53.040 message for us is that the key thing for returns 0:00:53.040 --> 0:00:55.160 of the next several quarters is what kind of policy 0:00:55.200 --> 0:00:58.320 path we take, you know, coming out of this pandemic 0:00:58.360 --> 0:01:01.720 and charting a path forward. You know, three broad scenarios 0:01:01.920 --> 0:01:04.640 if we do just give you know, you know, extensive 0:01:04.720 --> 0:01:07.959 unemployment insurance, plug the revenue hole for states. We think 0:01:08.000 --> 0:01:10.160 that will happen, but that's the limit of what we happen. 0:01:10.160 --> 0:01:12.440 We think it's the return to the sort of secular 0:01:12.440 --> 0:01:15.039 stagnation that we're all familiar with. And the portfolios that 0:01:15.360 --> 0:01:19.080 investors have already crowded into tech and healthcare and investment 0:01:19.080 --> 0:01:21.520 grade and so on. Not huge, you know, scope who 0:01:21.520 --> 0:01:23.600 are really massive will market off of that. But the 0:01:23.600 --> 0:01:25.800 two more interesting scenarios and and the two that I 0:01:25.840 --> 0:01:28.360 think deserve much more attention, or the the sort of 0:01:28.360 --> 0:01:32.040 stagflationary effects if you do see increased friction of you know, 0:01:32.080 --> 0:01:35.520 tech regulation, friction with China, and then and then the 0:01:35.600 --> 0:01:39.600 third scenario, not stagflation, but I'm calling elevation, where we 0:01:39.720 --> 0:01:43.679 get bold new policy post globalization, shifting towards higher capex, 0:01:43.959 --> 0:01:46.679 higher R and D, new industrial policy, the kind of 0:01:46.680 --> 0:01:48.960 things that can really boost productivity and growth. And I 0:01:49.040 --> 0:01:51.680 think that's what the market is really underprising. Jared. What's 0:01:51.680 --> 0:01:54.880 so great about your academic track with theology and your 0:01:54.920 --> 0:01:58.480 PhD and philosophy is maybe you can give us a 0:01:58.520 --> 0:02:02.760 new philosophy for a new market. Is the philosophy forward 0:02:02.800 --> 0:02:06.680 and Investing in two thousand twenty one, two thousand twenty 0:02:06.760 --> 0:02:10.280 three and beyond twenty two and beyond twenty three and beyond. 0:02:10.720 --> 0:02:13.120 Is it the same as the old philosophy or is 0:02:13.160 --> 0:02:16.160 it something new? Well, I think it's absolutely something new. 0:02:16.200 --> 0:02:19.320 I mean, just look at the realignment happening in you know, 0:02:19.360 --> 0:02:22.639 and in political cultures around the world. You're seeing people, uh, 0:02:22.680 --> 0:02:25.200 you know, the populace left, the populace right coming together 0:02:25.280 --> 0:02:28.040 on propositions that they that you know, we're never up 0:02:28.040 --> 0:02:30.400 for discussion before. Just look at what the U. S. 0:02:30.480 --> 0:02:33.440 Government has done, you know, in a Republican controlled Senate, 0:02:33.800 --> 0:02:36.160 you know, expanding fiscal policy on a scale we've never 0:02:36.200 --> 0:02:39.480 seen before in US peacetime, something that nobody would have 0:02:39.480 --> 0:02:42.000 thought possible. I mean just remember the top vote in 0:02:42.000 --> 0:02:44.000 two thousand and eight when they voted down you know, 0:02:44.040 --> 0:02:47.160 that package and crushed market. And it's that on this occasion, 0:02:47.440 --> 0:02:50.200 you know, I think that that Republicans have surprised everyone 0:02:50.480 --> 0:02:53.520 with the willingness to uh, you know, grow, grow, grow 0:02:53.600 --> 0:02:56.680 the government balance sheet. Um, what's happening? You know, Uh, 0:02:56.960 --> 0:02:59.080 the same thing is happening in Europe now with you know, 0:02:59.120 --> 0:03:03.520 potential volution in terms of fiscal policy. Japan coming through 0:03:03.560 --> 0:03:07.600 with you know, eleven percent of real water fiscal stimulus. 0:03:07.639 --> 0:03:09.640 I mean, these are things that we're unthinkable even six, 0:03:09.720 --> 0:03:12.480 six or twelve months ago, and if they're followed through with, 0:03:12.960 --> 0:03:15.320 you know, they're kind of productivity boosting policies that can 0:03:15.360 --> 0:03:18.440 really uh get us to a new level. I think 0:03:18.440 --> 0:03:22.040 it requires a complete rethink of active allocation and portfolios. 0:03:22.600 --> 0:03:25.880 So so how would that make you reallocate your your 0:03:25.960 --> 0:03:29.280 your investments. Well, if we're gonna you know, if developed 0:03:29.400 --> 0:03:32.280 countries are gonna stop relying on you know, just monetary 0:03:32.280 --> 0:03:35.560 policy to to help us limp along, but invest in 0:03:35.920 --> 0:03:39.400 you know, new technology, you know, you know, incentivized corporate capex, 0:03:39.960 --> 0:03:42.240 invest in research and development. Again, I mean, there's nothing 0:03:42.360 --> 0:03:45.240 that correlates better with productivity than than R and D. 0:03:45.920 --> 0:03:48.680 So if you do see scope for productivity to rise, 0:03:48.760 --> 0:03:52.640 for you know, employment to broaden out, income inequality to decline, 0:03:52.920 --> 0:03:55.560 that's how you can see you know, really meaningfully higher 0:03:55.560 --> 0:03:58.560 GDP growth and developed economies that otherwise you know, kind 0:03:58.600 --> 0:04:01.960 of stagnated. It wanted to person. That means suddenly all 0:04:02.000 --> 0:04:04.280 the trades that everyone has hated for us so long, 0:04:04.400 --> 0:04:08.960 the you know, value stocks, the financials, you know, materials, industrials, 0:04:09.080 --> 0:04:12.440 um you know, Europe, Japan, the things that people don't 0:04:12.480 --> 0:04:14.800 own today suddenly become much more attractive in a world 0:04:14.840 --> 0:04:17.400 of higher growth and productivity. Jan what did a Bank 0:04:17.400 --> 0:04:19.200 of America with us? So? Jardy, are you telling me 0:04:19.279 --> 0:04:22.320 that this rotation into value into the six colories of 0:04:22.360 --> 0:04:24.679 this market is not just a squeeze, It has legs. 0:04:25.200 --> 0:04:27.880 I'm not telling you this is the one, John, but 0:04:27.920 --> 0:04:29.680 I'd love it would be true. But we need more 0:04:29.720 --> 0:04:32.840 to confirmation. We need more confirmation. Yeah, there's two things 0:04:32.880 --> 0:04:35.440 in in our our latest report that we flagged as 0:04:35.480 --> 0:04:37.680 things to watch to know when it's a big one. 0:04:37.880 --> 0:04:41.039 You know. Number one is the bond market. It's great 0:04:41.080 --> 0:04:43.680 to see you know, value and and and high yield 0:04:43.720 --> 0:04:47.000 in Europe rallying. But until you see confirmation from bond 0:04:47.080 --> 0:04:49.799 yields telling you that a higher growth, higher demand driven 0:04:49.800 --> 0:04:52.640 inflation is in the future, that's number one. Number two 0:04:52.680 --> 0:04:55.440 is Brett You know, when the top five stocks in 0:04:55.440 --> 0:04:59.000 the SMP are more than market cap, that's not the 0:04:59.240 --> 0:05:01.760 that's not the instide of a shiny new ball market 0:05:01.800 --> 0:05:03.479 to see a big rally. We found in our in 0:05:03.480 --> 0:05:06.480 our quantitative study that you need to see um much 0:05:06.560 --> 0:05:10.360 broad participation before you see big equity returns, right, Jared, 0:05:10.560 --> 0:05:12.840 It's amazing how rude John is on a Friday. It's 0:05:12.880 --> 0:05:17.640 just it's really really typical, folks. We'll get through it today, Jared. 0:05:17.760 --> 0:05:20.680 I I the last time I saw Ken Lewis was 0:05:20.720 --> 0:05:24.720 a Bank of America's shop in Singapore. That was a long, 0:05:24.839 --> 0:05:28.280 long time ago, and that was the last time international 0:05:28.400 --> 0:05:33.760 stocks did well. When does the international equity market finally 0:05:33.920 --> 0:05:39.120 turn on a relative or even dare say, an absolute basis. Well, 0:05:39.120 --> 0:05:41.599 the news this weekend and last week out of Japan 0:05:41.600 --> 0:05:44.520 and Europe, I think is is a really great start. Um, 0:05:44.560 --> 0:05:46.280 if you can see you know, I mean, Europe has 0:05:46.400 --> 0:05:49.440 some ways to go to verify and approve the packages 0:05:49.480 --> 0:05:50.920 that they're talking about it. But if you if you 0:05:50.960 --> 0:05:54.080 see resistance from northern European countries, uh, you know, see 0:05:54.080 --> 0:05:57.840 those dominoes fall, and we suddenly have scope for you know, 0:05:57.920 --> 0:06:00.640 some kind of debt mutualization, for some kind of continent 0:06:00.720 --> 0:06:03.960 wide fiscal policy. Then um, you know, some of the 0:06:04.040 --> 0:06:08.080 deep value trades is maybe value traps European banks, maybe 0:06:08.720 --> 0:06:11.880 most of all, are suddenly in play. From an investor 0:06:11.880 --> 0:06:14.200 point of view, things that nobody's own blows have been 0:06:14.640 --> 0:06:17.960 you know, decimated in those kind of assets in Japan 0:06:18.000 --> 0:06:21.440 as well. I mean, they relied on extreme nentary policy 0:06:21.520 --> 0:06:24.080 for so long that if Japan can start to boost 0:06:24.240 --> 0:06:26.840 you demand get out of this balance sheet recession that 0:06:26.880 --> 0:06:29.320 they've been been stuck in, and suddenly I think those 0:06:29.360 --> 0:06:32.839 assets become attractive. You've got to see follow through obviously, um, 0:06:32.960 --> 0:06:35.920 but once we get confirmation from from the market that 0:06:36.279 --> 0:06:38.520 things are really starting to turn, you see in inflation 0:06:38.600 --> 0:06:42.320 expectations turn, then I think it represents an incredible, maybe 0:06:42.360 --> 0:06:47.120 even generational buying opportunity. Jarn would Banks for America, Chared, 0:06:47.240 --> 0:06:50.000 We've got to continue this conversation. Jared's not saying this 0:06:50.080 --> 0:06:56.200 is the one PM, but it might be the dollar 0:06:56.480 --> 0:06:59.880 week the euro advances. And this for me, Tom the 0:07:00.120 --> 0:07:03.839 story at the moment, risk appetite continues to build and 0:07:03.920 --> 0:07:08.880 that dollar strength continues to fight, no question about it. 0:07:09.040 --> 0:07:11.840 Catherine Man of course, running economics at City Grow Up, 0:07:11.960 --> 0:07:15.640 and what a job Villin Powder did providing leadership there. 0:07:16.040 --> 0:07:19.120 One of his great acquisitions is Abraham Robari, who was 0:07:19.240 --> 0:07:23.040 just brilliant on Europe with a certain authority and then 0:07:23.080 --> 0:07:25.880 on foreign exchange as well. And we're thrilled that Dr 0:07:26.000 --> 0:07:29.320 Robari could join us. This morning, Abraham John mentions the 0:07:29.440 --> 0:07:33.240 yuro call one ten. John has seen this forty seven 0:07:33.240 --> 0:07:36.520 times in his lengthy career. Are we gonna get suckered 0:07:36.560 --> 0:07:42.720 again into strong euro? And then? Oops? Yes, Tom, Tom, 0:07:42.800 --> 0:07:45.440 thanks for having me on. That's exactly how we feel. 0:07:45.880 --> 0:07:48.840 So we think for the for the moment, there is 0:07:48.880 --> 0:07:50.960 a bit of upside drift in the Euro, and that's 0:07:51.160 --> 0:07:54.680 partly because there is a search in markets for undervalued 0:07:54.720 --> 0:07:57.960 assets and euros on equities btt s, and to some 0:07:58.040 --> 0:08:00.720 degree the Euro show up there. But we think this 0:08:00.800 --> 0:08:03.160 is going to be on borrow times. So even though 0:08:03.200 --> 0:08:04.800 we think there will be a little bit more upside 0:08:04.880 --> 0:08:07.480 drift in the Euro and the euro dollar for instance, 0:08:07.840 --> 0:08:10.440 we think that there won't be much more headroom and 0:08:10.680 --> 0:08:13.880 just as before, this rally will be over before long. 0:08:14.360 --> 0:08:16.560 There's a question about the other side of that trade, 0:08:16.560 --> 0:08:19.400 which is the dollar and watching the dollar continue to weaken. 0:08:19.520 --> 0:08:21.680 I was kind of shocked this morning when I came 0:08:21.720 --> 0:08:24.800 in to my living room, uh that the dollar was 0:08:24.840 --> 0:08:27.840 weakening versus even the Chinese u N there in Minby, 0:08:27.920 --> 0:08:31.680 despite the elevated tensions between the US and China, are 0:08:31.720 --> 0:08:34.600 we finally reaching a point where people have had it 0:08:34.640 --> 0:08:37.040 with the increase in the debt loads and some of 0:08:37.400 --> 0:08:39.440 what's going on in the United States and are moving 0:08:39.480 --> 0:08:42.559 away from the dollar or is this just a temporary reallocation. 0:08:42.920 --> 0:08:46.640 So from our perspective, it is probably more temporary, and 0:08:46.679 --> 0:08:48.760 there are good and bad reasons for it. I think 0:08:48.800 --> 0:08:51.080 the good reasons for why the dollar is a little 0:08:51.080 --> 0:08:54.240 bit under pressure right now is that the global investor 0:08:54.280 --> 0:08:56.360 base is getting less worried about the rest of the world. 0:08:56.440 --> 0:08:59.960 So we are seeing activity indicators in general slightly exceeding 0:09:00.240 --> 0:09:04.800 what people were expecting. But even on the health side, 0:09:04.840 --> 0:09:07.760 I think the long suffering emerging markets are seeing signs 0:09:07.760 --> 0:09:09.920 of flattening as well. So they're good reasons for the 0:09:09.920 --> 0:09:11.280 rest of the world if you like to see a 0:09:11.280 --> 0:09:14.040 little bit of dollar downside. And that also translates again 0:09:14.080 --> 0:09:17.280 into looking for what looks cheap, and US acids don't 0:09:17.280 --> 0:09:20.840 look cheap by any metric across the board. And then 0:09:20.880 --> 0:09:23.560 there are the bad reasons quote unquote. So there's some 0:09:23.760 --> 0:09:27.240 level of concern around US China attention, the debate about 0:09:27.360 --> 0:09:31.760 US debatement, and then also slowly beginning concern about the 0:09:31.760 --> 0:09:34.480 potential risk attached to the U S election so these 0:09:34.520 --> 0:09:37.680 are I think, very acute for the time being, but 0:09:37.800 --> 0:09:41.040 once again we think that's probably temporary. We think that 0:09:41.200 --> 0:09:44.600 the US still looks, as you know, among the least 0:09:44.720 --> 0:09:47.800 ugly in the in the global economy. That the likelier 0:09:47.880 --> 0:09:50.440 of a bound second growth in the US is is 0:09:50.520 --> 0:09:53.360 much higher than elsewhere. So we we think it's once 0:09:53.360 --> 0:09:56.760 again too early too to write off the dollar and 0:09:56.800 --> 0:10:00.360 call an end to the strong dollar. Even right now, 0:10:00.360 --> 0:10:02.440 it just feels like a sentiment story. It feels like 0:10:02.480 --> 0:10:05.319 a positioning story, and that's what's pushing some of these 0:10:05.320 --> 0:10:07.720 big moves over the last several weeks. It doesn't feel 0:10:07.760 --> 0:10:09.760 like it's got anything to do with right differentials, just 0:10:09.840 --> 0:10:13.200 optimism around places like Europe. Why don't you buy into 0:10:13.240 --> 0:10:16.120 the euro optimism of the last couple of weeks, Abra him, Yes, 0:10:16.200 --> 0:10:18.840 So we think there are two reasons why we're skeptical. 0:10:19.240 --> 0:10:23.640 One is exactly on that issue of risk appetite. I 0:10:23.640 --> 0:10:25.920 think a good chunk of that was that previously we 0:10:25.960 --> 0:10:28.560 had very defensive positioning, and and I think we are 0:10:28.600 --> 0:10:31.280 now at a point where positioning is by no means stretched, 0:10:31.320 --> 0:10:34.160 but it's it's no longer very defensive. So we're already 0:10:34.200 --> 0:10:37.960 at relatively neutral levels, and we do think they're significant risks. Well, 0:10:38.000 --> 0:10:40.600 let's call it the second phase of the recovery down 0:10:40.600 --> 0:10:44.240 the road, so significant risks of disappointment that could weigh 0:10:44.480 --> 0:10:46.960 on broader risk appetite, and again I think assets like 0:10:47.160 --> 0:10:49.959 yours and equities would be very vulnerable. The second has 0:10:50.000 --> 0:10:53.319 to do much more with the specific European developments. We 0:10:53.360 --> 0:10:56.880 of course had these initiatives around the EU recovery from 0:10:56.960 --> 0:11:00.360 the French, German proposals and so forth. And though we 0:11:00.400 --> 0:11:05.479 think that these are significant visible fiscal transfers supported by Germany, 0:11:05.640 --> 0:11:07.920 we don't think they're a Hamiltonian moment. We don't think 0:11:07.920 --> 0:11:11.560 this is a game changer for the Eurozone or for 0:11:11.679 --> 0:11:14.400 the euro in that it doesn't really chart the clear 0:11:14.480 --> 0:11:16.719 path going forward. It's it's dealing with the one off 0:11:16.720 --> 0:11:20.000 situation in a faily, in a fairly constrained way. So 0:11:20.080 --> 0:11:22.920 these two reasons make as skeptical that we're looking at 0:11:22.960 --> 0:11:26.720 a kind of enduring break in the euro or enduring 0:11:26.800 --> 0:11:29.640 upside for Eurozone assets. Abraham and Bowery of Silly Group 0:11:29.679 --> 0:11:31.760 with us today. Abraham is just follow up on the 0:11:31.920 --> 0:11:35.240 CP next week, just briefly might sound stupid on the 0:11:35.240 --> 0:11:36.839 surface of things, but I'm trying to work out whether 0:11:36.920 --> 0:11:39.920 more que next week is euro positive or euro negative. 0:11:40.000 --> 0:11:42.439 Which one is it. It's a very good it's a 0:11:42.520 --> 0:11:45.839 very good point. We think on balance right now more 0:11:45.920 --> 0:11:49.640 quies euro positive, and that's because you still have a 0:11:49.720 --> 0:11:54.440 risk premium, particularly for BTPs and Euro purchases. A BUREASID 0:11:54.480 --> 0:11:57.440 purchases by BCB bring down that risk premium. So in 0:11:57.440 --> 0:12:01.280 that sense we think if bTB did not increased asset purchases, 0:12:01.559 --> 0:12:04.000 in fact, the Euro would end up setting off, and 0:12:04.080 --> 0:12:07.960 so would of course in particular periphery sovereign day Abraham. 0:12:08.000 --> 0:12:11.160 You mentioned a Hamiltonian moment. Many people are thinking the 0:12:11.200 --> 0:12:14.920 Broadway play. I'm thinking about way way back, where maybe 0:12:14.920 --> 0:12:18.319 it was fractious, but Hamilton's had to deal with I'm 0:12:18.320 --> 0:12:21.719 going to say thirteen colonies or states, however you want 0:12:21.760 --> 0:12:26.080 to describe it. You can't have a Hamiltonian moment with 0:12:26.200 --> 0:12:29.640 twenty seven just have countries, can you. I am very 0:12:29.640 --> 0:12:32.840 sympathetic to your perspective. I wouldn't completely write it off 0:12:32.840 --> 0:12:36.280 for you know, very different future, but but but I 0:12:36.320 --> 0:12:38.520 think certainly this isn't it, and we're far away from it. 0:12:38.960 --> 0:12:42.120 And in this specific case, as I mentioned, it's it's 0:12:42.160 --> 0:12:45.400 one off. There's no transfer of physical powers or political 0:12:45.440 --> 0:12:50.000 powers even and we're dealing with a construct that's not 0:12:50.040 --> 0:12:54.320 even easily scaled. So I think it is very inappropriate 0:12:54.360 --> 0:12:58.200 to refer to this as as Hamiltonian. So, just going forward, 0:12:58.240 --> 0:13:01.440 to broaden out your base, cases that the dollar will 0:13:01.440 --> 0:13:04.880 resume its strengthening and you'll see a weakening in the 0:13:04.960 --> 0:13:07.199 Euro going forward, and that the dollar will end the 0:13:07.280 --> 0:13:10.360 year as the dominant currency, just as it was a 0:13:10.360 --> 0:13:15.120 couple of months ago. Is that correct? Yeah, I think broadly. 0:13:15.320 --> 0:13:17.040 But we're we have a couple of things along the way, 0:13:17.080 --> 0:13:19.040 and I think the one that obviously stems out is 0:13:19.040 --> 0:13:21.520 the U S. Election. So what we assume is that 0:13:21.559 --> 0:13:24.880 we are in a sort of late stage of the 0:13:25.040 --> 0:13:27.720 ridge recovery, but then there will be a period of 0:13:27.960 --> 0:13:31.360 uncertainty around the U S. Election, and we think that 0:13:31.400 --> 0:13:33.080 the dollar might end up be a little bit under 0:13:33.080 --> 0:13:36.480 pressure because of that, but then around the election the 0:13:36.520 --> 0:13:39.079 dollar would once again risen with uptrend as well. So 0:13:39.160 --> 0:13:42.000 are a few more absence laws, but we believe that 0:13:42.080 --> 0:13:45.480 the dollar bull market can still continue. It's John Freu, 0:13:45.520 --> 0:13:47.040 I want you to get a question in here on 0:13:47.080 --> 0:13:50.200 the CC before meeting, because I think you know, John, 0:13:50.240 --> 0:13:52.920 you looked awfully good on the lawn of the ECB 0:13:53.080 --> 0:13:55.800 building just a few years ago. I mean you were 0:13:55.840 --> 0:13:59.120 like the Frankfurst expert as well. John, what do you 0:13:59.240 --> 0:14:01.480 see from the c B? And I know you've got 0:14:01.559 --> 0:14:05.199 a question for Dr Roberry about it. Tom. I used 0:14:05.200 --> 0:14:07.280 the time my visits to the e c B really 0:14:07.320 --> 0:14:09.600 effectively because they go on tour twice a year, so 0:14:09.600 --> 0:14:12.439 I'd end up in places like Cyprus covering the European 0:14:12.559 --> 0:14:14.800 Central Bank. You've got to time these things properly. Will 0:14:14.840 --> 0:14:17.200 do that. Hopefully next year, if these get back to normal, 0:14:17.240 --> 0:14:19.240 will go on one of those ECB tours as well. 0:14:20.000 --> 0:14:24.240 That's the problem for the CB. They're already doing so much. 0:14:24.720 --> 0:14:27.320 What's the objective of the next move. You'll remember just 0:14:27.360 --> 0:14:29.720 a couple of months ago, Christine the Guard said she 0:14:29.760 --> 0:14:31.920 was not here to close spreads. She wanted to put 0:14:31.920 --> 0:14:34.560 pressure on the fiscal policymaker. What kind of pressure do 0:14:34.600 --> 0:14:37.520 you put on fiscal if you follow up next Thursday 0:14:37.600 --> 0:14:41.160 with more que, more asset purchases. Well, I think it's 0:14:41.200 --> 0:14:45.360 absolutely critical that they continue and reinforce at this next meeting, 0:14:45.400 --> 0:14:50.480 because not only are spreads still wide in in peripery 0:14:50.480 --> 0:14:52.840 sovereign DETT, but in between we've had the German court 0:14:52.920 --> 0:14:57.440 ruling with HAVE which had questions the ECB capability to 0:14:57.560 --> 0:14:59.880 do its job. So I think at this meeting it's 0:15:00.040 --> 0:15:03.240 totally essentially the DCB at least in some shape or form, 0:15:03.360 --> 0:15:07.240 reinforces its presence in in asset markets. But beyond that, 0:15:07.280 --> 0:15:10.200 also just keep in mind, unlike the fat DCP has 0:15:10.200 --> 0:15:14.720 not been particularly proactive, forceful or aggressive as Chappower likes 0:15:14.760 --> 0:15:16.880 to refer to it, we've seen a pretty steady run 0:15:17.000 --> 0:15:19.480 rate from d CD, so I think it's again important 0:15:19.480 --> 0:15:22.720 for the ECB symbolically to be active, even if kind 0:15:22.720 --> 0:15:26.120 of on a weekly basis. We don't see particularly pressure 0:15:26.240 --> 0:15:30.320 rising on on risk assets in Europe, but I think 0:15:30.880 --> 0:15:32.760 that the CB does act in some shape or form. 0:15:32.840 --> 0:15:35.960 Next week will be extremely important. Abraham mc bery city 0:15:35.960 --> 0:15:37.680 grow up on a situation in Europe and a foreign 0:15:37.680 --> 0:15:40.320 exchange market. Abraham grant a cash off the sir, thank you, 0:15:40.360 --> 0:15:46.000 send O best to it say it's so important about 0:15:46.040 --> 0:15:49.200 the US Chamber of Commerce, which I guess is a 0:15:49.240 --> 0:15:52.800 lobbying group as it's founding in nineteen o eight was 0:15:52.840 --> 0:15:57.760 an international delegation to to Japan at the time that 0:15:57.920 --> 0:16:02.440 was extraordinary, and then President Taft really driving forward the 0:16:02.480 --> 0:16:05.160 founding of the Chamber to the modern day of this 0:16:05.320 --> 0:16:10.120 controversy and that, but also the representation of business abroad. 0:16:10.440 --> 0:16:12.920 Myron Brilliant is involved with this, is head of International 0:16:12.960 --> 0:16:16.920 Affairs for the Chamber, and he joins us. Now, let's say, Myron, 0:16:16.960 --> 0:16:20.120 you and the crew where to get on Kathay Pacific 0:16:20.360 --> 0:16:23.920 tonight and Monday morning. You're in Hong Kong or in 0:16:24.000 --> 0:16:27.880 Beijing to bring a business delegation in. It's not going 0:16:27.960 --> 0:16:31.320 to be a normal meeting, isn't well, Tom, I wasn't 0:16:31.360 --> 0:16:34.800 alive in night when the US Chamber of Commerce was 0:16:34.840 --> 0:16:39.240 created by President Tafts support. But I can tell you 0:16:39.280 --> 0:16:43.120 that our mission hasn't changed. Right. We know that we 0:16:43.200 --> 0:16:47.800 have tremendous interest in selling and exporting around the world, 0:16:47.800 --> 0:16:50.440 and of course Hong Kong has been an important gateway 0:16:50.520 --> 0:16:53.640 to China and to Asia, and we do a fair 0:16:53.640 --> 0:16:56.880 amount of business sixty seven billion dollars of trade investment 0:16:56.920 --> 0:17:00.000 between Hong Kong and I'd say so if I were 0:17:00.120 --> 0:17:02.640 landing today in Hong Kong, I'd be very concerned about 0:17:02.680 --> 0:17:09.240 Hong Kong's future. We issue earlier in the week about this, okay, 0:17:09.240 --> 0:17:11.439 but this is really really important. Iron We've got a 0:17:11.440 --> 0:17:13.960 press conference coming up with the President of this afternoon. 0:17:14.400 --> 0:17:18.520 I hear Kizzier or Mr Kudlosier or somebody else's ere 0:17:18.920 --> 0:17:21.880 My Ironnew, what would you say to them about how 0:17:21.880 --> 0:17:26.399 to handle this exceptionally delicate time. Well, if the China 0:17:26.560 --> 0:17:30.119 US relationship has never been more complex, and I've been 0:17:30.119 --> 0:17:32.760 involved in it for about thirty years, I was there, 0:17:33.480 --> 0:17:37.080 uh lobbying for China's accession to the WTL and getting 0:17:37.240 --> 0:17:41.600 rid of the annual MFN status debate in the nine 0:17:41.840 --> 0:17:45.040 so I know the history here. But China US relations 0:17:45.040 --> 0:17:48.000 are much more important on a national security front, on 0:17:48.040 --> 0:17:51.440 the geostrategic front, and of course on economic terms as well. 0:17:52.040 --> 0:17:53.880 So what I would be saying is that I think 0:17:53.960 --> 0:17:56.520 China does need to have a response from the US government. 0:17:56.680 --> 0:17:58.720 Of course, the business commit doesn't want to have the 0:17:58.720 --> 0:18:01.879 claddal consequences of that, But there has been an action 0:18:02.000 --> 0:18:04.520 taken by the Chinese government that is an erosion of 0:18:04.600 --> 0:18:07.720 the one country, two systems approach that has served Hong 0:18:07.800 --> 0:18:10.560 Kong well, has served the course, Hong Kong as an 0:18:10.560 --> 0:18:14.639 international community of financial hub, a rules based economy, and 0:18:14.680 --> 0:18:17.919 I think it served China's interest well. And this action 0:18:18.040 --> 0:18:21.840 taken by China to adopt a new national security law, 0:18:21.880 --> 0:18:26.240 I think undermines that confidence and creates instability and insecurity 0:18:26.520 --> 0:18:29.600 and adds to a plafila of issues that already exists 0:18:29.640 --> 0:18:33.200 in the U S China relationship that are complex and challenging, 0:18:33.240 --> 0:18:37.320 from technology to trade to Hong Kong, obviously human rights 0:18:37.320 --> 0:18:40.040 and other issues as well well. Uncertainty is the key 0:18:40.080 --> 0:18:43.000 word here, and that was the prevailing sentiment among businesses 0:18:43.040 --> 0:18:45.960 and c suites when we saw the trade tensions ramping 0:18:46.000 --> 0:18:48.840 up between the US and China. Now there's a question 0:18:49.000 --> 0:18:51.720 of the uncertainty of whether the Phase one deal is 0:18:51.760 --> 0:18:54.160 off the table, whether we're going to see the US 0:18:54.200 --> 0:18:58.920 take measures that increased sanctions or tariffs on China. How 0:18:59.000 --> 0:19:01.920 much are you were read about that uncertainty, that lack 0:19:01.960 --> 0:19:05.080 of clarity on the US response and what China will 0:19:05.119 --> 0:19:08.600 do in retaliation of the effect on US businesses. So, 0:19:08.720 --> 0:19:13.280 first off, we very much supported UH the US administration's 0:19:13.320 --> 0:19:16.359 effort to try to address unfair trade actions through a 0:19:16.359 --> 0:19:19.800 trade negotiation, and we were very much supportive of the 0:19:19.800 --> 0:19:24.880 actions around intellectual property, around technology transfer. Of course, trying 0:19:24.920 --> 0:19:26.919 to deal with some issues that were not addressed in 0:19:26.920 --> 0:19:31.040 Phase one, like subsidies and state owned enterprise structures and 0:19:31.119 --> 0:19:35.000 things like that. However, we believe that Phase one agreement 0:19:35.040 --> 0:19:36.960 is in the interest of both China and the United 0:19:37.000 --> 0:19:39.960 States and brought out in some stability. China has not 0:19:40.040 --> 0:19:43.160 fulfilled all of its obligations under its Phase one agreement. 0:19:43.200 --> 0:19:45.880 This is gonna be another issue of tension and has 0:19:45.880 --> 0:19:48.480 emerged as one in the last few weeks. But I 0:19:48.480 --> 0:19:52.000 think that the negotiations between China United States on the 0:19:52.040 --> 0:19:55.439 trade front has been to some extent isolated from the 0:19:55.480 --> 0:19:59.200 broader political challenges in the relationship, and that's a good thing. 0:19:59.520 --> 0:20:02.000 We want to see China the United States work through 0:20:02.000 --> 0:20:05.000 these difficult trade issues because the stakes are so large 0:20:05.320 --> 0:20:07.520 for the economy of China, the United States, and of 0:20:07.560 --> 0:20:11.280 course the global economy. But that said, uh, this is 0:20:11.320 --> 0:20:14.440 an issue that is coming to the forefront because it's 0:20:14.440 --> 0:20:18.000 been a very difficult environment with COVID nineteen. The pandemic 0:20:18.080 --> 0:20:21.120 has of course created a challenge before trying to purchase 0:20:21.160 --> 0:20:23.720 all the goods they should be purchasing from the United States, 0:20:24.200 --> 0:20:26.480 and I think they've been a little slow and implementing 0:20:26.520 --> 0:20:29.359 some of their obligations around financial services in I p R, 0:20:29.600 --> 0:20:32.959 although they have taken some steps in that direction. I 0:20:33.000 --> 0:20:36.760 hope those negotiations get fully implemented. I think the Phase 0:20:36.800 --> 0:20:40.000 one agreement is something we supported very forcefully. We provided 0:20:40.040 --> 0:20:41.760 a lot of input to our government. We talked to 0:20:41.760 --> 0:20:44.320 the Chinese government about it. But there that's a four 0:20:44.440 --> 0:20:46.320 that's not a ceiling in this and there's so much 0:20:46.400 --> 0:20:49.920 more work to be done to improve the commercialationship between 0:20:49.960 --> 0:20:52.080 China the United States, and we're going to continue to 0:20:52.119 --> 0:20:55.440 be advocates in that front. Martin brilliant with full let's 0:20:55.440 --> 0:21:03.840 continuing the conversation of the US Chamber of Commis right 0:21:03.840 --> 0:21:06.840 now with a someone and I always go back, folks 0:21:06.880 --> 0:21:09.480 to his fabulous interview with Jeff Bezos of a number 0:21:09.520 --> 0:21:13.480 of the years ago. David Rubinstein with his efforts here 0:21:13.480 --> 0:21:16.760 at Bloomberg, with Leadership Live and others to speak to 0:21:16.960 --> 0:21:22.080 people directly and at length about the sensitive issues of 0:21:22.119 --> 0:21:25.880 their business. Mr Rubenstein clearly with the Carlisle Group as well, 0:21:26.119 --> 0:21:31.280 David well timed with the leadership of YouTube. I find 0:21:31.359 --> 0:21:35.720 people glued to the product, glued to YouTube. But there 0:21:35.760 --> 0:21:39.320 are real issues here, olah, the Twitter upset of the 0:21:39.400 --> 0:21:43.359