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Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane

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Speaker 1: jay Ley. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg We

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Speaker 1: now look at monetary ramifications off this job report. In

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Speaker 1: twenty nine minutes, Julia Cornado, Macro Policy Advisers joins us. Julia,

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Speaker 1: I look at the reaction functions available or predictable to

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Speaker 1: the FED. Do we understand them or we flying as

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Speaker 1: blind as maybe something. I mean, I think it's pretty

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Speaker 1: clear what the objective is for the FED, and that

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Speaker 1: is to keep the recovery going as long as it

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Speaker 1: possibly can. And so I think that's why we're talking about,

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Speaker 1: you know, interest rate cuts. Now. The prescription when you're

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Speaker 1: close to zero on interest rates is to move ahead

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Speaker 1: of risks and not wait for the for them to

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Speaker 1: fully materialize in the data. So we expect to see

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Speaker 1: some jobs slowing today. We expect to see a slowing trend.

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Speaker 1: We've we've seen the global economy slow ah and it

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Speaker 1: looks like it's going to be taking out some insurance

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Speaker 1: but John, I'm asking you this question too, because you've

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Speaker 1: got to ask us a card because he's gonna want

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Speaker 1: a rate cut. What does a rate cut accomplish, John Farrell,

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Speaker 1: very very unlikely that it will accomplish much, given how

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Speaker 1: loose financial conditions already are. And Julie, and We've asked

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Speaker 1: the Federal Reserve chair this question. In the news conference.

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Speaker 1: Tom Kane asked the vice chairman this question, What will

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Speaker 1: it do if they cut rights at the end of

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Speaker 1: this month. Well, let's keep in mind that the expectation

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Speaker 1: of rap cuts is one of the reason financial conditions

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Speaker 1: are so very true. So in the face of all

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Speaker 1: of the risks that markets have to look out at,

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Speaker 1: they have this insurance from the Fed to cut rates.

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Speaker 1: They've built that in and that's kept financial conditions from

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Speaker 1: going into a tightening cycle. And so that's that's exactly

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Speaker 1: how policy works. That's the transmission mechanism. So it's not

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Speaker 1: like it's going to ease them more, but markets have

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Speaker 1: already heard the Fed loud and clear that they're going

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Speaker 1: to move and that's one of the things that offset

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Speaker 1: some of the risks out there. So Junior, essentially we

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Speaker 1: just need to validate market expectations. But beyond that, I

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Speaker 1: failed to see how it helps. I mean, it's the

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Speaker 1: price of credit the problem in the United States right now,

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Speaker 1: most people would say no, it's the price of credit

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Speaker 1: the problem. In Europe right now, most people would say no.

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Speaker 1: Likewise in Japan, where is the price of credit actually

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Speaker 1: a problem? No, it's not really the price of credit,

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Speaker 1: but it's short circuiting the transmission of these risks through

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Speaker 1: the confidence channel, and so it's not necessarily and that

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Speaker 1: we see that in financial conditions. Okay, this is really

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Speaker 1: really important, and we're talking with Julia Cornado with really

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Speaker 1: significant experience in thinking through the mathiness of all this

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Speaker 1: over to the behavioral nous of all this the confidence channel.

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Speaker 1: Why don't they just cut rates this afternoon after an

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Speaker 1: average or a shorter rate. That would be an immediate

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Speaker 1: confidence boost, isn't it? Well, if it if they cut

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Speaker 1: rates in between meetings that looks like an emergency, that

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Speaker 1: looks like panic, that wouldn't never fairly boost confidence. But

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Speaker 1: if they move methodically and say, look, we're sking some slowing,

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Speaker 1: We're going to address it. Don't worry, keep doing what

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Speaker 1: you're doing, And that's how you keep confidence on track.

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Speaker 1: It's a very tricky game, and we're in an uncertain

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Speaker 1: period like this, but I think moving unexpectedly can actually

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Speaker 1: hurt confidence. They try to set up expectations for easy policy, John,

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Speaker 1: I can't. And they how important this discussion is the

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Speaker 1: history of this of successes in too many failures of

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Speaker 1: guessing the future. There's confidence issues critical Or here's the

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Speaker 1: line from the chairman, announce of protection is worth a

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Speaker 1: pound of cure at the moment, though, Julia, there seems

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Speaker 1: to be seems to be a disagreement. I think that's

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Speaker 1: a different song, Julia. I think there seems to be

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Speaker 1: a disagreement between what announce of protection actually is between

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Speaker 1: the Federal Reserve and where the market is currently. The

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Speaker 1: market seeing announce of protection as a hundred basis points

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Speaker 1: of cuts over the next twelve months. Does that sound

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Speaker 1: like ann ounce of protection to you? That sounds like

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Speaker 1: a lot. Uh. And I think that the said can

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Speaker 1: afford to be more data dependent that they may have

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Speaker 1: to deliver that much. It sort of depends on how

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Speaker 1: much transmission we actually see to the real economy. So

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Speaker 1: it's a little bit chicken and egg. You're you're right,

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Speaker 1: about that UM, and I think that the FED can

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Speaker 1: just stay on course. Cut in July, see how the

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Speaker 1: data flow in. If another cut is needed, then they'll

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Speaker 1: do another cut and on they go. What data matters?

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Speaker 1: If the data flows in after this ginormous jobs report

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Speaker 1: in fourteen minutes, fifteen minutes, what data matters, Well, the

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Speaker 1: jobs data are very important, comprehensive data that they see. UM.

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Speaker 1: The trade development, business investment is one one thing that

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Speaker 1: they have identified right now, Well, business investment has been

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Speaker 1: sort of sluggish, it's not contracting, it's sort of flattened

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Speaker 1: out after a very strong couple of years. So they're

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Speaker 1: watching that other intrasensitive sectors, cyclical sectors, housing, UM. And

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Speaker 1: then again right now the job's report really is front

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Speaker 1: and center because it's the resiliency of the domestic service

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Speaker 1: sector that's key here, that makes the difference between sort

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Speaker 1: of a bumpy soft landing to tend in a recession.

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Speaker 1: This is critical service sector. You bring up probably the

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Speaker 1: most important question for a lot of people at the moment.

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Speaker 1: Looking at the labor market, manufacturing is really weak worldwide,

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Speaker 1: and we started to see that weakness materialized in the

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Speaker 1: United States as well. Whether it feeds into the service

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Speaker 1: sector in a way that would produce a really big

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Speaker 1: down turn beyond just returning to trent growth. Are you

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Speaker 1: seeing any sign of that already, Julia, We haven't seen

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Speaker 1: signs of, uh, something that's terribly worrisome. We have seen

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Speaker 1: some slowing in the service sector indicators with everything else.

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Speaker 1: The I s M non manufacturing indexes come down off

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Speaker 1: the highest, so has the hiring component of that index.

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Speaker 1: It's not yet moving towards contractionary territory though, so it

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Speaker 1: looks okay. I think the resilience story still holds up. Um.

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Speaker 1: But again, if that's not going to take chances by

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Speaker 1: waiting around, hopefully they're going to stabilize that. And so

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Speaker 1: that's what we're looking for in today's report and India

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Speaker 1: July report. Then we'll get at the beginning of August

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Speaker 1: to see how that domestic service sector holds up. For

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Speaker 1: your statistical care folks, let's get a non farm number

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Speaker 1: from Dr Coronado. Do you have a payrolls number off

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Speaker 1: one sixties survey? Yeah, I'm I'm right around to survey

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Speaker 1: m at one sixty five, So, uh, it's down. It's

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Speaker 1: a bounce back from May, but a slower trend. Okay,

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Speaker 1: it's still plenty. Remember our sort of break even is

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Speaker 1: a hundred k. That's what we need to hold the

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Speaker 1: unemployment rate steady. Uh So anything above that is not bad,

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Speaker 1: and so that would be a decent number, but it

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Speaker 1: would be down from where we have been nicely frame

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Speaker 1: Rica don at one uh Dr Coronado at one six

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Speaker 1: and also after careful surveillance research, Dr Coronado likes mint chocolate.

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Speaker 1: Show choice. What is it about I scream with you today?

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Speaker 1: Tell it's the time of year. It's that time of year,

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Speaker 1: and returned to Jason Furman, a Harvard University a former

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Speaker 1: chairman of the President's Council of Economic Advices and of

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Speaker 1: course at the Peterson Institute as well. Dr Furman, what

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Speaker 1: is the policy prescription right now for the two Americas

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Speaker 1: we have? We have some kind of run rate of

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Speaker 1: decent employment bouncing seventy two up to two, but a

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Speaker 1: huge part of America seems disassociated from this fully employed America.

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Speaker 1: What is your labor prescription? Yeah, I think you see

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Speaker 1: it in the numbers. UM this month, year over year

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Speaker 1: average hourly earnings up three point one. That's actually lower

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Speaker 1: wage growth than what we had about months ago, when

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Speaker 1: it was running at nearly three and a half percent

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Speaker 1: a year. I the good news is that, you know,

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Speaker 1: means the Fed just doesn't need to be very worried

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Speaker 1: about inflation. Yet another reason they don't need to be um.

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Speaker 1: The prescription for that is heart economy and continued um

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Speaker 1: low unemployment rate. That hasn't been working as well as

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Speaker 1: we'd liked, so I think we'd need to try a

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Speaker 1: bit more of it. Adjacent, one theme for this program

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Speaker 1: over the last couple of hours is whether we're returning

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Speaker 1: to trend growth in and around two GDP and maybe

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Speaker 1: returning to more mature payrolls growth. Something a little bit

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Speaker 1: more conservative away from two hundred thousand towards say a

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Speaker 1: hundred k. Today's number makes that call a little bit

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Speaker 1: more complicated, Jason, what's your base case for that return

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Speaker 1: to trend growth? Is that something you see slowly happening

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Speaker 1: over time this year? Yeah, I see that happening slowly

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Speaker 1: over time this year. I think that's exactly the right word.

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Speaker 1: And you know, I think historically evidence this trend is

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Speaker 1: more like one point seven five percent. I don't think

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Speaker 1: we'll fall that far this year, but I think that's

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Speaker 1: where we're heading. And you know, just look at the

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Speaker 1: unemployment rate it has you know, basically you know, is

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Speaker 1: falling at a lower rate than it was before. Um,

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Speaker 1: so we're closing the gap more slowly than we were before.

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Speaker 1: Jason Furman and John Ferrell will speak with Lawrence Cudlow

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Speaker 1: of the White House here in a bit. He's going

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Speaker 1: to spin a supply side message that things are good,

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Speaker 1: debt is good, we can grow ourselves out of debt.

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Speaker 1: What is the thing that Larry Cudlo gets most wrong? No,

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Speaker 1: I think it's that the underlying trend growth of the

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Speaker 1: economy is more like one seven five to per cent,

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Speaker 1: and that you know, it's like a super tanker. It's

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Speaker 1: not something that turns on a dime. It's not a

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Speaker 1: new president elected and all of a sudden everyone changes

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Speaker 1: their estimates um of trend growth. And just you know,

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Speaker 1: look at job growth last year it was two hundred

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Speaker 1: a month. This year it's about a hundred and seventy

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Speaker 1: thousand a month. It's probably going to come down from

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Speaker 1: there an absent master productivity growth. UM, we can't you know,

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Speaker 1: we're not going to be able to generate the three

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Speaker 1: growth at the White House. This is really important. It

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Speaker 1: speaks to the tensions evidence certainly over the last forty

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Speaker 1: eight hours in America, a polarized America. David blanche Flower

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Speaker 1: may very clear that the one way to jump start

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Speaker 1: all this is immigration, and then that there's all these

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Speaker 1: jobs that are skilled jobs that are unwanted and a

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Speaker 1: growing population would help that. How do you study right

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Speaker 1: now productivity in the body count of America? Can we

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Speaker 1: get to a better labor America with a present population growth?

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Speaker 1: We definitely have very unfavorable demography right now. And you know,

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Speaker 1: you can either have more babies in wait twenty years

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Speaker 1: or have more immigrants and they can work right away. Um. Probably, Uh,

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Speaker 1: you know, the ladder is a little bit more feasible.

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Speaker 1: I mean, the latter is a little more feasible. And

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Speaker 1: that comes from policy as well. You're an expert in

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Speaker 1: policy prescription. I think you've been very fair, uh and

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Speaker 1: indeed balanced and looking at those that are conservative and

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Speaker 1: those are liberal as well. Into the election, how are

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Speaker 1: we going to address the debate on productivity? I mean,

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Speaker 1: this is hugely emotional in America. What is the best

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Speaker 1: prescription besides the trope of you know, everybody needs to

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Speaker 1: be more educated. I get that. What's the immediate prescription?

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Speaker 1: The problem is is not one answer. There's a lot

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Speaker 1: of different ingredients. Immigration actually doesn't just help with the

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Speaker 1: labor force. It helps with productivity because you bring people

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Speaker 1: in with a lot of skills and a lot to

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Speaker 1: contribute to our economy. Um. I actually think we could

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Speaker 1: do another round a business tactor form um And what

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Speaker 1: way didn't didn't they get enough last time? Well? I

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Speaker 1: don't think we need to lower business taxes, but if

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Speaker 1: you take steps like shifting to expensing more favorable tax

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Speaker 1: treatment of R and D. And if you do that,

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Speaker 1: by the way, you can probably raise rates a bit

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Speaker 1: and and bring in some more revenues. You sound like

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Speaker 1: you're positively Johnsonian on this. Are you talking about true?

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Speaker 1: I mean, I mean I'm gonna use the phrase generally,

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Speaker 1: but an investment tax credit to really spur domestic incentives

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Speaker 1: to create jobs. Well, we have expensing in the law,

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Speaker 1: but then it phases out over a five year period. Um,

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Speaker 1: i'd actually make that permanent. But then you need to

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Speaker 1: do some other things to make that work, like bigger

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Speaker 1: limits on interest deductibility and more. Uh, you know, and

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Speaker 1: and and and potentially higher tax rate. But I think

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Speaker 1: focusing on innovation. I mean, you know, the R and

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Speaker 1: D tax credit is sometime with the United States pioneered,

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Speaker 1: we're now way behind most of the world on it um.

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Speaker 1: We could expand that, right I any day, folks, I

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Speaker 1: expect Dr Ferman to start talking with the Texas accent

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Speaker 1: as he goes all the sixties at LB Jan's. Jason

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Speaker 1: Furman has always thank you for the view on policy

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Speaker 1: here off really quite good jobs for Dr Ferman, of

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Speaker 1: course with the Peterson Institute at Harvard University. Right now,

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Speaker 1: perfect guest Michael Darter with us with them CAM Advisers,

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Speaker 1: and we see this as Karen was mentioning with real

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Speaker 1: seismic change in the market and shift. Michael, what I

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Speaker 1: would point out, and this is looking, folks at four

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Speaker 1: or five fancy charts which don't work on radio. We're

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Speaker 1: about sixty or seventy sent back to where we were

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Speaker 1: before rate cut certitude. With this good jobs report, do

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Speaker 1: we eliminate or ameliorate or lesson rate cut certitude? Hi, Tom,

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Speaker 1: thanks for having me on. I certainly hope not, because

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Speaker 1: what you're dealing with here with payrolls is a coincident indicator,

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Speaker 1: and the long leading indicators have been pointing down. Even

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Speaker 1: with the backup in the tenure yield. Today you still

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Speaker 1: have an inverted treasury yield curve. That's been the case

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Speaker 1: for over a month now. And so if we're going

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Speaker 1: to take one piece of coincident data and have a

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Speaker 1: parade about the FED not easing policy, that yield curb

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Speaker 1: in version is more likely to persist in the business

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Speaker 1: cycle is more likely to end in about a year's time.

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Speaker 1: What is the leading indicators that matter to Michael darda Well.

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Speaker 1: I like to look at the yield curve. Um it's

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Speaker 1: frequently dismissed because it is such a long leading indicator

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Speaker 1: with variation from cycle to cycle. So it's not uncommon

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Speaker 1: to see other data that still looks fine for quite

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Speaker 1: some time. I look at monetary growth, so we've had

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Speaker 1: some intermittent negative readings in the inflation adjusted and one

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Speaker 1: money stock year over year. That tends to happen when

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Speaker 1: the curved handcake. And then we can also look at

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Speaker 1: credit markets and then some shorter term leading indicators like

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Speaker 1: jobless claims, and in those indicators still look okay. And

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Speaker 1: so you know this is an economy that's not falling

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Speaker 1: off a cliff. It is slowing. But I think if

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Speaker 1: the FET is going to try to quote unquote get

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Speaker 1: tough and defy those July rate cut expectations, then we

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Speaker 1: could be headed into troubled waters. This is so important

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Speaker 1: in folks. I'm looking at the Bloomberg screen future is

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Speaker 1: negative twelve. They are negative five earlier? Is Mr Darta

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Speaker 1: mentions the yield two point zero one? Michael, I'm looking

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Speaker 1: at the vanilla spread the twos in the tens you're

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Speaker 1: expert at using the Bloomberg was spreads. I mean, all

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Speaker 1: of a sudden, that vanilla curve was twenty four and

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Speaker 1: twenty five and twenty six basis points point to five

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Speaker 1: percentage points difference in yield between the ten year and

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Speaker 1: the two year, and it flattens down to seventeen basis points.

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Speaker 1: Is that the kind of thing that would be the

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Speaker 1: final straw for the FED to see a point a

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Speaker 1: negative point zero one basis points on two s tends? Unfortunately,

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Speaker 1: I don't think the FED is actually paying that close

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Speaker 1: of attention to the to the curve, whether it tends

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Speaker 1: to twose. I'd like to look at the ten year

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Speaker 1: relative to the bill rate or the policy rate. Most

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Speaker 1: of the academic literature, Yes, I agree, business cycles, you

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Speaker 1: looked at a rate that's more harnessed to the FEDS

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Speaker 1: policy rates. So the two year note yield has expectations

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Speaker 1: of rate cuts in a multiple rate cuts, which is

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Speaker 1: why that spread is still positive. But for the FEDS part,

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Speaker 1: I think they're looking, you know, mostly at the macroeconomic data.

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Speaker 1: They're looking at payrolls, are looking at joldless claims, they're

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Speaker 1: looking at the unemployment rate, and that's all well and good,

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Speaker 1: But aside from claims, you're really looking at a set

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Speaker 1: of coincidence or even lagging indicators. And you've got the

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Speaker 1: stock market up strongly. So you have some members of

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Speaker 1: the Fed getting increasingly uncomfortable with the amount of rate

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Speaker 1: cut expectations that that we have in the market. So

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Speaker 1: you could have a showdown here going into the July

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Speaker 1: meeting where the Fed quote unquote tries to stand tough.

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Speaker 1: I think that would be a serious and potentially catastrophic

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Speaker 1: mistake for the business cycle. But we get more data

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Speaker 1: between now in that meeting. I want to revisit again

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Speaker 1: the kind of data that Vice Chairman Clarato will be

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Speaker 1: looking at with this set of PhD s. I mean,

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Speaker 1: is it just retail sales and that kind of consumption

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Speaker 1: data seventy of the economy or is it more on

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Speaker 1: the business side. You know, Tom, I think it's both.

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Speaker 1: But one problem we have is you don't want to

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Speaker 1: focus too much on one data point. And so let's

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Speaker 1: take today, for example, two thousand, quite a strong number,

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Speaker 1: but if you look at a three month average, we're

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Speaker 1: running at about a hundred and seventy one thousand for

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Speaker 1: overall payrolls for private sector people. Dr right, So go

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Speaker 1: back to the January of this year, those three month

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Speaker 1: averages were two forty five and two forty respectively. So

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Speaker 1: so if we're looking at trends, there's a clear slowing trend.

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Speaker 1: Now that doesn't necessarily mean that you're headed off of

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Speaker 1: a cliff, but slowdowns by definition must pre recessions. So

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Speaker 1: the FED should be a bit more alert here. Um,

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Speaker 1: you've mentioned Vice Chair Clarita. He watches inflation expectations very carefully,

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Speaker 1: and we've had a pretty significant pullback and bond market

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Speaker 1: inflation expectations that alone in my books with Justice well,

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Speaker 1: but this is important, Michael we've got service sector inflation.

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Speaker 1: Three issue, we've got goods inflation near deflation. Do you

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Speaker 1: see evidence yet, given all of the trade and manufacturing

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Speaker 1: and slow down in that, do you see evidence yet

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Speaker 1: that we are importing disinflation and deflation from abroad or

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Speaker 1: from the US goods sector over to that core service

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Speaker 1: sector inflation. Well, keep in mind that the core service

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Speaker 1: sector inflation is sticky price inflation. It will tend to

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Speaker 1: lag the business cycle. So I'm afraid what's happening here

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Speaker 1: is forward looking bond markets are anticipating a slowdown in

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Speaker 1: aggregate demand. So nominal GDP growth, which ran up to

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Speaker 1: the high end of the recovery range last year, is

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Speaker 1: already slowing and is likely to continue to slow. So really,

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Speaker 1: if we're going to be importing disinflation, I think we're

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Speaker 1: importing it from simply a slowdown in aggregate demand. Just

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Speaker 1: the A S A D model, Tom, Yeah, Well, the

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Speaker 1: S A D models one model to use. But can

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Speaker 1: these models be efficacious for a FED? I mean, have

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Speaker 1: they gone beyond beyond any kind of traditional econ one

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Speaker 1: on one analysis to where they literally have to make

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Speaker 1: it up as they go based on leading data? I

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Speaker 1: think that the Fed's in a position now where they're

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Speaker 1: they're going to be forced to take a bit of

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Speaker 1: a leap of faith um in the forward looking indicators

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Speaker 1: in order to avoid the risk of a downturn and

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Speaker 1: a repeat of the zero lower bound scenario. If they're

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Speaker 1: not willing to do that, then you know, it's more

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Speaker 1: likely this business cycle comes to an end, and when

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Speaker 1: the FED does get around it easing, they're going to

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Speaker 1: have to do a lot more of it. And so

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Speaker 1: let's try to avoid that eventuality if we can. But

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Speaker 1: that means that you don't play this in a totally

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Speaker 1: conventional way, fixated on coincident and lagging information. That's a

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Speaker 1: good way to be continently behind the curve. Michael, thank

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Speaker 1: you so much. Michael, daughter will clinic their folks, MKM partners.

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Speaker 1: The Trump Administration's views on the jobs report. I'm pleased

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Speaker 1: to say we join now on Bloomberg Television and on

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Speaker 1: Bloomberg Radio by Larry Cuttlow, National Economic Council Director. Great

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Speaker 1: to see you as always, Larry, Thank you, Jaathan appreciate it.

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Speaker 1: Really really strong job number's a really nice bounce back

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Speaker 1: from the month of May. Do you think we're overestimating

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Speaker 1: some of the weakness that some people think will come

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Speaker 1: through nineteen into well. I don't know why, you know,

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Speaker 1: there's always this course of people who want to be pessimistic.

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Speaker 1: I would simply say that the big numbers today two thousand, uh,

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Speaker 1: you know, good wage increases, still about three low unemployment rate.

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Speaker 1: We are still in a very strong prosperity cycle. It's

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Speaker 1: a growth cycle. It's a prosperity cycle. Here July four

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Speaker 1: life liberty and the pursuit have happened as things are

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Speaker 1: looking pretty good. I can't explain the chronic pessimism. All

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Speaker 1: say is we have very good pro growth policies, low taxes, deregulation, opening,

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Speaker 1: energy trade reform. I think the incentives of our supply

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Speaker 1: side policies are working, and I don't know why people

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Speaker 1: don't want to see that. I'm very optimistic because you

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Speaker 1: might guess, Larry, you haven't been afraid to wait. In

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Speaker 1: to the debate around the Federal Reserve, a lot of

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Speaker 1: people asking the question, what does July five the dates

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Speaker 1: of today? I mean, for July thirty one, the Federal

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Speaker 1: Reserve meeting, what is the case for a rate cut?

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Speaker 1: After this labor market report Larry. Well, look, I don't

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Speaker 1: think you know, here we go again. Um, I don't

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Speaker 1: think there's a Phillips curve trade off between strong jobs,

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Speaker 1: for example, and higher inflation and interest rates. I don't

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Speaker 1: believe that. I think more people working and succeeding as fabulous,

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Speaker 1: and I think the evidence shows that the inflation rate

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Speaker 1: is rock bottom. You know, I was just looking at

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Speaker 1: some of the market figures on the way over here again,

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Speaker 1: and not only do you have an inverted you curve,

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Speaker 1: which I think is somewhat troublesome for the longer term,

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Speaker 1: but the break evens on the inflation, you know, the

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Speaker 1: tips break evens the five year Jonathan is one and

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Speaker 1: a half percent, and that's the CPI number. So the

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Speaker 1: pc deflated that the FED users would be about thirty

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Speaker 1: basis points less than that. So you're one a quarter

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Speaker 1: percent inflation, which is way below the Fed's target and

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Speaker 1: what most people want. And that's the reason I think

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Speaker 1: they should take back the interest rate hike. Now I'm

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Speaker 1: not encroaching on FED independence. I'm actually just reading the

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Speaker 1: market tea leaves if you ask me, the Federal Act

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Speaker 1: in its own time. But I'm just saying I think

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Speaker 1: that's the case, and then I guess secondly, with a

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Speaker 1: weak global economy, uh, taking out an insurance policy is

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Speaker 1: not a bad thing. So, Larry, I think the debate

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Speaker 1: a lot of people having is how level weights will

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Speaker 1: actually help whether the price of credit is the problem

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Speaker 1: inside the United States, whether the price of credit is

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Speaker 1: the proble them in Europe. And most people are answering

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Speaker 1: no to that question. How will the lower rate actually

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Speaker 1: help address some of the issues you outline, Larry, Well, Look,

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Speaker 1: I just don't want anything to interfere with this strong

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Speaker 1: prosperity cycle. That's my principal point. And I think as

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Speaker 1: market signals have been suggesting for quite some time, the

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Speaker 1: interest rate story is that it looks unbalanced. I mean anytime.

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Speaker 1: It's not that I'm going to inject stimulus here. I'm

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Speaker 1: not really looking at that old model. I'm just saying

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Speaker 1: that when ten year treasury paper is trading well below

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Speaker 1: the FED funds rate or the three month treasury bill rate,

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Speaker 1: I think that's a message to the FED that their

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Speaker 1: target rate is too high. Frankly, and I think they're

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Speaker 1: looking at that. I'm not sure that our views are

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Speaker 1: much different than the Fed's views. I don't know when

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Speaker 1: they'll act there an independent agency, but that that's my

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Speaker 1: basic point. This is not so much about stimulus as

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Speaker 1: putting more balance into the financial sector and the yokerve.

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Speaker 1: Let's talk about trade chant weight. There's some talk, some

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Speaker 1: reports we might get face to face meetings sometime soon,

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Speaker 1: perhaps even next week. Can you talk to me about that?

428
00:26:07,280 --> 00:26:09,320
Speaker 1: Could they begin next week to face to face talks

429
00:26:09,520 --> 00:26:12,680
Speaker 1: between the United States and China. Well, I can't confirm

430
00:26:12,760 --> 00:26:15,479
Speaker 1: the face to face next week. I know there are

431
00:26:15,600 --> 00:26:19,840
Speaker 1: discussions ongoing that will get the two teams together at

432
00:26:19,920 --> 00:26:22,840
Speaker 1: some point in the near future. What I want to

433
00:26:22,880 --> 00:26:26,680
Speaker 1: say is, UM, they're on the phone, the leaders, the

434
00:26:26,760 --> 00:26:31,280
Speaker 1: senior people on both sides, Liu Hey from China, Ambassador Lekheiser,

435
00:26:31,359 --> 00:26:35,120
Speaker 1: Secretary Ammunition for the USA. They'll be on the phone.

436
00:26:35,160 --> 00:26:36,920
Speaker 1: They've been on the phone. They'll be on the phone

437
00:26:36,960 --> 00:26:39,520
Speaker 1: this coming week. I think a face some based meeting

438
00:26:39,640 --> 00:26:41,560
Speaker 1: is in the cards. I don't want to get ahead

439
00:26:41,600 --> 00:26:45,280
Speaker 1: of that story, but I think it's a positive story. UM.

440
00:26:45,480 --> 00:26:47,920
Speaker 1: As you know, last week or two weekends ago, the

441
00:26:48,040 --> 00:26:52,520
Speaker 1: President UM basically reopened the talks. I think it's always

442
00:26:52,600 --> 00:26:54,880
Speaker 1: better to talk than not to talk. Let's talk about

443
00:26:54,920 --> 00:26:57,439
Speaker 1: the content of those talks. Do we restart from fresh?

444
00:26:57,880 --> 00:27:00,760
Speaker 1: Secretary Mannuchin said, we've been ninety percent of the way there.

445
00:27:00,880 --> 00:27:03,600
Speaker 1: We were the way there, and I'm wondering if that's

446
00:27:03,640 --> 00:27:06,320
Speaker 1: the starting position or whether we start again, Larry, which

447
00:27:06,359 --> 00:27:09,160
Speaker 1: one is it? Well, I know that the US team

448
00:27:10,160 --> 00:27:15,800
Speaker 1: much much favors where we left off last May. Now again,

449
00:27:15,960 --> 00:27:18,359
Speaker 1: I don't want to get engaged in a lot of

450
00:27:18,440 --> 00:27:21,879
Speaker 1: hypotheticals here, but I think what Steve Minushan is saying,

451
00:27:22,359 --> 00:27:24,440
Speaker 1: and I think Bob Lah has your agrees. I know

452
00:27:24,600 --> 00:27:28,200
Speaker 1: I certainly do. We made a lot of headway. Then

453
00:27:28,280 --> 00:27:31,479
Speaker 1: the talks stopped in May, as you know, and now

454
00:27:31,560 --> 00:27:35,800
Speaker 1: they're going to resume, So why not start from where

455
00:27:35,880 --> 00:27:39,119
Speaker 1: we left off. We didn't have a deal, but we

456
00:27:39,280 --> 00:27:42,200
Speaker 1: made progress on a lot of fronts. Now, I want

457
00:27:42,240 --> 00:27:45,520
Speaker 1: to reiterate something because there's always things in the newspapers

458
00:27:45,560 --> 00:27:49,040
Speaker 1: and on the media and whatnot. Let's not forget the

459
00:27:49,160 --> 00:27:54,960
Speaker 1: basics here with respect to ending intellectual property, theft, forced

460
00:27:55,119 --> 00:28:01,400
Speaker 1: transfer of technology, various cyber hacking and cyber interference issues,

461
00:28:02,160 --> 00:28:08,000
Speaker 1: tariff and non tariff barriers, unbalanced trade conditions in general,

462
00:28:08,240 --> 00:28:11,040
Speaker 1: and of course perhaps the most important one is the

463
00:28:11,200 --> 00:28:15,399
Speaker 1: enforcement mechanisms. Now, having said that, Jonathan, the U S

464
00:28:15,520 --> 00:28:19,880
Speaker 1: I believes we did make headway and that's exactly where

465
00:28:19,920 --> 00:28:22,640
Speaker 1: we should pick up the story. The President indicated as

466
00:28:22,760 --> 00:28:26,560
Speaker 1: much at the G twenty talks in Osaka. So that's

467
00:28:26,600 --> 00:28:29,920
Speaker 1: our view. Basically, let's try to cross the finish line.

468
00:28:30,280 --> 00:28:33,080
Speaker 1: But it's still going to be difficult, no question. Well,

469
00:28:33,119 --> 00:28:35,520
Speaker 1: let's talk about some of those difficulties. The President has

470
00:28:35,560 --> 00:28:38,920
Speaker 1: allowed Huawei to stop buying technology from U S firms

471
00:28:39,000 --> 00:28:42,000
Speaker 1: once again, suspended another round of tariffs perhaps as well.

472
00:28:42,320 --> 00:28:47,320
Speaker 1: What did the President get in return this last weekend, Larry, Well, look, um,

473
00:28:48,640 --> 00:28:52,200
Speaker 1: the talks have been reopened, and there is the expectation

474
00:28:53,160 --> 00:28:55,959
Speaker 1: that China almost in good faith. But I hope as

475
00:28:56,000 --> 00:28:59,520
Speaker 1: a matter of continuing, policy will continue, or we'll pick

476
00:28:59,640 --> 00:29:04,400
Speaker 1: up purchases of US various US imported goods and services,

477
00:29:04,680 --> 00:29:09,440
Speaker 1: most particularly the agriculture and farming sector. We think that's

478
00:29:09,520 --> 00:29:13,800
Speaker 1: actually um part of the goodwill agreement in return for which,

479
00:29:13,840 --> 00:29:17,680
Speaker 1: as you noted, the President said, we will suspend tariff

480
00:29:17,840 --> 00:29:22,600
Speaker 1: increases from this point on. But look, it's that so

481
00:29:22,720 --> 00:29:27,600
Speaker 1: much tipped for TAD. You didn't get any new deals

482
00:29:27,760 --> 00:29:31,520
Speaker 1: coming out of Osaka. What you got was a continuation

483
00:29:31,680 --> 00:29:34,680
Speaker 1: of the talks, which is a good thing, and let's

484
00:29:34,680 --> 00:29:37,320
Speaker 1: see if we could make any forward progress on where

485
00:29:37,400 --> 00:29:40,840
Speaker 1: we left off last May. There never any preconditions, The

486
00:29:40,920 --> 00:29:44,720
Speaker 1: United States has never suggested any preconditions for this. But

487
00:29:44,840 --> 00:29:48,360
Speaker 1: I think the relaxation of the h of the tariff

488
00:29:48,400 --> 00:29:51,720
Speaker 1: threat is a positive goodwill gesture. Larry, you've said in

489
00:29:51,760 --> 00:29:54,040
Speaker 1: the past that the Kuawei issue is separate from the

490
00:29:54,080 --> 00:29:56,840
Speaker 1: trade negotiations. It looks like it's part of the broad

491
00:29:56,880 --> 00:30:00,000
Speaker 1: of trade negotiations. Now, can you confirm that, well, actual,

492
00:30:00,200 --> 00:30:03,360
Speaker 1: I've never said that they were separate. UM. Maybe somebody

493
00:30:03,400 --> 00:30:05,560
Speaker 1: else did. That's not my view. The President's view, which

494
00:30:05,600 --> 00:30:08,600
Speaker 1: is what matters, is that they will be part of

495
00:30:08,680 --> 00:30:11,960
Speaker 1: the general talks regarding trade, and I think that's quite

496
00:30:12,000 --> 00:30:15,680
Speaker 1: evident from what happened in Osaka. And again, if there's

497
00:30:15,680 --> 00:30:19,080
Speaker 1: any confusion, Jonathan, let me try to clear up with

498
00:30:20,280 --> 00:30:24,040
Speaker 1: with respect to UM, shall we say a little UM,

499
00:30:24,560 --> 00:30:28,760
Speaker 1: a little more lenient treatment of Huawei. We're not talking

500
00:30:28,840 --> 00:30:33,000
Speaker 1: about family jewels, we're not talking about five G, we're

501
00:30:33,040 --> 00:30:36,760
Speaker 1: not talking about core issues with respect to telecom and

502
00:30:36,920 --> 00:30:40,880
Speaker 1: so forth. We're talking about what I've called general merchandise.

503
00:30:41,720 --> 00:30:47,640
Speaker 1: The Commerce Department may decide to grant some additional licensing

504
00:30:48,440 --> 00:30:52,800
Speaker 1: for telecom products that are the low tech and are

505
00:30:53,040 --> 00:30:56,680
Speaker 1: readily available around the world. Jonathan, I hope. I want

506
00:30:56,760 --> 00:30:59,960
Speaker 1: to make this as clear as I possibly can. Stuff

507
00:31:00,040 --> 00:31:02,960
Speaker 1: that could be bought in Asia, for example, uh that

508
00:31:03,080 --> 00:31:07,040
Speaker 1: will probably be relaxed. But Huawei remains on the end

509
00:31:07,080 --> 00:31:12,320
Speaker 1: of the list. We remain very concerned that Huawei's relationship

510
00:31:12,400 --> 00:31:16,720
Speaker 1: with the Chinese government may be a difficult problem sensitive

511
00:31:16,760 --> 00:31:20,560
Speaker 1: issues for national security. We will not open licenses for

512
00:31:20,720 --> 00:31:26,200
Speaker 1: any national security areas, be they chips or whatever. We're

513
00:31:26,280 --> 00:31:29,280
Speaker 1: just looking at stuff that's readily available on world markets

514
00:31:29,480 --> 00:31:32,440
Speaker 1: and does not have any national security inferences. But Larry,

515
00:31:32,480 --> 00:31:35,040
Speaker 1: that gets a little bit complex because from a foreign

516
00:31:35,080 --> 00:31:37,480
Speaker 1: diplomacy point of view, how can the United States have

517
00:31:37,560 --> 00:31:40,640
Speaker 1: any diplomatic influence on foreign governments and their interaction with

518
00:31:40,800 --> 00:31:43,600
Speaker 1: the likes of Huawei when the United States but suahwe

519
00:31:43,760 --> 00:31:46,720
Speaker 1: is part of a broader bilateral trade negotiation. That gets

520
00:31:46,720 --> 00:31:51,360
Speaker 1: a little bit complex, doesn't it. Well, I'm not sure Johnathan,

521
00:31:51,400 --> 00:31:54,520
Speaker 1: where you're going on that one. I mean, remember, we

522
00:31:54,680 --> 00:32:00,240
Speaker 1: are in very close touch with our allies, the Five Eyes,

523
00:32:00,760 --> 00:32:06,480
Speaker 1: uh Germany, France regarding the Uahwei problem, I mean, the

524
00:32:06,600 --> 00:32:12,600
Speaker 1: national security related issues are enormous in the US, in

525
00:32:12,760 --> 00:32:16,680
Speaker 1: Asia and in Europe and all these governments, and we're

526
00:32:16,720 --> 00:32:21,280
Speaker 1: in touch with them, you know, Secretary Pompeo, John Bolden

527
00:32:21,360 --> 00:32:23,959
Speaker 1: and many others, including myself, We're in touch with these

528
00:32:24,080 --> 00:32:28,080
Speaker 1: nations to talk about the Huahwei threat to our security.

529
00:32:28,640 --> 00:32:31,880
Speaker 1: So this is part of the overall at diplomacy. I

530
00:32:31,920 --> 00:32:34,840
Speaker 1: don't think it's a breaking diplomacy, and we're all working

531
00:32:34,920 --> 00:32:38,640
Speaker 1: towards the same end, which is a safe and secure

532
00:32:39,480 --> 00:32:45,640
Speaker 1: alliance to make sure that Chinese inroads into our security

533
00:32:45,720 --> 00:32:49,360
Speaker 1: are prevented. Frankly, funny question for you, Larry, just on

534
00:32:49,440 --> 00:32:52,720
Speaker 1: the timeline. Are you comfortable with these negotiations running into

535
00:32:53,800 --> 00:32:55,280
Speaker 1: an election year? What do you need to get this

536
00:32:55,320 --> 00:32:58,960
Speaker 1: addressed in the background of this year. Well, look, there's

537
00:32:59,000 --> 00:33:02,880
Speaker 1: no timeline. We've said this again and again. I've said

538
00:33:02,920 --> 00:33:06,360
Speaker 1: it on your show and others, trying to clarify. The

539
00:33:06,480 --> 00:33:10,120
Speaker 1: President wants a quality deal. He said this in Osaka

540
00:33:10,160 --> 00:33:13,560
Speaker 1: and he's many times before Osaka. We want to resolve

541
00:33:13,760 --> 00:33:16,960
Speaker 1: the sticky issues. We want to resolve the security issues.

542
00:33:17,000 --> 00:33:19,680
Speaker 1: We want to resolve the trade issues. This is of

543
00:33:19,800 --> 00:33:25,400
Speaker 1: course crucial to the economy of the US, to manufacturing,

544
00:33:25,480 --> 00:33:30,120
Speaker 1: to farming, to technology, you name it. So there's no timeline.

545
00:33:30,160 --> 00:33:33,040
Speaker 1: The issue is we want quality, we don't have to

546
00:33:33,120 --> 00:33:36,160
Speaker 1: have speed. And frankly, I don't think that's linked to

547
00:33:36,400 --> 00:33:41,959
Speaker 1: the elections in I think that's a matter of US economic,

548
00:33:42,080 --> 00:33:46,760
Speaker 1: trade and national security policy. We will only sign on

549
00:33:47,040 --> 00:33:49,600
Speaker 1: to a deal that is in the interests of the

550
00:33:49,680 --> 00:33:53,600
Speaker 1: United States. As President Trump is often said, it has

551
00:33:53,640 --> 00:33:56,760
Speaker 1: to be a great deal. Larry right to catch with you,

552
00:33:56,920 --> 00:33:58,120
Speaker 1: hope you Well, let's get to see it back in

553
00:33:58,120 --> 00:34:00,080
Speaker 1: front of the Candra with this, Letty count that the

554
00:34:00,240 --> 00:34:19,600
Speaker 1: National Economic Council Director joining us from Washington, Simon Kennedy,

555
00:34:19,719 --> 00:34:23,560
Speaker 1: has done extraordinary duty for Bloomberg News over the last

556
00:34:23,640 --> 00:34:26,120
Speaker 1: number of years, leading our Brexit coverage, leading all of

557
00:34:26,160 --> 00:34:30,040
Speaker 1: our economic coverage as well, and drives forward the gossip.

558
00:34:30,920 --> 00:34:35,800
Speaker 1: The i m F wrapped a little bit around the realities. Simon,

559
00:34:36,040 --> 00:34:40,080
Speaker 1: your important story moments ago that Governor Kearney is vetted

560
00:34:40,480 --> 00:34:45,640
Speaker 1: with Irish and British passports to be a European at

561
00:34:45,760 --> 00:34:48,839
Speaker 1: the i m F. That is the tradition Michael Kabezeus

562
00:34:48,880 --> 00:34:52,799
Speaker 1: and others over the years. Great, what is the likelihood

563
00:34:53,160 --> 00:34:58,920
Speaker 1: of managing director Kearney. He's actively been discussed in European capitals.

564
00:34:59,560 --> 00:35:03,280
Speaker 1: He ously been a subject of speculation both on Bloomberg

565
00:35:03,320 --> 00:35:05,680
Speaker 1: stories and elsewhere this week, but we moved the store.

566
00:35:05,719 --> 00:35:08,640
Speaker 1: We advanced the story a bit forward today in saying

567
00:35:08,680 --> 00:35:11,919
Speaker 1: that his name is absolutely being discussed. Our conversations within

568
00:35:12,360 --> 00:35:17,200
Speaker 1: European capitals about Mark Arney uh and even there's a

569
00:35:17,320 --> 00:35:20,839
Speaker 1: chance that there could be finance ministers next week which

570
00:35:20,880 --> 00:35:23,400
Speaker 1: a single nominee could could come back to have come

571
00:35:23,440 --> 00:35:25,360
Speaker 1: out of Europe. He may be challenged by mergery, marketing,

572
00:35:25,440 --> 00:35:29,239
Speaker 1: may even be challenged by European candidates. But it is

573
00:35:29,280 --> 00:35:31,600
Speaker 1: interesting that, given he is not a European by birth,

574
00:35:31,960 --> 00:35:36,760
Speaker 1: that European governments are still working to discuss his candidacy. Simon,

575
00:35:36,800 --> 00:35:38,520
Speaker 1: you and I have sat in the bar of the St.

576
00:35:38,600 --> 00:35:42,319
Speaker 1: Regis Hotel and wait for the white smoked rise out

577
00:35:42,360 --> 00:35:46,120
Speaker 1: of the I m F headquarters in Washington. How do

578
00:35:46,239 --> 00:35:50,360
Speaker 1: they actually pick a replacement to Madame Legarde? How do

579
00:35:50,440 --> 00:35:54,359
Speaker 1: they what's the process? So the process is that an

580
00:35:54,400 --> 00:35:57,520
Speaker 1: official process, the twenty four member Executive boarder of the

581
00:35:57,600 --> 00:36:01,279
Speaker 1: I m F receives nominations and then UM picks a

582
00:36:01,320 --> 00:36:03,920
Speaker 1: winning candidate. But of course you can't get past the politics.

583
00:36:04,000 --> 00:36:08,399
Speaker 1: You can't get past nationalities. There is a tradition UM

584
00:36:08,680 --> 00:36:10,520
Speaker 1: that the I m F job is picked by the

585
00:36:10,560 --> 00:36:13,120
Speaker 1: European governments and that the World Bank presidency is picked

586
00:36:13,200 --> 00:36:18,000
Speaker 1: by the US administration. UM consts every time the job

587
00:36:18,120 --> 00:36:19,920
Speaker 1: came up, just did with David Malpas of the World

588
00:36:19,960 --> 00:36:22,000
Speaker 1: Bank a few months ago, there's a debate about whether

589
00:36:22,000 --> 00:36:24,960
Speaker 1: it should be opened up UH and every time the

590
00:36:25,080 --> 00:36:29,240
Speaker 1: status quo is is maintained. So of course emerging markets.

591
00:36:29,239 --> 00:36:32,720
Speaker 1: Emerging markets in the past have have pushed for pushed

592
00:36:32,760 --> 00:36:36,920
Speaker 1: candidates on the basis of the increased heft that the

593
00:36:37,040 --> 00:36:39,800
Speaker 1: likes of China, India, etcetera play in the world economy.

594
00:36:39,840 --> 00:36:42,759
Speaker 1: They've never actually coalesced really behind a single candidate, though,

595
00:36:42,960 --> 00:36:44,719
Speaker 1: and they can be outvoted by the U S and

596
00:36:44,760 --> 00:36:48,440
Speaker 1: the Europeans on the on the executive board. But again

597
00:36:48,520 --> 00:36:51,520
Speaker 1: we may see some European sy some emerging market candidates

598
00:36:51,600 --> 00:36:53,799
Speaker 1: come forward, and then the test will be if other

599
00:36:54,080 --> 00:36:55,920
Speaker 1: if all the emerging markets can kind of line up

600
00:36:55,920 --> 00:36:59,920
Speaker 1: by one, and that would be a greater test. So simon,

601
00:37:00,000 --> 00:37:02,239
Speaker 1: what do you think the whoever is the next head

602
00:37:02,320 --> 00:37:04,000
Speaker 1: of the I m F, what is number one on

603
00:37:04,080 --> 00:37:06,960
Speaker 1: the to do list for that next head? Well, number

604
00:37:07,000 --> 00:37:10,920
Speaker 1: one is playing a part potentially ensuring up the world economy. Uh,

605
00:37:11,360 --> 00:37:14,360
Speaker 1: were clearly slowing. It's in the worst shape since just

606
00:37:14,520 --> 00:37:18,080
Speaker 1: after the financial crisis about a decade ago, um and

607
00:37:18,280 --> 00:37:21,360
Speaker 1: so be ensuring that the I m F is a

608
00:37:21,560 --> 00:37:23,399
Speaker 1: as a as a place at the table shoot things

609
00:37:23,440 --> 00:37:28,360
Speaker 1: that start to go wrong. Incidentally, Mark Harney delivering a

610
00:37:28,400 --> 00:37:31,359
Speaker 1: big speech this week on those risks UM and talking

611
00:37:31,400 --> 00:37:35,200
Speaker 1: about the potential for a larger than currently anticipated slow down.

612
00:37:35,239 --> 00:37:38,320
Speaker 1: Pretty good job application in that speech, UH, and so

613
00:37:38,480 --> 00:37:40,120
Speaker 1: that would be their main, main role. But at the

614
00:37:40,160 --> 00:37:42,640
Speaker 1: second time they're looking Christine Leguard will be leaving at

615
00:37:42,680 --> 00:37:44,839
Speaker 1: the same time as a negotiation would be taken place

616
00:37:44,960 --> 00:37:49,040
Speaker 1: over a recapital inkery getting more money, more firepower for

617
00:37:49,080 --> 00:37:51,120
Speaker 1: the IMF. It's been a bit quiet lately, which is

618
00:37:51,200 --> 00:37:52,759
Speaker 1: it's always a good thing when the IMF is not

619
00:37:52,840 --> 00:37:56,799
Speaker 1: in the headlines. UM Argentina obviously getting the biggest loan

620
00:37:56,880 --> 00:38:00,319
Speaker 1: ever last year, but generally the IMF has has had

621
00:38:00,360 --> 00:38:03,520
Speaker 1: a quiet time, which is no bad thing, uh, and

622
00:38:03,640 --> 00:38:07,279
Speaker 1: so the challenge really would be maintaining ability in the

623
00:38:07,320 --> 00:38:11,120
Speaker 1: world economy. Simon Kennedy, what does the first Laguard press

624
00:38:11,200 --> 00:38:14,120
Speaker 1: conference look like as Philip Laine sitting next to her,

625
00:38:14,920 --> 00:38:17,640
Speaker 1: pushing her notes so she can act smart like you

626
00:38:17,800 --> 00:38:20,760
Speaker 1: do with me. I don't think so. I think Christine

627
00:38:20,800 --> 00:38:25,080
Speaker 1: regards a pretty as Bloomberg Bloomberg Opinion rights today, a

628
00:38:25,200 --> 00:38:28,600
Speaker 1: pretty effective leader. She's had lots of big jobs in

629
00:38:28,960 --> 00:38:31,719
Speaker 1: law and in finance ministry in France, at the i

630
00:38:31,960 --> 00:38:34,520
Speaker 1: M f M. This is someone who you have seen

631
00:38:34,600 --> 00:38:36,440
Speaker 1: her at the press, commerce and the like, who clearly

632
00:38:36,560 --> 00:38:39,720
Speaker 1: is a master's her brief and it knows what today

633
00:38:39,840 --> 00:38:41,960
Speaker 1: and to some extent she could actually be just reading

634
00:38:42,200 --> 00:38:44,879
Speaker 1: by then, reading from the Mario Drug playbook. And that's

635
00:38:44,920 --> 00:38:47,800
Speaker 1: not well, that's not criticism of her. Who Ever takes

636
00:38:47,880 --> 00:38:51,440
Speaker 1: over from Mario Drug will more likely than not inherit

637
00:38:51,520 --> 00:38:54,600
Speaker 1: a playbook from the Drug will have put in place

638
00:38:54,640 --> 00:38:57,880
Speaker 1: in the final months of his of his presidency. That

639
00:38:58,000 --> 00:39:00,040
Speaker 1: wasn't his intention, but the world economy might drive in

640
00:39:00,160 --> 00:39:02,640
Speaker 1: that way. Is Mr Kennedy knows there's an art to

641
00:39:02,719 --> 00:39:04,839
Speaker 1: this and some of the humor there of me saying,

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Speaker 1: Philip Laying the esteemed Irish economists as chief economists, that

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00:39:09,560 --> 00:39:13,200
Speaker 1: UH E c B would push your notes very often

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00:39:13,320 --> 00:39:17,080
Speaker 1: to any given question, particularly from Bloomberg News assembled in

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Speaker 1: frankfort Mario, dragging literally Paul reads off a statement. I

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Speaker 1: mean often not It's not an unusual event, Paul assignment.

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00:39:25,400 --> 00:39:27,920
Speaker 1: I've got to rip up the script and go to

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00:39:28,040 --> 00:39:35,040
Speaker 1: a one four weaker pounds sterling. Does sterling matter within

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00:39:35,160 --> 00:39:39,840
Speaker 1: the litmus paper of Prime Minister Johnson, prime Minister Hunt

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00:39:40,000 --> 00:39:43,319
Speaker 1: or is it a beast of its own? I think

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00:39:43,360 --> 00:39:45,520
Speaker 1: it's I think they'll the prints has always been pretty

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Speaker 1: good on this. I'm maintaining a currency step by markets. Um.

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00:39:50,400 --> 00:39:53,719
Speaker 1: Obviously it's going to take some place from breakfit and

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00:39:53,880 --> 00:39:57,400
Speaker 1: and internally Mark Connie uh and the Bank of England

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00:39:57,440 --> 00:40:01,120
Speaker 1: perhaps more hawkus than the said, and the see maintaining

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00:40:02,000 --> 00:40:05,520
Speaker 1: some kind of support under the pound because you know

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Speaker 1: the free fall is becoming noticeable the last number of days.

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00:40:09,160 --> 00:40:11,279
Speaker 1: Can you give us a y? I mean, is it

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00:40:11,400 --> 00:40:17,040
Speaker 1: just political, the whole political stew of this government race

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00:40:17,120 --> 00:40:19,080
Speaker 1: they're in. I don't know, I don't know if that's

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00:40:19,080 --> 00:40:22,520
Speaker 1: really taking it taking having an effect to certainly some

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Speaker 1: talk with the Bank England. The back Wingland is going

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00:40:25,400 --> 00:40:28,200
Speaker 1: to have to trim that the hawkishnist it's previously shown.

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Speaker 1: The day has not been great. There is concern about

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Speaker 1: Perhaps it's not the politics, but there's certainly the concernness

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00:40:37,040 --> 00:40:39,200
Speaker 1: and no deal breakfast is much greater. Now you've got

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00:40:39,239 --> 00:40:42,640
Speaker 1: to Jeremy Hunt and you've got Boris Johnson kind of

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00:40:42,680 --> 00:40:45,400
Speaker 1: trying to trying to prove their metal to the to

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Speaker 1: the Conservative Party that still let them. Simon, thank you

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00:40:48,080 --> 00:40:51,720
Speaker 1: for the time this morning on short notice, Simon Kennedy

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Speaker 1: running all of our economics and putting on an important report.

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00:40:56,440 --> 00:40:59,840
Speaker 1: It brings forward Governor Karney perhaps as a managing director.

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Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and

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00:41:05,120 --> 00:41:10,400
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast

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00:41:10,480 --> 00:41:14,680
Speaker 1: platform you prefer. I'm on Twitter at Tom Keene before

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Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg

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Speaker 1: Radio