1 00:00:05,120 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene, along 2 00:00:09,240 --> 00:00:13,080 Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jay Lee. We bring 3 00:00:13,119 --> 00:00:17,159 Speaker 1: you insight from the best and economics, finance, investment, and 4 00:00:17,280 --> 00:00:23,280 Speaker 1: international relations. Find Bloomberg Surveillance on Apple podcast, Suncloud, Bloomberg 5 00:00:23,360 --> 00:00:30,040 Speaker 1: dot com, and of course, on the Bloomberg Terminal. A 6 00:00:30,200 --> 00:00:34,280 Speaker 1: conversation this morning with the Mayor of New York. Based 7 00:00:34,320 --> 00:00:38,080 Speaker 1: on the briefing I'm from my law enforcement officials and 8 00:00:38,159 --> 00:00:41,200 Speaker 1: based on the evidence that we were able to accumulate, 9 00:00:41,680 --> 00:00:45,080 Speaker 1: he has now been upgraded to a suspect and we're 10 00:00:45,120 --> 00:00:48,680 Speaker 1: asking all New york Is to assist us in his apprehension. 11 00:00:49,240 --> 00:00:52,720 Speaker 1: H please do not approach him. If you see him, 12 00:00:52,840 --> 00:00:55,480 Speaker 1: or if you know about his you know his whereabouts, 13 00:00:55,600 --> 00:00:58,880 Speaker 1: please notify law enforcement. Can you tell us what you 14 00:00:59,240 --> 00:01:02,080 Speaker 1: and all of your staff have learned about Mr James 15 00:01:02,400 --> 00:01:06,520 Speaker 1: in the last six or seven hours. Well, you know 16 00:01:06,640 --> 00:01:10,040 Speaker 1: this is moving and is extremely fluid of There is 17 00:01:10,080 --> 00:01:13,480 Speaker 1: a host of evidence that we have been recovering of 18 00:01:13,680 --> 00:01:18,640 Speaker 1: the NYPD, the FBI, as well as our state law 19 00:01:18,760 --> 00:01:23,520 Speaker 1: enforcement entities have all collaborated together. I cannot say enough 20 00:01:23,800 --> 00:01:26,560 Speaker 1: about the fast of growth that you have you are 21 00:01:26,640 --> 00:01:29,880 Speaker 1: witnessing of. They had to piece together this case, from 22 00:01:29,920 --> 00:01:33,520 Speaker 1: the band arrival here to the city, to the devices, 23 00:01:34,880 --> 00:01:37,840 Speaker 1: things that we collected. They're doing a great job in 24 00:01:37,920 --> 00:01:40,560 Speaker 1: bringing this person to justice. Mayor, I want to talk 25 00:01:40,680 --> 00:01:43,160 Speaker 1: here about what we're gonna do. As Governor Hoco said 26 00:01:43,200 --> 00:01:46,319 Speaker 1: about crime, you know the numbers in Chicago, you don't 27 00:01:46,319 --> 00:01:48,360 Speaker 1: know the numbers here. I would say that you are 28 00:01:48,480 --> 00:01:52,600 Speaker 1: arguably the most qualified politician in the nation with your 29 00:01:52,640 --> 00:01:57,080 Speaker 1: experience from Bushwick years ago, after where you are now 30 00:01:57,120 --> 00:02:01,960 Speaker 1: to talk about this First, I'm cameras in amendments and 31 00:02:02,080 --> 00:02:05,840 Speaker 1: civil liberties and all that London is covered with cameras 32 00:02:06,240 --> 00:02:10,280 Speaker 1: after terror events. Is this the tipping point where New 33 00:02:10,360 --> 00:02:14,280 Speaker 1: York City one fifth of the cameras of London, begins 34 00:02:14,320 --> 00:02:18,960 Speaker 1: to monitor the public like London. Well, I think that 35 00:02:19,000 --> 00:02:22,639 Speaker 1: I've been talking about this since the time I took office. 36 00:02:22,680 --> 00:02:26,040 Speaker 1: In January. I sent to my deputy mayor public safety 37 00:02:26,320 --> 00:02:29,440 Speaker 1: across the globe to find out, how are we protecting 38 00:02:29,520 --> 00:02:32,560 Speaker 1: human beings throughout the entire globe. And we are not 39 00:02:32,760 --> 00:02:36,520 Speaker 1: going to sit back and allow this technology to exist 40 00:02:36,760 --> 00:02:38,959 Speaker 1: and not protect the people of the city. And we're 41 00:02:38,960 --> 00:02:42,720 Speaker 1: going to continue to explore it. Mayor Adams, you also 42 00:02:42,800 --> 00:02:46,680 Speaker 1: had put more police forces into subway stations to protect 43 00:02:46,720 --> 00:02:48,640 Speaker 1: the people of the city, given that this is just 44 00:02:48,760 --> 00:02:52,120 Speaker 1: one in a series of events that have unfolded over 45 00:02:52,240 --> 00:02:55,840 Speaker 1: the last year during the pandemic, even in subway stations, 46 00:02:55,880 --> 00:02:59,600 Speaker 1: acts of violence. Clearly that failed yesterday. I know you've 47 00:02:59,600 --> 00:03:02,320 Speaker 1: said you given yourself an incomplete on crime in the 48 00:03:02,360 --> 00:03:05,000 Speaker 1: first one hundred days of your campaign. Is that incomplete 49 00:03:05,040 --> 00:03:08,960 Speaker 1: looking more like a failure, less like anything of semblance 50 00:03:08,960 --> 00:03:12,520 Speaker 1: of a passing grade. Well, we should be clear. We've 51 00:03:12,560 --> 00:03:14,280 Speaker 1: been here before, as New York is. You know, I 52 00:03:14,360 --> 00:03:17,600 Speaker 1: often talk about my mid eighties when I started into 53 00:03:17,639 --> 00:03:21,880 Speaker 1: transit police ironically, and I'm aware of what it takes 54 00:03:21,960 --> 00:03:29,440 Speaker 1: to turn around generational poverty, generational crisis, that violence in 55 00:03:29,480 --> 00:03:32,880 Speaker 1: our cities. And then we cannot ignore the over proliferation 56 00:03:32,919 --> 00:03:37,560 Speaker 1: of guns. Uh No, NYPD. My administration has not failed. 57 00:03:37,720 --> 00:03:41,800 Speaker 1: We have removed eighteen hundred guns up the streets of 58 00:03:41,880 --> 00:03:45,640 Speaker 1: our cities since being elected. Think about that. You are 59 00:03:45,960 --> 00:03:50,000 Speaker 1: experts at the study of games. On January four, you 60 00:03:50,160 --> 00:03:52,600 Speaker 1: stated you showed up at a press conference and said, 61 00:03:52,640 --> 00:03:55,720 Speaker 1: we gotta do something about gangs. These kids three dead 62 00:03:55,760 --> 00:03:59,040 Speaker 1: in the last twenty four hours, not the headlines like Brooklyn, 63 00:03:59,280 --> 00:04:02,600 Speaker 1: but three days on Gates Avenue, on the Avenue, on 64 00:04:02,680 --> 00:04:06,440 Speaker 1: Laconia Avenue. What are we gonna do about the gangs 65 00:04:06,480 --> 00:04:10,720 Speaker 1: that pull these kids into crime and violence at a 66 00:04:10,800 --> 00:04:14,320 Speaker 1: zero And it's called precision policing, not just throwing out 67 00:04:14,320 --> 00:04:19,000 Speaker 1: a wide net. Having a precision approach to those who 68 00:04:19,160 --> 00:04:22,359 Speaker 1: are trigger police and violent gangs. That is at the 69 00:04:22,400 --> 00:04:26,040 Speaker 1: heart of our crisis. Uh, they're the mayor of New 70 00:04:26,120 --> 00:04:28,840 Speaker 1: York City and an important conversation and we really need 71 00:04:28,880 --> 00:04:31,719 Speaker 1: to be abundantly clear that we had a headline at 72 00:04:31,800 --> 00:04:34,760 Speaker 1: that moment of the apprehension of the suspect, and that 73 00:04:34,920 --> 00:04:38,279 Speaker 1: was corrected by ABC or sorry for that. That happens 74 00:04:38,279 --> 00:04:44,800 Speaker 1: within the news flow that we have, as you know 75 00:04:44,880 --> 00:04:47,680 Speaker 1: on Bloomberg surveillance. We've done everything we can to speak 76 00:04:47,680 --> 00:04:50,719 Speaker 1: to experts into people who have lived so much of 77 00:04:50,760 --> 00:04:54,080 Speaker 1: continental Europe and this new war. It is our honor 78 00:04:54,120 --> 00:04:57,720 Speaker 1: now to speak to Nina Krascheva, professor of International Affairs 79 00:04:58,160 --> 00:05:00,800 Speaker 1: at the New School, with the hair didge of her 80 00:05:00,880 --> 00:05:04,640 Speaker 1: family far and back to World War Two. And you know, 81 00:05:04,800 --> 00:05:07,320 Speaker 1: we don't have time to go into the story of 82 00:05:07,360 --> 00:05:09,559 Speaker 1: your family coming out of the death of I believe 83 00:05:09,600 --> 00:05:13,720 Speaker 1: your grandfather in World War Two. But we can speak 84 00:05:13,760 --> 00:05:16,920 Speaker 1: to you with your academics at New School, your work 85 00:05:16,920 --> 00:05:21,120 Speaker 1: at Princeton, of the mind of Vladimir Putin. As we've 86 00:05:21,120 --> 00:05:25,359 Speaker 1: talked to Angela Stent, you have studied Putin and his 87 00:05:25,560 --> 00:05:30,640 Speaker 1: affair with not the Russia the Soviet Union of Christeff 88 00:05:30,680 --> 00:05:33,880 Speaker 1: but the Russia and Soviet Union of Stalin. What is 89 00:05:33,920 --> 00:05:38,520 Speaker 1: the distinction of how Vladimir Putin looks at the early 90 00:05:38,640 --> 00:05:43,160 Speaker 1: Soviet Union. Well, we thank you very much. We know 91 00:05:43,360 --> 00:05:46,479 Speaker 1: that he doesn't like the early Soviet Union because he 92 00:05:46,600 --> 00:05:50,040 Speaker 1: thinks it was an interruption of great imperial history when 93 00:05:50,520 --> 00:05:55,600 Speaker 1: the Soviet Union was trying to become part of its 94 00:05:55,640 --> 00:06:00,680 Speaker 1: own self, sort of as Stallion put it, um country 95 00:06:00,760 --> 00:06:05,200 Speaker 1: within its own nation. So socialism or communism with um 96 00:06:05,839 --> 00:06:09,920 Speaker 1: within one taken country Putin wants to be. And I 97 00:06:09,960 --> 00:06:12,120 Speaker 1: disagree with a lot of experts who say he wants 98 00:06:12,160 --> 00:06:15,160 Speaker 1: to recreate the Soviet Union. He actually wants to go 99 00:06:15,240 --> 00:06:19,480 Speaker 1: back into history thousand years and the only reason he's 100 00:06:19,520 --> 00:06:22,120 Speaker 1: interested in study, well, one of the reasons he's interested 101 00:06:22,160 --> 00:06:25,520 Speaker 1: in studed because Studin was a gather of lands such 102 00:06:25,600 --> 00:06:28,440 Speaker 1: as Catherine the Great, right such just Peter the Great. 103 00:06:28,560 --> 00:06:30,880 Speaker 1: So he was a gather of lands, and he sees 104 00:06:30,920 --> 00:06:35,240 Speaker 1: cruse Chef as somebody who gave away those lands. And 105 00:06:35,320 --> 00:06:38,200 Speaker 1: if you need to be very brutal and very firm 106 00:06:38,480 --> 00:06:42,200 Speaker 1: and very angry at the world together lands, Putin is 107 00:06:42,240 --> 00:06:46,200 Speaker 1: going to be that. Mr Kristcheff was very much affiliated 108 00:06:46,200 --> 00:06:51,200 Speaker 1: with Poland in the news this morning, Professor Kristcheva is Finland. 109 00:06:51,480 --> 00:06:54,200 Speaker 1: I refuse to believe that Vladim and Putin will not 110 00:06:54,320 --> 00:06:58,800 Speaker 1: focus on Finland, given this heritage of Leningrad and St. Petersburg. 111 00:06:59,279 --> 00:07:02,640 Speaker 1: What is the embolism to Mr Putin of this new 112 00:07:02,680 --> 00:07:08,800 Speaker 1: independence of Sweden and the eight under mild border of Finland. Well, 113 00:07:08,880 --> 00:07:12,520 Speaker 1: it is you know, originally the Russians were saying, well, 114 00:07:12,520 --> 00:07:15,480 Speaker 1: we're not afraid of Finland and Sweden becoming part of 115 00:07:15,560 --> 00:07:19,080 Speaker 1: NATO because we have good relationship with them. I think 116 00:07:19,080 --> 00:07:22,440 Speaker 1: the tone may be changing, but I think what's important 117 00:07:22,520 --> 00:07:26,560 Speaker 1: here is that Putin trying to prevent NATO from expanding east, 118 00:07:26,720 --> 00:07:30,760 Speaker 1: in fact made NATO even more expensional in in the 119 00:07:30,880 --> 00:07:34,200 Speaker 1: East and that in the East, and that's that's what 120 00:07:34,480 --> 00:07:37,520 Speaker 1: should really give them pause on the other hand, what 121 00:07:37,640 --> 00:07:41,320 Speaker 1: I also know about Puttin is that once you challenge him, 122 00:07:41,560 --> 00:07:45,320 Speaker 1: he's going to challenge back. So I think that it's 123 00:07:45,320 --> 00:07:49,600 Speaker 1: about time for Sweden and Finland to think about NATO, 124 00:07:49,760 --> 00:07:52,840 Speaker 1: because if Putin gets angry, he does get angry, and 125 00:07:52,920 --> 00:07:55,200 Speaker 1: we did. We do see it. We we've seen it 126 00:07:55,240 --> 00:07:57,600 Speaker 1: and we do see it in Ukraine. Now, Nina, does 127 00:07:57,640 --> 00:08:02,480 Speaker 1: this end with regime change in Russia? Well, this is 128 00:08:02,520 --> 00:08:05,320 Speaker 1: a very terrifying words to say, because we go to 129 00:08:05,400 --> 00:08:09,240 Speaker 1: prison for this for even utter those words. Um No, 130 00:08:09,600 --> 00:08:13,239 Speaker 1: I don't think it does. Uh, it may get less toxic, 131 00:08:13,320 --> 00:08:16,080 Speaker 1: because Puttin is toxic. But I do think that. I mean, 132 00:08:16,120 --> 00:08:18,400 Speaker 1: what happened now, and we've never seen it before, even 133 00:08:18,440 --> 00:08:22,240 Speaker 1: under Stallion, because now the KGB over that security Forces, 134 00:08:22,280 --> 00:08:25,520 Speaker 1: the FSB and Putting they are one and the same. 135 00:08:25,640 --> 00:08:28,760 Speaker 1: Even on the Stallion they were sort of on parallel tracks. 136 00:08:28,800 --> 00:08:32,480 Speaker 1: But starting with the brutal Dictator and f F KGB 137 00:08:33,080 --> 00:08:35,360 Speaker 1: Uh it was a different name then, but security forces 138 00:08:35,400 --> 00:08:38,800 Speaker 1: worked for him. Now Putting works with He is the 139 00:08:38,880 --> 00:08:41,720 Speaker 1: security force. And so in this sense, even if the 140 00:08:41,760 --> 00:08:45,480 Speaker 1: main hydroid at the top of it is the main dragon, 141 00:08:45,640 --> 00:08:48,160 Speaker 1: is gone, the system will remain the system is not 142 00:08:48,200 --> 00:08:50,480 Speaker 1: going to give itself up, so maybe they would be 143 00:08:50,559 --> 00:08:54,079 Speaker 1: slightly better relationship with outside world. But for the Russians, 144 00:08:54,080 --> 00:08:57,200 Speaker 1: it really doesn't look good inside. Well, let's talk about 145 00:08:57,240 --> 00:09:03,400 Speaker 1: inside Russia, professor. Does domestic feeling within Russia a have 146 00:09:03,480 --> 00:09:06,600 Speaker 1: a bearing on the Kremlin or on Vladimir Putin's decision 147 00:09:06,640 --> 00:09:11,600 Speaker 1: making whatsoever? And be what is that feeling at this moment? Well, 148 00:09:11,640 --> 00:09:14,160 Speaker 1: it was. It's really very interesting what happened because at 149 00:09:14,160 --> 00:09:17,360 Speaker 1: the beginning was such a shock on February twenty and 150 00:09:17,720 --> 00:09:22,920 Speaker 1: about fifty one of the country was just terrified, horrified, 151 00:09:23,240 --> 00:09:25,040 Speaker 1: and a lot of people went, as you remember, went 152 00:09:25,120 --> 00:09:29,559 Speaker 1: to protest, and then the state completely regrouped and basically 153 00:09:29,600 --> 00:09:33,679 Speaker 1: any word of opposition now became a crime. Everything is 154 00:09:33,720 --> 00:09:36,839 Speaker 1: a crime. People just stopped in the streets. My niece 155 00:09:37,160 --> 00:09:40,880 Speaker 1: was arrested three times. Uh stopped and asked why are 156 00:09:40,920 --> 00:09:44,720 Speaker 1: you here when you're um when your passport shows that 157 00:09:44,760 --> 00:09:47,600 Speaker 1: you live in an entirely different part of part of Moscow. 158 00:09:47,760 --> 00:09:50,160 Speaker 1: So it is like that, I mean, it's very stealininless 159 00:09:50,679 --> 00:09:53,480 Speaker 1: right now, and so slowly but surely, with also great 160 00:09:53,520 --> 00:09:56,640 Speaker 1: propaganda on TV that we are liberating with the Russian 161 00:09:56,760 --> 00:10:01,520 Speaker 1: liberate our Ukrainian brothers from Nazi regime installed by the 162 00:10:01,600 --> 00:10:06,679 Speaker 1: United States and NATO. Then now about support they as 163 00:10:06,679 --> 00:10:09,640 Speaker 1: they call it special Operation. I mean, the numbers are fudge, 164 00:10:10,080 --> 00:10:12,040 Speaker 1: but there is a lot of patriotism. And one of 165 00:10:12,080 --> 00:10:15,240 Speaker 1: the patriotism part is because the sanctions now and not 166 00:10:15,360 --> 00:10:19,000 Speaker 1: just financial and economic, they are cultural, they are society, 167 00:10:19,160 --> 00:10:22,960 Speaker 1: they're humanitarian and everything, and so Russians have no other 168 00:10:23,040 --> 00:10:25,360 Speaker 1: choice but to rally around the flat. Professor, I've got 169 00:10:25,400 --> 00:10:28,920 Speaker 1: thirty seconds. We saw Vladimir Putin yesterday at the Cosmo 170 00:10:29,000 --> 00:10:32,000 Speaker 1: Drome in the far east of Russia. Is he healthy? 171 00:10:34,440 --> 00:10:36,800 Speaker 1: A lot of rumors once again, a lot of rumors. 172 00:10:36,840 --> 00:10:39,199 Speaker 1: He doesn't look sick to me, but the people do, 173 00:10:39,400 --> 00:10:41,559 Speaker 1: saying that the reason he went into Ukraine sort of 174 00:10:41,600 --> 00:10:46,040 Speaker 1: follow up the cliff so quickly and on Februar, because 175 00:10:46,040 --> 00:10:49,240 Speaker 1: he's rushing for something. I don't know that, but they're rumors. 176 00:10:50,160 --> 00:10:52,880 Speaker 1: For Nina Kristcheffer, thank you so much for joining Bloomberg 177 00:10:52,960 --> 00:10:57,240 Speaker 1: this morning, Professor kristef at the New School UH here 178 00:10:57,360 --> 00:11:00,000 Speaker 1: in New York City, and of course, with their heritage 179 00:11:00,000 --> 00:11:03,160 Speaker 1: age across so many decades of the Soviet Union in 180 00:11:03,200 --> 00:11:11,640 Speaker 1: the Russian Federation. We're now gonna do what we do 181 00:11:11,760 --> 00:11:15,440 Speaker 1: best at Bloomberg Surveillance, and that is speak to someone 182 00:11:15,559 --> 00:11:20,160 Speaker 1: truly expert. Stephen Englanders, Global head of G ten FX 183 00:11:20,200 --> 00:11:24,240 Speaker 1: Research at Standard Charter. They have a fantastic Bill Winter's 184 00:11:24,280 --> 00:11:28,120 Speaker 1: remit to look at emerging markets and particularly the Pacific 185 00:11:28,240 --> 00:11:31,920 Speaker 1: rim up to Japan. Stephen Englander, thank you so much 186 00:11:31,960 --> 00:11:36,280 Speaker 1: for joining us this morning. The ramifications of a weaker 187 00:11:36,400 --> 00:11:41,520 Speaker 1: Japanese yen now at one out to one thirty. What 188 00:11:41,640 --> 00:11:44,520 Speaker 1: does that do to the degrees of freedom that Powell 189 00:11:44,640 --> 00:11:49,800 Speaker 1: and Laguard have? How does weak yen redound back to 190 00:11:50,520 --> 00:11:54,559 Speaker 1: and unraveling of the yen red down back to America? 191 00:11:54,760 --> 00:11:59,400 Speaker 1: In Europe, well, I'd say that the yend is the 192 00:11:59,559 --> 00:12:03,320 Speaker 1: very optional along with the euro where the central banks 193 00:12:03,320 --> 00:12:07,719 Speaker 1: have some ambiguity with respect to how hockey is they 194 00:12:07,720 --> 00:12:10,520 Speaker 1: want to be. In fact, the the b o J's 195 00:12:10,559 --> 00:12:14,840 Speaker 1: downright dubbish ecbats kind of on offense. UM. I don't 196 00:12:14,840 --> 00:12:19,120 Speaker 1: think it's going to change very much what the Fed does. UM. 197 00:12:19,160 --> 00:12:22,640 Speaker 1: I don't think the impact on US inflation or global 198 00:12:22,720 --> 00:12:27,720 Speaker 1: growth is that strong. Um And the end is weakness 199 00:12:27,840 --> 00:12:32,760 Speaker 1: is probably partly reflecting Chinese economic growth weakness, and the 200 00:12:32,960 --> 00:12:37,360 Speaker 1: you know, the Governor Coroda's adamant insistence that they can 201 00:12:37,360 --> 00:12:41,800 Speaker 1: continue the same kind of policy with Japanese rates drifting 202 00:12:41,840 --> 00:12:45,040 Speaker 1: further and further away from everyone else's. It is such 203 00:12:45,080 --> 00:12:49,079 Speaker 1: an artificiality, particularly with this phrase of buying their own 204 00:12:49,200 --> 00:12:53,160 Speaker 1: paper on board at the Bank of Japan. The standard 205 00:12:53,240 --> 00:12:57,600 Speaker 1: charter view on this is Japan something that will amend 206 00:12:57,679 --> 00:13:01,280 Speaker 1: in a melleable way to the shocks of weekend and 207 00:13:01,400 --> 00:13:04,199 Speaker 1: all around it. In this experiment of y s C 208 00:13:05,240 --> 00:13:10,440 Speaker 1: or do you worry that something could snap, Well, I'd 209 00:13:10,440 --> 00:13:13,880 Speaker 1: say we're not very exciting about the continuation of y 210 00:13:13,960 --> 00:13:17,880 Speaker 1: c C under current circumstances. Um. We we don't see 211 00:13:18,520 --> 00:13:21,240 Speaker 1: a huge benefit to Japan from a weaker yen at 212 00:13:21,240 --> 00:13:26,240 Speaker 1: this point in a world where um growth is is 213 00:13:26,320 --> 00:13:31,080 Speaker 1: kind of limited by supply, having a weaker currency doesn't 214 00:13:31,400 --> 00:13:35,120 Speaker 1: really increase your ability to supply more um. You just 215 00:13:35,160 --> 00:13:38,600 Speaker 1: pay more for imports. Now, in the case of Japan, 216 00:13:38,800 --> 00:13:42,320 Speaker 1: the they've wanted to get their inflation up um, you know, 217 00:13:42,400 --> 00:13:45,720 Speaker 1: for many years, almost a decade or more. But the 218 00:13:45,800 --> 00:13:48,280 Speaker 1: problem is that they want to get domestic inflation up, 219 00:13:48,400 --> 00:13:51,600 Speaker 1: not kind of make the population poorer because the port 220 00:13:51,640 --> 00:13:54,640 Speaker 1: costs are higher. So, you know, so we don't see 221 00:13:54,800 --> 00:13:58,560 Speaker 1: kind of where this has ended. And I'm looking right 222 00:13:58,559 --> 00:14:00,520 Speaker 1: now at a very confusing picture when you take a 223 00:14:00,520 --> 00:14:04,080 Speaker 1: look at the at the words from the Bank of Japan, 224 00:14:04,160 --> 00:14:07,920 Speaker 1: Governor Quarta versus other authorities that are concerned about what 225 00:14:07,960 --> 00:14:10,760 Speaker 1: you said, which is rising costs. Quota meanwhile is the 226 00:14:10,800 --> 00:14:14,000 Speaker 1: one who's doubling down uneasing policies and the sort of 227 00:14:14,200 --> 00:14:17,440 Speaker 1: yield curve control. At what point will there be a 228 00:14:17,559 --> 00:14:19,960 Speaker 1: break and will be he'd be forced to back away 229 00:14:20,040 --> 00:14:22,720 Speaker 1: from the purchases that Tom was talking about and really 230 00:14:22,760 --> 00:14:28,200 Speaker 1: pay more attention to the end. It may not be immediate. Um. 231 00:14:28,240 --> 00:14:30,840 Speaker 1: You know, in a number of places, the you know, 232 00:14:31,120 --> 00:14:33,120 Speaker 1: the limit to how weak the currency can be in 233 00:14:33,560 --> 00:14:35,760 Speaker 1: g ten countries and sometimes how expensive it is to 234 00:14:35,840 --> 00:14:39,680 Speaker 1: travel abroad. But there's not that much of it now. Um. 235 00:14:39,760 --> 00:14:44,080 Speaker 1: Quite possibly the erosion of real wages to Japan is 236 00:14:44,120 --> 00:14:47,360 Speaker 1: going to become a political issue down down the road, 237 00:14:47,440 --> 00:14:51,320 Speaker 1: So that might end up being the limiting factor. And 238 00:14:51,760 --> 00:14:55,280 Speaker 1: I think as um, you know, many have discussed. I mean, 239 00:14:55,440 --> 00:14:59,160 Speaker 1: y CC is great if it's kind of demand shocks 240 00:14:59,240 --> 00:15:02,600 Speaker 1: that you're kind of trying to control and if your 241 00:15:02,840 --> 00:15:07,160 Speaker 1: forecast of developments are are good and it provides guidance 242 00:15:07,680 --> 00:15:11,720 Speaker 1: when circumstances have changed as much as they have. UM, 243 00:15:11,760 --> 00:15:14,160 Speaker 1: it's not clear that y CC is the tool that 244 00:15:14,160 --> 00:15:18,120 Speaker 1: that really gives you the flexibility that you need. Steve, 245 00:15:18,200 --> 00:15:20,480 Speaker 1: you mentioned that part of the end weakness may have 246 00:15:20,560 --> 00:15:22,680 Speaker 1: to do with the growth story in China, and it 247 00:15:22,760 --> 00:15:25,160 Speaker 1: strikes me that the b o J isn't the only 248 00:15:25,160 --> 00:15:28,600 Speaker 1: central bank we're talking about keeping policy easy while everyone 249 00:15:28,640 --> 00:15:30,880 Speaker 1: else is out there hawking. China is as well. We 250 00:15:30,880 --> 00:15:34,720 Speaker 1: were just talking about China, uh, talking about further triple 251 00:15:34,760 --> 00:15:37,400 Speaker 1: our cuts if needed. Why aren't we seeing more weakness 252 00:15:37,400 --> 00:15:42,080 Speaker 1: for unman B that we're seeing for the Japanese end. Well, 253 00:15:42,120 --> 00:15:45,400 Speaker 1: you know, there's lots of moving parts for China. I 254 00:15:45,520 --> 00:15:49,000 Speaker 1: think that the entry of China into the global um, 255 00:15:49,880 --> 00:15:53,240 Speaker 1: you know, financial system, the the opening up of China markets, 256 00:15:53,240 --> 00:15:59,120 Speaker 1: so there is capital inflow into China and the it's 257 00:15:59,360 --> 00:16:01,840 Speaker 1: very music. But you know the fact that they have 258 00:16:01,920 --> 00:16:05,880 Speaker 1: such a large trade surplus on an ongoing basis, UM, 259 00:16:06,000 --> 00:16:08,880 Speaker 1: they're just not spending much abroad. They usually travel a 260 00:16:08,960 --> 00:16:12,840 Speaker 1: lot or not and UM, you know, their current account 261 00:16:12,840 --> 00:16:15,720 Speaker 1: is strong and they have capital influence that usually you know, 262 00:16:16,400 --> 00:16:19,120 Speaker 1: that's that's a good sign for the currency. Obviously. I 263 00:16:19,120 --> 00:16:24,080 Speaker 1: think that there's some concerns about the impact of the 264 00:16:24,200 --> 00:16:28,600 Speaker 1: latest COVID wave and their ability to UM grow and 265 00:16:28,880 --> 00:16:31,760 Speaker 1: how aggressive the policy easing is going to be, but 266 00:16:31,800 --> 00:16:36,360 Speaker 1: there's some tail winds to c n Y that you 267 00:16:36,360 --> 00:16:41,040 Speaker 1: you can't ignore. Steve Angelders, thank you so much. Greatly appreciated. 268 00:16:41,080 --> 00:16:50,120 Speaker 1: With Standard Charter Bank, we get a perspective, a change 269 00:16:50,160 --> 00:16:53,800 Speaker 1: perspective on the American economy. Kathleen bus Johnstick joins us 270 00:16:54,160 --> 00:16:56,440 Speaker 1: right now. We are thrilled for that here with mixed 271 00:16:57,000 --> 00:16:59,080 Speaker 1: moments in the market. Kathy, thank you so much for 272 00:16:59,160 --> 00:17:02,800 Speaker 1: joining us from Oxford Economics. Kathy, what has changed for 273 00:17:02,880 --> 00:17:06,480 Speaker 1: you on the duration of high inflation in the last 274 00:17:06,520 --> 00:17:10,760 Speaker 1: twenty four hours. Thanks Tom, happy to be with you. Um. 275 00:17:10,800 --> 00:17:14,040 Speaker 1: You know, the numbers really just confirm our view that 276 00:17:14,080 --> 00:17:17,800 Speaker 1: we've had for a while now that inflation is untolerably high, 277 00:17:17,880 --> 00:17:20,360 Speaker 1: and you're hearing that from Fed officials. That's why they're 278 00:17:20,359 --> 00:17:22,920 Speaker 1: saying we need to get to neutral quickly and then 279 00:17:23,160 --> 00:17:26,800 Speaker 1: actually moved to restrictive. Now we're going to debate whether 280 00:17:26,840 --> 00:17:30,080 Speaker 1: the peak and inflation for consumer prices that is is 281 00:17:30,160 --> 00:17:33,199 Speaker 1: in whether it was March or April May, and we 282 00:17:33,280 --> 00:17:36,760 Speaker 1: think it's probably April. But nevertheless, the real issue is 283 00:17:37,040 --> 00:17:40,760 Speaker 1: how quickly does it decelerate um and and there I 284 00:17:40,800 --> 00:17:43,560 Speaker 1: think most believe it's going to be much more gradually 285 00:17:44,080 --> 00:17:48,960 Speaker 1: than previously thought. And we still see headline inflation still 286 00:17:49,000 --> 00:17:51,360 Speaker 1: above five percent by the end of the year. So yes, 287 00:17:51,400 --> 00:17:54,480 Speaker 1: it's a bit of a reprieve, but still really high 288 00:17:54,560 --> 00:17:58,040 Speaker 1: and uncomfortably high for the Fed reserve. Kathleen, can you 289 00:17:58,080 --> 00:18:01,160 Speaker 1: make that help us understand that can action between pp 290 00:18:01,359 --> 00:18:05,080 Speaker 1: I and cp I Basically the prices that consumers pay 291 00:18:05,119 --> 00:18:07,840 Speaker 1: in stores when they go out to eat versus the 292 00:18:07,920 --> 00:18:11,280 Speaker 1: prices that producers have to pay and how much that 293 00:18:11,320 --> 00:18:15,320 Speaker 1: directly gets passed through to future inflation that people feel 294 00:18:15,600 --> 00:18:18,480 Speaker 1: in the grocery store or when they go on a vacation. 295 00:18:18,800 --> 00:18:21,239 Speaker 1: What do we have a sense of how direct and 296 00:18:21,280 --> 00:18:25,880 Speaker 1: what the time is for that transmission. Yeah, so it's 297 00:18:25,880 --> 00:18:28,320 Speaker 1: a great question. And you know what we have seen 298 00:18:28,520 --> 00:18:31,399 Speaker 1: in this business, Suguli, So that's really different than the 299 00:18:31,440 --> 00:18:36,240 Speaker 1: prior decade is that Corporate America has really strong pricing power. 300 00:18:36,720 --> 00:18:39,440 Speaker 1: So let's say if we went back five six years ago, 301 00:18:40,080 --> 00:18:43,040 Speaker 1: you would have hopefel prices would have won up, but 302 00:18:43,160 --> 00:18:45,560 Speaker 1: corporations would have had a hard time pass laying it 303 00:18:45,600 --> 00:18:49,200 Speaker 1: on to consumers and it would have erode it profit margins. 304 00:18:49,640 --> 00:18:51,879 Speaker 1: Now we're not really seeing that right Earnings. I know 305 00:18:51,960 --> 00:18:54,000 Speaker 1: you've been speaking a lot about earnings for the last 306 00:18:54,000 --> 00:18:56,840 Speaker 1: few days. We're going to get the um the next 307 00:18:56,920 --> 00:19:00,440 Speaker 1: quarterly earnings data rolling out, But up until this point, 308 00:19:00,440 --> 00:19:03,200 Speaker 1: everything have actually been quite good and that's helped fuel 309 00:19:03,240 --> 00:19:05,879 Speaker 1: the equity market. That's because Corporate America has pricing power 310 00:19:06,200 --> 00:19:08,679 Speaker 1: and we see that many surveys. But Kathy, are we 311 00:19:08,720 --> 00:19:10,960 Speaker 1: starting to reach the limits of that? Lisa has brought 312 00:19:11,000 --> 00:19:12,800 Speaker 1: it up a few times during the show bed Bath 313 00:19:12,880 --> 00:19:16,800 Speaker 1: and beyond disappointing facing inflationary pressure, supply chain headwinds, and 314 00:19:16,800 --> 00:19:19,160 Speaker 1: a headline just coming out from the company, they see 315 00:19:19,200 --> 00:19:23,440 Speaker 1: a slowdown in consumer demand. If demand starts to deteriorate, 316 00:19:23,480 --> 00:19:26,720 Speaker 1: consumers start to push back against higher prices, are less 317 00:19:26,720 --> 00:19:29,360 Speaker 1: tolerant of it. Is that the point we're at now, 318 00:19:30,720 --> 00:19:34,359 Speaker 1: we may be and that is the critical point of 319 00:19:34,400 --> 00:19:37,080 Speaker 1: the cycle. Right we all know we're late cycle. How 320 00:19:37,160 --> 00:19:40,040 Speaker 1: late are we in the cycle and how much pressure 321 00:19:39,800 --> 00:19:43,560 Speaker 1: on corporate profits. Right, So if you see input costs 322 00:19:43,600 --> 00:19:46,639 Speaker 1: still rising as a PPI data suggest unit labor costs, 323 00:19:46,640 --> 00:19:50,040 Speaker 1: we know wage games are still high. If companies are 324 00:19:50,040 --> 00:19:54,200 Speaker 1: no longer able to pass it on as easily to consumers, 325 00:19:54,240 --> 00:19:57,800 Speaker 1: then it is gonna start to bite into corporate profit margins. 326 00:19:57,840 --> 00:20:01,320 Speaker 1: There's no way around that, and we may be reaching 327 00:20:01,359 --> 00:20:03,679 Speaker 1: that point now. The consumers to us still look like 328 00:20:03,720 --> 00:20:06,399 Speaker 1: they're in really good shape, but remember they don't have 329 00:20:06,520 --> 00:20:08,919 Speaker 1: that fiscal stimulus, right, the checks that we're given out 330 00:20:08,960 --> 00:20:11,439 Speaker 1: a year ago, that's gone, and now you really have 331 00:20:11,560 --> 00:20:14,479 Speaker 1: to rely on private wage gains to really carry you 332 00:20:14,520 --> 00:20:17,600 Speaker 1: through and the expect savings. The real question really for 333 00:20:17,640 --> 00:20:19,080 Speaker 1: all of us when we fork I asked and look 334 00:20:19,080 --> 00:20:20,880 Speaker 1: at this, is how much of that you know, two 335 00:20:20,920 --> 00:20:24,480 Speaker 1: point seven trillion worth of accumulated savings does the consumer 336 00:20:24,520 --> 00:20:28,440 Speaker 1: rely on? Kathy, We're also talking about an inflation surge 337 00:20:28,520 --> 00:20:30,960 Speaker 1: stemming from commodities, and this often has been thought of 338 00:20:31,000 --> 00:20:35,359 Speaker 1: as something that's temporary, transient, pick your poisonous word. How 339 00:20:35,440 --> 00:20:38,680 Speaker 1: much is that changing in an era where it does 340 00:20:38,720 --> 00:20:41,600 Speaker 1: seem like we are deglobalizing and it seems like these 341 00:20:41,640 --> 00:20:44,399 Speaker 1: shocks are all having the same impact even though they 342 00:20:44,440 --> 00:20:48,520 Speaker 1: are very different in nature. Yeah, that is something that 343 00:20:48,600 --> 00:20:51,360 Speaker 1: could play out, you know, over the medium to long 344 00:20:51,520 --> 00:20:54,600 Speaker 1: term and it and it is a real potential game 345 00:20:54,720 --> 00:20:59,760 Speaker 1: changer to the backdrop um that globalization really brought in 346 00:21:00,040 --> 00:21:04,439 Speaker 1: disinflationary forces where it kind of capped overall price games. 347 00:21:04,520 --> 00:21:06,679 Speaker 1: If that's changing and praying on the ends, which it 348 00:21:06,720 --> 00:21:10,000 Speaker 1: looks like it may be, that is very different. You know, 349 00:21:10,080 --> 00:21:12,480 Speaker 1: scenario doesn't necessarily it's hard to say, you know, we're 350 00:21:12,480 --> 00:21:15,320 Speaker 1: exactly oil prices or or copper or where that will 351 00:21:15,320 --> 00:21:17,560 Speaker 1: play out. But what we can say is that you 352 00:21:17,600 --> 00:21:24,439 Speaker 1: know that disinflationary impulse could be behind us or economics. 353 00:21:30,119 --> 00:21:33,400 Speaker 1: This is a very confusing moment. I am here with 354 00:21:33,480 --> 00:21:36,359 Speaker 1: Tom Keane, with Kaylee Lines. We are broadcasting both on 355 00:21:36,560 --> 00:21:40,240 Speaker 1: radio as well as on television at a delicate moment 356 00:21:40,480 --> 00:21:43,840 Speaker 1: where we're looking at earnings reflecting both strength when you 357 00:21:43,880 --> 00:21:46,359 Speaker 1: take a look at delta and the incredible demand, and 358 00:21:46,359 --> 00:21:49,280 Speaker 1: then you look at JP Morgan talking about increased credit 359 00:21:49,359 --> 00:21:52,280 Speaker 1: loss provisions as a result of some of this uncertainty. 360 00:21:52,640 --> 00:21:55,320 Speaker 1: Peter Sheer has been passing through all of this and 361 00:21:55,400 --> 00:21:59,160 Speaker 1: has a fantastic view uh joining us right now, Peter 362 00:21:59,240 --> 00:22:02,320 Speaker 1: sheer a orse I have with back economics with the 363 00:22:02,520 --> 00:22:05,600 Speaker 1: full view. What's your view on how we should read 364 00:22:05,760 --> 00:22:09,640 Speaker 1: this moment. So I'm starting with equities. I think equities 365 00:22:09,680 --> 00:22:11,640 Speaker 1: right now are to me an easier read. I expect 366 00:22:11,640 --> 00:22:14,520 Speaker 1: equity indust needs to go back to the pre March 367 00:22:14,600 --> 00:22:16,960 Speaker 1: fed lows. So I think we get back and retest that. 368 00:22:17,000 --> 00:22:18,680 Speaker 1: So I think you're gonna see ongoing pressure in the 369 00:22:18,720 --> 00:22:23,200 Speaker 1: equity markets. To me, that translates to pressure on credit spreads. 370 00:22:23,200 --> 00:22:25,080 Speaker 1: So I think we see credit spreads wide in particularly 371 00:22:25,119 --> 00:22:27,200 Speaker 1: the I G spector, which is held in pretty well 372 00:22:27,200 --> 00:22:29,560 Speaker 1: in the last month or so. And then finally on 373 00:22:29,680 --> 00:22:32,280 Speaker 1: treasury yields, it's a little bit more up in the air. 374 00:22:32,520 --> 00:22:34,840 Speaker 1: I really actually think the two year, three or four 375 00:22:34,920 --> 00:22:36,479 Speaker 1: year stage I want to be buying those. I think 376 00:22:36,520 --> 00:22:38,359 Speaker 1: those yields can head lower. I'm a little bit more 377 00:22:38,400 --> 00:22:41,239 Speaker 1: confused in the tense to thirties. Peter, You're great at 378 00:22:41,280 --> 00:22:45,960 Speaker 1: looking across equities, bonds, currencies, commodities. I'm seeing tangible currency 379 00:22:46,119 --> 00:22:49,800 Speaker 1: signals of an unraveling with your almost hitting a one 380 00:22:49,800 --> 00:22:53,000 Speaker 1: oh seven. It's almost like a David focus landal moaning 381 00:22:53,040 --> 00:22:56,560 Speaker 1: from Deutsche Bank. With the depreciation we're seeing against the dollar. 382 00:22:57,000 --> 00:23:01,240 Speaker 1: From where you sit at the academy, is the system 383 00:23:01,240 --> 00:23:05,239 Speaker 1: malieable now and functionable or do you look at it 384 00:23:05,280 --> 00:23:09,040 Speaker 1: with kinks or with breakpoints? So I think we're at 385 00:23:09,080 --> 00:23:11,480 Speaker 1: this early stages of a real shift and how we 386 00:23:11,520 --> 00:23:13,200 Speaker 1: have to think about Europe, how we have to think 387 00:23:13,200 --> 00:23:16,320 Speaker 1: about dealing with autocratic nations, not just Russia, but also 388 00:23:16,440 --> 00:23:19,240 Speaker 1: China the Middle East. And I think that's creating this 389 00:23:19,480 --> 00:23:22,560 Speaker 1: new shift where you're getting the commodity nations and the 390 00:23:22,600 --> 00:23:26,040 Speaker 1: autocrats aligning with China because China is a massive consumer 391 00:23:26,040 --> 00:23:28,679 Speaker 1: of what they're selling, they need it. I think Europe 392 00:23:28,720 --> 00:23:30,359 Speaker 1: is going to struggle. I think you're gonna start seeing 393 00:23:30,359 --> 00:23:32,399 Speaker 1: all these second order effects and you don't know what 394 00:23:32,440 --> 00:23:34,840 Speaker 1: it's gonna be, whether it's gonna be car harnesses or 395 00:23:35,040 --> 00:23:37,920 Speaker 1: neon production. Europe is gonna have a lot of trouble, 396 00:23:37,920 --> 00:23:39,200 Speaker 1: and food is going to be a problem over the 397 00:23:39,240 --> 00:23:41,119 Speaker 1: summer as well. So I think it makes sense to, 398 00:23:41,240 --> 00:23:44,040 Speaker 1: you know, avoid European assets right now. Well, and when 399 00:23:44,040 --> 00:23:46,680 Speaker 1: we're talking about food, that leads me to the idea 400 00:23:46,720 --> 00:23:49,359 Speaker 1: of just higher prices across the board, higher input costs 401 00:23:49,520 --> 00:23:51,800 Speaker 1: that companies are facing. You're starting to see that showing 402 00:23:51,840 --> 00:23:53,679 Speaker 1: up in earnings Bed Bath and Beyond. One example, it's 403 00:23:53,680 --> 00:23:55,960 Speaker 1: down about twelve at the opening bell after posting a 404 00:23:56,000 --> 00:23:58,520 Speaker 1: surprise lost warning of supply chain issues. And the interesting 405 00:23:58,560 --> 00:24:01,080 Speaker 1: line out of the company is they're starting to see 406 00:24:01,600 --> 00:24:05,800 Speaker 1: consumer demand taking a hit. Peter, are we reaching or 407 00:24:05,960 --> 00:24:08,119 Speaker 1: at the limit of the ability of these companies to 408 00:24:08,200 --> 00:24:11,720 Speaker 1: exercise pricing power and to pass costs on? Yeah, I 409 00:24:11,720 --> 00:24:13,560 Speaker 1: think that's very exact here right now. People are just 410 00:24:13,600 --> 00:24:15,560 Speaker 1: kind of getting hit left, right, and center right, whether 411 00:24:15,600 --> 00:24:17,680 Speaker 1: it's gas, whether it's food, whether it's all the goods 412 00:24:17,680 --> 00:24:19,879 Speaker 1: and services they're buying. So we're seeing that at the 413 00:24:19,920 --> 00:24:22,639 Speaker 1: same time, you're seeing mortgage rates go spike higher. So 414 00:24:22,680 --> 00:24:25,000 Speaker 1: I think you could get this double whammy where consumers 415 00:24:25,000 --> 00:24:26,800 Speaker 1: are a little bit spent out, they're tapped out, it's 416 00:24:26,840 --> 00:24:29,080 Speaker 1: getting too expensive for them to buy, and the housing 417 00:24:29,119 --> 00:24:31,800 Speaker 1: market could start turning very quickly. So that's why I 418 00:24:31,840 --> 00:24:33,520 Speaker 1: do think that the FAT is gonna be able to 419 00:24:33,520 --> 00:24:36,080 Speaker 1: maintain QUT, which is dangerous for stocks. I think they're 420 00:24:36,080 --> 00:24:37,679 Speaker 1: going to have to back pedal on all the rate 421 00:24:37,760 --> 00:24:39,919 Speaker 1: hike talk though, because I think that economy is more 422 00:24:39,960 --> 00:24:42,720 Speaker 1: precarious than people are talking about and Peter, this is 423 00:24:42,840 --> 00:24:45,119 Speaker 1: perhaps reflected in the banking sector as well. As we 424 00:24:45,200 --> 00:24:47,360 Speaker 1: passed through some of the earnings and take a look 425 00:24:47,359 --> 00:24:49,760 Speaker 1: at some of the opening bell moves. JP Morgan now 426 00:24:49,840 --> 00:24:53,240 Speaker 1: down uh substantially at one point down more than four percent. 427 00:24:53,359 --> 00:24:56,200 Speaker 1: Now down about three percent. But I was just looking, 428 00:24:56,359 --> 00:24:59,640 Speaker 1: that is the lowest since January five, two twenty one. 429 00:24:59,680 --> 00:25:04,400 Speaker 1: For sspective, JP Morgan gained twenty five percent last year. 430 00:25:04,400 --> 00:25:07,240 Speaker 1: We have almost erased those gains. Peter, what is this 431 00:25:07,320 --> 00:25:10,000 Speaker 1: saying at a point when we are seeing a resteepening 432 00:25:10,000 --> 00:25:12,480 Speaker 1: in the yield curve and you're actually getting some income 433 00:25:12,520 --> 00:25:16,240 Speaker 1: for overnight rates. Well, what I think is people overestimate 434 00:25:16,280 --> 00:25:18,280 Speaker 1: what two s tends means for banks. Most banks are 435 00:25:18,280 --> 00:25:21,040 Speaker 1: fairly well hedged and that affects their income. But that's 436 00:25:21,119 --> 00:25:23,199 Speaker 1: really slow and over time, where banks make a lot 437 00:25:23,240 --> 00:25:25,400 Speaker 1: of their money is on transactions. And if you see 438 00:25:25,400 --> 00:25:27,800 Speaker 1: that housing market slow, the number of re fives goes down, 439 00:25:27,880 --> 00:25:30,320 Speaker 1: the number of you mortgages go down. I think that's 440 00:25:30,320 --> 00:25:32,159 Speaker 1: a bigger hit if people start tapping out of their 441 00:25:32,200 --> 00:25:33,879 Speaker 1: credit cards and saying, hey, I better start paying this 442 00:25:33,920 --> 00:25:36,399 Speaker 1: off now because yields are getting too high. So I 443 00:25:36,440 --> 00:25:38,640 Speaker 1: think you could see a bit of a consumer lead 444 00:25:38,720 --> 00:25:40,840 Speaker 1: slow down, a housing led slowdown, and that to me 445 00:25:40,960 --> 00:25:42,720 Speaker 1: is much worse for bank earnings than anything to do 446 00:25:42,760 --> 00:25:44,920 Speaker 1: with two sends yield curve peter. A lot of people 447 00:25:44,920 --> 00:25:47,600 Speaker 1: will say this is an overbeared market. People have gotten 448 00:25:47,640 --> 00:25:50,080 Speaker 1: so bearish and so down in the dump set of time, 449 00:25:50,119 --> 00:25:52,359 Speaker 1: when companies are still doing pretty well. How do you 450 00:25:52,680 --> 00:25:55,600 Speaker 1: sort of pass through that noise which is real and 451 00:25:55,680 --> 00:25:58,480 Speaker 1: come up with some sort of conviction about the direction 452 00:25:58,480 --> 00:26:00,920 Speaker 1: of travel. You know, I think it's very tricky. You 453 00:26:01,000 --> 00:26:02,440 Speaker 1: try and sit here and read the signs in the 454 00:26:02,480 --> 00:26:05,600 Speaker 1: page and get lucky, like yesterday morning, where we're telling people, okay, 455 00:26:05,600 --> 00:26:07,760 Speaker 1: we're barish, but it felt like you really want to 456 00:26:07,800 --> 00:26:09,760 Speaker 1: pop after cp I, we got that that guy to 457 00:26:09,840 --> 00:26:13,040 Speaker 1: a chance to reload. So you're managing that, and it 458 00:26:13,080 --> 00:26:17,120 Speaker 1: does seem though it swings accessively to extremebarishnist to extreme bullishists. 459 00:26:17,280 --> 00:26:19,080 Speaker 1: One thing we spend a lot of time thinking about 460 00:26:19,160 --> 00:26:22,000 Speaker 1: is that there is very little liquidity either direction, right. 461 00:26:22,000 --> 00:26:23,760 Speaker 1: We always think about no liquidity on the way down. 462 00:26:23,920 --> 00:26:25,920 Speaker 1: There's no liquidity on the way up or down, which 463 00:26:25,920 --> 00:26:28,040 Speaker 1: means any signal you get is lost. So I think 464 00:26:28,040 --> 00:26:29,639 Speaker 1: you've gotta be a little bit in nimbo. You're running 465 00:26:29,640 --> 00:26:31,679 Speaker 1: smaller position size, and so I'm trading this from the 466 00:26:31,680 --> 00:26:33,800 Speaker 1: Berry side, and again at the back of that you 467 00:26:33,840 --> 00:26:35,440 Speaker 1: look for long ideas. I want to be lawns some 468 00:26:35,520 --> 00:26:38,120 Speaker 1: emerging markets, especially how it in South America. I love 469 00:26:38,119 --> 00:26:39,919 Speaker 1: the oil and energy space. I think we are going 470 00:26:39,960 --> 00:26:42,919 Speaker 1: to spend so much money not only building out sustainable energy, 471 00:26:42,960 --> 00:26:46,880 Speaker 1: but reinvesting and refocusing on traditional energy sources, the oil services, 472 00:26:46,880 --> 00:26:49,040 Speaker 1: those companies like that are going to do very, very well. 473 00:26:49,280 --> 00:26:51,919 Speaker 1: So there's opportunities within this whole kind of mess to 474 00:26:52,000 --> 00:26:54,680 Speaker 1: try and trade around. Peter. You know the Lehman Index, 475 00:26:54,760 --> 00:26:58,760 Speaker 1: the Bloomberg aggregate indexes, the credit index I believe is 476 00:26:58,800 --> 00:27:03,480 Speaker 1: down pretty much the largest draw down in history. That's 477 00:27:03,520 --> 00:27:07,200 Speaker 1: French Peter tiered academy for a bond bear market. I'm 478 00:27:07,280 --> 00:27:12,119 Speaker 1: fascinated by the equity language. Do you buy the bond dip? 479 00:27:14,080 --> 00:27:16,000 Speaker 1: So I want to start shifting into some bombs. I 480 00:27:16,000 --> 00:27:17,480 Speaker 1: think you are going to see people looking at this 481 00:27:17,520 --> 00:27:19,720 Speaker 1: and saying, Okay, this a little bit more permanent, and 482 00:27:19,880 --> 00:27:22,640 Speaker 1: to me, when we had quantitative easy, what that does 483 00:27:22,760 --> 00:27:24,720 Speaker 1: is at every part of the point on the yield 484 00:27:24,760 --> 00:27:27,640 Speaker 1: curve and risker, someone gets pushed out, and I think 485 00:27:27,640 --> 00:27:30,600 Speaker 1: the reverse is gonna happen on the way back end. Peter. 486 00:27:31,200 --> 00:27:33,720 Speaker 1: Come on, we're friends. We've been doing this a while. Peter. 487 00:27:33,840 --> 00:27:37,960 Speaker 1: You're an academy of securities. Your monthly statement is delivered 488 00:27:38,000 --> 00:27:40,720 Speaker 1: by carrier pigeon or whatever they do. You know, you're 489 00:27:40,680 --> 00:27:43,199 Speaker 1: a bunch of davy guys. Great, I'm looking at my 490 00:27:43,240 --> 00:27:48,040 Speaker 1: monthly statement and I'm self three years yield or four 491 00:27:48,119 --> 00:27:52,800 Speaker 1: years yield. You're telling me to buy the dip. First off, 492 00:27:52,840 --> 00:27:55,639 Speaker 1: I think on the retail side, everyone just keeps contributing 493 00:27:55,760 --> 00:27:58,040 Speaker 1: to a G G and B n D monthly. It's 494 00:27:58,080 --> 00:28:00,520 Speaker 1: in there for one case, I think already seen a 495 00:28:00,520 --> 00:28:01,919 Speaker 1: lot of selling pressures. When you look at the e 496 00:28:01,960 --> 00:28:03,639 Speaker 1: p s, there's a lot of men already a lot 497 00:28:03,640 --> 00:28:05,479 Speaker 1: of outflows. So I think people are able to reload 498 00:28:05,560 --> 00:28:08,240 Speaker 1: right now. It's the institutional investors that are driving. I 499 00:28:08,240 --> 00:28:09,960 Speaker 1: think people are starting to take a little bit of 500 00:28:10,000 --> 00:28:13,080 Speaker 1: a niblett yields here. What does that mean for the 501 00:28:13,119 --> 00:28:15,879 Speaker 1: equity market, Peter? When it didn't seem to blink at 502 00:28:15,920 --> 00:28:18,040 Speaker 1: yield at two and three quarters of a percent, are 503 00:28:18,080 --> 00:28:20,440 Speaker 1: we going to reach the point where it does indeed 504 00:28:20,480 --> 00:28:24,120 Speaker 1: blink and the Tina thesis is called into question. Yeah, 505 00:28:24,160 --> 00:28:25,600 Speaker 1: I think we're at that stage right now. I think 506 00:28:25,640 --> 00:28:28,800 Speaker 1: we're already seeing that where if you tackle a bitcoin right, 507 00:28:28,800 --> 00:28:31,720 Speaker 1: it keeps struggling, and as yields go higher risk assets. 508 00:28:31,720 --> 00:28:35,359 Speaker 1: When you look at the the higher risk text stocks right, 509 00:28:35,359 --> 00:28:38,320 Speaker 1: they've done worse. So I think you're seeing people repriced 510 00:28:38,440 --> 00:28:41,320 Speaker 1: risk and they're focused on steady growth, they're focused on dividends, 511 00:28:41,320 --> 00:28:43,960 Speaker 1: they're looking for opportunity, they're looking for energy. So I 512 00:28:44,000 --> 00:28:46,440 Speaker 1: think you're gonna again, I'm not comfortable with equities until 513 00:28:46,440 --> 00:28:49,560 Speaker 1: they get back to both the March levels of this year, 514 00:28:49,720 --> 00:28:52,720 Speaker 1: which for most coincides with one level. So I think 515 00:28:52,760 --> 00:28:55,880 Speaker 1: that's where we get back. It's another you know something 516 00:28:55,920 --> 00:28:58,000 Speaker 1: on the SMP maybe a bit lower. That's where I 517 00:28:58,000 --> 00:29:01,560 Speaker 1: can get constructive again. What's going to be the leadership 518 00:29:01,600 --> 00:29:04,240 Speaker 1: to the downside if that makes sense, Peter? What what 519 00:29:04,440 --> 00:29:07,560 Speaker 1: creates the drag? What area of the equity market in particular? 520 00:29:08,200 --> 00:29:09,840 Speaker 1: And I think it's still gonna be this, you know, 521 00:29:09,880 --> 00:29:12,680 Speaker 1: the big high tax stocks where people question the valuations, 522 00:29:12,680 --> 00:29:14,160 Speaker 1: where people say, well, you know what, we've got a 523 00:29:14,200 --> 00:29:16,160 Speaker 1: good run. We can take some gains and look for 524 00:29:16,240 --> 00:29:18,760 Speaker 1: something else, and maybe we just want to be a 525 00:29:18,760 --> 00:29:20,800 Speaker 1: little bit conservative with so much going on right now. 526 00:29:21,280 --> 00:29:23,360 Speaker 1: Peter Sheer, thank you so much for being with us 527 00:29:23,360 --> 00:29:26,160 Speaker 1: of Academy Security as head of macro strategy, some really 528 00:29:26,160 --> 00:29:31,040 Speaker 1: insightful moments. This is the Bloomberg Surveillance Podcast. Thanks for listening. 529 00:29:31,400 --> 00:29:34,720 Speaker 1: Join us live weekdays from seven to ten am Eastern 530 00:29:34,960 --> 00:29:39,000 Speaker 1: on Bloomberg Radio and on Bloomberg Television each day from 531 00:29:39,080 --> 00:29:44,320 Speaker 1: six to nine am for insight from the best in economics, finance, investment, 532 00:29:44,480 --> 00:29:49,520 Speaker 1: and international relations. And subscribe to the Surveillance podcast on 533 00:29:49,600 --> 00:29:53,400 Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course on 534 00:29:53,520 --> 00:29:57,640 Speaker 1: the terminal. I'm Tom Keene, and this is Bloomberg