1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:21,240 Speaker 1: on Apple car Play or Android Auto with the Bloomberg 4 00:00:21,320 --> 00:00:24,840 Speaker 1: Business App. Listen on demand wherever you get your podcasts, 5 00:00:25,280 --> 00:00:26,920 Speaker 1: or watch us live on YouTube. 6 00:00:27,120 --> 00:00:30,680 Speaker 2: Julian Emmanuel starts us strowing this morning single best paragraph 7 00:00:30,720 --> 00:00:34,960 Speaker 2: I've seen on innovation, bullmarkets and draw down quote. 8 00:00:35,240 --> 00:00:39,159 Speaker 3: Don't fear a bullmarket draw down. It's normal. It's not 9 00:00:39,240 --> 00:00:42,239 Speaker 3: a correction. Even it's sort of like a video was 10 00:00:42,280 --> 00:00:45,519 Speaker 3: down four days in a row. How do you respond 11 00:00:45,560 --> 00:00:45,839 Speaker 3: to that? 12 00:00:45,960 --> 00:00:50,199 Speaker 2: As an investor not as sophisticated as Julian Emmanuel. 13 00:00:49,920 --> 00:00:51,200 Speaker 3: You have to think long term. 14 00:00:51,240 --> 00:00:54,160 Speaker 4: And again you hit it a few moments ago, people 15 00:00:54,240 --> 00:00:57,320 Speaker 4: up in the snack court getting teary eyed because they're 16 00:00:57,360 --> 00:00:58,440 Speaker 4: sending their kids. 17 00:00:58,160 --> 00:00:58,880 Speaker 3: Back to school. 18 00:00:59,280 --> 00:01:05,000 Speaker 4: September never fails to disappoint the bulls. There's always always 19 00:01:05,000 --> 00:01:08,200 Speaker 4: a time, and it started that way yesterday. And from 20 00:01:08,280 --> 00:01:11,280 Speaker 4: our point of view, none of the elements that end 21 00:01:11,400 --> 00:01:15,400 Speaker 4: bull markets are present. And so you know, even if 22 00:01:15,440 --> 00:01:18,640 Speaker 4: you look back at all the great bubbles nineteen ninety nine, 23 00:01:18,680 --> 00:01:23,000 Speaker 4: for instance, you had four discrete ten percent plus drawdowns 24 00:01:23,280 --> 00:01:25,920 Speaker 4: in a nine month period where the Nasdaq rowse over 25 00:01:25,959 --> 00:01:26,880 Speaker 4: one hundred percent. 26 00:01:27,560 --> 00:01:29,399 Speaker 3: So what are we doing here? 27 00:01:29,520 --> 00:01:33,080 Speaker 5: Are we sticking with the big tech names, Julian, or 28 00:01:33,080 --> 00:01:36,360 Speaker 5: are we trying to find some value outside of what 29 00:01:36,560 --> 00:01:38,039 Speaker 5: has worked so well for so long. 30 00:01:38,160 --> 00:01:43,360 Speaker 4: So our view into twenty twenty six is that big 31 00:01:43,440 --> 00:01:46,920 Speaker 4: tech will continue to lead. This is an AI driven 32 00:01:47,120 --> 00:01:53,280 Speaker 4: bull market, Okay, but again Stomaching that volatility isn't necessarily 33 00:01:53,480 --> 00:01:57,080 Speaker 4: for everyone. And frankly, what we're trying to do is 34 00:01:57,400 --> 00:02:00,440 Speaker 4: sort of isolate the people that would prefer to have 35 00:02:00,480 --> 00:02:03,800 Speaker 4: an element of hedging in the portfolio, because quite honestly, 36 00:02:04,320 --> 00:02:07,120 Speaker 4: if you sort of transfer a little bit of risk, 37 00:02:07,680 --> 00:02:12,160 Speaker 4: it enables you to buy the dip that's inevitable. So 38 00:02:12,240 --> 00:02:16,239 Speaker 4: for us, that's low evaluation stocks and a little bit 39 00:02:17,080 --> 00:02:18,040 Speaker 4: of a defensive tilt. 40 00:02:18,120 --> 00:02:21,639 Speaker 2: Can you go into La Techdor downtown the steakhouse Daniel 41 00:02:21,600 --> 00:02:24,960 Speaker 2: Blue Steakhouse in the place the place falls quiet when 42 00:02:25,040 --> 00:02:29,160 Speaker 2: Juliana Manuart walks in because you write the single best 43 00:02:29,560 --> 00:02:34,760 Speaker 2: earning summary every day of the earning season. Nobody's talking 44 00:02:34,800 --> 00:02:37,959 Speaker 2: about quarter ending September thirty. How do you and Ed 45 00:02:38,040 --> 00:02:41,920 Speaker 2: Hyman frame out revenue growth off nominal. 46 00:02:41,520 --> 00:02:46,239 Speaker 3: GDP and the earning season it begins October fourteenth. 47 00:02:46,320 --> 00:02:50,079 Speaker 4: Well, it's it isn't going to be as strong as 48 00:02:50,160 --> 00:02:52,520 Speaker 4: these last couple because it's. 49 00:02:52,440 --> 00:02:55,000 Speaker 6: Just not I just said that last time I got 50 00:02:55,000 --> 00:02:58,480 Speaker 6: it wrong, and well no, no, actually actually the person 51 00:02:58,560 --> 00:03:02,959 Speaker 6: that concox our surprise guys in disease actually got it right. 52 00:03:03,560 --> 00:03:08,200 Speaker 4: Hats off to my colleague Stan Schipley for that. But frankly, 53 00:03:08,960 --> 00:03:13,959 Speaker 4: what it says in general is there's more to all 54 00:03:14,000 --> 00:03:17,760 Speaker 4: of this than just the bump from inflation. There is 55 00:03:18,360 --> 00:03:24,360 Speaker 4: organic growth going on across business, and frankly you're seeing it, 56 00:03:24,520 --> 00:03:28,680 Speaker 4: you know, really broad based, given the fact that what's 57 00:03:28,800 --> 00:03:32,400 Speaker 4: different about this bull market as opposed to the Internet 58 00:03:32,400 --> 00:03:36,520 Speaker 4: in the nineteen nineties is you're seeing the vast majority 59 00:03:36,640 --> 00:03:41,400 Speaker 4: of stocks advancing together. Tech is outperforming, but you're seeing 60 00:03:41,440 --> 00:03:42,480 Speaker 4: them advance together. 61 00:03:43,880 --> 00:03:45,760 Speaker 5: What do you think we're going to get from this 62 00:03:45,880 --> 00:03:48,120 Speaker 5: Federal Reserve? What does a market need from the Fed? 63 00:03:48,200 --> 00:03:52,240 Speaker 5: Does a market need a big easing kind of play 64 00:03:52,240 --> 00:03:54,040 Speaker 5: over the next twelve months or. 65 00:03:54,680 --> 00:04:03,160 Speaker 4: Not the market expects seizing. Certainly, the political will seems 66 00:04:03,160 --> 00:04:07,920 Speaker 4: to be pointing towards more easing rather than less. I 67 00:04:07,960 --> 00:04:10,720 Speaker 4: would say that if you look at the last couple 68 00:04:10,800 --> 00:04:17,839 Speaker 4: of years, provided that the direction of travel in terms 69 00:04:17,880 --> 00:04:22,120 Speaker 4: of the economy is an expected trough in BROW in 70 00:04:22,200 --> 00:04:25,440 Speaker 4: the fourth quarter, and then you get gradually higher growth. 71 00:04:25,880 --> 00:04:29,040 Speaker 4: We don't necessarily need that degree of easing, but we 72 00:04:29,120 --> 00:04:33,440 Speaker 4: certainly do require a cut in September. 73 00:04:33,480 --> 00:04:37,360 Speaker 2: How do you respond to the idea that retail has 74 00:04:37,400 --> 00:04:41,240 Speaker 2: a wall of money, they have pension money. Eric Belchuna says, 75 00:04:41,320 --> 00:04:45,280 Speaker 2: it's all going into ETFs almost is an immovable force, 76 00:04:45,680 --> 00:04:48,159 Speaker 2: like an aircraft carrier going through the water. 77 00:04:48,279 --> 00:04:50,720 Speaker 3: How does that change guessing the market? 78 00:04:50,960 --> 00:04:55,240 Speaker 4: Well, Jack Bogel had been talking about this for twenty 79 00:04:55,360 --> 00:05:01,440 Speaker 4: thirty years previously, and what it actually does at the margin, 80 00:05:02,000 --> 00:05:06,640 Speaker 4: because there's so much money going into ETFs, is that 81 00:05:06,800 --> 00:05:10,240 Speaker 4: it gives you more of an opportunity to isolate the 82 00:05:10,279 --> 00:05:14,599 Speaker 4: winners and the losers because there are mispricings at the 83 00:05:14,640 --> 00:05:18,440 Speaker 4: individual stock level, and we've seen that throughout this bull market, 84 00:05:18,720 --> 00:05:22,640 Speaker 4: because correlations among stocks are at some of the lowest 85 00:05:22,720 --> 00:05:24,520 Speaker 4: levels they've been in a generation. 86 00:05:25,400 --> 00:05:28,560 Speaker 5: When you go talk to your institutional investor clients joining 87 00:05:28,680 --> 00:05:30,560 Speaker 5: around the world, what do they want to talk about? 88 00:05:30,640 --> 00:05:33,120 Speaker 5: What's the question they really hit you with the most. 89 00:05:33,640 --> 00:05:40,680 Speaker 4: It's certainly all surrounding AI. You know, yeah, surprise, surprise, 90 00:05:41,240 --> 00:05:45,680 Speaker 4: and then the other surprise is valuations. Look, it's an 91 00:05:45,800 --> 00:05:51,360 Speaker 4: uncomfortable time if you're sensitive to valuations, and generally we are, 92 00:05:51,720 --> 00:05:56,280 Speaker 4: but this is an environment that all the fundamental underlying 93 00:05:56,839 --> 00:06:01,560 Speaker 4: trends support, you know, persist didn't higher valuation. 94 00:06:01,720 --> 00:06:04,320 Speaker 2: One final question, way Lee from Blackrock, So she's gonna 95 00:06:04,400 --> 00:06:06,080 Speaker 2: leave if if you don't answer this? 96 00:06:06,120 --> 00:06:08,640 Speaker 3: Where's Dheimen on the American economy? Right now? 97 00:06:10,320 --> 00:06:14,840 Speaker 4: We're troughing, and I go back to April when the 98 00:06:15,000 --> 00:06:16,640 Speaker 4: entire world thought we were going. 99 00:06:16,560 --> 00:06:17,799 Speaker 3: To have her Asuay Wally didn't. 100 00:06:17,920 --> 00:06:21,640 Speaker 4: She was long well evercore is I certainly did not, 101 00:06:22,960 --> 00:06:27,000 Speaker 4: and we don't see it either. And we also see 102 00:06:27,279 --> 00:06:33,560 Speaker 4: inflation peaking in the fourth quarter and gently falling over valuable. 103 00:06:33,600 --> 00:06:36,039 Speaker 3: Julian Emmanuel, thank you so much for getting us as 104 00:06:36,080 --> 00:06:37,520 Speaker 3: started to stay with us. 105 00:06:37,760 --> 00:06:41,000 Speaker 2: More from Bloomberg Surveillance coming up after this. 106 00:06:48,240 --> 00:06:51,800 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch US Live 107 00:06:51,880 --> 00:06:55,039 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 108 00:06:55,120 --> 00:06:58,760 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 109 00:06:58,920 --> 00:06:59,920 Speaker 1: watch US Live on. 110 00:07:00,120 --> 00:07:04,320 Speaker 2: To Juliana Manuel the Way, lead global chief investment strategist 111 00:07:04,600 --> 00:07:06,880 Speaker 2: at Blackrock well Waitalie. We can do like a two 112 00:07:06,920 --> 00:07:10,360 Speaker 2: hour conversation here, but let me just dovetail it over 113 00:07:10,960 --> 00:07:16,040 Speaker 2: to the bond. As to me, it still reads idiosyncratic 114 00:07:17,000 --> 00:07:18,920 Speaker 2: story by story. 115 00:07:18,840 --> 00:07:21,760 Speaker 3: Versus a large global bond sell off. Do I have 116 00:07:21,880 --> 00:07:22,320 Speaker 3: that right? 117 00:07:24,000 --> 00:07:30,040 Speaker 7: There is a fundamental theme underpinning this bond yield reprising 118 00:07:30,640 --> 00:07:34,560 Speaker 7: and this is to do with Tim Premier needing to 119 00:07:34,720 --> 00:07:40,480 Speaker 7: reprise to reflect the deeper fiscal trajectory and the broadly 120 00:07:40,800 --> 00:07:46,880 Speaker 7: still persistent inflationary pressure. Now there is a country specific 121 00:07:46,960 --> 00:07:51,680 Speaker 7: flavor to the individual country bond market. But for the 122 00:07:51,720 --> 00:07:54,600 Speaker 7: reasons that I just laid out, we have long held 123 00:07:54,760 --> 00:07:59,480 Speaker 7: the view that long dated bond yields needs to reprice higher. 124 00:08:00,040 --> 00:08:01,280 Speaker 8: They never reprise gradually. 125 00:08:01,360 --> 00:08:05,240 Speaker 7: They always reprise suddenly, which is where we are right now. 126 00:08:05,440 --> 00:08:06,280 Speaker 3: That's very suddenly. 127 00:08:06,360 --> 00:08:09,960 Speaker 2: Really, what does it mean when out past ten years 128 00:08:10,040 --> 00:08:10,960 Speaker 2: we reprice? 129 00:08:11,640 --> 00:08:14,360 Speaker 3: What does it mean for the shorter term paper that 130 00:08:14,440 --> 00:08:16,400 Speaker 3: most of our listeners and viewers are in. 131 00:08:17,960 --> 00:08:21,440 Speaker 7: So, Thomas, you know, we have had the view of 132 00:08:22,360 --> 00:08:25,720 Speaker 7: the curve needing to steepen. So in part there is 133 00:08:25,880 --> 00:08:28,480 Speaker 7: a underweight to the long end of the curve, but 134 00:08:28,520 --> 00:08:33,000 Speaker 7: there is also a preference, an implicit overweight to the 135 00:08:33,040 --> 00:08:35,920 Speaker 7: front end of the curve, and so far this year 136 00:08:35,920 --> 00:08:39,960 Speaker 7: we have seen significant steepening, but more relative to the 137 00:08:40,080 --> 00:08:42,320 Speaker 7: very long end, so on poking about thirty year rather 138 00:08:42,440 --> 00:08:46,280 Speaker 7: than ten years. But what has also happened is that 139 00:08:46,559 --> 00:08:50,720 Speaker 7: the front end of the curve actually priced in more raycards, 140 00:08:51,200 --> 00:08:53,680 Speaker 7: especially kind of going out to the end of next year. 141 00:08:53,760 --> 00:08:57,600 Speaker 7: So that is further supporting this deepening view, meaning that 142 00:08:57,679 --> 00:09:00,439 Speaker 7: they actually played out better than we expect. We were 143 00:09:00,480 --> 00:09:04,079 Speaker 7: expecting to just collect coupon from the front end of 144 00:09:04,120 --> 00:09:07,320 Speaker 7: the curve, and we're also getting capital appreciation because of 145 00:09:07,320 --> 00:09:12,160 Speaker 7: the rape repricing rape path repricing, so that's done really 146 00:09:12,200 --> 00:09:14,960 Speaker 7: well and almost almost too well. We still have the 147 00:09:15,040 --> 00:09:18,800 Speaker 7: steepening view, but because of the very significant steepening that 148 00:09:18,840 --> 00:09:21,680 Speaker 7: we have already seen relative especially kind of all the 149 00:09:21,679 --> 00:09:24,400 Speaker 7: way out of thirty years, I think that view is 150 00:09:24,440 --> 00:09:26,720 Speaker 7: a lower connection at this point. 151 00:09:27,040 --> 00:09:30,360 Speaker 5: Wait, we saw early this year when there's all the 152 00:09:30,559 --> 00:09:34,520 Speaker 5: concern about some of the tariff policies, a mi A 153 00:09:34,600 --> 00:09:38,120 Speaker 5: shift and asset allocation. Outside of the US, the rest 154 00:09:38,160 --> 00:09:41,360 Speaker 5: of the world, including European equities and so on. 155 00:09:42,559 --> 00:09:44,080 Speaker 8: How do you see that these days? 156 00:09:44,120 --> 00:09:47,320 Speaker 5: How do you think about geographic allocation of capital? 157 00:09:48,600 --> 00:09:52,840 Speaker 7: I would say from a part of consideration alone, that 158 00:09:52,960 --> 00:10:00,520 Speaker 7: does not immediately translate to international markets over the US 159 00:10:00,559 --> 00:10:05,000 Speaker 7: market because it has global read across, and international market 160 00:10:05,040 --> 00:10:08,560 Speaker 7: have also come under pressure because of tariff read through, 161 00:10:09,040 --> 00:10:11,640 Speaker 7: and we think about kind of the dynamics of negotiations. 162 00:10:11,720 --> 00:10:16,640 Speaker 7: It does not automatically mean that tariffs because it's mostly 163 00:10:16,679 --> 00:10:19,480 Speaker 7: uncertainty coming from the US. It needs to be negative 164 00:10:19,480 --> 00:10:22,319 Speaker 7: for US and more positive for international market. 165 00:10:22,480 --> 00:10:24,199 Speaker 8: What's happened so far this year in. 166 00:10:24,200 --> 00:10:28,720 Speaker 7: Terms of the our performance of international market, specifically Europe 167 00:10:28,960 --> 00:10:32,600 Speaker 7: and may be parts of emergent market relative to the US, 168 00:10:32,640 --> 00:10:35,680 Speaker 7: has everything to do with a weaker dollar now. A 169 00:10:35,720 --> 00:10:38,720 Speaker 7: weaker dollar now close to ten percent down on the year, 170 00:10:38,920 --> 00:10:42,120 Speaker 7: has everything to do with number one cash path has 171 00:10:42,240 --> 00:10:46,120 Speaker 7: reprised the lower and number two term premier has reprised higher, 172 00:10:46,480 --> 00:10:49,319 Speaker 7: and the combination of both of those things would lead 173 00:10:49,360 --> 00:10:52,319 Speaker 7: to a weaker dollar, which we have had, and that 174 00:10:52,400 --> 00:10:57,120 Speaker 7: has meant international markets are looking on a relative basis better. 175 00:10:57,320 --> 00:11:01,880 Speaker 7: But the bigger fundamental picture remains when we look at earnings, 176 00:11:01,920 --> 00:11:07,280 Speaker 7: it's still mostly US markets that are driving meaningful earnings growth, 177 00:11:07,400 --> 00:11:10,920 Speaker 7: and within US is still around the ecosystem of technology 178 00:11:10,960 --> 00:11:15,920 Speaker 7: AI tech plus international markets are really struggling to grow earnings. 179 00:11:16,120 --> 00:11:18,800 Speaker 7: The emerging markets are doing better, but there's a translation effact. 180 00:11:19,120 --> 00:11:22,440 Speaker 2: Well, in one final question, the United Kingdom is an 181 00:11:22,520 --> 00:11:26,200 Speaker 2: ungodly mess. We're going to be governors Marcus Ashworth folks 182 00:11:26,200 --> 00:11:28,040 Speaker 2: out with a brilliant essay today. 183 00:11:28,040 --> 00:11:29,839 Speaker 3: We hope to get them on tomorrow. 184 00:11:30,240 --> 00:11:33,480 Speaker 2: Walley, how does that work out? I mean with Liz Trust, 185 00:11:33,840 --> 00:11:37,000 Speaker 2: it was a true crisis. Are we like a list 186 00:11:37,040 --> 00:11:40,240 Speaker 2: trust moment? Or is this different with the Chancellor of 187 00:11:40,280 --> 00:11:40,959 Speaker 2: the Exchequer? 188 00:11:42,480 --> 00:11:46,080 Speaker 7: Well, UK seems specific, but the challenge that they face 189 00:11:46,760 --> 00:11:50,040 Speaker 7: is not specific to the UK. UK is perhaps more 190 00:11:50,080 --> 00:11:55,520 Speaker 7: emblematic and more pronounced. But the bigger picture is this 191 00:11:55,559 --> 00:11:59,520 Speaker 7: is a tougher trade off environment facing the government and 192 00:11:59,600 --> 00:12:02,560 Speaker 7: facing central banks. The government is facing a taugher trade 193 00:12:02,559 --> 00:12:06,400 Speaker 7: off between fiscal discipline and also the need to spend 194 00:12:06,440 --> 00:12:09,240 Speaker 7: more to boost growth, and a central bank is facing 195 00:12:09,280 --> 00:12:13,160 Speaker 7: a tafa trade off between supporting growth and managing price 196 00:12:13,360 --> 00:12:16,920 Speaker 7: stability and inflation. So in this world shaped by a 197 00:12:17,040 --> 00:12:21,120 Speaker 7: supply constraint because of mega forces, We've talked a lot 198 00:12:21,160 --> 00:12:25,960 Speaker 7: about them. Tafer tradeoff is really characterizing the UK in particular, 199 00:12:26,080 --> 00:12:29,160 Speaker 7: but across the major economies. 200 00:12:29,520 --> 00:12:31,360 Speaker 3: Too. Short of visit, Whaley would love to get you 201 00:12:31,360 --> 00:12:34,560 Speaker 3: in the studio here when you can again. Wally is 202 00:12:34,600 --> 00:12:36,679 Speaker 3: with Blackrock. Stay with us. 203 00:12:36,679 --> 00:12:39,920 Speaker 2: More from Bloomberg Surveillance coming up after this. 204 00:12:47,160 --> 00:12:50,760 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 205 00:12:50,840 --> 00:12:54,000 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 206 00:12:54,080 --> 00:12:57,720 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or 207 00:12:57,880 --> 00:12:59,000 Speaker 1: watch us live on. 208 00:12:58,920 --> 00:13:03,479 Speaker 2: YouTube with us with City Group, head of Emerging Market Economics, 209 00:13:03,559 --> 00:13:08,320 Speaker 2: Chief Asia Economists with a huge platform for the International Bank. 210 00:13:08,440 --> 00:13:11,559 Speaker 2: You're at the University of Philippines. You're flying to Logan. 211 00:13:11,960 --> 00:13:14,880 Speaker 2: Good morning, your first day at Harvard. What was it 212 00:13:15,000 --> 00:13:18,240 Speaker 2: like your first day at Harvard in their PhD program? 213 00:13:18,320 --> 00:13:21,280 Speaker 9: Well, this is back in the mid nineties. Completely intimidated. 214 00:13:21,440 --> 00:13:24,200 Speaker 9: But hey, I'm a product of globalization. I mean, here's 215 00:13:24,200 --> 00:13:26,959 Speaker 9: someone who came into Philippines, had nothing and it was 216 00:13:26,960 --> 00:13:27,760 Speaker 9: a great experience. 217 00:13:28,400 --> 00:13:30,560 Speaker 3: Who was your advisors at Harvard? 218 00:13:30,679 --> 00:13:33,640 Speaker 8: So Martin, Marty Felsen, you're the privilege of Martin. 219 00:13:33,600 --> 00:13:37,679 Speaker 9: Absolutely and David Cutler and you know other professor, fantastic professor. 220 00:13:37,960 --> 00:13:40,120 Speaker 3: That's a good way to migrate to the fiscal debate. 221 00:13:40,200 --> 00:13:43,240 Speaker 2: He got a little bit of that with Marty Feltsiegin folks, 222 00:13:43,240 --> 00:13:46,840 Speaker 2: he was Professor Felsain was a huge supporter of what 223 00:13:46,880 --> 00:13:50,600 Speaker 2: I've done for years. How messed up is it? Or 224 00:13:50,760 --> 00:13:54,560 Speaker 2: is it idiosyncratic right now? Where the Philippines say we'll 225 00:13:54,559 --> 00:13:57,000 Speaker 2: do well in Japan's killing over. 226 00:13:57,360 --> 00:13:59,840 Speaker 9: No, it's really interesting the divergence we're seeing between emerging 227 00:13:59,880 --> 00:14:03,040 Speaker 9: markets and developed economies. And I guess that's probably symptomatic 228 00:14:03,080 --> 00:14:05,080 Speaker 9: of the fact that so many emerging market countries have 229 00:14:05,120 --> 00:14:06,839 Speaker 9: gone through repeated bouts. 230 00:14:06,679 --> 00:14:07,840 Speaker 8: Of crisis in the past. 231 00:14:07,880 --> 00:14:10,000 Speaker 9: So in a way they've learned to kind of be 232 00:14:10,080 --> 00:14:14,000 Speaker 9: They've been disciplined by the market to keep their fiscal indexes. 233 00:14:14,120 --> 00:14:16,040 Speaker 8: Yes, but you look at us. You know, I'm an 234 00:14:16,080 --> 00:14:17,080 Speaker 8: exorbitant privilege. 235 00:14:17,080 --> 00:14:18,760 Speaker 9: So if you've gotten away with a lot of things, 236 00:14:18,880 --> 00:14:21,680 Speaker 9: you know, it takes a lot politically, it becomes very 237 00:14:21,680 --> 00:14:24,560 Speaker 9: difficult to actually self correct. So it is interesting to 238 00:14:24,560 --> 00:14:27,240 Speaker 9: see some of these divergences happening. But of course, you know, 239 00:14:27,320 --> 00:14:28,880 Speaker 9: we are still getting in. I mean, a lot of 240 00:14:28,880 --> 00:14:30,960 Speaker 9: the sell off we're seeing in developed markets obviously seem 241 00:14:31,000 --> 00:14:33,760 Speaker 9: to impact a lot more what's happening in DM markets 242 00:14:33,760 --> 00:14:37,120 Speaker 9: for a lot of adiosyncratic reasons. And then we'll see 243 00:14:37,120 --> 00:14:40,760 Speaker 9: to what extent parts of emerging markets can be relatively 244 00:14:40,800 --> 00:14:41,480 Speaker 9: more insulated. 245 00:14:42,320 --> 00:14:44,720 Speaker 3: You're based in Hong Kong. Yes, you're coming here to 246 00:14:44,760 --> 00:14:45,120 Speaker 3: New York. 247 00:14:45,200 --> 00:14:48,680 Speaker 5: You're meeting institutional investor clients. What's your message today that Asia? 248 00:14:48,960 --> 00:14:51,080 Speaker 9: Look, I think the message is we are slowing down. 249 00:14:51,120 --> 00:14:52,960 Speaker 9: I mean, we've had a lot of positive surprises in 250 00:14:53,000 --> 00:14:55,000 Speaker 9: second quarter GDP growth, but I think there's really a 251 00:14:55,080 --> 00:14:57,200 Speaker 9: risk going in the second half with the reversal of 252 00:14:57,240 --> 00:14:59,680 Speaker 9: the export payback effects because a lot of these tariffs 253 00:15:00,240 --> 00:15:02,640 Speaker 9: kick in belatedly, and then all this uncertainty is going 254 00:15:02,680 --> 00:15:05,040 Speaker 9: to have an impact on capets, and capex is a 255 00:15:05,120 --> 00:15:08,360 Speaker 9: very trade intensive activity. So overall, I mean, if Asia 256 00:15:08,400 --> 00:15:11,000 Speaker 9: hasn't really had much inflation, I mean, even before all 257 00:15:11,040 --> 00:15:14,080 Speaker 9: of this, we've had very benign core inflationary pressures, and 258 00:15:14,080 --> 00:15:16,560 Speaker 9: so I really think there's not a lot of hurdles 259 00:15:16,560 --> 00:15:19,440 Speaker 9: for central banks to continue to be relatively you know, 260 00:15:19,520 --> 00:15:22,640 Speaker 9: dubbish and benign. And that's kind of the the macro 261 00:15:22,680 --> 00:15:25,520 Speaker 9: theme is really more of a slowdown theme. But having 262 00:15:25,600 --> 00:15:28,120 Speaker 9: said that, despite the slowdown, we can still have some 263 00:15:28,200 --> 00:15:31,240 Speaker 9: kind of disconnect between macro fundamentals and financial markets. 264 00:15:31,280 --> 00:15:33,320 Speaker 8: Look, what's happening to Chinese equities. 265 00:15:33,240 --> 00:15:33,480 Speaker 3: So. 266 00:15:34,880 --> 00:15:37,720 Speaker 5: How are the terrors playing out across Asia? 267 00:15:37,840 --> 00:15:38,560 Speaker 3: Rit large? 268 00:15:38,840 --> 00:15:40,880 Speaker 9: No, So it's really kind of interesting because at the 269 00:15:40,880 --> 00:15:43,160 Speaker 9: start of the year, you know, Trump campaign sixty percent 270 00:15:43,200 --> 00:15:45,520 Speaker 9: tariff on China and ten percent on everyone else, and 271 00:15:45,800 --> 00:15:47,320 Speaker 9: there was a lot of hope that there will be 272 00:15:47,320 --> 00:15:49,680 Speaker 9: a capex supply chain move to other parts of Asia, 273 00:15:49,760 --> 00:15:53,160 Speaker 9: like Asion. But if anything, what's happened is China's net 274 00:15:53,160 --> 00:15:55,920 Speaker 9: export engine has actually been stronger than expected, and the 275 00:15:56,000 --> 00:15:59,280 Speaker 9: tiref differential is narrower than expected. And then when you 276 00:15:59,280 --> 00:16:02,000 Speaker 9: factor in this shipment levee, it even complicates things. So 277 00:16:02,040 --> 00:16:05,440 Speaker 9: in a way, this rebalancing is kind of not really happening. 278 00:16:05,680 --> 00:16:08,160 Speaker 9: And so I think, you know, you know, I mean, 279 00:16:08,200 --> 00:16:10,440 Speaker 9: obviously it's still a challenge. I do think we're not 280 00:16:10,520 --> 00:16:12,960 Speaker 9: seeing it fully into data because of this front loading, 281 00:16:13,040 --> 00:16:15,600 Speaker 9: but we are starting to see parts of Southeast Asia 282 00:16:15,720 --> 00:16:19,200 Speaker 9: really see a slow down in exports, like Thailand, Malaysia, Singapore, 283 00:16:19,560 --> 00:16:22,520 Speaker 9: and I think this kind of excess deflationary pressure, excess 284 00:16:22,520 --> 00:16:26,040 Speaker 9: supply out of China impacting manufactured goods is a challenge, 285 00:16:26,200 --> 00:16:27,920 Speaker 9: so overlay. 286 00:16:27,440 --> 00:16:28,840 Speaker 3: A dollar call here. 287 00:16:29,000 --> 00:16:31,480 Speaker 2: I don't want you to do effect strategy for City group, 288 00:16:32,000 --> 00:16:33,960 Speaker 2: but to me, the heart of the matter is the 289 00:16:34,000 --> 00:16:38,560 Speaker 2: release valve of the system, and a given structured trilemma 290 00:16:38,960 --> 00:16:40,360 Speaker 2: is currency movement. 291 00:16:41,520 --> 00:16:46,440 Speaker 3: How does the steam out of the pressure cooker in 292 00:16:46,560 --> 00:16:49,800 Speaker 3: the dollar work out in the eighteen months forward? 293 00:16:50,160 --> 00:16:52,680 Speaker 9: Okay, well, our view is that at least in the 294 00:16:52,760 --> 00:16:54,960 Speaker 9: next you know, until by the end of the year, 295 00:16:55,040 --> 00:16:57,880 Speaker 9: we are still expecting dollar weakness. And part of that 296 00:16:58,000 --> 00:16:59,640 Speaker 9: is really on the view that we're expecting the FED 297 00:16:59,640 --> 00:17:02,160 Speaker 9: to cut and we're you know, we're expecting to cut 298 00:17:02,160 --> 00:17:04,560 Speaker 9: every meeting for the next five meetings. So as US 299 00:17:04,600 --> 00:17:06,639 Speaker 9: economy is expected to slow down, I mean, we had 300 00:17:06,640 --> 00:17:09,719 Speaker 9: this upburger vision in second quarter, but inevitably it's going 301 00:17:09,760 --> 00:17:11,560 Speaker 9: to slow down. It's going to slow down faster than 302 00:17:11,640 --> 00:17:12,840 Speaker 9: someone little pen pays. 303 00:17:12,840 --> 00:17:17,760 Speaker 2: So strength, that's singing dollar strength, that's even yen strength. 304 00:17:17,800 --> 00:17:19,240 Speaker 2: I mean, I don't want you to make a call 305 00:17:19,280 --> 00:17:21,399 Speaker 2: in yen, but a one forty eight down to a 306 00:17:21,440 --> 00:17:23,800 Speaker 2: one forty can they withstand now? 307 00:17:23,920 --> 00:17:27,560 Speaker 3: Those strong currencies given the Trump terrafi. 308 00:17:27,480 --> 00:17:30,080 Speaker 9: The case of Japan, I mean, the currency despite any movement, 309 00:17:30,080 --> 00:17:32,600 Speaker 9: I mean, it's still relatively on a real effective exchange 310 00:17:32,640 --> 00:17:34,880 Speaker 9: a quite cheap in Japan for the rest of Asia. 311 00:17:34,920 --> 00:17:36,480 Speaker 9: I mean, this is why I kind of started off 312 00:17:36,480 --> 00:17:38,919 Speaker 9: talking about central banks having more room to cut because 313 00:17:39,359 --> 00:17:41,320 Speaker 9: if in the end, your economy is slowing down, and 314 00:17:41,359 --> 00:17:44,720 Speaker 9: you know, dollars not really a hurdle. If anything, when 315 00:17:44,760 --> 00:17:46,840 Speaker 9: you have an export slow down, rather than have the 316 00:17:47,000 --> 00:17:49,920 Speaker 9: fts weaken as an automatic stabilizer, it's kind of going 317 00:17:49,960 --> 00:17:52,120 Speaker 9: against you. It gives you a little bit more room 318 00:17:52,200 --> 00:17:55,199 Speaker 9: to kind of ease monetary policy. The other interesting thing 319 00:17:55,240 --> 00:17:57,240 Speaker 9: that's happening is kind of dollars cnah, you know, the 320 00:17:57,320 --> 00:17:59,960 Speaker 9: dollars c and why fixings being relatively strong and stable. 321 00:18:00,560 --> 00:18:02,600 Speaker 9: So again, I mean it's going to be interesting whether 322 00:18:02,800 --> 00:18:05,000 Speaker 9: going into five fifteen to five year plan, if there's 323 00:18:05,040 --> 00:18:08,679 Speaker 9: more messaging from China rebalancing to what extent does that 324 00:18:08,720 --> 00:18:11,280 Speaker 9: get reflected with a greater acceptance of a bit of 325 00:18:11,280 --> 00:18:12,040 Speaker 9: stronger redmen B. 326 00:18:12,520 --> 00:18:15,760 Speaker 5: So, how does China view the US as an economic 327 00:18:16,000 --> 00:18:20,080 Speaker 5: partner competitor? What's China thinking? 328 00:18:20,440 --> 00:18:23,400 Speaker 9: I mean, obviously, I mean trust, Trust is something Once 329 00:18:23,440 --> 00:18:25,359 Speaker 9: you lose that, it takes a lot of time. Look, 330 00:18:25,400 --> 00:18:27,160 Speaker 9: I think China is going to be very very careful. 331 00:18:27,240 --> 00:18:29,600 Speaker 9: They now realize the lesson that, Hey, you know, it 332 00:18:29,640 --> 00:18:32,720 Speaker 9: pays to have economic leverage to have a choke point. 333 00:18:32,800 --> 00:18:35,399 Speaker 9: So having that chokepoint of critical minerals really help them 334 00:18:35,440 --> 00:18:37,240 Speaker 9: to de escalate the tariff, which is why I don't 335 00:18:37,240 --> 00:18:38,760 Speaker 9: think they want to give up that choke point. It's 336 00:18:38,840 --> 00:18:41,639 Speaker 9: very important to have leverage. And again, of course they 337 00:18:41,720 --> 00:18:43,760 Speaker 9: still need to deal with China the US. It's still 338 00:18:43,800 --> 00:18:47,280 Speaker 9: a very very important economic relationship. So I think they're 339 00:18:47,320 --> 00:18:49,120 Speaker 9: going to want to, you know, obviously kind of stay 340 00:18:49,119 --> 00:18:51,879 Speaker 9: engaged to a certain extent and have some positive overtures 341 00:18:51,880 --> 00:18:54,880 Speaker 9: if there is a Sheet Trump summit by APEC in November. 342 00:18:55,280 --> 00:18:57,359 Speaker 9: But I mean, China is still going to be diversifying 343 00:18:57,359 --> 00:18:58,320 Speaker 9: its economic relationship. 344 00:18:58,320 --> 00:19:00,320 Speaker 3: When you were at Harvard, did Ken Roga throw a 345 00:19:00,320 --> 00:19:01,240 Speaker 3: piece of chalk at you? 346 00:19:01,800 --> 00:19:03,439 Speaker 8: He wasn't at Harbor when I was there. 347 00:19:03,320 --> 00:19:06,240 Speaker 2: He was lucky for you. Here's my book of the summer, 348 00:19:06,320 --> 00:19:08,760 Speaker 2: Our dollariar problem, folks. I'll do all the books out, 349 00:19:09,040 --> 00:19:11,480 Speaker 2: try to get it out today as we begin the 350 00:19:11,760 --> 00:19:16,360 Speaker 2: autumnal season. Here our dollar your problems is wonderful compendium 351 00:19:16,400 --> 00:19:19,680 Speaker 2: of fiscal financial crisis. Do you have in the back 352 00:19:19,720 --> 00:19:25,640 Speaker 2: of your mind, given Trump tensions, France tensions, Italy, whatever, 353 00:19:26,040 --> 00:19:29,680 Speaker 2: that where we could get to a point of volatility 354 00:19:29,720 --> 00:19:30,640 Speaker 2: here them. 355 00:19:30,840 --> 00:19:31,720 Speaker 8: I think it's really interesting. 356 00:19:31,800 --> 00:19:33,440 Speaker 9: I mean, look, I think there are some debates about 357 00:19:33,440 --> 00:19:37,200 Speaker 9: how much of dollar weakness is structural versus cyclical because 358 00:19:37,320 --> 00:19:39,359 Speaker 9: US is going to slow down. Look, I think I 359 00:19:39,359 --> 00:19:42,560 Speaker 9: don't want to over exaggerate the structural dedollarization story because 360 00:19:42,560 --> 00:19:44,560 Speaker 9: the reality is there's not really be a lot of alternatives. 361 00:19:44,840 --> 00:19:46,800 Speaker 9: But I do think something is happening in terms of 362 00:19:46,800 --> 00:19:49,560 Speaker 9: markets wanting to have a higher term premium for a 363 00:19:49,600 --> 00:19:53,000 Speaker 9: long data US treasuries because of fiscal risk, inflation risk, 364 00:19:53,160 --> 00:19:56,840 Speaker 9: kind of mercantileist policy, wanting a weeker dollar, and any 365 00:19:56,960 --> 00:19:59,199 Speaker 9: risk of economic coercion. So I think there is something 366 00:19:59,240 --> 00:20:02,680 Speaker 9: there that's happening at the margin, but the dollar is 367 00:20:02,720 --> 00:20:03,560 Speaker 9: the very dominant. 368 00:20:03,880 --> 00:20:06,720 Speaker 3: I want to final question. We have a display back to. 369 00:20:06,680 --> 00:20:12,720 Speaker 2: My ute of a Chinese military might in the last 370 00:20:12,720 --> 00:20:17,080 Speaker 2: twenty four hours, North Korea, Russia, China all lined up 371 00:20:17,760 --> 00:20:20,440 Speaker 2: lots of holding hands with the India and that what 372 00:20:20,480 --> 00:20:24,200 Speaker 2: does it symbolize for your bank about the Pacific rim 373 00:20:24,520 --> 00:20:25,760 Speaker 2: and over to South Asia. 374 00:20:25,840 --> 00:20:27,439 Speaker 9: No, look, I think there is really a tug of 375 00:20:27,480 --> 00:20:29,679 Speaker 9: war going on globally now about the kind of the 376 00:20:29,760 --> 00:20:31,879 Speaker 9: levers of economic power. And I think, you know, there 377 00:20:31,960 --> 00:20:32,960 Speaker 9: is a lot of changes. I mean, a lot of 378 00:20:32,960 --> 00:20:35,439 Speaker 9: people are talking about changes in world order and to 379 00:20:35,480 --> 00:20:38,080 Speaker 9: what extent are we moving towards multipolarity and this is 380 00:20:38,080 --> 00:20:40,199 Speaker 9: going to be an orderly adjustment or not. And I 381 00:20:40,200 --> 00:20:42,520 Speaker 9: think what we're seeing here is really a sign of 382 00:20:42,600 --> 00:20:44,720 Speaker 9: kind of a posturing that's coming out of you know, 383 00:20:44,720 --> 00:20:46,800 Speaker 9: obviously China and kind of showing them there. 384 00:20:47,200 --> 00:20:49,879 Speaker 2: I need to get you in trouble with compliance, absolutely, 385 00:20:50,240 --> 00:20:52,160 Speaker 2: I got to get you in trouble with your lawyers. 386 00:20:52,320 --> 00:20:54,800 Speaker 3: Do you look at the Trump regime as one off 387 00:20:55,400 --> 00:20:58,399 Speaker 3: which we will heal from or is this a seismic 388 00:20:58,520 --> 00:21:00,639 Speaker 3: shift and global economics? 389 00:21:00,800 --> 00:21:03,439 Speaker 9: Well, again, I am from you know, I'm hardly you 390 00:21:03,560 --> 00:21:06,240 Speaker 9: probably know more about US politics than I do. So 391 00:21:06,359 --> 00:21:09,800 Speaker 9: again I think hopefully this is part of an adjustment 392 00:21:09,800 --> 00:21:12,919 Speaker 9: and pendulum swing, and they may be pivot a little bit. 393 00:21:13,000 --> 00:21:15,560 Speaker 8: But look, I think he got elected twice. 394 00:21:15,240 --> 00:21:18,919 Speaker 9: So it's hard to ignore the fact that there is 395 00:21:18,960 --> 00:21:21,800 Speaker 9: something underpinning kind of this populist movement going on in 396 00:21:22,560 --> 00:21:23,160 Speaker 9: the US. 397 00:21:23,160 --> 00:21:24,840 Speaker 2: Why you're going to bring the m bar back at 398 00:21:24,840 --> 00:21:27,040 Speaker 2: the Old Mandarin in Hong Kong. We'd like to see 399 00:21:27,080 --> 00:21:30,400 Speaker 2: that they took it away. They had a brass plaquet 400 00:21:30,520 --> 00:21:33,480 Speaker 2: in seats. Joanna, Thank you so much, Johanna and Shua 401 00:21:34,000 --> 00:21:37,520 Speaker 2: where this was city group, Just wonderful. They're the Asian economists. 402 00:21:37,600 --> 00:21:38,320 Speaker 3: Stay with us. 403 00:21:38,560 --> 00:21:49,200 Speaker 2: More from Bloomberg Surveillance coming up after this. 404 00:21:49,200 --> 00:21:53,080 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 405 00:21:53,160 --> 00:21:56,440 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 406 00:21:56,600 --> 00:21:59,399 Speaker 1: with the Bloomberg Business app. You can also watch us 407 00:21:59,440 --> 00:22:03,360 Speaker 1: live every weekday on YouTube and always on the Bloomberg Terminal. 408 00:22:03,560 --> 00:22:07,960 Speaker 2: Time for your September Civix lesson only with Professor Cantrell 409 00:22:08,040 --> 00:22:14,680 Speaker 2: of Pimpko Pocket Recision, Murkowski of Alaska's Mental about It, 410 00:22:15,080 --> 00:22:19,360 Speaker 2: Mike Ground's pheasant Hunter from South Dakota, Mental about It, 411 00:22:19,440 --> 00:22:23,879 Speaker 2: inform us what in God's name is a Trumpian pocket recision? 412 00:22:24,040 --> 00:22:26,320 Speaker 10: Basically, this is an effort by the White House to 413 00:22:26,400 --> 00:22:31,000 Speaker 10: cut spending that Congress has already approved. And this is 414 00:22:31,119 --> 00:22:34,159 Speaker 10: a real poke in the eye to the institution of Congress. 415 00:22:34,200 --> 00:22:37,600 Speaker 10: I think there have been several of those, actually, both 416 00:22:37,600 --> 00:22:39,879 Speaker 10: President Trump and President Biden, and just I think the 417 00:22:39,920 --> 00:22:42,560 Speaker 10: executive branch in general of the last few decades, as 418 00:22:42,560 --> 00:22:45,479 Speaker 10: the executive branch has become more powerful and Congress has 419 00:22:45,520 --> 00:22:49,280 Speaker 10: become less powerful. But pocket recision, I think is definitely 420 00:22:49,280 --> 00:22:53,680 Speaker 10: exacerbating already already tensions on Capitol Hill. I don't think 421 00:22:53,680 --> 00:22:56,840 Speaker 10: they'll allow for it. I don't think this will actually happen, 422 00:22:57,320 --> 00:22:59,560 Speaker 10: but just the fact that we're talking about it and 423 00:23:00,080 --> 00:23:03,120 Speaker 10: members of Congress are very upset about it, I think, 424 00:23:03,200 --> 00:23:05,639 Speaker 10: will you know, cause even more frictions we get to 425 00:23:05,760 --> 00:23:06,240 Speaker 10: New York. 426 00:23:06,400 --> 00:23:08,960 Speaker 2: When they go out, they go back home, it's recess. 427 00:23:09,560 --> 00:23:12,000 Speaker 2: A lot of people are getting yelled at in meetings. 428 00:23:12,200 --> 00:23:17,760 Speaker 2: What's the internal body language of representatives and senators after 429 00:23:17,880 --> 00:23:20,120 Speaker 2: going home and listening to the voters. 430 00:23:20,640 --> 00:23:23,440 Speaker 10: Well, I think, you know, the Republicans in Congress, and 431 00:23:23,480 --> 00:23:26,440 Speaker 10: both the House and the Senate were took a very 432 00:23:27,160 --> 00:23:30,400 Speaker 10: bold vote by voting for the one Big, Beautiful bill 433 00:23:30,480 --> 00:23:32,840 Speaker 10: of course that the extension of the Trump Task cuts, 434 00:23:33,280 --> 00:23:36,960 Speaker 10: additional new task cuts, but also some Medicaid cuts. And 435 00:23:37,720 --> 00:23:41,040 Speaker 10: they are hearing from those folks who are really upset 436 00:23:41,119 --> 00:23:43,720 Speaker 10: about those cuts. I think they are trying to sell 437 00:23:43,760 --> 00:23:48,399 Speaker 10: this as a pro growth, sort of pro middle class bill. 438 00:23:48,880 --> 00:23:51,160 Speaker 10: I think remains to be seen if you look at polling, 439 00:23:51,680 --> 00:23:54,600 Speaker 10: you know, I think that folks are a sort of 440 00:23:54,640 --> 00:23:57,439 Speaker 10: skeptical of that narrative. I think the big question, though, 441 00:23:57,480 --> 00:23:59,200 Speaker 10: will be in the beginning of twenty twenty six, when 442 00:23:59,200 --> 00:24:02,320 Speaker 10: some of these tasks will come to fruition. It will 443 00:24:02,440 --> 00:24:04,840 Speaker 10: that sort of the sentiment around this change. But it's 444 00:24:04,880 --> 00:24:07,240 Speaker 10: been difficult. I mean, they are this was a big 445 00:24:07,680 --> 00:24:10,560 Speaker 10: legislative feat honestly for Speaker Johnson to pass this with 446 00:24:10,640 --> 00:24:14,400 Speaker 10: such a smull majority. But not sure not well sort 447 00:24:14,400 --> 00:24:17,719 Speaker 10: of TBD on whether the electorate is, you know, how 448 00:24:17,760 --> 00:24:19,000 Speaker 10: well we'll be received. 449 00:24:19,480 --> 00:24:21,480 Speaker 5: Is our government going to shut down dan September? 450 00:24:21,480 --> 00:24:23,320 Speaker 10: I think that's a big question, and actually this pocket 451 00:24:23,320 --> 00:24:27,520 Speaker 10: decisions sort of makes it I think even more uh, 452 00:24:27,920 --> 00:24:31,359 Speaker 10: you know, maybe more relevant. You know, of course, the 453 00:24:31,400 --> 00:24:34,840 Speaker 10: government has to be funded every every fiscal year. That 454 00:24:34,880 --> 00:24:38,920 Speaker 10: fiscal year begins October first. Unlike lots of different types 455 00:24:39,000 --> 00:24:41,879 Speaker 10: of bills for government funding, that requires sixty votes in 456 00:24:41,880 --> 00:24:46,400 Speaker 10: the Senate. That means that by definition, Republicans need democratic 457 00:24:46,440 --> 00:24:50,520 Speaker 10: co operation. So you need by definition a bob bipartisan 458 00:24:50,560 --> 00:24:53,640 Speaker 10: bill to avoid a government shutdown because of these things 459 00:24:53,720 --> 00:24:57,520 Speaker 10: like pocket recisions, because of friction between Republicans and Democrats. 460 00:24:57,600 --> 00:24:59,920 Speaker 10: Right now, I do think there is a pretty high 461 00:25:00,119 --> 00:25:02,240 Speaker 10: chance that we could see at least a temporary government 462 00:25:02,320 --> 00:25:04,399 Speaker 10: checkdown or at least a lot of drama around. 463 00:25:04,600 --> 00:25:06,119 Speaker 3: Let's go micro here with Friendschill. 464 00:25:06,200 --> 00:25:09,840 Speaker 2: I mean, we know Friendshill quite well Financial Services Committee, Arkansas. 465 00:25:10,359 --> 00:25:12,320 Speaker 2: You know, I'm going to say he's putting up with 466 00:25:12,359 --> 00:25:15,400 Speaker 2: a Trump Act as being a different kind of Republican. 467 00:25:15,440 --> 00:25:19,520 Speaker 2: People like French Hill and the GOP. What's the backstory 468 00:25:19,600 --> 00:25:22,679 Speaker 2: right now? Are they just trying to get to March 469 00:25:22,880 --> 00:25:25,320 Speaker 2: where again it's the election frenzy of November. 470 00:25:26,119 --> 00:25:28,840 Speaker 10: Well, look, I mean I think a lot of Republicans 471 00:25:28,840 --> 00:25:30,920 Speaker 10: in Congress, I mean, I don't know about Chairman Hill, 472 00:25:30,960 --> 00:25:34,000 Speaker 10: whether he feels this way or not, but presumably he does. 473 00:25:34,119 --> 00:25:38,560 Speaker 10: Is that they have their majority much thanks to President Trump. 474 00:25:38,720 --> 00:25:40,879 Speaker 10: So you know, I think that what we see in 475 00:25:41,000 --> 00:25:45,920 Speaker 10: every cycle, every new administration, the party in power gives 476 00:25:46,000 --> 00:25:51,000 Speaker 10: that their president a lot of wiggle room, a pretty 477 00:25:51,040 --> 00:25:54,400 Speaker 10: wide birth in terms of doing whatever they want to do. 478 00:25:54,480 --> 00:25:57,040 Speaker 10: I do think though, to your point that that starts 479 00:25:57,080 --> 00:26:00,439 Speaker 10: that kind of window, that flexibility starts to close as 480 00:26:00,480 --> 00:26:02,280 Speaker 10: we get closer to the midterm election, and. 481 00:26:02,320 --> 00:26:04,400 Speaker 3: We'll book, don't give me a weaker day. 482 00:26:05,440 --> 00:26:08,719 Speaker 10: Come on, Oh my goodness, I look, I think that 483 00:26:08,920 --> 00:26:11,960 Speaker 10: next year, as we go closer in fundraising, what have 484 00:26:12,080 --> 00:26:14,240 Speaker 10: you mean? Republicans have done a great job of fundraising. 485 00:26:14,280 --> 00:26:17,119 Speaker 10: I mean really, the Democrats are much more in the wilderness, 486 00:26:17,200 --> 00:26:21,760 Speaker 10: if you will, than Republicans particularly and fundraising. You know, 487 00:26:21,800 --> 00:26:24,600 Speaker 10: the fundraising continues to be healthy. You know this they 488 00:26:24,760 --> 00:26:27,040 Speaker 10: you know, the president may be able to keep his 489 00:26:27,040 --> 00:26:30,080 Speaker 10: his party you know, together. But usually what you see 490 00:26:30,160 --> 00:26:32,600 Speaker 10: is going into a midterm election cycle, usually the spring, Tom, 491 00:26:32,640 --> 00:26:36,160 Speaker 10: to give you sort of a time frame, is usually white. 492 00:26:37,680 --> 00:26:39,520 Speaker 3: Broncos rebuild for the next year. 493 00:26:39,600 --> 00:26:41,159 Speaker 10: Okay, you know what, We're not going to have to 494 00:26:41,200 --> 00:26:44,280 Speaker 10: rebuild Tom. This we are looking quite strong, thank you 495 00:26:44,359 --> 00:26:44,800 Speaker 10: very much. 496 00:26:45,800 --> 00:26:47,480 Speaker 5: So let me I mean, is it too early to 497 00:26:47,480 --> 00:26:50,280 Speaker 5: start thinking about the mid midterm elections here? 498 00:26:50,400 --> 00:26:52,360 Speaker 10: I mean I think it's uh, you know, we'll we'll 499 00:26:52,400 --> 00:26:56,880 Speaker 10: see in terms of you know, the the the sentiment. 500 00:26:56,920 --> 00:26:59,960 Speaker 10: I mean September of usually of the year before the midterm, 501 00:27:00,240 --> 00:27:03,400 Speaker 10: usually pretty early, we'll have some elections that are happening 502 00:27:03,480 --> 00:27:08,240 Speaker 10: in November, you know, the Virginia gubernatorial race. New Jersey 503 00:27:08,320 --> 00:27:11,320 Speaker 10: has it. Yeah, so these are you know, these can 504 00:27:11,440 --> 00:27:13,600 Speaker 10: be kind of canary in the coal mine, if you will. 505 00:27:13,960 --> 00:27:16,479 Speaker 10: I think it's it's important not to extrapolate too much 506 00:27:16,520 --> 00:27:20,600 Speaker 10: from those those sort off cycle elections. Broadly speaking, though, 507 00:27:20,840 --> 00:27:24,760 Speaker 10: if passes prologue, you know, Republicans will probably lose some 508 00:27:25,080 --> 00:27:27,399 Speaker 10: seats in the House. They of course only have a 509 00:27:27,400 --> 00:27:30,000 Speaker 10: two seat majority right now. That's why you're seeing them 510 00:27:30,920 --> 00:27:34,440 Speaker 10: really focus on this redistricting effort, which is quite unconventional. 511 00:27:34,520 --> 00:27:38,040 Speaker 10: Usually redistricting happens every ten years after the census. They're 512 00:27:38,080 --> 00:27:41,840 Speaker 10: accelerating that with the hopes that they can actually add 513 00:27:41,840 --> 00:27:46,080 Speaker 10: some new Republican safe seats and potentially defy history and 514 00:27:46,200 --> 00:27:46,800 Speaker 10: keep the House. 515 00:27:47,000 --> 00:27:47,719 Speaker 3: Give one more here. 516 00:27:48,960 --> 00:27:53,560 Speaker 5: I ask a lot of the Washington folks, where's the 517 00:27:53,640 --> 00:27:55,640 Speaker 5: Democratic Party today? I don't hear them, I. 518 00:27:55,600 --> 00:27:56,240 Speaker 3: Don't see them. 519 00:27:56,240 --> 00:27:57,280 Speaker 8: I don't know who to likee. 520 00:27:58,880 --> 00:27:59,280 Speaker 7: Rebuilding. 521 00:28:00,720 --> 00:28:04,520 Speaker 10: There's gonna be a rebuilding year or rebuilding years. Yeah, 522 00:28:04,560 --> 00:28:07,199 Speaker 10: I mean, look, their brand is incredibly tarnished. I mean 523 00:28:07,280 --> 00:28:10,159 Speaker 10: you look at you know, polling. Take polling for what 524 00:28:10,240 --> 00:28:13,560 Speaker 10: it's worth on both Republican and Democratic side, but the 525 00:28:13,560 --> 00:28:18,879 Speaker 10: polling suggests that they have the lowest favorability rating that 526 00:28:18,920 --> 00:28:20,040 Speaker 10: they've had for decades. 527 00:28:20,160 --> 00:28:23,439 Speaker 3: Okay, but in nineteen sixty two Nixon he loses the 528 00:28:23,520 --> 00:28:28,119 Speaker 3: California governor's race. He's at the absolute bottom in what 529 00:28:28,359 --> 00:28:30,760 Speaker 3: six years later he was President of the United States. 530 00:28:30,960 --> 00:28:34,200 Speaker 3: Where is that initiative on the part of the Democratic Party. 531 00:28:34,280 --> 00:28:35,720 Speaker 10: Well, I think a lot of folks who are going 532 00:28:35,760 --> 00:28:38,440 Speaker 10: to be the future leaders of the Democratic Party are 533 00:28:38,480 --> 00:28:42,000 Speaker 10: trying to sort of, you know again, maybe give the 534 00:28:42,040 --> 00:28:45,040 Speaker 10: Democrats in the House and the Senate a wide berth 535 00:28:45,080 --> 00:28:47,760 Speaker 10: if you will. I think what you'll really start seeing 536 00:28:47,840 --> 00:28:50,920 Speaker 10: after the maternal elections is folks are appearing kind of 537 00:28:50,960 --> 00:28:54,600 Speaker 10: sticking their heads out of the sand and maybe start 538 00:28:54,800 --> 00:28:58,080 Speaker 10: leading the Democratic Party. But until then, I think it's 539 00:28:58,120 --> 00:29:01,680 Speaker 10: going to be what we're seeing, which is just you know, 540 00:29:02,200 --> 00:29:04,240 Speaker 10: ail here. It may be too strong of a word, 541 00:29:04,360 --> 00:29:05,920 Speaker 10: but it's it is pretty incompas shock. 542 00:29:05,960 --> 00:29:09,560 Speaker 5: That's some young male or female hasn't just stepped up 543 00:29:09,560 --> 00:29:12,040 Speaker 5: and says I'm going to be the face. You know, 544 00:29:12,080 --> 00:29:13,520 Speaker 5: we haven't just haven't seen that. 545 00:29:14,240 --> 00:29:16,680 Speaker 10: I mean, we do have a New York City mayror 546 00:29:16,840 --> 00:29:17,640 Speaker 10: race that I think. 547 00:29:19,720 --> 00:29:22,680 Speaker 2: Is Washington watching the race. We saw Mayor de Blasio 548 00:29:22,840 --> 00:29:23,520 Speaker 2: endors mister. 549 00:29:24,240 --> 00:29:24,479 Speaker 1: I think. 550 00:29:24,600 --> 00:29:27,360 Speaker 10: I think Republicans are chomping at the bit. I think 551 00:29:27,400 --> 00:29:29,800 Speaker 10: they would love to have a New York City mayor 552 00:29:29,880 --> 00:29:33,080 Speaker 10: Mandannie because then they can, you know, demagog him. 553 00:29:33,160 --> 00:29:34,560 Speaker 8: And even though, of course. 554 00:29:34,520 --> 00:29:36,240 Speaker 10: As we all know, New York City politics is quite 555 00:29:36,240 --> 00:29:37,960 Speaker 10: different than national It's a weekly visit. 556 00:29:39,240 --> 00:29:40,920 Speaker 3: I love it, and a calendar. 557 00:29:41,000 --> 00:29:44,040 Speaker 2: She's with Pimco, folks, a great student of what our 558 00:29:44,080 --> 00:29:45,560 Speaker 2: elected officials are doing. 559 00:29:45,800 --> 00:29:50,640 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 560 00:29:50,760 --> 00:29:55,040 Speaker 1: and anywhere else you get your podcasts. 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