1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you 2 00:00:05,360 --> 00:00:07,680 Speaker 1: along with my co host Lisa Brahma Waits. Each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money. Whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple 6 00:00:15,520 --> 00:00:17,959 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:20,799 Speaker 1: at Bloomberg dot com. Wall Street confidence ahead of the 8 00:00:21,960 --> 00:00:25,200 Speaker 1: year seems to be increasing. Consumer confidence not so much. 9 00:00:25,239 --> 00:00:27,680 Speaker 1: We've got to read today the consumer confidence in the 10 00:00:27,760 --> 00:00:30,720 Speaker 1: US declined for a fourth straight month. The big question 11 00:00:30,760 --> 00:00:33,280 Speaker 1: in my mind is are we seeing a sort of 12 00:00:33,280 --> 00:00:36,400 Speaker 1: reversal where the consumer starts to sort of become less 13 00:00:36,440 --> 00:00:40,559 Speaker 1: confident and less uh profligate when it's with its spending 14 00:00:40,960 --> 00:00:44,320 Speaker 1: while Wall Street gets more excited about stock prices. Chris Rupkei, 15 00:00:44,520 --> 00:00:47,640 Speaker 1: Managing director in chief financial economist at m UFG Union 16 00:00:47,640 --> 00:00:49,720 Speaker 1: Bank joining us. Now, what do you make of this, 17 00:00:49,720 --> 00:00:54,160 Speaker 1: this waning consumer confidence? Yeah, it's interesting because don't forget 18 00:00:54,200 --> 00:00:59,000 Speaker 1: there's two separate measures, and uh, the Michigan survey of 19 00:00:59,120 --> 00:01:01,920 Speaker 1: consumers sent mint as opposed to confidence more or less 20 00:01:01,960 --> 00:01:04,960 Speaker 1: the same. Uh, it's come back quite a bit. So 21 00:01:05,040 --> 00:01:07,360 Speaker 1: it was down in the dumps in August when the 22 00:01:07,400 --> 00:01:12,520 Speaker 1: stock market had that turmoil and purchasing managers said manufacturing 23 00:01:12,600 --> 00:01:16,440 Speaker 1: was in a recession. Uh. That consumer confidence measure has 24 00:01:16,480 --> 00:01:19,839 Speaker 1: come back and doesn't look as worrisome as the one 25 00:01:20,120 --> 00:01:21,800 Speaker 1: that came out today. So it's a bit of a 26 00:01:22,520 --> 00:01:25,000 Speaker 1: mixed bag here. Yeah, it's Chris. We also have the 27 00:01:25,600 --> 00:01:29,040 Speaker 1: again the housing data that come in very strong. Are 28 00:01:29,040 --> 00:01:32,880 Speaker 1: you still confident that this consumer can continue to support 29 00:01:33,080 --> 00:01:37,400 Speaker 1: this economy through well, so far, so good. We'll get 30 00:01:37,440 --> 00:01:41,119 Speaker 1: another look at how many jobs are being created, uh 31 00:01:41,280 --> 00:01:44,640 Speaker 1: next Friday. So that's really as long as it's not 32 00:01:44,800 --> 00:01:50,200 Speaker 1: just what consumers or workers are spending, it's also how 33 00:01:50,240 --> 00:01:53,720 Speaker 1: many new workers are being added each year. And right 34 00:01:53,720 --> 00:01:56,480 Speaker 1: now the jobs reports you know, running about a hundred 35 00:01:56,560 --> 00:01:59,800 Speaker 1: thirty thousand per month of new jobs. Those are going 36 00:01:59,840 --> 00:02:03,520 Speaker 1: to be new consumers that will spend uh the economy, 37 00:02:03,880 --> 00:02:07,040 Speaker 1: will you know, spend dollars that helps the economy grow. 38 00:02:07,160 --> 00:02:10,880 Speaker 1: But yeah, we are. It is interesting real GDP numbers 39 00:02:10,960 --> 00:02:13,800 Speaker 1: have come down the estimates for the fourth quarter, so 40 00:02:13,840 --> 00:02:16,280 Speaker 1: we'll see how that all plays out. So I want 41 00:02:16,320 --> 00:02:17,880 Speaker 1: to shift gears a little bit too. The housing market 42 00:02:17,919 --> 00:02:20,320 Speaker 1: We've got a couple of better than expected data points 43 00:02:20,320 --> 00:02:22,679 Speaker 1: out this morning showing that new home sales in the 44 00:02:22,760 --> 00:02:24,919 Speaker 1: United States posted their best two months and more than 45 00:02:24,960 --> 00:02:27,680 Speaker 1: twelve years. How much can we draw from that in 46 00:02:27,800 --> 00:02:31,760 Speaker 1: terms of the broader economic reach. Yeah, people are surprised 47 00:02:31,800 --> 00:02:36,120 Speaker 1: by this data. It gets revived dramatically sometimes. So the 48 00:02:36,200 --> 00:02:39,800 Speaker 1: reason we the reason new home sales are so strong 49 00:02:40,720 --> 00:02:45,240 Speaker 1: today is we had a wicked upward revision to the 50 00:02:45,639 --> 00:02:48,440 Speaker 1: September data a month ago. In other words, a month 51 00:02:48,520 --> 00:02:51,079 Speaker 1: ago we thought there was a seven hundred one thousand 52 00:02:51,120 --> 00:02:55,359 Speaker 1: new homes being purchased annual rate, now at seven d eight. 53 00:02:56,200 --> 00:02:59,800 Speaker 1: So the difference is seven hundred thirty eight means we 54 00:03:00,040 --> 00:03:02,680 Speaker 1: reached a twelve year high and we came off modestly 55 00:03:03,600 --> 00:03:05,640 Speaker 1: so far. I mean, don't forget to put it in 56 00:03:05,800 --> 00:03:09,560 Speaker 1: historical perspective. During the housing bubble years over a decade ago, 57 00:03:10,320 --> 00:03:13,320 Speaker 1: new home sales were running easily above one point two 58 00:03:13,360 --> 00:03:16,880 Speaker 1: million per year at an annual rate, and now we're 59 00:03:16,919 --> 00:03:20,680 Speaker 1: back to seven thirty eight thousand. Still, you know, it 60 00:03:20,720 --> 00:03:24,919 Speaker 1: does show you that, you know, the consumer confidence can't 61 00:03:24,919 --> 00:03:27,280 Speaker 1: be that bad off if they're buying the most new 62 00:03:27,320 --> 00:03:31,760 Speaker 1: homes that they have in roughly twelve years. So you know, 63 00:03:31,800 --> 00:03:35,160 Speaker 1: it's very mixed data today, I would say the underlying 64 00:03:35,280 --> 00:03:37,680 Speaker 1: data is not that bad for the economy. We don't 65 00:03:37,680 --> 00:03:42,520 Speaker 1: want to question the economic outlook for next year yet. Trade, Chris, 66 00:03:42,560 --> 00:03:46,320 Speaker 1: it looks like we're making some headway on global trade, 67 00:03:46,400 --> 00:03:50,240 Speaker 1: maybe a Phase one deal. From an economics perspective, what 68 00:03:50,280 --> 00:03:52,240 Speaker 1: would that mean to you? To get such a deal? 69 00:03:53,560 --> 00:03:56,240 Speaker 1: That would be good? I mean there's two different things. 70 00:03:56,240 --> 00:03:58,120 Speaker 1: There's kind of like the announcement, it's kind of like 71 00:03:58,160 --> 00:04:02,840 Speaker 1: FED policy. There's the end anouncement effect of trade deals, 72 00:04:03,200 --> 00:04:08,920 Speaker 1: which could affect you know, stock market levels and investor confidence. 73 00:04:09,480 --> 00:04:11,880 Speaker 1: And you know, the trade war effect on the stock 74 00:04:11,920 --> 00:04:14,160 Speaker 1: market is nil. I mean maybe some of that is 75 00:04:14,200 --> 00:04:17,000 Speaker 1: are always hopeful for an agreement, but with the SMP 76 00:04:17,160 --> 00:04:21,719 Speaker 1: five closing up year to date last night, uh, people 77 00:04:21,760 --> 00:04:25,719 Speaker 1: aren't worried about the you know, the these news headlines, 78 00:04:26,320 --> 00:04:29,720 Speaker 1: but um, yeah, it would be big because the way 79 00:04:29,800 --> 00:04:33,599 Speaker 1: I would approach this is that our next big deadline 80 00:04:33,680 --> 00:04:39,280 Speaker 1: is December. There there's potentially we're gonna put tariffs on 81 00:04:39,320 --> 00:04:41,880 Speaker 1: the final tronch a hundred sixty billion of goods that 82 00:04:42,279 --> 00:04:47,960 Speaker 1: consumers like, things like cell phones, laptop computers, video game consoles, 83 00:04:48,080 --> 00:04:51,279 Speaker 1: So we'll see where that goes. The biggest effect for 84 00:04:51,320 --> 00:04:54,560 Speaker 1: me is an economist, is if the five billion roughly 85 00:04:54,960 --> 00:04:58,440 Speaker 1: imports from China a couple of years ago, if those 86 00:04:58,480 --> 00:05:03,280 Speaker 1: imports all get terrif at, that would be a hit 87 00:05:03,320 --> 00:05:06,520 Speaker 1: of almost one percentage point to GDP. So if you're 88 00:05:06,520 --> 00:05:10,159 Speaker 1: looking for two percent GDP next year, I'd have to 89 00:05:10,200 --> 00:05:13,680 Speaker 1: market down closer to simply if the Troy. But you know, 90 00:05:13,920 --> 00:05:16,440 Speaker 1: we got to go to tariffs across the board and 91 00:05:16,440 --> 00:05:18,480 Speaker 1: we're not We're not there, and it looks like we're 92 00:05:18,520 --> 00:05:20,240 Speaker 1: not going to get there, so that would be good news. 93 00:05:20,440 --> 00:05:22,240 Speaker 1: One of the big challenges over the past year has 94 00:05:22,279 --> 00:05:25,880 Speaker 1: been deciphering what is simply a global economy that is 95 00:05:25,920 --> 00:05:29,279 Speaker 1: slowing down, the heels of China's economy decelerating, and what 96 00:05:29,560 --> 00:05:32,920 Speaker 1: is due to trade. And I think about Hewlett Packard's earnings, 97 00:05:32,960 --> 00:05:34,720 Speaker 1: for example, we were talking about this with an entree 98 00:05:34,760 --> 00:05:37,240 Speaker 1: of us in earlier this morning. He was talking about 99 00:05:37,279 --> 00:05:40,280 Speaker 1: how capital expenditures when it comes to the cloud, when 100 00:05:40,320 --> 00:05:44,520 Speaker 1: it comes to services, have been going down. I mean, 101 00:05:44,560 --> 00:05:47,080 Speaker 1: do you take something from this that goes beyond just 102 00:05:47,520 --> 00:05:50,320 Speaker 1: do we get some you know, prophylactic deal. Uh that 103 00:05:50,320 --> 00:05:52,400 Speaker 1: that sort of gives a truce and allows people the 104 00:05:52,480 --> 00:05:55,760 Speaker 1: confidence to go forward. Well, one of the things I'm 105 00:05:55,800 --> 00:05:58,479 Speaker 1: a little bit worried about is that this slowdown and 106 00:05:58,560 --> 00:06:03,040 Speaker 1: business investment isn't completely due to China. I mean, China 107 00:06:03,080 --> 00:06:07,000 Speaker 1: obviously the tariffs on some of the imports for manufacturers 108 00:06:07,000 --> 00:06:10,679 Speaker 1: here isn't great. Equipment has been slowing, but don't forget 109 00:06:10,680 --> 00:06:13,080 Speaker 1: what twelve year. I mean, we're ten years over ten 110 00:06:13,160 --> 00:06:16,159 Speaker 1: years into an economic expansion, and there still is a 111 00:06:16,240 --> 00:06:19,480 Speaker 1: business cycle. A lot of this equipment that companies buy 112 00:06:19,560 --> 00:06:21,760 Speaker 1: is very long live, so they're not going to come 113 00:06:21,760 --> 00:06:24,719 Speaker 1: out and buy every single year a bunch of the 114 00:06:24,760 --> 00:06:27,440 Speaker 1: new equipment. You know, they space it out every three, 115 00:06:27,520 --> 00:06:30,359 Speaker 1: four or five years. So what if they've already bought 116 00:06:30,400 --> 00:06:33,880 Speaker 1: the equipment they need given this ten year expansion. So 117 00:06:34,000 --> 00:06:38,120 Speaker 1: we're already seeing data like durable goods orders not going 118 00:06:38,240 --> 00:06:41,320 Speaker 1: up anymore, which tells me that companies have as much 119 00:06:41,320 --> 00:06:44,159 Speaker 1: equipment as they need right now to meet the current 120 00:06:44,200 --> 00:06:47,400 Speaker 1: demand for goods and services. So it's not just China, 121 00:06:47,480 --> 00:06:51,320 Speaker 1: but it's complicated. It's complicated. We are kind of in 122 00:06:51,360 --> 00:06:57,960 Speaker 1: an aging economic expansion where purchases should slow UM naturally, 123 00:06:58,600 --> 00:07:02,400 Speaker 1: so Chris, just next thirty second, UM, given your economic outlook, 124 00:07:02,400 --> 00:07:04,440 Speaker 1: do you think the FED. I guess the market's discounting 125 00:07:04,480 --> 00:07:06,640 Speaker 1: one FED rate cut maybe in that September meeting. Is 126 00:07:06,680 --> 00:07:10,360 Speaker 1: that consistent with your outlook? I don't want to talk 127 00:07:10,360 --> 00:07:13,840 Speaker 1: about rate cuts. I don't think it does any good 128 00:07:13,840 --> 00:07:15,760 Speaker 1: at this level. I mean, we're not yet at the 129 00:07:15,880 --> 00:07:19,160 Speaker 1: level of negative rates like Japan and Europe, which did nothing. 130 00:07:19,600 --> 00:07:22,200 Speaker 1: I think they've kind of turned the light switch on 131 00:07:22,280 --> 00:07:25,040 Speaker 1: and off too many times for interest rates the Federal Reserve, 132 00:07:25,440 --> 00:07:28,000 Speaker 1: and now they've kind of broken their tool. I don't 133 00:07:28,040 --> 00:07:31,440 Speaker 1: think cutting rates from one point seven five is going 134 00:07:31,480 --> 00:07:34,200 Speaker 1: to cause any US corporation to go out and spend 135 00:07:34,240 --> 00:07:38,560 Speaker 1: more on equipment, buy new offices or warehouses. I think 136 00:07:39,080 --> 00:07:41,680 Speaker 1: the days of the FED running to the riding to 137 00:07:41,720 --> 00:07:45,120 Speaker 1: the rescue and cutting rates and boost and growth, it's 138 00:07:45,160 --> 00:07:48,080 Speaker 1: just not going to happen. I would prefer with the 139 00:07:48,120 --> 00:07:51,120 Speaker 1: baby boom generation retiring, that they keep rates where they are, 140 00:07:51,480 --> 00:07:53,360 Speaker 1: if not move them up in the next couple of 141 00:07:53,400 --> 00:07:56,040 Speaker 1: years a little bit. Chris russ Ruki, thanks so much 142 00:07:56,080 --> 00:07:59,040 Speaker 1: for joining us. We appreciate your thoughts. Chris Rupkey, Managing 143 00:07:59,080 --> 00:08:02,760 Speaker 1: director in chief Financial Economists for mu f G Union Bank, 144 00:08:02,840 --> 00:08:19,440 Speaker 1: joining us on the phone time to check in with 145 00:08:19,480 --> 00:08:23,320 Speaker 1: Bloomberg Opinion. We're joined by opinion columnist Marcus Ashworth. Marcus 146 00:08:23,360 --> 00:08:26,120 Speaker 1: has a columns covering European markets for Bloomberg Opinion. He 147 00:08:26,160 --> 00:08:30,480 Speaker 1: joins us from the London radio studio of Bloomberg. So, Marcus, 148 00:08:30,760 --> 00:08:33,800 Speaker 1: we're getting close to the election. December twelve is the election. 149 00:08:33,800 --> 00:08:35,920 Speaker 1: What if you could just give us an update on 150 00:08:35,960 --> 00:08:42,560 Speaker 1: how things are playing out there? Ha, well, um, yeah, 151 00:08:42,600 --> 00:08:45,640 Speaker 1: it's pretty straightforward. Uh, if you want to look it 152 00:08:45,640 --> 00:08:48,600 Speaker 1: in the round, which is never easy because it's always 153 00:08:48,600 --> 00:08:53,480 Speaker 1: a new um comment or lead story of some form. 154 00:08:53,520 --> 00:08:58,040 Speaker 1: But the polls are pretty certain that the ruling Conservative 155 00:08:58,040 --> 00:09:02,800 Speaker 1: party on the Boris Johnson will get a commanding majority 156 00:09:03,679 --> 00:09:07,720 Speaker 1: which will enable them therefore to go ahead and probably 157 00:09:07,720 --> 00:09:13,440 Speaker 1: before Christmas, complete the Brexit withdrawal bill passage, which will 158 00:09:13,520 --> 00:09:17,360 Speaker 1: enable them to leave the European Union before the end 159 00:09:17,360 --> 00:09:21,120 Speaker 1: of January and then indeed move forward to doing a 160 00:09:21,160 --> 00:09:24,760 Speaker 1: trade deal and the transition period which they think will 161 00:09:24,880 --> 00:09:28,400 Speaker 1: end before the end of about this time in a year. Now, 162 00:09:28,440 --> 00:09:30,960 Speaker 1: that's the conventional view, and there's lots of other people 163 00:09:30,960 --> 00:09:33,439 Speaker 1: out there who would love to see lots of different things, 164 00:09:33,440 --> 00:09:37,160 Speaker 1: and of course all all elections can go wrong and 165 00:09:37,200 --> 00:09:39,040 Speaker 1: things can change. We have two and a bit weeks 166 00:09:39,080 --> 00:09:42,000 Speaker 1: to go, and we certainly saw this time in two 167 00:09:42,040 --> 00:09:44,520 Speaker 1: years ago that they all went horribly, horribly wrong for 168 00:09:44,559 --> 00:09:49,040 Speaker 1: the previous Conservative Prime Minister tresam May. But this is 169 00:09:49,080 --> 00:09:53,920 Speaker 1: a much more careful campaign from Boris Johnson. He's been 170 00:09:55,240 --> 00:09:59,480 Speaker 1: under wraps doing everything he should do. The manifesto has 171 00:09:59,520 --> 00:10:05,199 Speaker 1: been understated. Uh, they flashed out the Labor Party very skillfully, 172 00:10:05,240 --> 00:10:10,600 Speaker 1: I think, to expose himselves as this massive Marxist sort 173 00:10:10,600 --> 00:10:14,760 Speaker 1: of spend spend spend, unbelievable amount of plans that they 174 00:10:14,800 --> 00:10:18,839 Speaker 1: want to want to bring um, which doesn't scare that 175 00:10:18,880 --> 00:10:21,000 Speaker 1: many people, it would seem. With that, you know, if 176 00:10:21,000 --> 00:10:22,920 Speaker 1: you look at the polls, it seems the Labor Party 177 00:10:22,960 --> 00:10:27,600 Speaker 1: of actually shifted up slightly from a rock bed off 178 00:10:27,720 --> 00:10:31,480 Speaker 1: we said, up towards thirty maybe early thirties now, So 179 00:10:31,520 --> 00:10:34,360 Speaker 1: there is still a chance um of of not a 180 00:10:34,400 --> 00:10:36,880 Speaker 1: conservative majority, but it's a pretty slim one. So I'm 181 00:10:36,920 --> 00:10:40,800 Speaker 1: wondering what enthusiasm is in terms of the expected turnout 182 00:10:41,000 --> 00:10:44,320 Speaker 1: for the December twelfth election. Well, you look at two things. 183 00:10:44,760 --> 00:10:48,719 Speaker 1: One is circled voter registrations have getting very excited about today, 184 00:10:48,760 --> 00:10:51,839 Speaker 1: which is a three million people have signed up to vote. 185 00:10:52,360 --> 00:10:56,439 Speaker 1: Sarcasm from you, because why are you being sarcastic about that? 186 00:10:56,520 --> 00:10:59,160 Speaker 1: Because I've seen this all before so many times, and 187 00:10:59,280 --> 00:11:02,960 Speaker 1: all the youth, uh you know vote youth quake which 188 00:11:03,080 --> 00:11:05,640 Speaker 1: was came around last time. We actually analyze the numbers 189 00:11:05,679 --> 00:11:09,040 Speaker 1: more of an old not turn up than a youth quake. 190 00:11:09,440 --> 00:11:12,240 Speaker 1: And it's not so much the youth, it's the middle 191 00:11:12,280 --> 00:11:15,600 Speaker 1: band of sort of perhaps twenty five or forty five 192 00:11:16,240 --> 00:11:19,920 Speaker 1: who have turned substantially more to the left in the 193 00:11:20,040 --> 00:11:23,520 Speaker 1: UK over the last few years. And whether they turn 194 00:11:23,640 --> 00:11:28,080 Speaker 1: up or they just just disperse, Uh, it is uh 195 00:11:28,559 --> 00:11:31,160 Speaker 1: the question this time around. But that there is a 196 00:11:31,200 --> 00:11:34,599 Speaker 1: definite lifting inverter registration is always an excellent thing in 197 00:11:34,640 --> 00:11:40,640 Speaker 1: any democracy. By definitionally we can't command you know, decent turnout. 198 00:11:40,679 --> 00:11:44,680 Speaker 1: Then you don't really have a mandate. So I think that, um, 199 00:11:44,760 --> 00:11:48,080 Speaker 1: whether these guys turn out, Um, traditionally you find the 200 00:11:48,120 --> 00:11:50,559 Speaker 1: youth vote doesn't turn out quite so much. It was 201 00:11:50,600 --> 00:11:54,080 Speaker 1: a nice rainy day on December twelve. Um, then you 202 00:11:54,120 --> 00:11:56,640 Speaker 1: know we should see. But there's a lot of good 203 00:11:56,640 --> 00:11:58,679 Speaker 1: things going about this campaign, a lot of bad things. 204 00:11:58,760 --> 00:12:01,560 Speaker 1: I'm sure we we We saw some some pretty interesting 205 00:12:01,840 --> 00:12:06,600 Speaker 1: comments from the UH chief Rabbi today. So there's a 206 00:12:06,640 --> 00:12:09,600 Speaker 1: lot of a lot of invector coming into this campaign. 207 00:12:09,679 --> 00:12:12,960 Speaker 1: Which is which is you know, making it a pretty 208 00:12:13,000 --> 00:12:15,720 Speaker 1: seminal election. I think, Marcus, I want to turn into 209 00:12:15,760 --> 00:12:18,240 Speaker 1: a columny. You were published today talking about all right, 210 00:12:18,480 --> 00:12:22,800 Speaker 1: Brexit asidement. But if and when Boris Johnson wins the selection, 211 00:12:23,360 --> 00:12:26,520 Speaker 1: how is he going to relate to the Bank of England. Well, 212 00:12:26,640 --> 00:12:28,920 Speaker 1: you know, one has to feel for central bank is 213 00:12:28,960 --> 00:12:31,680 Speaker 1: not not much really, but you know this time around, 214 00:12:31,760 --> 00:12:35,280 Speaker 1: I mean I've been pretty harsh on Mark Karney for 215 00:12:35,280 --> 00:12:37,520 Speaker 1: for getting involved in the Brexit debate, where I think 216 00:12:37,520 --> 00:12:40,520 Speaker 1: he shouldn't have done. Nonetheless, he's been pretty good at 217 00:12:40,559 --> 00:12:45,400 Speaker 1: modernizing the Bank of England. But the economy is evidently 218 00:12:45,480 --> 00:12:47,800 Speaker 1: going into a bit of a little slamp here, as 219 00:12:47,880 --> 00:12:49,800 Speaker 1: is Europe, as of the rest of the world is 220 00:12:49,840 --> 00:12:52,079 Speaker 1: not as not sort of necessarily but you know, a 221 00:12:52,120 --> 00:12:55,640 Speaker 1: little bit of Brexit push behind it. Um I think 222 00:12:55,760 --> 00:12:57,880 Speaker 1: first quarter, second quarter next year are going to be 223 00:12:58,320 --> 00:13:00,600 Speaker 1: close to zero. I think in the in the UK. 224 00:13:01,080 --> 00:13:03,760 Speaker 1: And that's going to mean does the Bank having have 225 00:13:03,920 --> 00:13:08,080 Speaker 1: to actually cut interest rates which would be seemed countertutive. 226 00:13:08,120 --> 00:13:11,800 Speaker 1: Off or we're reading is that there is huge fiscal 227 00:13:11,880 --> 00:13:14,320 Speaker 1: spending coming from you know, if labor gets in it's 228 00:13:14,360 --> 00:13:20,040 Speaker 1: it's karamba, I mean the lift uplifts. Yeah, it is karamba. 229 00:13:20,240 --> 00:13:22,640 Speaker 1: It is literally ridiculous. And of course it won't happen. 230 00:13:22,920 --> 00:13:24,959 Speaker 1: One was they won't get elected to even they get 231 00:13:25,000 --> 00:13:27,640 Speaker 1: later to the minority government, other parties will stop them. 232 00:13:27,679 --> 00:13:32,000 Speaker 1: But nonetheless that there is even on the expected Conservative 233 00:13:32,000 --> 00:13:34,480 Speaker 1: when there will be a very big uplifting in fiscal 234 00:13:34,559 --> 00:13:37,360 Speaker 1: spelling from should say simply from a two percent of 235 00:13:37,400 --> 00:13:41,280 Speaker 1: budget deficit ratiator GDP to a three percent. That's a 236 00:13:41,320 --> 00:13:46,280 Speaker 1: fifty uplift on your fiscal rule. That's big numbers actually 237 00:13:46,360 --> 00:13:49,880 Speaker 1: for what one off you know into a into a 238 00:13:49,920 --> 00:13:52,240 Speaker 1: new government and that's going to be a big spend. 239 00:13:52,880 --> 00:13:54,640 Speaker 1: But how does the bank having in the Central Bank 240 00:13:54,720 --> 00:13:57,360 Speaker 1: handle that well, obviously you think they would not want 241 00:13:57,360 --> 00:14:00,000 Speaker 1: to raise rates. The trouble is is a short term 242 00:14:00,040 --> 00:14:02,560 Speaker 1: they may be fools to Marcus Ashworth, Thank you so much, 243 00:14:02,960 --> 00:14:06,480 Speaker 1: Marcus Ashworth, Bloomberg Opinion columnist joining us from London. Note 244 00:14:06,480 --> 00:14:09,000 Speaker 1: where those elections are going to be held in short 245 00:14:09,120 --> 00:14:13,480 Speaker 1: order December twelve, and we will be abiding by a 246 00:14:13,520 --> 00:14:16,400 Speaker 1: whole host of rules ahead of that, where they're sort 247 00:14:16,400 --> 00:14:18,360 Speaker 1: of phased in periods where we can't talk about it, 248 00:14:18,400 --> 00:14:20,040 Speaker 1: but now we can talk all about it. So have 249 00:14:20,120 --> 00:14:22,040 Speaker 1: no fear we're gonna go Brexit crazy. Ahead of this 250 00:14:22,040 --> 00:14:40,960 Speaker 1: Thanksgiving break, well, new home sales posted the best two 251 00:14:40,960 --> 00:14:43,720 Speaker 1: months in more than twelve years, really giving us another 252 00:14:43,800 --> 00:14:47,080 Speaker 1: data point that the housing market remains quite resilient in 253 00:14:47,080 --> 00:14:51,480 Speaker 1: the world of extraordinarily low interest rates mortgage rates. Jeff Tylor, 254 00:14:51,480 --> 00:14:54,120 Speaker 1: co founder managing director for Digital Risk, joins us on 255 00:14:54,160 --> 00:14:56,840 Speaker 1: the phone. So Jeff, what do you make of these 256 00:14:56,920 --> 00:15:01,320 Speaker 1: numbers regarding the US home market. Well, thank you so 257 00:15:01,400 --> 00:15:03,840 Speaker 1: much for having me, Paul today, a pleasure to be here. 258 00:15:04,000 --> 00:15:06,200 Speaker 1: If you look at this entire year, coming into twenty 259 00:15:06,200 --> 00:15:08,280 Speaker 1: and nineteen, it was projected to be at one point 260 00:15:08,400 --> 00:15:12,680 Speaker 1: six trillion residential um mortgage market for this year. We're 261 00:15:12,880 --> 00:15:14,520 Speaker 1: coming out at the end of the year, we're gonna 262 00:15:14,520 --> 00:15:17,520 Speaker 1: be somewhere around two point three, So, you know, a 263 00:15:17,560 --> 00:15:21,280 Speaker 1: statement of the obvious, It's been absolutely incredible year. For 264 00:15:21,400 --> 00:15:22,880 Speaker 1: the housing market, and a lot of it has been 265 00:15:22,960 --> 00:15:26,000 Speaker 1: driven by the volatility and interest rates which are down 266 00:15:26,040 --> 00:15:28,800 Speaker 1: close to over a point. So right now we see 267 00:15:28,840 --> 00:15:33,040 Speaker 1: extremely strong housing market nationally for new home sales, existing 268 00:15:33,080 --> 00:15:35,320 Speaker 1: home sales and expecting that to go into a very 269 00:15:35,360 --> 00:15:39,720 Speaker 1: strong Also, how monolithic is the US housing market? And 270 00:15:39,760 --> 00:15:43,000 Speaker 1: I wonder whether the gains that we're seeing are being 271 00:15:43,080 --> 00:15:45,240 Speaker 1: driven by the sun Belt in places that have been 272 00:15:45,240 --> 00:15:48,680 Speaker 1: incredibly popular for tax reasons and weather reasons, and we 273 00:15:48,720 --> 00:15:52,120 Speaker 1: have not seen the same strength in other places. So 274 00:15:52,120 --> 00:15:53,840 Speaker 1: I think it can very You make a very good point. 275 00:15:53,840 --> 00:15:56,440 Speaker 1: I mean it real is it's always location, location, location, 276 00:15:56,520 --> 00:15:59,240 Speaker 1: I think post tax reform, I still we are starting 277 00:15:59,240 --> 00:16:02,440 Speaker 1: to see more significant gains in areas like like Florida 278 00:16:02,560 --> 00:16:05,680 Speaker 1: and Texas if people look to to relocate. But still 279 00:16:05,680 --> 00:16:08,440 Speaker 1: in the Northeast and the Midwest, we're still seeing strong 280 00:16:08,640 --> 00:16:12,960 Speaker 1: incremental price increase and demand in the marketplace. So on 281 00:16:12,960 --> 00:16:16,320 Speaker 1: a national level, we have a very, very very strong 282 00:16:16,400 --> 00:16:20,320 Speaker 1: mortgage market and haven't seen much weakness anywhere at all. 283 00:16:20,400 --> 00:16:23,239 Speaker 1: The only thing that we are continue to see sometimes 284 00:16:23,400 --> 00:16:26,200 Speaker 1: is the supply and demand with the home builders are 285 00:16:26,200 --> 00:16:28,520 Speaker 1: actually being able to build, you know, the first time 286 00:16:28,840 --> 00:16:31,600 Speaker 1: first on homebuyers in that price point that they're looking for, 287 00:16:31,720 --> 00:16:33,240 Speaker 1: somewhere in the two to four and a thousand all 288 00:16:33,240 --> 00:16:35,440 Speaker 1: that range. So, Jeff, give us a sense of the 289 00:16:35,520 --> 00:16:39,200 Speaker 1: mortgage market today compared to say, you know, prior to 290 00:16:39,280 --> 00:16:42,480 Speaker 1: the financial crisis, when uh, you know, it got very 291 00:16:42,560 --> 00:16:44,560 Speaker 1: easy on the credit side. Where are we today? Is 292 00:16:44,560 --> 00:16:47,520 Speaker 1: it a healthy market? It is? And so one of 293 00:16:47,520 --> 00:16:49,040 Speaker 1: the things that we do at the Risk is were 294 00:16:49,040 --> 00:16:51,640 Speaker 1: the largest quality control provider in the countries. On top 295 00:16:51,680 --> 00:16:55,240 Speaker 1: of originations, we have that lens. The defect rate, to 296 00:16:55,280 --> 00:16:58,000 Speaker 1: give you perspective today is somewhere about a point of three. 297 00:16:58,680 --> 00:17:01,760 Speaker 1: The underwriting standard, the products that are in the market 298 00:17:01,760 --> 00:17:05,560 Speaker 1: place are solid, are extremely solid. So when people talk 299 00:17:05,560 --> 00:17:08,200 Speaker 1: about we're going to have a housing crisis potentially in 300 00:17:08,240 --> 00:17:10,000 Speaker 1: a couple of years, that's not the case at all. 301 00:17:10,040 --> 00:17:13,639 Speaker 1: This is not a bubble. These are subtle, subtle, solid standards. 302 00:17:13,920 --> 00:17:17,639 Speaker 1: Regulatory rules are in place, really are very focused on 303 00:17:17,720 --> 00:17:21,119 Speaker 1: making sure that people who qualify for loans are loans 304 00:17:21,119 --> 00:17:22,840 Speaker 1: that they can't afford and that they can pay for. 305 00:17:23,040 --> 00:17:25,399 Speaker 1: So we're very very happy at the quality of the 306 00:17:25,400 --> 00:17:27,879 Speaker 1: mortgage zones being done nationally. Yeah, that's something a lot 307 00:17:27,920 --> 00:17:31,000 Speaker 1: of people have talked about that will stave off another crisis. 308 00:17:31,240 --> 00:17:33,800 Speaker 1: At the same time, there's some pretty fundamental shifts in 309 00:17:33,840 --> 00:17:37,760 Speaker 1: the way that loans are extended in terms of what 310 00:17:37,840 --> 00:17:42,000 Speaker 1: you call an online data, social media, etcetera. In order 311 00:17:42,080 --> 00:17:44,359 Speaker 1: to extend credit. Can you talk a little bit about 312 00:17:44,359 --> 00:17:49,119 Speaker 1: how that's transforming the real estate market at a great point, 313 00:17:49,359 --> 00:17:51,280 Speaker 1: and I could go a little broader, even the consumer 314 00:17:51,359 --> 00:17:53,360 Speaker 1: lending and to your point, the way that that consumer 315 00:17:53,400 --> 00:17:56,560 Speaker 1: loans are being made to the millennials and Generation Z. 316 00:17:57,200 --> 00:18:01,080 Speaker 1: They're getting really really creative between I've called a combination 317 00:18:01,320 --> 00:18:04,240 Speaker 1: of a consumer loan UM and a home eq we 318 00:18:04,359 --> 00:18:06,240 Speaker 1: loan if you already have a house, and then the 319 00:18:06,240 --> 00:18:08,960 Speaker 1: way that they're reaching out and you know, through this 320 00:18:09,040 --> 00:18:12,560 Speaker 1: digital uh digital omni channels to be able to get 321 00:18:12,600 --> 00:18:16,359 Speaker 1: the first time HomeBuyer is interested in potentially buying a house. 322 00:18:16,520 --> 00:18:20,800 Speaker 1: So you know, things like all the advertising via social 323 00:18:20,840 --> 00:18:24,080 Speaker 1: media being that's really driving a lot of people who 324 00:18:24,080 --> 00:18:25,800 Speaker 1: may be still be renting and trying to give them 325 00:18:25,800 --> 00:18:27,760 Speaker 1: a different way of thinking about how they would come 326 00:18:27,760 --> 00:18:30,360 Speaker 1: into the how they would come into the housing market 327 00:18:30,440 --> 00:18:32,119 Speaker 1: for the first time as their current rentors. On the 328 00:18:32,119 --> 00:18:34,399 Speaker 1: flip side, there also has been a lot of advancement 329 00:18:34,440 --> 00:18:38,440 Speaker 1: made when it comes to digitally pricing homes and moving 330 00:18:38,440 --> 00:18:40,639 Speaker 1: away from just a human assessor that comes in and 331 00:18:40,960 --> 00:18:44,280 Speaker 1: designates a value to your apartment in your house. Can 332 00:18:44,320 --> 00:18:46,359 Speaker 1: you give us a sense of how much that's getting 333 00:18:46,400 --> 00:18:52,480 Speaker 1: adopted in invaluation models, that's a great question. So specifically 334 00:18:52,520 --> 00:18:54,359 Speaker 1: in big cities where you have a lot of comparable 335 00:18:54,800 --> 00:18:58,199 Speaker 1: A d MS automation valuation models are very accurate and 336 00:18:58,200 --> 00:19:00,800 Speaker 1: can be used a lot by banks, and especially if 337 00:19:00,800 --> 00:19:02,920 Speaker 1: they're refinancing a house. So let's say that the house, 338 00:19:02,960 --> 00:19:05,440 Speaker 1: maybe it was sold a year ago, but the interest 339 00:19:05,520 --> 00:19:07,440 Speaker 1: rates drop a point, so they come back in and 340 00:19:07,560 --> 00:19:09,680 Speaker 1: do an a v M. That's used quite a bit then. 341 00:19:10,160 --> 00:19:13,320 Speaker 1: But again, when you get out more in the rural areas, 342 00:19:13,520 --> 00:19:15,600 Speaker 1: a lot of times you still probably need some of 343 00:19:15,640 --> 00:19:18,600 Speaker 1: that human input to make sure that you're getting the 344 00:19:18,960 --> 00:19:21,280 Speaker 1: right price points that you're learning against because there's not 345 00:19:21,359 --> 00:19:24,120 Speaker 1: as many comps. So the A v M models really 346 00:19:24,160 --> 00:19:27,240 Speaker 1: I think work well in larger urban areas, but when 347 00:19:27,240 --> 00:19:29,040 Speaker 1: you get into some of the more rural areas in 348 00:19:29,040 --> 00:19:31,680 Speaker 1: the country, you still need a combination of the data 349 00:19:31,680 --> 00:19:35,000 Speaker 1: and technology, but probably having a person to put an eyeball, 350 00:19:35,040 --> 00:19:36,840 Speaker 1: set of eyeballs, toll that helps to make sure you 351 00:19:36,880 --> 00:19:38,879 Speaker 1: have a right price point. So, Jeff, I know there 352 00:19:38,920 --> 00:19:41,280 Speaker 1: was a narrative out there for a while the millennials 353 00:19:41,320 --> 00:19:45,480 Speaker 1: and gen Z folks were not buying homes similar to 354 00:19:45,600 --> 00:19:48,080 Speaker 1: maybe past generations. Is that still the case or is 355 00:19:48,080 --> 00:19:51,680 Speaker 1: that evolving? It's evolving and we're actually starting to see 356 00:19:51,720 --> 00:19:54,160 Speaker 1: millennials and gen Z, which is you know, as defined 357 00:19:54,240 --> 00:19:56,920 Speaker 1: it's twenty four years old, starting to look to buy 358 00:19:57,400 --> 00:19:59,680 Speaker 1: much more right now. And so what's driving that? Which 359 00:19:59,720 --> 00:20:02,399 Speaker 1: drive it is you know, they're able to move, specially 360 00:20:02,520 --> 00:20:05,879 Speaker 1: millennials are able to move into the suburbs and so 361 00:20:05,920 --> 00:20:08,240 Speaker 1: they can actually find a house that they can afford. 362 00:20:08,320 --> 00:20:10,320 Speaker 1: The different here, though, is the way the workforces in 363 00:20:10,359 --> 00:20:12,639 Speaker 1: America are changing. Think about how many of us have 364 00:20:12,680 --> 00:20:15,920 Speaker 1: the opportunity to work remotely from home. So if you 365 00:20:15,960 --> 00:20:18,240 Speaker 1: can work remotely from home, now, all of a sudden, 366 00:20:18,240 --> 00:20:20,879 Speaker 1: they're not thinking about that commute like our parents might have, 367 00:20:21,040 --> 00:20:22,560 Speaker 1: you know, five days a week. If they can work 368 00:20:22,560 --> 00:20:25,000 Speaker 1: three days remote now let's saying okay, I can work 369 00:20:25,000 --> 00:20:27,240 Speaker 1: from home. I want to go live in the suburbs. 370 00:20:27,280 --> 00:20:29,880 Speaker 1: I can afford this, And then on top of that, 371 00:20:30,200 --> 00:20:33,840 Speaker 1: you're seeing a lot of smarter the developers putting together, 372 00:20:33,840 --> 00:20:36,840 Speaker 1: as the term called hip hip Serbia, where they're putting 373 00:20:36,880 --> 00:20:39,359 Speaker 1: together these communities in the areas that really kind of 374 00:20:39,359 --> 00:20:42,040 Speaker 1: make it feel more like it's an urban area. So 375 00:20:42,119 --> 00:20:46,199 Speaker 1: you've got, you know, walkable restaurants, you've got restaurants that 376 00:20:46,200 --> 00:20:48,560 Speaker 1: you would have want, places you want to go out, bars, 377 00:20:48,840 --> 00:20:50,720 Speaker 1: things that you can do in a very very nice, 378 00:20:51,080 --> 00:20:54,880 Speaker 1: uh central locations. So that's driving people from renting and saying, 379 00:20:54,880 --> 00:20:57,040 Speaker 1: you know what, we're gonna go ahead and we're gonna 380 00:20:57,040 --> 00:20:59,960 Speaker 1: buy what's all those new again hip strip malls? All right? 381 00:21:00,160 --> 00:21:03,000 Speaker 1: Like this, this is, this is It's been a phenomenal, 382 00:21:03,359 --> 00:21:06,680 Speaker 1: phenomenal conversation. Jeff Taylor, co founder managing director at Digital Risk, 383 00:21:07,240 --> 00:21:22,800 Speaker 1: joining us on the phone. Well, I think the market 384 00:21:22,840 --> 00:21:25,760 Speaker 1: consensus seems to be that the US and China are 385 00:21:25,880 --> 00:21:29,680 Speaker 1: inching along towards a trade negotiation, maybe a phase one 386 00:21:30,320 --> 00:21:33,240 Speaker 1: type of trade dealer. Next guest isn't so sure. Kamal 387 00:21:33,320 --> 00:21:37,160 Speaker 1: shri Kumar, president of Shri Kumar Global Strategies, good friend 388 00:21:37,200 --> 00:21:39,480 Speaker 1: of the show, joins us on the phone from Santa Monica. Shree, 389 00:21:39,520 --> 00:21:41,880 Speaker 1: thanks so much for joining US again. I know you've 390 00:21:42,040 --> 00:21:47,040 Speaker 1: generally been cautious about the I guess the progress that's 391 00:21:47,080 --> 00:21:51,800 Speaker 1: being made here between US and China. What's your current view? Uh, 392 00:21:51,920 --> 00:21:54,879 Speaker 1: thank you for having me, Paul, And in terms of views, 393 00:21:55,000 --> 00:21:57,600 Speaker 1: they haven't changed much at all. In terms of the 394 00:21:57,680 --> 00:22:02,560 Speaker 1: last several months b c. These trade talks start and 395 00:22:02,800 --> 00:22:07,480 Speaker 1: go on from about March at May two eighteen onwards, 396 00:22:07,480 --> 00:22:09,240 Speaker 1: so we have been on for more than a year 397 00:22:09,240 --> 00:22:12,560 Speaker 1: and a half. We have heard several times that progress 398 00:22:12,640 --> 00:22:16,359 Speaker 1: is being made. We even heard we were imminently completely 399 00:22:16,400 --> 00:22:19,520 Speaker 1: resolved with the accord, and then we have gone back 400 00:22:19,560 --> 00:22:22,879 Speaker 1: every time, probably with a Trump tweet or with a 401 00:22:23,080 --> 00:22:27,480 Speaker 1: with a different move or different camps within the Trump administration. 402 00:22:28,200 --> 00:22:30,600 Speaker 1: I don't think this is any different. I think the 403 00:22:30,640 --> 00:22:34,080 Speaker 1: basic problem is what the United States is demanding of 404 00:22:34,160 --> 00:22:39,080 Speaker 1: the Chinese, namely in terms of protection of intellectual property rights, 405 00:22:39,200 --> 00:22:43,119 Speaker 1: the ability to supervise that it is being done and 406 00:22:43,200 --> 00:22:46,840 Speaker 1: to make sure that forced mergers don't take place. That 407 00:22:47,080 --> 00:22:49,520 Speaker 1: is something it is going to be impossible for the 408 00:22:49,600 --> 00:22:54,760 Speaker 1: Chinese to concede. So either President Trump declares victory and 409 00:22:54,800 --> 00:22:58,440 Speaker 1: then comes away with whatever he has, or else does 410 00:22:58,480 --> 00:23:01,880 Speaker 1: nothing happen. I think in either case, we are left 411 00:23:02,000 --> 00:23:07,320 Speaker 1: with no complete accord before the November twenty twenty elections. Okay, 412 00:23:07,359 --> 00:23:09,440 Speaker 1: so that's what a lot of people are actually saying 413 00:23:09,480 --> 00:23:12,919 Speaker 1: that we're heading into with the best case scenario a 414 00:23:13,000 --> 00:23:16,040 Speaker 1: removal or a lack of implementation of the December tariffs 415 00:23:16,040 --> 00:23:18,520 Speaker 1: that would hit some of the consumer products in the 416 00:23:18,560 --> 00:23:22,800 Speaker 1: United States more extremely and just sort of a sense 417 00:23:22,960 --> 00:23:26,399 Speaker 1: that we're on hold here given that backdrop, let's make 418 00:23:26,400 --> 00:23:29,119 Speaker 1: that assumption. What does that mean in terms of the 419 00:23:29,160 --> 00:23:31,680 Speaker 1: effect on growth. Is it just sort of all systems 420 00:23:31,680 --> 00:23:36,960 Speaker 1: to go, everything is set to rally in given that, Lisa, Then, 421 00:23:37,200 --> 00:23:41,600 Speaker 1: as far as the US reaction to it is concerned, though, 422 00:23:41,720 --> 00:23:45,080 Speaker 1: the equity markets, which went up in anticipation of something 423 00:23:45,119 --> 00:23:48,119 Speaker 1: being reached once it is clear that there will be 424 00:23:48,160 --> 00:23:52,240 Speaker 1: nothing for another year to day back off because the 425 00:23:52,320 --> 00:23:55,439 Speaker 1: discounting of the trade accord is one part of the 426 00:23:55,440 --> 00:24:00,480 Speaker 1: equity run up. Second thing, the uncertainty for capital spending 427 00:24:00,520 --> 00:24:03,760 Speaker 1: in the United States, which has affected a capital spending 428 00:24:03,760 --> 00:24:07,240 Speaker 1: in recent quarters, is not going to go away, especially 429 00:24:07,240 --> 00:24:12,160 Speaker 1: with the trade uncertainty continuing. Third, we are finding out 430 00:24:12,200 --> 00:24:17,320 Speaker 1: that global trade has has slowed significantly based on numbers 431 00:24:17,320 --> 00:24:20,199 Speaker 1: which were released in the last couple of days, and 432 00:24:20,320 --> 00:24:22,399 Speaker 1: that too said just to me, that is going to 433 00:24:22,440 --> 00:24:27,040 Speaker 1: go hand in hand with slower global growth. And so 434 00:24:27,840 --> 00:24:31,000 Speaker 1: my expectations still continues to be, Lisa, that we go 435 00:24:31,080 --> 00:24:35,000 Speaker 1: into a recession starting about the middle of twenty twenty 436 00:24:35,000 --> 00:24:39,720 Speaker 1: in the United States and global growth being significantly slower 437 00:24:39,760 --> 00:24:44,639 Speaker 1: than in the past. So the Hong Kong situation is 438 00:24:44,680 --> 00:24:47,720 Speaker 1: making it presumably much more difficult on the trade front, 439 00:24:47,760 --> 00:24:50,880 Speaker 1: even though, uh, you know, there's talk that maybe they're 440 00:24:50,880 --> 00:24:53,760 Speaker 1: trying to keep separate parallel paths there. How do you 441 00:24:53,760 --> 00:24:57,560 Speaker 1: think the two are intertwined. The two are very intertwined. 442 00:24:58,000 --> 00:25:00,720 Speaker 1: Whatever they say, whatever, the two side may come out 443 00:25:00,760 --> 00:25:02,960 Speaker 1: and say, I don't think they can keep them apart. 444 00:25:03,440 --> 00:25:07,120 Speaker 1: And the reason is, let's assume that we have some 445 00:25:07,240 --> 00:25:10,080 Speaker 1: form of a tentative trade accord in the next few days, 446 00:25:10,760 --> 00:25:14,760 Speaker 1: and then the Hong Kong protests continue and the Chinese 447 00:25:14,760 --> 00:25:17,920 Speaker 1: forces in turn are sent across the water into Hong 448 00:25:18,000 --> 00:25:21,600 Speaker 1: Kong from the mainland in order to put down the demonstration. 449 00:25:21,680 --> 00:25:24,919 Speaker 1: Then all bets are off. Hong Kong loses its special 450 00:25:24,960 --> 00:25:30,000 Speaker 1: trade privileges according to US Congress determination in the next 451 00:25:30,040 --> 00:25:33,159 Speaker 1: ten days. In fact, only a week left for the 452 00:25:33,240 --> 00:25:36,320 Speaker 1: President to decide whether he's going to sign off on 453 00:25:36,400 --> 00:25:39,879 Speaker 1: the Hong Kong Support Bill, which passed unanimously in the 454 00:25:40,000 --> 00:25:43,520 Speaker 1: U S. Senate and with only one descent in the U. S. House. 455 00:25:44,240 --> 00:25:46,840 Speaker 1: Is if he does not do anything, it becomes law 456 00:25:46,960 --> 00:25:49,760 Speaker 1: at the passage of ten days, and that's not going 457 00:25:49,800 --> 00:25:53,480 Speaker 1: to please the Chinese all putting it all together, even 458 00:25:53,520 --> 00:25:56,960 Speaker 1: if you announce an accord, it doesn't get implemented or 459 00:25:57,119 --> 00:25:59,880 Speaker 1: there is. There are a few tweets essentially backing off 460 00:26:00,119 --> 00:26:02,640 Speaker 1: from the accord after that. So I think they are 461 00:26:02,880 --> 00:26:07,199 Speaker 1: very closely intertwined, and I see no easy resolution to 462 00:26:07,280 --> 00:26:11,119 Speaker 1: the Hong Kong situation. You cannot let the protests continue 463 00:26:11,160 --> 00:26:15,159 Speaker 1: indefinitely because that in turn gives a signal to minority 464 00:26:15,240 --> 00:26:18,240 Speaker 1: groups on the mainland that it's okay to do so. 465 00:26:18,760 --> 00:26:21,399 Speaker 1: On the other hand, if it is put down violently, 466 00:26:21,960 --> 00:26:24,959 Speaker 1: that wouldn't go well with the US Congress. Even if 467 00:26:25,000 --> 00:26:28,240 Speaker 1: President Trump may tolerate it, US Congress is not going 468 00:26:28,280 --> 00:26:30,760 Speaker 1: to So you have growing unrest in Hong Kong and 469 00:26:30,760 --> 00:26:33,760 Speaker 1: the questions about what the international response is going to 470 00:26:33,800 --> 00:26:37,240 Speaker 1: be in terms of toward Beijing. Those tensions rising US 471 00:26:37,359 --> 00:26:40,560 Speaker 1: China not getting necessarily closer to any kind of real 472 00:26:40,600 --> 00:26:44,119 Speaker 1: trade deal. The idea of that actually solidifying seems somewhat 473 00:26:44,160 --> 00:26:47,320 Speaker 1: more remote now than I did, say, twelve or eighteen 474 00:26:47,359 --> 00:26:52,919 Speaker 1: months ago. So by stocks um by stocks in the setup, no, 475 00:26:53,200 --> 00:26:55,080 Speaker 1: I would say this is this is not a good 476 00:26:55,080 --> 00:26:58,560 Speaker 1: scenario for buying stocks at all. Right, Well, so that's 477 00:26:58,600 --> 00:27:01,680 Speaker 1: that's actually I mean that that's counterintuitive. And the reason 478 00:27:01,680 --> 00:27:04,560 Speaker 1: why I said that is because everyone comes on and says, well, 479 00:27:04,640 --> 00:27:07,320 Speaker 1: there bearish, there, there bulls on risk heading into the 480 00:27:07,320 --> 00:27:12,320 Speaker 1: first half of I'm not bullish on risk coming into 481 00:27:12,359 --> 00:27:15,400 Speaker 1: twenty twenty. I see the fourth quarter. We have already 482 00:27:15,440 --> 00:27:18,960 Speaker 1: seen the Federal Reserve Bank of Atlanta looking for something 483 00:27:19,000 --> 00:27:21,960 Speaker 1: like a half a percent growth. This is much slower 484 00:27:22,000 --> 00:27:25,639 Speaker 1: than earlier quarters. We are going as we today we 485 00:27:25,720 --> 00:27:28,480 Speaker 1: found out that the U S. Consumer confidence number is 486 00:27:28,520 --> 00:27:31,280 Speaker 1: down for the fourth month in a row. You're going 487 00:27:31,359 --> 00:27:33,919 Speaker 1: to go into twenty twenty and if a LISA on 488 00:27:34,040 --> 00:27:37,159 Speaker 1: top of all this, you're going to add trade uncertainty. 489 00:27:37,359 --> 00:27:41,480 Speaker 1: I don't see how risk sets are benefiting. Lastly, look 490 00:27:41,520 --> 00:27:44,480 Speaker 1: at the signal from the U. S. Treasury market in 491 00:27:44,520 --> 00:27:48,000 Speaker 1: the last couple of days, even as the equities have rallied, 492 00:27:48,400 --> 00:27:52,080 Speaker 1: Treasury yields have come down, and if you look back 493 00:27:52,160 --> 00:27:57,040 Speaker 1: at past recessions, particularly the two thousand seven two nine recession, 494 00:27:57,720 --> 00:28:01,080 Speaker 1: the bond market was a very act. You're predictor of 495 00:28:01,119 --> 00:28:04,440 Speaker 1: the recession to come and the equities who are rallying 496 00:28:04,680 --> 00:28:08,160 Speaker 1: eight months into the recession, so you have to see 497 00:28:08,200 --> 00:28:11,399 Speaker 1: which signal you're going to take. It is possible that 498 00:28:11,440 --> 00:28:14,360 Speaker 1: equity investors will still hold on in the first part 499 00:28:14,400 --> 00:28:17,880 Speaker 1: of twenty twenty, in which case I think disappointment will 500 00:28:17,960 --> 00:28:21,600 Speaker 1: come more like mid to late twenty twenty. Kamal Street Kumar, 501 00:28:21,720 --> 00:28:24,160 Speaker 1: thank you so much for being with us. Of three 502 00:28:24,240 --> 00:28:28,960 Speaker 1: Kumar Global Strategies, President of the company. Thanks for listening 503 00:28:29,000 --> 00:28:31,720 Speaker 1: to the Bloomberg Penl podcast. You can subscribe and listen 504 00:28:31,760 --> 00:28:35,119 Speaker 1: to interviews at Apple Podcasts or whatever podcast platform you prefer. 505 00:28:35,320 --> 00:28:37,879 Speaker 1: I'm Paul Sweeney. I'm on Twitter at pt Sweeney and 506 00:28:38,000 --> 00:28:40,440 Speaker 1: Lisa Bramwo It's I'm on Twitter at Lisa A. Bramo. 507 00:28:40,520 --> 00:28:43,640 Speaker 1: It's one before the podcast. You can always catch us worldwide. 508 00:28:43,640 --> 00:28:44,600 Speaker 1: I'm Bloomberg Radio