1 00:00:00,320 --> 00:00:04,160 Speaker 1: Who you put your trust in matters. Investors have put 2 00:00:04,200 --> 00:00:07,640 Speaker 1: their trust in independent registered investment advisors to the tune 3 00:00:07,640 --> 00:00:12,240 Speaker 1: of four trillion dollars. Why learn more and find your 4 00:00:12,240 --> 00:00:28,280 Speaker 1: independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:28,680 --> 00:00:32,400 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:32,440 --> 00:00:37,480 Speaker 1: insight from the best in economics, finance, investment, and international relations. 7 00:00:37,880 --> 00:00:42,479 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 8 00:00:42,560 --> 00:00:51,720 Speaker 1: of course on the Bloomberg. Right now, let's bring in Robertson. 9 00:00:51,800 --> 00:00:54,160 Speaker 1: She's with Amber's Pure Pont Bob. We've been talking through 10 00:00:54,160 --> 00:00:57,480 Speaker 1: the morning about where we are. Is it a good 11 00:00:57,480 --> 00:01:02,880 Speaker 1: time to take advantage of the volatility that's coming or 12 00:01:03,040 --> 00:01:07,880 Speaker 1: is that a risky business? Pros love movement in the market, 13 00:01:08,360 --> 00:01:11,600 Speaker 1: that's where you make money. Things have been quiet supposedly. 14 00:01:11,959 --> 00:01:13,840 Speaker 1: Is it going to be more volatile into the end 15 00:01:13,840 --> 00:01:15,720 Speaker 1: of the year. I think we are going to see 16 00:01:15,800 --> 00:01:19,479 Speaker 1: significant increases in volatility as we go forward. I think 17 00:01:19,480 --> 00:01:23,120 Speaker 1: a couple of things are driving at One is obviously 18 00:01:23,160 --> 00:01:25,319 Speaker 1: the potential that the FED will finally high rates, and 19 00:01:25,360 --> 00:01:28,880 Speaker 1: that always tends to create some volatility. Uh. Second is 20 00:01:28,920 --> 00:01:32,080 Speaker 1: we have not only the election here. We have discussions 21 00:01:32,080 --> 00:01:35,440 Speaker 1: about Greek fiscal policy coming up later this year with 22 00:01:35,520 --> 00:01:38,600 Speaker 1: the EU potential there. We have a big referendum in 23 00:01:38,680 --> 00:01:42,880 Speaker 1: Italy coming up about the future governance there and what 24 00:01:42,959 --> 00:01:47,720 Speaker 1: that implies for for reforms going forward. We have ongoing 25 00:01:47,760 --> 00:01:51,080 Speaker 1: reform processes in a number of places Brazil, around the world. 26 00:01:51,120 --> 00:01:53,800 Speaker 1: So I think there are some catalyst as we go 27 00:01:53,840 --> 00:01:55,560 Speaker 1: into the latter part of the year. And of course 28 00:01:55,680 --> 00:01:58,440 Speaker 1: the central banks, I think is another big one. I 29 00:01:58,720 --> 00:02:02,279 Speaker 1: think central banks really are beginning to push back against 30 00:02:02,320 --> 00:02:04,880 Speaker 1: this notion that they can continue to solve all the 31 00:02:04,880 --> 00:02:07,080 Speaker 1: world's problem. David wants to go big and wide. Let 32 00:02:07,080 --> 00:02:09,520 Speaker 1: me go you right now. Is there a Monday trade 33 00:02:09,560 --> 00:02:12,080 Speaker 1: from Robert Sinch? I mean, is there something that just 34 00:02:12,840 --> 00:02:16,959 Speaker 1: screams because you know, you do some great obscure stuff. Yen, luony, 35 00:02:17,080 --> 00:02:19,839 Speaker 1: luoni yen, and that is there something that sticks out 36 00:02:19,960 --> 00:02:23,320 Speaker 1: right now? You know? We we we talked to a 37 00:02:23,360 --> 00:02:27,400 Speaker 1: couple of weeks ago about UM the movement down in 38 00:02:27,440 --> 00:02:29,679 Speaker 1: the pace SO and we thought that that to take 39 00:02:29,720 --> 00:02:32,720 Speaker 1: out the oil play. UM. You know, we could be 40 00:02:33,080 --> 00:02:36,680 Speaker 1: um short Canada long pace SO or short Russian Ruble 41 00:02:36,760 --> 00:02:39,960 Speaker 1: short pace so. Um, you know, I think we've had 42 00:02:40,120 --> 00:02:42,640 Speaker 1: a pretty good rebound now in the Mexican pace, so 43 00:02:42,720 --> 00:02:45,400 Speaker 1: from around twenty down to under nineteen. I think that 44 00:02:45,480 --> 00:02:48,600 Speaker 1: trade is is played out for now. I still think 45 00:02:48,600 --> 00:02:51,399 Speaker 1: we're going higher in the dollar, um. And I think 46 00:02:51,600 --> 00:02:53,760 Speaker 1: we could see you know, dollar yen higher, we could 47 00:02:53,840 --> 00:02:57,880 Speaker 1: see euro dollar lower. So I do think this is 48 00:02:58,200 --> 00:03:00,480 Speaker 1: an environment where the dollar is going to you better, 49 00:03:00,680 --> 00:03:03,639 Speaker 1: and we should look at the dollar versus a basket 50 00:03:03,680 --> 00:03:06,000 Speaker 1: of foreign currencies. Right, Tom mentioned this is a Monday, 51 00:03:06,040 --> 00:03:08,440 Speaker 1: a chance to regroup after what happened last week. Let's 52 00:03:08,440 --> 00:03:10,880 Speaker 1: talk about the flash crash, what we saw in Sterling 53 00:03:11,320 --> 00:03:13,640 Speaker 1: a few days hence. Now, what's your reaction to what 54 00:03:13,720 --> 00:03:16,000 Speaker 1: happened there? What? What? What conclusion should we draw from 55 00:03:16,000 --> 00:03:19,160 Speaker 1: what happened there? You know, in the foreign exchange world, 56 00:03:19,200 --> 00:03:22,240 Speaker 1: there is this because it's an over the counter market. Uh. 57 00:03:22,320 --> 00:03:24,760 Speaker 1: And there is this strange time between the clothes in 58 00:03:24,800 --> 00:03:29,040 Speaker 1: New York and the real opening time in Asia. Um. Now, 59 00:03:29,080 --> 00:03:31,560 Speaker 1: this was twenty years ago when I used to manage money, 60 00:03:31,560 --> 00:03:33,880 Speaker 1: but we used to leave overnight orders to go into 61 00:03:33,919 --> 00:03:39,160 Speaker 1: the Asian session. We would specifically limit no transactions between 62 00:03:39,240 --> 00:03:42,200 Speaker 1: five pm and seven pm New York time, because we 63 00:03:42,280 --> 00:03:45,480 Speaker 1: knew there was tremendous illiquidity going into this New Zealand 64 00:03:45,560 --> 00:03:49,400 Speaker 1: Australian marketplace. That's when we had this volatility again the 65 00:03:49,440 --> 00:03:52,120 Speaker 1: other night. And uh, you know, I would have thought 66 00:03:52,120 --> 00:03:54,480 Speaker 1: the markets had grown up from that, but there is 67 00:03:54,520 --> 00:03:57,360 Speaker 1: still that awkward period between the New York close and 68 00:03:57,360 --> 00:04:00,080 Speaker 1: the Singapore Hong Kong open when you can off and 69 00:04:00,200 --> 00:04:02,520 Speaker 1: get these very volatile moves in markets. And I think 70 00:04:02,560 --> 00:04:04,160 Speaker 1: that's what we saw the other Now, your sense there 71 00:04:04,200 --> 00:04:06,920 Speaker 1: is it was a liquidity issue, nothing nothing more. I 72 00:04:06,920 --> 00:04:09,040 Speaker 1: think it was a liquidity issue. We may find out 73 00:04:09,080 --> 00:04:11,720 Speaker 1: in some earnings reports that there was some errors made 74 00:04:11,720 --> 00:04:15,080 Speaker 1: somewhere along the way, um, but clearly it was. It 75 00:04:15,200 --> 00:04:18,000 Speaker 1: was such a disorderly move that you have to chalk 76 00:04:18,080 --> 00:04:21,960 Speaker 1: this up to illiquidity and probably an error that somebody 77 00:04:21,960 --> 00:04:24,400 Speaker 1: will will fess up to at some point in the future. 78 00:04:24,440 --> 00:04:26,640 Speaker 1: I'm embarrassed, Bob that I didn't bring this up earlier 79 00:04:26,680 --> 00:04:30,280 Speaker 1: this morning. Let's cover it right now. I noticed obviously 80 00:04:30,320 --> 00:04:33,960 Speaker 1: weak sterling, but just in the last week week euro 81 00:04:34,240 --> 00:04:37,719 Speaker 1: as well. It's almost like a little wind shifting here. 82 00:04:39,000 --> 00:04:44,760 Speaker 1: Sterling dollar is cable, euro, Sterling is across the channel fuel, 83 00:04:44,880 --> 00:04:47,839 Speaker 1: which do you look at? Which matters here? Well, I 84 00:04:47,880 --> 00:04:51,600 Speaker 1: think again this becomes is this a just a move 85 00:04:51,680 --> 00:04:55,080 Speaker 1: down for sterling or is this a move up for 86 00:04:55,120 --> 00:04:58,400 Speaker 1: the dollar? You know, we've seen dollar yen back up 87 00:04:58,440 --> 00:05:01,040 Speaker 1: above one oh three, it held that one hundred level 88 00:05:01,040 --> 00:05:03,200 Speaker 1: back at one oh three. We've seen euro dollar come 89 00:05:03,240 --> 00:05:07,680 Speaker 1: below one twelve. We've seen sterling obviously move lower. At 90 00:05:07,720 --> 00:05:10,880 Speaker 1: what point do we start talking about a stronger dollar 91 00:05:11,120 --> 00:05:13,320 Speaker 1: rather than just a weak cable. And I think we're 92 00:05:13,360 --> 00:05:15,320 Speaker 1: at that point round right now. You know, if you 93 00:05:15,360 --> 00:05:19,240 Speaker 1: look at at five year interest rate differentials around the world, 94 00:05:19,440 --> 00:05:22,480 Speaker 1: you know, five year swap rate in the US relative 95 00:05:22,560 --> 00:05:26,440 Speaker 1: to five year swap rates in in other major countries, 96 00:05:26,600 --> 00:05:29,479 Speaker 1: and you wait that by the waitings of the Dollar 97 00:05:29,600 --> 00:05:32,880 Speaker 1: index at d x Y, this is the widest differential 98 00:05:32,880 --> 00:05:36,599 Speaker 1: in favor of the dollar this year. So quietly, over 99 00:05:36,640 --> 00:05:39,599 Speaker 1: the last couple of weeks, interest rate differentials really have 100 00:05:39,800 --> 00:05:42,839 Speaker 1: shifted back in favor of the dollar. And suddenly it's 101 00:05:42,839 --> 00:05:46,120 Speaker 1: the dollar moving higher rather than sterling moving lower. But 102 00:05:46,200 --> 00:05:50,279 Speaker 1: then the euro goes with ster What I'm in, what 103 00:05:50,400 --> 00:05:54,839 Speaker 1: I'm seeing as an amateur, is euros becoming attached to sterling. 104 00:05:54,960 --> 00:05:58,200 Speaker 1: Is that a wrong assessment. I think it's more than 105 00:05:58,240 --> 00:06:01,320 Speaker 1: the dollar is moving higher and the euro actually I 106 00:06:01,360 --> 00:06:04,839 Speaker 1: think is is holding up better um than I would 107 00:06:04,880 --> 00:06:07,159 Speaker 1: have expected it. And David, this is really important, and 108 00:06:07,200 --> 00:06:10,560 Speaker 1: this is the compensating factors of different currency pairs. One 109 00:06:10,560 --> 00:06:12,880 Speaker 1: of the biggest mistakes I see in for an exchange 110 00:06:12,920 --> 00:06:15,880 Speaker 1: analysis is we don't look at them as pair traits. 111 00:06:16,360 --> 00:06:19,559 Speaker 1: And there's a set of pair trades. Of course, David, 112 00:06:19,600 --> 00:06:23,600 Speaker 1: you had memorized permutations and combinations. I mean, I mean, 113 00:06:24,000 --> 00:06:27,080 Speaker 1: do you know that David's from Brooklyn and Bob he 114 00:06:27,279 --> 00:06:31,960 Speaker 1: learned permutations and combinations growing kale on his roof because 115 00:06:32,000 --> 00:06:36,400 Speaker 1: he knows there's like a hybrid lens, hybrid lens of kale. 116 00:06:36,800 --> 00:06:39,160 Speaker 1: It's the same way in foreign exchange. David, I have 117 00:06:39,160 --> 00:06:41,000 Speaker 1: a modern day Mendel. Let me ask you more about 118 00:06:41,000 --> 00:06:42,680 Speaker 1: the pace. So, as I mentioned, you had this great 119 00:06:42,720 --> 00:06:45,719 Speaker 1: note Mexico and oil not connected here. You know, we 120 00:06:45,760 --> 00:06:47,800 Speaker 1: had the debate last night, we've been tracking the pay 121 00:06:47,880 --> 00:06:50,799 Speaker 1: so with Donald Trump's pull rings, with Hillary Clinton's pullings, 122 00:06:50,800 --> 00:06:52,160 Speaker 1: you have sort of a novel look at what we're 123 00:06:52,160 --> 00:06:55,039 Speaker 1: seeing there. Yeah, I mean I think that you know 124 00:06:55,120 --> 00:06:58,760 Speaker 1: there are there are two different time frames to look at, right, 125 00:06:58,800 --> 00:07:02,320 Speaker 1: And I think that UM, the rebound and oil had 126 00:07:02,480 --> 00:07:05,880 Speaker 1: not been showing up in the pay so UM primarily 127 00:07:05,880 --> 00:07:09,400 Speaker 1: because of this uncertainty about the election outcome. UM. And 128 00:07:09,440 --> 00:07:11,920 Speaker 1: as we pull that away, you sort of get back 129 00:07:11,920 --> 00:07:15,760 Speaker 1: to fundamentals and and uh, you know, in the short run, 130 00:07:16,120 --> 00:07:19,880 Speaker 1: there is so little going on in these markets these days, 131 00:07:19,960 --> 00:07:23,520 Speaker 1: and so few drivers in the foreign exchange markets that 132 00:07:23,600 --> 00:07:27,240 Speaker 1: traders are willing to to basically jump on anything that's moving. 133 00:07:27,680 --> 00:07:31,960 Speaker 1: And so I think the notion of this um, you know, 134 00:07:32,040 --> 00:07:35,880 Speaker 1: Trump victory probability and movements in the pace so really 135 00:07:35,920 --> 00:07:37,920 Speaker 1: caught on in the markets, and it becomes a self 136 00:07:37,920 --> 00:07:40,680 Speaker 1: fulfilling prophecy, right if people think that other people are 137 00:07:40,680 --> 00:07:44,040 Speaker 1: going to trade dollar pace so based on the election movements, 138 00:07:44,080 --> 00:07:46,800 Speaker 1: and they'll start doing it, and it feeds on itself, 139 00:07:47,160 --> 00:07:49,680 Speaker 1: and that works until it doesn't. And I have a 140 00:07:49,720 --> 00:07:52,360 Speaker 1: feeling that you know, obviously over the next three weeks 141 00:07:52,400 --> 00:07:54,480 Speaker 1: we're gonna find out that there are four weeks that 142 00:07:54,520 --> 00:07:57,239 Speaker 1: it doesn't work anymore because we've we passed the election. 143 00:07:57,560 --> 00:07:59,640 Speaker 1: But I think we're starting to do that. And I 144 00:07:59,640 --> 00:08:02,320 Speaker 1: think that part of what the movement and the big 145 00:08:02,360 --> 00:08:04,400 Speaker 1: movement up in the Peso in the last a week 146 00:08:04,480 --> 00:08:07,560 Speaker 1: or so has been a realization that, hey, you know, 147 00:08:07,760 --> 00:08:10,240 Speaker 1: energy prices have gone up, oil prices have gone up. 148 00:08:10,880 --> 00:08:13,720 Speaker 1: We've completely forgot about this relationship with oil and now 149 00:08:13,760 --> 00:08:15,240 Speaker 1: I think there's a bit of a catch up move 150 00:08:15,320 --> 00:08:19,720 Speaker 1: going on. Robert Sinch with this amorous Pierpunt updateus on 151 00:08:19,880 --> 00:08:24,680 Speaker 1: the institution that is this Federal Reserve system. Mr Trump 152 00:08:24,800 --> 00:08:28,760 Speaker 1: wants to go after this institution and that would President 153 00:08:28,760 --> 00:08:32,680 Speaker 1: Trump change the FED? You know, I think one of 154 00:08:32,679 --> 00:08:36,040 Speaker 1: the concerns, you know, I have a couple of concerns 155 00:08:36,080 --> 00:08:38,960 Speaker 1: about central banks. One that I think they've played their 156 00:08:38,960 --> 00:08:41,440 Speaker 1: hands as far as they can and they really are 157 00:08:42,080 --> 00:08:44,800 Speaker 1: running out of options and anything that's really going to 158 00:08:44,880 --> 00:08:49,559 Speaker 1: affect the economies and inflation going forward. The second is 159 00:08:49,679 --> 00:08:53,520 Speaker 1: this little bubbling up of intrusion on central bank independence. 160 00:08:53,559 --> 00:08:55,959 Speaker 1: We've seen a little bit of it in Japan where 161 00:08:56,400 --> 00:08:59,640 Speaker 1: people around Prime Minister Abbe have been making comments about 162 00:08:59,640 --> 00:09:01,959 Speaker 1: how the ee O J needs to continue to take 163 00:09:02,080 --> 00:09:05,800 Speaker 1: more action. Um, I'm not sure what's really left for 164 00:09:05,840 --> 00:09:08,600 Speaker 1: them to do. That's a big demographic problem they're facing 165 00:09:08,600 --> 00:09:12,600 Speaker 1: in Japan. Uh. We've seen Prime Minister May in the 166 00:09:12,720 --> 00:09:15,800 Speaker 1: UK make a couple of pretty shocking statements. One of 167 00:09:15,840 --> 00:09:19,720 Speaker 1: them was about the side effects of central bank actions. 168 00:09:19,800 --> 00:09:22,400 Speaker 1: I'm not exactly sure what the implication of that was. 169 00:09:23,040 --> 00:09:24,920 Speaker 1: And now I think, you know, we we certainly saw 170 00:09:25,080 --> 00:09:27,840 Speaker 1: last night that that Mr Trump said he would instruct 171 00:09:28,280 --> 00:09:31,640 Speaker 1: you know, a attorney general, an attorney general to look 172 00:09:31,640 --> 00:09:35,080 Speaker 1: into Hillary Clinton's I mean, this is kind of unprecedented stuff. 173 00:09:35,080 --> 00:09:37,599 Speaker 1: You wonder what he would instruct the Treasury secretary to 174 00:09:37,640 --> 00:09:41,480 Speaker 1: do about monetary policy. So I think there is this 175 00:09:41,600 --> 00:09:44,760 Speaker 1: concern that after holding up monetary policy is the real 176 00:09:45,160 --> 00:09:49,640 Speaker 1: savior for the global economies, that now that they're running 177 00:09:49,640 --> 00:09:52,800 Speaker 1: on empty uh and fiscal policy is nowhere to be seen, 178 00:09:52,880 --> 00:09:56,480 Speaker 1: that they start encroaching more on monetary policy. Um, and 179 00:09:56,800 --> 00:09:59,840 Speaker 1: I think it's a concern about central bank independence going forward. 180 00:10:00,040 --> 00:10:02,480 Speaker 1: Had stand Fisher, the vice chairs speak yesterday, Janet Yellen 181 00:10:02,520 --> 00:10:04,440 Speaker 1: speaking at the Boston FED later this week, do you 182 00:10:04,480 --> 00:10:07,000 Speaker 1: think that the Yelling Fed could be doing more to 183 00:10:07,040 --> 00:10:10,880 Speaker 1: emphasize this point that it is not subject to political winds. 184 00:10:11,240 --> 00:10:13,280 Speaker 1: You you hear it from the outside, you here economists 185 00:10:13,320 --> 00:10:16,640 Speaker 1: defending it, but um, we haven't heard explicitly from a 186 00:10:16,720 --> 00:10:19,440 Speaker 1: chair Janet Yellen, at least not not explicitly and not 187 00:10:19,559 --> 00:10:22,200 Speaker 1: in quantity. A lot here about the independence of the Fed. 188 00:10:22,440 --> 00:10:25,160 Speaker 1: You know. Knowing some people who have been with the FED, 189 00:10:25,320 --> 00:10:28,400 Speaker 1: my guess is they're pretty baffled by this. I think 190 00:10:28,440 --> 00:10:31,199 Speaker 1: they're sitting there going, wait a second, we're the only 191 00:10:31,240 --> 00:10:34,520 Speaker 1: ones who have been acting here. Um, we are. We 192 00:10:34,559 --> 00:10:37,920 Speaker 1: are not political in our decision process, although they've been 193 00:10:37,920 --> 00:10:41,520 Speaker 1: accused of that, UM. And I think that that they 194 00:10:41,559 --> 00:10:44,559 Speaker 1: get a little surprised at these things even bubble up 195 00:10:44,600 --> 00:10:47,880 Speaker 1: like this. Um, we'll probably get a bit defensive about it, 196 00:10:47,960 --> 00:10:51,600 Speaker 1: circle the wagons as they normally do. UM. But I 197 00:10:51,600 --> 00:10:53,480 Speaker 1: think part of this is they they brought it on 198 00:10:53,559 --> 00:10:57,880 Speaker 1: themselves by their rhetoric of talking about about normalizing policy 199 00:10:57,920 --> 00:11:00,199 Speaker 1: and then not doing it. A whole seg inn of 200 00:11:00,240 --> 00:11:03,240 Speaker 1: the American population that is wondering why they saved and 201 00:11:03,240 --> 00:11:06,679 Speaker 1: why they're not getting any return on those savings for retirement. 202 00:11:07,240 --> 00:11:09,679 Speaker 1: So I think a lot of of of tensions are 203 00:11:09,720 --> 00:11:13,240 Speaker 1: bubbling up and again because fiscal policy around the world 204 00:11:13,320 --> 00:11:17,000 Speaker 1: has been so non participatory in this process, what do 205 00:11:17,040 --> 00:11:20,040 Speaker 1: people do. They keep focusing back on the monetary authorities 206 00:11:20,080 --> 00:11:24,320 Speaker 1: around the world. UM as as miracle workers, and I 207 00:11:24,360 --> 00:11:26,560 Speaker 1: think they need to keep pushing back and saying they've 208 00:11:26,600 --> 00:11:31,000 Speaker 1: done what they can do. I I wonder as you 209 00:11:31,040 --> 00:11:33,360 Speaker 1: look ahead, there's so much scuttle but here that Leo 210 00:11:33,400 --> 00:11:36,199 Speaker 1: Brander might be a Hillary Clinton Treasury search differences this 211 00:11:36,280 --> 00:11:37,880 Speaker 1: can preclude that from happening. Do you think if if 212 00:11:37,960 --> 00:11:40,640 Speaker 1: Hillary Clinton would be elected? No, I don't think so. 213 00:11:40,800 --> 00:11:44,600 Speaker 1: I think that that, um, you know, there there may 214 00:11:44,600 --> 00:11:46,959 Speaker 1: be some concern about you used to worry about movements 215 00:11:46,960 --> 00:11:49,360 Speaker 1: between the Fed and Wall Street, now that they have 216 00:11:49,440 --> 00:11:52,440 Speaker 1: movements between the Fed and the Treasury. But I think 217 00:11:52,480 --> 00:11:56,320 Speaker 1: that that once somebody leaves the Fed, um, you know, 218 00:11:56,440 --> 00:11:59,320 Speaker 1: their I D doesn't work at the doors anymore. Uh, 219 00:11:59,360 --> 00:12:02,480 Speaker 1: they can't get ready access. So I don't think that's 220 00:12:02,520 --> 00:12:06,160 Speaker 1: a tremendous issue. I think you know, clearly there was. 221 00:12:06,400 --> 00:12:09,880 Speaker 1: It was a very political appointment, uh to the to 222 00:12:09,679 --> 00:12:12,960 Speaker 1: to have her participating in the in the federal reserve system. 223 00:12:13,040 --> 00:12:15,880 Speaker 1: So you know, I think that that, you know, that 224 00:12:15,960 --> 00:12:17,960 Speaker 1: might actually be a little bit healthier in terms of 225 00:12:18,000 --> 00:12:21,760 Speaker 1: re establishing the the the political nature of the fat 226 00:12:22,480 --> 00:12:24,600 Speaker 1: Bob same, Thank you so much with the MS pure Pint, 227 00:12:24,760 --> 00:12:28,079 Speaker 1: greatly appreciate your attendant's unclosed. Good, you have your good 228 00:12:28,080 --> 00:12:44,280 Speaker 1: to be here here, David. My favorite tweet last night 229 00:12:44,360 --> 00:12:46,000 Speaker 1: was from a woman. Well there was the one for 230 00:12:46,200 --> 00:12:48,920 Speaker 1: Jason over at the Journal who said, my television just 231 00:12:49,040 --> 00:12:51,560 Speaker 1: threw itself out the window. Let's just go with that 232 00:12:51,640 --> 00:12:56,120 Speaker 1: thing now as we bringing Greg Greg Horizon Investments. Your 233 00:12:56,160 --> 00:12:59,680 Speaker 1: your notes have been absolutely fabulous. And to keep the 234 00:12:59,679 --> 00:13:03,000 Speaker 1: base ball thing going, Mr Vlier, Mr Trump needed a 235 00:13:03,000 --> 00:13:04,959 Speaker 1: home run and he hit a double. Was it a 236 00:13:05,040 --> 00:13:07,520 Speaker 1: legit double off the wall or was it a ground 237 00:13:07,600 --> 00:13:11,240 Speaker 1: rule double in Yankee Stadium? Hi? Tim, good morning. Now. 238 00:13:11,320 --> 00:13:13,000 Speaker 1: I think it was a legit double. I think he 239 00:13:13,080 --> 00:13:15,880 Speaker 1: really energized his bass, which she had to do. They're 240 00:13:15,880 --> 00:13:19,000 Speaker 1: going to turn out if it's windy and raining in Ohio. 241 00:13:19,200 --> 00:13:21,520 Speaker 1: They're turning out, and I think you know he spoke 242 00:13:21,600 --> 00:13:24,440 Speaker 1: to them. Did he add any new support? Well, that's 243 00:13:24,480 --> 00:13:26,640 Speaker 1: the issue. I'm not sure he did. Let me bring 244 00:13:26,640 --> 00:13:28,840 Speaker 1: it over to Secretary Clinton. The f T had a 245 00:13:28,840 --> 00:13:31,600 Speaker 1: great chart the other day of a certain blue collar 246 00:13:31,679 --> 00:13:36,920 Speaker 1: county in Ohio. She's got to get marginal voters with 247 00:13:37,080 --> 00:13:41,320 Speaker 1: the weekend she had. Can she do that? Yeah? I 248 00:13:41,360 --> 00:13:44,120 Speaker 1: think she can. I think that, uh, I would say 249 00:13:44,120 --> 00:13:46,800 Speaker 1: the weekend Trump had. You know, I'm not sure he's 250 00:13:46,800 --> 00:13:49,640 Speaker 1: going to bring a lot of those voters either. You 251 00:13:49,679 --> 00:13:52,120 Speaker 1: know that if you step back just for a second 252 00:13:52,120 --> 00:13:54,679 Speaker 1: and look at the forest rather than the trees, I mean, 253 00:13:54,720 --> 00:13:58,640 Speaker 1: the forest is there's been massive defections among Republicans who 254 00:13:58,720 --> 00:14:01,800 Speaker 1: were really worried. Now they not only would lose the Senate, 255 00:14:02,040 --> 00:14:04,480 Speaker 1: but they might even lose the House as well. So 256 00:14:04,520 --> 00:14:07,040 Speaker 1: you've got a really anxious party. I'm not sure one 257 00:14:07,400 --> 00:14:11,839 Speaker 1: pretty good debate performance by Trump is going to change that. Greg, 258 00:14:11,840 --> 00:14:13,839 Speaker 1: what do you make of the degree to which that tape, 259 00:14:13,840 --> 00:14:16,600 Speaker 1: which was released on on Friday afternoon published by The 260 00:14:16,640 --> 00:14:18,640 Speaker 1: Washington Post, played a role in this debate. I look 261 00:14:18,679 --> 00:14:20,440 Speaker 1: back on what happened last night, you can almost cut 262 00:14:20,480 --> 00:14:23,680 Speaker 1: the debate into There was the first thirty minutes, which 263 00:14:23,680 --> 00:14:25,720 Speaker 1: I would say ex very contentious, and it played a 264 00:14:25,800 --> 00:14:28,040 Speaker 1: major role there. This isn't something that Secretary Clint came 265 00:14:28,080 --> 00:14:30,480 Speaker 1: back to though at the end of the debate, a 266 00:14:30,560 --> 00:14:32,680 Speaker 1: sigh of relief from the Trump campaign that this is 267 00:14:32,680 --> 00:14:35,400 Speaker 1: now at least in part behind him. What do you 268 00:14:35,400 --> 00:14:37,440 Speaker 1: make of how it played out in the debate? It's 269 00:14:37,440 --> 00:14:41,880 Speaker 1: in part behind him, assuming there are no additional disclosures, 270 00:14:41,920 --> 00:14:44,360 Speaker 1: and I am not willing to make that prediction. I 271 00:14:44,400 --> 00:14:47,840 Speaker 1: think that there could be more bombshells for both of them, 272 00:14:47,840 --> 00:14:51,160 Speaker 1: with her from wiki leaks, with him with taxes. I'm 273 00:14:51,200 --> 00:14:53,520 Speaker 1: not sure The New York Times has released all that 274 00:14:53,600 --> 00:14:56,280 Speaker 1: they have, and of course with him and other women. 275 00:14:56,600 --> 00:15:00,720 Speaker 1: So we've got another month of this cringe inducing campaign 276 00:15:00,800 --> 00:15:03,239 Speaker 1: to go, and I think there's going to be more disclosures. 277 00:15:03,600 --> 00:15:07,480 Speaker 1: You mentioned the defections on the Republican side. What was 278 00:15:07,560 --> 00:15:11,760 Speaker 1: it about this tape, about these comments in particular that 279 00:15:11,880 --> 00:15:15,440 Speaker 1: were so distasteful? Yes, the vulgarity, for sure. But but 280 00:15:15,720 --> 00:15:17,360 Speaker 1: there will be those who say this is nothing new. 281 00:15:17,400 --> 00:15:19,880 Speaker 1: We we we knew at least what Donald Trump was like, 282 00:15:19,960 --> 00:15:22,320 Speaker 1: if not what he is like. Why why did this 283 00:15:22,360 --> 00:15:24,760 Speaker 1: happen now? Well, I say two things. Number one, what 284 00:15:24,760 --> 00:15:27,560 Speaker 1: do you describe doing as a felony? Last time I checked? 285 00:15:27,960 --> 00:15:31,800 Speaker 1: Number Two, I think that a lot of Republicans you said, 286 00:15:31,800 --> 00:15:34,240 Speaker 1: oh my god, he's talked about growing women. I think 287 00:15:34,240 --> 00:15:36,800 Speaker 1: they're real concern, as I said earlier, is that they 288 00:15:36,800 --> 00:15:39,640 Speaker 1: could lose Congress. I mean they're looking at potentially a 289 00:15:39,760 --> 00:15:43,320 Speaker 1: really ugly election. I think that motivated a lot of 290 00:15:43,320 --> 00:15:47,800 Speaker 1: the defections. Help me here, Greg, with with all that 291 00:15:47,880 --> 00:15:51,640 Speaker 1: we've observed in the in the final twenty days of 292 00:15:51,640 --> 00:15:54,400 Speaker 1: the election. There was a whisper of a moment last 293 00:15:54,520 --> 00:15:59,160 Speaker 1: night where Secretary Clinton shifted from the dance over to 294 00:15:59,600 --> 00:16:02,880 Speaker 1: I will represent all Americans. And I turned to someone 295 00:16:02,880 --> 00:16:05,440 Speaker 1: who was watching the debate with and said, that's the 296 00:16:05,560 --> 00:16:09,400 Speaker 1: first moment where she's speaking to all the voters and 297 00:16:09,480 --> 00:16:13,040 Speaker 1: not just the usual constituencies. Did you sense that or 298 00:16:13,080 --> 00:16:17,720 Speaker 1: does that wit? October nine? Yeah, yeah, I think Tom 299 00:16:17,840 --> 00:16:20,080 Speaker 1: that in the last week or two, when you make 300 00:16:20,080 --> 00:16:23,480 Speaker 1: your closing pitch, the candidates usually get a lot more 301 00:16:23,840 --> 00:16:29,600 Speaker 1: bipartisan tiid and cue the music. Better Angels, We're not 302 00:16:29,680 --> 00:16:31,480 Speaker 1: We're not there yet. I think we got a waste 303 00:16:31,480 --> 00:16:34,680 Speaker 1: to go before we hear that kind of talk. David 304 00:16:34,720 --> 00:16:36,960 Speaker 1: to put it in the tweet I love last night 305 00:16:37,080 --> 00:16:39,880 Speaker 1: as Mr Velier speaks to the Better Angels. Was the 306 00:16:39,920 --> 00:16:42,520 Speaker 1: woman who said, look, it's like Game of Thrones. You 307 00:16:42,600 --> 00:16:45,320 Speaker 1: tell the kids go do something, you close the door, 308 00:16:45,640 --> 00:16:48,160 Speaker 1: you turn a volume down, and you have your thumb 309 00:16:48,360 --> 00:16:51,280 Speaker 1: the revote control if the kids come in the room. 310 00:16:51,560 --> 00:16:54,200 Speaker 1: That's what the beginning of the debate was like last night. Wondering, 311 00:16:54,280 --> 00:16:56,680 Speaker 1: wondering what was going to happen. Greg talk about the 312 00:16:56,800 --> 00:16:59,360 Speaker 1: undecided nous in the room, I mean, it's it's it 313 00:16:59,440 --> 00:17:02,880 Speaker 1: seems this campaign has gone on for so long, many 314 00:17:02,920 --> 00:17:05,400 Speaker 1: many months. Now you have a room of undecided voters. 315 00:17:05,440 --> 00:17:07,719 Speaker 1: I'd say that the voters who were on stage with 316 00:17:07,760 --> 00:17:10,280 Speaker 1: the two candidates didn't actually ask many questions. I think 317 00:17:10,280 --> 00:17:11,840 Speaker 1: that the two candidates took a lot of care of 318 00:17:11,840 --> 00:17:13,800 Speaker 1: a lot of the back and forth themselves here. But 319 00:17:14,000 --> 00:17:17,440 Speaker 1: how real is the undecided factor right now? I don't 320 00:17:17,480 --> 00:17:21,359 Speaker 1: think it's that big anymore. Maybe there's still five of 321 00:17:21,400 --> 00:17:24,560 Speaker 1: the electorate that could be swayed, but it's dwindling and 322 00:17:24,720 --> 00:17:26,960 Speaker 1: I'm not sure. You know, one of the big takeaways 323 00:17:27,000 --> 00:17:29,480 Speaker 1: from last night is that I'm not sure they moved 324 00:17:29,520 --> 00:17:33,160 Speaker 1: the needle that much. You know, Trump again really rallied 325 00:17:33,200 --> 00:17:36,520 Speaker 1: his base. They're motivated to vote for him. But I 326 00:17:36,560 --> 00:17:40,640 Speaker 1: think among these undecided there's one issue, if I might, 327 00:17:40,720 --> 00:17:43,479 Speaker 1: there's one issue that still has to be addressed, and 328 00:17:43,520 --> 00:17:46,480 Speaker 1: that's pro growth. I've been harping on this for a 329 00:17:46,520 --> 00:17:50,199 Speaker 1: long time. I think that her agenda more regulations and 330 00:17:50,240 --> 00:17:53,639 Speaker 1: you know, more higher taxes, is not pro growth. I 331 00:17:53,720 --> 00:17:57,560 Speaker 1: think if Trump realized that he could make some inroads there. 332 00:17:58,119 --> 00:18:01,040 Speaker 1: Does he have a campaign staff? I say this, folks, 333 00:18:01,119 --> 00:18:03,600 Speaker 1: I mean you know, full disclosure. I was outside the 334 00:18:03,600 --> 00:18:06,840 Speaker 1: Trump Tower yesterday and Greg, it was such a zoo 335 00:18:06,920 --> 00:18:09,479 Speaker 1: with a naked cowboy and the rest of it. We 336 00:18:09,480 --> 00:18:12,480 Speaker 1: we went across the street and around it because we 337 00:18:12,520 --> 00:18:17,000 Speaker 1: didn't want aerrabs to see it and and help me here. 338 00:18:17,119 --> 00:18:20,639 Speaker 1: Does he have a cane pick campaign staff? Well, you 339 00:18:20,640 --> 00:18:22,280 Speaker 1: look at some of the key states and you have 340 00:18:22,359 --> 00:18:25,159 Speaker 1: to talk about the ground game. It's kind of our cane. 341 00:18:25,560 --> 00:18:28,080 Speaker 1: But those of us who are really into this wouldn't 342 00:18:28,080 --> 00:18:30,800 Speaker 1: tell you that in a lot of key states like Florida, 343 00:18:31,160 --> 00:18:34,480 Speaker 1: he had a bunch of amateurs working for him, poorly funded, 344 00:18:34,760 --> 00:18:37,800 Speaker 1: have never really worked on campaigns. Her ground game is 345 00:18:37,880 --> 00:18:40,439 Speaker 1: really good and in a close election that could be 346 00:18:40,480 --> 00:18:43,720 Speaker 1: worth half a point half half a half point, yeah, 347 00:18:43,800 --> 00:18:46,399 Speaker 1: half a points important in a close state. There was 348 00:18:46,440 --> 00:18:49,720 Speaker 1: a moment during the debate when my jaw dropped Martha 349 00:18:49,800 --> 00:18:53,919 Speaker 1: rat It's asking about Syria, and what emerged was a 350 00:18:54,000 --> 00:18:57,720 Speaker 1: real disconnect between one Donald Trump and one Mike Pence. 351 00:18:58,359 --> 00:19:00,879 Speaker 1: She pointed out that they've said two different things about 352 00:19:00,920 --> 00:19:03,960 Speaker 1: what the course of action should be in that country 353 00:19:03,960 --> 00:19:08,560 Speaker 1: with regard to to Russia's participation. Uh. And Donald Trump 354 00:19:08,600 --> 00:19:11,119 Speaker 1: allowed that it was something that he and Mike Pence 355 00:19:11,160 --> 00:19:14,080 Speaker 1: had had not discussed this, I said, last hour, five 356 00:19:14,160 --> 00:19:15,760 Speaker 1: days in here, these two have been running mates and 357 00:19:15,920 --> 00:19:18,159 Speaker 1: and is it how surprising is it to you here 358 00:19:18,200 --> 00:19:20,120 Speaker 1: that this isn't something that's come up. I think it's 359 00:19:20,119 --> 00:19:22,000 Speaker 1: a big deal, David. I mean, first of all, I 360 00:19:22,040 --> 00:19:25,160 Speaker 1: think over the weekend Pence was a gassed over that 361 00:19:25,280 --> 00:19:29,639 Speaker 1: tape and the sexual stuff. He's a conservative Christian and 362 00:19:29,680 --> 00:19:32,400 Speaker 1: I think that Trump threw him under the bus last 363 00:19:32,480 --> 00:19:36,479 Speaker 1: night on Syria very dismissively. And currently so there's not 364 00:19:36,520 --> 00:19:38,320 Speaker 1: a lot a lot of love between the two. There's 365 00:19:38,359 --> 00:19:40,760 Speaker 1: been rumoring and Pence might leave the ticket. I don't 366 00:19:40,760 --> 00:19:43,439 Speaker 1: think he's going anywhere because if he endures this for 367 00:19:43,480 --> 00:19:47,240 Speaker 1: another month, he becomes one of the front runners. Well 368 00:19:47,280 --> 00:19:49,480 Speaker 1: that's right where I wanted to go. In the final question, 369 00:19:49,520 --> 00:19:52,920 Speaker 1: we have Mr Villiers, is Mr Pence and Mr Ryan 370 00:19:53,000 --> 00:19:56,680 Speaker 1: and the others. Are they just positioning themselves for Greg 371 00:19:56,760 --> 00:20:00,840 Speaker 1: Villiers New Hampshire primary to come. I think if you 372 00:20:00,880 --> 00:20:02,880 Speaker 1: gave most of them truth sir, and they would tell 373 00:20:02,920 --> 00:20:06,800 Speaker 1: you that They're all already thinking past the selection. They're 374 00:20:06,840 --> 00:20:09,679 Speaker 1: thinking about the next one. Pence is going to be 375 00:20:09,680 --> 00:20:13,280 Speaker 1: a player, Ryan Rubio, maybe Cruise. A big cast of 376 00:20:13,400 --> 00:20:16,680 Speaker 1: characters I think are secretly rooting for Trump to lose. 377 00:20:17,600 --> 00:20:20,159 Speaker 1: Great briefing, and I'm sure we'll have much more. Greg Villier, 378 00:20:20,200 --> 00:20:23,760 Speaker 1: your notes are more than valuable. Folks. Again, we got 379 00:20:23,800 --> 00:20:27,600 Speaker 1: many emails, Mr. Vliers, paperwork we do. We protect the 380 00:20:27,640 --> 00:20:31,720 Speaker 1: copyright of all of our guests. Please contact Arizing Investments 381 00:20:31,800 --> 00:20:36,400 Speaker 1: for the uh, the the chiseled granite slabs that Mr 382 00:20:36,520 --> 00:20:47,480 Speaker 1: puts out every moment. Who you put your trust in matters. 383 00:20:48,160 --> 00:20:52,000 Speaker 1: Investors have put their trust in independent registered investment advisors 384 00:20:52,040 --> 00:20:56,360 Speaker 1: to the tune of four trillion dollars. Why they see 385 00:20:56,400 --> 00:21:00,160 Speaker 1: their role is to serve, not sell. That's why all 386 00:21:00,160 --> 00:21:02,880 Speaker 1: schwab is committed to the success of over seven thousand 387 00:21:02,960 --> 00:21:08,040 Speaker 1: independent financial advisors who passionately dedicate themselves to helping people 388 00:21:08,080 --> 00:21:12,280 Speaker 1: achieve their financial goals. Learn more and find your independent 389 00:21:12,280 --> 00:21:25,520 Speaker 1: advisor dot com. It is wonderful to pause now after 390 00:21:25,560 --> 00:21:28,440 Speaker 1: the dropeth in gold of a week or so ago. 391 00:21:28,640 --> 00:21:32,639 Speaker 1: James Steele writes brilliant notes for HSBC on the bigger 392 00:21:32,680 --> 00:21:36,360 Speaker 1: picture on gold nut, the minutia of companies and all that, 393 00:21:36,440 --> 00:21:39,600 Speaker 1: but just the bigger view, James, it's Golden Week in 394 00:21:39,800 --> 00:21:43,879 Speaker 1: China and then China comes back. You notice a pulse 395 00:21:44,000 --> 00:21:47,560 Speaker 1: of demand in India with all the ballet of China. 396 00:21:47,720 --> 00:21:52,679 Speaker 1: Is there a pulse to acquire gold in China? I 397 00:21:52,760 --> 00:21:58,080 Speaker 1: think yes, There's been a considerable decline between when they 398 00:21:58,480 --> 00:22:02,560 Speaker 1: went on Golden Week and now. So merchants and traders 399 00:22:02,600 --> 00:22:05,080 Speaker 1: as they have come back to their desks, uh, and 400 00:22:05,240 --> 00:22:08,080 Speaker 1: back to their businesses this morning, will have been greeted 401 00:22:08,280 --> 00:22:13,000 Speaker 1: with a substantially lower gold price. And definitely those reacting 402 00:22:13,040 --> 00:22:19,679 Speaker 1: to the consumer demand will, I suspect, seek to purchase 403 00:22:19,720 --> 00:22:23,359 Speaker 1: bullion around these prices. That's not to say that the 404 00:22:23,600 --> 00:22:28,560 Speaker 1: washout is over, but I definitely think that the physical 405 00:22:28,560 --> 00:22:31,560 Speaker 1: demand in the Far East will will react to this. James, 406 00:22:31,600 --> 00:22:35,280 Speaker 1: what's the biggest driver of gold right now? Is it? 407 00:22:35,359 --> 00:22:38,720 Speaker 1: Is it speculation about Fed policy? Is it the election? 408 00:22:38,720 --> 00:22:41,359 Speaker 1: Where where are you seeing drivers of growth? Yes? I 409 00:22:41,359 --> 00:22:44,360 Speaker 1: would say it's the Fed policy angle, um, and that 410 00:22:44,400 --> 00:22:49,320 Speaker 1: feeds through into the currencies. A secondary but important one 411 00:22:49,600 --> 00:22:52,040 Speaker 1: is uh, the election, and I think as we run 412 00:22:52,160 --> 00:22:56,479 Speaker 1: up closer to the election that will be increasingly important. Uh. 413 00:22:56,760 --> 00:23:00,800 Speaker 1: It's interesting to note that gold has been relatively a 414 00:23:00,880 --> 00:23:06,800 Speaker 1: new or two changes in the polls between Trump closing 415 00:23:06,800 --> 00:23:12,400 Speaker 1: on Hillary or Hillary opening up against Mr Trump. Gold 416 00:23:12,440 --> 00:23:15,280 Speaker 1: doesn't seem to have reacted much to that. It's been 417 00:23:15,359 --> 00:23:19,879 Speaker 1: much more sensitive, however, to UH comments from officials at 418 00:23:19,920 --> 00:23:25,320 Speaker 1: the Federal Reserve. I was looking at when Hillary Clinton 419 00:23:25,320 --> 00:23:26,680 Speaker 1: gains in the polls. It seems like one month gold 420 00:23:26,720 --> 00:23:28,879 Speaker 1: volatility has fallen a little bit. What why do you 421 00:23:28,920 --> 00:23:30,520 Speaker 1: think that is? When when when you see the lack 422 00:23:30,560 --> 00:23:32,840 Speaker 1: of volatility, when you see the lack of movement with 423 00:23:32,880 --> 00:23:37,360 Speaker 1: regards is that surprising to you? I think any gain 424 00:23:37,400 --> 00:23:41,359 Speaker 1: in the polls um for for for the leader would 425 00:23:41,400 --> 00:23:44,959 Speaker 1: probably tend to reduce the volatility because that would be 426 00:23:45,040 --> 00:23:48,879 Speaker 1: one less thing the market would would would be uncertain about. 427 00:23:49,480 --> 00:23:52,240 Speaker 1: So UM, I don't think. I think if it were 428 00:23:52,320 --> 00:23:56,119 Speaker 1: much closer, the vault would probably would probably be higher. 429 00:23:57,480 --> 00:23:59,600 Speaker 1: James Steele, when I look at the chart, I know 430 00:23:59,680 --> 00:24:03,199 Speaker 1: you're not a technical analyst, but UM, do you have 431 00:24:03,280 --> 00:24:06,159 Speaker 1: the sense that gold has broken through support or is 432 00:24:06,200 --> 00:24:09,639 Speaker 1: the rally still intact which nicely started the end of 433 00:24:09,640 --> 00:24:14,320 Speaker 1: two thousand fifteen. That's a good question. Um, it's taken 434 00:24:14,320 --> 00:24:18,359 Speaker 1: a real dent. There's absolutely no doubt about that. We 435 00:24:18,440 --> 00:24:24,560 Speaker 1: had quite significant technical selling when we got down to 436 00:24:25,800 --> 00:24:30,000 Speaker 1: and then again down around twelve fifty nine, the more 437 00:24:30,040 --> 00:24:35,600 Speaker 1: recent low. If you look at a rough retracement from 438 00:24:35,680 --> 00:24:38,120 Speaker 1: the beginning of the move around, say if you put 439 00:24:38,119 --> 00:24:42,320 Speaker 1: it at ten in December, as you highlighted up to, 440 00:24:42,320 --> 00:24:45,879 Speaker 1: say twelve thirteen seventy five, then that would be around 441 00:24:46,160 --> 00:24:51,480 Speaker 1: twelve ten. And I think the market will hold well 442 00:24:51,800 --> 00:24:55,920 Speaker 1: well above that because yep, I don't mean I don't 443 00:24:55,920 --> 00:24:57,480 Speaker 1: mean it erupt, but I mean we go through to 444 00:24:57,600 --> 00:25:02,440 Speaker 1: twelve fifty or twelve sixty in support is ten sixty? 445 00:25:02,680 --> 00:25:04,359 Speaker 1: Do you look at this as a pullback and a 446 00:25:04,400 --> 00:25:07,600 Speaker 1: break of the James Steele rally, is it's known worldwide? 447 00:25:08,119 --> 00:25:09,760 Speaker 1: Or do you look at this as we may we 448 00:25:09,840 --> 00:25:13,439 Speaker 1: may test that ten sixty level and as a gloom 449 00:25:13,440 --> 00:25:17,240 Speaker 1: and doom crusee we migrate back to eight nine ounce. 450 00:25:18,200 --> 00:25:20,960 Speaker 1: Uh No, I don't think we will break down to 451 00:25:21,000 --> 00:25:25,720 Speaker 1: those levels, uh at all. I think monetary policy still 452 00:25:25,720 --> 00:25:29,440 Speaker 1: remains to loose. We have negative interest rates outside of 453 00:25:29,480 --> 00:25:32,280 Speaker 1: the US and no real sign that that's going to 454 00:25:32,880 --> 00:25:36,320 Speaker 1: that's going to reverse. UM and Also, you know, the 455 00:25:36,320 --> 00:25:40,160 Speaker 1: fan rate rises are clearly well telegraphed, and uh, we're 456 00:25:40,160 --> 00:25:43,160 Speaker 1: only looking for very modest ones. So I think that 457 00:25:43,240 --> 00:25:47,720 Speaker 1: might be already somewhat digested into the absorb absorbed into 458 00:25:47,800 --> 00:25:51,760 Speaker 1: the price. So no, I don't see a major um 459 00:25:52,080 --> 00:25:54,760 Speaker 1: decline of that of that magnitude. I see it's staying 460 00:25:54,800 --> 00:25:59,119 Speaker 1: well north of James. I look at the growth of 461 00:25:59,240 --> 00:26:01,880 Speaker 1: gold backed e t f s inflows, I think north 462 00:26:01,920 --> 00:26:05,399 Speaker 1: of twenty seven billion dollars, and I wonder what effect 463 00:26:05,440 --> 00:26:07,320 Speaker 1: that's having on the on the marketplace, how much that's 464 00:26:07,400 --> 00:26:10,720 Speaker 1: changed the the the contours of the gold marketplace right now. 465 00:26:13,080 --> 00:26:15,320 Speaker 1: It's been one of the most bullish. It's probably the 466 00:26:15,520 --> 00:26:21,240 Speaker 1: most bullish development on market wise that we've seen, um 467 00:26:21,280 --> 00:26:25,000 Speaker 1: in years. Uh. It's absorbed a great deal of gold. Uh, 468 00:26:25,119 --> 00:26:28,960 Speaker 1: you know, without going into the merits of of of 469 00:26:29,000 --> 00:26:31,879 Speaker 1: an e t F necessarily, but it gives you a 470 00:26:31,920 --> 00:26:35,440 Speaker 1: good way to hold in store gold. But before people 471 00:26:35,440 --> 00:26:38,080 Speaker 1: would tend to go to coins and small bars or 472 00:26:38,400 --> 00:26:40,920 Speaker 1: or equities, and this gives them, you know, an an 473 00:26:40,960 --> 00:26:43,879 Speaker 1: alternative this day if they choose to do so. And 474 00:26:44,000 --> 00:26:47,840 Speaker 1: it's built up considerably. UM. One of the things that's 475 00:26:47,840 --> 00:26:50,000 Speaker 1: interesting I'm glad you mentioned the e T s because 476 00:26:50,400 --> 00:26:54,000 Speaker 1: although the net comics positions then net long COMICX positions 477 00:26:54,000 --> 00:26:57,640 Speaker 1: have come down considerably with this, with this drop since 478 00:26:57,680 --> 00:27:01,960 Speaker 1: the high of twelve, the ETFs have been very firm. 479 00:27:02,119 --> 00:27:04,520 Speaker 1: James Steele with us and we've been getting tons of mail. 480 00:27:04,920 --> 00:27:07,480 Speaker 1: Is always on his gold call. James, you have to 481 00:27:07,520 --> 00:27:12,720 Speaker 1: live within the milieu of a major shop HSBC. And 482 00:27:12,720 --> 00:27:15,000 Speaker 1: it's not that you love to make outlier calls. It 483 00:27:15,119 --> 00:27:17,400 Speaker 1: just happens to be where you guys are in Sterling now. 484 00:27:18,000 --> 00:27:21,080 Speaker 1: And on the duration of low yields, How does Steve 485 00:27:21,200 --> 00:27:25,040 Speaker 1: Major's bond call low yields out to two thousand and 486 00:27:25,080 --> 00:27:27,560 Speaker 1: twenty one as far as I can see, how does 487 00:27:27,600 --> 00:27:30,119 Speaker 1: it fold into your work on gold? Are you and 488 00:27:30,240 --> 00:27:35,080 Speaker 1: Mr Major not in speaking terms? Oh? No, we certainly are. 489 00:27:35,240 --> 00:27:39,000 Speaker 1: Now Now we try to be aware, well we are, 490 00:27:39,040 --> 00:27:42,119 Speaker 1: we are, we are aware of of of everybody's views. UM. 491 00:27:42,600 --> 00:27:48,440 Speaker 1: We discuss things and his view about low rates going 492 00:27:48,600 --> 00:27:52,240 Speaker 1: further out, which have been you're gracious enough to say, 493 00:27:51,760 --> 00:27:56,480 Speaker 1: have been UH correct of for for many, many many quarters. 494 00:27:56,520 --> 00:27:59,760 Speaker 1: Now UM is supportive of of the gold price, UH 495 00:28:00,320 --> 00:28:03,920 Speaker 1: without without doubt it lowers opportunity cost of owning gold. 496 00:28:04,000 --> 00:28:07,920 Speaker 1: It makes it easier to UH to own gold as 497 00:28:07,960 --> 00:28:13,640 Speaker 1: a comparatively safe safe haven. UM. There's many positives that 498 00:28:13,960 --> 00:28:17,680 Speaker 1: low interest rate environment have for gold going forward, so 499 00:28:17,880 --> 00:28:22,800 Speaker 1: it helps secure and gives us an economic and good 500 00:28:22,880 --> 00:28:27,320 Speaker 1: rationale for for our views on bullion. There's a looking 501 00:28:27,359 --> 00:28:29,600 Speaker 1: at at at the dollar, the strength of the dollar, 502 00:28:29,800 --> 00:28:31,480 Speaker 1: and I wanted the degree to which that's a that's 503 00:28:31,520 --> 00:28:34,280 Speaker 1: effecting gold will continue to affect goal. What's your forecast 504 00:28:34,359 --> 00:28:38,720 Speaker 1: there in terms of how the dollar relates to go on? Well, UM, 505 00:28:38,760 --> 00:28:42,920 Speaker 1: we do have the dollar weakening slightly to the euro 506 00:28:43,480 --> 00:28:47,600 Speaker 1: UH by year end. Recently it's it's it's been stronger. 507 00:28:47,960 --> 00:28:52,880 Speaker 1: So our currency view is usual to slightly supportive of 508 00:28:52,880 --> 00:28:55,600 Speaker 1: of gold. UM. The big issue, of course has been 509 00:28:55,720 --> 00:28:59,240 Speaker 1: the reaction of the pound, which has been down sharply. 510 00:28:59,680 --> 00:29:01,640 Speaker 1: And and I think there's two ways to look at 511 00:29:01,680 --> 00:29:04,760 Speaker 1: that for gold. Actually, because when you when we first 512 00:29:04,760 --> 00:29:08,600 Speaker 1: got the vote on Brexit, UM, the gold market jumped 513 00:29:09,400 --> 00:29:12,640 Speaker 1: a jumped, not necessarily because of currency moves, but more 514 00:29:12,760 --> 00:29:19,240 Speaker 1: because of the geopolitical risk associated with the the the 515 00:29:19,360 --> 00:29:23,560 Speaker 1: UK leaving the U. So in this case, although generally 516 00:29:23,600 --> 00:29:27,800 Speaker 1: speaking a weaker pound would be a big negative for gold, 517 00:29:27,800 --> 00:29:31,040 Speaker 1: it might not be so much the case this time. 518 00:29:31,600 --> 00:29:34,160 Speaker 1: That's that's the interesting thing about the gold market is 519 00:29:34,480 --> 00:29:37,560 Speaker 1: you have to balance many other things out, and although 520 00:29:37,680 --> 00:29:42,520 Speaker 1: currencies generally have the dominant impact on gold, you have 521 00:29:42,600 --> 00:29:44,480 Speaker 1: to look at why the currency is moving as well. 522 00:29:45,240 --> 00:29:46,880 Speaker 1: When you look at Brexit, when you look at the 523 00:29:46,960 --> 00:29:49,880 Speaker 1: uncertainty over when that might take place, how how much 524 00:29:49,880 --> 00:29:53,680 Speaker 1: of a complicating factor is that? Well? I think as 525 00:29:53,680 --> 00:29:55,400 Speaker 1: far as gold has concerned, a lot of it has 526 00:29:55,440 --> 00:29:58,640 Speaker 1: already been priced in. It was priced in very quickly 527 00:29:58,880 --> 00:30:01,360 Speaker 1: with the rally. When when the vote, when the vote 528 00:30:01,400 --> 00:30:05,080 Speaker 1: came through, We'll have to see how how things progress. 529 00:30:05,160 --> 00:30:08,600 Speaker 1: But right now I think it's mostly in the gold market, 530 00:30:08,880 --> 00:30:12,720 Speaker 1: and the gold market will tend now to look towards 531 00:30:12,760 --> 00:30:16,560 Speaker 1: fed E c B Bank of Japan policy frameforce elasticity 532 00:30:16,680 --> 00:30:21,760 Speaker 1: or responsiveness of jewelry. Two, the price of gold, I 533 00:30:21,800 --> 00:30:24,720 Speaker 1: mean an ounce of gold. How how tight is that? 534 00:30:26,000 --> 00:30:30,600 Speaker 1: That's where again this is very interesting because it is 535 00:30:30,640 --> 00:30:34,360 Speaker 1: split pretty much in two halves. UM. Jewelry demand in 536 00:30:34,400 --> 00:30:39,360 Speaker 1: the West does not appear to be incredibly price responsive UM, 537 00:30:39,560 --> 00:30:44,600 Speaker 1: mostly because it's a function of income. Higher incomes mean 538 00:30:45,160 --> 00:30:47,880 Speaker 1: more spending on luxury goods, and you don't tend to 539 00:30:47,920 --> 00:30:52,520 Speaker 1: see a big movement in jewelry demand either way. Because 540 00:30:52,560 --> 00:30:55,440 Speaker 1: of price movements, it tends to be more related to 541 00:30:55,560 --> 00:30:59,600 Speaker 1: income and also to employment levels. Now in the Far East, 542 00:30:59,640 --> 00:31:03,520 Speaker 1: where a margin on jewelry is much much lower UM 543 00:31:03,720 --> 00:31:08,000 Speaker 1: and there's less discretionary income, it's much more sensitive. And 544 00:31:08,080 --> 00:31:12,560 Speaker 1: I think that's why, alluding back to earlier conversation, why 545 00:31:12,600 --> 00:31:16,800 Speaker 1: we're probably going to see a nice physical response from 546 00:31:16,800 --> 00:31:20,080 Speaker 1: the Chinese merchants when they as they as they get 547 00:31:20,120 --> 00:31:22,880 Speaker 1: going again after after Golden Weeks, they'll they'll be greeted 548 00:31:23,200 --> 00:31:26,800 Speaker 1: with a substantially lower lower price. And the lower price 549 00:31:26,880 --> 00:31:30,400 Speaker 1: now is finally beginning to kick in and encourage Indian demand, 550 00:31:30,480 --> 00:31:33,520 Speaker 1: which has been off the radar for many months, but 551 00:31:33,560 --> 00:31:36,680 Speaker 1: it's going to come back, you suggesting, I do think 552 00:31:36,680 --> 00:31:40,720 Speaker 1: so moderately, um more more. I think the more of 553 00:31:40,720 --> 00:31:43,240 Speaker 1: the growth will be in China, um the but the 554 00:31:43,280 --> 00:31:45,040 Speaker 1: Indian demand I think will be up as well. The 555 00:31:45,120 --> 00:31:48,800 Speaker 1: month soon was good this uh this year, which might 556 00:31:48,880 --> 00:31:52,360 Speaker 1: sound an odd thing to say, but a lot of 557 00:31:52,400 --> 00:31:54,800 Speaker 1: gold is bought in the northern tribal belt and is 558 00:31:54,840 --> 00:31:58,400 Speaker 1: dependent upon rural incomes and rule incomes in turn or 559 00:31:58,400 --> 00:32:02,520 Speaker 1: depend upon the harvest and the months soon go to harvest. 560 00:32:02,720 --> 00:32:05,040 Speaker 1: How maybe is this a naive question, James, when you 561 00:32:05,080 --> 00:32:07,800 Speaker 1: talk about gold sales in China, how open a marketplace 562 00:32:07,920 --> 00:32:09,640 Speaker 1: is that? How much government intervention is there in the 563 00:32:09,920 --> 00:32:13,920 Speaker 1: gold market in China? It's quite open. There have been 564 00:32:13,920 --> 00:32:18,840 Speaker 1: reforms that have taken the government out of that stemming 565 00:32:18,880 --> 00:32:23,720 Speaker 1: back years now. So it's a relatively open as far 566 00:32:23,720 --> 00:32:27,000 Speaker 1: as as far as that's concerned, James, to congratulations again 567 00:32:27,000 --> 00:32:29,280 Speaker 1: and killing the gold call here in the number of months, 568 00:32:29,280 --> 00:32:31,840 Speaker 1: and certainly the shift there is very important, as she 569 00:32:31,920 --> 00:32:46,360 Speaker 1: steals with HSBC is surveillance. I'm David Gurrow with Tom Keene. 570 00:32:46,360 --> 00:32:48,640 Speaker 1: Bank of Japan Governor Rohiko Kuroda sat down for an 571 00:32:48,640 --> 00:32:51,160 Speaker 1: interview with Bloomberg over the weekend and gave the clearest 572 00:32:51,160 --> 00:32:53,960 Speaker 1: signal yet that it may take longer than initially forecast 573 00:32:54,000 --> 00:32:57,000 Speaker 1: for the BOJ to hit its two percent inflation target. 574 00:32:57,520 --> 00:33:04,120 Speaker 1: We don't I intend to exit from extremely accommodative expansion 575 00:33:04,120 --> 00:33:08,120 Speaker 1: already at this stage. We will continue or even strengthen 576 00:33:08,320 --> 00:33:13,240 Speaker 1: our monitor easing in coming months and years to achieve 577 00:33:13,280 --> 00:33:15,960 Speaker 1: the presentive phrase one and the four the time being, 578 00:33:16,040 --> 00:33:22,360 Speaker 1: as I said eighteen US this podcast would would continue. 579 00:33:23,520 --> 00:33:25,680 Speaker 1: Croda also made it clear he'll continue to support a 580 00:33:25,720 --> 00:33:29,440 Speaker 1: strong stimulus program, responding to the idea of curbing monetary 581 00:33:29,480 --> 00:33:33,360 Speaker 1: easing with a laugh. We're joined now by Takatoshio, Professor 582 00:33:33,360 --> 00:33:37,600 Speaker 1: of International Public Ferries at Columbia University. Professor, you know, 583 00:33:37,680 --> 00:33:39,200 Speaker 1: let me ask you, first of all, just about what 584 00:33:39,240 --> 00:33:42,200 Speaker 1: we heard from Governor Coroda over the weekend, both the 585 00:33:42,280 --> 00:33:44,960 Speaker 1: Brookings and in this speech. You've read a note about 586 00:33:45,120 --> 00:33:49,600 Speaker 1: the the inflation overshooting commitment, calling it epic making. Why 587 00:33:49,640 --> 00:33:55,320 Speaker 1: is that the case? Yes, this, obviously in commitment is 588 00:33:55,520 --> 00:34:00,240 Speaker 1: amount to the what we call the price level anything 589 00:34:00,360 --> 00:34:05,160 Speaker 1: in the little journ, which means that the Banqua commits 590 00:34:05,200 --> 00:34:10,880 Speaker 1: to offset any dested in the price levels not achieving 591 00:34:10,880 --> 00:34:16,279 Speaker 1: two percent in the years after they tugged hit the 592 00:34:16,440 --> 00:34:20,400 Speaker 1: two percent targets. The two percent is now not the goal, 593 00:34:20,840 --> 00:34:25,800 Speaker 1: but the average of the two percent over the medium 594 00:34:25,920 --> 00:34:30,160 Speaker 1: term is two is the target. So this is very 595 00:34:30,160 --> 00:34:35,520 Speaker 1: strong commitment that the easing will continue. So by delaying 596 00:34:35,880 --> 00:34:43,879 Speaker 1: the forecast of achieving two percent target dates, they supplemented it. 597 00:34:43,880 --> 00:34:47,400 Speaker 1: It was a very strong commitment on the afterwards, after 598 00:34:47,600 --> 00:34:50,920 Speaker 1: hitting two percent, it's going to breaks to u to 599 00:34:51,200 --> 00:34:54,640 Speaker 1: upwards maybe three percent, maybe four percent. Professor, you know, 600 00:34:54,680 --> 00:34:57,600 Speaker 1: we have another delay, seemingly from the governor saying that 601 00:34:57,680 --> 00:35:01,000 Speaker 1: this would not take effect until two wasn't eighteen. This 602 00:35:01,080 --> 00:35:03,040 Speaker 1: is the fifth delay that we've seen. What do you 603 00:35:03,080 --> 00:35:06,600 Speaker 1: what do you make of the near constancy of these delays. Well, 604 00:35:06,640 --> 00:35:10,960 Speaker 1: it's um a combinations factors. Some of them are beyond 605 00:35:11,040 --> 00:35:16,640 Speaker 1: that US control. Mainly oil prices continue to be low 606 00:35:17,239 --> 00:35:23,600 Speaker 1: and the domestic labor they're not demanding the wage increase, 607 00:35:23,680 --> 00:35:28,600 Speaker 1: so consumption is so those are the miscalculations on miss podcast. 608 00:35:29,320 --> 00:35:31,960 Speaker 1: But now we are seeing that oil prices are going 609 00:35:32,160 --> 00:35:37,400 Speaker 1: up and uh finally that I think a labor market 610 00:35:37,440 --> 00:35:41,680 Speaker 1: in depend is almost full employment. So they they have 611 00:35:41,680 --> 00:35:45,240 Speaker 1: been a good post. Professor Rito. I'm sorry to remind 612 00:35:45,320 --> 00:35:48,880 Speaker 1: you that it's been twenty six years since you crafted 613 00:35:48,960 --> 00:35:51,680 Speaker 1: your must read book The Japanese Economy that at the 614 00:35:51,719 --> 00:35:55,040 Speaker 1: time all of us read cover to cover. You then 615 00:35:55,080 --> 00:35:57,800 Speaker 1: went on with Barry Ike Green and Charles White plots 616 00:35:58,239 --> 00:36:02,040 Speaker 1: to look at international econom mix. Please explain to our 617 00:36:02,080 --> 00:36:06,319 Speaker 1: global audience as you were shortlisted for Mr Kuroda's job 618 00:36:06,800 --> 00:36:12,200 Speaker 1: please explain the independence of the Bank of Japan in 619 00:36:12,440 --> 00:36:19,400 Speaker 1: modern deflationary Japan. How independent is uh, mr Kuroda, It 620 00:36:19,600 --> 00:36:24,040 Speaker 1: is very independent. I think um boj is as independent 621 00:36:24,239 --> 00:36:28,680 Speaker 1: as whether reserve or easy bo of boe UM. I 622 00:36:28,680 --> 00:36:34,480 Speaker 1: think all those four major central banks are now under pressure, 623 00:36:35,040 --> 00:36:39,920 Speaker 1: and uh the kewe and your interest rate or native 624 00:36:40,000 --> 00:36:44,960 Speaker 1: interest rate, all of them seemed to have failed at 625 00:36:45,000 --> 00:36:48,320 Speaker 1: even to present very quickly. So now people are talking 626 00:36:48,360 --> 00:36:54,520 Speaker 1: about the coordination between multiples and fiscal policy, which to 627 00:36:54,719 --> 00:36:58,840 Speaker 1: some people sounds like loosing independence. But I do not 628 00:36:59,120 --> 00:37:03,360 Speaker 1: think that losing independence. I think it is uh, you know, 629 00:37:03,800 --> 00:37:09,120 Speaker 1: coordination all the equal to You took your doctorate at 630 00:37:09,239 --> 00:37:14,200 Speaker 1: Harvard with Professor Blanchard Olivier Blanchard. He has been critical 631 00:37:14,280 --> 00:37:18,000 Speaker 1: of modern macro economics and how we're going to do 632 00:37:18,200 --> 00:37:21,440 Speaker 1: economics forward. What would you like to see from the 633 00:37:21,480 --> 00:37:26,680 Speaker 1: Bank of Japan in terms of a new strategy given 634 00:37:26,719 --> 00:37:31,840 Speaker 1: the assault on so called dynamics stochastic general equilibrium theory, 635 00:37:31,920 --> 00:37:33,960 Speaker 1: what would what would you like to see out of 636 00:37:34,000 --> 00:37:38,800 Speaker 1: your Japan economics? Is your professor is critical of modern 637 00:37:38,840 --> 00:37:43,160 Speaker 1: macro Well, I'm sorry, I just got quotes from Yemen, 638 00:37:43,400 --> 00:37:48,200 Speaker 1: not Olivia. About jobs. But data side, UM, I think 639 00:37:48,239 --> 00:37:55,800 Speaker 1: the dynamics stochastic generic libum macro UH had not proved 640 00:37:56,040 --> 00:38:04,360 Speaker 1: that they are relevant in analyzing the current situation, especially 641 00:38:04,520 --> 00:38:11,439 Speaker 1: for the analyzing global financial crisis of or eight or nine. 642 00:38:11,520 --> 00:38:15,040 Speaker 1: I think the DSc model that central banks do have 643 00:38:15,920 --> 00:38:21,200 Speaker 1: but as one of three or four macro models so 644 00:38:21,440 --> 00:38:27,720 Speaker 1: UM UH DSD is very useful in amazing how the 645 00:38:27,960 --> 00:38:33,600 Speaker 1: individual sectors like helphold and corporations who the act to 646 00:38:34,600 --> 00:38:40,959 Speaker 1: a policy changes UM that's more deep paramid long term 647 00:38:41,760 --> 00:38:46,279 Speaker 1: effect and they failed to analyze um, you know, very 648 00:38:46,280 --> 00:38:51,480 Speaker 1: short terms domino like h implement or under utilization of 649 00:38:51,600 --> 00:38:55,040 Speaker 1: the resources and professortail. Thank you so much, taka Ito, 650 00:38:55,600 --> 00:38:59,080 Speaker 1: Columbia University from more Sina Heights of this morning here 651 00:38:59,080 --> 00:39:01,680 Speaker 1: of course visited in the studio before a real honor 652 00:39:01,719 --> 00:39:05,520 Speaker 1: to have him in after Friends and Laquas interview with 653 00:39:05,760 --> 00:39:15,440 Speaker 1: Mr Coroda. Thanks for listening to the Bloomberg Surveillance podcast. 654 00:39:15,760 --> 00:39:20,880 Speaker 1: Subscribe and listen to interviews on iTunes, SoundCloud, or whichever 655 00:39:21,040 --> 00:39:25,480 Speaker 1: podcast platform you prefer. I'm out on Twitter at Tom Keene, 656 00:39:25,560 --> 00:39:29,359 Speaker 1: David Gura is at David Gura. Before the podcast, you 657 00:39:29,360 --> 00:39:45,880 Speaker 1: can always catch US worldwide. I'm Bloomberg Radio. Who you 658 00:39:45,920 --> 00:39:49,800 Speaker 1: put your trust in matters. Investors have put their trust 659 00:39:49,840 --> 00:39:53,160 Speaker 1: in independent registered investment advisors to the tune of four 660 00:39:53,320 --> 00:39:58,360 Speaker 1: trillion dollars. Why learn more and find your independent advisor 661 00:39:58,480 --> 00:40:01,399 Speaker 1: dot com.