WEBVTT - Economic Impact of Government Shutdown 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.320 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.000 us live on YouTube. 0:00:27.160 --> 0:00:30.520 It's unfair to David Seefe. It's a chief economist for 0:00:30.600 --> 0:00:32.760 all developed markets at number and we're just to go, 0:00:33.240 --> 0:00:37.200 what's nominal GDP look like? What is the first derivative 0:00:37.280 --> 0:00:40.120 of consumption? No, we got to talk to him about 0:00:40.360 --> 0:00:43.760 he was at Harvard with Governor Myron and today a 0:00:43.920 --> 0:00:49.440 blistering article by Wonderful Time orlack or like at Bloomberg 0:00:49.560 --> 0:00:53.040 about our start, Professor Sief, Let's start with what is 0:00:53.360 --> 0:00:53.920 our start? 0:00:54.360 --> 0:00:58.520 Well, good morning, So our star is the real rate? 0:00:58.640 --> 0:01:03.160 So not counting inflation that would be neither expansionary or 0:01:03.200 --> 0:01:04.440 contractionary to the economy. 0:01:04.520 --> 0:01:07.920 How many plugins are in your calculation of our start? 0:01:08.000 --> 0:01:08.959 How many guesses? 0:01:09.560 --> 0:01:10.480 How many guesses? 0:01:11.160 --> 0:01:12.960 There are a lot of things that would go into it, 0:01:13.000 --> 0:01:14.760 but there are a couple of things that are by 0:01:14.800 --> 0:01:18.720 far the most important, please population growth being one of them, 0:01:19.319 --> 0:01:22.280 and rates of national savings being another. 0:01:22.400 --> 0:01:23.640 Very important aspect of it. 0:01:23.720 --> 0:01:27.160 There's a huge disagreement on this discuss how you approach 0:01:27.240 --> 0:01:30.640 it at Nimura. Is our start coming down back to 0:01:30.720 --> 0:01:33.880 what we remember pre COVID, or do we establish a 0:01:33.959 --> 0:01:36.760 new ur start at a higher interest rate. 0:01:37.000 --> 0:01:39.120 Well, so, I think the biggest thing when it comes 0:01:39.120 --> 0:01:41.120 to our star has really been a forty to forty 0:01:41.120 --> 0:01:42.600 five year trend, which has been. 0:01:42.600 --> 0:01:44.040 A slow and steady decline. 0:01:44.080 --> 0:01:47.400 Great moderation, yes, and that's more than anything else, I 0:01:47.400 --> 0:01:50.840 would say due to slowing population growth. It's been happening 0:01:50.840 --> 0:01:53.840 around the world, and the places where the neutral rate 0:01:53.920 --> 0:01:57.520 is the lowest and has been for decades are places 0:01:57.560 --> 0:01:58.520 like Japan. 0:01:58.440 --> 0:02:00.880 Where the population growth has been the way. So that 0:02:01.000 --> 0:02:02.000 is a very. 0:02:01.720 --> 0:02:05.280 Slow moving force, but one that probably over the course 0:02:05.320 --> 0:02:08.200 of decades is the single most important one out there. 0:02:08.520 --> 0:02:13.320 And so I think that what happened after Lehman in 0:02:13.360 --> 0:02:17.200 the Great Recession was that we, because of the overhang 0:02:17.240 --> 0:02:19.920 from that, our star really fell below what was the 0:02:19.960 --> 0:02:23.360 declining trend. And then COVID happened, and it was, for 0:02:23.480 --> 0:02:26.920 various reasons the opposite. It jumped up to above what 0:02:27.080 --> 0:02:29.960 was its longer run trend. And now I think we 0:02:30.000 --> 0:02:34.560 are certainly heading back towards that longer run trend. Now, 0:02:34.560 --> 0:02:38.760 what Governor Myron has proposed certainly is controversial in terms 0:02:38.800 --> 0:02:40.680 of some of the inputs he's put in and therefore 0:02:40.680 --> 0:02:43.320 the conclusions he's come out with. But I think that 0:02:44.440 --> 0:02:47.840 it's probably more people than not would agree that it 0:02:47.880 --> 0:02:50.840 has fallen or is falling in the post COVID era 0:02:51.240 --> 0:02:52.840 and may continue to fall further. 0:02:53.600 --> 0:02:55.840 So what did you cadge that? Well, I was like 0:02:55.880 --> 0:02:57.639 a lawyer, basically, he knows what he's doing. 0:02:58.960 --> 0:03:02.320 So, David, the Fed has cut twenty five basis points, 0:03:02.320 --> 0:03:03.400 and do you think they're going to proceed? What do 0:03:03.440 --> 0:03:04.799 you think the cadence is going to be of their 0:03:05.240 --> 0:03:06.639 kind of rate moves going forward? 0:03:06.720 --> 0:03:09.000 Yeah, you know, we have no reason to doubt the 0:03:09.320 --> 0:03:12.920 dot plot for the rest of the Powell's time in office, 0:03:12.960 --> 0:03:15.640 so especially for the rest of this year. So we 0:03:15.680 --> 0:03:19.240 think that they'll cut in October, and frankly, how could 0:03:19.240 --> 0:03:21.040 they not given that it looks like they're not going 0:03:21.080 --> 0:03:24.560 to necessarily have all the data they would December, we 0:03:24.600 --> 0:03:29.480 also think they will cut again, so it's not necessarily 0:03:30.000 --> 0:03:32.400 something we think is completely necessary to do, but they've 0:03:32.400 --> 0:03:34.280 put it out there that that's what they're going to do, 0:03:34.920 --> 0:03:38.480 despite the fact that they upgraded economic projections, and so 0:03:39.360 --> 0:03:43.320 hard to see them being knocked off of that, especially 0:03:43.320 --> 0:03:46.320 with the probably less data than normal or maybe no 0:03:46.440 --> 0:03:50.080 data coming out. And then we expect they'll cut once 0:03:50.160 --> 0:03:54.520 more under Powell in March. Then we think that post 0:03:54.520 --> 0:03:57.040 Powell there are probably another couple cuts coming, and that's 0:03:57.120 --> 0:03:59.480 really more of a matter of the next Fed chair, 0:03:59.520 --> 0:04:01.840 whoever it is, is probably going to be much more 0:04:01.880 --> 0:04:05.800 dubbish than Powell and at least receive some deference from 0:04:05.800 --> 0:04:06.960 the rest of the committee. 0:04:07.320 --> 0:04:09.680 All Right, it looks like our government may shut down 0:04:09.720 --> 0:04:11.800 at midnight tonight. As an economist, do you. 0:04:11.760 --> 0:04:15.400 Care, well, we certainly, we certainly care for doing our jobs. 0:04:15.440 --> 0:04:17.520 I mean, this is this is where we is. What 0:04:17.560 --> 0:04:20.080 we do is we analyze government data. So it's going 0:04:20.120 --> 0:04:22.039 to be a little bit of a famine at first 0:04:22.080 --> 0:04:25.160 and then feast as the data eventually come out later 0:04:25.200 --> 0:04:26.000 and there's catch up. 0:04:26.800 --> 0:04:27.960 But in terms of the real. 0:04:27.800 --> 0:04:31.279 Economy, probably not so much. There will probably be a 0:04:31.320 --> 0:04:36.120 small hit to GDP from the lack of work going 0:04:36.120 --> 0:04:39.200 on in Q three or Q four A Q four 0:04:39.240 --> 0:04:41.560 I guess, because we're starting Q four tomorrow. But then 0:04:42.160 --> 0:04:44.600 we would expect there to be almost one for one 0:04:44.680 --> 0:04:47.320 catch up growth once the government reopened so Q one 0:04:47.440 --> 0:04:51.000 Q two of next year. I think that it's particularly 0:04:51.040 --> 0:04:54.240 important in that the lack of data coming out right 0:04:54.279 --> 0:04:58.440 as the FED is has tacked dubvishly does make it, 0:04:58.480 --> 0:05:00.800 as I said, more difficult for the to deviate from 0:05:00.839 --> 0:05:04.240 that because what would be the justification for doing so. 0:05:04.240 --> 0:05:07.960 So it may lead to monetary policy outcomes that once 0:05:08.000 --> 0:05:09.920 we then get the data, we're like, oh, well, maybe 0:05:09.960 --> 0:05:12.920 they shouldn't have done that. But for the real economy 0:05:12.960 --> 0:05:15.520 as a whole, it's hard to see this being such 0:05:15.520 --> 0:05:16.120 a huge deal. 0:05:17.200 --> 0:05:19.920 It seems like the consumer out there is in pretty 0:05:20.000 --> 0:05:22.640 solid shape here. How do you think about the US 0:05:22.680 --> 0:05:24.400 consumer in seventy percent of this economy. 0:05:24.480 --> 0:05:26.760 Yeah, we see the consumer as pretty strong, and we 0:05:26.800 --> 0:05:27.080 had an. 0:05:27.080 --> 0:05:29.400 Upside surprise a couple of weeks ago to retail sales, 0:05:30.000 --> 0:05:33.599 and generally speaking we've seen over a year of strength 0:05:33.720 --> 0:05:37.680 in retail sales, and that really we think reflects the 0:05:37.720 --> 0:05:40.280 fact that although there aren't a lot of hires going on, 0:05:41.040 --> 0:05:44.120 there really are very very low levels of layoffs. 0:05:43.680 --> 0:05:44.720 Going on in the economy. 0:05:44.760 --> 0:05:48.080 So the vibe may be one that the economy isn't 0:05:48.120 --> 0:05:50.279 that great, although even that is starting to change. 0:05:50.320 --> 0:05:51.880 But the hard data are pretty clear. 0:05:51.960 --> 0:05:56.120 But isn't it k shaped where the vibe is half 0:05:56.160 --> 0:05:59.880 the nation's flat in our backs, farmers screening for aid 0:06:00.040 --> 0:06:03.200 from the president, soybeans Brazil, all that we know the drill, 0:06:03.640 --> 0:06:06.839 any other people are packed in restaurants. Paul goes to that, 0:06:06.880 --> 0:06:08.440 Lisa and I can't afford. 0:06:10.560 --> 0:06:14.159 It's not necessarily an unfair characterization. The key thing, though, 0:06:14.200 --> 0:06:15.880 is that as long as the people who are currently 0:06:15.960 --> 0:06:18.839 spending money continue to feel good, they're going to continue 0:06:18.839 --> 0:06:23.040 to spend money. If people who are new entrants into 0:06:23.040 --> 0:06:25.480 the labor market are having more trouble than normal finding 0:06:25.480 --> 0:06:27.760 a job, and there is some of that, that's a 0:06:27.800 --> 0:06:30.760 real social issue, but it's not necessarily going to hurt 0:06:30.800 --> 0:06:33.440 the economic data over the short run, and that's what 0:06:33.440 --> 0:06:34.320 we're seeing. 0:06:34.320 --> 0:06:36.400 Data ce for this with the Murrow. We continue the 0:06:36.480 --> 0:06:40.760 chief economis for developed markets at the Murrow. Stay with us. 0:06:41.000 --> 0:06:44.240 More from Bloomberg Surveillance coming up after this. 0:06:51.480 --> 0:06:55.080 You're listening to the Bloomberg Surveillance podcast. Catch us Live 0:06:55.120 --> 0:06:58.279 weekday afternoons from seven to ten am Eastern Listen on 0:06:58.360 --> 0:07:01.760 Apple Karplay and Android out with the Bloomberg Business Up 0:07:01.960 --> 0:07:03.640 or watch US live on YouTube. 0:07:03.680 --> 0:07:07.240 Monica Garra joins US right Now US Policy Mortgage, seeingly 0:07:07.560 --> 0:07:12.400 wealth Management. What are the ramifications to someone in Illinois 0:07:13.320 --> 0:07:17.680 or Arizona of a government shutdown? I get Washington. What's 0:07:17.720 --> 0:07:18.920 it mean for the rest of the nation. 0:07:19.440 --> 0:07:22.680 It means jobs, Like you know, post office for example, could. 0:07:22.560 --> 0:07:23.760 You don't get your mail delivered? 0:07:24.120 --> 0:07:26.520 It can get delayed, right. It depends on how long 0:07:26.560 --> 0:07:29.280 this goes. You know, they start to shut down parts 0:07:29.320 --> 0:07:31.960 of the you know, non essential workers. If you're thinking 0:07:31.960 --> 0:07:35.400 about your local offices, et cetera, that could have an 0:07:35.400 --> 0:07:37.480 impact across different you know states. 0:07:37.680 --> 0:07:42.960 Well, twelve years ago, sixteen days shutdown. The jobs day 0:07:43.080 --> 0:07:46.160 was October fourth. It came out October twenty seconds. 0:07:46.200 --> 0:07:47.760 So we get it just delayed, I guess. 0:07:47.920 --> 0:07:52.640 I mean, so is there what does that mean for markets? 0:07:52.640 --> 0:07:54.520 What are you telling your clients about a government shutdown? 0:07:54.600 --> 0:07:56.320 I kind of feel like it's we kind of do 0:07:56.400 --> 0:07:58.840 this somewhat frequently. It's not that big a deal. What 0:07:59.200 --> 0:07:59.960 are you telling your clients? 0:08:00.120 --> 0:08:03.000 I mean, on average you get markets s five hundred 0:08:03.080 --> 0:08:05.760 rallying four point four percent during times of government shutdown 0:08:05.760 --> 0:08:06.960 regardless of life. 0:08:07.040 --> 0:08:09.280 Market's rallied during a shutdown. 0:08:09.040 --> 0:08:12.240 Rally during through the shutdown, so essentially they see through it. 0:08:12.600 --> 0:08:15.760 They stay exuberant. But the where you see any sort 0:08:15.760 --> 0:08:18.920 of pullback or correction, it's around those industries and sectors 0:08:19.280 --> 0:08:23.600 that have heavy reliance on contracts, right, like defense, like 0:08:23.680 --> 0:08:27.880 healthcare in certain instances, and we think, especially on defense, 0:08:28.200 --> 0:08:30.520 right that that could be a nice buy opportunity. 0:08:31.520 --> 0:08:34.160 So what are we doing here as it relates to 0:08:35.280 --> 0:08:37.600 do you care who gets blamed for this? Do we 0:08:37.640 --> 0:08:41.000 care if it's the Democrats or the Republicans, the Trump administration? 0:08:41.080 --> 0:08:42.120 Do we care about that stuff? 0:08:42.640 --> 0:08:44.040 We just want the market that I mean, we want 0:08:44.080 --> 0:08:45.480 the government to kind of do what it has to 0:08:45.520 --> 0:08:47.760 do and maybe get open at some point. 0:08:47.960 --> 0:08:52.960 I mean, do we care? I would say writ large, No, 0:08:53.080 --> 0:08:57.120 the blame piece is not as critical, right, It's about 0:08:57.280 --> 0:09:00.360 what actually happens through the cycle, how long it goes. Now, 0:09:00.440 --> 0:09:04.200 what's important for us politically, though, is to understand those dynamics, 0:09:04.240 --> 0:09:07.600 right that the Democrats want that ACA subsidy extension, the 0:09:07.679 --> 0:09:11.000 GOP is you know, against it. But then there's this 0:09:11.200 --> 0:09:13.920 additional element that could be thrown in where the White 0:09:13.920 --> 0:09:16.640 House could come in trying to use this as a 0:09:16.679 --> 0:09:19.560 catalyst for impoundments or enforcement control, meaning right that they're 0:09:19.559 --> 0:09:23.640 going to withhold potential funding for certain non ideologically aligned 0:09:23.679 --> 0:09:26.920 you know, programs and agency act takes. 0:09:26.960 --> 0:09:29.200 Let's talk about the job we're gonna Nathan Dean againhos 0:09:29.200 --> 0:09:32.440 expert on this, But Monica, do you assume it? Morgan Stanley, 0:09:32.480 --> 0:09:35.680 the president will handle this differently than any other president 0:09:36.400 --> 0:09:38.920 has ever handled a shutdown. That's that's the heart of 0:09:38.920 --> 0:09:39.840 the matter, right. 0:09:40.280 --> 0:09:43.439 Right, I mean that's where the impoundment piece comes into play. 0:09:43.679 --> 0:09:43.880 Right. 0:09:44.200 --> 0:09:46.880 We saw him do that with Ukraine funding, so there 0:09:46.920 --> 0:09:49.120 is a precedent. And so while they're not going to 0:09:49.160 --> 0:09:51.360 get these mass layoffs, right, we've seen that that's not 0:09:51.440 --> 0:09:52.040 going to happen. 0:09:52.440 --> 0:09:53.640 You could get. 0:09:53.600 --> 0:09:56.679 A this essentially this as an excuse or a catalyst 0:09:56.720 --> 0:09:58.640 to then come in and say, well, you know, we 0:09:58.760 --> 0:10:01.439 want to go harder on these c energy components. Right 0:10:01.440 --> 0:10:03.640 at the EPA, we're going to stop funding for that. 0:10:03.960 --> 0:10:06.800 And if you get that dynamic, that's the sort of 0:10:06.920 --> 0:10:09.880 stick off ramp that gets the Democrats to the table. 0:10:10.120 --> 0:10:13.400 The carrot off ramp is do you get those rural 0:10:13.520 --> 0:10:18.120 state GOP members allowed enough voice to then come together 0:10:18.200 --> 0:10:20.640 with Democrats to get those ACA subsidy extensions. 0:10:20.960 --> 0:10:22.920 I look at President Trump, but I think he's hitting 0:10:22.920 --> 0:10:25.840 it out of the ballpark every day, it seems like. 0:10:26.400 --> 0:10:29.280 Yet people tell me these approval ratings aren't very good. 0:10:30.000 --> 0:10:31.040 How do you guys square that? 0:10:31.880 --> 0:10:33.920 And I think you have to take it. You have 0:10:33.960 --> 0:10:37.320 to take too These two things separately. Markets are separate. 0:10:37.600 --> 0:10:41.360 Then social issues and things that might be potentially driving 0:10:41.880 --> 0:10:44.560 fears with voters, and those two things are very different. 0:10:44.640 --> 0:10:48.440 There's percolating a zeitgeist that the fiscal bill that the 0:10:48.480 --> 0:10:53.400 President spearheaded through will not bring in more Texas. There's 0:10:53.440 --> 0:10:56.839 a huge assumption text revenue will go up. What does 0:10:56.920 --> 0:10:57.920 Morgan Stanley say? 0:10:58.920 --> 0:11:01.280 And our view we think, I think that if you're 0:11:01.280 --> 0:11:04.800 looking at earnings, if you're looking at the markets, tax 0:11:04.880 --> 0:11:08.920 revenues are likely to increase right more in this next pull. 0:11:09.080 --> 0:11:11.320 That doesn't mean it's going to be for the long run, 0:11:11.520 --> 0:11:13.520 right And so we think short term we could get 0:11:13.520 --> 0:11:15.559 some nice tax receipts here towards the end of the year, 0:11:15.880 --> 0:11:18.520 but then into twenty twenty five, we still do expect 0:11:18.559 --> 0:11:22.680 a slow down. And that's because you're looking at positive 0:11:22.679 --> 0:11:26.280 GDP numbers right nominal six point eight percent. Where do 0:11:26.320 --> 0:11:26.880 you go from there? 0:11:27.080 --> 0:11:27.240 Right? 0:11:27.440 --> 0:11:30.520 Twenty seconds? Nobody cares. All we care about is TSA. 0:11:30.760 --> 0:11:33.640 If there's a government shut down, what happens to TSA? 0:11:33.920 --> 0:11:36.400 TSA I believe is going to be deemed essential. 0:11:36.720 --> 0:11:38.960 So just just rocks. 0:11:39.080 --> 0:11:40.120 You don't have to have to worry about that. 0:11:40.120 --> 0:11:41.360 With the Gulf Stream just going out. 0:11:41.600 --> 0:11:44.200 No, no, that's true. I just no, I'm not. I'm 0:11:44.240 --> 0:11:47.480 going to Middletown further out. Okay, yeah, further out it's 0:11:47.520 --> 0:11:48.160 too congested. 0:11:48.280 --> 0:11:48.480 Yep. 0:11:48.720 --> 0:11:51.559 Monica Grera, thank you so much, Executive director, head of 0:11:51.679 --> 0:11:55.920 US Policy at Morgan Stanley Wealth Management. Stay with us. 0:11:56.160 --> 0:12:06.440 More from Bloomberg Surveillance coming up after this. 0:12:06.440 --> 0:12:10.360 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:12:10.400 --> 0:12:13.800 starting at seven am Eastern on Applecarplay and Android Auto 0:12:13.840 --> 0:12:16.800 with the Bloomberg Business app. You can also listen live 0:12:16.880 --> 0:12:20.440 on Amazon Alexa from our flagship New York station, Just 0:12:20.480 --> 0:12:23.000 say Alexa play Bloomberg eleven thirty. 0:12:23.120 --> 0:12:26.520 We have in studio. We've spent weeks trying to get 0:12:26.520 --> 0:12:29.920 her in here. Suki Cooper joins us. What's it like 0:12:30.040 --> 0:12:34.000 working with Steven Englander at Standard Charter amazing English. 0:12:34.120 --> 0:12:35.960 I'm inspired every day. It's fantastic. 0:12:36.600 --> 0:12:42.280 Inspire us with a broader commodity trend. Rishue Sherman would say, 0:12:42.360 --> 0:12:45.840 we're waiting for a super commodity trend. Is it upon us, 0:12:45.880 --> 0:12:46.680 Suki Cooper? 0:12:47.280 --> 0:12:50.400 We still see further highs for the gold markets. We've 0:12:50.440 --> 0:12:53.600 seen a number of factors driving the market and it's changed. 0:12:53.840 --> 0:12:55.720 At the start of this year we saw a shift 0:12:55.720 --> 0:13:00.200 away from central bank flows driving the market to ETFs 0:13:00.240 --> 0:13:03.200 becoming much more important, and now we've seen the correlation 0:13:03.280 --> 0:13:06.600 between real yields and gold coming back. The macro environment 0:13:06.720 --> 0:13:11.240 is increasingly important to ranging from concerns around the US 0:13:11.240 --> 0:13:14.880 potential shutdown government shutdown, to the scope for FED to 0:13:14.880 --> 0:13:19.040 cut rates, further ranging to tariff concerns as well. All 0:13:19.080 --> 0:13:21.880 of these factors are playing into safe have and demand 0:13:21.920 --> 0:13:22.800 for gold. 0:13:23.000 --> 0:13:26.720 Is there a valuation called ever for gold and other 0:13:26.840 --> 0:13:29.560 precious metals or is it just people are buying them? 0:13:29.559 --> 0:13:32.079 They're buying them. I just never know how to value gold, 0:13:32.360 --> 0:13:34.640 get a sense when it's expensive gold. 0:13:34.760 --> 0:13:36.400 I think you need to view it as a commodity 0:13:36.520 --> 0:13:40.000 and a currency. So when when investor appetite is lacking. 0:13:40.040 --> 0:13:42.800 That's when the jewelry market, the physical market becomes important. 0:13:42.800 --> 0:13:45.280 So like the nineteen nineties, that's when the jewelry markets 0:13:45.280 --> 0:13:47.440 set the floor for gold. And that's what was happening 0:13:47.480 --> 0:13:49.040 over the last couple of years. It was really that 0:13:49.160 --> 0:13:52.000 central bank demand that was not just seting the floor 0:13:52.040 --> 0:13:54.560 but driving it higher. But now we're seeing it behave 0:13:54.600 --> 0:13:57.559 as a currency, and that's when these external factors like 0:13:57.600 --> 0:13:59.679 the dollar become much more important. 0:14:00.000 --> 0:14:02.320 Would say to me, hey, stupid, ask her about the 0:14:02.360 --> 0:14:06.440 Pacific Rim Indonesia freeport. They had a terrible accident there 0:14:06.440 --> 0:14:10.200 and I did a lot with FCX years ago. Where 0:14:10.320 --> 0:14:14.679 is Suki Cooper and the given supply of stuff in 0:14:14.679 --> 0:14:17.840 the commodity space, are we running out of iron ore? 0:14:17.960 --> 0:14:21.040 Are we running out of gold? Its new supply and 0:14:21.080 --> 0:14:22.520 Frankie the softs as well. 0:14:23.160 --> 0:14:25.360 When we look at the gold markets, the supply has 0:14:25.400 --> 0:14:29.120 been very easily absorbed. And yes, this Grasburg force majeure 0:14:29.360 --> 0:14:31.840 has meant that we've seen supply coming offline. We're going 0:14:31.880 --> 0:14:32.920 to see quite a sharp run. 0:14:33.160 --> 0:14:35.720 Force masure is French. If you go to the University 0:14:35.720 --> 0:14:39.160 of Birmingham, yep, I have no idea what it means continue. 0:14:39.640 --> 0:14:41.840 But next year they're looking for a decline in a 0:14:42.000 --> 0:14:43.960 put around about thirty five percent, so that means around 0:14:43.960 --> 0:14:47.600 about seventeen tons, and we'll be offline. And yes, it 0:14:47.720 --> 0:14:50.440 tightens the market, but these are the sort of flows 0:14:50.480 --> 0:14:52.600 we can see in the ETFs on a daily basis, 0:14:52.800 --> 0:14:55.120 so the market can absorb such a last but it 0:14:55.200 --> 0:14:56.760 just tightens our underlying balance. 0:14:57.440 --> 0:14:59.600 I mean, we all talk about gold rightfully, so up 0:14:59.600 --> 0:15:03.080 forty five percent year to date, but spots silver and 0:15:03.080 --> 0:15:06.160 that's up like sixty sixty percent this year. What's driving that? 0:15:06.720 --> 0:15:09.480 Silver to me is a fascinating market given its vast 0:15:09.640 --> 0:15:12.800 array of and usage. But until this year, silver had 0:15:12.800 --> 0:15:15.920 been lacking golds at performance, and that was partially because 0:15:15.960 --> 0:15:18.680 central bank demand was driving gold and silver didn't have 0:15:18.760 --> 0:15:21.320 that kicker, even though it's deeply undersupplied for the past 0:15:21.360 --> 0:15:24.520 three years. But this year, because we've seen gold now 0:15:24.560 --> 0:15:27.960 pivoting to driving FOLLO on those macro factors, silver's now 0:15:27.960 --> 0:15:31.880 started to ride on its coattails and relatively is underinvested. 0:15:31.920 --> 0:15:34.760 So those ETF flows in silver are picking up at 0:15:34.840 --> 0:15:37.479 even faster pace. And almost three thousand tons. 0:15:37.800 --> 0:15:39.880 Tell us about the things off division. I mean with 0:15:40.000 --> 0:15:43.080 standard Charter bank to look to Australia in iron ore, 0:15:43.520 --> 0:15:46.600 is the dynamic of iron ore into Shanghai iron ore? 0:15:46.960 --> 0:15:49.840 Is it normal? The flows to China. 0:15:49.600 --> 0:15:52.000 And all iron is not a market that I look 0:15:52.040 --> 0:15:57.080 at in detail, so I can't take it up. But 0:15:57.200 --> 0:15:59.640 looking at the gold flows into China, that's something that 0:15:59.640 --> 0:16:01.720 we can and kind of want to and we see 0:16:01.720 --> 0:16:05.440 that China's appetite for goals app type for commodities remain strong. 0:16:05.760 --> 0:16:07.520 Whether we're looking at copper markets. 0:16:08.160 --> 0:16:11.320 Copper and people used to like the copper inventories. Do 0:16:11.400 --> 0:16:14.080 they have like a strategic copper reserve? They have like 0:16:14.200 --> 0:16:16.920 seven fort knoxes of copper out there. 0:16:17.880 --> 0:16:20.080 There's some commodities where we're starting to see a build. 0:16:20.080 --> 0:16:24.160 We haven't got visible data on how much strategic stockware 0:16:24.280 --> 0:16:28.040 it might be, but markets like platinum, we've seeing imports 0:16:28.120 --> 0:16:29.440 far outpacing consumption. 0:16:29.560 --> 0:16:33.320 Shukie Cooper with she is with the Standard Charter bank 0:16:33.360 --> 0:16:36.240 and just definitive and come odities stay with us. More 0:16:36.360 --> 0:16:46.680 from Bloomberg Surveillance coming up after this. 0:16:46.680 --> 0:16:50.600 This is the Bloomberg Surveillance podcast. Listen live each weekday 0:16:50.640 --> 0:16:53.920 starting at seven am Eastern on Applecarplay and Android otto 0:16:54.080 --> 0:16:56.880 with the Bloomberg Business app. You can also watch us 0:16:56.920 --> 0:16:59.960 live every weekday on YouTube and always on the bloom 0:17:00.040 --> 0:17:00.640 Burg terminal. 0:17:00.720 --> 0:17:02.200 To the newspapers, Lisa, what do you have? 0:17:02.400 --> 0:17:05.320 Okay, So yesterday we talked about the NFL announcing Bad 0:17:05.359 --> 0:17:09.840 Bunny the super Bowl halftime performer. Okay, now there's a controversy. 0:17:09.880 --> 0:17:12.439 The stories are starting to come out. So he's basically, 0:17:12.560 --> 0:17:15.440 you know Grammy Award winning artist Fresh Office residency in 0:17:15.480 --> 0:17:18.960 Puerto Rico, And that's kind of what's sparking the backlash 0:17:18.960 --> 0:17:19.440 a little bit. 0:17:20.200 --> 0:17:21.040 He decided on the. 0:17:20.960 --> 0:17:23.520 Residency instead of performing in the US because he said 0:17:23.560 --> 0:17:26.000 he was worried about ice agents using it as an 0:17:26.000 --> 0:17:29.879 opportunity to scoop up migrants. So that's sparking some online 0:17:29.920 --> 0:17:34.280 protests from you know, MAGA influencers, conservative social media accounts. 0:17:34.560 --> 0:17:36.879 And then not only that, but the Wall Street Journal 0:17:36.920 --> 0:17:39.919 actually has an article too how how Swifties are upset 0:17:40.000 --> 0:17:41.840 because they thought that she. 0:17:41.960 --> 0:17:44.840 Would be performing at the super Bowl. Remember that was 0:17:44.840 --> 0:17:45.320 the whole thing. 0:17:45.359 --> 0:17:48.000 After they got engaged, and all the Swifties are like, yes, 0:17:48.040 --> 0:17:49.600 She's going to be in the half time, you know, 0:17:49.920 --> 0:17:52.560 performing at the super Bowl. It's not going to happen, 0:17:53.000 --> 0:17:56.200 but it's not the first time. Sometimes there's controversy behind 0:17:56.240 --> 0:17:59.520 some of the performers that they picked, like Kendricks Blomar, Beyonce. 0:17:59.600 --> 0:18:03.199 There were some controversy Shakira j Lo's halftime performances. There 0:18:03.200 --> 0:18:04.080 were some controversy. 0:18:04.320 --> 0:18:09.120 Shakira killed it. I Kira killed it. 0:18:10.080 --> 0:18:13.240 They did all right, but you can't please everyone, I guess. 0:18:13.680 --> 0:18:16.520 But those are kind of the backlash that's starting to commit. 0:18:16.600 --> 0:18:17.800 But he's still set. 0:18:17.880 --> 0:18:20.400 I mean, his residency was phenomenal. 0:18:20.640 --> 0:18:21.479 Loved it, loved it. 0:18:21.520 --> 0:18:22.440 Watch it on Amazon. 0:18:23.080 --> 0:18:25.440 A little bias there, like a home bias. 0:18:25.280 --> 0:18:26.720 On Puerto Rico. 0:18:26.960 --> 0:18:30.320 Yes, okay, this is on the back of yesterday story 0:18:30.359 --> 0:18:33.239 from Bloomberg News. The Financial Times has a little bit 0:18:33.240 --> 0:18:35.080 more on the record number of mega deals in the 0:18:35.119 --> 0:18:35.640 third quarter. 0:18:36.040 --> 0:18:38.120 So we kind of talked about this yesterday. 0:18:37.800 --> 0:18:40.000 When you had that fifty five billion leverage by out 0:18:40.040 --> 0:18:43.280 of Electronic Arts. So they crunch the numbers they put 0:18:43.320 --> 0:18:47.040 together from London Stock Exchange Group, Global mergers acquisitions activity 0:18:47.080 --> 0:18:51.840 passed one trillion dollars in the third quarter. Fourteen deals 0:18:51.880 --> 0:18:55.000 valued in excess of ten billion dollars announced globally, and 0:18:55.040 --> 0:18:57.560 it's kind of like this. It's turnaround from you know, 0:18:57.680 --> 0:19:00.400 uncertainty over tariff. So things are starting to change, People 0:19:00.440 --> 0:19:02.159 starting to do some deals. The biggest one you know 0:19:02.200 --> 0:19:05.080 remember Union Pacific, that eighty five billion dollar takeover of 0:19:05.160 --> 0:19:09.440 Northern so Northern, Norfolk Southern. But the big breakups too, 0:19:09.600 --> 0:19:11.840 like remember Craft Hines carried doctor Pepper. 0:19:12.560 --> 0:19:14.639 So it's kind of all this where people kind of 0:19:14.640 --> 0:19:16.919 thought in President Trump was elected that maybe there'd be 0:19:17.240 --> 0:19:20.760 more deal activity low, you know, less regulatory scrutiny, more 0:19:20.800 --> 0:19:23.479 deals happenings. Maybe this is this is what we're getting. 0:19:23.760 --> 0:19:25.679 Yeah, because I remember they were they were also you 0:19:25.720 --> 0:19:28.359 know it put it like a pause on IPO's for 0:19:28.400 --> 0:19:30.520 a bit, you know, with the Arabs and all that uncertainty. 0:19:30.560 --> 0:19:31.400 But things are. 0:19:31.280 --> 0:19:34.719 Picking up back. Maybe, yes, I know you love that. Okay, 0:19:34.760 --> 0:19:38.080 this is some advice from Bill ny the science guy. Okay, 0:19:38.400 --> 0:19:40.520 who doesn't love Bill Moore the science guy. Okay, how 0:19:40.560 --> 0:19:43.439 to keep your brain healthy. Okay, here's what you have 0:19:43.480 --> 0:19:46.240 to do, because this is what he does. He's sixty 0:19:46.320 --> 0:19:49.080