WEBVTT - Surveillance: Tariffs Make U.S. Economy Worse Off, Roubini Says 0:00:00.080 --> 0:00:12.640 Yeah, Welcome to the Bloomberg Surveillance podcast and I'm Tom 0:00:12.720 --> 0:00:15.720 Keane jay Ley. We bring you insight from the best 0:00:15.800 --> 0:00:21.280 in economics, finance, investment, and international relations. Find Bloomberg Surveillance 0:00:21.280 --> 0:00:25.720 on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course, 0:00:26.079 --> 0:00:33.599 on the Bloomberg John, I guess here in New York City, 0:00:33.640 --> 0:00:36.519 I'm ready place to say, is no real Rebeti Rebetti 0:00:36.560 --> 0:00:39.640 macrob Associates chairman and n y U Stunt School of 0:00:39.680 --> 0:00:43.040 Business professor. No real good morning to you, sir, Good 0:00:43.040 --> 0:00:45.440 morning Donathan. Instead of a bunch of fancy n y 0:00:45.520 --> 0:00:48.800 U economics, I want to talk about somebody listening to 0:00:48.840 --> 0:00:53.080 this in Iowa or Oklahoma, or maybe it's lumber up 0:00:53.080 --> 0:00:56.279 in Montana or Washington State, John, somewhere, you know, like 0:00:56.360 --> 0:01:00.360 dairy in Wisconsin. Whatever. We got this mumbo joe umboard 0:01:00.360 --> 0:01:03.680 trade stuff, and it's everybody in suits and ties and 0:01:03.760 --> 0:01:07.119 fancy white shirts like you're wearing. Forget about it. What 0:01:07.280 --> 0:01:13.480 does that tariff mean for producers in services and goods? 0:01:14.360 --> 0:01:17.080 Not in three zip codes in New York, not in 0:01:17.200 --> 0:01:20.199 two zip codes in Washington. Well, it means two things. 0:01:20.319 --> 0:01:24.160 One is that any farmers selling soybeans or other products 0:01:24.200 --> 0:01:27.240 to China is going to face now massive tariffs, and 0:01:27.280 --> 0:01:30.560 therefore they're starting to hurt and complain and too as 0:01:30.560 --> 0:01:32.520 a consumer, think of it. If you impose it tw 0:01:34.040 --> 0:01:37.760 tariff on five hundred billions of inputs from China, that's 0:01:37.959 --> 0:01:41.600 like tax of a hundred and twenty five billion dollar 0:01:41.760 --> 0:01:45.280 a year on the US consumer. It's a massive tax 0:01:45.319 --> 0:01:49.040 increase hundred and twenty five billion. So it hurts the consumer, 0:01:49.640 --> 0:01:52.840 it hurts the producer, and it makes the US economy 0:01:52.920 --> 0:01:56.600 works off. It's a disaster. When the President sends China's 0:01:56.600 --> 0:01:59.760 paying that tax, is that a campaign message? Do you 0:01:59.840 --> 0:02:04.360 think the cons directly directly? Do you think the consumers 0:02:04.400 --> 0:02:08.320 understand that they are the individuals paying this Well, he's 0:02:08.360 --> 0:02:10.560 saying China is paying the tax in the same way 0:02:10.600 --> 0:02:12.880 we say that Max is going to pay for the wall. 0:02:13.120 --> 0:02:17.120 That's nonsense, because once you impose the tax, what's gonna 0:02:17.160 --> 0:02:19.880 happen is that the price of imported goods from China 0:02:19.919 --> 0:02:23.359 the United States is gonna go up, mostly by the 0:02:23.400 --> 0:02:26.320 amount of the tax. Now could go out by less 0:02:26.760 --> 0:02:28.880 than the amount of the tax if the Chinese cut 0:02:29.040 --> 0:02:31.480 down the dollar price of their goods and there will 0:02:31.520 --> 0:02:34.080 be some impact of that, but most of the impact 0:02:34.160 --> 0:02:37.320 of a tariff is imposed on importers. There is the 0:02:37.440 --> 0:02:39.800 U S consumers as simple as that is a hundred 0:02:39.800 --> 0:02:43.519 and twenty five billion dollars tax on the US consumer, 0:02:43.639 --> 0:02:46.240 on the U S assholes. And it's the most regressive 0:02:46.600 --> 0:02:50.120 tax of all because those consumer goods about from China 0:02:50.160 --> 0:02:52.120 that you buy wal match that are cheap goods that 0:02:52.120 --> 0:02:54.760 allow you to have per capita income rising and your 0:02:54.800 --> 0:02:57.760 present power. So is there a regressive tax or not 0:02:57.840 --> 0:03:00.560 only is the tax, but the regress sime tax is 0:03:00.560 --> 0:03:04.720 the most exective tax of all. Translate this for John 0:03:04.760 --> 0:03:07.480 Pharaoh of the Midlands. Is the Midlands? Is that work 0:03:09.000 --> 0:03:13.120 is the lake country that's further north, that's over, that's 0:03:13.120 --> 0:03:15.799 my lake superior. But but if you look at the 0:03:15.840 --> 0:03:17.919 Middlands of England, you go back to the corn laws. 0:03:18.600 --> 0:03:24.000 Is President Trump dragging the corn laws of England Pharaoh's 0:03:24.000 --> 0:03:27.880 great great grandfather? Are you dragging the corn laws into 0:03:27.919 --> 0:03:30.959 the twenty one century? Is that all we're doing effectively 0:03:31.000 --> 0:03:34.040 is the same thing? Is protection? Is that protection is 0:03:34.120 --> 0:03:38.080 might benefit and the margin some producers in the import 0:03:38.160 --> 0:03:42.280 computing sectors. But that's a very small number of people, 0:03:42.560 --> 0:03:46.040 but it hurts all consumers. So the same workers as 0:03:46.040 --> 0:03:50.040 consumers are worse off. And anyone was in an export 0:03:50.040 --> 0:03:53.360 producing business, their jobs, that income, their profits are gonna 0:03:53.400 --> 0:03:57.560 go down. So you're making worse off consumers and exporters 0:03:57.600 --> 0:04:02.000 for the benefit of a very small number of essentially producers. 0:04:02.000 --> 0:04:04.080 And that would be like Lord Ferrell back in the 0:04:04.120 --> 0:04:07.640 seventeenth century. John there wasn't a Lord Frown. He was 0:04:07.640 --> 0:04:11.080 probably insistily. The cost are huge, you know. Like you know, 0:04:11.120 --> 0:04:14.480 a few years ago we imposed the taxes on tires 0:04:14.560 --> 0:04:18.760 imported by China. Was estimated that the cost for every 0:04:18.839 --> 0:04:21.480 job that was saved in the tarry industry West was 0:04:21.520 --> 0:04:23.680 a million dollar. I mean, you can just give a 0:04:23.680 --> 0:04:26.800 substitut to those workers and not impose the tax on 0:04:26.839 --> 0:04:30.080 all the consumers. So it's a tax that is totally distory. 0:04:30.360 --> 0:04:33.960 A final question, it's an important one. The Chinese behavior 0:04:34.000 --> 0:04:37.600 hasn't changed towards trade. It needs to change. That's an overwhelm. 0:04:37.600 --> 0:04:40.520 We can census among economists that it needs to change. 0:04:40.839 --> 0:04:43.599 The objective of this administration is to get the Chinese 0:04:43.600 --> 0:04:45.720 to change. You're saying this is the wrong way. What's 0:04:45.720 --> 0:04:48.240 the right way. Well, it's the wrong way because they're 0:04:48.279 --> 0:04:51.000 going to retaliate. They cannot lose face. You want to 0:04:51.040 --> 0:04:53.760 control the rise of the power of China, the right 0:04:53.800 --> 0:04:56.719 way is to do it the multilaterally, not just alone, 0:04:56.760 --> 0:04:59.919 but with Europe, Japan in others way of complained about China, 0:05:00.360 --> 0:05:02.880 and do it in a way that you start negotiation 0:05:02.960 --> 0:05:06.680 and you put pressure of them. If you start unilateral tariffs, 0:05:06.680 --> 0:05:09.000 they're gonna retaliate, and yes, they will live to a 0:05:09.040 --> 0:05:13.240 much ate on goods, but they can impose massive restrictions 0:05:13.240 --> 0:05:16.160 on hundreds of billions of dollars of foreign direct investment 0:05:16.200 --> 0:05:19.560 by Apple GM and hundreds of business they've done business 0:05:19.680 --> 0:05:22.520 in China, so they're gonna hurt. They lend their currents 0:05:22.560 --> 0:05:25.040 in a weekend by eight percent, and they could even 0:05:25.120 --> 0:05:28.960 eventually have the corruption of dumping US treasury. So that 0:05:29.120 --> 0:05:31.520 a wide variety of options, and they take the long 0:05:31.600 --> 0:05:34.360 term view. They don't have election in three months, so 0:05:34.400 --> 0:05:36.520 they can wait and play it out over the next 0:05:36.560 --> 0:05:39.839 two decades. Our nuclearruption is the joy of having you 0:05:39.960 --> 0:05:43.080 hear from Milan. And of course, with John Ferrell's love 0:05:43.160 --> 0:05:46.160 for a Simolan, we go out to segment with the 0:05:46.279 --> 0:05:52.200 A Simon fight, So you are not realists, not gonna 0:05:52.200 --> 0:05:59.880 come back now interest of her life. That's beautiful, Thank 0:05:59.880 --> 0:06:02.800 you tell King full of months of pain, this makes 0:06:02.880 --> 0:06:21.080 up for it. I appreciate that we're gonna do a 0:06:21.120 --> 0:06:25.080 more learned view here on the financial system that the 0:06:25.200 --> 0:06:28.320 U S confronts right now in emerging market Stephanie Siegel 0:06:28.680 --> 0:06:31.560 out of Chapel Hill and the Johns Hopkins University School 0:06:31.560 --> 0:06:36.080 of Advanced International Studies, does this looking sort of broader 0:06:36.120 --> 0:06:38.520 and deeper where Rubini is looking at more of the 0:06:38.560 --> 0:06:42.400 crisis dynamics and the actual political dynamics. How about just 0:06:42.680 --> 0:06:46.839 where are we in finance, Stephanie. Good morning Stephanie Siegal 0:06:47.000 --> 0:06:51.320 and I love your idea of first best responses. Do 0:06:51.440 --> 0:06:55.040 they need the International Monetary Fund to make first best 0:06:55.160 --> 0:07:00.880 response or is there a new em responsibility? Well, first off, 0:07:00.880 --> 0:07:03.880 good morning, it's nice to be with you. UM. I 0:07:03.920 --> 0:07:06.200 think the point of the piece I think that you 0:07:06.240 --> 0:07:11.040 were referring to was to differentiate between countries that are 0:07:11.040 --> 0:07:16.560 facing just fundamental economic vulnerabilities and um, those countries that 0:07:16.600 --> 0:07:19.200 could potentially get swept up in a broader e M 0:07:19.280 --> 0:07:23.360 contagion and the first best response that I was referring 0:07:23.400 --> 0:07:27.920 to was first off just stronger, more fundamental policies that 0:07:27.960 --> 0:07:31.960 address some of the economic imbalances. But then also recognizing 0:07:32.000 --> 0:07:34.840 that we're going into a period of vulnerability for e 0:07:35.040 --> 0:07:38.240 m s. We're going into a period of um of 0:07:38.360 --> 0:07:42.040 interest rate hikes and dollar strengthening, and that leaves EMS 0:07:42.120 --> 0:07:45.200 more vulnerable. Um. And so if you're in a world 0:07:45.240 --> 0:07:48.600 where financing for those em starts to dry up, UM, 0:07:48.760 --> 0:07:51.960 what are the options that those countries have? And but 0:07:52.680 --> 0:07:56.560 nique unique here? Dr seagells the idea of dollarization. That's 0:07:56.600 --> 0:07:58.960 a new word, and that I'm sure we had it 0:08:00.080 --> 0:08:02.400 eight we had it in two thousand seven. But am 0:08:02.440 --> 0:08:06.280 I right that the dollarization, the dollar denominated effect of 0:08:06.320 --> 0:08:11.560 all this debt on EM is dramatically different this time? Um? 0:08:11.600 --> 0:08:14.040 I don't know if I would say that it's dramatically different. 0:08:14.120 --> 0:08:16.440 So what is different this time? So we've had a 0:08:16.520 --> 0:08:21.160 decade of very low global interest rates UM that has 0:08:21.240 --> 0:08:24.920 actually encouraged a great deal of borrowing, including from non 0:08:24.960 --> 0:08:29.280 financial corporates, and a lot of that emerging market borrowing 0:08:29.320 --> 0:08:33.280 by those corporates has been in foreign currency, in dollars. 0:08:33.960 --> 0:08:36.760 So as the dollar is strengthening, it becomes that much 0:08:36.800 --> 0:08:39.600 harder for those e m s to repay those debts. 0:08:40.240 --> 0:08:43.000 And that's that's part of the phenomenon right now that's 0:08:43.080 --> 0:08:45.760 driving some of the broader e M weakness Apart from 0:08:45.800 --> 0:08:48.880 just the pure fundamentals. Stephanie, what's the dominant channel for 0:08:48.920 --> 0:08:53.679 contagion UM? That is an excellent question. I mean, I 0:08:53.720 --> 0:08:55.880 think you would first look at what are the real 0:08:56.040 --> 0:08:59.800 economic linkages between some of the vulnerable em so, thinking 0:09:00.080 --> 0:09:03.880 in terms of of just pure trade and those trade linkages, 0:09:03.920 --> 0:09:06.439 I think most people think that the e m s 0:09:06.480 --> 0:09:09.360 that are under the most stressed right now, that they're 0:09:09.760 --> 0:09:13.040 economic linkages to the rest of the world are are manageable. 0:09:13.679 --> 0:09:16.600 And so then you look to financial linkages that are 0:09:16.640 --> 0:09:20.280 their banks and other investors that have exposure to the 0:09:20.559 --> 0:09:22.719 those e M s UM, and I think a lot 0:09:22.760 --> 0:09:26.320 of people feel like those UM exposures are also manageable, 0:09:26.480 --> 0:09:29.960 in part because of the cleanup that took place after 0:09:30.080 --> 0:09:34.440 the global financial crisis. UM. The third area, and this 0:09:34.520 --> 0:09:37.600 is kind of the unknown right now, is just the 0:09:37.640 --> 0:09:42.480 broader risk sentiment UM and how investors feel about the 0:09:42.520 --> 0:09:46.160 overall environment. And I think that's where you start to 0:09:46.200 --> 0:09:49.360 get into UM. What are what are some of the 0:09:49.440 --> 0:09:52.120 unknowns right now? And and first and foremost in a 0:09:52.120 --> 0:09:54.560 lot of people's mind is where does this trade war 0:09:54.600 --> 0:09:58.439 between the US and China UM end up? And are 0:09:58.480 --> 0:10:01.680 we looking at something that would potentially be resolved quickly 0:10:01.920 --> 0:10:03.800 or are we looking at something that could be much 0:10:03.840 --> 0:10:08.880 more protracted and have much broader impacts UM beyond just 0:10:08.960 --> 0:10:11.600 the US and China, Stephanie. Investors look at those three 0:10:11.640 --> 0:10:13.559 things that you just described. They look at those three 0:10:13.600 --> 0:10:16.559 things and they conclude that the United States will be unaffected, 0:10:16.760 --> 0:10:19.199 it will be insulated. Is that your conclusion as well? 0:10:19.280 --> 0:10:22.880 Or do you look at it differently? Um? I look 0:10:22.920 --> 0:10:25.839 at it differently in the sense that I think if 0:10:25.880 --> 0:10:29.560 this is kind of a near term phenomenon it um 0:10:29.600 --> 0:10:33.160 it is certainly manageable. And in particular, if the US 0:10:33.400 --> 0:10:36.680 knows what it is that it's asking of China and 0:10:36.800 --> 0:10:41.199 they can actually enter into a negotiation where each side 0:10:41.200 --> 0:10:44.480 can make some progress, then then you're looking at a 0:10:44.559 --> 0:10:47.960 quicker resolution. I think where people get concerned, and I 0:10:48.080 --> 0:10:50.400 agree with this is if we're looking at a much 0:10:50.440 --> 0:10:56.079 broader trend toward um deliberalization and deglobalization, and what does 0:10:56.120 --> 0:10:59.679 that mean for the global outlook. Um, And there I 0:10:59.720 --> 0:11:02.319 think the much bleaker story. And what's so interesting year 0:11:02.480 --> 0:11:04.880 is the overlay which we heard a little bit from 0:11:04.960 --> 0:11:07.400 Lawrence Cudlow yesterday at the Economic Club of New York, 0:11:07.400 --> 0:11:09.839 and we heard it a lot Stephanie Siegel from Nora 0:11:10.040 --> 0:11:14.840 Robini an hour ago, is the overlay of US fiscal policy. 0:11:15.240 --> 0:11:18.600 We talked about Chairman Powell is central Banker to the world. 0:11:19.440 --> 0:11:23.080 Is our fiscal deficit the fiscal impulse to the e 0:11:23.240 --> 0:11:28.000 M world? Right? And so you're are you kind of 0:11:28.040 --> 0:11:31.679 asking what the implications are for our Absolutely at one 0:11:31.720 --> 0:11:34.400 point three one point for chronic deficit, we get some 0:11:34.480 --> 0:11:36.280 form of slowdown, we go out to one eight two 0:11:36.320 --> 0:11:39.600 trillion deficit. How does that affect Ecuador? How does that 0:11:39.640 --> 0:11:43.960 affect Indonesia? Yeah, and I think there's um. There are 0:11:44.000 --> 0:11:47.439 a couple of channels. Again. I think one this immediate 0:11:47.480 --> 0:11:50.319 fiscal impulse that we're seeing the fact that growth is 0:11:50.400 --> 0:11:52.360 much higher in the US as a result of this 0:11:52.440 --> 0:11:55.640 fiscal stimulus. UM. On the one hand, because of those 0:11:55.679 --> 0:11:59.920 real linkages, that's actually positive for the global economy, except 0:12:00.320 --> 0:12:03.679 it also presents a very large financing need. And so 0:12:03.840 --> 0:12:06.640 in this environment where you've got higher interest rates in 0:12:06.640 --> 0:12:11.000 the US and dollar strength and an additional financing need. 0:12:11.120 --> 0:12:14.120 Are we the United States then pulling financing away from 0:12:14.120 --> 0:12:16.679 the rest of the world. UM, So that poses a 0:12:16.800 --> 0:12:20.200 risk to e M S and then a risk two 0:12:20.200 --> 0:12:22.760 E M S UM and to ourselves. Frankly, is what 0:12:22.920 --> 0:12:25.880 happens after this kind of sugar high of fiscal stimulus 0:12:25.880 --> 0:12:28.720 wears off, And that I think is a concern for everybody. 0:12:28.760 --> 0:12:31.040 It's definitely the first concern. It's a concern that the 0:12:31.120 --> 0:12:34.000 Central Bank Governor of India race several months ago that 0:12:34.120 --> 0:12:36.360 the Treasury together with the ballet sheet roll off at 0:12:36.400 --> 0:12:38.760 the FED, which just going to suck up dollar liquidity 0:12:38.800 --> 0:12:43.360 from e M. Is that playing out already? That I 0:12:43.400 --> 0:12:45.400 think is hard to tell. I mean, we we have 0:12:45.600 --> 0:12:51.160 already seen UM outflows from EMS UM in UH in 0:12:51.200 --> 0:12:53.280 the first half of the year. So I think you 0:12:53.280 --> 0:12:55.720 know there are a couple of drivers behind that. Is 0:12:55.960 --> 0:12:59.640 UM increased demand from the United States and specifically for 0:13:00.080 --> 0:13:03.680 US treasuries UM. Is that is that a factor playing 0:13:03.720 --> 0:13:06.559 into it? I think? So it's definitely great to cant 0:13:06.559 --> 0:13:10.120 shout with you, C S I S Deputy Director and 0:13:10.400 --> 0:13:23.360 senior fellow. So let's talk to Jane Furley joining US 0:13:23.360 --> 0:13:26.719 sound of the Global Capital of FEORIG Exchange in London. Rabbabanks, 0:13:26.760 --> 0:13:30.079 Senior currency analyst, Jane, let's get to the big debate. 0:13:30.120 --> 0:13:32.559 It's the US dollar debate and an unloved rally through 0:13:32.559 --> 0:13:37.040 the front half of this year. What's your base case now, Jane, Well, 0:13:37.080 --> 0:13:39.760 we still think that you'd be better off holding long dollars. 0:13:39.760 --> 0:13:42.120 I mean, I think what we've probably seen is some 0:13:42.200 --> 0:13:44.319 position adjustment. And let you mentioned that rally in the 0:13:44.360 --> 0:13:46.320 dollar has gone a long way, but there has been 0:13:46.640 --> 0:13:49.079 I know it shift perhaps and some of the factors 0:13:49.080 --> 0:13:51.320 that the market is talking about a shift perhaps and 0:13:51.760 --> 0:13:55.080 in concerns about where US growth is going to go 0:13:55.120 --> 0:13:58.439 on the back of a trade excuse me, trade wars, 0:13:58.960 --> 0:14:01.680 a new debate back growth potentially been hit there, and 0:14:01.720 --> 0:14:06.280 also some concerns about that flowing or capped inflation potential. 0:14:06.720 --> 0:14:09.240 Also in the US, we had softer data on that 0:14:09.320 --> 0:14:12.640 front last week, So I think this is profit taking. 0:14:12.880 --> 0:14:15.400 I still think that emerging markets are going to be 0:14:15.520 --> 0:14:18.520 vulnerable in the wake of the pressure on China, and 0:14:19.000 --> 0:14:22.120 I do think that the long dollar positions will win through. 0:14:22.120 --> 0:14:23.800 But I do think right now we are seeing some 0:14:23.840 --> 0:14:26.680 position adjustment. What do you think, Jane, right now is 0:14:26.680 --> 0:14:29.760 the dominant concern for e m f X the dominant 0:14:29.800 --> 0:14:31.720 concern and where is it coming from? Most people on 0:14:31.760 --> 0:14:34.360 the morning light this morning might point to trade. Kit 0:14:34.520 --> 0:14:38.360 Jukes is calling the trade situation Washington water torch. Just 0:14:38.400 --> 0:14:41.320 this drip drip of tariff news together with FED hikes. 0:14:41.320 --> 0:14:44.520 What do you look at. Well, I think this has 0:14:44.520 --> 0:14:46.360 been the theme all year, But I think what's different. 0:14:46.400 --> 0:14:48.440 There's the emphasis. If you go back to the beginning 0:14:48.440 --> 0:14:50.440 of the year, though there was a lot of optimism 0:14:50.440 --> 0:14:54.040 that the trade situation would brush over, that the it 0:14:54.080 --> 0:14:56.320 would be a short run thing, there would be a compromise, 0:14:56.400 --> 0:14:58.800 and by now we've more or less a forgotten about it. 0:14:58.800 --> 0:15:01.400 But I think right now, you know, many more commentators 0:15:01.480 --> 0:15:04.160 are coming to recognize that this can really be a 0:15:04.280 --> 0:15:07.520 drawn out process. And I think that's the change, that's 0:15:07.560 --> 0:15:09.840 what's really getting under the market skin. And I think 0:15:10.040 --> 0:15:12.800 if we look to emerging markets, well, they are obviously 0:15:12.800 --> 0:15:16.280 in the front line of a full away in market confidence. 0:15:16.280 --> 0:15:19.640 And we've seen a capital outflow from the emerging markets 0:15:19.680 --> 0:15:22.920 really from the beginning of the at least since the spring. 0:15:23.320 --> 0:15:25.840 But it wasn't until maybe the summer that this became 0:15:25.880 --> 0:15:29.600 a much broader effect, that this began to really rattle 0:15:29.760 --> 0:15:32.360 a confidence in a much bigger way. But I do 0:15:32.560 --> 0:15:35.360 think that that the trade ward thing is is very 0:15:35.440 --> 0:15:37.440 much in the front line. We just don't know how 0:15:37.520 --> 0:15:39.240 much it's going to slow Chinese guys. We don't know 0:15:39.240 --> 0:15:41.640 how much it's going to knock onto other economies. I 0:15:41.760 --> 0:15:46.120 just looked at the eurindollar volatility surface and it's fairly symmetrical. 0:15:46.200 --> 0:15:48.560 There doesn't seem to be or one way bet. Where 0:15:48.800 --> 0:15:51.320 is the one way bet that you can play against 0:15:51.520 --> 0:15:56.720 right now? Is it weak yen and you push against that? Well? No, 0:15:56.880 --> 0:15:58.640 I think I think the end is as a really 0:15:58.640 --> 0:16:01.240 confusing one at easter. You know, if you're looking in 0:16:01.280 --> 0:16:04.000 on the phone exchange market this year, because you've seen 0:16:04.000 --> 0:16:06.440 this sell off in emerging markets this year, and many 0:16:06.440 --> 0:16:08.360 people might be forgiven for thinking, well that means of 0:16:08.440 --> 0:16:10.840 cause the year and it's the safe haven currency, Well 0:16:11.080 --> 0:16:13.280 in that case it should be really quite strong. But 0:16:13.520 --> 0:16:16.800 I think what's happened is that the markets looked at 0:16:16.840 --> 0:16:19.560 the higher interest rates coming up we're coming through from 0:16:19.600 --> 0:16:21.760 the Federal Reserve. It's looking at the strong growth story 0:16:21.760 --> 0:16:25.560 in the US, and actually, you know, many Japanese investors, 0:16:26.360 --> 0:16:29.600 particularly perhaps I thought, well, actually I think I'd rather 0:16:29.640 --> 0:16:31.960 put my money in the dollar, pick up a little 0:16:31.960 --> 0:16:35.480 bit of yield. And therefore you've seen the years it's 0:16:35.560 --> 0:16:38.160 not as as as strong as as many people might 0:16:38.240 --> 0:16:41.400 have expected, given the sell off an emerging market, So 0:16:41.480 --> 0:16:44.200 interest rate differentials really coming through. I think the days 0:16:44.240 --> 0:16:47.080 when the end really benefits is when we have some 0:16:47.200 --> 0:16:51.120 sort of shock, some sort of unforeseen bad news, and 0:16:51.160 --> 0:16:53.240 we have this knee jerk back into the end. But 0:16:53.280 --> 0:16:55.840 as long as the interest rate of differentials are seen 0:16:55.920 --> 0:16:57.920 to be boosting the dollar, I think it's going to 0:16:58.000 --> 0:17:01.440 be difficult for um to see the end pick up 0:17:01.480 --> 0:17:03.760 too much ground against the US dollar. Well, Jane of right, 0:17:03.800 --> 0:17:06.040 differential as a plan into the dollar en cross, Why 0:17:06.080 --> 0:17:08.440 is it not playing into the euro dollar cross? Because 0:17:08.480 --> 0:17:10.760 your dollars at to one seventeen. What's it doing up 0:17:10.800 --> 0:17:15.760 there with rate differentials heavily skewed in the dollars favor? Well, 0:17:15.840 --> 0:17:18.080 you're right. I mean again, if we look back into 0:17:18.320 --> 0:17:21.320 maybe the middle of August, we had you know, lows 0:17:21.720 --> 0:17:25.119 round about one thirteen, and suddenly we're back in in 0:17:25.119 --> 0:17:28.000 in in the Euro's favor again. I think there is 0:17:28.040 --> 0:17:30.040 some position adjustment here. I think the sell off in 0:17:30.359 --> 0:17:34.160 the Euro was probably a little bit too fast through 0:17:34.200 --> 0:17:36.760 the first couple of weeks of August. But I do 0:17:36.960 --> 0:17:39.240 think that when you have a scenario whether you used 0:17:39.240 --> 0:17:42.640 to be has signaled really quite clearly that it's got 0:17:42.680 --> 0:17:45.680 no intention of hiking interest rates, at least to someone 0:17:45.920 --> 0:17:48.240 of next year. When you've got budget issues for for 0:17:48.320 --> 0:17:50.359 Italy two, I think that you might look vulnerable at 0:17:50.359 --> 0:17:54.800 these levels. What is the number one question your clients 0:17:54.840 --> 0:17:59.760 are asking you right now? The number one question from 0:18:00.080 --> 0:18:03.480 UK customers, Irish customers are still very much about Brexit, 0:18:03.600 --> 0:18:05.480 and this of course has been the same situation for 0:18:05.960 --> 0:18:11.600 two years. It's still a huge issue for Sterling. It is, well, 0:18:11.640 --> 0:18:13.400 you know, should we be buying sterling now is there 0:18:13.400 --> 0:18:14.840 going to be a deal? Or should we be saying 0:18:14.840 --> 0:18:17.080 spelling is there going to be no deal? It's obviously 0:18:17.160 --> 0:18:19.920 very very difficult to change that question. But yeah, John 0:18:20.040 --> 0:18:22.879 Jane has two goldfish and her desk ones called even 0:18:22.920 --> 0:18:25.080 you know, there's cold remains, it's just sitting on the fence. 0:18:25.119 --> 0:18:31.119 It just goes just and there's a cold boris Again 0:18:31.200 --> 0:18:34.760 you said those in the UK ask about Brexit. Does 0:18:34.800 --> 0:18:40.480 anyone outside the UK ever ask about Brexit? There? Yes 0:18:40.680 --> 0:18:43.000 is the answer. Yes, Perhaps were not the same sort 0:18:43.040 --> 0:18:44.960 of intensity, but you know that there's a lot of 0:18:45.080 --> 0:18:47.640 There's perhaps three different options that many investors have had. 0:18:47.640 --> 0:18:49.920 They could buy Sterling, they corself early, or they could 0:18:49.920 --> 0:18:52.040 just remain on the sidelines, and I do suspect that 0:18:52.480 --> 0:18:55.440 many investors, if they had the option, have stayed out 0:18:55.440 --> 0:18:57.560 of it. For those that don't have the option, what's 0:18:57.560 --> 0:19:01.040 your advice to them, I think they need to try 0:19:01.080 --> 0:19:04.399 to extremely carefully and clearly. We've seen studying recover some 0:19:04.480 --> 0:19:06.160 ground over the last week and say there's a little 0:19:06.200 --> 0:19:09.040 bit more optimism that November could come through. But I 0:19:09.040 --> 0:19:11.760 think the focus needs to be on the UK government. 0:19:12.160 --> 0:19:15.480 If there is no consensus within the UK government, there's 0:19:15.480 --> 0:19:17.080 got to be a question mark as to whether or 0:19:17.119 --> 0:19:20.000 not a trade deal is going to get through. There 0:19:20.080 --> 0:19:22.680 is of course the potential for stiling to valy hard 0:19:23.160 --> 0:19:26.679 if a deal is signed in November or whenever, but 0:19:26.760 --> 0:19:28.879 if that doesn't get through, rati factor in Parliament and 0:19:28.920 --> 0:19:31.600 Starling still looks pretty fun. Very quickly here, Jane, what 0:19:31.680 --> 0:19:36.320 are you watching within this trade war that we're in. 0:19:36.400 --> 0:19:39.240 The Chinese are responded, They say they will respond as 0:19:39.240 --> 0:19:43.159 a September twenty day. What actually is the one perspective 0:19:43.240 --> 0:19:47.919 or item that you're looking towards. Well, I think we 0:19:48.400 --> 0:19:50.000 I think you're right. I think we need to watch 0:19:50.000 --> 0:19:53.280 what China's do. I think it's quite interesting. Also another 0:19:53.400 --> 0:19:56.000 factor to watch US corporates. We've seen some pushback from 0:19:56.080 --> 0:19:59.520 US corporates over the last few weeks, but specifically US farmers. 0:19:59.720 --> 0:20:02.960 You've go to watch the November mix terms as well 0:20:03.000 --> 0:20:05.040 that this could all be interesting. So don't think there's 0:20:05.080 --> 0:20:07.199 one particular thing. I think this is a confluence of 0:20:07.480 --> 0:20:11.040 a lot of different factors coming together. Jane, fully, thank 0:20:11.080 --> 0:20:25.240 you so much, greatly appreciate it. With robo bank today, 0:20:26.720 --> 0:20:30.119 the chairman of the Senate Judiciary Committee, this, of course, 0:20:30.240 --> 0:20:34.160 is the Senator Charles Grassley, Republican of Iowa. Next Monday, 0:20:34.520 --> 0:20:39.880 he has set aside time to hear from Judge Brett Kavanaugh, 0:20:40.320 --> 0:20:43.639 of course, nominated to the Supreme Court, and to also 0:20:43.800 --> 0:20:48.159 here from Christine Blaze Ford, a research psychologist in Northern 0:20:48.200 --> 0:20:54.760 California who has accused Judge Kavanaugh of sexual assault, and 0:20:54.880 --> 0:20:56.520 here to tell us a little bit more about this 0:20:57.160 --> 0:20:59.720 is our own Bloomberg expert when it comes to the 0:21:00.000 --> 0:21:03.760 Bereame Court. Kimberly, Robinson, Kimberly, thank you very much for 0:21:03.880 --> 0:21:08.320 being with us. Can you explain what this is setting 0:21:08.440 --> 0:21:12.120 up on Monday? What exactly are we going to kind 0:21:12.119 --> 0:21:15.680 of be presented with. Well, this is a really rapidly 0:21:15.800 --> 0:21:19.920 developing story, so what we say now might change completely 0:21:19.920 --> 0:21:24.240 on Monday. But right now, Republican senators have said that 0:21:24.320 --> 0:21:28.199 they want to give Kavanaugh's accuser a form where she 0:21:28.240 --> 0:21:32.440 can really air out the complete allegations that she has 0:21:32.480 --> 0:21:35.720 against Brett Kavanaugh. But then we're also going to hear 0:21:35.760 --> 0:21:38.640 from Brett Kavanaugh so that, in his words, he can 0:21:38.720 --> 0:21:44.800 defend his integrity. Now, the President has defended Judge Kavanaugh, 0:21:44.800 --> 0:21:49.600 correct calling him an outstanding judge and dismissing as quote ridiculous. 0:21:50.400 --> 0:21:54.359 The prospect that Brett Kavanaugh might withdraw his nomination is 0:21:54.400 --> 0:21:57.840 that correct? Well, that's true, but the White House's response 0:21:57.920 --> 0:22:01.560 has been somewhat surprising. They do say that they still 0:22:01.560 --> 0:22:05.000 support Brett Kavanaugh and that they don't intend to pull 0:22:05.080 --> 0:22:09.440 his nomination. At the same time, we saw White House 0:22:09.480 --> 0:22:12.160 advisor Kelly and Conway come out and say that this 0:22:12.200 --> 0:22:16.120 woman's allegations must be given a full hearing um. And 0:22:16.200 --> 0:22:19.080 so it's kind of a bit of a surprise given 0:22:19.160 --> 0:22:21.639 some of the allegations that we've heard against the President 0:22:22.160 --> 0:22:24.760 himself and the tactics we've seen from the White House 0:22:24.760 --> 0:22:27.960 on those. But they are standing by Kavanaugh as of now. 0:22:28.160 --> 0:22:31.359 I believe that that the debate of this, and you know, 0:22:31.400 --> 0:22:34.000 I give credit to Michael and Kimberly, who I thought 0:22:34.440 --> 0:22:39.000 framed Ms. Conway's intent here is the Republican calculus on 0:22:39.080 --> 0:22:42.320 women and on suburban women, the people that you know, 0:22:42.359 --> 0:22:45.199 frankly put Mr Trump over the edge to victory, uh 0:22:45.320 --> 0:22:48.639 in two thousand sixteen. From where you sit with the 0:22:48.680 --> 0:22:52.320 Supreme Court tilt, do you think that politics is just 0:22:52.440 --> 0:22:55.280 all supreme here it has nothing to do with Mr 0:22:55.359 --> 0:22:58.400 Kavanaugh or or you know, the debate at hand, and 0:22:58.480 --> 0:23:02.320