1 00:00:01,400 --> 00:00:04,120 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 2 00:00:04,120 --> 00:00:06,240 Speaker 1: with my co host of Bonnie Quinn. Every business day 3 00:00:06,240 --> 00:00:10,360 Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts, 4 00:00:10,400 --> 00:00:13,600 Speaker 1: along with essential market moving news. Kind of Bloomberg Markets 5 00:00:13,600 --> 00:00:17,000 Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts, 6 00:00:17,000 --> 00:00:20,040 Speaker 1: and on Bloomberg dot com. We have the breaking news. 7 00:00:20,200 --> 00:00:23,159 Speaker 1: There is an outline of a Brexit trade deal that 8 00:00:23,280 --> 00:00:26,760 Speaker 1: has been reached. This is, according to officials, the outline 9 00:00:26,800 --> 00:00:30,880 Speaker 1: of an historic post Brexit trade agreement reached. Now negotiators 10 00:00:30,880 --> 00:00:33,560 Speaker 1: still putting the finishing touches to an accord. According to 11 00:00:33,600 --> 00:00:36,839 Speaker 1: these officials, they spoke on condition of anonymity, and of 12 00:00:36,880 --> 00:00:38,920 Speaker 1: course it would then need to go to a vote 13 00:00:38,920 --> 00:00:41,960 Speaker 1: of the twenty seven member countries. But an outline has 14 00:00:41,960 --> 00:00:43,720 Speaker 1: been reached. We know going into the day that there 15 00:00:43,720 --> 00:00:47,400 Speaker 1: were two disagreements over fish, what access EU boats would 16 00:00:47,440 --> 00:00:50,000 Speaker 1: have to British waters and what rights the EU would 17 00:00:50,000 --> 00:00:53,320 Speaker 1: have to impose retaliatory tariffs should the UK limit that 18 00:00:53,400 --> 00:00:56,520 Speaker 1: access in the future. Well, now it looks like those 19 00:00:56,800 --> 00:01:00,800 Speaker 1: conditions have been sorted out. The British pound is rebounding 20 00:01:00,880 --> 00:01:03,840 Speaker 1: versus the US dollar and the euro up one versus 21 00:01:03,880 --> 00:01:07,520 Speaker 1: the US dollar. We have a little bounce in the 22 00:01:07,480 --> 00:01:11,200 Speaker 1: foot seed to fifty and the Treasury is here in 23 00:01:11,240 --> 00:01:14,759 Speaker 1: the US are also reacting. Let's get some more details. Now, 24 00:01:14,760 --> 00:01:17,280 Speaker 1: we'll go to Brussels. Our reporter Maria to day Oh 25 00:01:17,360 --> 00:01:19,840 Speaker 1: has been keeping an eye on the minute by minute 26 00:01:19,840 --> 00:01:22,560 Speaker 1: news out of the negotiations. Maria, we know that the 27 00:01:22,560 --> 00:01:29,480 Speaker 1: Brexit negotiators, Deputy Steph Rizo and also David Frost, has 28 00:01:29,520 --> 00:01:32,280 Speaker 1: been meeting since early morning. What else do we know 29 00:01:32,319 --> 00:01:36,360 Speaker 1: about those meetings? Well, Vonnie, in terms of the actual 30 00:01:36,400 --> 00:01:39,399 Speaker 1: content that's going into this deal, what made this deal? 31 00:01:39,520 --> 00:01:42,880 Speaker 1: Finally pick that we don't really know. This is happening 32 00:01:43,160 --> 00:01:45,080 Speaker 1: behind closed doors. But when we do know, when the 33 00:01:45,080 --> 00:01:47,600 Speaker 1: market is reacting to this, is that there is an 34 00:01:47,600 --> 00:01:51,200 Speaker 1: outline to eight deals. There is now a document that 35 00:01:51,280 --> 00:01:54,080 Speaker 1: could become a deal. We understand that they are working 36 00:01:54,080 --> 00:01:56,680 Speaker 1: on some final touches and in fact they're hoping to 37 00:01:56,760 --> 00:01:59,920 Speaker 1: make an announcement of a deal that's been formalized. Sort 38 00:02:00,040 --> 00:02:01,600 Speaker 1: you know, in terms of the details, as I say, 39 00:02:01,680 --> 00:02:03,720 Speaker 1: you know, you're dead right. This is about the fish. 40 00:02:03,760 --> 00:02:05,600 Speaker 1: It was about the level playing field and how the 41 00:02:05,680 --> 00:02:09,040 Speaker 1: two would come together. It's unclear to say wouldn't make 42 00:02:09,120 --> 00:02:12,440 Speaker 1: this tick, but nonetheless this huge. It is the idea 43 00:02:12,520 --> 00:02:14,840 Speaker 1: that a deal is now very much within side and 44 00:02:14,880 --> 00:02:18,320 Speaker 1: they won't announce it in the very short hours. Maria, 45 00:02:18,680 --> 00:02:21,720 Speaker 1: what is the sense of next steps here? At some 46 00:02:21,840 --> 00:02:24,560 Speaker 1: point we had to come to a day like today 47 00:02:24,560 --> 00:02:27,760 Speaker 1: where they would hammer out both sides. The various points 48 00:02:28,160 --> 00:02:29,960 Speaker 1: give us a sense of kind of how the next 49 00:02:30,000 --> 00:02:34,200 Speaker 1: steps procedurally are supposed to happen. Well, first of all, 50 00:02:34,240 --> 00:02:35,720 Speaker 1: of course we were going to get to a day 51 00:02:35,760 --> 00:02:37,520 Speaker 1: like this where where a deal was announced. But I 52 00:02:37,520 --> 00:02:39,680 Speaker 1: would also say it's it's now. It's easy to take 53 00:02:39,720 --> 00:02:41,679 Speaker 1: it for granted, but just twenty four hours ago we're 54 00:02:41,680 --> 00:02:44,600 Speaker 1: talking about potentially a no deal w two terms. And 55 00:02:44,639 --> 00:02:47,040 Speaker 1: this deal is is a huge thing because it means 56 00:02:47,080 --> 00:02:50,200 Speaker 1: that it's no protests, no terriffs, this is a very 57 00:02:50,200 --> 00:02:52,800 Speaker 1: close partnership, and it means that, especially if you're a 58 00:02:52,800 --> 00:02:55,560 Speaker 1: business right now, it removes a lot of the legal eternity. 59 00:02:55,639 --> 00:02:57,560 Speaker 1: So it is it is huge and and and I 60 00:02:57,600 --> 00:03:00,000 Speaker 1: guess just just that line that of course the day 61 00:03:00,120 --> 00:03:01,919 Speaker 1: like this is gonna come, but it was not something 62 00:03:01,919 --> 00:03:04,359 Speaker 1: that we're taking for granted. Just a few days ago. Now, 63 00:03:04,400 --> 00:03:06,760 Speaker 1: in terms of what happens next, when this deal is 64 00:03:06,760 --> 00:03:09,560 Speaker 1: announced and this is at a technical level, the European, 65 00:03:09,600 --> 00:03:11,799 Speaker 1: the EU twenty seven countries and the Member States will 66 00:03:11,840 --> 00:03:14,240 Speaker 1: have to say they agree with it. The understanding, of 67 00:03:14,240 --> 00:03:16,840 Speaker 1: course is that Mr Barnier is the EU negotiator, is 68 00:03:16,880 --> 00:03:19,480 Speaker 1: working very closely with him, so he would not agree 69 00:03:19,520 --> 00:03:22,520 Speaker 1: to something they don't agree with already. And then after 70 00:03:22,560 --> 00:03:24,360 Speaker 1: that this will have to be right asided by the 71 00:03:24,400 --> 00:03:26,840 Speaker 1: UK Parliament. That's not going to be a problem in 72 00:03:26,880 --> 00:03:29,239 Speaker 1: principle that as Prime Minister does have a majority there, 73 00:03:29,520 --> 00:03:31,639 Speaker 1: and then it had to be good to the EU Parliament. 74 00:03:32,000 --> 00:03:35,119 Speaker 1: That could become more complicated this time, funny, funnily enough, 75 00:03:35,360 --> 00:03:38,200 Speaker 1: purely because I've always said they needed time to vote 76 00:03:38,200 --> 00:03:41,119 Speaker 1: this the settled ready that they can't read the documents 77 00:03:41,120 --> 00:03:43,760 Speaker 1: that we're looking at thousands of pages from now until 78 00:03:43,880 --> 00:03:45,720 Speaker 1: summer twenty eight. That was the last play that were 79 00:03:45,720 --> 00:03:48,120 Speaker 1: scheduled for this. So there could be a legal lean 80 00:03:48,200 --> 00:03:50,920 Speaker 1: boat between the deal being agree or a technical level 81 00:03:50,920 --> 00:03:52,760 Speaker 1: and then ratified. But we'll have to see about that. 82 00:03:53,160 --> 00:03:56,320 Speaker 1: An options traders had been positioning for a deal. They 83 00:03:56,400 --> 00:03:59,240 Speaker 1: drugged down the cost of hedging a weaker sterling over 84 00:03:59,240 --> 00:04:01,200 Speaker 1: the coming months. So it looks like they are looking 85 00:04:01,200 --> 00:04:04,080 Speaker 1: for a weaker startling, which of course is rebounding today 86 00:04:04,160 --> 00:04:06,880 Speaker 1: on the you know, the excitement that there might actually 87 00:04:06,920 --> 00:04:09,040 Speaker 1: be a deal and that there won't be all kinds 88 00:04:09,040 --> 00:04:12,040 Speaker 1: of chaos at the end of the year. Now, Maria, obviously, 89 00:04:12,240 --> 00:04:14,520 Speaker 1: you know each country has to agree with it, but 90 00:04:14,600 --> 00:04:17,159 Speaker 1: we hear that they're standing by. They haven't gone home 91 00:04:17,200 --> 00:04:20,760 Speaker 1: for you know what's widely celebrated across Europe, and that 92 00:04:20,920 --> 00:04:24,479 Speaker 1: is a Christmas even Christmas Day, yes, and you know, 93 00:04:24,520 --> 00:04:26,839 Speaker 1: the timing of this bondage it was just so difficult 94 00:04:26,839 --> 00:04:29,320 Speaker 1: in this whole negotiation on a bigger picture to have 95 00:04:29,480 --> 00:04:32,479 Speaker 1: been really difficult in terms of the logistics because of coronavirus. 96 00:04:32,560 --> 00:04:35,160 Speaker 1: You know, we talked about breakfit that's happening on and 97 00:04:35,160 --> 00:04:37,080 Speaker 1: on and never ending story. But actually, if we look 98 00:04:37,080 --> 00:04:39,360 Speaker 1: at the details, this was a very quick deal by 99 00:04:39,400 --> 00:04:42,800 Speaker 1: European standards, because the talk's only got theorious in the 100 00:04:42,839 --> 00:04:45,520 Speaker 1: summer because coronavirus is a priority at the start of 101 00:04:45,560 --> 00:04:47,600 Speaker 1: the year. Now, in terms of now we know there 102 00:04:47,600 --> 00:04:49,880 Speaker 1: has been a very close relationship and a very close 103 00:04:49,880 --> 00:04:53,640 Speaker 1: partnership between the unigropeting team and the EU capitals. In 104 00:04:53,720 --> 00:04:56,719 Speaker 1: principle that should not be an issue. Everyone wants to 105 00:04:56,760 --> 00:04:58,800 Speaker 1: get this wrapped up before the end of the year, 106 00:04:59,040 --> 00:05:02,160 Speaker 1: purely bone be as a transition period will end on 107 00:05:02,240 --> 00:05:04,920 Speaker 1: December thirty one. That's the legal deadline cannot be moved, 108 00:05:05,040 --> 00:05:07,520 Speaker 1: so they wanted to remove that and certainty from business, 109 00:05:07,520 --> 00:05:09,279 Speaker 1: and for a lot of businesses on both sides of 110 00:05:09,320 --> 00:05:12,000 Speaker 1: the channel, the UK and Europe too, this was a 111 00:05:12,080 --> 00:05:15,000 Speaker 1: huge clivage just to think what rules are going to 112 00:05:15,040 --> 00:05:16,840 Speaker 1: apply in January first, how are we going to be 113 00:05:16,920 --> 00:05:19,320 Speaker 1: able to do business? What's going to happen now? Of course, 114 00:05:19,360 --> 00:05:21,280 Speaker 1: the coronavirus is very much a place, so this is 115 00:05:21,520 --> 00:05:24,360 Speaker 1: for sure going to make it much easier for business. 116 00:05:24,480 --> 00:05:27,760 Speaker 1: If something is announced today, maybe not ratified quickly, but 117 00:05:27,800 --> 00:05:30,000 Speaker 1: a deal inside and that means that to some extent, 118 00:05:30,080 --> 00:05:33,159 Speaker 1: when you get to January first, you've avoided that clivte. 119 00:05:33,720 --> 00:05:37,800 Speaker 1: So Maria, as Vannie mentioned earlier, both the pound, sterling 120 00:05:37,800 --> 00:05:40,320 Speaker 1: and the euro are rallying, kind of echoing what you're 121 00:05:40,360 --> 00:05:42,880 Speaker 1: saying about the business communities is getting a sense of 122 00:05:43,240 --> 00:05:47,599 Speaker 1: certainty here. Is it generally accepted that the business community 123 00:05:47,640 --> 00:05:50,719 Speaker 1: is behind it. Or is behind kind of where the 124 00:05:50,760 --> 00:05:53,720 Speaker 1: EU is in terms of negotiating Brexit. It has always 125 00:05:53,720 --> 00:05:56,480 Speaker 1: had the support of the business community. It just from 126 00:05:56,480 --> 00:06:00,719 Speaker 1: a negotiating perspective, well, to some extent, it depends on 127 00:06:00,760 --> 00:06:03,520 Speaker 1: who you ask. If it's the UK community, the business community. 128 00:06:03,560 --> 00:06:06,200 Speaker 1: The one thing they've said is please remove the politics 129 00:06:06,320 --> 00:06:09,640 Speaker 1: from this. Let's just give us clarity and guidance as 130 00:06:09,720 --> 00:06:11,720 Speaker 1: to what is going to happen. This is a huge 131 00:06:11,760 --> 00:06:14,520 Speaker 1: relationship never been done before. What you have. The factor 132 00:06:14,560 --> 00:06:17,159 Speaker 1: here is that right now the UK had full access 133 00:06:17,200 --> 00:06:20,159 Speaker 1: to the European sivil market. By leaving the European Union, 134 00:06:20,200 --> 00:06:22,560 Speaker 1: they could have gone to w two terms. This is 135 00:06:22,600 --> 00:06:25,800 Speaker 1: a huge, huge departure from the status quo. So this 136 00:06:25,880 --> 00:06:28,560 Speaker 1: is the business community for sure repeating this idea that 137 00:06:29,000 --> 00:06:31,360 Speaker 1: you know, let's just move away from the Brexit narrative 138 00:06:31,400 --> 00:06:34,440 Speaker 1: on the Brexit political language, just give us clarity for 139 00:06:34,560 --> 00:06:38,200 Speaker 1: the European companies. It was also about clarity just what 140 00:06:38,400 --> 00:06:40,800 Speaker 1: is going to happen in two weeks time. Of course 141 00:06:40,800 --> 00:06:42,920 Speaker 1: there's a story, you know, this is an incredible news 142 00:06:42,920 --> 00:06:45,240 Speaker 1: sockat But if you've got money on the line and 143 00:06:45,240 --> 00:06:47,039 Speaker 1: you don't know what's gonna happen in ten days time. 144 00:06:47,360 --> 00:06:49,840 Speaker 1: For sure. That meant that there was going potentially going 145 00:06:49,880 --> 00:06:52,640 Speaker 1: to be last investment, that smaller companies were already very 146 00:06:52,640 --> 00:06:54,920 Speaker 1: concerned about the impact. That this is going to happen again, 147 00:06:54,960 --> 00:06:57,839 Speaker 1: this is probably going to be a huge relief. You know, 148 00:06:57,880 --> 00:07:00,080 Speaker 1: the terms we don't know, but the fact that you 149 00:07:00,120 --> 00:07:01,920 Speaker 1: know you are going to have a deal in place, 150 00:07:01,960 --> 00:07:04,640 Speaker 1: that this is not a w t O shock immediately happening, 151 00:07:04,640 --> 00:07:06,440 Speaker 1: it does remove a lot of the incerdents. I mean, 152 00:07:06,600 --> 00:07:08,920 Speaker 1: I really cannot stress that enough. Well, and of course 153 00:07:08,920 --> 00:07:11,320 Speaker 1: we've got a little preview of what might happen chaos 154 00:07:11,440 --> 00:07:14,480 Speaker 1: wise when France had to stop truckers coming in just 155 00:07:14,520 --> 00:07:17,120 Speaker 1: the other day. That was on done at midnight last night, 156 00:07:17,240 --> 00:07:21,800 Speaker 1: so the backlog did get going again. But this all happening, 157 00:07:21,880 --> 00:07:23,920 Speaker 1: as you know, at the very same time as we 158 00:07:23,920 --> 00:07:27,160 Speaker 1: were getting these headlines. The UK's Health secretary this morning, 159 00:07:27,200 --> 00:07:31,520 Speaker 1: Matt Hancock, put more areas into the highest tier four lockdown. 160 00:07:31,680 --> 00:07:35,000 Speaker 1: In other words, you know, Britain is getting more and 161 00:07:35,040 --> 00:07:38,600 Speaker 1: more locked down. Even as this is happening. Hospitalizations are 162 00:07:38,680 --> 00:07:42,640 Speaker 1: nearing the spring COVID peak in the UK and presumably Maria. 163 00:07:42,960 --> 00:07:48,080 Speaker 1: Even though the the the instinct in Britain might be 164 00:07:48,160 --> 00:07:51,200 Speaker 1: to celebrate this deal. That would be a very dangerous 165 00:07:51,200 --> 00:07:54,600 Speaker 1: thing to do right now. Well, you know, again it's 166 00:07:54,640 --> 00:07:57,120 Speaker 1: it's you make a good point, Bunnie. The context here 167 00:07:57,360 --> 00:08:00,200 Speaker 1: not nice and it's definitely not an easy per for 168 00:08:00,600 --> 00:08:02,840 Speaker 1: the UK. And again going back to the question of 169 00:08:02,880 --> 00:08:06,680 Speaker 1: the business community, it's relief to because the UK economy 170 00:08:06,800 --> 00:08:09,920 Speaker 1: is hurting. We know this already. It's been battered by coronavirus. 171 00:08:09,960 --> 00:08:12,400 Speaker 1: This is a situation that's not been solved. If anything, 172 00:08:12,440 --> 00:08:15,120 Speaker 1: you have lockdown now and going back into lockdown, and 173 00:08:15,160 --> 00:08:18,040 Speaker 1: you have an economy that clearly is not operating or 174 00:08:18,240 --> 00:08:21,040 Speaker 1: or cannot operate on a normal basis. If you at 175 00:08:21,320 --> 00:08:24,400 Speaker 1: a new deal scenario on top of a huge health crisis, 176 00:08:24,280 --> 00:08:26,040 Speaker 1: but the one that we have right now, you can 177 00:08:26,080 --> 00:08:28,280 Speaker 1: imagine that for a business, for a company, this was 178 00:08:28,400 --> 00:08:31,240 Speaker 1: looking very very bleak. So again, you know, it's it's 179 00:08:31,240 --> 00:08:34,400 Speaker 1: not a moment to celebrate because the context is still 180 00:08:34,559 --> 00:08:38,080 Speaker 1: very challenging, especially for the UK economy. But again it's 181 00:08:38,080 --> 00:08:39,960 Speaker 1: it's this idea of relief. You know, you still have 182 00:08:40,040 --> 00:08:42,400 Speaker 1: the health crisis going on, but to some extent you 183 00:08:42,440 --> 00:08:44,760 Speaker 1: do know that come januarys or the first. You're not 184 00:08:44,920 --> 00:08:49,280 Speaker 1: jumping into this black hole of uncertainty, Maria. Timing the 185 00:08:49,320 --> 00:08:52,160 Speaker 1: rest of this evening, I note that it's approximately eight 186 00:08:52,920 --> 00:08:57,080 Speaker 1: pm in Brussels. Would you expect to hear more from 187 00:08:57,760 --> 00:09:00,480 Speaker 1: the Europeans officials? Course is something that will be developing 188 00:09:00,480 --> 00:09:04,240 Speaker 1: overnight into tomorrow. Yeah, look for sure, right now it's 189 00:09:04,280 --> 00:09:06,640 Speaker 1: about well, I believe, if I'm not wrong, it's it's 190 00:09:06,679 --> 00:09:09,439 Speaker 1: actually five pm right now here in Brussels. But the 191 00:09:09,559 --> 00:09:14,200 Speaker 1: time is or you working in strange hours. But you know, 192 00:09:14,240 --> 00:09:16,280 Speaker 1: there is still time for them to come out and say, 193 00:09:16,320 --> 00:09:19,320 Speaker 1: you know, we have this deal, just to almost make 194 00:09:19,360 --> 00:09:21,560 Speaker 1: the announcement, to make it formal, and then it's over 195 00:09:21,600 --> 00:09:24,280 Speaker 1: to the capitals, to the Prime Minister to make an 196 00:09:24,320 --> 00:09:27,480 Speaker 1: announcement himself and then wait for the two parliaments to 197 00:09:27,640 --> 00:09:30,680 Speaker 1: ratify this. But given that still, you know, there's hours 198 00:09:30,760 --> 00:09:33,120 Speaker 1: of working hours to this date and everyone wants to 199 00:09:33,120 --> 00:09:35,280 Speaker 1: get it done before Christmas. To some extent, I would 200 00:09:35,280 --> 00:09:38,880 Speaker 1: not be surprised from the moment this is announced, things 201 00:09:38,880 --> 00:09:41,920 Speaker 1: will move quickly from that point on, Maria, you know, 202 00:09:42,400 --> 00:09:45,160 Speaker 1: did we have any kind of an idea at all 203 00:09:45,480 --> 00:09:49,200 Speaker 1: where the common ground might come? Because these two agreement. 204 00:09:49,200 --> 00:09:52,640 Speaker 1: Disagreements over fish were you know, very very substantial. What 205 00:09:52,760 --> 00:09:55,440 Speaker 1: access will the EU boats have to British waters? I 206 00:09:55,440 --> 00:09:58,520 Speaker 1: mean that's a that's a that's a sovereign question. And 207 00:09:58,559 --> 00:10:01,679 Speaker 1: also what rights that you would have to impose retaliatory 208 00:10:01,720 --> 00:10:05,240 Speaker 1: tariffs if the UK limit those rights? That are you 209 00:10:05,240 --> 00:10:08,439 Speaker 1: know said in Stone now in the future. I mean, 210 00:10:08,640 --> 00:10:12,720 Speaker 1: these are huge and they related fisheries question, but really 211 00:10:12,920 --> 00:10:16,520 Speaker 1: they relate to a lot more than that. Yes, and Bonny, Uh, 212 00:10:16,840 --> 00:10:19,080 Speaker 1: that's exactly it. You know, this was a very difficult 213 00:10:19,160 --> 00:10:22,920 Speaker 1: dynamic in which the United Kingdom was struggling to make 214 00:10:22,920 --> 00:10:26,080 Speaker 1: an offer on fish that would be acceptable to the EU. 215 00:10:26,200 --> 00:10:29,679 Speaker 1: But again the EU was unclear about how much they 216 00:10:29,760 --> 00:10:32,200 Speaker 1: could move if they did not yet a guarantee that 217 00:10:32,280 --> 00:10:35,319 Speaker 1: the United Kingdom is to some extent willing to play 218 00:10:35,440 --> 00:10:38,640 Speaker 1: among common rules. Uh, to the idea that it does 219 00:10:38,679 --> 00:10:41,600 Speaker 1: not become an unspair and a loyal competitor to the 220 00:10:41,600 --> 00:10:44,880 Speaker 1: European Union. It's unclear what's meade this kick. You know, 221 00:10:44,960 --> 00:10:46,720 Speaker 1: I would love to be able to answer the question. 222 00:10:46,760 --> 00:10:49,240 Speaker 1: At this point, we really don't know exactly what the 223 00:10:49,280 --> 00:10:51,080 Speaker 1: precise ion which is going to look like. What I 224 00:10:51,120 --> 00:10:53,680 Speaker 1: can tell you though, is that yesterday was that this 225 00:10:53,760 --> 00:10:56,280 Speaker 1: idea that was floating and doing the rounds that the 226 00:10:56,360 --> 00:10:58,719 Speaker 1: United Kingdom had initially said, you have to reduce the 227 00:10:58,840 --> 00:11:01,400 Speaker 1: catch by alley of fish. And I know this is 228 00:11:01,600 --> 00:11:04,280 Speaker 1: very into the weeks, very very tiny little details, but 229 00:11:04,280 --> 00:11:07,360 Speaker 1: they said reduced it to six. The Europeans had said 230 00:11:07,400 --> 00:11:10,360 Speaker 1: they only wanted to do twenty five, but a compromise 231 00:11:10,400 --> 00:11:13,520 Speaker 1: bigger of around thirty to thirty five had emerged. The 232 00:11:13,600 --> 00:11:15,800 Speaker 1: European has also said that they wanted to attain your 233 00:11:15,800 --> 00:11:18,600 Speaker 1: transition to the new potus. The UK initially said they 234 00:11:18,600 --> 00:11:21,000 Speaker 1: were only willing to offer three, and a compromise of 235 00:11:21,000 --> 00:11:23,800 Speaker 1: around five years had done floating, So I guess it's 236 00:11:23,880 --> 00:11:26,880 Speaker 1: somewhere around those details. And you know there was another 237 00:11:26,920 --> 00:11:29,600 Speaker 1: issue here which was about competition. How much can the 238 00:11:29,679 --> 00:11:32,880 Speaker 1: United Kingdom diverged from the European standards. I mean, the 239 00:11:32,880 --> 00:11:35,200 Speaker 1: whole point of Brexit, of course, was taken back control 240 00:11:35,240 --> 00:11:38,000 Speaker 1: and being able to do your own regulations. So that's 241 00:11:38,080 --> 00:11:40,880 Speaker 1: that's clear and everyone understands that. But you also said, 242 00:11:41,080 --> 00:11:43,520 Speaker 1: if you do that, we need to be able to 243 00:11:43,559 --> 00:11:47,119 Speaker 1: cut access into our market and potentially retaliate with harriffs. 244 00:11:47,200 --> 00:11:49,520 Speaker 1: So we'll be interesting to see what the compromise on 245 00:11:49,559 --> 00:11:51,520 Speaker 1: that also looked like. Like it's just a few days 246 00:11:51,559 --> 00:11:55,280 Speaker 1: ago this was presented as being very, very difficult. Maria 247 00:11:55,360 --> 00:11:57,880 Speaker 1: today are amazing, Thank you so much. This is a 248 00:11:57,880 --> 00:12:00,880 Speaker 1: culmination really of you know, four plus years of work, 249 00:12:00,920 --> 00:12:04,240 Speaker 1: and Maria of course covers the European Commission, the European Council, 250 00:12:04,280 --> 00:12:08,040 Speaker 1: the European Presidency, the ECB, everything Europe related for US 251 00:12:08,080 --> 00:12:11,240 Speaker 1: out of Brussels typically, but Frankfort and other places as well. 252 00:12:11,240 --> 00:12:13,080 Speaker 1: So Maria, thank you for jumping on the phone on 253 00:12:13,120 --> 00:12:18,160 Speaker 1: this news. As we know, there is help for the 254 00:12:18,200 --> 00:12:22,240 Speaker 1: airline industry in the pandemic relief bill that again hasn't 255 00:12:22,280 --> 00:12:24,520 Speaker 1: been signed yet by the President, but is out there. 256 00:12:25,559 --> 00:12:28,880 Speaker 1: Our next guest points this out. Taxpayers are putting up 257 00:12:28,920 --> 00:12:32,000 Speaker 1: almost five hundred thousand dollars for each laid off airline 258 00:12:32,000 --> 00:12:35,320 Speaker 1: worker to have three months of employment, while cooks and 259 00:12:35,400 --> 00:12:39,640 Speaker 1: waiters get nothing. In other words, airlines are outranking restaurants 260 00:12:39,640 --> 00:12:44,360 Speaker 1: in relief money. John oh Sarah Bloomberg opinion columnist joins us, Now, Joe, 261 00:12:44,480 --> 00:12:46,920 Speaker 1: did thought go into this or was it a simple 262 00:12:46,960 --> 00:12:49,320 Speaker 1: matter of the airline lobby being more powerful? Than the 263 00:12:49,320 --> 00:12:53,080 Speaker 1: restaurant lobby. Well, there there is a restaurant lobby. Let's 264 00:12:53,080 --> 00:12:58,040 Speaker 1: start there. Whereas airlines have been um staffed up you 265 00:12:58,120 --> 00:13:01,000 Speaker 1: might want to say, for for many decade, because airlines 266 00:13:01,000 --> 00:13:03,520 Speaker 1: have had dealings with the federal government from that many 267 00:13:03,559 --> 00:13:07,520 Speaker 1: decades between the f a A and um, uh you know, 268 00:13:07,640 --> 00:13:10,959 Speaker 1: various various airline regulations and so on and so forth. 269 00:13:11,000 --> 00:13:14,719 Speaker 1: So so so you know, you're shocked there. I mean, restaurants 270 00:13:14,760 --> 00:13:19,160 Speaker 1: are just it is a just diffused organization. They're not 271 00:13:19,360 --> 00:13:23,240 Speaker 1: large companies. And even you know, restaurant chains, I mean 272 00:13:23,480 --> 00:13:27,400 Speaker 1: putting McDonald's aside. Uh, you know, in a city like 273 00:13:27,720 --> 00:13:30,600 Speaker 1: New York. You know Danny Meyer who is probably the 274 00:13:30,600 --> 00:13:32,559 Speaker 1: best known restaurateur in the city. You know, he has 275 00:13:32,600 --> 00:13:36,640 Speaker 1: maybe twenty restaurants, and so that just doesn't give them 276 00:13:36,640 --> 00:13:40,600 Speaker 1: the cloud that the airline industry has, even though they 277 00:13:40,640 --> 00:13:43,520 Speaker 1: employ more people and even though their people are really 278 00:13:43,559 --> 00:13:47,600 Speaker 1: really hurting. So, Joe, this is a searing column by 279 00:13:47,679 --> 00:13:50,719 Speaker 1: you kind of comparing and contrasting the airline industry with 280 00:13:50,840 --> 00:13:54,760 Speaker 1: the restaurant business. So the restaurant's obviously it is a 281 00:13:55,240 --> 00:13:58,280 Speaker 1: you know, it's it's it's a diffuse industry. Lots of 282 00:13:58,320 --> 00:14:02,440 Speaker 1: independent operators. Historically, has there not been a push to 283 00:14:02,600 --> 00:14:06,840 Speaker 1: kind of organize better this industry that is so important 284 00:14:06,920 --> 00:14:11,000 Speaker 1: to many people's daily lives. Well, there is a restaurant 285 00:14:11,040 --> 00:14:14,720 Speaker 1: lobby of sorts UM, the National Restaurant Associations, but it 286 00:14:14,760 --> 00:14:19,600 Speaker 1: doesn't seem to have a lot of clout for whatever reason. UM. 287 00:14:19,640 --> 00:14:25,840 Speaker 1: After the pandemic, after the first round of of stimulus, 288 00:14:25,840 --> 00:14:28,840 Speaker 1: the p p P program, Uh, there are a bunch 289 00:14:28,840 --> 00:14:31,920 Speaker 1: of independent restaurateurs tried to start an organization called the 290 00:14:32,040 --> 00:14:36,120 Speaker 1: Independent Restaurant Coalition and they had a lot of success. 291 00:14:36,640 --> 00:14:40,200 Speaker 1: They got they have they have a bill that UM 292 00:14:40,600 --> 00:14:43,160 Speaker 1: would cost a hundred and twenty billion dollars, which is 293 00:14:43,160 --> 00:14:46,320 Speaker 1: a lot of money. And the idea is that instead 294 00:14:46,440 --> 00:14:48,160 Speaker 1: of trying to do it like the p p P, 295 00:14:48,880 --> 00:14:52,440 Speaker 1: you know, the restaurant industry would be get money based 296 00:14:52,440 --> 00:14:57,520 Speaker 1: on last year's revenues pre pre pandemic revenues UM and 297 00:14:57,520 --> 00:14:59,960 Speaker 1: and believe it or not, the bill passed the how 298 00:15:00,160 --> 00:15:03,240 Speaker 1: in October actually by quite a quite a large margin. 299 00:15:03,720 --> 00:15:07,440 Speaker 1: It had more than fifty UM CO sponsors in the 300 00:15:07,520 --> 00:15:12,040 Speaker 1: Senate bipartisan But you know, the Senators run by one 301 00:15:12,080 --> 00:15:14,480 Speaker 1: guy and his name is Mitch McConnell, and he was 302 00:15:14,520 --> 00:15:20,440 Speaker 1: more interested in that three martini lunch tax break, which 303 00:15:20,600 --> 00:15:22,600 Speaker 1: he claims will help restaurants. But no one in the 304 00:15:22,640 --> 00:15:24,680 Speaker 1: restaurant industry seems to think it will make much difference, 305 00:15:24,720 --> 00:15:26,800 Speaker 1: at least not in the short term. I mean, at 306 00:15:26,840 --> 00:15:29,160 Speaker 1: the very least. If people start flying again, they will 307 00:15:29,200 --> 00:15:31,800 Speaker 1: need to go out for restaurants at their destination. But 308 00:15:31,800 --> 00:15:33,960 Speaker 1: it's gonna be a long time before people really start 309 00:15:34,000 --> 00:15:37,680 Speaker 1: flying in in in numbers again, Joe, particularly since you 310 00:15:37,680 --> 00:15:40,560 Speaker 1: know the vaccines aren't out there yet. So you know, 311 00:15:41,240 --> 00:15:45,760 Speaker 1: what is the thinking behind this. There's there's two things. 312 00:15:45,520 --> 00:15:50,040 Speaker 1: There's two things going on here. Um uh. The first 313 00:15:50,160 --> 00:15:53,800 Speaker 1: is that that airlines. Um, you know, they will be 314 00:15:53,960 --> 00:15:57,200 Speaker 1: bringing people back to work. It's easier to give money 315 00:15:57,680 --> 00:16:01,040 Speaker 1: to a large company that can do one thing. They 316 00:16:01,080 --> 00:16:03,000 Speaker 1: can bring fifteen thousand people back to work. They can 317 00:16:03,040 --> 00:16:06,640 Speaker 1: bring twenty thousand people back to work. It's easier, Whereas 318 00:16:06,880 --> 00:16:09,560 Speaker 1: you know, giving money to restaurants is a is a 319 00:16:09,640 --> 00:16:11,960 Speaker 1: kind of a messier proposition because there are all so 320 00:16:12,000 --> 00:16:14,440 Speaker 1: many of them and they're so small, and it'll be 321 00:16:14,600 --> 00:16:17,760 Speaker 1: you know, there's that. But the thing you have to 322 00:16:17,760 --> 00:16:20,240 Speaker 1: remember about restaurants. It's not just a place to eat. 323 00:16:20,920 --> 00:16:25,520 Speaker 1: Every major city in the United States, restaurants are at 324 00:16:25,560 --> 00:16:30,800 Speaker 1: the core of their vibrancy and their downtown area. And 325 00:16:31,160 --> 00:16:33,200 Speaker 1: you know, if you're gonna build a new suburban area, 326 00:16:33,200 --> 00:16:35,320 Speaker 1: it's going to be built in large part around restaurants. 327 00:16:35,320 --> 00:16:38,560 Speaker 1: I mean, they play a hugely important role in the 328 00:16:38,640 --> 00:16:45,120 Speaker 1: life of cities, and so ignoring restaurants is really damaging 329 00:16:45,760 --> 00:16:49,000 Speaker 1: America cities and and that's what breaks my heart about 330 00:16:49,040 --> 00:16:52,360 Speaker 1: this more than anything else. So, Joe, I mean, what's 331 00:16:52,400 --> 00:16:56,080 Speaker 1: the I guess the fate of the US restaurants if 332 00:16:56,320 --> 00:16:58,160 Speaker 1: you will. I mean, you know these I'm gonna call 333 00:16:58,200 --> 00:17:00,480 Speaker 1: them individually owned Mama pop, if you will. But you know, 334 00:17:00,600 --> 00:17:04,760 Speaker 1: the non chain owned restaurants, the numbers were seeing, not 335 00:17:04,880 --> 00:17:07,119 Speaker 1: just New York City but kind of across the country 336 00:17:07,160 --> 00:17:10,320 Speaker 1: are staggering in terms of how many are likely have 337 00:17:10,400 --> 00:17:13,000 Speaker 1: gone out of business, are likely to go out of business. 338 00:17:13,000 --> 00:17:17,600 Speaker 1: How bad is it gonna get a dud estimated they 339 00:17:17,600 --> 00:17:19,439 Speaker 1: have going out of business in the US. That's a 340 00:17:19,480 --> 00:17:21,320 Speaker 1: lot you walked down. I mean, look, I'm in New 341 00:17:21,400 --> 00:17:22,800 Speaker 1: York or so I walked down the streets in New 342 00:17:22,840 --> 00:17:25,960 Speaker 1: York City and you just see them closed up everywhere. Um, 343 00:17:26,000 --> 00:17:28,320 Speaker 1: you know some of them will survive. You know, there's 344 00:17:28,320 --> 00:17:30,680 Speaker 1: certainly well, there are restaurants that will survive. There's there's 345 00:17:30,720 --> 00:17:33,000 Speaker 1: no question about that. Some of them have learned to 346 00:17:33,080 --> 00:17:36,359 Speaker 1: shift to take out, even even at the very high end. 347 00:17:36,400 --> 00:17:40,240 Speaker 1: I get I get notices from uh Daniel Blue, who's 348 00:17:40,280 --> 00:17:42,919 Speaker 1: one of the great chefs in America, saying, you know, 349 00:17:43,040 --> 00:17:46,280 Speaker 1: get get our Christmas dinner for you know, seventy five dollars, 350 00:17:46,280 --> 00:17:48,720 Speaker 1: will drop it off at your house, that kind of thing. So, 351 00:17:48,880 --> 00:17:52,160 Speaker 1: you know, some restaurants, restaurants will survive. But I think 352 00:17:52,200 --> 00:17:55,080 Speaker 1: what you're gonna see is that when the pandemic ends 353 00:17:55,440 --> 00:17:59,240 Speaker 1: and people can start going to restaurants again, um, you'll 354 00:17:59,240 --> 00:18:01,480 Speaker 1: see a lot few a restaurant. And it will take 355 00:18:01,680 --> 00:18:04,359 Speaker 1: I think a generation for restaurants to build up to 356 00:18:04,400 --> 00:18:07,240 Speaker 1: where they were, just because there will be so little 357 00:18:07,359 --> 00:18:11,080 Speaker 1: capital left in the industry. Right and and you know, 358 00:18:11,119 --> 00:18:13,480 Speaker 1: as we've been saying all week, if you've seen your 359 00:18:13,480 --> 00:18:15,760 Speaker 1: restaurant closed down, if you've had to lay off staff, 360 00:18:15,800 --> 00:18:18,240 Speaker 1: if you've worked for years to build up a successful restaurant, 361 00:18:18,280 --> 00:18:21,080 Speaker 1: do you really have the fortitude, never mind the capital, 362 00:18:21,440 --> 00:18:24,440 Speaker 1: to actually start all that whole process again. So, Joe, 363 00:18:24,560 --> 00:18:27,320 Speaker 1: I was listening to Carl Gadonna speaking with the guys 364 00:18:27,400 --> 00:18:29,160 Speaker 1: a little earlier on today, and he was talking about 365 00:18:29,240 --> 00:18:32,280 Speaker 1: is better to take a scattergun approach than a rifle approach. 366 00:18:32,320 --> 00:18:35,119 Speaker 1: And I'm paraphrasing, but in a sense, this is a 367 00:18:35,200 --> 00:18:38,159 Speaker 1: rifle approach, right as as you said, you can re 368 00:18:38,280 --> 00:18:40,320 Speaker 1: employ a lot of people if you target just even 369 00:18:40,359 --> 00:18:44,000 Speaker 1: one airline, whereas targeting restaurants is more scattergon. It's definitely 370 00:18:44,040 --> 00:18:48,600 Speaker 1: a lot more difficult to put together, absolutely that. And 371 00:18:49,280 --> 00:18:53,480 Speaker 1: I think that the pp the PPP experience, excuse me, 372 00:18:54,240 --> 00:18:58,600 Speaker 1: the pp P experience has not um then all that 373 00:18:58,720 --> 00:19:03,200 Speaker 1: satisfactory for Congress. I mean so many, so many uh, 374 00:19:03,280 --> 00:19:06,920 Speaker 1: companies got left left out. Somebody felt like, uh, you know, 375 00:19:07,119 --> 00:19:09,320 Speaker 1: larger companies got money that didn't really need it, and 376 00:19:09,320 --> 00:19:11,520 Speaker 1: so on and so forth. So it's really hard to 377 00:19:11,520 --> 00:19:15,280 Speaker 1: put together a program that would work. I mean, I 378 00:19:15,320 --> 00:19:18,040 Speaker 1: do think that the program the restaurant industry put together 379 00:19:18,119 --> 00:19:20,680 Speaker 1: would have worked if it had if it had been tried, 380 00:19:20,760 --> 00:19:24,760 Speaker 1: But of course we'll never know because it didn't get tried. Hey, Joe, 381 00:19:24,760 --> 00:19:26,280 Speaker 1: thanks so much for joining us. This is just a 382 00:19:26,320 --> 00:19:30,879 Speaker 1: fascinating column here uh Jonah Sarah Bloomberg Opinion calumnists. You 383 00:19:30,880 --> 00:19:33,520 Speaker 1: can read Joe's work and all the good work from 384 00:19:33,520 --> 00:19:36,840 Speaker 1: the folks of Bloomberg Opinion by type in Bloomberg dot Com, 385 00:19:37,040 --> 00:19:41,240 Speaker 1: slash opinion or OPI I n go on the Bloomberg 386 00:19:41,320 --> 00:19:43,520 Speaker 1: terminal and Vannie you know you think about it. And again, 387 00:19:43,520 --> 00:19:45,920 Speaker 1: it's not just New York cities. It's it's cities around 388 00:19:45,920 --> 00:19:49,080 Speaker 1: the country. Uh, small towns around the country where restaurants 389 00:19:49,119 --> 00:19:52,160 Speaker 1: which operate in such a razor thin margin to begin with, 390 00:19:52,560 --> 00:19:55,600 Speaker 1: are really really having a tough time to understandably exactly. 391 00:19:55,680 --> 00:19:58,840 Speaker 1: They usual only have a few weeks, you know, leg room, 392 00:19:58,920 --> 00:20:02,240 Speaker 1: let's say, and and that obviously run out very very 393 00:20:02,240 --> 00:20:04,240 Speaker 1: early on, and some of them couldn't even take the 394 00:20:04,240 --> 00:20:06,360 Speaker 1: PPP money because they weren't sure if they'd be able 395 00:20:06,359 --> 00:20:08,720 Speaker 1: to re employ there are people or if they were 396 00:20:08,720 --> 00:20:10,000 Speaker 1: going to be able to keep them on the books 397 00:20:10,000 --> 00:20:13,040 Speaker 1: that they couldn't make that that call that early on. 398 00:20:13,119 --> 00:20:15,320 Speaker 1: So it's it's a desperate situation. Yes. So now if 399 00:20:15,320 --> 00:20:17,159 Speaker 1: you're a restaurantory, you're saying, can I make it to 400 00:20:17,400 --> 00:20:21,320 Speaker 1: March April, May, June, because that's presumably when the light 401 00:20:21,359 --> 00:20:23,760 Speaker 1: at the end of the tunnel really is out there 402 00:20:23,800 --> 00:20:27,760 Speaker 1: for so many people. We've got a whole host of 403 00:20:27,880 --> 00:20:31,600 Speaker 1: economic data this morning seemed to drive home the story 404 00:20:31,840 --> 00:20:36,719 Speaker 1: that the economy is slowing down, the consumer is feeling 405 00:20:36,720 --> 00:20:39,560 Speaker 1: it in the pocketbook, whether you look at consumers, spending, 406 00:20:39,600 --> 00:20:42,960 Speaker 1: consumer income, all kind of challenging and I guess that 407 00:20:42,960 --> 00:20:46,280 Speaker 1: should not be surprising giving the unappointment that we continue 408 00:20:46,400 --> 00:20:48,439 Speaker 1: to see in the jobless claims that we continue to 409 00:20:48,480 --> 00:20:50,320 Speaker 1: see in this economy. To get a sense of what 410 00:20:50,359 --> 00:20:53,359 Speaker 1: this means for markets, who welcome Ben Emmon's Managing director, 411 00:20:53,400 --> 00:20:57,080 Speaker 1: Global macro Strategy at Medley Global Advisors. Ben, thanks so 412 00:20:57,119 --> 00:20:59,359 Speaker 1: much for joining us once again. Give us your take 413 00:20:59,440 --> 00:21:02,439 Speaker 1: on that the economic data we saw this morning and 414 00:21:02,480 --> 00:21:07,119 Speaker 1: how that may impact your outlook. Corey Paul, thanks for 415 00:21:07,200 --> 00:21:09,920 Speaker 1: having us. Uh. Yeah, it was a mixed back in 416 00:21:10,040 --> 00:21:13,200 Speaker 1: terms of the data. You know, if you drill into 417 00:21:13,200 --> 00:21:16,240 Speaker 1: the spending data, you see to the savings rate continust 418 00:21:16,280 --> 00:21:19,760 Speaker 1: the clients. So there is still spending happening, people drawing 419 00:21:19,800 --> 00:21:23,200 Speaker 1: on savings, but there's also a watch between those who 420 00:21:23,280 --> 00:21:28,160 Speaker 1: make income in the manufacturing sector that's actually outpacing those 421 00:21:28,160 --> 00:21:31,399 Speaker 1: in the services sector, and that does explain you know, 422 00:21:31,440 --> 00:21:33,959 Speaker 1: what's happening in the economy right We're closed down a 423 00:21:33,960 --> 00:21:37,439 Speaker 1: lot of places again, services are really depressed, and it's 424 00:21:37,480 --> 00:21:40,840 Speaker 1: all drive driven by manufacturing, which you know is really 425 00:21:41,280 --> 00:21:45,000 Speaker 1: the pandemic that's that's driving that. So economy is mixed 426 00:21:45,040 --> 00:21:47,680 Speaker 1: at the moment. It's good to see the Simnus bill 427 00:21:48,280 --> 00:21:50,760 Speaker 1: potentially getting larger if that actually would have happened, But 428 00:21:51,200 --> 00:21:53,600 Speaker 1: I think we're dealing with subdued activity for the moment, 429 00:21:53,680 --> 00:21:57,399 Speaker 1: which is reflecting the markets, so low yields and sideways 430 00:21:57,680 --> 00:22:01,159 Speaker 1: movement in stocks. Ben I'm seeing more and more notes 431 00:22:01,400 --> 00:22:04,399 Speaker 1: talking about inflation, and even Cameron klays this morning of 432 00:22:04,440 --> 00:22:07,040 Speaker 1: Bloomberg saying he's rolling the dice. He doesn't think inflation 433 00:22:07,080 --> 00:22:10,240 Speaker 1: will stay under the radar, and you think higher inflation 434 00:22:10,320 --> 00:22:13,920 Speaker 1: is on the way as well, explain the case if 435 00:22:13,920 --> 00:22:16,239 Speaker 1: only I think that that is certainly a case. You 436 00:22:16,240 --> 00:22:20,159 Speaker 1: know that there's obviously as the pandemic does get resolved 437 00:22:20,240 --> 00:22:23,480 Speaker 1: next year that the general viewers that we're going to 438 00:22:23,560 --> 00:22:26,639 Speaker 1: make up for all the lost services activity already on 439 00:22:26,720 --> 00:22:29,520 Speaker 1: top of this production activity I've seen, which is very 440 00:22:29,560 --> 00:22:32,440 Speaker 1: strong this year because of the pandemic. But then you 441 00:22:32,520 --> 00:22:36,080 Speaker 1: also think about the expectations. So we've pretty much normalized 442 00:22:36,320 --> 00:22:40,320 Speaker 1: in the markets at least expectations instinctly that you know, 443 00:22:40,359 --> 00:22:43,320 Speaker 1: say a five year expectations about the same as what 444 00:22:43,440 --> 00:22:46,040 Speaker 1: people think in ten years from now, and it tends 445 00:22:46,080 --> 00:22:48,399 Speaker 1: to be coinciding with sort of a point in history 446 00:22:48,400 --> 00:22:51,639 Speaker 1: at least that the economy does firm off as inflation 447 00:22:51,720 --> 00:22:54,359 Speaker 1: is what people think is better than than than what 448 00:22:54,440 --> 00:22:57,560 Speaker 1: it was. And I think that's important because if people 449 00:22:57,640 --> 00:23:00,879 Speaker 1: had an expectation will continue to see really low and 450 00:23:00,960 --> 00:23:05,040 Speaker 1: fish if not risk of deflation, the economy cannot really recover, right, 451 00:23:05,040 --> 00:23:07,920 Speaker 1: it cannot really get stronger. They also look at real 452 00:23:08,040 --> 00:23:12,800 Speaker 1: use to yield account for inflation. We're hitting pretty close 453 00:23:12,840 --> 00:23:15,240 Speaker 1: to the levels have we seen in twenty twelve. We 454 00:23:15,320 --> 00:23:18,280 Speaker 1: will remember from that time we rose pretty fast and 455 00:23:18,320 --> 00:23:22,240 Speaker 1: real yields the following years the economy firms again, probably 456 00:23:22,280 --> 00:23:24,280 Speaker 1: in a more in expectation that the economy will be 457 00:23:24,359 --> 00:23:27,640 Speaker 1: driven by a further rise in inflation in the future, 458 00:23:28,840 --> 00:23:32,760 Speaker 1: rather than say a major investment boom for example. So 459 00:23:33,160 --> 00:23:36,200 Speaker 1: I think this is why there's an anticipation and say 460 00:23:36,200 --> 00:23:38,000 Speaker 1: she will be a bit higher next year. Full the 461 00:23:38,000 --> 00:23:41,960 Speaker 1: time being. All Right, So Ben, we've seen any equity 462 00:23:41,960 --> 00:23:45,800 Speaker 1: markets a rotation trade, a per announced rotation trade. Really, 463 00:23:46,000 --> 00:23:51,360 Speaker 1: I would argue since September, um investors discounting uh opening 464 00:23:51,359 --> 00:23:53,479 Speaker 1: of the economy in the in the back half of 465 00:23:53,760 --> 00:23:57,440 Speaker 1: next year, given the economic data that we're seeing today, 466 00:23:57,480 --> 00:24:00,119 Speaker 1: and do you still do you still feel that's a 467 00:24:00,240 --> 00:24:04,520 Speaker 1: reasonable call for equity investors. I think so, Paul. I 468 00:24:04,560 --> 00:24:07,879 Speaker 1: think that the rotation that started in August was a 469 00:24:08,119 --> 00:24:11,600 Speaker 1: was a very good sign of that the market believe 470 00:24:11,720 --> 00:24:14,840 Speaker 1: that one week we can solve the pandemic, and the 471 00:24:14,920 --> 00:24:18,200 Speaker 1: science is now shown that we can, which that doesn't 472 00:24:18,200 --> 00:24:21,760 Speaker 1: mean that we can to an extent normalize activity that 473 00:24:21,800 --> 00:24:25,439 Speaker 1: we've known before. And because the market took such a 474 00:24:25,520 --> 00:24:28,720 Speaker 1: collapse in the traditional activity of the economy, right the 475 00:24:28,800 --> 00:24:32,720 Speaker 1: services in person services, that's a big gap still between 476 00:24:33,000 --> 00:24:36,440 Speaker 1: that sector of the market and say technology, So there's 477 00:24:36,600 --> 00:24:40,120 Speaker 1: formal room to rotate, so to speaking, sort of reposition 478 00:24:40,160 --> 00:24:44,119 Speaker 1: your portfolio for this upside in the services economy that 479 00:24:44,200 --> 00:24:47,560 Speaker 1: would likelihood to see next year. Um. And I would 480 00:24:47,600 --> 00:24:51,040 Speaker 1: point out that because you know, part of the services 481 00:24:51,040 --> 00:24:54,240 Speaker 1: is particularly financial services. You know, because of course a 482 00:24:54,320 --> 00:24:56,560 Speaker 1: nice surprise next week last week on the on the 483 00:24:56,840 --> 00:25:01,240 Speaker 1: Bible and dividend resumption. Because of the sister financials have 484 00:25:01,280 --> 00:25:03,880 Speaker 1: an opportunity to outperform, which will add to the rotation 485 00:25:03,920 --> 00:25:06,760 Speaker 1: I think in the first quarter. So we're almost out 486 00:25:06,800 --> 00:25:09,480 Speaker 1: of time then, But just give me the reason why 487 00:25:09,520 --> 00:25:12,760 Speaker 1: you expect demand will bounce back so substantially next year. 488 00:25:12,840 --> 00:25:14,879 Speaker 1: After all, we still haven't got you know, even a 489 00:25:14,920 --> 00:25:18,240 Speaker 1: six D check into people's pockets for the next phase 490 00:25:18,400 --> 00:25:21,520 Speaker 1: of relief. And it's not at all clear that we're 491 00:25:21,520 --> 00:25:25,080 Speaker 1: going to have business creation at the small business level. 492 00:25:26,840 --> 00:25:29,200 Speaker 1: And funny, I think that there's of course a sort 493 00:25:29,200 --> 00:25:32,240 Speaker 1: of government support needed. You know, Biden had an interesting 494 00:25:32,280 --> 00:25:34,600 Speaker 1: speech during the pack campaign that he really wanted to 495 00:25:34,640 --> 00:25:37,600 Speaker 1: put a center stage on small business, so the BATS 496 00:25:37,640 --> 00:25:41,479 Speaker 1: will be more initiative on his administration to revive small business. 497 00:25:41,680 --> 00:25:44,920 Speaker 1: Clearly that dynamic plays a big role there, obviously given 498 00:25:44,920 --> 00:25:47,560 Speaker 1: the shutdown activity of pre seeing I also would point 499 00:25:47,560 --> 00:25:51,000 Speaker 1: out the global story, it's very much a revival globally 500 00:25:51,160 --> 00:25:55,199 Speaker 1: to be expected to if indeed also traders, it's already 501 00:25:55,200 --> 00:25:57,879 Speaker 1: shown his revised this year as a leading indicator. I 502 00:25:57,920 --> 00:25:59,880 Speaker 1: think that's all going to that we're going to see 503 00:26:00,080 --> 00:26:05,680 Speaker 1: more revival actually demands as a pandemic. Hopefully guess results Well, 504 00:26:05,680 --> 00:26:08,120 Speaker 1: it certainly wouldn't be unwelcome and it wouldn't be unwelcome 505 00:26:08,119 --> 00:26:11,359 Speaker 1: inflation and that instance. Ben, So thank you much appreciate 506 00:26:11,560 --> 00:26:14,480 Speaker 1: your analysis and of course all of your contributions through 507 00:26:14,520 --> 00:26:18,000 Speaker 1: the entire year. Ben Emmons is Managing director at Global 508 00:26:18,119 --> 00:26:21,800 Speaker 1: Macro Strategy of Global micro Strategy at Medley Global Advisors. 509 00:26:22,400 --> 00:26:26,400 Speaker 1: Once again Ben Emmon's m D at Medley Global Advisors 510 00:26:26,440 --> 00:26:30,840 Speaker 1: joining us. Now, we got a raft of economic data 511 00:26:30,920 --> 00:26:34,479 Speaker 1: this morning from mortgage applications which were up point eight percent. 512 00:26:34,960 --> 00:26:38,719 Speaker 1: We got inflation data, durable goods orders, and initial jobless claims. 513 00:26:38,760 --> 00:26:42,120 Speaker 1: I mean, it was just a absolute boatload of data 514 00:26:42,200 --> 00:26:46,240 Speaker 1: and economist delight, Yes, exactly. Let's bring in an economist 515 00:26:46,280 --> 00:26:49,200 Speaker 1: who was delighted. Elena actually has he a senior economist 516 00:26:49,240 --> 00:26:52,440 Speaker 1: at Ford Bloomberg Economics. So, Elena, what can we take 517 00:26:52,480 --> 00:26:55,080 Speaker 1: away from the raft of data this morning? A broadly 518 00:26:55,480 --> 00:27:02,119 Speaker 1: better picture, broadly deteriorating picture, broadly deteriorating. I think there 519 00:27:02,000 --> 00:27:06,560 Speaker 1: are recent about of data telling us that basically thinks 520 00:27:06,560 --> 00:27:10,520 Speaker 1: are really getting worse, and unfortunately it will get much 521 00:27:10,520 --> 00:27:14,320 Speaker 1: worse before it gets better according to our projections. So 522 00:27:14,600 --> 00:27:17,880 Speaker 1: what really stood out for me this morning was significant 523 00:27:17,920 --> 00:27:21,800 Speaker 1: deterioration in personal income and spending for the month of 524 00:27:21,920 --> 00:27:26,760 Speaker 1: November UH as as we saw personal income dropped by 525 00:27:26,840 --> 00:27:30,159 Speaker 1: one point one percent in the month, and that was 526 00:27:30,200 --> 00:27:34,840 Speaker 1: attributable to the critics and proprieties income UH resulting from 527 00:27:34,880 --> 00:27:40,000 Speaker 1: the exploration of the Teachered protection program. Farmers become plunged 528 00:27:40,280 --> 00:27:45,919 Speaker 1: and other benefits also decreased. So this is basically telling 529 00:27:46,000 --> 00:27:51,040 Speaker 1: us that this new fiscal package is absolutely required and 530 00:27:51,359 --> 00:27:57,280 Speaker 1: it is required immediately UH to support continued spending consumer 531 00:27:57,359 --> 00:28:01,000 Speaker 1: spending in the economy. So unfortunately, we will see things 532 00:28:01,040 --> 00:28:06,600 Speaker 1: to really drop deteriorate in the coming weeks, and we 533 00:28:06,640 --> 00:28:09,320 Speaker 1: even expect the negative reading on pay rolls for the 534 00:28:09,359 --> 00:28:12,200 Speaker 1: months of December. All Right, So, Lena, I guess the 535 00:28:12,600 --> 00:28:14,800 Speaker 1: question for a lot of folks is the first quarter 536 00:28:14,920 --> 00:28:17,760 Speaker 1: of next year, the dark winter, if you will, the 537 00:28:17,760 --> 00:28:21,640 Speaker 1: pandemic numbers hopefully will peak. That's what we're hearing from 538 00:28:21,680 --> 00:28:23,239 Speaker 1: some of the folks in the health care but it's 539 00:28:23,280 --> 00:28:25,080 Speaker 1: gonna be a very difficult time. The question I guess 540 00:28:25,080 --> 00:28:28,120 Speaker 1: for an economist is are we going to have negative 541 00:28:28,359 --> 00:28:31,359 Speaker 1: GDP in the first quarter. You know the dreaded double 542 00:28:31,400 --> 00:28:36,840 Speaker 1: dip recession, right, so we still expect the fourth quarter 543 00:28:37,000 --> 00:28:40,320 Speaker 1: to week some positive growth in the vicinity of two 544 00:28:40,360 --> 00:28:43,400 Speaker 1: and a half percent. But then yes, we expect a 545 00:28:43,440 --> 00:28:47,000 Speaker 1: negative print on the first quarter GDP. We have long 546 00:28:47,160 --> 00:28:52,800 Speaker 1: forecasted half the percentage point drop. But if COVID cases 547 00:28:52,920 --> 00:28:58,640 Speaker 1: really accelerate and UH result in broad based blockdowns, particularly 548 00:28:58,680 --> 00:29:01,959 Speaker 1: in a very highly ten repopulated areas such as New 549 00:29:02,040 --> 00:29:05,120 Speaker 1: York and California, we may see even a bigger drop 550 00:29:05,120 --> 00:29:07,600 Speaker 1: in the first quarter of next year. So a lot 551 00:29:07,680 --> 00:29:11,840 Speaker 1: will depend on what happens to consumer spending. And again, 552 00:29:12,080 --> 00:29:17,520 Speaker 1: this morning's data continued to show that services and deteriorating 553 00:29:17,600 --> 00:29:21,200 Speaker 1: and that will certainly continue into the first quarter. We 554 00:29:21,280 --> 00:29:26,800 Speaker 1: saw a restaurant spending and transportation really really declining. And 555 00:29:27,480 --> 00:29:30,479 Speaker 1: what what really was worrying to me is that drop 556 00:29:30,480 --> 00:29:35,200 Speaker 1: in groubal good spending. So and that comes despite a 557 00:29:35,280 --> 00:29:39,880 Speaker 1: significantly high savings that consumers still have. So we'll see 558 00:29:39,920 --> 00:29:44,520 Speaker 1: where it goes. But UH, if consumer sentiments consumer confidence 559 00:29:44,600 --> 00:29:48,880 Speaker 1: declined significantly going into the next year, then we may 560 00:29:48,920 --> 00:29:53,360 Speaker 1: see some decline and consumer spending and overall growth as well. 561 00:29:54,400 --> 00:29:56,760 Speaker 1: To me, take any heart and the fact that housing 562 00:29:56,960 --> 00:30:00,360 Speaker 1: might be at least some bite s part on the economy, 563 00:30:00,400 --> 00:30:04,200 Speaker 1: even though today's numbers again were deterioration from the previous months, 564 00:30:05,160 --> 00:30:09,400 Speaker 1: right Vunny, I think the decline in both existing and 565 00:30:09,520 --> 00:30:13,280 Speaker 1: new homes sales this week was really a reflection of 566 00:30:14,080 --> 00:30:18,280 Speaker 1: shortage to be a shortage in inventories, rather than UH 567 00:30:18,600 --> 00:30:23,120 Speaker 1: declined interest in buying houses. I think that we will 568 00:30:23,160 --> 00:30:27,040 Speaker 1: continue to see strong demand for housing going into one 569 00:30:27,600 --> 00:30:31,920 Speaker 1: and that will be supported not only by UM low 570 00:30:32,040 --> 00:30:37,320 Speaker 1: interest rates, low mortgage rates, but also by shifting preferences 571 00:30:37,720 --> 00:30:41,360 Speaker 1: for a more suburban living for more remote living. So 572 00:30:41,680 --> 00:30:44,800 Speaker 1: and I dontal evidence suggests that people are even accepting 573 00:30:44,880 --> 00:30:48,920 Speaker 1: lower wages to be able to work from remote location. 574 00:30:49,400 --> 00:30:52,760 Speaker 1: And I don't think that even if we defeat the crisis, 575 00:30:52,800 --> 00:30:56,280 Speaker 1: even if the pandemic is taking care of UH some time, 576 00:30:56,680 --> 00:31:00,520 Speaker 1: you know, next year, I think this trend will probably 577 00:31:00,600 --> 00:31:05,720 Speaker 1: stay with us, at least partially supporting strong demantal housing. Elena, 578 00:31:05,760 --> 00:31:08,280 Speaker 1: thank you so much once again for joining us. Elena, 579 00:31:08,360 --> 00:31:11,480 Speaker 1: she let you have a senior US economists for Bloomberg Economics, 580 00:31:11,480 --> 00:31:15,240 Speaker 1: helping us to part through the raft of economic data. 581 00:31:15,320 --> 00:31:18,680 Speaker 1: We had this morning that, as Elena suggested on the margin, 582 00:31:19,320 --> 00:31:22,560 Speaker 1: is more negative than we had seen. But again that's uh. 583 00:31:22,680 --> 00:31:25,360 Speaker 1: It really so much depends upon the pandemic numbers over 584 00:31:25,400 --> 00:31:29,560 Speaker 1: the next several months. Thanks for listening to Boomberg Markets podcast. 585 00:31:29,720 --> 00:31:33,120 Speaker 1: You can subscribe and listen to interviews at Apple Podcasts 586 00:31:33,200 --> 00:31:36,760 Speaker 1: or whatever podcast platform you prefer. I'm Bonnie Quinn. I'm 587 00:31:36,800 --> 00:31:39,400 Speaker 1: on Twitter at Bonnie Quinn, and I'm Paul Sweeney. I'm 588 00:31:39,440 --> 00:31:42,080 Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can 589 00:31:42,120 --> 00:31:44,360 Speaker 1: always catch us worldwide at Bloomberg Radio.