WEBVTT - Surveillance: Monetary Policy Tools Are Ineffective, Kelly Says 0:00:09.840 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:30.080 Bloomberg dot Com, and of course on the Bloomberg I'm 0:00:30.080 --> 0:00:31.880 about a single bust chart right now. We'll do this 0:00:31.920 --> 0:00:34.960 with David Kelly, Chief Global Strategy is to JPMorgan and 0:00:35.000 --> 0:00:37.720 he mentioned earlier in the hour the sea word courage, 0:00:38.600 --> 0:00:41.040 the courage to act. Let's look at a single bust 0:00:41.080 --> 0:00:45.120 chart which defines how lonely Europe is right now. This 0:00:45.200 --> 0:00:48.839 is Swiss twenty year with a normal yield. Here in 0:00:48.880 --> 0:00:53.000 August of two thousand and seven, the great deflation, we 0:00:53.159 --> 0:00:56.400 flatten and we've just ron over again. And I would 0:00:56.440 --> 0:00:59.800 suggest David that this is a linkage of courage into 0:01:00.040 --> 0:01:03.600 eerie and not only for the ECB, but for all 0:01:03.640 --> 0:01:07.440 of us. The theory of how we've extricated ourselves from 0:01:07.440 --> 0:01:10.160 this crisis is really under test. Oh yes, it is 0:01:10.200 --> 0:01:12.720 because one of the things that's happened, you know, there 0:01:12.920 --> 0:01:14.280 there are things that are pushed down in faction of 0:01:14.319 --> 0:01:16.839 the long run, including information technology. One of the big 0:01:16.840 --> 0:01:20.080 things is QUI basically causes as surprises go up more 0:01:20.080 --> 0:01:23.440 than real output um. It also tends to help push 0:01:23.480 --> 0:01:26.959 income towards upper income individuals. The snag is upper income 0:01:26.959 --> 0:01:29.919 individuals don't spend the money exactly. And so what happens 0:01:29.920 --> 0:01:32.200 is you produce a hundred dollars worth of output, you 0:01:32.200 --> 0:01:34.240 produce a hundred dollars income with it, but the income 0:01:34.560 --> 0:01:37.080 doesn't actually come around by the output. So this, this 0:01:37.160 --> 0:01:40.400 process of actually this growing wealth gap and growing income 0:01:40.440 --> 0:01:43.560 gap is actually sucking demand out of the global economy. 0:01:43.600 --> 0:01:46.520 So you've got to do something, oddly enough, very egalitarian 0:01:46.600 --> 0:01:48.560 to try and actually generate more aggregat And what's so 0:01:48.600 --> 0:01:50.600 important here, and I continue to go back this. I 0:01:50.640 --> 0:01:52.160 know I can do this with you, with your work 0:01:52.240 --> 0:01:54.800 with Bob Goodman a million years ago. Look at the 0:01:55.040 --> 0:01:59.200 X axis. We've been doing this for a decade exactly. 0:01:59.280 --> 0:02:01.560 It's not one your inner three year in Mama Marvin 0:02:01.640 --> 0:02:04.320 good Friends, which they do a two year experiment. It 0:02:04.440 --> 0:02:08.680 is the definition of year experiment. How do we extricate 0:02:08.720 --> 0:02:11.800 ourselves off the XX Well, I think, I think actually 0:02:11.840 --> 0:02:14.600 we need to look at this distribution issue and the 0:02:14.680 --> 0:02:17.600 issue of aggurate amount of the economy itself. Oddly enough, 0:02:17.919 --> 0:02:20.120 if we think about taxation and spending in a way 0:02:20.280 --> 0:02:23.480 to give more money to lower middle income people, they 0:02:23.480 --> 0:02:26.160 will spend it. Then you get hundred dollars worth of 0:02:26.200 --> 0:02:29.080 spending for hundred dollars worth of output, and suddenly the 0:02:29.080 --> 0:02:31.200 economy picks up. It's what I mean. I'm not saying 0:02:31.200 --> 0:02:34.760 that because I believe in great income redistribution as a 0:02:34.760 --> 0:02:36.880 is a good thing in general, but actually it's an 0:02:36.880 --> 0:02:40.399 economic palette of it probably would work, but you can't 0:02:40.440 --> 0:02:43.799 fix it through monetary policy. Low interest rates will not 0:02:43.960 --> 0:02:48.079 fix this, friends, Right, Okay, David, let's you know, take 0:02:48.120 --> 0:02:49.920 it the other way around. If there is a recession, 0:02:50.639 --> 0:02:54.440 does do central banks have enough tools to do with it? Um? No? 0:02:54.520 --> 0:02:57.560 But but but I would argue that the what central 0:02:57.560 --> 0:02:59.880 banks could do it was what they could always do, 0:03:00.000 --> 0:03:01.560 which is that can they can be a buyer of 0:03:01.840 --> 0:03:04.200 last resort and they can protect the financial system and 0:03:04.200 --> 0:03:07.320 then allow the economics recovered by itself. I think the 0:03:07.360 --> 0:03:11.840 economy will tend to recover by itself anyway. But um, 0:03:11.919 --> 0:03:14.200 I don't think that you know, another twenty five basis 0:03:14.240 --> 0:03:17.040 points or fifty basis points would actually stimulate economic growth. 0:03:17.080 --> 0:03:18.560 It hasn't done it in Japan, it hasn't done it 0:03:18.560 --> 0:03:20.280 in Europe. I don't really think it did is in 0:03:20.280 --> 0:03:22.520 the United States either. I think that was more cyclical 0:03:22.560 --> 0:03:26.360 forces which pulled the economy back up, natural cyclical forces 0:03:26.480 --> 0:03:29.560 rather than rather than monetary stimulus. So I'm not too 0:03:29.560 --> 0:03:31.400 worried about them not having tools in their tool kit, 0:03:31.480 --> 0:03:33.960 because frankly, I think they're ineffective anyway. But I do 0:03:34.000 --> 0:03:36.280 think we need to think very honestly and carefully about 0:03:36.560 --> 0:03:39.360 how how is it that that monetary policy is not 0:03:39.680 --> 0:03:41.800 pushing up in flasher pushing up aggregate demand, and think 0:03:41.840 --> 0:03:44.360 about how do you get aggregate demand going. Let's just 0:03:44.400 --> 0:03:47.000 think about how do you get demand going in an economy. 0:03:47.240 --> 0:03:48.840 And you can do it by giving more money to 0:03:49.040 --> 0:03:51.920 lower middle income consumers, or you can create more certainty 0:03:51.960 --> 0:03:55.600 for businesses, and that means get rid of tarr trade wars, 0:03:55.640 --> 0:03:58.440 get trades certainty, get immigration certainly, try to have more 0:03:58.480 --> 0:04:01.240 policy certainty, and that will promote more investment spending, and 0:04:01.280 --> 0:04:03.240 that can also give your aggurate amount. But you've really 0:04:03.240 --> 0:04:05.720 got to think directly about how do you get demand 0:04:05.880 --> 0:04:08.160 going in an economy, And that's really outside of the 0:04:08.160 --> 0:04:11.600 purview of central banks, right, And that's one of the 0:04:11.600 --> 0:04:13.960 concerns actually that Japan has had to grapple with for 0:04:13.960 --> 0:04:18.080 for many decades. Is Europe becoming like Japan? Uh? Well, 0:04:18.120 --> 0:04:20.919 I think there there's there are some similarities. Of course, 0:04:20.960 --> 0:04:23.160 I think you've got demographics not as badly about as 0:04:23.160 --> 0:04:25.400 in Japan, but you've got some problems. But I think 0:04:25.400 --> 0:04:27.560 you do have some positives. And the unemployment rate is 0:04:27.600 --> 0:04:29.680 still coming down in Europe. They've still got about eight 0:04:29.720 --> 0:04:31.680 percent unemployment in Japan, It's like two and a half 0:04:31.760 --> 0:04:35.800 percent um. So Europe has got more unutilized resources, and 0:04:35.800 --> 0:04:38.680 they also didn't have the huge asset bubble that really 0:04:38.720 --> 0:04:41.080 propelled Japan to the problems it had. And and the 0:04:41.120 --> 0:04:44.040 third advantage of that Europe has is despite the problems 0:04:44.040 --> 0:04:45.560 we have in easily or certainly the problems we have 0:04:45.600 --> 0:04:48.840 in Greece, the aggregate debt of Eurozone countries is far 0:04:49.040 --> 0:04:52.039 smaller relative to your zone GDP than is the case 0:04:52.080 --> 0:04:54.640 in Japan. So I think Japan has gone is a 0:04:54.640 --> 0:04:58.120 lot further down that sort of miserable path than Europe is. 0:04:58.360 --> 0:05:01.040 Let's clear markets, David All, he knows his chart. He 0:05:01.160 --> 0:05:03.120 and I lived in I'm just making this up quick. 0:05:03.160 --> 0:05:05.240 Folks were throwing this out, Jimmy. I'll get this to 0:05:05.360 --> 0:05:09.400 you in a bit. This is allied Irish Bank from 0:05:09.440 --> 0:05:12.840 another time in place and what the Irish did, and 0:05:12.839 --> 0:05:17.000 they had the courage to clear the market going from 0:05:17.000 --> 0:05:21.240 five thousand essentially zero five euros or whatever it is 0:05:21.760 --> 0:05:24.880 per share. Is all we're talking about is Europe has 0:05:24.920 --> 0:05:29.080 a fear they can't clear their troubled financial system. Well, 0:05:29.120 --> 0:05:31.840 I think I think that's that's obviously it's it's a 0:05:32.080 --> 0:05:35.599 pro Irish. Well, well, they Irish. You know, that was 0:05:35.720 --> 0:05:38.720 very controversial, controversial because what they iris is they and 0:05:38.720 --> 0:05:41.040 they had the courage to get out front of everybody 0:05:41.040 --> 0:05:43.599 else and clear the banking. Also, they also suffered a 0:05:43.720 --> 0:05:46.400 huge recession because of it, and they and they did 0:05:46.400 --> 0:05:49.279 take on a lot of responsibility upon the Irish people 0:05:49.560 --> 0:05:52.720 for stuff that really was the responsibility of international investors. 0:05:52.720 --> 0:05:55.520 I think history is on, you know, unclear and whether 0:05:55.520 --> 0:05:57.040 they did the right thing or not, but Ireland has 0:05:57.480 --> 0:05:58.960 What they did do is they took the tough fiscal 0:05:59.000 --> 0:06:01.599 medicine they made, They made the tough fiscal choices they 0:06:01.680 --> 0:06:04.599 they and the population put up with it. And so 0:06:04.640 --> 0:06:07.120 the Ireland has bounced back. Um, but I think that. 0:06:07.360 --> 0:06:10.039 But to be honestly, ours political system actually works rather well. 0:06:10.320 --> 0:06:12.000 I mean, you know, relative to what you see in 0:06:12.000 --> 0:06:15.520 the US or in Britain, there are relatively logical choices 0:06:15.560 --> 0:06:17.880 being made by the major parties on both sides to 0:06:18.080 --> 0:06:20.680 keep Oreland on a relatively even keel. And and then 0:06:20.680 --> 0:06:22.960 I think is also helping. Politics doesn't matter. I could 0:06:23.000 --> 0:06:25.400 just see you, me, Vanni, Quinn, Francie, all of us 0:06:25.400 --> 0:06:28.560 in Dublin going over the success of the Irish clearing 0:06:28.760 --> 0:06:32.039 of markets. It was truly courageous. As David mentioned, a 0:06:32.080 --> 0:06:35.080 real debate about how Ireland did it. But boy, that 0:06:35.200 --> 0:06:38.119 was something back in oh seven, oh eight oh nine, 0:06:38.360 --> 0:06:41.880 David Kelly, thank you so much. With JP Morgan, asset manager. 0:06:54.680 --> 0:06:57.279 One of the joys of my year is the Quinnipiac 0:06:57.640 --> 0:07:01.040 conference without just a thousand college kids. It's a great, 0:07:01.080 --> 0:07:04.040 great moment in New York. And even better, Francis Donald 0:07:04.120 --> 0:07:06.919 joins me on stage this afternoon over at one of 0:07:06.920 --> 0:07:10.520 our larger hotels. She is with Manu life uh and 0:07:11.000 --> 0:07:14.880 in strategy and economics there as well. Francis, it's great 0:07:14.960 --> 0:07:17.640 to get up on stage with twelve kids or whatever 0:07:17.680 --> 0:07:21.520 it is, and explain the idiocy of the media and 0:07:21.520 --> 0:07:24.920 the frenzy in hysteria right now. Let's let's pretend we're 0:07:25.000 --> 0:07:28.120 Quentin Pia this afternoon. What is the hysteria right now 0:07:28.160 --> 0:07:31.160 that most upset you that we need to ignore? Well, 0:07:31.200 --> 0:07:33.640 I certainly take a different approach than you do. Tom. 0:07:33.760 --> 0:07:35.720 What I'm going to talk about today for the first 0:07:35.760 --> 0:07:37.440 time in the several years that we've been doing this 0:07:37.560 --> 0:07:41.200 is we're at end cycle. This is the first possible 0:07:41.240 --> 0:07:45.160 recession that these kids have seen in their adult lifetime, 0:07:45.200 --> 0:07:48.480 and that many of us in this industry will experience firsthand. 0:07:48.520 --> 0:07:52.440 So you're calling recession you have before. So we certainly 0:07:52.520 --> 0:07:54.440 have been looking at the very hot or the much 0:07:54.520 --> 0:07:57.960 higher probability of a recession, and it looks like the 0:07:58.000 --> 0:08:00.760 markets have come into this framework as well. The big 0:08:00.840 --> 0:08:02.360 question that I have now and I have been a 0:08:03.040 --> 0:08:05.920 recession believer, is that the FED has moved devish ly 0:08:06.680 --> 0:08:09.560 in my view, much earlier than I had initially expected. 0:08:09.840 --> 0:08:12.880 Have they actually managed to engineer a soft landing by 0:08:13.000 --> 0:08:16.240 using forward guidance, by using their dot plot to inject 0:08:16.280 --> 0:08:19.560 some easing into this market that actually reduces my probability 0:08:19.600 --> 0:08:22.600 of a recession. It remains to be seen. So let's 0:08:22.600 --> 0:08:25.760 talk about the doom crew. Because you walked into the room, Francis, 0:08:25.800 --> 0:08:27.960 and the first thing you said was I think of 0:08:28.000 --> 0:08:30.760 recessions in and you guys always come at me. So 0:08:30.840 --> 0:08:33.560 let's talk about it. Why twenty what's so special about 0:08:35.200 --> 0:08:37.960 isn't actually a year where something blows up. It's not 0:08:38.040 --> 0:08:40.280 a two thousand eight scenario. It's a year where the 0:08:40.320 --> 0:08:43.960 model signal to us that the combination of fiscal tightening, 0:08:44.320 --> 0:08:48.520 monetary policy tightening, and some tariffs way on GDP and 0:08:48.600 --> 0:08:51.520 we get close to about zero percent. And this is 0:08:51.520 --> 0:08:53.439 where the decimal start to matter. And this is why 0:08:53.480 --> 0:08:57.280 I actually care about geopolitical risk more than I did 0:08:57.280 --> 0:08:59.360 two years ago, because this is a year where decimal 0:08:59.400 --> 0:09:01.720 points will matter, where the math will matter if we 0:09:01.800 --> 0:09:04.280 actually flip into sub zero. Present grows. So there was 0:09:04.280 --> 0:09:05.920 another group of paper at the back end of twenty 0:09:06.120 --> 0:09:08.600 seen that said, look at what's going to happen here 0:09:08.600 --> 0:09:10.960 is we're gonna return towards trend growth. And as the 0:09:10.960 --> 0:09:13.400 economy decelerates back towards trend growth, there's going to be 0:09:13.440 --> 0:09:16.599 some people that confuse that for a trip towards a recession. 0:09:17.120 --> 0:09:18.640 Now I'm trying to work out whether this is a 0:09:18.640 --> 0:09:21.360 trip back towards trend growth or a trip towards recession. 0:09:21.400 --> 0:09:24.080 How do you get the clarity between the two things 0:09:24.080 --> 0:09:26.200 as to where we're heading. Well, in this case, we're 0:09:26.200 --> 0:09:29.760 both right. So is a trip back down a deceleration? 0:09:30.120 --> 0:09:33.120 My concern is those who call for recession. There's still 0:09:33.160 --> 0:09:35.880 a lot of fiscal stimulus in this pipeline. The bigger 0:09:35.920 --> 0:09:40.360 confusion isn't twenty recession session, it's what happened in Q 0:09:40.520 --> 0:09:43.640 four and Q one. We have seen substantial distortions to 0:09:43.679 --> 0:09:46.320 the economic data in Q one. I don't think they 0:09:46.360 --> 0:09:48.560 lift until we start getting March data, which is only 0:09:48.559 --> 0:09:50.560 going to come through in the middle of April. But 0:09:50.640 --> 0:09:52.600 to me, starting in that segment, you are going to 0:09:52.600 --> 0:09:54.960 see a recceleration of Q two Q three, and the 0:09:55.000 --> 0:09:57.680 recessionistas might back off that pedal a bit. But let's 0:09:57.760 --> 0:10:00.120 keep our timelines very clear here. We still have have 0:10:00.360 --> 0:10:04.040 some breathing room before the negative growth prints. Financial conditions 0:10:04.120 --> 0:10:07.040 materially looser over the last several months. Off the back 0:10:07.080 --> 0:10:08.760 of all of this, we now have a rights market 0:10:08.800 --> 0:10:11.679 that is pricing rate cuts. Do you think that's a 0:10:11.720 --> 0:10:13.760 little bit too premature, or do you think that's the 0:10:13.840 --> 0:10:15.880 right move? Hit, I have a different perspective on how 0:10:15.920 --> 0:10:18.199 the market is looking at rate cuts. So let's say 0:10:18.200 --> 0:10:20.280 I think we have like thirty basis points priced in 0:10:20.320 --> 0:10:23.280 for to me, that's not the market saying we have 0:10:23.720 --> 0:10:25.800 one and change cuts. It's the market saying we have 0:10:25.840 --> 0:10:28.800 about a thirty percent probability of a hundred basis point move. 0:10:29.200 --> 0:10:32.079 Because if the Fed moves in, it's not going to 0:10:32.160 --> 0:10:34.520 be by basis points. That's not going to be enough. 0:10:34.640 --> 0:10:36.920 When you're this close to the zero lower bound, you've 0:10:36.920 --> 0:10:38.480 got a shock and awe. It's going to be three 0:10:38.480 --> 0:10:40.200 to four cuts if they choose to go that route. 0:10:40.360 --> 0:10:43.760 Let's go back six months. Do we have wage inflation? 0:10:44.480 --> 0:10:49.320 We certainly have wage inflation. It's deflating, Is that what 0:10:49.360 --> 0:10:51.600 I'm getting here? No, it means that it's not filtering 0:10:51.600 --> 0:10:54.280 through into our CPI or pp I data to the 0:10:54.360 --> 0:10:58.439 same extent. A variety of structural factors, globalization, the inability 0:10:58.480 --> 0:11:02.040 to pass on these cost pressures that come through. We'll 0:11:02.040 --> 0:11:04.720 probably see it in margins with about a nine month lag. 0:11:04.960 --> 0:11:07.080 But the question is, even if we were to see 0:11:07.120 --> 0:11:09.720 two or two and a half percent pc with the 0:11:09.720 --> 0:11:12.160 FED respond I don't think so. We just said David 0:11:12.200 --> 0:11:14.800 Kelley and with Michael Faroli's great work at JP Morgan 0:11:14.880 --> 0:11:17.960 and the new terminal rate, is this two percent bogey 0:11:18.040 --> 0:11:22.280 on inflation, on nostalgic thing of the past. Absolutely, does 0:11:22.280 --> 0:11:23.960 it need to be set at one point eight or 0:11:24.000 --> 0:11:26.640 something like that in my view probably? I mean, look 0:11:26.679 --> 0:11:30.120 at the City Surprise Index on inflation, not the economic one, 0:11:30.120 --> 0:11:33.000 but the inflation one. We have seen eight years where 0:11:33.040 --> 0:11:37.240 inflation data has come in below economist expectations eight years. 0:11:37.280 --> 0:11:39.960 The only reason Francis Donald brings up the City Surprising 0:11:40.040 --> 0:11:42.880 nextus because she and to Bias Lefkovic are the biggest 0:11:42.880 --> 0:11:45.360 Montreal Canadian fans and that it's waiting for us to 0:11:45.360 --> 0:11:47.440 get to ice helcake. You know, It's just it's had 0:11:47.520 --> 0:11:49.680 nothing to do with with City group, but everything to 0:11:49.679 --> 0:11:54.480 do so. I actually saw to Bias earlier this week 0:11:54.520 --> 0:11:56.240 and the two things we talked about where the Montreal 0:11:56.280 --> 0:11:58.800 Canadians and the FED. What was the most interesting, The 0:11:58.840 --> 0:12:03.160 most important one was drug Canadians. Well, and in both cases, 0:12:03.200 --> 0:12:06.079 I think we have some concerns leading forward into next year. 0:12:06.160 --> 0:12:09.040 But but let's let's take this forward mantro was terrible 0:12:09.120 --> 0:12:12.880 last year at full disclosure, folks, I bleed lesabitan, but 0:12:13.080 --> 0:12:15.440 they've really done a lot better this year. Is that 0:12:15.480 --> 0:12:18.120 where the FED is six months from now? Now? I 0:12:18.160 --> 0:12:20.400 think the FED needs to put itself on the sidelines. 0:12:20.480 --> 0:12:22.440 If the FED can be successful, I think Mr Powell 0:12:22.480 --> 0:12:24.480 agrees with you. And so when I hear that there's 0:12:24.559 --> 0:12:27.160 days like today's with a significant amount of FED speak, 0:12:27.200 --> 0:12:29.360 I get a little curvous. I don't want to see 0:12:29.400 --> 0:12:31.079 a lot of FED speak. I want the Fed out 0:12:31.120 --> 0:12:33.520 of the picture so that risk asses can rally. I'm 0:12:33.559 --> 0:12:38.079 looking it yields John mentions is sophisticated yield curve in version, 0:12:38.160 --> 0:12:40.719 which he does on the real yield one PM on Fridays. 0:12:41.200 --> 0:12:43.720 That's all great, but what it means is more financial 0:12:43.760 --> 0:12:47.720 repression for our listeners, right and it just continues forward? Yeah, 0:12:47.760 --> 0:12:49.679 I mean yield caravan version. What is it telling us 0:12:49.720 --> 0:12:52.400 that we didn't already know? Growth expectations are low, the 0:12:52.440 --> 0:12:55.480 Feds on the sidelines, and there isn't a lot of inflation. Sure, 0:12:55.480 --> 0:12:57.880 there are probably some distortions here. I'm sure you've had 0:12:58.160 --> 0:13:00.520 dozens of guests that explain that the level might not 0:13:00.559 --> 0:13:02.520 be as indicative as it has in the past. But 0:13:02.600 --> 0:13:04.920 a flat ter inverted yield curve is telling us what 0:13:04.960 --> 0:13:06.720 we should already see in the data, which is that 0:13:06.800 --> 0:13:09.240 we're end cycle. The FED may have gone too far 0:13:09.280 --> 0:13:11.280 and it's probably done. So, Francis, you've come on the 0:13:11.280 --> 0:13:14.240 program before with us and said, there's three puts to 0:13:14.320 --> 0:13:18.760 this market, the Federal reserve, trite talks, and Chinese stimulus. 0:13:19.600 --> 0:13:21.400 Any of those three right now that you have some 0:13:21.440 --> 0:13:24.200 confidence that you think could push back your base case 0:13:24.240 --> 0:13:27.240 of recession. So the FED move came earlier than I 0:13:27.280 --> 0:13:30.120 was expecting. We didn't see, you know, rate hike in 0:13:30.160 --> 0:13:33.480 twenty nineteen, starning about early March based on the paradigm 0:13:33.480 --> 0:13:36.920 shift within the FED towards average inflation. My concern right 0:13:36.920 --> 0:13:38.040 now is that there might be a little bit too 0:13:38.120 --> 0:13:40.880 much optimism in that China put story, that it's probably 0:13:40.920 --> 0:13:43.240 mostly in the price I hear a lot of analysts 0:13:43.240 --> 0:13:44.640 tell me that we're going to see a U shaped 0:13:44.679 --> 0:13:46.760 or V shaped recovery in China. To me, it looks 0:13:46.760 --> 0:13:49.200 a little bit more like a stabilization by the end 0:13:49.200 --> 0:13:51.280 of this year. If we don't get that V shaped recovery, 0:13:51.280 --> 0:13:55.200 there could be some disappointment. Are they pushing their disinflation 0:13:55.520 --> 0:13:58.880 and goods deflation out to the rest of the world. 0:13:59.120 --> 0:14:02.040 They have, They have done it for years. They will 0:14:02.040 --> 0:14:03.960 probably continue to do it. I think this is an 0:14:03.960 --> 0:14:08.439 interesting sideline story that should gain more attention into China 0:14:08.480 --> 0:14:11.640 is about to enter deflation by PPI measures. We feel 0:14:11.679 --> 0:14:14.160 that in the United States, we feel that globally this 0:14:14.240 --> 0:14:16.920 is a massive deflationary shock. I'm sure it's part of 0:14:16.960 --> 0:14:18.719 the reason why the Fed said, you know what, we're 0:14:18.720 --> 0:14:20.680 not going to get to two percent average inflation in 0:14:21.680 --> 0:14:23.960 or and through the weekend we get the p m 0:14:23.960 --> 0:14:26.400 I s for China and into next week to so 0:14:26.560 --> 0:14:28.840 some really interesting data points coming from the Chinese side 0:14:28.880 --> 0:14:31.840 of things. A fan of p m I s, but 0:14:31.920 --> 0:14:35.560 I must admit they're important right now. I'm not a 0:14:35.600 --> 0:14:37.120 fan of them either, except for the fact that out 0:14:37.120 --> 0:14:40.160 of China we have so little real time activity trackers 0:14:40.160 --> 0:14:42.400 that it's probably one of our best bet I would 0:14:42.400 --> 0:14:44.960 actually watch that employment sub index within it as a 0:14:45.000 --> 0:14:47.120 good sense of what's happening to the jobs growth there. 0:14:47.200 --> 0:15:04.240 Francis Donald, thanks update as well. Let's go right over 0:15:04.240 --> 0:15:06.840 the foreign exchange Jane following with us right now Jane Folly, 0:15:06.920 --> 0:15:10.280 let me set it up. D X Y blended Dollar index, stronger, 0:15:10.360 --> 0:15:14.640 yen not doing much, Euro maybe going through one twelve, 0:15:15.080 --> 0:15:18.280 and all of a sudden emerging markets perking up weaker 0:15:18.840 --> 0:15:23.400 as well. That's set What are you focused on? Well, 0:15:23.440 --> 0:15:25.600 to be honest, most of what you just said pointed 0:15:25.640 --> 0:15:27.920 to me that the dollar can remain really quite firm 0:15:27.960 --> 0:15:31.080 because in an environment where you see emerging markets looking 0:15:31.080 --> 0:15:34.360 more belie, that's is suggestive of a lack of confidence 0:15:34.400 --> 0:15:36.880 in the market. We've see that of course in stocks too. 0:15:37.200 --> 0:15:39.400 Then in verse just's have to make a decision about 0:15:39.720 --> 0:15:42.160 where else are they're going to go. They're worried about 0:15:42.240 --> 0:15:45.560 risk capetite, they're pulling back on their risk. They generally 0:15:45.600 --> 0:15:48.600 come back into safe assets, to come back into detail currencies, 0:15:48.600 --> 0:15:51.400 and generally because they say favors are the yen and 0:15:51.400 --> 0:15:53.680 a thesis fact. But when you've got negative yields and 0:15:54.040 --> 0:15:57.280 those the dollar too, many people may look like a 0:15:57.320 --> 0:15:59.760 better safe haven. That's certainly what happened I think last 0:15:59.840 --> 0:16:01.880 year when we saw itself off in an emerging market, 0:16:01.880 --> 0:16:05.480 and I think that's again what we're seeing right now. So, Jane, 0:16:05.560 --> 0:16:08.280 is the breaks that continues to wind its way through 0:16:08.440 --> 0:16:10.640 a parliament. It seems like we're maybe getting a little 0:16:10.680 --> 0:16:13.360 bit closer. I hastened to say that, what is your 0:16:13.400 --> 0:16:16.320 call on sterling, given you know, we have a little 0:16:16.360 --> 0:16:19.080 seems like there might be a real path here, or 0:16:19.120 --> 0:16:21.520 split in the path where there's hard breaks that are 0:16:21.520 --> 0:16:23.480 still on the table, but they seem to be making 0:16:23.520 --> 0:16:25.520 some progress. How do you think the pound reacts here 0:16:25.680 --> 0:16:28.920 either way? Well, you know, we we saw yesterday that 0:16:29.040 --> 0:16:31.240 the pound, at least in the cable dip into the 0:16:31.280 --> 0:16:33.440 lower levels of the week yesterday, and this is on 0:16:33.480 --> 0:16:36.960 disappointment that the MPs had their their votes last night 0:16:37.000 --> 0:16:41.200 on eight amendments and there wasn't a majority for single one, 0:16:41.240 --> 0:16:43.640 and that seems to disappoint the market invested. I think 0:16:43.680 --> 0:16:46.600 we're hoping for some solid direction for an alternative to 0:16:46.680 --> 0:16:49.560 treason maze plan, which of course me no MPs don't like, 0:16:49.720 --> 0:16:53.520 so the markets disappointed. But actually I'm not as disappointed 0:16:53.880 --> 0:16:57.080 as perhaps the value of sterling would would suggest, because 0:16:57.080 --> 0:16:59.640 I think some progress was made. I think what we 0:16:59.760 --> 0:17:03.920 see perhaps as uh, the the the plan about a 0:17:04.000 --> 0:17:07.159 potential customs union, and this of course is a trade 0:17:07.200 --> 0:17:09.800 arrangement with with Europe. Seemed to get more support than 0:17:09.920 --> 0:17:12.920 than the others, and this might again see some progress 0:17:13.040 --> 0:17:15.120 over the weekend as MP's get together and they talk 0:17:15.160 --> 0:17:18.239 about common ground and I think by by Monday we 0:17:18.320 --> 0:17:23.760 might have a clearer view about the potential alternatives for 0:17:23.840 --> 0:17:26.840 a Brexit deal. But of course people must remember that legally, 0:17:26.960 --> 0:17:30.760 as it's positioned, the UK is going to leave um 0:17:31.240 --> 0:17:33.959 um in a couple of weeks time the EU and 0:17:34.000 --> 0:17:37.159 we need a change in law in order to avoid that. 0:17:37.240 --> 0:17:39.480 So that as you've just slightly pointed out, that threat 0:17:39.520 --> 0:17:42.359 of the no deal Brexit is still hanging over the 0:17:42.440 --> 0:17:46.160 heads of earning investors and we're limited any recovery. Where's 0:17:46.160 --> 0:17:50.679 the EM opportunity right now? And Jane Folly well, I 0:17:50.720 --> 0:17:53.480 think that's a that's a difficult question given the environment 0:17:53.520 --> 0:17:55.360 that we're in. I mean, certainly I would be very 0:17:55.359 --> 0:17:59.000 cautious about e M. The market has been nervous about 0:17:59.000 --> 0:18:01.160 global growth. We see Hourkeey playing at in the back 0:18:01.200 --> 0:18:03.480 that we've got elections there in a couple of weeks 0:18:03.480 --> 0:18:06.520 and market extremely nervous. And when you've got a big 0:18:06.520 --> 0:18:10.600 EM player like that Turkey really looking at and you've 0:18:10.640 --> 0:18:12.280 got that on top of global growth, I think it's 0:18:12.280 --> 0:18:14.800 a very nervous viral, you know, away from the idiosyncratic. 0:18:14.880 --> 0:18:16.920 So I got I got a four print and Brazilian 0:18:17.000 --> 0:18:20.520 real and I got argentinean Paso out pushing forty four. 0:18:20.600 --> 0:18:23.440 Come on, there's there's sort of a group tendency here, 0:18:23.560 --> 0:18:27.639 isn't there Well, there is, there is, and and to 0:18:27.680 --> 0:18:29.520 be honest, I think you know, the wise investors always 0:18:29.560 --> 0:18:33.520 going to look through the bigger picture and pick out 0:18:33.760 --> 0:18:37.000 the countries that are doing better. Where you see the economy, 0:18:37.080 --> 0:18:41.159 We'll pick out for us where is it well, you know, again, 0:18:41.200 --> 0:18:43.040 a lot large part of this comes down to what 0:18:43.119 --> 0:18:47.520 happens with China and US and the trade negotiations. Some 0:18:47.560 --> 0:18:51.960 countries could benefit from agriculture down there, um, and again 0:18:52.119 --> 0:18:53.959 it depends which way it's going to swing. It if 0:18:54.240 --> 0:18:57.119 China again is picking up buying sybean from the US, 0:18:57.200 --> 0:18:59.359 and maybe there isn't going to be the benefits for 0:19:00.000 --> 0:19:02.399 other Latin American countries with which there could be. So 0:19:02.720 --> 0:19:05.440 there's there's there's a lot of risky, there's a lot 0:19:05.440 --> 0:19:09.080 of um potential outcomes and a lot of these are 0:19:09.080 --> 0:19:11.919 a really good picture events. Amazing Jane Folly, thank you 0:19:11.960 --> 0:19:15.119 so much. Wonderful update with robble Bank just always advantage 0:19:15.480 --> 0:19:30.679 when she's um, do you want to bring in our 0:19:30.800 --> 0:19:34.560 esteem guests? Absolutely? Um. You know. Obviously we are are 0:19:34.600 --> 0:19:37.879 here at the Bloomberg Equality Summer broadcasting live from the 0:19:38.000 --> 0:19:41.400 link at our world headquarters here in Lectionton Avenue fifty 0:19:41.480 --> 0:19:44.400 ninth Street, and we think about Hollywood. It's been said 0:19:44.400 --> 0:19:47.840 that Hollywood is one of the least welcoming industries for women. 0:19:48.080 --> 0:19:50.440 And I love this point that I think our guests made. 0:19:50.600 --> 0:19:54.440 Even the coal industry does a better job deally being 0:19:54.440 --> 0:19:56.960 accepting and support above women than this Hollywood. So it 0:19:57.000 --> 0:19:59.520 help us kind of dig through this issue. We welcome 0:19:59.600 --> 0:20:02.800 our our guess, Maria Geis. She is a writer and director. 0:20:02.840 --> 0:20:05.200 Maria's thanks so much for joining us here at Bloomberg. 0:20:05.640 --> 0:20:09.919 How did it ever get so bad for women in Hollywood? 0:20:10.000 --> 0:20:13.800 What's the history there? Well, let's see. Let's start with 0:20:14.040 --> 0:20:17.719 what Hollywood does today. I mean, Hollywood pays out seven 0:20:17.760 --> 0:20:21.800 billion dollars in wages every year. It creates eight percent 0:20:22.000 --> 0:20:25.639 of the media content that's distributed globally, and it helps 0:20:25.720 --> 0:20:29.120