Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene
Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Already
Speaker 1: pleased to say to give us her insight, Kathy Fisht
Speaker 1: joins us here in the New York studio Burnsting, head
Speaker 1: of Wealth and Investment Strategies. Cathy, great to catch up
Speaker 1: with you. I'm just wondering what your tanning clients at
Speaker 1: the moment. As you see the big numbers, the big
Speaker 1: price action of the last twenty four hours, how do
Speaker 1: you keep them calm? Well? Think about it. When the
Speaker 1: trade talks first surfaced in March, we all thought that
Speaker 1: this would be a little bit of posturing and this
Speaker 1: would blow over, and the numbers were not too large.
Speaker 1: But now things have escalated and we have to recognize
Speaker 1: that people are trying to connect the dots and figure
Speaker 1: out will this create a headwind two earnings, Will this
Speaker 1: create some damage to capital spending? As companies try to
Speaker 1: think through what it means. And it's early, we don't
Speaker 1: know yet, but you can see why that is indeed
Speaker 1: causing markets to step back a bit, and we expect
Speaker 1: this volatility to continue. But that doesn't mean you get
Speaker 1: out of stocks. It means you are careful. It means
Speaker 1: that with active management, we can try to position our
Speaker 1: portfolios appropriately to focus on companies that could be less affective.
Speaker 1: But I do caution that we know that the broad
Speaker 1: based impact if psychology is affected in a negative way,
Speaker 1: you know, could could, could be real. But again, the
Speaker 1: companies are in very good shape today. The economy is strong,
Speaker 1: so we're not in any way suggesting clients change their allocations.
Speaker 1: Had to digest news flow when you don't know what
Speaker 1: the news is, and there were several reports about restrictions
Speaker 1: the Chinese investments, and the Treasury Secretary went out onto
Speaker 1: Twitter um yesterday morning and said the statement that will
Speaker 1: come out will not be specific to China, but to
Speaker 1: all countries that are trying to steal our technology. Then
Speaker 1: the Trade Adviser Petter Navarro over at the White House,
Speaker 1: he gave an interview to see NBC and he said
Speaker 1: the followings. The whole idea that we're putting investment restrictions
Speaker 1: on the world, please discount that there's no plans to
Speaker 1: impose investment restrictions on any countries that are interfering in
Speaker 1: any way with our country. That is not the plan. Um, Kathy,
Speaker 1: how do you know what's going on? If I can
Speaker 1: interrupt you? And what was amazing about what you just
Speaker 1: said is moments later the White House came back and
Speaker 1: back pedaled from what Mr Navarro said, I mean moments
Speaker 1: after he made those comments. So it's very difficult Tom,
Speaker 1: just to have a clue what is going on? Was
Speaker 1: going to learn this study. Yeah, I do think that
Speaker 1: the market has accepted that there is, let's gently say,
Speaker 1: conflicting comments coming out of Washington, and that's been going
Speaker 1: on for some time. This is not new, and therefore
Speaker 1: there may have been a little more complacency because there
Speaker 1: have been all these conflicting statements. But as I said before,
Speaker 1: what we do see now is that there is some
Speaker 1: actual damage starting to come from these tariffs. And that's
Speaker 1: that's the realities. What is the actual financial impact of
Speaker 1: some of these decisions that are being made. Well, let's
Speaker 1: be clear here, the real financial impact not so much
Speaker 1: here in the anounted States, but abroad, Chinese equities, the
Speaker 1: Shankai composite into a bear market. We know how sensitive
Speaker 1: the administration in China is to financial markets, and I
Speaker 1: just wonder whether the Chinese actually had the stomach to
Speaker 1: really take on a trade to um Kathy, do you
Speaker 1: see the Chinese having the stomach to do that. Yeah,
Speaker 1: And and as you know, the Chinese have talked about
Speaker 1: other things that they can do besides trade wars. In particular,
Speaker 1: they can halt licenses, they can slow down imports, they
Speaker 1: can do all sorts of things at the docks, and
Speaker 1: and there's and of course the Chinese have currency issues,
Speaker 1: and they have the fact that they owned many US
Speaker 1: treasuries as well, So they do have UM multiple levers
Speaker 1: to pull. But but some of them could be quite consequential.
Speaker 1: And we aren't expecting there to be dramatic change because
Speaker 1: of that, but certainly UM it is. It is tough
Speaker 1: for all parties involved. Remember, the global economy has grown
Speaker 1: in recent decades because of an improvement in free global trade,
Speaker 1: So to hinder that becomes a very big global issue,
Speaker 1: not just for the two countries we're talking about here,
Speaker 1: very much so, but maybe more of a problem for
Speaker 1: the Chinese. UM I failed to see why the Chinese
Speaker 1: would interfere with the docks. I failed to see why
Speaker 1: the Chinese would get involved in in factories on the
Speaker 1: mainland because they are so vulnerable to the direction of
Speaker 1: capital flows and the last thing that they want to
Speaker 1: do is start spooking potential investment in the country. I mean,
Speaker 1: what's the incentive for them to do that? Kathy, Well,
Speaker 1: I don't think it's much of incentive, but it's I
Speaker 1: do think there's a there has to be some way
Speaker 1: to get back and say we are not going to
Speaker 1: just take whatever comes our way. So I do think
Speaker 1: you're seeing a lot more discussions between other countries about
Speaker 1: how they can work together. And as you know, China
Speaker 1: has many other trading partners, so there's lots of discussions
Speaker 1: going on behind the scenes. We have to recognize that.
Speaker 1: So you say, stays, I was to risk our sense
Speaker 1: hearing out of states, we do say stay exposed and um,
Speaker 1: as you know, because earnings have been good on valuations
Speaker 1: that have actually come down, right, the SMPS trading around
Speaker 1: sixteen times earnings now, which is certainly not far from average.
Speaker 1: So even though these these clouds are here, we would
Speaker 1: certainly not want our clients to get out of stock.
Speaker 1: Remember when we used to rotate, we'd rotate. We're rotating
Speaker 1: into this? Are we going to get back to rotating?
Speaker 1: So rotating is something that people have talked about for years,
Speaker 1: as you said, and actually yesterday you saw we did
Speaker 1: actually see the fank stocks lose some lump stem steam.
Speaker 1: And the question is did they rotate into something else?
Speaker 1: And doesn't look that way. It looks like there was
Speaker 1: just a little sell off yesterday. That's one day. I
Speaker 1: mean like over three months or over eight months, do
Speaker 1: we still rotate? Yeah? I can't remember. It isn't it is, remember,
Speaker 1: and part of its part of the reason why not
Speaker 1: is because everything is so interconnected. It's very rare now
Speaker 1: that you have one industry, your sector that people think
Speaker 1: is immune to whatever buffeting factors. But think the split
Speaker 1: and technology kind of made a whole lot of sense
Speaker 1: up until yesterday, Kathy on the chip stocks come under
Speaker 1: pressure because of what may or may not happen with
Speaker 1: China and the internet companies outperform um many of those
Speaker 1: companies with really strong secular growth stories. Did we just
Speaker 1: throw everything count yesterday and just a broad based risk
Speaker 1: averse day? I think yesterday everybody throw everything out. But
Speaker 1: also it's always normal to sell your winners when things
Speaker 1: get jittery, so you would expect some of the stocks
Speaker 1: that have done the best to sell off the most
Speaker 1: when there's a brash sell off. Does it raise any
Speaker 1: questions about evaluations in certain pockets of the equity market?
Speaker 1: It does, although you know, you know, the nice thing
Speaker 1: about some of the stocks that have done well is
Speaker 1: that the valuations are not that out of line. Whether
Speaker 1: it's an Apple or a Facebook, they're you know, given
Speaker 1: how strong the earnings are. That's a it's a different
Speaker 1: story perhaps for a Netflix. Yeah. And the corporate bid
Speaker 1: as well, just as a final question, the corporate bid
Speaker 1: for many of these companies now out of the market
Speaker 1: because we're so close to learning season. How critical do
Speaker 1: you think that was yesterday going going into the next
Speaker 1: couple of weeks. There's always technical factors, So I'm not
Speaker 1: going to try to guess on which one way we'd
Speaker 1: like you to. I do think the bigger issue now though,
Speaker 1: the trade issue is the bigger one by far, because
Speaker 1: this is this is significant, This is really throwing a
Speaker 1: wrench and what everything has driven been driven by in
Speaker 1: reaching decades. You predict there will be more Harley Davidson's
Speaker 1: I I'm not going to predict that, but I do
Speaker 1: think that's what people are going to be looking for
Speaker 1: and looking very carefully. Um. And if you if, if
Speaker 1: you're a company, and you have any of these things
Speaker 1: on the march, and I would indeed expect to see
Speaker 1: some more of them. Yes, Kathy Fisher, thank you so
Speaker 1: much for greatly appreciate it, really really well timed. You're
Speaker 1: we bring in our next guest, and Nobel Laurea, Yeah,
Speaker 1: and Yale Professor of Economics, Robert Shillip professor always quite
Speaker 1: can't shot with you a student of economic history, not
Speaker 1: just me, but you still and I guess we always
Speaker 1: will be. Um, what would you compare the current era
Speaker 1: in history too? Any parallels? You can't parallel everything, you know,
Speaker 1: there's so many things going on in one time. But
Speaker 1: one thing that comes to my mind is that's the
Speaker 1: year of the smooth Holly tariff. President Hoover signed it
Speaker 1: into It was a big increase in tariffs, and at
Speaker 1: launched a trade war. By nine thirty two, uh said
Speaker 1: hit There. Hoover was was arguing that there wouldn't be
Speaker 1: a trade war but he gave it up, and you
Speaker 1: know what, those tariffs came down. I think that we
Speaker 1: learned a lesson from Smooth Holly. We have to remember
Speaker 1: it again. We have to read history. So Smooth Holly,
Speaker 1: I remember the average tariff being something around across all US.
Speaker 1: I mean, professor, We're nowhere near to that, are we.
Speaker 1: Well we've come down and see. The thing that happened
Speaker 1: is uh that that tariff began to be viewed as
Speaker 1: a sign of grotesque lack of enlightenment. That you punish
Speaker 1: your name. Beggar thy neighbor was the term. They'll fight back,
Speaker 1: and you know it was part of the process that
Speaker 1: brought us World War two. It generated such a conflictual
Speaker 1: and hostile atmosphere, uh that it wasn't a good idea.
Speaker 1: Admittedly it was a higher tariff. Uh. Well, you know,
Speaker 1: we don't know where Trump would like to go, but
Speaker 1: I think he's probably scaling it down in terms of
Speaker 1: the public reaction and will continue to. The starting point
Speaker 1: is different, as is the goal. Um. The ultimate goal
Speaker 1: is to get the Chinese remove the barriers to entry.
Speaker 1: How successful are we likely to be and that ambition, Well,
Speaker 1: we have an existing structure called the World Trade Organization,
Speaker 1: and the US under President Obama filed complaints with the
Speaker 1: w t O and that was in process, but it
Speaker 1: didn't fix the problem. So we have a big problem.
Speaker 1: Admittedly that the Trump is right about of international diplomacy,
Speaker 1: that the World Trade Organization doesn't have enough teeth to
Speaker 1: uh to fix the problem. But I don't know, you know,
Speaker 1: the experiment that we're going through now, which what strikes
Speaker 1: me about it is the tone is so angry that
Speaker 1: I'm I don't think that Americans in the long run
Speaker 1: want this kind of angry international arena. We we could
Speaker 1: go for hours here, John, I thought those questions were great.
Speaker 1: But John fare and I interviewed David blanch Flower of
Speaker 1: Dartmouth the other day, and I want you to follow
Speaker 1: up with that. Professor blanche Flowers said, we're not fully employed.
Speaker 1: Every politician, not every most politicians, most market people tell
Speaker 1: us we are fully employed. You've got a piece of
Speaker 1: chalk in your hand at Yale and your lecturing. Are
Speaker 1: we fully employed? Well, we have a lot of people
Speaker 1: who have left the labor for us, I suppose. But see,
Speaker 1: unemployment is rather hard to define because it's a matter
Speaker 1: of intention. If you've left the labor for us, and
Speaker 1: I consider yourself retired. That's not unemployed. But what is
Speaker 1: What is your real feeling about it? Maybe you left
Speaker 1: and retired early because it didn't look good. I think
Speaker 1: there's a certain fuzzy He may be right that it's
Speaker 1: not as strong and as good as it appears through
Speaker 1: the national statistics. When we look at this, and to
Speaker 1: bring it back to John's observation of history, where is
Speaker 1: this nation after the election? If we assume Mr Trump
Speaker 1: is one term, maybees to term. Who am I to say?
Speaker 1: But is President Trump in his movement of populism? Is
Speaker 1: it a one off or does it endure? Well? That
Speaker 1: is an important question. I'm gonna focus that in too.
Speaker 1: Look at his tax cuts, notably the corporate profit tax cut.
Speaker 1: UH brought the top statutory rate down from That's a
Speaker 1: huge tax cuts. So I want to know is that
Speaker 1: going to last? Is it going to be reversed by
Speaker 1: subsequent governments? That is the big question when you're looking
Speaker 1: at valuations in the market. The market has bought into
Speaker 1: these are permanent cuts. My nothing is permitive, of course,
Speaker 1: but my guess is that this is a cut that
Speaker 1: will last even if Trump and the Republicans lose their
Speaker 1: control that they now have. Uh I will bet that
Speaker 1: we won't see it. Going back on Bob Shoulder, thank
Speaker 1: you so much. Professor of Economics University and of course
Speaker 1: a price taker at Stockholm where also wherever they do
Speaker 1: the mill mile pro Robert Schulder of Yel. It is
Speaker 1: a good time to speak to David Goldman. That can
Speaker 1: be about derivative mathematics and debt Defeatman, or it can
Speaker 1: be about China. He is a student of China. He
Speaker 1: takes a long view. He is of course writing in
Speaker 1: Asia Times and with Macro Strategy LLC. David Goldman, wonderful
Speaker 1: to catch up with you again. And one of your
Speaker 1: latest essays you talk about how you need to speak
Speaker 1: to those opposite you. You use the example of scientists
Speaker 1: in World War Two, where we took the German scientists,
Speaker 1: including Werner von bron Over to make things go in
Speaker 1: science in America. We're not speaking to China, are are we?
Speaker 1: What will the price President Trump pays China at this
Speaker 1: point believes that the United States, in the person of
Speaker 1: Peter the Borrow, for example, wants to stop China from
Speaker 1: realizing it's economic conditions, and this it considers a repeat
Speaker 1: of the opium war demands of they will hunker down.
Speaker 1: The problem that Trump addresses, which is real, is that
Speaker 1: we're losing our technological edge. The solution to it is
Speaker 1: not to try to stop China from developing its technolog
Speaker 1: school edge, because we can't. The solution is to do
Speaker 1: much better than they can. And my first proposal to
Speaker 1: the administration is organized a systematic brain drain. Pick off
Speaker 1: China's best talents, get them to the United States working
Speaker 1: for us, because that's where the preponderance of highly educated
Speaker 1: tech professionals is going to come from. That's what we
Speaker 1: did with Brexit. We saw Brexit, we said brain John
Speaker 1: Farrell over to America. It was a brain who did
Speaker 1: whom the favor there is, David, I hope you've got
Speaker 1: my back here. I do hope you have um. The
Speaker 1: technology transfer is dues the issues around intellectual property. The
Speaker 1: President has a point here, doesn't he David m oh
Speaker 1: Absolutely he does. China now pays more for I P
Speaker 1: than any other country in the world billion dollars a
Speaker 1: year that paid virtually nothing ten years ago, probably should
Speaker 1: be three or four times that. But even if trying
Speaker 1: to paid top dollar for everything they took from this
Speaker 1: instead of stealing from and paying for others. We still
Speaker 1: have the problem that China will eventually leap frog us
Speaker 1: if we remain staging. And the problem is our rate
Speaker 1: of innovation, particularly in anything to do with manufacturing, has
Speaker 1: come to a whole. Were very good at acts, but
Speaker 1: we're not very good at manufacturing. That's all gone overseas.
Speaker 1: And unless we reverse snap, as the President says, we're
Speaker 1: in big trouble. But we're not going to do that
Speaker 1: by preventing, for example, wet from buying plow conscious, don't
Speaker 1: us have trash program to produce their own skips, which
Speaker 1: is what they're doing right now. Blah the way Huahwe
Speaker 1: now has an unlimited budget from the Chinese government to
Speaker 1: produce substitutes. It will be more expensive, you'll be you'll
Speaker 1: be creating in ifficial dual supply chains. Yeah, that's bad
Speaker 1: for profitability, it's bad for world economy. But China will
Speaker 1: do it. The trick is for us to leap fraud
Speaker 1: China turn some of their industries into the equivalent of
Speaker 1: eight track tape players by creating new much so David,
Speaker 1: the Chinese brazenly unveiling the made in China goals. And
Speaker 1: I just wonder whether the United States can get Europe
Speaker 1: and the rest of the world on site to really
Speaker 1: sort of break down what the Chinese are doing, how
Speaker 1: they're subsidizing it, the barriers to entry that they'll put
Speaker 1: around that effort as well, and whether the world acting
Speaker 1: together can really stop that from happening. Well, you can't
Speaker 1: stop the Chinese from using the Chinese economic models to
Speaker 1: trying to advance their industry, but the weakness of the
Speaker 1: Chinese model as you put vast amounts of social resources
Speaker 1: into existing technologies. Our trick, our advantage is innovation. We
Speaker 1: want to create new technologies. For example, uh, twenty years
Speaker 1: from now, we're not going to be paying ten billion
Speaker 1: dollars to build the fabrication plan for semi conductors. There
Speaker 1: will be different physical processies which we reduce the cost
Speaker 1: by eight. We should have a Manhattan Project program to
Speaker 1: replace the existing chip pad technologies. Let the tiny is
Speaker 1: build massive chip plants, then go in and do something
Speaker 1: entirely new and bankrupt. And that's what Basebil we did
Speaker 1: to rush it during the Cold War. Can we incentivize
Speaker 1: manufacturing investment in America. Can we use your Global Wall Street,
Speaker 1: David Goldman and tax credits and investments and to keep
Speaker 1: the investment here to create American jobs. Well, sure we can.
Speaker 1: I mean, we'd it and they're During the regular administration,
Speaker 1: we were spending about one point through one point four
Speaker 1: percent of GDP on fundamental research sponsored by the federal government.
Speaker 1: There was a public private partnership where DARPA or other
Speaker 1: government agencies NASA would fund the basic research and then
Speaker 1: companies would commercialized that. That's what we've got lasers, uh
Speaker 1: inexpensive and fast, microchips, lap panel displays virtually everything that
Speaker 1: goes into the different economy. Then now we're spending roughly
Speaker 1: half that amount lower the to GDP and the president
Speaker 1: doesn't even have a scient advisor in the Whitehouse. Well, yes,
Speaker 1: we've done it before I was there in the regular administration. Then, David,
Speaker 1: not enough time, tod, Let's do it again. David Gouldvin
Speaker 1: with Asia Weekly writing there, greatly appreciated on some interesting
Speaker 1: ways to engage with China. Jane Fowley with US at
Speaker 1: Rubble Bank in London, thrilled that she could be with
Speaker 1: us this morning as we look at the market turn
Speaker 1: green on the screen. Is current mentioned? But within that,
Speaker 1: Jane Fowley is foreign exchange is litmus paper. What is
Speaker 1: the dollar dynamics right now? What is the dollar bet
Speaker 1: that is out there? Well, you know, I'm still adolable,
Speaker 1: and I think if we look at the performance of
Speaker 1: the dollar, so it's not about February, I think we
Speaker 1: can see it's it's that performed almost every market. It's
Speaker 1: that performed that G ten. It's that performed all of Asia,
Speaker 1: all of Latin and almost all in Eastern Europe too.
Speaker 1: It's just the Ukrainian currency hitut has that performed it.
Speaker 1: So we're looking at a very very strong dollar, and
Speaker 1: I think there's two real reasons for that. First of all,
Speaker 1: we have the Federal Reserve of because it's been tightened
Speaker 1: and interest rated at a time when much of the
Speaker 1: rest of the the G ten central banks have been
Speaker 1: coming out and asserting that they're done credential, so you
Speaker 1: have interest rate differentials. And then, of course you have
Speaker 1: that spark in this capital outflow from emerging markets back
Speaker 1: into de turn back into to the US. The US
Speaker 1: dollar and the environment that we have right now with
Speaker 1: pay attention is only enforcing that risk of version. We
Speaker 1: are hearing from different shops some bold calls and currency
Speaker 1: movements which are almost all strong dollar and weaker other
Speaker 1: thing including yen. Some calls out from one ten out
Speaker 1: in one twenty. Do you have the same baldness at
Speaker 1: Rebble Bank? Not? On On the end, I think the
Speaker 1: dollar en, if you like, is is perhaps a little
Speaker 1: bit tougher in this environment where we have the dollar
Speaker 1: at performing. But generally speaking, you know, I would say
Speaker 1: that it is the the Japanese end that is the
Speaker 1: more tried and tested safe haven. So in the sort
Speaker 1: of environment that you might see with with tradables, then
Speaker 1: you'd accept the end to strengthen as well. But I think,
Speaker 1: you know, there's a couple of things which have perhaps
Speaker 1: undermine them when it comes to the US dollar in
Speaker 1: the last few months. The first, of course, with interstruct
Speaker 1: differentials the start of year, many people thought that the
Speaker 1: Bank of Japan could be pushing away from this ultra
Speaker 1: easy policy. This year that's been really pushed back against
Speaker 1: by the Bank of Japan now. But the other thing
Speaker 1: is is the Korean situation. Of course, a year ago
Speaker 1: we were very much in the midst of of a
Speaker 1: of a crisis there that people were worried about the
Speaker 1: missile flying overhead above Japan. That particular threat has has
Speaker 1: been lessened, and I think that has reduced some of
Speaker 1: that safe haven demand for the year. But you know,
Speaker 1: if we look ahead trade tensions, they are something whereby
Speaker 1: people do fly to safe havens, and I think the yen,
Speaker 1: you know, will stand relatively firm in this environment despite
Speaker 1: the interesstruct differentials favoring the US dollar. Jane Fawley, the
Speaker 1: dollar versus the Euro, what are your what are your perspective?
Speaker 1: What are the chances of the of the dollar going
Speaker 1: to let's say one oh four, one oh five against
Speaker 1: the Euro in the next let's say a year. Well,
Speaker 1: I would say that one four, one five is still
Speaker 1: a long way away. My forecast is a much more
Speaker 1: moderate one twelve. Will it get down that far, Well,
Speaker 1: you know, never say never, but I think, you know,
Speaker 1: we've got to try and think of the factors that
Speaker 1: would really undermine the euro, because I think what we
Speaker 1: have at the moment, we have at the story of
Speaker 1: dollar strength, um flow coming out of emerging markets back
Speaker 1: into the dollar. But you know, I think, you know,
Speaker 1: some of this could have gone back into the euro.
Speaker 1: If we were in the fundamentals that really characterized the
Speaker 1: euro in twenty seventeen, when things look good for the Euro.
Speaker 1: Growth was better than expect to, the politics were better
Speaker 1: than expected. But since then we've got this much murkier Euroe. Well,
Speaker 1: that's where I was going to go, is I mean,
Speaker 1: you know we've just had the election in Italy and
Speaker 1: you have a political crisis or at least a political
Speaker 1: confrontation that is building in Germany. Um what? And and
Speaker 1: then of course you know Britain is supposed to have
Speaker 1: exited the European Union. Uh what? What kind of could
Speaker 1: you create a scenario on which you could see a
Speaker 1: big sell off in the in the Europe? Yeah, I
Speaker 1: mean we've seen it before. Certainly, we just don't need
Speaker 1: to go back to the to the Eurozone crisis. So yes,
Speaker 1: we would have to have real concerns about the cohesion
Speaker 1: of the system, you know, to really set the euro
Speaker 1: chumbling intersect differentials will will set your dollar on a
Speaker 1: course lower. But I think we'd have to be really
Speaker 1: worrying about some degree of crisis for it to to
Speaker 1: really accelerate. Now, if we think about what might happen,
Speaker 1: I mean, you're quite right. You've just pointed out that
Speaker 1: the weakness of mercle that could be a shock for
Speaker 1: the euros. Well, these are things that actually people know about.
Speaker 1: I mean, it's not I'm just reading off the headlines.
Speaker 1: There are probably a lot of things we don't even
Speaker 1: know about. Well, I think when we kept to October,
Speaker 1: now this is going to be interesting because around about
Speaker 1: them we have the presentation of the Italian budget. Now,
Speaker 1: I think that could really release some strains again in
Speaker 1: the in the Eurozone. But having come through the prices,
Speaker 1: having you know, put measures in place to to strengthen
Speaker 1: their hooking coherent of the system. I'm not really visited
Speaker 1: visiting that we could have another crisis, but I certainly
Speaker 1: do think that there will be factors out there which
Speaker 1: will make the market worried. So I do think that
Speaker 1: the euro is going lower against the US dollars. I mean,
Speaker 1: I mean this brings up more general question from you know,
Speaker 1: single point estimate on a given currency pair, which is Jane,
Speaker 1: we've all seen this before, which is a rationalization of
Speaker 1: weakening em currencies in every step of the way down,
Speaker 1: well meaning people try to think through what it means
Speaker 1: and what it means for e m and too often
Speaker 1: it ends in some form of crisis. Why would we
Speaker 1: think otherwise this time? I suppose it's a crisis for
Speaker 1: whom I mean, certainly if you look at some of
Speaker 1: the ems, you look at Argentina, yes you have a crisis.
Speaker 1: Will there be a crisis and Turken in the next
Speaker 1: five years, maybe there will. So some countries certainly are
Speaker 1: a little bit more vulnerable than others to crisis, and
Speaker 1: certainly emerging markets just by the very findition that they
Speaker 1: are emerging markets are at more more risk. Will the
Speaker 1: Euro have another crisis? Well, you know, certainly the European
Speaker 1: official community doing everything that can to try and avoid
Speaker 1: that with structural reforms. But clearly, this is a new currency,
Speaker 1: this is a new system. It is it is very
Speaker 1: difficult to bring together so many different countries and push
Speaker 1: them together with one currency, so that there's going to
Speaker 1: be cracks and strains, and in the next recession that
Speaker 1: will highlight that the cracks and stones within the e
Speaker 1: m U and and certainly you know that's a situation
Speaker 1: which will certainly undermine the Euro. So I do see
Speaker 1: going forward in the next tenth that thing, maybe fifty
Speaker 1: years bounds of euro strength of euro weakness. Jane, Thank
Speaker 1: you so much. Jane Fally greatly appreciated from raval Bank
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