WEBVTT - Single Best Idea with Tom Keene: Geoffrey Yu & Sarah Wolfe

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Singast IDEA short Sweet, What a great list today, Jeffer

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<v Speaker 2>you extended conversation, Greg Peters from Pigum, extended conversation Adam Posen,

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<v Speaker 2>We got him in there around Ted Pick of Morgan

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<v Speaker 2>Stanley with John and Lisa out at Davos. Just a

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<v Speaker 2>really terrific set of conversations. Jeff for you was just

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<v Speaker 2>brilliant on the asymmetry of a pair. Now, in the

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<v Speaker 2>equity market, it can be where's the bid, where's the ass?

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<v Speaker 2>As a pro you never forget the bid in the ask,

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<v Speaker 2>and they can move separately. It's like time stands still

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<v Speaker 2>the phrases, the bid walks away, the stock starts going down,

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<v Speaker 2>and your stomach turns over. In the currency market, it's

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<v Speaker 2>a pair a euro dollar. Does a dollar go up

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<v Speaker 2>in a strong dollar or is it a week euro?

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<v Speaker 2>Is it a week euro? Brilliant Jeffrey you of B

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<v Speaker 2>and Y on asymmetry.

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<v Speaker 3>I'm going to qualify something Tom said earlier that Trump

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<v Speaker 3>needs a weeker dollar. I'll say two things. Firstly, Trump

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<v Speaker 3>doesn't need a week of dollar. Trump needs other currencies

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<v Speaker 3>to strengthen. And secondly, if Trump needs a week of dollar.

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<v Speaker 3>He needs a weeker dollar in real terms, which also

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<v Speaker 3>means that other currencies other countries, especially China and Europe,

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<v Speaker 3>need to reflate better in a sustained fashion, in a

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<v Speaker 3>healthy manner. So those are the two things. And then yeah,

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<v Speaker 3>those are probably out of his control because that relies

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<v Speaker 3>on policies elsewhere.

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<v Speaker 2>Reflates a really loaded phrase there. There's different types of inflation.

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<v Speaker 2>There's inflation as you know it. We live it every day.

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<v Speaker 2>Our team is apoplectic about the price of eggs out there.

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<v Speaker 2>There is disinflation DS disinflation, which is a lesser inflation,

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<v Speaker 2>and then there's outright deflation de deflation. Gary Shilling with

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<v Speaker 2>an iconic book on that, easy to read book on it,

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<v Speaker 2>where prices actually go down, and there's different kinds of deflation.

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<v Speaker 2>England has a heritage with us as many other societies.

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<v Speaker 2>Worry in China right now about deflation. Reflation are Reflation

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<v Speaker 2>is really undescribed. Reflation is some form of goofy process

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<v Speaker 2>to reflate, to push up, to goose up an economy.

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<v Speaker 2>And Jeffery you later in the interview, talked about they

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<v Speaker 2>have to go to their fiscal space they've got to

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<v Speaker 2>reflate through a sound, somewhat normal fiscal policy. Somewhat normal always,

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<v Speaker 2>Sarah Wolf at Morgan Stanley just brilliant. Ted Pick was

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<v Speaker 2>on from Davos. How do you think Ted Pick is

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<v Speaker 2>so smart? He reads Sarah Wolf in Morgan Stanley Economics.

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<v Speaker 2>Sarah Wolf on the topic at Davos tariffs.

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<v Speaker 4>It's a study of magnitude, and it's a study of timing.

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<v Speaker 5>If we look back to the exis the X axis.

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<v Speaker 4>Of course, if we look back to the twenty eighteen

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<v Speaker 4>twenty nineteen tariffs, and you read the transcripts among the

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<v Speaker 4>FMC participants, they were broadly looking through the tariffs right

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<v Speaker 4>that it was a one off price effect, that it

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<v Speaker 4>wasn't going to be inflationary for the longer run, and

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<v Speaker 4>they were more worried about the following hit to growth

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<v Speaker 4>after the tariffs.

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<v Speaker 5>Can we do the same.

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<v Speaker 4>Thing this time?

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<v Speaker 5>Not necessarily, it's a little bit more complicated. If we're

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<v Speaker 5>phasing in tariffs over the course of this year, it's

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<v Speaker 5>going to be a lot more difficult to discern the

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<v Speaker 5>effects of tariffs versus the effects of just real inflation.

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<v Speaker 5>It's also going to be a price level increase that's

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<v Speaker 5>occurring over a longer period of time than normal, So

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<v Speaker 5>it's going to be more inflationary than what we saw

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<v Speaker 5>back in twenty eighteen twenty nineteen, and so the Fed

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<v Speaker 5>might be in a position where they're going to have

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<v Speaker 5>to take cuts off if that's the case, or not

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<v Speaker 5>cut at all and kind of be on whole until

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<v Speaker 5>they see all the tears play out and what it

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<v Speaker 5>means for economic activity.

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<v Speaker 2>Sir well, Thematic Investing in Economics at Morgan Stanley just

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<v Speaker 2>a great, great lineup today. We're really starting twenty twenty

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<v Speaker 2>five strong. We're on your commute across the nation. Major

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<v Speaker 2>shot out the ninety nine one FM in Washington all

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<v Speaker 2>the way up to Fridgid, New England ninety two nine FM.

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<v Speaker 2>I guess the cold is breaking across at the nation,

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<v Speaker 2>best idea