1
00:00:00,080 --> 00:00:13,800
Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jaily.

2
00:00:13,960 --> 00:00:17,560
Speaker 1: We bring you insight from the best in economics, finance, investment,

3
00:00:18,000 --> 00:00:23,480
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

4
00:00:23,600 --> 00:00:33,639
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Let

5
00:00:33,640 --> 00:00:35,840
Speaker 1: me bring in our our our first guest, John Farrell,

6
00:00:35,880 --> 00:00:39,040
Speaker 1: who you know quite well. Robin nibolodies with Chatham House. Uh.

7
00:00:39,080 --> 00:00:43,440
Speaker 1: They do wonderful work and thinking about international relations. Robin,

8
00:00:43,560 --> 00:00:45,159
Speaker 1: let me give you an open question to start. What

9
00:00:45,320 --> 00:00:49,880
Speaker 1: is the chadow House lead essay for this January? UM?

10
00:00:49,920 --> 00:00:53,440
Speaker 1: The lead essay for US is Europe UM. I think

11
00:00:53,640 --> 00:00:56,960
Speaker 1: it's not just about Brexit. It's about the Italian election.

12
00:00:57,120 --> 00:01:01,680
Speaker 1: It's about whether Macran and Anglo Meracle can get it together,

13
00:01:01,720 --> 00:01:04,440
Speaker 1: if Angler Mercle can get a government put together to

14
00:01:04,760 --> 00:01:09,760
Speaker 1: lead a rejuvenation of European integration. This matters because the

15
00:01:09,800 --> 00:01:13,720
Speaker 1: United States is self obsessed UM, and where Europe goes

16
00:01:13,760 --> 00:01:15,840
Speaker 1: I think matters for big questions like the future of

17
00:01:15,880 --> 00:01:18,840
Speaker 1: the global economy and global cooperation. So Europe is our

18
00:01:18,840 --> 00:01:20,880
Speaker 1: main focus, well, my main folk. Eric Nelson of the

19
00:01:20,959 --> 00:01:23,520
Speaker 1: UNI Credit was right out of it that Europe arguably

20
00:01:23,560 --> 00:01:25,520
Speaker 1: is doing better than the United States. Do you buy

21
00:01:25,520 --> 00:01:31,640
Speaker 1: that idea, not only economically but almost politically. Um, let's see,

22
00:01:31,800 --> 00:01:35,160
Speaker 1: everything is relative. I think the United uh, Europe and

23
00:01:35,160 --> 00:01:36,920
Speaker 1: the European Union are doing better in the sense that

24
00:01:36,959 --> 00:01:39,160
Speaker 1: they waived off some of the big popular scares of

25
00:01:39,200 --> 00:01:42,200
Speaker 1: twenty seventeen. They're seeing some I think, what looks like

26
00:01:42,280 --> 00:01:46,800
Speaker 1: sustainable growth, which has picked out of the drug program,

27
00:01:46,800 --> 00:01:50,240
Speaker 1: of fiscal easing of monetariesing um, And yeah, I do

28
00:01:50,320 --> 00:01:52,560
Speaker 1: think there's some quite deep roots to it. You're seeing

29
00:01:52,560 --> 00:01:56,880
Speaker 1: it as diverse economies as Portugal, Spain, Italy, some parts

30
00:01:56,880 --> 00:01:58,680
Speaker 1: of Central Europe still keeping it up. And of course

31
00:01:58,680 --> 00:02:01,480
Speaker 1: Germany is just remarkable with the surpluses it's achieving right

32
00:02:01,480 --> 00:02:04,120
Speaker 1: now and it's on its budget. It actually gives a

33
00:02:04,120 --> 00:02:06,760
Speaker 1: lot of room. You know, you think the country's in trouble,

34
00:02:06,800 --> 00:02:08,320
Speaker 1: but here we are sitting, what with the twenty five

35
00:02:08,400 --> 00:02:10,760
Speaker 1: billion euros surplus on its budget this year and maybe

36
00:02:10,760 --> 00:02:15,799
Speaker 1: being up tote incredible. Robin. What's been remarkable about Germany

37
00:02:15,880 --> 00:02:18,440
Speaker 1: is it doesn't have a government and it's taken Chancellor

38
00:02:18,480 --> 00:02:20,960
Speaker 1: Merkell over three months, more than three months to get

39
00:02:20,960 --> 00:02:23,120
Speaker 1: it together. Do you see signs that Chancellor Merkel is

40
00:02:23,160 --> 00:02:26,760
Speaker 1: finally getting it together. And what are the main objectives

41
00:02:26,760 --> 00:02:29,600
Speaker 1: of this government this time around? Well, I think it's

42
00:02:30,200 --> 00:02:33,160
Speaker 1: uh to your first part of your question. It is

43
00:02:33,200 --> 00:02:35,359
Speaker 1: getting it together in the sense at least the two

44
00:02:35,400 --> 00:02:38,280
Speaker 1: party leaderships have come up with a program between the

45
00:02:38,440 --> 00:02:41,240
Speaker 1: SPD and her cd U C s U coalition. I

46
00:02:41,240 --> 00:02:43,520
Speaker 1: think there's a long way to go with the SPD

47
00:02:44,080 --> 00:02:46,840
Speaker 1: UH and the rank and file. The coalition agreement has

48
00:02:46,840 --> 00:02:48,799
Speaker 1: to be approved by them, so I don't think we're

49
00:02:48,800 --> 00:02:50,480
Speaker 1: out of the woods yet actually, and her authority, of

50
00:02:50,480 --> 00:02:53,239
Speaker 1: course is much much less strong than it was when

51
00:02:53,240 --> 00:02:56,200
Speaker 1: she created the other governments. If they can achieve it. However,

52
00:02:56,600 --> 00:02:59,320
Speaker 1: I think their priority is to invest in infrastructure, which

53
00:02:59,360 --> 00:03:01,720
Speaker 1: is we've talked for some time now, is one of

54
00:03:02,000 --> 00:03:05,200
Speaker 1: Germany's growing Achilles heels. There's quite a bit of a

55
00:03:05,240 --> 00:03:08,600
Speaker 1: sense of how do you redistribute the the you know,

56
00:03:08,639 --> 00:03:12,640
Speaker 1: the positive economic news, and this can be some easing off,

57
00:03:12,680 --> 00:03:16,359
Speaker 1: as I understand it, of pension tightening up on pension contributions.

58
00:03:16,360 --> 00:03:19,400
Speaker 1: Instead of that, they'll carry on being relatively generous and

59
00:03:19,440 --> 00:03:21,680
Speaker 1: better healthcare provisions. So what you can see here as

60
00:03:21,720 --> 00:03:24,519
Speaker 1: an effort to say to the German people there are

61
00:03:25,360 --> 00:03:29,399
Speaker 1: benefits socially too strong economic growth over time, and it's

62
00:03:29,400 --> 00:03:30,920
Speaker 1: not all about belt tightening, and that would be an

63
00:03:30,919 --> 00:03:33,240
Speaker 1: important shift of message for Germany to be frank robin

64
00:03:33,280 --> 00:03:36,840
Speaker 1: their domestic objectives. Emmanuel mccran, the President of France, will

65
00:03:36,840 --> 00:03:40,280
Speaker 1: be hoping there will be some European objectives. Does she

66
00:03:40,400 --> 00:03:42,840
Speaker 1: have the political capital at home to drive through the

67
00:03:43,200 --> 00:03:47,640
Speaker 1: vision of Emmanuel Macron across Europe to a more integrated Eurozone.

68
00:03:48,360 --> 00:03:51,520
Speaker 1: I I I try to put my cards on one

69
00:03:51,560 --> 00:03:53,920
Speaker 1: side of the table. I'd say I don't think she does. Actually,

70
00:03:54,000 --> 00:03:56,120
Speaker 1: her own party, the c d U c s U,

71
00:03:56,360 --> 00:04:00,640
Speaker 1: remain very skeptical about deeper integration of the Azern without

72
00:04:00,680 --> 00:04:05,320
Speaker 1: actually having seen at least real French structural reform in

73
00:04:05,440 --> 00:04:09,640
Speaker 1: place and delivering results. The SPD her partners much more

74
00:04:09,680 --> 00:04:12,240
Speaker 1: in favor, but remember they only polled about in the

75
00:04:12,320 --> 00:04:16,919
Speaker 1: last election. Um and where the where the growth is

76
00:04:16,960 --> 00:04:20,120
Speaker 1: on the margins that are skeptical about European integration, much

77
00:04:20,160 --> 00:04:22,720
Speaker 1: like the Labor Party is skeptical in the United Kingdom

78
00:04:22,760 --> 00:04:25,520
Speaker 1: about the EU as a whole. So I don't think so.

79
00:04:25,640 --> 00:04:27,719
Speaker 1: The good news, of course, on the ANA for Germany's

80
00:04:27,720 --> 00:04:31,320
Speaker 1: I don't think Macron personally is that committed in the

81
00:04:31,440 --> 00:04:34,719
Speaker 1: near term to deeper Eurozone integration. What he wants is

82
00:04:34,760 --> 00:04:38,200
Speaker 1: an ear that can protect him as he conducts really

83
00:04:38,200 --> 00:04:41,520
Speaker 1: difficult domestic reforms. So I think he's more interested in

84
00:04:41,800 --> 00:04:46,120
Speaker 1: immigration controls, more intersted in protections against foreign investment by

85
00:04:46,120 --> 00:04:48,680
Speaker 1: state and companies like the Chinese. You know, he's I

86
00:04:48,720 --> 00:04:52,200
Speaker 1: think the protection agenda of Europe, almost slightly old Fortress

87
00:04:52,240 --> 00:04:56,240
Speaker 1: Europe two point oh is more his priority. I look

88
00:04:57,200 --> 00:05:01,760
Speaker 1: where we are, Robin, and almost what the theory is

89
00:05:01,839 --> 00:05:04,960
Speaker 1: of international relations. Now, to Ian Bremer's point, it does

90
00:05:05,040 --> 00:05:13,120
Speaker 1: seem like every nation and almost every theory for itself, Um,

91
00:05:13,160 --> 00:05:18,480
Speaker 1: there is. I think there is a theory of change

92
00:05:18,480 --> 00:05:22,120
Speaker 1: in a theory of good government. I believe that remains

93
00:05:22,360 --> 00:05:25,760
Speaker 1: in the future applicable for everyone, and I do think

94
00:05:25,800 --> 00:05:30,400
Speaker 1: that is reflected in the economies of Europe, the United States,

95
00:05:31,080 --> 00:05:34,119
Speaker 1: you know, Australia, let's call it the West. The reason

96
00:05:34,160 --> 00:05:35,640
Speaker 1: I say that is, although there seems to be a

97
00:05:35,640 --> 00:05:39,600
Speaker 1: lot of competition for these different approaches, um, not all

98
00:05:39,640 --> 00:05:42,000
Speaker 1: countries at the same stage of economic development. So it's

99
00:05:42,040 --> 00:05:45,000
Speaker 1: fine for China to run a centralized approach. But China

100
00:05:45,400 --> 00:05:48,320
Speaker 1: is not yet a fully functioning consumer economy driven by

101
00:05:48,320 --> 00:05:51,040
Speaker 1: innovation and technology. The demands of the people are not

102
00:05:51,160 --> 00:05:54,320
Speaker 1: the same. So I still think there may be one theory.

103
00:05:54,360 --> 00:05:56,240
Speaker 1: The problem is getting there is gonna take a lot

104
00:05:56,279 --> 00:05:59,119
Speaker 1: longer than anyone expected before. Let me cut to the chase.

105
00:05:59,600 --> 00:06:03,120
Speaker 1: How the president we greeted in Davos, freed Zakaria wrote

106
00:06:03,160 --> 00:06:07,159
Speaker 1: about a post American world. You almost wonder what the

107
00:06:07,200 --> 00:06:09,760
Speaker 1: post Trumpian world world will be like, whether it's one

108
00:06:09,839 --> 00:06:13,080
Speaker 1: term or two terms. Um. And actually I had a

109
00:06:13,080 --> 00:06:15,279
Speaker 1: piece that came out in the Berlin Policy Journal earlier

110
00:06:15,320 --> 00:06:17,200
Speaker 1: this week where I think I picked up probably on

111
00:06:17,240 --> 00:06:19,480
Speaker 1: some of that theme that you mentioned. Free Zakaria mentioned

112
00:06:19,520 --> 00:06:21,600
Speaker 1: as well. I think we're moving to a stage of

113
00:06:21,640 --> 00:06:25,720
Speaker 1: the world where America's traditional allies cannot count on America

114
00:06:26,200 --> 00:06:29,560
Speaker 1: to have their back except on issues of existential threats

115
00:06:29,560 --> 00:06:32,719
Speaker 1: to their security. We are not on a common agenda

116
00:06:32,839 --> 00:06:37,440
Speaker 1: right now. America is fixing America first, but I think

117
00:06:37,480 --> 00:06:39,280
Speaker 1: this is helping other parts of the world, if I

118
00:06:39,320 --> 00:06:42,200
Speaker 1: may say so, to grow up. Europe needs to grow

119
00:06:42,279 --> 00:06:44,760
Speaker 1: up and take more care of its own regional security.

120
00:06:45,120 --> 00:06:48,040
Speaker 1: Japan is going to have to grow up and find

121
00:06:48,040 --> 00:06:50,279
Speaker 1: ways to get on better with South Korea so that

122
00:06:50,320 --> 00:06:53,960
Speaker 1: they can protect themselves against China's rise. Um in the

123
00:06:54,000 --> 00:06:56,719
Speaker 1: Middle East, we've already seen it. The Saluadis have decided

124
00:06:56,760 --> 00:07:00,240
Speaker 1: they better grow up and look after that. So, you know,

125
00:07:00,279 --> 00:07:02,719
Speaker 1: even though they like Trump, I do think they trust America.

126
00:07:02,839 --> 00:07:05,000
Speaker 1: That's a good place to go. John, It's a tough

127
00:07:05,040 --> 00:07:07,240
Speaker 1: decision what we should do with Robin Nivlet next. Should

128
00:07:07,240 --> 00:07:09,960
Speaker 1: we talk about Saudi Arabia and the massive changes in

129
00:07:10,000 --> 00:07:12,200
Speaker 1: the Middle East? Or should we talk about the continued

130
00:07:12,280 --> 00:07:16,240
Speaker 1: collapse of a Milan. I can't. Robert has got to

131
00:07:16,280 --> 00:07:18,280
Speaker 1: say about that. It's got something to add some value

132
00:07:18,280 --> 00:07:20,440
Speaker 1: wad for a c Meland. Then then I would love that.

133
00:07:20,560 --> 00:07:23,360
Speaker 1: Robin Nivlet, I love American football. You know, do you

134
00:07:23,400 --> 00:07:25,160
Speaker 1: want to do that? We can? We can do that then, Robert,

135
00:07:25,240 --> 00:07:27,840
Speaker 1: Robin Nivolett, the Chatham House Director, We'll be sticking with

136
00:07:27,920 --> 00:07:45,280
Speaker 1: us here on Bloomberg Surveillance. It's twenty eighteen, the year

137
00:07:45,400 --> 00:07:49,000
Speaker 1: the reflation trade materializes. Brent crude had to push through

138
00:07:49,080 --> 00:07:52,000
Speaker 1: seventy dollars for the first time in several years. The

139
00:07:52,080 --> 00:07:55,200
Speaker 1: dollar has weakened to a multi year low, a three

140
00:07:55,480 --> 00:07:57,840
Speaker 1: year low, unemployment in Germany at an all time low,

141
00:07:57,960 --> 00:08:00,760
Speaker 1: and unemployment here in the United States, and a decade low.

142
00:08:00,960 --> 00:08:03,800
Speaker 1: All the ingredients you would think for an inflation pick up.

143
00:08:03,880 --> 00:08:06,920
Speaker 1: Let's get across the David Page Acts or investment Managements

144
00:08:06,920 --> 00:08:12,320
Speaker 1: senior economists. David, is this the year that it actually materializes? Well, yes,

145
00:08:12,360 --> 00:08:13,880
Speaker 1: we think it is, but I don't think it's going

146
00:08:13,880 --> 00:08:15,560
Speaker 1: to be a dramatic story, and I think it's something

147
00:08:15,600 --> 00:08:18,360
Speaker 1: that unfolds over over a couple of quarters. We do

148
00:08:18,480 --> 00:08:20,840
Speaker 1: expect to see evidence of firm inflation, particularly in the

149
00:08:20,840 --> 00:08:23,240
Speaker 1: economies that look like they've got tighter markets. We're thinking

150
00:08:23,240 --> 00:08:26,280
Speaker 1: of the US, we're thinking the UK. I think in Eurozone,

151
00:08:26,280 --> 00:08:28,360
Speaker 1: where there's more stair capacity, it's going to take more

152
00:08:28,360 --> 00:08:30,600
Speaker 1: time to emerge. But as you say, I think the

153
00:08:30,600 --> 00:08:32,920
Speaker 1: oil price is something that's going to provide a slight

154
00:08:32,960 --> 00:08:34,880
Speaker 1: list at the start. We don't expect that to run

155
00:08:34,920 --> 00:08:37,920
Speaker 1: too much more Dollar weakness exacerbates. But I think what

156
00:08:38,040 --> 00:08:40,400
Speaker 1: really is pushing is likely to come through here is

157
00:08:40,400 --> 00:08:43,040
Speaker 1: wage inflation. We've been looking for this for so long,

158
00:08:43,200 --> 00:08:45,199
Speaker 1: but the tightness of the US labor market I think

159
00:08:45,240 --> 00:08:47,600
Speaker 1: really does suggest that we start see more visible evidence

160
00:08:47,640 --> 00:08:50,840
Speaker 1: of that cyclical pickup in inflation coming through and offsetting

161
00:08:50,840 --> 00:08:54,079
Speaker 1: some of the headwinds that kept inflation so subdued last year. David,

162
00:08:54,120 --> 00:08:56,800
Speaker 1: at the moment we witness what could be more evidence

163
00:08:56,840 --> 00:09:01,040
Speaker 1: of a dysfunctional Washington d C over the last several months, though,

164
00:09:01,080 --> 00:09:03,680
Speaker 1: what we got was the tax built for markets and

165
00:09:03,760 --> 00:09:06,040
Speaker 1: for the investors that you speak with the fund managers

166
00:09:06,360 --> 00:09:09,160
Speaker 1: at actor. Is it okay to have a dysfunctional d

167
00:09:09,280 --> 00:09:11,800
Speaker 1: C again because we've got the tax bill and therefore

168
00:09:12,120 --> 00:09:16,280
Speaker 1: investors have got what they wanted and nothing else matters. Well,

169
00:09:16,320 --> 00:09:19,160
Speaker 1: I think markets have become used to dysfunction from Washington.

170
00:09:19,440 --> 00:09:21,520
Speaker 1: Bear in mind, this is not something that's just come

171
00:09:21,520 --> 00:09:24,160
Speaker 1: along with the Trump administration. We've seen this basically for

172
00:09:24,200 --> 00:09:26,400
Speaker 1: the last six years of the Obama administration as well,

173
00:09:26,679 --> 00:09:29,760
Speaker 1: So we now expect this sort of backdrop, I think,

174
00:09:29,800 --> 00:09:31,640
Speaker 1: to some extent, as long as we see the implementation

175
00:09:31,679 --> 00:09:34,080
Speaker 1: as the tax reform, which of course requires a budget

176
00:09:34,160 --> 00:09:36,679
Speaker 1: to be enacted, rather than these continuing resolutions that we

177
00:09:36,920 --> 00:09:38,680
Speaker 1: seem to be heading towards again at the end of

178
00:09:38,720 --> 00:09:41,439
Speaker 1: this week. But by and Marge, as long as we

179
00:09:41,480 --> 00:09:43,800
Speaker 1: get that tax reform come through, then we are going

180
00:09:43,840 --> 00:09:47,240
Speaker 1: to see markets broadly satisfied. We don't expect to see

181
00:09:47,240 --> 00:09:49,560
Speaker 1: too much more come from this administration, certainly not ahead

182
00:09:49,600 --> 00:09:52,600
Speaker 1: of the midterms. David, I'm looking at my screen May

183
00:09:52,640 --> 00:09:59,120
Speaker 1: Bloomberg screen equities, binds, currencies, commodities, and it's truly a

184
00:09:59,240 --> 00:10:03,560
Speaker 1: too good to be true screen. What's There's always an

185
00:10:03,600 --> 00:10:07,439
Speaker 1: exaginous shark at some point that gets in the way.

186
00:10:07,800 --> 00:10:10,920
Speaker 1: What is it? Well, I think in the very short

187
00:10:11,000 --> 00:10:13,840
Speaker 1: term we can look not only to the debate around

188
00:10:13,960 --> 00:10:16,760
Speaker 1: fists or spending plans, but also to the possibility of

189
00:10:16,840 --> 00:10:20,439
Speaker 1: trade or trade wars ramping up the agenda. Again, bear

190
00:10:20,440 --> 00:10:23,320
Speaker 1: in mind that we've seen the Trumps administration bring forwards

191
00:10:23,640 --> 00:10:26,360
Speaker 1: the reports it's going to get on steel production, to

192
00:10:26,400 --> 00:10:29,440
Speaker 1: some expand on intellectual property. We do expect this to

193
00:10:29,440 --> 00:10:31,280
Speaker 1: be included in the States of the Union. Could that

194
00:10:31,320 --> 00:10:33,800
Speaker 1: provide the shock? Could we see a shock turning from China?

195
00:10:34,559 --> 00:10:37,120
Speaker 1: It's very hard, as you know, to anticipate exactly what

196
00:10:37,240 --> 00:10:39,120
Speaker 1: one of these shots could be coming for other forwards.

197
00:10:39,120 --> 00:10:41,120
Speaker 1: But what we see from you know, the period of

198
00:10:41,120 --> 00:10:43,120
Speaker 1: time that we haven't seen, for example, of correction in

199
00:10:43,280 --> 00:10:46,760
Speaker 1: SMP over the last best part of a year. That's

200
00:10:46,840 --> 00:10:50,000
Speaker 1: quite an unusual period. We would expect to see some

201
00:10:50,320 --> 00:10:52,480
Speaker 1: correction comes through across the course of this year. They're

202
00:10:52,480 --> 00:10:54,920
Speaker 1: not balanced. That's something that we think that will probably

203
00:10:55,480 --> 00:10:57,720
Speaker 1: see the Federal Reserve have to pause at one point,

204
00:10:57,840 --> 00:11:01,720
Speaker 1: even though generically it's looking to tighten conthropology across the board.

205
00:11:01,880 --> 00:11:04,440
Speaker 1: I mean, an exager and shock Joan could be Milan

206
00:11:04,520 --> 00:11:06,080
Speaker 1: went two games in a row. That would be a

207
00:11:06,120 --> 00:11:08,000
Speaker 1: serious shock to my life. I can tell you that,

208
00:11:08,080 --> 00:11:10,000
Speaker 1: David Page, Let's talk about trade and then we can

209
00:11:10,000 --> 00:11:12,800
Speaker 1: talk about the Federal Reserve. On the trade issue, I

210
00:11:12,840 --> 00:11:15,079
Speaker 1: can't think of a single subject over the last I

211
00:11:15,120 --> 00:11:17,720
Speaker 1: don't know eighteen months that has consumed so much time

212
00:11:18,000 --> 00:11:22,559
Speaker 1: and produced so little. Nothing has actually happened. Those fears

213
00:11:22,679 --> 00:11:26,960
Speaker 1: have not materialized in any real way, shape or form.

214
00:11:27,040 --> 00:11:31,040
Speaker 1: Will they well, to some extent they have. I mean

215
00:11:31,080 --> 00:11:33,640
Speaker 1: we are in naptal negotiations. We are in a naptal

216
00:11:33,640 --> 00:11:38,080
Speaker 1: negotiation that look continually and increasingly threatened to see the

217
00:11:38,200 --> 00:11:41,600
Speaker 1: US pull out. Certainly, Nahal negotiations at this stage aren't

218
00:11:41,600 --> 00:11:43,560
Speaker 1: making progress. We have seen the U s but let's

219
00:11:43,600 --> 00:11:46,880
Speaker 1: be David, Eighteen months ago we were worried about a

220
00:11:47,160 --> 00:11:50,200
Speaker 1: trade war between the United States and China. If I

221
00:11:50,360 --> 00:11:54,600
Speaker 1: told you eighteen months ago that it's sitting here January eighteen,

222
00:11:55,080 --> 00:11:58,160
Speaker 1: trade relations between China and the United States would be

223
00:11:58,160 --> 00:12:01,280
Speaker 1: exactly the same, and for that matter, trade relations between

224
00:12:01,280 --> 00:12:03,080
Speaker 1: the United States and pretty much the rest of the

225
00:12:03,120 --> 00:12:06,920
Speaker 1: world would be very much unchanged. I think some people

226
00:12:06,960 --> 00:12:09,920
Speaker 1: would have been surprised. Some may have been, but I

227
00:12:09,920 --> 00:12:12,600
Speaker 1: don't think many. I mean, certainly we weren't. We suggested

228
00:12:12,640 --> 00:12:14,360
Speaker 1: that the first outlook was going to be for the

229
00:12:14,400 --> 00:12:17,520
Speaker 1: administration to deal with tax reform. They've done that. I

230
00:12:17,559 --> 00:12:20,720
Speaker 1: think the trade issue is something that now comes into play,

231
00:12:20,920 --> 00:12:23,560
Speaker 1: and more dramatically, could come into play if we see

232
00:12:23,720 --> 00:12:27,000
Speaker 1: a significant deterioration in Republicans control of Congress at the midterms.

233
00:12:27,320 --> 00:12:29,280
Speaker 1: Then you look to a president that still wants to

234
00:12:29,280 --> 00:12:31,200
Speaker 1: talk to his base, and that looks to some of

235
00:12:31,200 --> 00:12:33,880
Speaker 1: the remaining pools that he may have in the absence

236
00:12:33,880 --> 00:12:36,960
Speaker 1: of control. I look at the Apple computer nine hundred

237
00:12:36,920 --> 00:12:40,439
Speaker 1: and one billion dollar market cap, amazonic course over to

238
00:12:40,600 --> 00:12:44,199
Speaker 1: standard deviations higher as well. David Page, you look at

239
00:12:44,600 --> 00:12:47,600
Speaker 1: all this good feeling in America, do you believe within

240
00:12:47,679 --> 00:12:51,240
Speaker 1: your economics? Do you believe in trickle down theory. Is

241
00:12:51,280 --> 00:12:53,920
Speaker 1: all that I'm seeing on the Bloomberg screen as all

242
00:12:53,960 --> 00:12:57,000
Speaker 1: that I'm witnessing here in London is a trickling down

243
00:12:57,000 --> 00:13:01,240
Speaker 1: to the greater Republic. Yes, of it surely is. And

244
00:13:01,280 --> 00:13:04,200
Speaker 1: what's been the remarkable thing as the last fifteen months

245
00:13:04,200 --> 00:13:06,120
Speaker 1: has been the sharp pickup in sentiment and now that

246
00:13:06,160 --> 00:13:08,719
Speaker 1: has delivered firm and growth. We were surprised to the

247
00:13:08,800 --> 00:13:11,120
Speaker 1: upside to see two point three growth across the course

248
00:13:11,160 --> 00:13:13,560
Speaker 1: of two thousand and seventeen. We forecast growth of two

249
00:13:13,600 --> 00:13:16,360
Speaker 1: and a half percent in the US acceleration eight. The

250
00:13:16,360 --> 00:13:18,520
Speaker 1: Bloomber consensus is for eason more than that, is at

251
00:13:18,520 --> 00:13:21,600
Speaker 1: two point six. So yes, there is some growth coming

252
00:13:21,640 --> 00:13:24,520
Speaker 1: through um and part of that, obviously is is the

253
00:13:24,520 --> 00:13:27,520
Speaker 1: tax reform stimulus that we're seeing coming through. But I

254
00:13:27,559 --> 00:13:30,239
Speaker 1: think the key question that we have is how sustainable

255
00:13:30,280 --> 00:13:32,120
Speaker 1: is this? Do we see this seeing a pickup in

256
00:13:32,160 --> 00:13:35,960
Speaker 1: business investment that raises sustainable growth in the States, And

257
00:13:36,000 --> 00:13:37,760
Speaker 1: the answer to stay is no, we don't see that

258
00:13:37,840 --> 00:13:41,080
Speaker 1: coming through. We still think that sustainable growth is somewhat

259
00:13:41,360 --> 00:13:44,560
Speaker 1: more subdued. And I think this period of very welcome

260
00:13:44,840 --> 00:13:47,199
Speaker 1: robust growth coming from the US is something that's like

261
00:13:47,320 --> 00:13:49,320
Speaker 1: to fade over the coming couple of years. I mean,

262
00:13:49,320 --> 00:13:51,800
Speaker 1: I'm looking Jannsfu, I did not realize that, David Page

263
00:13:51,840 --> 00:13:56,199
Speaker 1: brilliant on this Bloomber consumer Comfort index is above where

264
00:13:56,240 --> 00:13:58,400
Speaker 1: it was in the spring of two thousand and seven.

265
00:13:58,640 --> 00:14:00,960
Speaker 1: I didn't know that. Should I put that chart out

266
00:14:01,040 --> 00:14:05,240
Speaker 1: and do it? Radial sees it first, do it? We

267
00:14:05,280 --> 00:14:07,720
Speaker 1: should do that. The soft data and the hard data

268
00:14:07,800 --> 00:14:10,040
Speaker 1: really picking up in the United States. David, I think

269
00:14:10,080 --> 00:14:12,880
Speaker 1: something that's a confused some not many, A lot of

270
00:14:12,880 --> 00:14:15,040
Speaker 1: people in the markets kind of understand what's happening in

271
00:14:15,080 --> 00:14:18,040
Speaker 1: the effects market. But for you, David, can you explain

272
00:14:18,559 --> 00:14:22,640
Speaker 1: this dollar weakness? Well, I think there's a couple of things.

273
00:14:22,640 --> 00:14:24,440
Speaker 1: I think in the short term, there are some risks

274
00:14:24,480 --> 00:14:27,440
Speaker 1: and we're thinking again, trade, were thinking again, government shutdown.

275
00:14:27,600 --> 00:14:29,360
Speaker 1: But I think it's much bigger than this. I think

276
00:14:29,400 --> 00:14:31,800
Speaker 1: what we're seeing is a sickly call development come through.

277
00:14:31,840 --> 00:14:35,160
Speaker 1: Here is a consistent scene that as we move towards

278
00:14:35,160 --> 00:14:37,840
Speaker 1: the later stages of global economic growth, a point where

279
00:14:37,880 --> 00:14:40,120
Speaker 1: we start to see commodities starting to pick up, that

280
00:14:40,200 --> 00:14:43,000
Speaker 1: the dollar tends to underperform. Many of us and looked

281
00:14:43,040 --> 00:14:45,080
Speaker 1: the sort of short term relationship between the dollar and

282
00:14:45,120 --> 00:14:47,520
Speaker 1: interest rate differentials, and that of course leads us to

283
00:14:47,560 --> 00:14:50,560
Speaker 1: suggest both the Federal Reserve is tightening monetary policy other

284
00:14:50,640 --> 00:14:53,960
Speaker 1: jurisdictions are only considering this over the medium term, so

285
00:14:54,000 --> 00:14:56,400
Speaker 1: surely the dollar should rise. But think back to two

286
00:14:56,400 --> 00:14:58,480
Speaker 1: thousand and four two thousand six, the last time we

287
00:14:58,520 --> 00:15:00,480
Speaker 1: went into a sort of to war to the end

288
00:15:00,520 --> 00:15:02,560
Speaker 1: of a cycle. Here we saw the Federal is a

289
00:15:02,680 --> 00:15:06,640
Speaker 1: consistently tightening monetary policy, and yet trade weighted dollar fell

290
00:15:06,680 --> 00:15:08,560
Speaker 1: by about five and a quarter percent from the start

291
00:15:08,600 --> 00:15:10,360
Speaker 1: of A four to the end of O six. This

292
00:15:10,400 --> 00:15:13,040
Speaker 1: is a consistent theme. It reflects the fact that yes,

293
00:15:13,120 --> 00:15:15,240
Speaker 1: the US is doing well, but to some extent that's

294
00:15:15,280 --> 00:15:17,800
Speaker 1: in the price that dollars appreciated markably over the last

295
00:15:17,840 --> 00:15:21,800
Speaker 1: four or five years um and looks relatively expensive. Now

296
00:15:22,480 --> 00:15:25,000
Speaker 1: many investors are thinking that other regions of the globe

297
00:15:25,240 --> 00:15:27,320
Speaker 1: may actually be doing better as well, and so it's

298
00:15:27,320 --> 00:15:30,240
Speaker 1: a relative story coming through. David. Thank you so much,

299
00:15:30,320 --> 00:15:36,359
Speaker 1: David Page access accent indefinitely. Managers really appreciate his attendance.

300
00:15:48,960 --> 00:15:50,880
Speaker 1: John Farrell in New York, I'm champ Keen in London

301
00:15:50,880 --> 00:15:54,480
Speaker 1: and with us and Lindsay Pieza joins us DR Pieza,

302
00:15:55,160 --> 00:15:57,240
Speaker 1: where's your run rate and g d P. Can you

303
00:15:57,280 --> 00:15:59,840
Speaker 1: get to a Trumpian three percent or are you more

304
00:16:00,040 --> 00:16:03,440
Speaker 1: subdued for the fourth quarter. I think we're still looking

305
00:16:03,480 --> 00:16:06,120
Speaker 1: for something below three percent, and we did see the

306
00:16:06,160 --> 00:16:11,200
Speaker 1: consumers still on very solid footing, but there's several other

307
00:16:11,280 --> 00:16:13,800
Speaker 1: pieces that just seemed to have lost momentum as we

308
00:16:13,920 --> 00:16:16,440
Speaker 1: did a final quarter of the year. So I think

309
00:16:16,960 --> 00:16:20,640
Speaker 1: three percent is very optimistic. I think a strong two

310
00:16:20,760 --> 00:16:23,520
Speaker 1: ish percent is really what we're going to be seeing.

311
00:16:24,000 --> 00:16:28,480
Speaker 1: Where are those momentum dampeners? I mean, it's Steve Nicholas,

312
00:16:28,520 --> 00:16:31,720
Speaker 1: You've got a great pulse of a huge body of

313
00:16:31,720 --> 00:16:35,040
Speaker 1: the nation away from the three zip codes on Global

314
00:16:35,440 --> 00:16:40,800
Speaker 1: New York Wall Street. Where where have we slipped or stumbled? Well,

315
00:16:40,840 --> 00:16:43,520
Speaker 1: I think a good lost momentum surround what we saw

316
00:16:43,520 --> 00:16:46,080
Speaker 1: out of Washington. There was a lot of euphoria, a

317
00:16:46,120 --> 00:16:49,720
Speaker 1: lot of excitement built into the marketplace. Consumers were actually

318
00:16:49,800 --> 00:16:54,280
Speaker 1: going out and spending an anticipation of receiving larger refund checks.

319
00:16:54,320 --> 00:16:57,120
Speaker 1: But I think there was some disappointment when we actually

320
00:16:57,160 --> 00:17:00,720
Speaker 1: saw the numbers of the amount of additional after tax

321
00:17:00,760 --> 00:17:04,720
Speaker 1: income that consumers can expect to receive uh come with

322
00:17:04,800 --> 00:17:08,560
Speaker 1: those refunds, and so I think some of the realization

323
00:17:09,160 --> 00:17:11,840
Speaker 1: that the tax reform will not be a silver bullet,

324
00:17:11,920 --> 00:17:14,879
Speaker 1: will not be a flip the switch scenario to five

325
00:17:15,000 --> 00:17:18,480
Speaker 1: or six percent, as the President I believe I promised

326
00:17:18,480 --> 00:17:21,679
Speaker 1: at one point. I think that alone is starting to

327
00:17:21,760 --> 00:17:24,720
Speaker 1: eat into some of this confidence, both on the consumer

328
00:17:24,760 --> 00:17:27,879
Speaker 1: side as well as on the business side. Within that

329
00:17:27,960 --> 00:17:31,439
Speaker 1: lindsay is I guess the consumer John and I are

330
00:17:31,480 --> 00:17:36,359
Speaker 1: looking at the screen down thousand eleven on futures, SMP,

331
00:17:37,680 --> 00:17:40,480
Speaker 1: it's a melt up. Why are we seeing the melt up?

332
00:17:40,600 --> 00:17:43,919
Speaker 1: As you look through the prism of economics, Well, the

333
00:17:43,920 --> 00:17:46,879
Speaker 1: equity market seems to benefit regardless of what the outcome

334
00:17:46,920 --> 00:17:49,120
Speaker 1: of tax reform is. If we do in fact see

335
00:17:49,240 --> 00:17:53,439
Speaker 1: organic growth companies taking that additional cash, putting that to work,

336
00:17:53,840 --> 00:17:57,199
Speaker 1: growing their business, increase hiring, which eventually will lead to

337
00:17:57,240 --> 00:18:00,680
Speaker 1: upward pressure on wages. And GDP does seem to see

338
00:18:00,680 --> 00:18:04,280
Speaker 1: a sizeable increase maybe of one to two percentage points

339
00:18:04,280 --> 00:18:07,520
Speaker 1: above this trend rate, Well, that's fantastic for the equity market.

340
00:18:07,800 --> 00:18:10,960
Speaker 1: On the flip side, if we see inorganic activity with

341
00:18:11,000 --> 00:18:14,119
Speaker 1: this increase in cash for corporations, meaning they keep the

342
00:18:14,160 --> 00:18:17,480
Speaker 1: cash on the balance sheet, or corporation it is debt

343
00:18:17,600 --> 00:18:20,399
Speaker 1: or buy back stock. Well, guess what. That's also fantastic

344
00:18:20,440 --> 00:18:23,160
Speaker 1: for the equity market, at least in the near term.

345
00:18:23,200 --> 00:18:25,760
Speaker 1: It does seem as if it's a win win for equities.

346
00:18:25,840 --> 00:18:29,399
Speaker 1: But longer term, unless we see the underlying momentum of

347
00:18:29,400 --> 00:18:32,680
Speaker 1: the economy pick up to justify where these levels are,

348
00:18:33,160 --> 00:18:35,680
Speaker 1: we would expect at some point a correction back down

349
00:18:35,720 --> 00:18:39,359
Speaker 1: to the more realistic two ish economy that we're seeing

350
00:18:39,359 --> 00:18:42,080
Speaker 1: out in the marketplace. Lindsay, away from equities elsewhere on

351
00:18:42,119 --> 00:18:44,800
Speaker 1: the screen, you've got all the ingredients a recipe for

352
00:18:44,840 --> 00:18:48,399
Speaker 1: a pickup in inflation. You've got crude approaching seventy dollars

353
00:18:48,400 --> 00:18:51,320
Speaker 1: a barrel a US dollar, that's the weakest has been

354
00:18:51,359 --> 00:18:54,080
Speaker 1: in about three years. You've mentioned some of the economic

355
00:18:54,119 --> 00:18:58,040
Speaker 1: indicator's unemployment, et cetera, pointing to a really tight labor market,

356
00:18:58,080 --> 00:19:00,200
Speaker 1: not just here in the United States but elsewhere as Wow,

357
00:19:00,600 --> 00:19:04,080
Speaker 1: how does J. Powell at the Federal Reserve guide the

358
00:19:04,119 --> 00:19:07,280
Speaker 1: market through that? This year? Just three are protected? Three

359
00:19:07,359 --> 00:19:11,320
Speaker 1: hikes moved to four. Well, actually, I think the risk

360
00:19:11,600 --> 00:19:13,760
Speaker 1: is to the downside. I think we're going to see

361
00:19:13,800 --> 00:19:16,080
Speaker 1: fewer rate hikes than the SET is promising, and it's

362
00:19:16,119 --> 00:19:19,840
Speaker 1: because of that inflation conundrum and the idea that we've

363
00:19:19,880 --> 00:19:23,960
Speaker 1: seen this this equation that that's perfectly which should be

364
00:19:24,040 --> 00:19:27,720
Speaker 1: perfectly baking inflation into the cake, has not been and

365
00:19:27,800 --> 00:19:29,920
Speaker 1: I don't see any evidence that that's going to change.

366
00:19:29,920 --> 00:19:34,040
Speaker 1: Particularly from the labor market standpoint. We've seen the unemployment

367
00:19:34,119 --> 00:19:37,160
Speaker 1: rate well within the sets target range of full employment

368
00:19:37,200 --> 00:19:40,720
Speaker 1: for years now, and yet that hasn't translated into wage pressures.

369
00:19:40,800 --> 00:19:44,439
Speaker 1: Why because the civilian unemployment rates, in our opinion, no

370
00:19:44,560 --> 00:19:47,600
Speaker 1: longer captures the true health of the labor market. And

371
00:19:47,640 --> 00:19:50,280
Speaker 1: when we look at all the structural changes that are occurring,

372
00:19:50,720 --> 00:19:54,640
Speaker 1: it's actually more keen to eight or nine percent unemployment.

373
00:19:55,080 --> 00:19:57,879
Speaker 1: And I don't see that evaporating and don't see corporations

374
00:19:57,880 --> 00:20:02,240
Speaker 1: absorbing that pool of available labor anytime soon. Even if

375
00:20:02,240 --> 00:20:05,280
Speaker 1: we use the investment pick up, it's mostly the structural

376
00:20:05,359 --> 00:20:08,080
Speaker 1: or equipment side as opposed to the employee side. So

377
00:20:08,119 --> 00:20:10,520
Speaker 1: I do think inflation is going to continue to invade

378
00:20:10,600 --> 00:20:14,080
Speaker 1: us for making it very difficult for a power fed

379
00:20:14,119 --> 00:20:17,200
Speaker 1: to push through three rate hypes. Lindsay px stay fold

380
00:20:17,240 --> 00:20:20,359
Speaker 1: the chief Economists joining us to discuss the economic in

381
00:20:20,359 --> 00:20:22,199
Speaker 1: the United States of America and what it means for J.

382
00:20:22,359 --> 00:20:39,600
Speaker 1: Powe and the Federal Reserve. It is our pleasure now

383
00:20:39,600 --> 00:20:43,040
Speaker 1: to introduce Neil Ferguson. He is a noted author, but

384
00:20:43,200 --> 00:20:46,800
Speaker 1: his most recent book is entitled The Square and the Tower,

385
00:20:47,040 --> 00:20:50,800
Speaker 1: Networks and Power from the Freemasons to Facebook, and he

386
00:20:50,920 --> 00:20:54,360
Speaker 1: joins us here in our eleven three oh studio. Neil,

387
00:20:54,400 --> 00:20:56,919
Speaker 1: thank you very much for being here and congratulations on

388
00:20:56,960 --> 00:21:01,840
Speaker 1: the new book. Let's begin with a part of the

389
00:21:01,920 --> 00:21:04,240
Speaker 1: sort of thought I think that runs through this, which

390
00:21:04,320 --> 00:21:06,359
Speaker 1: is the lesson of history and this is your writing,

391
00:21:06,480 --> 00:21:09,199
Speaker 1: is that trusting in networks to run the world is

392
00:21:09,200 --> 00:21:13,119
Speaker 1: a recipe for anarchy. I wonder how you could connect

393
00:21:13,119 --> 00:21:16,320
Speaker 1: that with your desire to actually write the book. Well,

394
00:21:16,640 --> 00:21:20,080
Speaker 1: we live at a time when the people who run

395
00:21:20,359 --> 00:21:25,840
Speaker 1: giant online social networks, people like say Mark Zuckerberg, have

396
00:21:26,119 --> 00:21:29,640
Speaker 1: been arguing everything is going to be awesome if we're

397
00:21:29,640 --> 00:21:32,240
Speaker 1: all connected. I mean, that has been the riff out

398
00:21:32,240 --> 00:21:35,800
Speaker 1: of Silicon Valley for the better part of twenty years.

399
00:21:36,760 --> 00:21:41,000
Speaker 1: And yet we saw in Sien that if you allowed

400
00:21:41,119 --> 00:21:44,320
Speaker 1: giant online social networks to play a big part in politics.

401
00:21:45,119 --> 00:21:48,080
Speaker 1: What you end up with is far from the global

402
00:21:48,080 --> 00:21:51,439
Speaker 1: community that Zuckerberg has talked about, and you actually end

403
00:21:51,520 --> 00:21:55,679
Speaker 1: up with polarization, extraordinary polarization between left and right. That's

404
00:21:55,680 --> 00:21:59,399
Speaker 1: a characteristic feature of Facebook and Twitter. And you end

405
00:21:59,480 --> 00:22:03,040
Speaker 1: up with crazy stuff going viral because the social networks

406
00:22:03,080 --> 00:22:05,960
Speaker 1: that we've created don't really care if something is true

407
00:22:06,040 --> 00:22:09,560
Speaker 1: or false. They just care if it's engaging two users.

408
00:22:09,560 --> 00:22:12,600
Speaker 1: So I think simply looking at the recent history of

409
00:22:12,760 --> 00:22:16,960
Speaker 1: very large online social networks, you can see how disruptive

410
00:22:17,680 --> 00:22:20,320
Speaker 1: they can be. And if you imagine a world that

411
00:22:20,520 --> 00:22:24,680
Speaker 1: is organized around network platforms, and some people have argued

412
00:22:24,720 --> 00:22:27,320
Speaker 1: for this, there's a kind of utopian streak out there

413
00:22:28,040 --> 00:22:30,600
Speaker 1: arguing that we should we should run the whole world

414
00:22:30,640 --> 00:22:33,520
Speaker 1: this way, then I think you end up with something

415
00:22:33,560 --> 00:22:36,320
Speaker 1: closer to anarchy. So the book is an attempt to

416
00:22:36,400 --> 00:22:39,320
Speaker 1: teach some history to Silicon Valley and people who work

417
00:22:39,359 --> 00:22:42,159
Speaker 1: in the tech industry, but it's also an attempt to

418
00:22:42,200 --> 00:22:45,719
Speaker 1: teach some technology, some network science to people who are

419
00:22:45,720 --> 00:22:48,000
Speaker 1: interested in history. Because actually that's a that's a ven

420
00:22:48,040 --> 00:22:51,960
Speaker 1: diagram where the two circles basically scarcely Overllow speak if

421
00:22:51,960 --> 00:22:54,760
Speaker 1: you can about the concept of hierarchy. I got that

422
00:22:54,880 --> 00:22:57,159
Speaker 1: far into the book over the weekend, and I'm just

423
00:22:57,200 --> 00:23:00,399
Speaker 1: wondering if you could explain the historical antisty eadments for

424
00:23:00,560 --> 00:23:03,840
Speaker 1: hierarchy and how they fit into our modern understanding of it. Well,

425
00:23:03,880 --> 00:23:07,240
Speaker 1: most of history isn't very networking. I mean most of history,

426
00:23:07,760 --> 00:23:12,240
Speaker 1: these distributed social networks are quite weak compared with hierarchical

427
00:23:12,280 --> 00:23:18,680
Speaker 1: structures like governments, states, armies, bureaucracies, churches. Most of history

428
00:23:18,720 --> 00:23:23,440
Speaker 1: is quite hierarchically organized. There's in most human organizations somebody

429
00:23:23,480 --> 00:23:25,960
Speaker 1: in charge. This may even be true of Bloomberg. I

430
00:23:26,160 --> 00:23:28,360
Speaker 1: have heard of have heard tell of a very powerful

431
00:23:28,400 --> 00:23:31,840
Speaker 1: man in this building. So most institutions are pretty hierarchical.

432
00:23:32,000 --> 00:23:36,840
Speaker 1: It's unusual for distributed social networks to be more powerful,

433
00:23:36,920 --> 00:23:40,560
Speaker 1: to be able to disrupt hierarchical order. That has happened

434
00:23:40,560 --> 00:23:43,280
Speaker 1: really only a couple of times in history, and I

435
00:23:43,359 --> 00:23:46,400
Speaker 1: talk about not only our own time, which is is familiar,

436
00:23:46,440 --> 00:23:49,680
Speaker 1: but also about that time after the printing press spread

437
00:23:49,720 --> 00:23:54,240
Speaker 1: across Europe, when a network created by the printing press

438
00:23:54,640 --> 00:23:57,200
Speaker 1: was so powerful that it was able essentially to disrupt

439
00:23:57,240 --> 00:24:00,520
Speaker 1: the power of the pope and a great many monarchs.

440
00:24:00,520 --> 00:24:03,240
Speaker 1: So this is the kind of story. There are these

441
00:24:03,280 --> 00:24:06,399
Speaker 1: periods where networks get empowered. It's usually because of a

442
00:24:06,440 --> 00:24:11,200
Speaker 1: technolog technological change, and at those times the hierarchical structures

443
00:24:11,400 --> 00:24:14,720
Speaker 1: can be weakened and even overthrown. Neil Ferguson with his

444
00:24:14,840 --> 00:24:18,439
Speaker 1: folks on his wonderful, hugely thought provoking book The Square

445
00:24:18,480 --> 00:24:20,760
Speaker 1: and the Tower. This is a book where all the

446
00:24:20,800 --> 00:24:24,160
Speaker 1: sertitude of Silicon Valley goes right up the window. H Neil,

447
00:24:24,200 --> 00:24:27,800
Speaker 1: you dovetail at nicely chapter forty five, Henry Kissinger's Network

448
00:24:27,840 --> 00:24:31,800
Speaker 1: of Power. You've written a definitive one volume and the

449
00:24:31,880 --> 00:24:36,480
Speaker 1: young Kissinger in his path. How do you dovetail dr

450
00:24:36,560 --> 00:24:41,040
Speaker 1: Kissinger into the modern day certitude of Silicon Valley? Well, Tom,

451
00:24:41,080 --> 00:24:44,439
Speaker 1: I think it was partly writing the Kissinger biography that

452
00:24:44,480 --> 00:24:48,320
Speaker 1: made me start thinking about networks. I have a hypothesis

453
00:24:48,359 --> 00:24:50,480
Speaker 1: about my second volume, which I still have to write,

454
00:24:50,520 --> 00:24:53,520
Speaker 1: of his life, and I don't know your breath, it

455
00:24:53,520 --> 00:24:56,040
Speaker 1: could be a few years. The hypothesis is that the

456
00:24:56,080 --> 00:24:59,400
Speaker 1: reason Kissinger, who was clearly a powerful intellect by six

457
00:24:59,600 --> 00:25:04,080
Speaker 1: and a very fluential public intellectual, became so politically powerful

458
00:25:04,119 --> 00:25:06,400
Speaker 1: to the point that he really became the most powerful

459
00:25:06,440 --> 00:25:10,760
Speaker 1: man after the president in two administrations had to do

460
00:25:10,840 --> 00:25:14,960
Speaker 1: with his extraordinary skill as a networker. And despite his

461
00:25:15,080 --> 00:25:22,000
Speaker 1: relatively academic background, Kistener proved extraordinarily adept at networking when

462
00:25:22,040 --> 00:25:24,560
Speaker 1: he got to Washington, not only within the government, but

463
00:25:24,680 --> 00:25:27,560
Speaker 1: more interesting outside the government. So I was thinking a

464
00:25:27,560 --> 00:25:29,800
Speaker 1: lot about networks, and I decided, look, before I can

465
00:25:29,800 --> 00:25:31,800
Speaker 1: write volume two, I have to get my head around

466
00:25:31,800 --> 00:25:34,600
Speaker 1: networks as a general phenomenal of it. I mean, I've

467
00:25:34,640 --> 00:25:37,400
Speaker 1: seen you Neil work, the Belvedere Hotel, the bar, there

468
00:25:37,440 --> 00:25:41,520
Speaker 1: were the twenty six dollar barley soup and the meat loaf.

469
00:25:41,680 --> 00:25:44,840
Speaker 1: Like nobody, I believe the President United States is gonna

470
00:25:44,840 --> 00:25:47,760
Speaker 1: wander up Happy Valley. You talk about the triumph of

471
00:25:47,840 --> 00:25:52,280
Speaker 1: Davos Man, Well, the president triumph in Davos, Well, I

472
00:25:52,320 --> 00:25:54,600
Speaker 1: don't think they're going to pelt him with rotten eggs

473
00:25:54,880 --> 00:26:01,320
Speaker 1: or even bread rolls. Because although Davos can't what Donald

474
00:26:01,600 --> 00:26:05,000
Speaker 1: Trump stands for, certainly on policy. They can't bear the protectionism,

475
00:26:05,000 --> 00:26:08,520
Speaker 1: they can't bear the nativism, they can't bear the lapses

476
00:26:08,560 --> 00:26:11,000
Speaker 1: into racism. On the other hand, he's the most powerful

477
00:26:11,040 --> 00:26:13,280
Speaker 1: man in the world. Sorry, he jan Ping You're not

478
00:26:13,359 --> 00:26:15,520
Speaker 1: as powerful as the president of the United States just yet,

479
00:26:15,560 --> 00:26:18,320
Speaker 1: whatever the economists may tell the world, and I think

480
00:26:18,680 --> 00:26:22,880
Speaker 1: that's ultimately does love power. So I suspect he'll get

481
00:26:22,880 --> 00:26:26,760
Speaker 1: a kind of frosty but polite hearing, and if he

482
00:26:26,760 --> 00:26:28,400
Speaker 1: gives a speech like the one he gave in Wars

483
00:26:28,520 --> 00:26:31,000
Speaker 1: or last year, it'll be hard for them to to

484
00:26:31,200 --> 00:26:34,679
Speaker 1: boo and hiss uh. The other other points to notice

485
00:26:34,800 --> 00:26:38,840
Speaker 1: is that you know, when Trump makes his anti globalization arguments,

486
00:26:39,240 --> 00:26:43,359
Speaker 1: ordinary Swiss people are nodding their heads. So whatever they

487
00:26:43,400 --> 00:26:45,280
Speaker 1: may be saying in the conference room, and you and

488
00:26:45,320 --> 00:26:47,320
Speaker 1: I know the kind of people who end up there

489
00:26:47,880 --> 00:26:52,040
Speaker 1: out there in German speaking Switzerland, I think most people

490
00:26:52,080 --> 00:26:56,480
Speaker 1: basically agree with Trump's critique of globalization, and especially with

491
00:26:56,560 --> 00:26:59,639
Speaker 1: his line on immigration. Neil, just to follow up, you

492
00:26:59,720 --> 00:27:03,720
Speaker 1: mentioned China and j Ping. Let's begin by your thoughts

493
00:27:03,840 --> 00:27:08,560
Speaker 1: on how networks have developed within China, both politically but

494
00:27:08,640 --> 00:27:12,240
Speaker 1: also culturally. China's fascinating and I just got back from there,

495
00:27:12,280 --> 00:27:15,720
Speaker 1: actually went on a on a trip to hang Jo

496
00:27:15,880 --> 00:27:21,000
Speaker 1: to see Ali Baba jack Mars headquarters, and what's very

497
00:27:21,040 --> 00:27:24,520
Speaker 1: striking is that the Chinese have evolved a completely different

498
00:27:24,560 --> 00:27:29,080
Speaker 1: model of the relationship between giant technology companies and government.

499
00:27:29,480 --> 00:27:33,439
Speaker 1: Here we basically have the separation of powers. Silicon Valley

500
00:27:33,680 --> 00:27:38,120
Speaker 1: hates the Trump administration and the feelings pretty much mutual

501
00:27:38,200 --> 00:27:42,520
Speaker 1: no matter how much the president uses the network platforms.

502
00:27:43,080 --> 00:27:45,280
Speaker 1: There's really quite a tension, I think, and I think

503
00:27:45,280 --> 00:27:48,560
Speaker 1: that tension will will grow. But in China, essentially the

504
00:27:48,640 --> 00:27:51,480
Speaker 1: big companies by Do Ali, Baba, ten Cent, the so

505
00:27:51,520 --> 00:27:55,159
Speaker 1: called b A t or Bat companies are subordinates to

506
00:27:55,280 --> 00:27:57,840
Speaker 1: the government. And when you see Jack mal together with

507
00:27:57,880 --> 00:28:00,600
Speaker 1: Shiji and Ping, there's no doubt who the senior outner is.

508
00:28:01,000 --> 00:28:03,520
Speaker 1: So that's a completely different model and it's going to

509
00:28:03,600 --> 00:28:06,600
Speaker 1: be fascinating to see how the two co exists. Neil Ferguson.

510
00:28:06,680 --> 00:28:08,960
Speaker 1: He is the author of the latest book called The

511
00:28:09,080 --> 00:28:13,600
Speaker 1: Square and the Tower. Networks and Power from the Freemasons

512
00:28:13,920 --> 00:28:24,080
Speaker 1: to Facebook. Thanks for listening to the Bloomberg Surveillance podcast.

513
00:28:24,440 --> 00:28:29,359
Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or

514
00:28:29,520 --> 00:28:33,840
Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom

515
00:28:33,920 --> 00:28:37,840
Speaker 1: Keane Before the podcast, you can always catch us worldwide.

516
00:28:38,280 --> 00:28:39,360
Speaker 1: I'm Bloomberg Radio