WEBVTT - How Trump Reshapes Market Opportunities 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, podcasts, radio news. 0:00:11.920 --> 0:00:16.320 This is the Bloomberg Surveillance Podcast. Catch us live weekdays 0:00:16.360 --> 0:00:19.840 at seven am Eastern on applecar Player, Android Auto with 0:00:19.880 --> 0:00:23.320 the Bloomberg Business App. Listen on demand wherever you get 0:00:23.360 --> 0:00:26.200 your podcasts, or watch us live on YouTube. 0:00:26.840 --> 0:00:30.600 Christina Hooper, Chief Global Market Strategy to Vetsco, thank you 0:00:30.640 --> 0:00:32.760 for joining us here this morning. Talk to us about 0:00:32.760 --> 0:00:34.360 the FED, talk to us about what happens in a 0:00:34.720 --> 0:00:35.440 Trump world. 0:00:37.400 --> 0:00:40.800 So I think the FED was right to be very 0:00:40.800 --> 0:00:44.520 emphatic in saying that they're not going to guess, assume, 0:00:44.760 --> 0:00:48.559 speculate about what policies are coming down the pike and 0:00:48.600 --> 0:00:52.040 the timing of them. So at this point it's all 0:00:52.159 --> 0:00:55.560 about the data and what is actually showing up in 0:00:55.600 --> 0:01:00.600 the data today. Now there is some risk that inflation resurges, 0:01:01.360 --> 0:01:04.080 and that has absolutely nothing to do with who is 0:01:04.080 --> 0:01:06.200 sitting in the White House. So I think the FED 0:01:06.319 --> 0:01:08.640 needs to be super careful. And so I think the 0:01:09.200 --> 0:01:13.959 FED is not necessarily going to cut in December. It 0:01:14.040 --> 0:01:16.560 is not a FEDA compley. It's going to be really 0:01:16.600 --> 0:01:19.920 dictated by what we see released in the next weeks 0:01:20.240 --> 0:01:23.959 before the meeting. I do think there's probably some caution 0:01:24.120 --> 0:01:27.440 in terms of worrying a bit about what could happen 0:01:27.600 --> 0:01:30.440 if we see a lot of Trump policies come to 0:01:30.480 --> 0:01:35.160 fruition in terms of stimulating growth and higher inflation. But 0:01:35.240 --> 0:01:37.479 at this point the Fed is not going to act 0:01:37.520 --> 0:01:39.959 on it, and I don't think it will until it 0:01:40.000 --> 0:01:42.480 shows up in the data or it's reliable enough in 0:01:42.560 --> 0:01:45.200 terms of the scope and the timing that they can 0:01:45.240 --> 0:01:47.080 add it to their economic projections. 0:01:47.120 --> 0:01:49.600 Well, Christina, I was listening to Bruce Casman over the weekend, 0:01:49.680 --> 0:01:52.000 he and Joe Lupp in at Any Rate podcast, the 0:01:52.080 --> 0:01:52.760 JP Morgan. 0:01:52.800 --> 0:01:53.640 We know who they are. 0:01:53.920 --> 0:01:57.200 You know they're talking about revising up growth expectations in 0:01:57.200 --> 0:02:00.320 the US, revising them down in the Eurozone and China. 0:02:00.360 --> 0:02:02.040 Do you agree with that and what is the impact 0:02:02.080 --> 0:02:03.000 on inflation from that? 0:02:04.960 --> 0:02:07.760 Well, I don't think that that's wrong. I don't know 0:02:07.840 --> 0:02:10.800 if it's going to be as dramatic as we assume. 0:02:11.480 --> 0:02:14.440 I certainly think that US growth is going to be stronger. 0:02:14.480 --> 0:02:16.720 It has been stronger, So this would just be a 0:02:16.720 --> 0:02:19.560 continuation of a trend that we've seen, and it might 0:02:19.639 --> 0:02:23.440 get some kind of boost from Trump policies. Again, we 0:02:23.600 --> 0:02:25.400 just don't know the scope, we don't know the timing, 0:02:25.680 --> 0:02:27.560 we don't know what policies they'll focus on. 0:02:27.720 --> 0:02:28.040 First. 0:02:29.280 --> 0:02:32.840 I do think that the Eurozone could face some headwinds, 0:02:32.880 --> 0:02:34.920 but I do think that we're going to be as 0:02:34.960 --> 0:02:38.520 seeing a reacceleration and growth there as well. It's just 0:02:38.560 --> 0:02:40.720 not going to be as strong as in the United States. 0:02:41.200 --> 0:02:46.120 So I don't think it's as dramatic a situation. I 0:02:46.120 --> 0:02:48.560 don't think there's going to be that significant a change 0:02:48.800 --> 0:02:51.359 from what we anticipated months before the election. 0:02:51.600 --> 0:02:53.840 Well, Christina, here's the disconnect for me. Like I agree 0:02:53.880 --> 0:02:56.120 with you, it's going to take time for fiscal stimulus 0:02:56.160 --> 0:02:57.920 to come through. It's going to take time, quite frankly, 0:02:57.960 --> 0:02:59.640 for the towers to come through, right because he's going 0:02:59.680 --> 0:03:01.639 to use that is negotiating to them by he I mean, 0:03:01.840 --> 0:03:04.239 you know President elect Donald Trump. But you know, sentiment 0:03:04.520 --> 0:03:06.800 is you know, not to be played with, not to 0:03:06.800 --> 0:03:08.440 be trifled with. If you follow me here, I mean, 0:03:08.480 --> 0:03:11.519 sentiment can start pricing this into markets far more quickly, 0:03:11.560 --> 0:03:14.639 far more you know, rapidly than we otherwise expect. I mean, 0:03:14.639 --> 0:03:16.880 what's the potential for that to happen between now and 0:03:16.919 --> 0:03:17.600 the end of this year. 0:03:19.240 --> 0:03:21.520 Oh, I certainly think there's the potential for that to happen. 0:03:21.600 --> 0:03:24.600 We're already seeing a very visceral reaction in markets. But 0:03:24.680 --> 0:03:27.760 I just want to draw the distinction between what happens 0:03:27.760 --> 0:03:30.320 in markets and what happens in the economy. We could 0:03:30.320 --> 0:03:35.680 see very well markets discount strong economy in twenty twenty five, 0:03:35.760 --> 0:03:37.240 and I'm not going to argue with that. I do 0:03:37.280 --> 0:03:39.920 think we're going to see a reacceleration in the US, 0:03:40.400 --> 0:03:45.200 but I do think markets have a way of reacting very, 0:03:45.520 --> 0:03:50.520 very robustly sometimes to what they think will happen, and 0:03:50.560 --> 0:03:53.800 then there's a point where markets are likely to moderate. 0:03:54.000 --> 0:03:56.440 It's not dis similar to what we saw in twenty sixteen. 0:03:56.840 --> 0:03:59.640 We saw a very strong rally and some retracing, so 0:03:59.680 --> 0:04:02.960 I would anticipate that's likely. But I certainly think we're 0:04:03.000 --> 0:04:07.480 going to see the exuberance in markets in a more 0:04:07.560 --> 0:04:11.040 distinct way than we will see show up in economic growth. 0:04:11.160 --> 0:04:14.640 Now that's not to discount that psychology plays a role 0:04:15.400 --> 0:04:18.160 that when sentiment is better on the part of consumers 0:04:18.160 --> 0:04:20.320 on the part of businesses, they spend more. And I 0:04:20.360 --> 0:04:22.200 also think we're just going to get a bump from 0:04:22.240 --> 0:04:27.479 having election certainty. The biggest risk that was before going 0:04:27.480 --> 0:04:30.960 into the election, was that we'd get some kind of challenge, 0:04:31.520 --> 0:04:35.160 we'd have prolonged uncertainty. That's behind us. And so now 0:04:35.520 --> 0:04:38.560 all those spending plans and hiring plans that had been 0:04:38.560 --> 0:04:42.400 held in abeyance by companies, and all those spending plans 0:04:42.400 --> 0:04:46.800 that had been held in abeyance by consumers, that can 0:04:46.839 --> 0:04:47.800 start again, all. 0:04:47.800 --> 0:04:52.599 Right, Christina, chief Global market strategist for Investco. Where do 0:04:52.600 --> 0:04:53.279 you go globally? 0:04:53.320 --> 0:04:53.560 Here? 0:04:53.960 --> 0:04:54.680 Knowing what we know? 0:04:56.920 --> 0:05:00.960 So we certainly know that policy are going to be 0:05:01.360 --> 0:05:05.320 supportive for the US economy, but that doesn't necessarily mean 0:05:05.440 --> 0:05:10.440 that equity that economies outside the US are left out. Yes, 0:05:10.480 --> 0:05:13.120 we might see some headwinds in the shorter term, but 0:05:13.200 --> 0:05:16.840 I do think, as I mentioned, the European economy as 0:05:16.839 --> 0:05:21.599 well as the UK economy will reaccelerate next year. I 0:05:21.600 --> 0:05:24.520 think we could see a scenario where, especially if we 0:05:24.640 --> 0:05:28.479 work out the tariff issues quickly, where we see a 0:05:28.560 --> 0:05:33.200 global economy that reaccelerates. And so that means investors need 0:05:33.279 --> 0:05:37.280 to be thinking broadly. It's not just about US equities, 0:05:37.360 --> 0:05:40.719 especially because valuations are so high. So within the US, 0:05:41.160 --> 0:05:44.320 I would add to exposure to small and midcaps, because 0:05:44.320 --> 0:05:47.240 I think those will benefit very much from the environment 0:05:47.520 --> 0:05:50.920 from fetising as well as Trump policies. And then of course, 0:05:51.240 --> 0:05:54.360 looking globally, I think there's a lot of opportunity in 0:05:54.560 --> 0:06:01.120 lower valuation places UK equities, emerging markets equities. So I 0:06:01.160 --> 0:06:05.640 think we need to to be focused not just on growth, 0:06:05.680 --> 0:06:09.359 but on valuations, and that leads to diversification. 0:06:09.279 --> 0:06:12.640 Emerging market equities. That is music from my ears. No no, no, 0:06:12.760 --> 0:06:14.520 I'm kidding. I'm kidding, you know, but I would love 0:06:14.520 --> 0:06:16.360 to ask you. I mean, obviously we can't ignore what's 0:06:16.360 --> 0:06:18.080 going on in currencies here, and we've come a long 0:06:18.120 --> 0:06:20.359 way in a very short period of time. Initially, you know, 0:06:20.400 --> 0:06:22.440 we saw mechs, we saw the China yuon, we saw 0:06:22.440 --> 0:06:24.520 the Korean one all depreciate on the back of the 0:06:24.560 --> 0:06:27.280 Trump victory, and then you know, came all the way 0:06:27.320 --> 0:06:29.279 back almost right in the case of the Mexican peso, 0:06:29.320 --> 0:06:31.880 it actually appreciated for a bit there, and then Friday 0:06:31.920 --> 0:06:33.760 we kind of melted down and we continue to be 0:06:33.839 --> 0:06:35.760 melting down here. Christina, talk to us a little bit 0:06:35.800 --> 0:06:38.200 about what the dollar. Well, you know, what is it 0:06:38.279 --> 0:06:38.960 telling you here? 0:06:40.800 --> 0:06:43.000 So what I think it's telling us is that there's 0:06:43.080 --> 0:06:46.640 a lot more to the currency picture than who is 0:06:46.680 --> 0:06:49.839 sitting in the White House. In fact, more is dictated 0:06:49.880 --> 0:06:52.800 by FED policy, and so I think we have to 0:06:52.839 --> 0:06:56.760 recognize that the US dollar is likely to weaken, but 0:06:57.000 --> 0:07:00.880 it's going to have different relationships with different made currencies, 0:07:01.279 --> 0:07:05.640 and it's going to ease more relative to some currencies 0:07:05.680 --> 0:07:08.520 than others, and that will play out over time as 0:07:08.520 --> 0:07:11.320 we see what other central banks are doing as well. 0:07:11.840 --> 0:07:14.120 In addition to the growth picture, I think it's really 0:07:14.160 --> 0:07:18.840 important to recognize that you as a strong US economy 0:07:19.120 --> 0:07:23.640 doesn't mean that other economies necessarily suffer. So we have 0:07:23.720 --> 0:07:26.640 to just watch this play out. But to me, what 0:07:26.680 --> 0:07:30.119 it's telling us is that this is not just who's 0:07:30.120 --> 0:07:31.080 sitting in the White House. 0:07:31.480 --> 0:07:33.600 All right, Christina, thank you so much for joining us. 0:07:33.880 --> 0:07:38.360 Christina Hooper, she is chief of Global market Strategist for Investigo, 0:07:38.440 --> 0:07:41.000 giving us her thoughts on these markets. 0:07:46.840 --> 0:07:50.679 You're listening to the Bloomberg Surveillance Podcast. Catch us live 0:07:50.800 --> 0:07:54.080 weekday afternoons from seven to ten am. Easter Listen on 0:07:54.160 --> 0:07:57.400 Apple car Play and Android Auto with a Bloomberg Business app, 0:07:57.520 --> 0:07:59.240 or watch us live on YouTube. 0:07:59.480 --> 0:08:02.520 Let's check in Zach Cohen congressional reporter. I don't know 0:08:02.520 --> 0:08:04.720 what he's doing down there. I mean, Zach, you still 0:08:04.760 --> 0:08:07.960 have some house races that have yet to be called. 0:08:08.880 --> 0:08:10.679 Where are we what's going on with those things? 0:08:11.560 --> 0:08:13.760 Sure, Republicans are certainly the driver's seat at this hour. 0:08:14.160 --> 0:08:16.640 They've maitted at least three seats, you know, picked up 0:08:16.640 --> 0:08:18.760 a number of others. But Democrats have also flepped a 0:08:18.760 --> 0:08:21.400 couple of seats, for a total of plus three at 0:08:21.400 --> 0:08:24.240 this juncture. Obviously, the medic number to watches two eighteen 0:08:24.600 --> 0:08:27.760 on Bloomberg dot com, and right now they're hovering at 0:08:27.760 --> 0:08:30.000 around two fifteen at least, And so they're really on 0:08:30.040 --> 0:08:32.040 the margin here. There's a couple of outstanding of races, 0:08:32.480 --> 0:08:35.160 mostly west of the Mississippi River, many of them in California, 0:08:35.400 --> 0:08:39.240 some in Iowa, Arizona, Alaska, even And so as those 0:08:39.240 --> 0:08:41.520 ballots continue to come in, especially a mail in ballasts 0:08:41.559 --> 0:08:44.240 that can arrive after election day, those need to be 0:08:44.280 --> 0:08:46.520 counted before some of these closer races can get called. 0:08:46.520 --> 0:08:48.440 And whether we find out whether in fact Speaker of 0:08:48.440 --> 0:08:49.520 Mike Johnson gets to keep. 0:08:49.440 --> 0:08:51.839 The gabble Zach percent see some announcements out of the 0:08:51.840 --> 0:08:53.880 White House this morning at least Stepanek, for example, talk 0:08:53.880 --> 0:08:55.640 to us a little bit about you know, Trump's cabinet. 0:08:55.640 --> 0:08:57.079 What can we expect to hear over the next few 0:08:57.120 --> 0:08:59.480 days weeks, I mean, talk to us about US Treasury secretary. 0:09:00.320 --> 0:09:02.760 Yeah, so certainly at least a phonic. The Republican from 0:09:02.800 --> 0:09:06.480 New York being tapped to be the ambassador to the 0:09:06.559 --> 0:09:11.720 United Nations, replacing Nickayhaley, who obviously ran against then former 0:09:11.720 --> 0:09:14.320 President Donald Trump now President elect Donald Trump and probably 0:09:14.360 --> 0:09:16.319 was not going to get that role again. Somebody who 0:09:16.320 --> 0:09:18.560 sort of worked her way up through the Republican ranks, 0:09:18.559 --> 0:09:21.840 started off as a real moderate representing upstate New York, 0:09:22.320 --> 0:09:25.839 and eventually became what she would call ultra maga, very 0:09:25.920 --> 0:09:27.920 aligned with the Trump movement that seems to be paying 0:09:27.920 --> 0:09:32.280 offer her. All of Trump's Senate confirmable appointees will need 0:09:32.280 --> 0:09:34.640 to go through the Senate confirmation process. However, he's been 0:09:34.679 --> 0:09:37.240 asking the next Republican leader, whoever that might be, whether 0:09:37.280 --> 0:09:40.120 it's John Thune, John Cornyn, Rick Scott, to kind of 0:09:40.160 --> 0:09:44.040 waive that process entirely and allow him to install cabinet 0:09:44.160 --> 0:09:48.000 and other appointees through what are called recess appointments, which 0:09:48.000 --> 0:09:50.360 are allowed under the Constitution. That remains to be seen 0:09:50.400 --> 0:09:53.600 whether Congress would allow that procedure, that ectipedetic procedure. But 0:09:53.720 --> 0:09:55.160 all of that is going to need to happen pretty 0:09:55.240 --> 0:09:56.280 quickly come January. 0:09:57.520 --> 0:09:59.440 Zach, give us a sense as we step back and 0:09:59.440 --> 0:10:02.480 look at this whole realistically, how much of a red 0:10:02.920 --> 0:10:06.240 sweep has it been for the Republicans And in fact, 0:10:07.160 --> 0:10:10.160 what can President Trump get done here, given that it 0:10:10.640 --> 0:10:14.160 has control of the Senate, appears to be at or 0:10:14.200 --> 0:10:17.080 close to control of the House. How much of a 0:10:17.120 --> 0:10:18.200 red sweep is it really? 0:10:19.160 --> 0:10:20.720 I mean, the fact that Trump was able to carry 0:10:20.720 --> 0:10:23.199 all seven battleground states, with the addition of I believe 0:10:23.240 --> 0:10:26.840 Arizona last night or early this morning, certainly indicates that 0:10:26.920 --> 0:10:29.920 this was a Republican maybe not a wave. You know 0:10:29.960 --> 0:10:32.240 that we're sort of past the era of weave politics. 0:10:32.280 --> 0:10:34.480 The fact that we're talking about a Republican victory potentially 0:10:34.520 --> 0:10:36.640 in the House that'll be determined by just a handful 0:10:36.679 --> 0:10:39.920 of votes, just given the fact that jerry mandering and 0:10:40.160 --> 0:10:42.760 partisan sorting, people voting with their feet to places like 0:10:42.800 --> 0:10:46.000 California or Florida depending on their politics, really makes it 0:10:46.040 --> 0:10:48.679 hard for either party to win. The kind of results 0:10:48.679 --> 0:10:50.520 that we saw back in the day where you know, 0:10:50.679 --> 0:10:52.520 regul would be able to win forty nine out of 0:10:52.559 --> 0:10:55.920 fifty states without batting an eyelash. But certainly the fact 0:10:55.920 --> 0:10:58.559 that Trump will come into power, certainly with a Republican 0:10:58.559 --> 0:11:01.480 controlled Senate, means one for his efforts to overhaul the 0:11:01.480 --> 0:11:04.880 federal bench. He'll be able to appoint judges not just 0:11:05.000 --> 0:11:07.440 the Supreme Court, but also to lower appellate courts and 0:11:07.520 --> 0:11:10.280 federal district courts, you know, some of those benches that 0:11:10.360 --> 0:11:14.000 make up the vast majority of federal litigation. Tom, So, certainly, 0:11:14.040 --> 0:11:17.600 either through recess appointments or through actual confirmation, he's got 0:11:17.640 --> 0:11:18.320 some power there. 0:11:18.800 --> 0:11:21.000 Thanks Act. Tom Horman's been announced as the borders are 0:11:21.040 --> 0:11:23.679 and I'm looking at you know what, many believe Trump 0:11:23.720 --> 0:11:26.000 is about to embark on the largest deportation program in 0:11:26.080 --> 0:11:29.560 US history. Talk to me about that announcement, that appointment, 0:11:29.880 --> 0:11:30.880 What do you expect out of that? 0:11:32.240 --> 0:11:33.719 Certainly I had to check if he was actually a 0:11:33.800 --> 0:11:36.360 point you know, nominated to be Secretary of Home mad Security, 0:11:36.400 --> 0:11:38.880 which is object to Senate confirmation, or if this is 0:11:38.920 --> 0:11:42.040 sort of a czar like position where he's named but 0:11:42.120 --> 0:11:45.080 with that you know, sort of limited power to promagate 0:11:45.120 --> 0:11:47.040 regulations that be able to do the kinds of things 0:11:47.040 --> 0:11:48.520 that Trump is talking about. Some of this can be 0:11:48.559 --> 0:11:51.680 done via executive border I would expect, you know, within 0:11:51.720 --> 0:11:53.440 the first couple of days we see some of the 0:11:53.480 --> 0:11:58.240 return to Trump era policies around remain in Mexico or 0:11:58.280 --> 0:12:00.960 catch and release, so to speak. But certainly Homan and 0:12:01.000 --> 0:12:02.960 others are going to have some pretty vast power under 0:12:03.000 --> 0:12:07.080 existing statute to change current immigration law. Whether a Republican 0:12:07.160 --> 0:12:10.560 lets send it, even a potentially narrowly narrow one. If 0:12:11.400 --> 0:12:13.800 you know, Dave McCormick doesn't hold on in Pennsylvania that 0:12:13.880 --> 0:12:15.960 race has been called, but apparently it's too close to 0:12:15.960 --> 0:12:18.679 call for some Democrats, then maybe we could see a 0:12:18.679 --> 0:12:22.280 confirmation fight if Susan Collins Lisa Rakowski have some concerns 0:12:22.280 --> 0:12:24.280 about any of these picks, so that'll be worth watching 0:12:24.320 --> 0:12:25.360 as well. 0:12:25.520 --> 0:12:28.840 Zach, what's the to do list for Congress right now? 0:12:29.960 --> 0:12:32.440 Certainly got to figure out government funding that expires in December, 0:12:32.600 --> 0:12:34.320 as we could another shut down fight on our hands 0:12:34.360 --> 0:12:36.360 if you've got Democrats who are hoping to lock in 0:12:36.559 --> 0:12:40.040 federal funding levels for at least the first nine months 0:12:40.040 --> 0:12:42.640 of the next Trump administration, and they'll be probably some 0:12:42.679 --> 0:12:44.720 Democrats some Republicans as well who'd want to go along 0:12:44.760 --> 0:12:46.600 with that, just to sort of clear the plate and 0:12:46.679 --> 0:12:49.480 allow Trump to come in set budget levels and come 0:12:49.559 --> 0:12:51.240 up for his own spending plan for the next couple 0:12:51.320 --> 0:12:54.280 of years, although some Republicans certainly will want to hold 0:12:54.320 --> 0:12:56.640 off on that decision in order to give the incoming 0:12:56.679 --> 0:13:00.280 Trump administration the ability to set funding levels. Or the 0:13:00.320 --> 0:13:03.079 current fiscal year that started September thirtieth of this calendar 0:13:03.160 --> 0:13:06.559 year will likely see defense appropriations or actually be a 0:13:06.600 --> 0:13:09.719 defense authorization built military policy bill that passes every year 0:13:09.760 --> 0:13:12.280 and has for the last sixty some midd years. That's 0:13:12.360 --> 0:13:16.120 usually a pretty bipartisan affair, and certainly Democrats are going 0:13:16.160 --> 0:13:17.959 to want to confirm as many judges as possible to 0:13:18.000 --> 0:13:21.280 the federal bench while they have unilateral control of that process. 0:13:21.320 --> 0:13:23.960 There's a number of vacancies, not at the Supreme Court 0:13:24.000 --> 0:13:27.040 level obviously, but for lower re pellate levels and at 0:13:27.040 --> 0:13:29.720 the district courts that they could see done with a 0:13:29.720 --> 0:13:32.160 simple majority, even if Trump wants to hold off on that. 0:13:32.679 --> 0:13:32.839 Zach. 0:13:32.920 --> 0:13:34.960 The US fixing can market is closed today, but the 0:13:35.000 --> 0:13:38.040 bond market villgilantes are far from dead talk to us 0:13:38.080 --> 0:13:40.679 about Treasury Secretary, Howard Lutnick. Is it going to be 0:13:40.760 --> 0:13:43.400 John Paulson, Glenn young Kin, Scott Besson? And you're a 0:13:43.440 --> 0:13:45.280 betting man, where do you place your bet? 0:13:46.400 --> 0:13:49.199 It entirely depends on not just obviously true Trump wants 0:13:49.480 --> 0:13:52.720 as his secretary, you know, to be the primary ambassador 0:13:52.720 --> 0:13:55.320 for the American economy overseas, as Jenna Yellen has done, 0:13:55.600 --> 0:13:58.360 but certainly what the market will bear. In the Senate, 0:13:58.960 --> 0:14:01.760 as I mentioned, senator centers are coming in Republicans with 0:14:01.840 --> 0:14:05.439 fifty three seats most likely assuming this result in Pennsylvania 0:14:05.440 --> 0:14:09.800 holds and having flipped seats in West Virginia, Montana, and Ohio. 0:14:10.360 --> 0:14:12.960 And so that gives him a pretty sizable majority to 0:14:12.960 --> 0:14:15.920 be able to confirm really whoever Trump wants in that job. 0:14:15.960 --> 0:14:18.920 And I could see somebody confirmed by January twentieth. Remember 0:14:18.920 --> 0:14:22.280 Congress comes in January third, and that's the beginning of 0:14:22.320 --> 0:14:24.120 the new Congress. Then there's a number of days before 0:14:24.160 --> 0:14:26.640 the inauguration of the next president on January twentieth, So 0:14:26.680 --> 0:14:30.920 it's not unusual for the Senate to start confirming nominees 0:14:30.960 --> 0:14:33.080 for a president elect. So that way they can come 0:14:33.120 --> 0:14:34.880 in with their team in place, and I would imagine 0:14:34.880 --> 0:14:37.720 Treasury secretary and other cabinet appointees would fit the bill 0:14:37.760 --> 0:14:38.240 on that one. 0:14:39.160 --> 0:14:41.160 Hey, Zach, thanks so much for joining us. Really appreciate it. 0:14:41.240 --> 0:14:44.320 Zach Ohen He is a congressional reporter for a Bloomberg 0:14:44.360 --> 0:14:45.960 government down in Washington, DC. 0:14:46.520 --> 0:14:50.800 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:14:50.880 --> 0:14:54.080 starting at seven am Eastern on applecar Play and Android 0:14:54.120 --> 0:14:57.000 Auto with the Bloomberg Business app. You can also listen 0:14:57.080 --> 0:14:59.960 live on Amazon Alexa from our flagship New York State 0:15:00.600 --> 0:15:02.920 Just Say Alexa playing Bloomberg eleven. 0:15:03.480 --> 0:15:06.320 Nick Stadneller joins us. He's in studio. He's had a 0:15:06.360 --> 0:15:10.200 product at Medley Global Advisors. He does this in Damien, 0:15:10.280 --> 0:15:14.600 called a merging mark. I ever heard of him exactly, Nick, 0:15:15.800 --> 0:15:18.520 What emerging markets do you focus on in Which is 0:15:18.520 --> 0:15:21.480 the most I think attractive to you at this moment? 0:15:22.440 --> 0:15:28.120 Well, historically I've done the Senior region, so Turkey, the Gulf, Russia, Ukraine. 0:15:28.400 --> 0:15:31.160 I've spent quite a few years living in most of 0:15:31.160 --> 0:15:34.280 those places. But sort of over the last couple of years, 0:15:34.320 --> 0:15:37.280 I've been looking a lot more globally and in terms 0:15:37.320 --> 0:15:40.520 of what looks interesting to me right now. Quite frankly, 0:15:40.520 --> 0:15:43.040 I'm a bit worried about a lot of emerging markets 0:15:43.120 --> 0:15:45.680 right now. But I think if I were, you know, 0:15:45.720 --> 0:15:48.160 if someone held a gun to mind, why is that Well? 0:15:48.200 --> 0:15:50.640 I think that the biggest risk that I see is 0:15:50.680 --> 0:15:54.200 an inflationary US and a deflationary China, and if both 0:15:54.200 --> 0:15:56.040 of those happened at the same time, it's going to 0:15:56.080 --> 0:15:58.440 be really bad for emerging markets for quite some time. 0:15:59.000 --> 0:16:00.920 But if somebody held a gun my head and said 0:16:01.080 --> 0:16:02.800 what do you like right now? I think I would 0:16:02.800 --> 0:16:06.080 probably be focusing more on frontier markets and further down 0:16:06.160 --> 0:16:10.160 the credit stream, so lower rated distress sovereigns in places 0:16:10.160 --> 0:16:12.480 like Sub Saharan Africa and parts. 0:16:12.200 --> 0:16:15.440 Of Asia that's not like Mexico or Brazil. 0:16:15.520 --> 0:16:18.800 That this yeah, I be talking about the dollar bonds, Paul. 0:16:18.840 --> 0:16:21.160 I mean, let's get into the nitty gritty here. I mean, 0:16:21.200 --> 0:16:23.320 let's first begin with the Central and Eastern Europe. Right, 0:16:23.360 --> 0:16:26.040 Let's talk about Hungary. Let's talk about victor Orbon He's 0:16:26.120 --> 0:16:28.680 first went to graduate Trump after he won. Let's talk 0:16:28.720 --> 0:16:31.520 about this rumor that Trump and Putin spoke just a 0:16:31.520 --> 0:16:34.280 few days back. And now I think the Krumlin's rejecting that. 0:16:34.360 --> 0:16:36.960 I mean, what's up, what's down, what's going on in 0:16:37.000 --> 0:16:37.480 your region? 0:16:38.200 --> 0:16:42.960 Well, I think the situation with Orbon and Hungary is 0:16:43.000 --> 0:16:45.720 a bit mixed, because, of course, Orbon's thrilled to see 0:16:45.720 --> 0:16:49.360 Trump win. They share a lot of political ideas. 0:16:49.440 --> 0:16:52.600 And they share a locker tamarack non and. 0:16:52.560 --> 0:16:55.200 I'm sure that Trump would be very supportive specifically of 0:16:55.320 --> 0:16:58.600 Orbon when he can. But the fact is that Trump 0:16:58.680 --> 0:17:02.680 is much euroskeptic, a skeptic of the Transatlantic Alliance, and 0:17:02.760 --> 0:17:04.600 there are a lot of worries about the Euro and 0:17:04.640 --> 0:17:09.840 the US relationship with the European Union and the Hungarian Foreest, 0:17:10.640 --> 0:17:13.680 you know, Czech and Poland. Those are all sort of 0:17:13.760 --> 0:17:16.680 high beata versions of the Euro and very closely tied 0:17:16.720 --> 0:17:18.960 to the fates of the Euro. So the irony is, 0:17:19.000 --> 0:17:23.360 even though or Bond really you know, supports Trump, it's 0:17:23.359 --> 0:17:25.439 probably not going to be very good for financial markets 0:17:25.440 --> 0:17:28.240 in Central Europe. And you're starting to see that filter 0:17:28.359 --> 0:17:30.080 into two currency prices there. 0:17:30.320 --> 0:17:33.000 And what about the impact of the German coalition, you know, 0:17:33.200 --> 0:17:35.080 falling out of bed here. I mean, like there's got 0:17:35.119 --> 0:17:37.160 to be an impact on some of these periphery markets 0:17:37.240 --> 0:17:40.400 like Poland, like Remania, Hungary, the Czech Republic, I mean, 0:17:40.400 --> 0:17:41.880 any sort of spillover from that. 0:17:43.080 --> 0:17:46.280 Well, I think right now it seems sort of minimal. 0:17:46.760 --> 0:17:49.479 One of the weird things that's happened is German boons 0:17:49.480 --> 0:17:53.640 are starting to trade through Euro interest rate swaps, which 0:17:53.680 --> 0:17:56.679 suggests sort of, I would say, a thing in the 0:17:56.880 --> 0:17:59.560 financial market conditions for the European bond market, and that 0:17:59.640 --> 0:18:02.000 sort of thing always filters in and the higher risk, 0:18:02.920 --> 0:18:06.639 the emerging sort of periphery of the EU is always 0:18:06.680 --> 0:18:09.000 going to suffer. But in the in the short term, 0:18:09.040 --> 0:18:11.160 I think, you know, a little bit of domestic political 0:18:11.160 --> 0:18:14.600 instability in Berlin is probably not going to throw the 0:18:14.640 --> 0:18:15.960 European Union off its rails. 0:18:16.000 --> 0:18:17.920 Now for our audience who's not following that, but we're 0:18:17.920 --> 0:18:20.680 seeing our swap sweads in the Eurzone, specifically shats spreads 0:18:20.680 --> 0:18:25.119 to your swap spreads in Germany narrow. We're seeing a 0:18:25.119 --> 0:18:27.240 little bit of a little bit of disruption and the 0:18:27.280 --> 0:18:29.840 plumbing of the European fixed income market right and the 0:18:29.840 --> 0:18:33.040 funding markets, and what we look at our European swap spreads, 0:18:33.040 --> 0:18:36.879 specifically German shats to your swap spreads, which is German. 0:18:37.359 --> 0:18:39.119 It's the spread between Europe. 0:18:39.280 --> 0:18:41.919 It's it's the spread between European swaps and basically the 0:18:42.000 --> 0:18:44.320 underlying bonds, and what you've seen are them narrow as 0:18:44.359 --> 0:18:46.080 the bond market is effectively sold off. 0:18:46.160 --> 0:18:48.320 Right. So I've been on Wall Street for thirty five years. 0:18:48.359 --> 0:18:49.600 I've never heard that once before. 0:18:49.640 --> 0:18:51.640 I mean, you have to be looking at this. I mean, 0:18:51.640 --> 0:18:54.159 this is like looking at the plumbing of the US market, right, 0:18:54.200 --> 0:18:56.320 But I mean, really where we are, Nick, I mean, 0:18:56.480 --> 0:19:00.320 is you're talking about, you know, financial conditions tightening in Europe, right, 0:19:00.359 --> 0:19:01.800 and so what does that mean? I mean, does that 0:19:01.840 --> 0:19:04.320 mean that you know we're going to see more stimulus 0:19:04.320 --> 0:19:06.560 out of the Eurozone or is that something we could 0:19:06.560 --> 0:19:08.160 be waiting for as well here in the US. 0:19:08.680 --> 0:19:11.120 Well, I think at the margin, it increases the chances 0:19:11.400 --> 0:19:13.199 that the European Central Bank is going to have to 0:19:13.200 --> 0:19:16.520 cut a bit more aggressively. But the history of European 0:19:16.600 --> 0:19:20.000 policy makers is that they do the bare minimum after 0:19:20.080 --> 0:19:23.960 they're absolutely forced into it. So I wouldn't get too 0:19:24.000 --> 0:19:27.600 preemptive and call a very bold move from European central 0:19:27.600 --> 0:19:28.520 bankers quite yet. 0:19:29.080 --> 0:19:30.920 So let's shift a little bit and look a little 0:19:30.920 --> 0:19:33.199 further sap into the Middle East and look into Israel. 0:19:33.280 --> 0:19:35.280 I know that's right in your wheelhouse as well. Let's 0:19:35.320 --> 0:19:37.840 look at what's going on in the golf region. I mean, 0:19:38.160 --> 0:19:40.480 any thoughts there, I mean, what does a Trump administration 0:19:40.640 --> 0:19:43.359