1 00:00:04,360 --> 00:00:07,200 Speaker 1: Hello, and welcome to Stephanomics, the podcast that brings the 2 00:00:07,200 --> 00:00:14,840 Speaker 1: global economy to you. This week, we're going to take 3 00:00:14,880 --> 00:00:18,439 Speaker 1: your hand and walk you confidently into twenty with a 4 00:00:18,480 --> 00:00:20,800 Speaker 1: guide to the year ahead from some of the brightest 5 00:00:20,840 --> 00:00:24,120 Speaker 1: mind we have here at Bloomberg Economics, our Chief economist 6 00:00:24,200 --> 00:00:28,760 Speaker 1: Tom Wrlick, Senior Trade reporter and scoopmeister Sean Donnan, and 7 00:00:28,800 --> 00:00:32,720 Speaker 1: our European Economy reporter Yana Randa. We're sitting all in 8 00:00:32,800 --> 00:00:35,800 Speaker 1: different studios in Washington, London, and Frankfurt, and we're just 9 00:00:35,800 --> 00:00:38,920 Speaker 1: going to chat together about what might happen in and 10 00:00:39,000 --> 00:00:42,520 Speaker 1: what it could all mean. I start with trepidation because 11 00:00:42,520 --> 00:00:44,720 Speaker 1: I'm mindful that we spend a lot of time in 12 00:00:46,080 --> 00:00:48,159 Speaker 1: thinking and talking about stuff we didn't expect to be 13 00:00:48,200 --> 00:00:51,880 Speaker 1: talking about this time last year. Protests in Hong Kong, 14 00:00:52,120 --> 00:00:56,040 Speaker 1: for example, or Chili. Not to mention interest rate cuts 15 00:00:56,160 --> 00:00:59,120 Speaker 1: by the US Central Bank year ago. Remember, we were 16 00:00:59,120 --> 00:01:04,040 Speaker 1: expecting monetary policy to be tightening this year, and more 17 00:01:04,120 --> 00:01:08,039 Speaker 1: bond purchases and printing money by the European Central Bank. 18 00:01:08,440 --> 00:01:12,240 Speaker 1: We weren't expecting that. Not to mention Boris Johnson becoming 19 00:01:12,400 --> 00:01:16,800 Speaker 1: Prime Minister. For goodness, sake, so we all know we're 20 00:01:16,800 --> 00:01:19,040 Speaker 1: going to be surprised by what happens in the year ahead, 21 00:01:19,360 --> 00:01:22,240 Speaker 1: and this is about just looking ahead what we can see. 22 00:01:22,640 --> 00:01:26,000 Speaker 1: But very briefly, I wanted to ask all three of 23 00:01:26,040 --> 00:01:29,560 Speaker 1: you what was your most memorable moment covering the global 24 00:01:29,560 --> 00:01:35,440 Speaker 1: economy in t Tom Wrling UM. So back in November, 25 00:01:35,840 --> 00:01:39,160 Speaker 1: we were in Beijing for the New Economy Forum UM 26 00:01:39,160 --> 00:01:42,640 Speaker 1: and Wang Xi Shan, arguably the second most powerful leader 27 00:01:42,760 --> 00:01:45,800 Speaker 1: in China, took to the stage and there he was 28 00:01:46,120 --> 00:01:50,600 Speaker 1: speaking to an assembled crowd of the most powerful chief executives, 29 00:01:51,080 --> 00:01:54,160 Speaker 1: government leaders, thought leaders from around the world. There's so 30 00:01:54,160 --> 00:01:58,120 Speaker 1: many questions about China, questions about the trade war, questions 31 00:01:58,120 --> 00:02:01,120 Speaker 1: about what's happening in Hong Kong Hong, and he was 32 00:02:01,160 --> 00:02:05,040 Speaker 1: a moment where Wang could have really addressed these questions, 33 00:02:05,440 --> 00:02:08,600 Speaker 1: and he didn't do it. He gave a powerful speech 34 00:02:08,880 --> 00:02:12,959 Speaker 1: which spoke to China's domestic political agenda. And what struck 35 00:02:13,000 --> 00:02:15,640 Speaker 1: me about that was that we really just don't have 36 00:02:15,680 --> 00:02:19,320 Speaker 1: a meeting of minds right now. The US and China. 37 00:02:19,560 --> 00:02:22,000 Speaker 1: The trade conflict between US and China, which has really 38 00:02:22,320 --> 00:02:26,720 Speaker 1: defined the global economy this year, is really just scene 39 00:02:26,760 --> 00:02:30,040 Speaker 1: in completely different terms in d C. And in Beijing. 40 00:02:30,520 --> 00:02:33,040 Speaker 1: It was a problem in could well be a big 41 00:02:33,040 --> 00:02:37,800 Speaker 1: problem in twenty twenty as well, Sean Donna. So my 42 00:02:37,880 --> 00:02:42,840 Speaker 1: momentt memorable moment in nineteen had to be sitting in 43 00:02:43,639 --> 00:02:48,800 Speaker 1: a barn with Lorenda Overman, who is a hog farmer 44 00:02:48,880 --> 00:02:52,480 Speaker 1: in North Carolina. Has lived on this piece of land 45 00:02:52,520 --> 00:02:55,320 Speaker 1: for thirty seven years. It's been her husband's family since 46 00:02:55,360 --> 00:02:58,280 Speaker 1: the Civil War, and she had just had the worst 47 00:02:58,400 --> 00:03:01,000 Speaker 1: year that she had had in already seven years as 48 00:03:01,000 --> 00:03:04,000 Speaker 1: a result of the trade wars and the impact on 49 00:03:04,320 --> 00:03:07,360 Speaker 1: pretty much everything she raises or grows. UH. It had 50 00:03:07,400 --> 00:03:11,520 Speaker 1: meant that she had stopped cutting checks to her son 51 00:03:11,840 --> 00:03:14,680 Speaker 1: and her son in law who worked on the farm, 52 00:03:14,840 --> 00:03:17,080 Speaker 1: and that meant that, as she said to me, she 53 00:03:17,160 --> 00:03:19,960 Speaker 1: was literally taking the food out of the mouths of 54 00:03:20,000 --> 00:03:23,120 Speaker 1: her grandchildren. It was a pretty amazing thing. She was 55 00:03:23,560 --> 00:03:25,960 Speaker 1: close to tears as she was laying out the finances 56 00:03:26,000 --> 00:03:29,600 Speaker 1: she ran through UH commodity prices and what that meant 57 00:03:29,639 --> 00:03:32,960 Speaker 1: for her own personal finances. And then she got to 58 00:03:33,000 --> 00:03:35,320 Speaker 1: the end of it all and told me that she 59 00:03:35,840 --> 00:03:40,520 Speaker 1: still remained a strong supporter of Donald Trump. And to me, 60 00:03:40,760 --> 00:03:45,520 Speaker 1: that was the paradox in the US economy and in 61 00:03:45,560 --> 00:03:48,920 Speaker 1: these trade wars in twenty nineteen. That tension between the 62 00:03:48,960 --> 00:03:52,160 Speaker 1: people who are getting hit or suffered as a result 63 00:03:52,200 --> 00:03:55,720 Speaker 1: of the trade wars and their continuing support for Donald Trump, 64 00:03:55,840 --> 00:04:01,600 Speaker 1: and whether that continues into is the big question Yana Randall. 65 00:04:02,920 --> 00:04:06,240 Speaker 1: For me, it was the e CBS decision in September, 66 00:04:06,360 --> 00:04:08,960 Speaker 1: so Mario Dragon, just a few weeks away from the 67 00:04:09,040 --> 00:04:12,960 Speaker 1: end of his term, announcing a massive stimulus package of 68 00:04:13,040 --> 00:04:18,440 Speaker 1: rad cut deeper below zero, quantitative easing, more favorable terms 69 00:04:18,440 --> 00:04:21,600 Speaker 1: of long term loans, a bunch of other things, And 70 00:04:21,720 --> 00:04:26,600 Speaker 1: that was just showing how severely the r Area economy 71 00:04:26,760 --> 00:04:32,320 Speaker 1: was hit by the trade war, by uncertainty, how vulnerable 72 00:04:32,360 --> 00:04:35,080 Speaker 1: the economy was. Suan, I guess we have to start 73 00:04:35,160 --> 00:04:39,400 Speaker 1: where we ended with Donald Trump's trade wars. I mean, 74 00:04:39,400 --> 00:04:42,080 Speaker 1: they completely dominated the outlook for the world economy quite 75 00:04:42,080 --> 00:04:47,160 Speaker 1: a lot in and I think particularly when many economists 76 00:04:47,200 --> 00:04:51,719 Speaker 1: were writing their look aheads for this coming year, the 77 00:04:51,760 --> 00:04:54,560 Speaker 1: prospects looked pretty menacing. It seemed like there was a 78 00:04:54,720 --> 00:04:57,120 Speaker 1: rising chance of the global recession in part because of 79 00:04:57,160 --> 00:05:00,320 Speaker 1: trade wars. By the time we got to Christmas, things 80 00:05:00,320 --> 00:05:03,960 Speaker 1: look Calma, Will Donald Trump settle for what he has 81 00:05:04,000 --> 00:05:08,279 Speaker 1: on China and retire gracefully or can we expect something else. Well, 82 00:05:08,320 --> 00:05:10,680 Speaker 1: I think it's first of all worth kind of benchmarking 83 00:05:10,839 --> 00:05:13,920 Speaker 1: where we are and and the point that we ended 84 00:05:13,920 --> 00:05:17,520 Speaker 1: twenty nineteen at and we're starting is a lot worse 85 00:05:17,560 --> 00:05:20,000 Speaker 1: than the point we ended twenty eight and started twenty 86 00:05:20,120 --> 00:05:22,800 Speaker 1: nineteen at. And there's a lot more tariffs in place 87 00:05:23,600 --> 00:05:27,039 Speaker 1: on trade between the world's two largest economies. And even 88 00:05:27,080 --> 00:05:30,200 Speaker 1: though we've had this Phase one deal that should be 89 00:05:30,240 --> 00:05:34,000 Speaker 1: signed in the coming weeks, uh, it has not gotten 90 00:05:34,120 --> 00:05:38,040 Speaker 1: rid of those tariffs or that drag on on the 91 00:05:38,080 --> 00:05:41,400 Speaker 1: global economy that they that they represent. So that I 92 00:05:41,440 --> 00:05:45,000 Speaker 1: think that's one point is is we have gotten to 93 00:05:45,279 --> 00:05:47,160 Speaker 1: and this is a kind of Donald Trump effect. We've 94 00:05:47,200 --> 00:05:49,880 Speaker 1: gotten to a point where we think of calm as 95 00:05:49,920 --> 00:05:52,480 Speaker 1: a lack of escalation, but we forget how far we've 96 00:05:52,600 --> 00:05:54,720 Speaker 1: escalated and and and where we are there. And I 97 00:05:54,760 --> 00:05:57,800 Speaker 1: think that's worth remembering. The second thing is is, you 98 00:05:57,839 --> 00:06:00,680 Speaker 1: know Donald Trump is if we we're gonna look at 99 00:06:00,720 --> 00:06:03,720 Speaker 1: it through a rational political lens and we're gonna look 100 00:06:03,720 --> 00:06:07,080 Speaker 1: at what he's done with China, Uh, it would make 101 00:06:07,120 --> 00:06:09,200 Speaker 1: a lot of sense to kind of pause the trade 102 00:06:09,200 --> 00:06:14,760 Speaker 1: wars here, have some negotiations go on through and uh 103 00:06:14,839 --> 00:06:17,720 Speaker 1: and and leave it there and and leave any further 104 00:06:18,279 --> 00:06:22,000 Speaker 1: deals or achievements or escalations if they need to come 105 00:06:22,080 --> 00:06:25,880 Speaker 1: until after the November election. But this is Donald Trump, 106 00:06:25,880 --> 00:06:28,760 Speaker 1: and Donald Trump is unpredictable. And it could be something 107 00:06:28,800 --> 00:06:32,479 Speaker 1: as simple as a poll coming out showing that he's 108 00:06:32,560 --> 00:06:36,520 Speaker 1: trailing in Iowa at some point, or trailing somewhere in 109 00:06:36,520 --> 00:06:38,800 Speaker 1: the manufacturing states where is gonna be really important in 110 00:06:38,800 --> 00:06:41,560 Speaker 1: the election, That may cause further actions. So, I mean, 111 00:06:41,640 --> 00:06:45,120 Speaker 1: it's I'm dodging the question there, but it's there's a 112 00:06:45,160 --> 00:06:47,840 Speaker 1: reason for that, and that we're dealing with president who's 113 00:06:47,880 --> 00:06:51,360 Speaker 1: more unpredictable than any other we've had beforehand. Tom, I mean, 114 00:06:51,560 --> 00:06:53,479 Speaker 1: share makes a good point that we are going into 115 00:06:53,480 --> 00:06:56,320 Speaker 1: this year. I mean, Donald Trump has normalized a lot 116 00:06:56,320 --> 00:06:59,159 Speaker 1: of things. Heaven knows, but we have. He has to 117 00:06:59,200 --> 00:07:01,520 Speaker 1: some extent normal lies to having tariffs in a way 118 00:07:01,560 --> 00:07:03,960 Speaker 1: that we didn't. We didn't think of that as a 119 00:07:03,960 --> 00:07:06,360 Speaker 1: normal fixture of the environment, at least of the level 120 00:07:06,360 --> 00:07:09,640 Speaker 1: they are now, um even a couple of years ago. 121 00:07:10,120 --> 00:07:12,960 Speaker 1: That has an impact on the global economy. If we 122 00:07:13,040 --> 00:07:18,520 Speaker 1: have a sort of steady state of uncertainty around trade 123 00:07:19,040 --> 00:07:22,200 Speaker 1: but no real escalation, the kind of thing that Sean 124 00:07:22,320 --> 00:07:24,280 Speaker 1: just described. You know what does that mean for the 125 00:07:24,280 --> 00:07:27,880 Speaker 1: global economy? And I guess particularly for China. So we've 126 00:07:27,960 --> 00:07:30,480 Speaker 1: run a bunch of numbers on this one, Stephanie. If 127 00:07:30,520 --> 00:07:35,000 Speaker 1: we look at a plausible base case of tariffs rolling 128 00:07:35,040 --> 00:07:37,960 Speaker 1: back some way towards the May two thousand and nineteen 129 00:07:38,080 --> 00:07:42,360 Speaker 1: levels and some reduction in uncertainty, then we're looking at 130 00:07:42,360 --> 00:07:45,800 Speaker 1: a boost global GDP. We think of around no point 131 00:07:45,880 --> 00:07:50,200 Speaker 1: three percent in so that's not nothing. It's about two 132 00:07:50,240 --> 00:07:54,120 Speaker 1: hundred and seventy billion dollars and China, which has been 133 00:07:54,120 --> 00:07:56,960 Speaker 1: one of the main losers from the trade war, does 134 00:07:57,080 --> 00:08:00,760 Speaker 1: a little bit better again. But I would certainly echo 135 00:08:01,080 --> 00:08:03,920 Speaker 1: Sean's point on this. We don't have to go very 136 00:08:03,960 --> 00:08:06,720 Speaker 1: far back in history Buenos Areas, the end of two 137 00:08:06,760 --> 00:08:10,520 Speaker 1: thousand and eighteen, Osaka in summer two thousand and nineteen 138 00:08:10,960 --> 00:08:14,920 Speaker 1: to remember positive moments in the US China trade conflict, 139 00:08:15,280 --> 00:08:19,720 Speaker 1: which evaporated almost before the leader's jets had taken off 140 00:08:19,760 --> 00:08:23,320 Speaker 1: on the runway. There's a bunch of uncertainties in this deal. 141 00:08:23,520 --> 00:08:27,360 Speaker 1: Where's the extra two hundred billion dollars in Chinese purchases 142 00:08:27,440 --> 00:08:29,760 Speaker 1: going to come from. What's the U S going to 143 00:08:29,880 --> 00:08:32,960 Speaker 1: offer in terms of tariff rollback? What commitments is trying 144 00:08:33,000 --> 00:08:35,840 Speaker 1: to going to make in terms of intellectual property. So 145 00:08:35,880 --> 00:08:38,920 Speaker 1: the baselines tentatively positive. There's a bunch of stuff that 146 00:08:38,960 --> 00:08:41,280 Speaker 1: could go wrong. As I should say at this point, 147 00:08:41,320 --> 00:08:43,840 Speaker 1: the very observant listeners will know that we don't have 148 00:08:43,880 --> 00:08:48,360 Speaker 1: anyone talking from Asia for this conversation this time of year. 149 00:08:48,400 --> 00:08:50,520 Speaker 1: I wasn't very keen on making people stay up really 150 00:08:50,559 --> 00:08:53,800 Speaker 1: really late to be on the line. But luckily we 151 00:08:53,880 --> 00:08:57,480 Speaker 1: do have Tom, who lived eleven years in Beijing. We 152 00:08:57,480 --> 00:09:02,600 Speaker 1: were there together in No but Tom, I think President 153 00:09:02,640 --> 00:09:05,480 Speaker 1: Trump would say he had a good year in Sorry, 154 00:09:05,520 --> 00:09:08,199 Speaker 1: he would say we had a great year minus that 155 00:09:08,360 --> 00:09:12,400 Speaker 1: small matter of the impeachment. Would President she Jimping say that? 156 00:09:13,000 --> 00:09:16,040 Speaker 1: I think President she Jimping would certainly say that he's 157 00:09:16,040 --> 00:09:18,679 Speaker 1: had a great year, and he would be resounding lee 158 00:09:18,679 --> 00:09:22,360 Speaker 1: echoed by his fellow members of the Chinese leadership, the 159 00:09:22,440 --> 00:09:26,160 Speaker 1: Chinese official press. It's quite hard to find anyone these 160 00:09:26,240 --> 00:09:29,920 Speaker 1: days who's willing to express a negative view on President 161 00:09:30,040 --> 00:09:33,280 Speaker 1: she or his achievements. Okay, so he's President President she 162 00:09:33,400 --> 00:09:35,800 Speaker 1: in his bath alone, would he would he look back 163 00:09:35,840 --> 00:09:38,400 Speaker 1: and actually also be looking into and think, yes, I'm 164 00:09:38,440 --> 00:09:42,240 Speaker 1: in an ok state. The reality, I think, stephaniely is 165 00:09:42,280 --> 00:09:45,560 Speaker 1: that if we think about the problems which China has 166 00:09:45,600 --> 00:09:49,400 Speaker 1: faced in two thousand and nineteen, to a large extent, 167 00:09:49,640 --> 00:09:54,360 Speaker 1: they reflect a strategic miscalculation which took place in the 168 00:09:54,400 --> 00:09:58,880 Speaker 1: past few years. The Belton Road Initiative, the Made in China, 169 00:09:58,960 --> 00:10:03,960 Speaker 1: the China Five initiative. Both of these were really ambitious 170 00:10:04,040 --> 00:10:09,280 Speaker 1: plans which kind of proclaimed China's arrival on the world stage. 171 00:10:09,600 --> 00:10:12,760 Speaker 1: The Belt and Road Initiative was China's arrival in terms 172 00:10:12,840 --> 00:10:17,480 Speaker 1: of international relations, building infrastructure across the world, wielding more 173 00:10:17,520 --> 00:10:23,199 Speaker 1: political influence across the world. The China Plan announced China's 174 00:10:23,320 --> 00:10:27,880 Speaker 1: arrival as a as an ambitious technological power and ambitious 175 00:10:27,880 --> 00:10:31,880 Speaker 1: technology power um the staking their claim for ownership of 176 00:10:31,920 --> 00:10:35,360 Speaker 1: the technologies which would um determine the pattern of winners 177 00:10:35,360 --> 00:10:38,320 Speaker 1: and losers in the global economy going forward. And both 178 00:10:38,320 --> 00:10:41,320 Speaker 1: of these things just rang really loud alarm bells in 179 00:10:41,360 --> 00:10:44,800 Speaker 1: the rest of the world, especially here in Washington, d C. 180 00:10:45,360 --> 00:10:48,160 Speaker 1: And I think the origin of the trade war partly 181 00:10:48,600 --> 00:10:52,720 Speaker 1: goes back to that overreach by China. So I think 182 00:10:52,720 --> 00:10:55,599 Speaker 1: two thousand and nineteen was a year where China avoided 183 00:10:55,840 --> 00:10:58,920 Speaker 1: the worst possible outcome. They've ended the year with the 184 00:10:58,960 --> 00:11:03,160 Speaker 1: trade truce. They haven't made very, very significant concessions to 185 00:11:03,240 --> 00:11:07,720 Speaker 1: the US on things like intellectual property, technology transfer, industrial subsidies. 186 00:11:08,400 --> 00:11:10,920 Speaker 1: So in that sense, I think they can claim a victory. 187 00:11:10,960 --> 00:11:14,040 Speaker 1: But why do they find themselves in this new difficult 188 00:11:14,040 --> 00:11:18,400 Speaker 1: position facing a newly hostile US and newly hostile world. 189 00:11:18,720 --> 00:11:21,360 Speaker 1: I think it's because of those strategic missteps over the 190 00:11:21,360 --> 00:11:24,480 Speaker 1: past few years. Suspect we'll get back to China's role 191 00:11:24,559 --> 00:11:28,240 Speaker 1: in the future of the of the global recovery a 192 00:11:28,280 --> 00:11:30,360 Speaker 1: little bit later, But yeah, and I want to want 193 00:11:30,360 --> 00:11:33,400 Speaker 1: to bring you in with a with a European perspective. 194 00:11:33,480 --> 00:11:36,960 Speaker 1: I mean, Germany was one of the economy's worst hit 195 00:11:37,600 --> 00:11:40,959 Speaker 1: by the trade wars, in the worst hit in many 196 00:11:41,000 --> 00:11:44,840 Speaker 1: ways than the US or China because it's so bound 197 00:11:44,920 --> 00:11:48,559 Speaker 1: up with the global trading system. How would you say 198 00:11:49,080 --> 00:11:52,120 Speaker 1: things are looking now for twenty in Germany? And I 199 00:11:52,120 --> 00:11:55,880 Speaker 1: guess the Eurozone economy generally. I think if you had 200 00:11:55,920 --> 00:11:59,160 Speaker 1: to summon summed up in one sentence, you would say 201 00:12:00,240 --> 00:12:03,120 Speaker 1: we can be lucky that if it doesn't get any worse. 202 00:12:03,760 --> 00:12:07,240 Speaker 1: So there are signs that both the German economy and 203 00:12:07,360 --> 00:12:11,120 Speaker 1: the Eurozone economy have stabilized. UM. For the past couple 204 00:12:11,160 --> 00:12:15,640 Speaker 1: of months, we've seen some indicators suggesting and ever so 205 00:12:15,760 --> 00:12:20,559 Speaker 1: slow pick up in momentum. Others have pointed to setbacks. 206 00:12:20,600 --> 00:12:23,680 Speaker 1: So right now we're in this in this phase where 207 00:12:23,760 --> 00:12:28,040 Speaker 1: the optimists say we're about to bottom out. If you 208 00:12:28,120 --> 00:12:33,680 Speaker 1: look at momentum over or forecast momentum over twenty it 209 00:12:33,760 --> 00:12:37,360 Speaker 1: won't pick up significantly. So we're not talking about any 210 00:12:37,480 --> 00:12:42,520 Speaker 1: v U shaped recoveries here. Um, we're talking about very 211 00:12:42,640 --> 00:12:48,760 Speaker 1: very um slow growth stabilization at the current level. So 212 00:12:48,800 --> 00:12:52,840 Speaker 1: the forecast don't look any better next year than they 213 00:12:53,000 --> 00:12:56,839 Speaker 1: then they do. Look now, the problem really is that 214 00:12:57,040 --> 00:13:01,720 Speaker 1: the manufacturing slump has been so deep, um, the recession 215 00:13:01,760 --> 00:13:05,520 Speaker 1: in industry has been so severe, uh that there is 216 00:13:05,559 --> 00:13:10,679 Speaker 1: only so much domestic demand private consumption investment can do 217 00:13:10,880 --> 00:13:16,400 Speaker 1: to offset that. And we're starting to see that confidence 218 00:13:16,679 --> 00:13:20,800 Speaker 1: is also declining in in the domestic economy. Uh. You 219 00:13:20,840 --> 00:13:25,319 Speaker 1: see labor markets being slowly affected. And it's that very 220 00:13:25,160 --> 00:13:29,319 Speaker 1: that very fine line we're walking at the moment where 221 00:13:29,360 --> 00:13:32,480 Speaker 1: things can improve from here, but it won't take much 222 00:13:32,520 --> 00:13:36,480 Speaker 1: for things to get significantly worse. So I think we 223 00:13:36,520 --> 00:13:39,280 Speaker 1: need to be very very careful in looking at what 224 00:13:39,440 --> 00:13:42,440 Speaker 1: the German and the Eurozone economy can do over the 225 00:13:42,440 --> 00:13:45,680 Speaker 1: next couple of months and over the next couple of quarters. Now, 226 00:13:45,840 --> 00:13:50,080 Speaker 1: listening to Christine look are the new ECB president, she said, 227 00:13:50,440 --> 00:13:53,560 Speaker 1: risks are still on the downside, but she also made 228 00:13:53,559 --> 00:13:59,319 Speaker 1: sure to stress in her in her first public press conference, 229 00:13:59,360 --> 00:14:04,120 Speaker 1: in her first official remarks on monetary policy, that those 230 00:14:04,240 --> 00:14:08,719 Speaker 1: risks from trade, those risks from protectionism, from vulnerabilities and 231 00:14:08,800 --> 00:14:15,319 Speaker 1: emerging markets have actually diminished somewhat. So there is a 232 00:14:15,440 --> 00:14:19,320 Speaker 1: willingness to be optimistic and see the signs of improvement, 233 00:14:19,680 --> 00:14:22,320 Speaker 1: but people are also very very aware that things can 234 00:14:22,360 --> 00:14:24,800 Speaker 1: go terribly wrong. Yeah, I guess it's a reminder. You know, 235 00:14:24,800 --> 00:14:27,240 Speaker 1: when we we do think about the overall picture for 236 00:14:27,240 --> 00:14:30,480 Speaker 1: the economy in we tend to say, you know, everything 237 00:14:30,560 --> 00:14:32,640 Speaker 1: is reliant on the consumer, and if you're sitting in 238 00:14:32,680 --> 00:14:36,080 Speaker 1: the US or even the UK, very consumer led economies, 239 00:14:36,120 --> 00:14:38,000 Speaker 1: that kind of sounds like good news because it's such 240 00:14:38,040 --> 00:14:40,920 Speaker 1: a big um. It's always the source of momentum in 241 00:14:40,920 --> 00:14:44,280 Speaker 1: the economy. But the countries like Germany, which have have 242 00:14:44,600 --> 00:14:47,960 Speaker 1: to some extent struggled to have that more consumer driven side, 243 00:14:48,360 --> 00:14:51,320 Speaker 1: have been so dependent on manufacturing. It is a it 244 00:14:51,440 --> 00:14:54,480 Speaker 1: is a potential weakness that we are now so dependent 245 00:14:54,560 --> 00:14:57,640 Speaker 1: on consumption globally. I mean, yeah, I should also ask 246 00:14:57,720 --> 00:15:02,280 Speaker 1: you about new leadership in Europe. You know, there was 247 00:15:02,280 --> 00:15:04,240 Speaker 1: a famous question about you know, if I want to 248 00:15:04,280 --> 00:15:06,200 Speaker 1: call Europe, who do I call? I mean, all of 249 00:15:06,240 --> 00:15:09,520 Speaker 1: those top jobs changed hands in the last twelve months, 250 00:15:09,960 --> 00:15:12,480 Speaker 1: not just at the European Central Bank you mentioned, but 251 00:15:12,560 --> 00:15:15,320 Speaker 1: a lot of the key jobs in Brussels, at the 252 00:15:15,360 --> 00:15:20,320 Speaker 1: European Commission and such. I mean, will will ordinary people 253 00:15:20,720 --> 00:15:24,680 Speaker 1: or even failing that, the people listening to Stephanomics notice 254 00:15:24,720 --> 00:15:27,120 Speaker 1: anything different with this new leadership. Are they going to 255 00:15:27,160 --> 00:15:30,080 Speaker 1: try and make their mark? I think so, and I 256 00:15:30,120 --> 00:15:34,080 Speaker 1: think we already have to be honest. Um, the past Commission, 257 00:15:34,120 --> 00:15:38,240 Speaker 1: the past leadership of Europe was still very much engulfed 258 00:15:38,280 --> 00:15:42,000 Speaker 1: in crisis fighting or picking up the pieces after after 259 00:15:42,080 --> 00:15:45,600 Speaker 1: Europe's debt crisis. It's not remember it's not too long 260 00:15:45,640 --> 00:15:49,880 Speaker 1: ago that Grace almost dropped out. So it was very 261 00:15:49,960 --> 00:15:54,640 Speaker 1: much fixing the problems, but not very much time for 262 00:15:55,360 --> 00:16:00,000 Speaker 1: problems that are inevitably coming our way. In the few 263 00:16:00,120 --> 00:16:03,400 Speaker 1: chure and I think was alla funderlying the new Commission 264 00:16:03,400 --> 00:16:08,120 Speaker 1: President set out very ambitious agenda. She made very very 265 00:16:08,160 --> 00:16:13,520 Speaker 1: clear that her commission, her her term, will be about 266 00:16:13,640 --> 00:16:18,400 Speaker 1: defining and shaping Europe's future. So it's about transforming society, 267 00:16:18,480 --> 00:16:24,080 Speaker 1: it's about fighting climate change, about making countries and society 268 00:16:24,200 --> 00:16:29,520 Speaker 1: ready for UM a life in in UH, embracing new 269 00:16:29,560 --> 00:16:35,000 Speaker 1: technologies UM, but also to look at aging society UM, 270 00:16:35,520 --> 00:16:40,560 Speaker 1: looking at how demographics shifts will affect living and and 271 00:16:40,680 --> 00:16:44,840 Speaker 1: sustaining economies in in Europe in particular. So I think 272 00:16:45,360 --> 00:16:48,800 Speaker 1: the agenda the Commission set out is very ambitious. We've 273 00:16:48,800 --> 00:16:52,240 Speaker 1: heard the first the first ideas about what they want 274 00:16:52,280 --> 00:16:55,400 Speaker 1: to do on climate and in particular it's a very 275 00:16:55,480 --> 00:16:58,400 Speaker 1: it's a topic that will be with us probably for 276 00:16:58,400 --> 00:17:02,120 Speaker 1: for a very long time, in particularly next year. So 277 00:17:02,160 --> 00:17:05,040 Speaker 1: I think we've already seen that they have ambitious plans 278 00:17:05,080 --> 00:17:08,600 Speaker 1: and how much of those will materialize that we will 279 00:17:09,200 --> 00:17:12,000 Speaker 1: find out. I suppose they will be interesting. This year. 280 00:17:12,040 --> 00:17:15,639 Speaker 1: I mean, I think was definitely a year when the 281 00:17:15,760 --> 00:17:20,159 Speaker 1: urgency of the climate debate became much more evident to 282 00:17:20,359 --> 00:17:23,520 Speaker 1: people that entered the mainstream, especially in Europe, and it's 283 00:17:23,560 --> 00:17:26,080 Speaker 1: interesting we've also that we have now seen the President 284 00:17:26,760 --> 00:17:31,760 Speaker 1: um in the head of the Commission putting that green 285 00:17:31,840 --> 00:17:34,920 Speaker 1: new Deal on the agenda. Will we see a lot 286 00:17:34,960 --> 00:17:37,720 Speaker 1: more practical action in You know, this would be the 287 00:17:37,760 --> 00:17:40,920 Speaker 1: obvious time for me to say something about Brexit, but 288 00:17:41,200 --> 00:17:43,399 Speaker 1: you know what, I'm not going to because we've talked 289 00:17:43,480 --> 00:17:48,440 Speaker 1: plenty about Brexit on this podcast and many other podcasts. 290 00:17:48,440 --> 00:17:49,800 Speaker 1: I guess the only thing I'll say is that I 291 00:17:49,800 --> 00:17:53,320 Speaker 1: can say with quite a lot of confidence that but 292 00:17:53,560 --> 00:17:56,879 Speaker 1: in the next few months, sometime in almost certainly the 293 00:17:56,960 --> 00:18:00,879 Speaker 1: end of January, Britain will have brexited. We will have left, 294 00:18:01,280 --> 00:18:04,480 Speaker 1: but there will still be plenty of uncertainty about what 295 00:18:04,600 --> 00:18:07,200 Speaker 1: our future relationships are going to be, well, pretty much 296 00:18:07,280 --> 00:18:15,560 Speaker 1: with anybody. I mean. At the end of it looked possible, 297 00:18:15,640 --> 00:18:18,119 Speaker 1: maybe not likely, but possible that the UK would be 298 00:18:18,160 --> 00:18:22,439 Speaker 1: coming into with a radical left winger as Prime Minister, 299 00:18:22,680 --> 00:18:25,840 Speaker 1: Jeremy Corbyn. That didn't happen, But at the end of 300 00:18:25,880 --> 00:18:28,320 Speaker 1: this year we could have a US president about to 301 00:18:28,359 --> 00:18:33,119 Speaker 1: take office with an agenda that's almost as radical as Corbin's. 302 00:18:34,240 --> 00:18:39,880 Speaker 1: Looking at some of the democratic that the leading Democratic candidates. 303 00:18:40,240 --> 00:18:44,800 Speaker 1: You know, assume one of those, say Elizabeth Warren has 304 00:18:44,840 --> 00:18:48,040 Speaker 1: won the presidency, how do you think that would change 305 00:18:48,080 --> 00:18:51,200 Speaker 1: how we would see the global economic outlook in the year. 306 00:18:52,400 --> 00:18:55,000 Speaker 1: So I think there's a prior question there, Stephanie, and 307 00:18:55,080 --> 00:18:59,560 Speaker 1: that's will the US Democratic Party look at what happened 308 00:18:59,640 --> 00:19:02,560 Speaker 1: in the UK election and say, okay, there's a lesson 309 00:19:02,640 --> 00:19:07,000 Speaker 1: here for us. The UK Labor Party tried a radical agenda. 310 00:19:07,280 --> 00:19:10,199 Speaker 1: It didn't resonate the ballot box. Maybe we need to 311 00:19:10,200 --> 00:19:12,840 Speaker 1: think about that when we're making a decision between a 312 00:19:12,920 --> 00:19:15,719 Speaker 1: Biden and a Warren and Assanders. But let's say they 313 00:19:15,720 --> 00:19:17,520 Speaker 1: go ahead. Let's say we get one of the more 314 00:19:17,560 --> 00:19:23,240 Speaker 1: progressive Democrat leaders um coming into the twenty election and winning. 315 00:19:23,960 --> 00:19:27,639 Speaker 1: If we think about the international aspect of it, the 316 00:19:27,680 --> 00:19:32,280 Speaker 1: most important thing is trade policy. And my reading of 317 00:19:32,320 --> 00:19:35,000 Speaker 1: the sort of the tea leaves the sort of initials 318 00:19:35,119 --> 00:19:39,399 Speaker 1: policy statements from the Democratic candidates is actually, they're going 319 00:19:39,440 --> 00:19:42,399 Speaker 1: to be as tough on trade as Donald Trump is. 320 00:19:42,960 --> 00:19:45,320 Speaker 1: But I think it's also fair to say that they 321 00:19:45,320 --> 00:19:48,160 Speaker 1: would be more predictable. There'd be a policy process, there'd 322 00:19:48,200 --> 00:19:52,479 Speaker 1: be more transparency, there'd be announcements rather than tweets. And 323 00:19:52,520 --> 00:19:54,720 Speaker 1: when we look at the drag from the trade war, 324 00:19:55,080 --> 00:19:57,000 Speaker 1: a bunch of it has come from tariffs, but a 325 00:19:57,000 --> 00:19:59,360 Speaker 1: bunch of it has come from uncertainty as well. If 326 00:19:59,359 --> 00:20:02,520 Speaker 1: the uncertain he goes down, if the predictability goes up, 327 00:20:02,720 --> 00:20:06,479 Speaker 1: that's going to be a positive for global growth. Second 328 00:20:06,520 --> 00:20:09,600 Speaker 1: aspect of it is the domestic agenda. And here too 329 00:20:09,640 --> 00:20:13,640 Speaker 1: there's a there's a prior question, which is Democrats might 330 00:20:13,640 --> 00:20:16,880 Speaker 1: well win the presidency, do they win the Senate. If 331 00:20:16,880 --> 00:20:18,679 Speaker 1: they don't win the Senate, it's going to be very 332 00:20:18,680 --> 00:20:22,160 Speaker 1: difficult for them to push through any far reaching domestic 333 00:20:22,200 --> 00:20:25,160 Speaker 1: policy reforms, and so I think we'd be looking very 334 00:20:25,200 --> 00:20:27,440 Speaker 1: much at the kind of the status quo in terms 335 00:20:27,440 --> 00:20:31,160 Speaker 1: of US tax policy. For example, if they do win 336 00:20:31,200 --> 00:20:33,919 Speaker 1: the Senate, which is going to be a stretch, then 337 00:20:33,960 --> 00:20:36,040 Speaker 1: I think we would be looking in a more ambitious 338 00:20:36,280 --> 00:20:39,800 Speaker 1: domestic reform agenda. We'd be looking at changes in tax policy, 339 00:20:39,800 --> 00:20:42,320 Speaker 1: we'd be looking at changes in healthcare policy. And I 340 00:20:42,320 --> 00:20:44,919 Speaker 1: think one of the impacts of that would be margin 341 00:20:45,040 --> 00:20:48,440 Speaker 1: compression for the US corporate sector, with pretty far reaching 342 00:20:48,480 --> 00:20:53,320 Speaker 1: implications for the markets. Because it was interesting that there 343 00:20:53,359 --> 00:20:55,760 Speaker 1: had not been a lot of discussion around the economic 344 00:20:55,880 --> 00:20:59,359 Speaker 1: or the potential market impact of a Trump victory until 345 00:21:00,160 --> 00:21:03,560 Speaker 1: he was actually elected, and then everyone claimed to be 346 00:21:03,640 --> 00:21:06,480 Speaker 1: not at all surprised by the US stock markets, you know, 347 00:21:06,600 --> 00:21:10,280 Speaker 1: soaring upwards. Um, you know, sometimes these things become obvious 348 00:21:10,320 --> 00:21:12,879 Speaker 1: only only just after something has happened. So you know, 349 00:21:13,000 --> 00:21:14,920 Speaker 1: we'll see. But Sean we if you looked at the 350 00:21:15,160 --> 00:21:18,960 Speaker 1: booking odds right now, you would say a Trump victory 351 00:21:19,240 --> 00:21:21,879 Speaker 1: was more likely than not, in part because the U 352 00:21:21,960 --> 00:21:24,680 Speaker 1: s economy looks like it's going to continue to be okay, 353 00:21:24,680 --> 00:21:28,160 Speaker 1: even with the uncertainty you talked about and the tariffs 354 00:21:28,160 --> 00:21:31,800 Speaker 1: from the trade wars. You have spent a good chunk 355 00:21:32,240 --> 00:21:34,440 Speaker 1: of I'm rather jealous. Actually, you've spent a good chunk 356 00:21:34,480 --> 00:21:37,200 Speaker 1: of the last few months out in the field. We 357 00:21:37,480 --> 00:21:42,000 Speaker 1: heard your discussion on stephonomics around the places you've been 358 00:21:42,000 --> 00:21:45,800 Speaker 1: in North Carolina. You've been to Granite City, You've been 359 00:21:45,920 --> 00:21:49,959 Speaker 1: on the Mississippi. When you cut through it all and 360 00:21:50,000 --> 00:21:52,400 Speaker 1: you talk to these people, has the trade war been 361 00:21:52,440 --> 00:21:56,880 Speaker 1: good or bad for Trump's chances of reelection? I think 362 00:21:57,280 --> 00:22:02,000 Speaker 1: if there is one weakness in Trump's economic argument going 363 00:22:02,040 --> 00:22:06,399 Speaker 1: into the election, it is the impact of his trade 364 00:22:06,440 --> 00:22:13,200 Speaker 1: wars on swing states like Wisconsin, Michigan, Pennsylvania, even Ohio, 365 00:22:13,800 --> 00:22:16,479 Speaker 1: And what we've seen in all of those places is 366 00:22:16,720 --> 00:22:20,840 Speaker 1: a slow down in manufacturing growth and in some cases 367 00:22:21,160 --> 00:22:24,879 Speaker 1: a the start of layoffs in manufacturing, some of which 368 00:22:25,160 --> 00:22:30,240 Speaker 1: is tied directly to the trade wars and impact of 369 00:22:30,320 --> 00:22:34,560 Speaker 1: everything from rising costs due to tariffs on inputs from 370 00:22:34,680 --> 00:22:40,280 Speaker 1: China or steel, but also just the damper on demand 371 00:22:41,280 --> 00:22:46,360 Speaker 1: that you've had, the retaliation that you've had from the Chinese, 372 00:22:46,440 --> 00:22:49,439 Speaker 1: which means US exports to China are going down, and 373 00:22:49,480 --> 00:22:52,720 Speaker 1: that you know, while the US exported less to China 374 00:22:53,000 --> 00:22:55,920 Speaker 1: or exports less to China than it than it imports, 375 00:22:55,960 --> 00:23:00,199 Speaker 1: that's still an important market for a lot of American companies. Uh. 376 00:23:00,320 --> 00:23:03,119 Speaker 1: So you're starting to see that filter through the economy 377 00:23:03,240 --> 00:23:06,080 Speaker 1: where you know, it started off in the agricultural sector. 378 00:23:06,240 --> 00:23:10,200 Speaker 1: We saw it a lot in agricultural equipment suppliers early on. 379 00:23:10,600 --> 00:23:15,159 Speaker 1: We're now seeing it in the trucking business. Uh. You know, 380 00:23:15,240 --> 00:23:19,280 Speaker 1: a few years ago or a year ago even Uh, 381 00:23:19,480 --> 00:23:23,600 Speaker 1: the you know, one great promise, Uh, if you were 382 00:23:23,640 --> 00:23:27,719 Speaker 1: a young blue collar man who might support tunnel Trump 383 00:23:28,000 --> 00:23:30,920 Speaker 1: in terms of employment, was signing up as a truck 384 00:23:31,000 --> 00:23:35,000 Speaker 1: driver where they were offering good salaries and benefits, and 385 00:23:35,119 --> 00:23:38,240 Speaker 1: trucking companies were shortening delivery routes so that they were 386 00:23:38,240 --> 00:23:41,320 Speaker 1: more family friendly and so on. Well, trucking companies are 387 00:23:41,320 --> 00:23:44,200 Speaker 1: starting to lay off people. We're seeing truck makers start 388 00:23:44,240 --> 00:23:47,600 Speaker 1: to lay off people. We're seeing digital engine makers starting 389 00:23:47,640 --> 00:23:50,280 Speaker 1: to lay off people. So that kind of industrial economy 390 00:23:50,560 --> 00:23:54,320 Speaker 1: in America, a lot of which is is concentrated in 391 00:23:55,040 --> 00:24:00,000 Speaker 1: those important swing states, is weakening. And how that carry 392 00:24:00,160 --> 00:24:03,600 Speaker 1: is through in is going to be really important to 393 00:24:03,680 --> 00:24:06,120 Speaker 1: the election prospects of Donald Trump. I mean, we need 394 00:24:06,160 --> 00:24:09,240 Speaker 1: to remember that all of these swing states were states 395 00:24:09,240 --> 00:24:12,520 Speaker 1: that Donald Trump won by not many votes. It's not 396 00:24:12,600 --> 00:24:15,840 Speaker 1: like you take a five percent swing even in those 397 00:24:15,880 --> 00:24:18,800 Speaker 1: states for a Democrat to win them. It could be 398 00:24:18,960 --> 00:24:21,679 Speaker 1: less than one percent that swings. And if you have, 399 00:24:22,160 --> 00:24:25,720 Speaker 1: you know, just enough people who are slightly disenchanted with 400 00:24:25,840 --> 00:24:30,920 Speaker 1: Donald Trump's economic policies or more broadly, with his presidency, 401 00:24:31,800 --> 00:24:34,359 Speaker 1: those you know, the fortune his fortunes could change very 402 00:24:34,400 --> 00:24:37,200 Speaker 1: quickly in those states. Well, of course, you know, the 403 00:24:37,240 --> 00:24:40,080 Speaker 1: irony is that a lot of those states were supposedly 404 00:24:40,160 --> 00:24:42,200 Speaker 1: the kind of voters that he was doing the trade 405 00:24:42,200 --> 00:24:46,240 Speaker 1: war four. I mean it is is um perhaps going 406 00:24:46,280 --> 00:24:50,200 Speaker 1: to be a striking feature of in the UK as well, 407 00:24:50,240 --> 00:24:53,760 Speaker 1: at the places where you've got this more nationalistic and 408 00:24:54,000 --> 00:24:59,080 Speaker 1: potentially protectionist policies, um end up hurting the very people 409 00:24:59,200 --> 00:25:03,120 Speaker 1: who voted for it and damaging their their interests more 410 00:25:03,240 --> 00:25:05,480 Speaker 1: more than anyone. But we shall we shall see how 411 00:25:05,480 --> 00:25:07,879 Speaker 1: that plays out. I'm not going to get anyone to 412 00:25:08,960 --> 00:25:12,719 Speaker 1: call the result of the US presidential election. I'm going 413 00:25:12,720 --> 00:25:17,719 Speaker 1: to remind listeners that Michael Bloomberg, the majority owner of 414 00:25:18,280 --> 00:25:22,680 Speaker 1: Bloomberg News, is running for president himself, running at least 415 00:25:22,720 --> 00:25:26,960 Speaker 1: for and for the for the Democratic candidacy. But Tom, 416 00:25:27,000 --> 00:25:29,159 Speaker 1: in your gut, do you think we will get to 417 00:25:29,200 --> 00:25:33,360 Speaker 1: the November US election with the US and the global 418 00:25:33,400 --> 00:25:37,199 Speaker 1: economy still looking broadly Okay, we know it's not great, 419 00:25:37,760 --> 00:25:41,640 Speaker 1: but still in decent shape. So I was really interested 420 00:25:41,680 --> 00:25:45,919 Speaker 1: to hear Sean's on the ground observations from some of 421 00:25:45,920 --> 00:25:48,760 Speaker 1: those swing states and how the trade war has been 422 00:25:48,800 --> 00:25:52,479 Speaker 1: impacting them if we're thinking about the US economy as 423 00:25:52,520 --> 00:25:56,399 Speaker 1: a whole. Though, we've got unemployment at the lowest level 424 00:25:56,760 --> 00:26:01,000 Speaker 1: since the late nineties sixties. The November job report, which 425 00:26:01,000 --> 00:26:04,760 Speaker 1: remember came in a very robust two sixty six thousand 426 00:26:05,280 --> 00:26:09,639 Speaker 1: new jobs significantly changed the narrative on where we're going 427 00:26:09,800 --> 00:26:15,280 Speaker 1: into I think a few people now expect a recession 428 00:26:15,680 --> 00:26:21,120 Speaker 1: in the year ahead. Most people, including US, expect low unemployment, 429 00:26:21,480 --> 00:26:26,080 Speaker 1: rising wages, robust consumption to keep growth chugging along. I 430 00:26:26,119 --> 00:26:27,800 Speaker 1: think the bet has to be when we look at 431 00:26:27,800 --> 00:26:30,560 Speaker 1: the national picture, President Trump is going to be coming 432 00:26:30,560 --> 00:26:33,959 Speaker 1: into the election with a pretty strong economy behind him. 433 00:26:34,600 --> 00:26:37,040 Speaker 1: I started with some of the stories that caught us 434 00:26:37,080 --> 00:26:42,200 Speaker 1: by surprise in There'll be plenty more surprises in twenty 435 00:26:42,280 --> 00:26:45,920 Speaker 1: we know. But what are you all especially looking out 436 00:26:46,000 --> 00:26:51,040 Speaker 1: for possible places for surprises that could could really matter 437 00:26:51,160 --> 00:26:55,240 Speaker 1: for the global economy? Yana Randa. I'm keeping my eye 438 00:26:55,240 --> 00:26:59,919 Speaker 1: on trade, on uncertainty about the economic outlook, and as 439 00:27:00,000 --> 00:27:03,680 Speaker 1: apecially on inflation because the numbers we've seen on wages, 440 00:27:04,040 --> 00:27:07,159 Speaker 1: they are actually coming up. The labor market is not 441 00:27:07,280 --> 00:27:11,359 Speaker 1: looking too shabby. In fact, we have unemployment close to 442 00:27:11,400 --> 00:27:15,800 Speaker 1: a record low across most of the region. So I 443 00:27:15,840 --> 00:27:19,680 Speaker 1: am I am really um looking out for for inflation 444 00:27:19,760 --> 00:27:22,600 Speaker 1: to pick up. Now it's not in the official statistics, 445 00:27:22,640 --> 00:27:26,320 Speaker 1: but there there is a risk that that, um, we 446 00:27:26,359 --> 00:27:29,119 Speaker 1: will see you a slight increase. You heard it here. First, 447 00:27:29,119 --> 00:27:34,159 Speaker 1: the correspondent from Frankfurt is worried about inflation, and Sean Donnan, 448 00:27:34,880 --> 00:27:37,800 Speaker 1: I'm going to be spending looking at the Swing States 449 00:27:38,240 --> 00:27:41,920 Speaker 1: and what's happening in industrial America. The big wild card, though, 450 00:27:42,600 --> 00:27:47,399 Speaker 1: uh in may come from China. We ended with a 451 00:27:47,520 --> 00:27:51,920 Speaker 1: wave of corporate defaults coming out of China and it's 452 00:27:52,040 --> 00:27:55,480 Speaker 1: starting to filter into the government sector there. Uh that 453 00:27:55,680 --> 00:27:58,959 Speaker 1: could build into something more consequential for both China and 454 00:27:59,000 --> 00:28:01,879 Speaker 1: the global economy. Tom So, if we think about the 455 00:28:01,880 --> 00:28:05,480 Speaker 1: global economy in I think the first word which pops 456 00:28:05,480 --> 00:28:08,679 Speaker 1: into everyone's head is trade. Um. But I think we 457 00:28:08,680 --> 00:28:11,800 Speaker 1: can make a case that actually the most important word 458 00:28:11,920 --> 00:28:17,640 Speaker 1: to characterize the global economy has been uncertainty. UM. Let 459 00:28:17,640 --> 00:28:21,680 Speaker 1: me give you three really brief examples. First, US trade 460 00:28:21,720 --> 00:28:25,439 Speaker 1: policy uncertainty, that surprise move on Mexico, all of the 461 00:28:25,440 --> 00:28:29,000 Speaker 1: surprises on China which Sean, Jenny Leonard and others have 462 00:28:29,080 --> 00:28:33,720 Speaker 1: reported on so well over the course of the year. Um. Secondly, Brexit, 463 00:28:34,240 --> 00:28:39,200 Speaker 1: all of that misinformation about the positives and negatives of Brexit, 464 00:28:39,480 --> 00:28:42,440 Speaker 1: the scope to get negotiations done quickly or not. And 465 00:28:42,520 --> 00:28:46,520 Speaker 1: thirdly China, this was probably below most people's radar. But 466 00:28:46,600 --> 00:28:48,680 Speaker 1: there was a report which came out in the middle 467 00:28:48,680 --> 00:28:52,239 Speaker 1: of the year by some really serious Chinese academics with 468 00:28:52,320 --> 00:28:55,080 Speaker 1: involvement from an adviser to the People's Bank of China, 469 00:28:55,440 --> 00:28:58,760 Speaker 1: and it said, you know what, China's GDP growth for 470 00:28:58,800 --> 00:29:02,160 Speaker 1: the last five years hasn't actually been six or seven percent, 471 00:29:02,440 --> 00:29:05,040 Speaker 1: It's been four and so on some of the most 472 00:29:05,080 --> 00:29:08,680 Speaker 1: important dimensions of the global economy. There's just a really 473 00:29:08,680 --> 00:29:15,000 Speaker 1: elevated level of uncertainty. And I'm reminded of a famous 474 00:29:15,000 --> 00:29:19,280 Speaker 1: statement by by Hannah Arrant, the great twentieth century philosopher, 475 00:29:19,920 --> 00:29:22,320 Speaker 1: made in a very different context, but I think really 476 00:29:22,360 --> 00:29:26,000 Speaker 1: relevant to the type of situation we face today, and 477 00:29:26,080 --> 00:29:30,440 Speaker 1: she said, when all we hear are lies, the consequence 478 00:29:30,640 --> 00:29:33,720 Speaker 1: is not that we start believing lies. It's that we 479 00:29:33,720 --> 00:29:37,600 Speaker 1: stopped believing anything um. And I think the biggest risk 480 00:29:37,640 --> 00:29:42,000 Speaker 1: for the economy globally in heading into and further forwards, 481 00:29:42,560 --> 00:29:46,720 Speaker 1: is that in this kind of miasthma of misinformation UM, 482 00:29:47,680 --> 00:29:51,480 Speaker 1: the uncertainty which has clouded the outlook this year, just 483 00:29:51,600 --> 00:29:55,280 Speaker 1: proves really hard to lift. And that uncertainty premium, that 484 00:29:55,360 --> 00:29:59,400 Speaker 1: uncertainty drag stays in place and drags on global growth 485 00:29:59,400 --> 00:30:02,520 Speaker 1: going forwards. Well said, thanks Tom, I mean having if 486 00:30:02,520 --> 00:30:05,880 Speaker 1: I'm going to give myself a few wild cards, having 487 00:30:05,920 --> 00:30:09,040 Speaker 1: been made a cheap joke about Yano and inflation, I 488 00:30:09,080 --> 00:30:11,360 Speaker 1: actually agree with her that that would be the big 489 00:30:11,400 --> 00:30:15,160 Speaker 1: surprise for markets and others this year. And let's face it, 490 00:30:15,160 --> 00:30:19,000 Speaker 1: it's perfectly likely when you have a consumer led economy 491 00:30:19,320 --> 00:30:23,840 Speaker 1: driven a recovery with a problem on the investment side 492 00:30:23,840 --> 00:30:26,960 Speaker 1: in that in those circumstances we often have seen inflation 493 00:30:27,000 --> 00:30:29,800 Speaker 1: in the past. I guess the other obvious go to 494 00:30:29,960 --> 00:30:35,600 Speaker 1: place for surprises and problems would be Italy. We could 495 00:30:35,600 --> 00:30:37,960 Speaker 1: certainly have a flare up at any time in Italy. 496 00:30:38,440 --> 00:30:41,240 Speaker 1: And finally, I think we have to remember the potential 497 00:30:41,280 --> 00:30:43,880 Speaker 1: seriousness of what's happening in Hong Kong and how that 498 00:30:43,920 --> 00:30:48,160 Speaker 1: could actually reverberate, not just on the geopolitical front, but 499 00:30:48,280 --> 00:30:53,160 Speaker 1: potentially economically as well. Plenty to think about. Thank you 500 00:30:53,280 --> 00:30:57,600 Speaker 1: very much to everyone here, Yano round out, Tom Marlick 501 00:30:57,720 --> 00:31:06,960 Speaker 1: and Sean Donnan. Thanks definitely, thanks for having us, Thanks 502 00:31:06,960 --> 00:31:09,360 Speaker 1: for listening to Stephanomics. We'll be back next week with 503 00:31:09,400 --> 00:31:12,560 Speaker 1: more on the ground insights into the global economy. In 504 00:31:12,600 --> 00:31:15,760 Speaker 1: the meantime. You can find us on the Bloomberg Terminal, website, app, 505 00:31:15,880 --> 00:31:18,600 Speaker 1: or wherever you get your podcasts, and please do take 506 00:31:18,640 --> 00:31:20,800 Speaker 1: the time to rate and review our show so it 507 00:31:20,840 --> 00:31:23,600 Speaker 1: can reach more listeners. For more news and analysis from 508 00:31:23,600 --> 00:31:27,320 Speaker 1: Bloomberg Economics, follow at Economics on Twitter, and you can 509 00:31:27,360 --> 00:31:31,040 Speaker 1: also find me on at my Stephanomics. This episode was 510 00:31:31,080 --> 00:31:35,320 Speaker 1: produced by Magnus Hendrickson special thanks to Sean Donnan, Tom Marlick, 511 00:31:35,520 --> 00:31:39,719 Speaker 1: and Yana Randall. Scott Lamman is our executive producer and 512 00:31:39,760 --> 00:31:42,520 Speaker 1: the head of Bloomberg Podcast is Francescani.