WEBVTT - The Global Economic Preview for 2020 0:00:04.360 --> 0:00:07.200 Hello, and welcome to Stephanomics, the podcast that brings the 0:00:07.200 --> 0:00:14.840 global economy to you. This week, we're going to take 0:00:14.880 --> 0:00:18.439 your hand and walk you confidently into twenty with a 0:00:18.480 --> 0:00:20.800 guide to the year ahead from some of the brightest 0:00:20.840 --> 0:00:24.120 mind we have here at Bloomberg Economics, our Chief economist 0:00:24.200 --> 0:00:28.760 Tom Wrlick, Senior Trade reporter and scoopmeister Sean Donnan, and 0:00:28.800 --> 0:00:32.720 our European Economy reporter Yana Randa. We're sitting all in 0:00:32.800 --> 0:00:35.800 different studios in Washington, London, and Frankfurt, and we're just 0:00:35.800 --> 0:00:38.920 going to chat together about what might happen in and 0:00:39.000 --> 0:00:42.520 what it could all mean. I start with trepidation because 0:00:42.520 --> 0:00:44.720 I'm mindful that we spend a lot of time in 0:00:46.080 --> 0:00:48.159 thinking and talking about stuff we didn't expect to be 0:00:48.200 --> 0:00:51.880 talking about this time last year. Protests in Hong Kong, 0:00:52.120 --> 0:00:56.040 for example, or Chili. Not to mention interest rate cuts 0:00:56.160 --> 0:00:59.120 by the US Central Bank year ago. Remember, we were 0:00:59.120 --> 0:01:04.040 expecting monetary policy to be tightening this year, and more 0:01:04.120 --> 0:01:08.039 bond purchases and printing money by the European Central Bank. 0:01:08.440 --> 0:01:12.240 We weren't expecting that. Not to mention Boris Johnson becoming 0:01:12.400 --> 0:01:16.800 Prime Minister. For goodness, sake, so we all know we're 0:01:16.800 --> 0:01:19.040 going to be surprised by what happens in the year ahead, 0:01:19.360 --> 0:01:22.240 and this is about just looking ahead what we can see. 0:01:22.640 --> 0:01:26.000 But very briefly, I wanted to ask all three of 0:01:26.040 --> 0:01:29.560 you what was your most memorable moment covering the global 0:01:29.560 --> 0:01:35.440 economy in t Tom Wrling UM. So back in November, 0:01:35.840 --> 0:01:39.160 we were in Beijing for the New Economy Forum UM 0:01:39.160 --> 0:01:42.640 and Wang Xi Shan, arguably the second most powerful leader 0:01:42.760 --> 0:01:45.800 in China, took to the stage and there he was 0:01:46.120 --> 0:01:50.600 speaking to an assembled crowd of the most powerful chief executives, 0:01:51.080 --> 0:01:54.160 government leaders, thought leaders from around the world. There's so 0:01:54.160 --> 0:01:58.120 many questions about China, questions about the trade war, questions 0:01:58.120 --> 0:02:01.120 about what's happening in Hong Kong Hong, and he was 0:02:01.160 --> 0:02:05.040 a moment where Wang could have really addressed these questions, 0:02:05.440 --> 0:02:08.600 and he didn't do it. He gave a powerful speech 0:02:08.880 --> 0:02:12.959 which spoke to China's domestic political agenda. And what struck 0:02:13.000 --> 0:02:15.640 me about that was that we really just don't have 0:02:15.680 --> 0:02:19.320 a meeting of minds right now. The US and China. 0:02:19.560 --> 0:02:22.000 The trade conflict between US and China, which has really 0:02:22.320 --> 0:02:26.720 defined the global economy this year, is really just scene 0:02:26.760 --> 0:02:30.040 in completely different terms in d C. And in Beijing. 0:02:30.520 --> 0:02:33.040 It was a problem in could well be a big 0:02:33.040 --> 0:02:37.800 problem in twenty twenty as well, Sean Donna. So my 0:02:37.880 --> 0:02:42.840 momentt memorable moment in nineteen had to be sitting in 0:02:43.639 --> 0:02:48.800 a barn with Lorenda Overman, who is a hog farmer 0:02:48.880 --> 0:02:52.480 in North Carolina. Has lived on this piece of land 0:02:52.520 --> 0:02:55.320 for thirty seven years. It's been her husband's family since 0:02:55.360 --> 0:02:58.280 the Civil War, and she had just had the worst 0:02:58.400 --> 0:03:01.000 year that she had had in already seven years as 0:03:01.000 --> 0:03:04.000 a result of the trade wars and the impact on 0:03:04.320 --> 0:03:07.360 pretty much everything she raises or grows. UH. It had 0:03:07.400 --> 0:03:11.520 meant that she had stopped cutting checks to her son 0:03:11.840 --> 0:03:14.680 and her son in law who worked on the farm, 0:03:14.840 --> 0:03:17.080 and that meant that, as she said to me, she 0:03:17.160 --> 0:03:19.960 was literally taking the food out of the mouths of 0:03:20.000 --> 0:03:23.120 her grandchildren. It was a pretty amazing thing. She was 0:03:23.560 --> 0:03:25.960 close to tears as she was laying out the finances 0:03:26.000 --> 0:03:29.600 she ran through UH commodity prices and what that meant 0:03:29.639 --> 0:03:32.960 for her own personal finances. And then she got to 0:03:33.000 --> 0:03:35.320 the end of it all and told me that she 0:03:35.840 --> 0:03:40.520 still remained a strong supporter of Donald Trump. And to me, 0:03:40.760 --> 0:03:45.520 that was the paradox in the US economy and in 0:03:45.560 --> 0:03:48.920 these trade wars in twenty nineteen. That tension between the 0:03:48.960 --> 0:03:52.160 people who are getting hit or suffered as a result 0:03:52.200 --> 0:03:55.720 of the trade wars and their continuing support for Donald Trump, 0:03:55.840 --> 0:04:01.600 and whether that continues into is the big question Yana Randall. 0:04:02.920 --> 0:04:06.240 For me, it was the e CBS decision in September, 0:04:06.360 --> 0:04:08.960 so Mario Dragon, just a few weeks away from the 0:04:09.040 --> 0:04:12.960 end of his term, announcing a massive stimulus package of 0:04:13.040 --> 0:04:18.440 rad cut deeper below zero, quantitative easing, more favorable terms 0:04:18.440 --> 0:04:21.600 of long term loans, a bunch of other things, And 0:04:21.720 --> 0:04:26.600 that was just showing how severely the r Area economy 0:04:26.760 --> 0:04:32.320 was hit by the trade war, by uncertainty, how vulnerable 0:04:32.360 --> 0:04:35.080 the economy was. Suan, I guess we have to start 0:04:35.160 --> 0:04:39.400 where we ended with Donald Trump's trade wars. I mean, 0:04:39.400 --> 0:04:42.080 they completely dominated the outlook for the world economy quite 0:04:42.080 --> 0:04:47.160 a lot in and I think particularly when many economists 0:04:47.200 --> 0:04:51.719 were writing their look aheads for this coming year, the 0:04:51.760 --> 0:04:54.560 prospects looked pretty menacing. It seemed like there was a 0:04:54.720 --> 0:04:57.120 rising chance of the global recession in part because of 0:04:57.160 --> 0:05:00.320 trade wars. By the time we got to Christmas, things 0:05:00.320 --> 0:05:03.960 look Calma, Will Donald Trump settle for what he has 0:05:04.000 --> 0:05:08.279 on China and retire gracefully or can we expect something else. Well, 0:05:08.320 --> 0:05:10.680 I think it's first of all worth kind of benchmarking 0:05:10.839 --> 0:05:13.920 where we are and and the point that we ended 0:05:13.920 --> 0:05:17.520 twenty nineteen at and we're starting is a lot worse 0:05:17.560 --> 0:05:20.000 than the point we ended twenty eight and started twenty 0:05:20.120 --> 0:05:22.800 nineteen at. And there's a lot more tariffs in place 0:05:23.600 --> 0:05:27.039 on trade between the world's two largest economies. And even 0:05:27.080 --> 0:05:30.200 though we've had this Phase one deal that should be 0:05:30.240 --> 0:05:34.000 signed in the coming weeks, uh, it has not gotten 0:05:34.120 --> 0:05:38.040 rid of those tariffs or that drag on on the 0:05:38.080 --> 0:05:41.400 global economy that they that they represent. So that I 0:05:41.440 --> 0:05:45.000 think that's one point is is we have gotten to 0:05:45.279 --> 0:05:47.160 and this is a kind of Donald Trump effect. We've 0:05:47.200 --> 0:05:49.880 gotten to a point where we think of calm as 0:05:49.920 --> 0:05:52.480 a lack of escalation, but we forget how far we've 0:05:52.600 --> 0:05:54.720 escalated and and and where we are there. And I 0:05:54.760 --> 0:05:57.800 think that's worth remembering. The second thing is is, you 0:05:57.839 --> 0:06:00.680 know Donald Trump is if we we're gonna look at 0:06:00.720 --> 0:06:03.720 it through a rational political lens and we're gonna look 0:06:03.720 --> 0:06:07.080 at what he's done with China, Uh, it would make 0:06:07.120 --> 0:06:09.200 a lot of sense to kind of pause the trade 0:06:09.200 --> 0:06:14.760 wars here, have some negotiations go on through and uh 0:06:14.839 --> 0:06:17.720 and and leave it there and and leave any further 0:06:18.279 --> 0:06:22.000 deals or achievements or escalations if they need to come 0:06:22.080 --> 0:06:25.880 until after the November election. But this is Donald Trump, 0:06:25.880 --> 0:06:28.760 and Donald Trump is unpredictable. And it could be something 0:06:28.800 --> 0:06:32.479 as simple as a poll coming out showing that he's 0:06:32.560 --> 0:06:36.520 trailing in Iowa at some point, or trailing somewhere in 0:06:36.520 --> 0:06:38.800 the manufacturing states where is gonna be really important in 0:06:38.800 --> 0:06:41.560 the election, That may cause further actions. So, I mean, 0:06:41.640 --> 0:06:45.120 it's I'm dodging the question there, but it's there's a 0:06:45.160 --> 0:06:47.840 reason for that, and that we're dealing with president who's 0:06:47.880 --> 0:06:51.360 more unpredictable than any other we've had beforehand. Tom, I mean, 0:06:51.560 --> 0:06:53.479 share makes a good point that we are going into 0:06:53.480 --> 0:06:56.320 this year. I mean, Donald Trump has normalized a lot 0:06:56.320 --> 0:06:59.159 of things. Heaven knows, but we have. He has to 0:06:59.200 --> 0:07:01.520 some extent normal lies to having tariffs in a way 0:07:01.560 --> 0:07:03.960 that we didn't. We didn't think of that as a 0:07:03.960 --> 0:07:06.360 normal fixture of the environment, at least of the level 0:07:06.360 --> 0:07:09.640 they are now, um even a couple of years ago. 0:07:10.120 --> 0:07:12.960 That has an impact on the global economy. If we 0:07:13.040 --> 0:07:18.520 have a sort of steady state of uncertainty around trade 0:07:19.040 --> 0:07:22.200 but no real escalation, the kind of thing that Sean 0:07:22.320 --> 0:07:24.280 just described. You know what does that mean for the 0:07:24.280 --> 0:07:27.880 global economy? And I guess particularly for China. So we've 0:07:27.960 --> 0:07:30.480 run a bunch of numbers on this one, Stephanie. If 0:07:30.520 --> 0:07:35.000 we look at a plausible base case of tariffs rolling 0:07:35.040 --> 0:07:37.960 back some way towards the May two thousand and nineteen 0:07:38.080 --> 0:07:42.360 levels and some reduction in uncertainty, then we're looking at 0:07:42.360 --> 0:07:45.800 a boost global GDP. We think of around no point 0:07:45.880 --> 0:07:50.200 three percent in so that's not nothing. It's about two 0:07:50.240 --> 0:07:54.120 hundred and seventy billion dollars and China, which has been 0:07:54.120 --> 0:07:56.960 one of the main losers from the trade war, does 0:07:57.080 --> 0:08:00.760 a little bit better again. But I would certainly echo 0:08:01.080 --> 0:08:03.920 Sean's point on this. We don't have to go very 0:08:03.960 --> 0:08:06.720 far back in history Buenos Areas, the end of two 0:08:06.760 --> 0:08:10.520 thousand and eighteen, Osaka in summer two thousand and nineteen 0:08:10.960 --> 0:08:14.920 to remember positive moments in the US China trade conflict, 0:08:15.280 --> 0:08:19.720 which evaporated almost before the leader's jets had taken off 0:08:19.760 --> 0:08:23.320 on the runway. There's a bunch of uncertainties in this deal. 0:08:23.520 --> 0:08:27.360 Where's the extra two hundred billion dollars in Chinese purchases 0:08:27.440 --> 0:08:29.760 going to come from. What's the U S going to 0:08:29.880 --> 0:08:32.960 offer in terms of tariff rollback? What commitments is trying 0:08:33.000 --> 0:08:35.840 to going to make in terms of intellectual property. So 0:08:35.880 --> 0:08:38.920 the baselines tentatively positive. There's a bunch of stuff that 0:08:38.960 --> 0:08:41.280 could go wrong. As I should say at this point, 0:08:41.320 --> 0:08:43.840 the very observant listeners will know that we don't have 0:08:43.880 --> 0:08:48.360 anyone talking from Asia for this conversation this time of year. 0:08:48.400 --> 0:08:50.520 I wasn't very keen on making people stay up really 0:08:50.559 --> 0:08:53.800 really late to be on the line. But luckily we 0:08:53.880 --> 0:08:57.480 do have Tom, who lived eleven years in Beijing. We 0:08:57.480 --> 0:09:02.600 were there together in No but Tom, I think President 0:09:02.640 --> 0:09:05.480 Trump would say he had a good year in Sorry, 0:09:05.520 --> 0:09:08.199 he would say we had a great year minus that 0:09:08.360 --> 0:09:12.400 small matter of the impeachment. Would President she Jimping say that? 0:09:13.000 --> 0:09:16.040 I think President she Jimping would certainly say that he's 0:09:16.040 --> 0:09:18.679 had a great year, and he would be resounding lee 0:09:18.679 --> 0:09:22.360 echoed by his fellow members of the Chinese leadership, the 0:09:22.440 --> 0:09:26.160 Chinese official press. It's quite hard to find anyone these 0:09:26.240 --> 0:09:29.920 days who's willing to express a negative view on President 0:09:30.040 --> 0:09:33.280 she or his achievements. Okay, so he's President President she 0:09:33.400 --> 0:09:35.800 in his bath alone, would he would he look back 0:09:35.840 --> 0:09:38.400 and actually also be looking into and think, yes, I'm 0:09:38.440 --> 0:09:42.240 in an ok state. The reality, I think, stephaniely is 0:09:42.280 --> 0:09:45.560 that if we think about the problems which China has 0:09:45.600 --> 0:09:49.400 faced in two thousand and nineteen, to a large extent, 0:09:49.640 --> 0:09:54.360 they reflect a strategic miscalculation which took place in the 0:09:54.400 --> 0:09:58.880 past few years. The Belton Road Initiative, the Made in China, 0:09:58.960 --> 0:10:03.960 the China Five initiative. Both of these were really ambitious 0:10:04.040 --> 0:10:09.280 plans which kind of proclaimed China's arrival on the world stage. 0:10:09.600 --> 0:10:12.760 The Belt and Road Initiative was China's arrival in terms 0:10:12.840 --> 0:10:17.480 of international relations, building infrastructure across the world, wielding more 0:10:17.520 --> 0:10:23.199 political influence across the world. The China Plan announced China's 0:10:23.320 --> 0:10:27.880 arrival as a as an ambitious technological power and ambitious 0:10:27.880 --> 0:10:31.880 technology power um the staking their claim for ownership of 0:10:31.920 --> 0:10:35.360 the technologies which would um determine the pattern of winners 0:10:35.360 --> 0:10:38.320 and losers in the global economy going forward. And both 0:10:38.320 --> 0:10:41.320 of these things just rang really loud alarm bells in 0:10:41.360 --> 0:10:44.800 the rest of the world, especially here in Washington, d C. 0:10:45.360 --> 0:10:48.160 And I think the origin of the trade war partly 0:10:48.600 --> 0:10:52.720 goes back to that overreach by China. So I think 0:10:52.720 --> 0:10:55.599 two thousand and nineteen was a year where China avoided 0:10:55.840 --> 0:10:58.920 the worst possible outcome. They've ended the year with the 0:10:58.960 --> 0:11:03.160 trade truce. They haven't made very, very significant concessions to 0:11:03.240 --> 0:11:07.720 the US on things like intellectual property, technology transfer, industrial subsidies. 0:11:08.400 --> 0:11:10.920 So in that sense, I think they can claim a victory. 0:11:10.960 --> 0:11:14.040 But why do they find themselves in this new difficult 0:11:14.040 --> 0:11:18.400 position facing a newly hostile US and newly hostile world. 0:11:18.720 --> 0:11:21.360 I think it's because of those strategic missteps over the 0:11:21.360 --> 0:11:24.480 past few years. Suspect we'll get back to China's role 0:11:24.559 --> 0:11:28.240 in the future of the of the global recovery a 0:11:28.280 --> 0:11:30.360 little bit later, But yeah, and I want to want 0:11:30.360 --> 0:11:33.400 to bring you in with a with a European perspective. 0:11:33.480 --> 0:11:36.960 I mean, Germany was one of the economy's worst hit 0:11:37.600 --> 0:11:40.959 by the trade wars, in the worst hit in many 0:11:41.000 --> 0:11:44.840 ways than the US or China because it's so bound 0:11:44.920 --> 0:11:48.559 up with the global trading system. How would you say 0:11:49.080 --> 0:11:52.120 things are looking now for twenty in Germany? And I 0:11:52.120 --> 0:11:55.880 guess the Eurozone economy generally. I think if you had 0:11:55.920 --> 0:11:59.160 to summon summed up in one sentence, you would say 0:12:00.240 --> 0:12:03.120 we can be lucky that if it doesn't get any worse. 0:12:03.760 --> 0:12:07.240 So there are signs that both the German economy and 0:12:07.360 --> 0:12:11.120 the Eurozone economy have stabilized. UM. For the past couple 0:12:11.160 --> 0:12:15.640 of months, we've seen some indicators suggesting and ever so 0:12:15.760 --> 0:12:20.559 slow pick up in momentum. Others have pointed to setbacks. 0:12:20.600 --> 0:12:23.680 So right now we're in this in this phase where 0:12:23.760 --> 0:12:28.040 the optimists say we're about to bottom out. If you 0:12:28.120 --> 0:12:33.680 look at momentum over or forecast momentum over twenty it 0:12:33.760 --> 0:12:37.360 won't pick up significantly. So we're not talking about any 0:12:37.480 --> 0:12:42.520 v U shaped recoveries here. Um, we're talking about very 0:12:42.640 --> 0:12:48.760 very um slow growth stabilization at the current level. So 0:12:48.800 --> 0:12:52.840 the forecast don't look any better next year than they 0:12:53.000 --> 0:12:56.839 then they do. Look now, the problem really is that 0:12:57.040 --> 0:13:01.720 the manufacturing slump has been so deep, um, the recession 0:13:01.760 --> 0:13:05.520 in industry has been so severe, uh that there is 0:13:05.559 --> 0:13:10.679 only so much domestic demand private consumption investment can do 0:13:10.880 --> 0:13:16.400 to offset that. And we're starting to see that confidence 0:13:16.679 --> 0:13:20.800 is also declining in in the domestic economy. Uh. You 0:13:20.840 --> 0:13:25.319 see labor markets being slowly affected. And it's that very 0:13:25.160 --> 0:13:29.319 that very fine line we're walking at the moment where 0:13:29.360 --> 0:13:32.480 things can improve from here, but it won't take much 0:13:32.520 --> 0:13:36.480 for things to get significantly worse. So I think we 0:13:36.520 --> 0:13:39.280 need to be very very careful in looking at what 0:13:39.440 --> 0:13:42.440 the German and the Eurozone economy can do over the 0:13:42.440 --> 0:13:45.680 next couple of months and over the next couple of quarters. Now, 0:13:45.840 --> 0:13:50.080 listening to Christine look are the new ECB president, she said, 0:13:50.440 --> 0:13:53.560 risks are still on the downside, but she also made 0:13:53.559 --> 0:13:59.319 sure to stress in her in her first public press conference, 0:13:59.360 --> 0:14:04.120 in her first official remarks on monetary policy, that those 0:14:04.240 --> 0:14:08.719 risks from trade, those risks from protectionism, from vulnerabilities and 0:14:08.800 --> 0:14:15.319 emerging markets have actually diminished somewhat. So there is a 0:14:15.440 --> 0:14:19.320 willingness to be optimistic and see the signs of improvement, 0:14:19.680 --> 0:14:22.320 but people are also very very aware that things can 0:14:22.360 --> 0:14:24.800 go terribly wrong. Yeah, I guess it's a reminder. You know, 0:14:24.800 --> 0:14:27.240 when we we do think about the overall picture for 0:14:27.240 --> 0:14:30.480 the economy in we tend to say, you know, everything 0:14:30.560 --> 0:14:32.640 is reliant on the consumer, and if you're sitting in 0:14:32.680 --> 0:14:36.080 the US or even the UK, very consumer led economies, 0:14:36.120 --> 0:14:38.000 that kind of sounds like good news because it's such 0:14:38.040 --> 0:14:40.920 a big um. It's always the source of momentum in 0:14:40.920 --> 0:14:44.280 the economy. But the countries like Germany, which have have 0:14:44.600 --> 0:14:47.960 to some extent struggled to have that more consumer driven side, 0:14:48.360 --> 0:14:51.320 have been so dependent on manufacturing. It is a it 0:14:51.440 --> 0:14:54.480 is a potential weakness that we are now so dependent 0:14:54.560 --> 0:14:57.640 on consumption globally. I mean, yeah, I should also ask 0:14:57.720 --> 0:15:02.280 you about new leadership in Europe. You know, there was 0:15:02.280 --> 0:15:04.240 a famous question about you know, if I want to 0:15:04.280 --> 0:15:06.200 call Europe, who do I call? I mean, all of 0:15:06.240 --> 0:15:09.520 those top jobs changed hands in the last twelve months, 0:15:09.960 --> 0:15:12.480 not just at the European Central Bank you mentioned, but 0:15:12.560 --> 0:15:15.320 a lot of the key jobs in Brussels, at the 0:15:15.360 --> 0:15:20.320 European Commission and such. I mean, will will ordinary people 0:15:20.720 --> 0:15:24.680 or even failing that, the people listening to Stephanomics notice 0:15:24.720 --> 0:15:27.120 anything different with this new leadership. Are they going to 0:15:27.160 --> 0:15:30.080 try and make their mark? I think so, and I 0:15:30.120 --> 0:15:34.080 think we already have to be honest. Um, the past Commission, 0:15:34.120 --> 0:15:38.240 the past leadership of Europe was still very much engulfed 0:15:38.280 --> 0:15:42.000 in crisis fighting or picking up the pieces after after 0:15:42.080 --> 0:15:45.600 Europe's debt crisis. It's not remember it's not too long 0:15:45.640 --> 0:15:49.880 ago that Grace almost dropped out. So it was very 0:15:49.960 --> 0:15:54.640 much fixing the problems, but not very much time for 0:15:55.360 --> 0:16:00.000 problems that are inevitably coming our way. In the few 0:16:00.120 --> 0:16:03.400 chure and I think was alla funderlying the new Commission 0:16:03.400 --> 0:16:08.120 President set out very ambitious agenda. She made very very 0:16:08.160 --> 0:16:13.520 clear that her commission, her her term, will be about 0:16:13.640 --> 0:16:18.400 defining and shaping Europe's future. So it's about transforming society, 0:16:18.480 --> 0:16:24.080 it's about fighting climate change, about making countries and society 0:16:24.200 --> 0:16:29.520 ready for UM a life in in UH, embracing new 0:16:29.560 --> 0:16:35.000 technologies UM, but also to look at aging society UM, 0:16:35.520 --> 0:16:40.560 looking at how demographics shifts will affect living and and 0:16:40.680 --> 0:16:44.840 sustaining economies in in Europe in particular. So I think 0:16:45.360 --> 0:16:48.800 the agenda the Commission set out is very ambitious. We've 0:16:48.800 --> 0:16:52.240 heard the first the first ideas about what they want 0:16:52.280 --> 0:16:55.400 to do on climate and in particular it's a very 0:16:55.480 --> 0:16:58.400 it's a topic that will be with us probably for 0:16:58.400 --> 0:17:02.120 for a very long time, in particularly next year. So 0:17:02.160 --> 0:17:05.040 I think we've already seen that they have ambitious plans 0:17:05.080 --> 0:17:08.600 and how much of those will materialize that we will 0:17:09.200 --> 0:17:12.000 find out. I suppose they will be interesting. This year. 0:17:12.040 --> 0:17:15.639 I mean, I think was definitely a year when the 0:17:15.760 --> 0:17:20.159 urgency of the climate debate became much more evident to 0:17:20.359 --> 0:17:23.520 people that entered the mainstream, especially in Europe, and it's 0:17:23.560 --> 0:17:26.080 interesting we've also that we have now seen the President 0:17:26.760 --> 0:17:31.760 um in the head of the Commission putting that green 0:17:31.840 --> 0:17:34.920 new Deal on the agenda. Will we see a lot 0:17:34.960 --> 0:17:37.720 more practical action in You know, this would be the 0:17:37.760 --> 0:17:40.920 obvious time for me to say something about Brexit, but 0:17:41.200 --> 0:17:43.399 you know what, I'm not going to because we've talked 0:17:43.480 --> 0:17:48.440 plenty about Brexit on this podcast and many other podcasts. 0:17:48.440 --> 0:17:49.800 I guess the only thing I'll say is that I 0:17:49.800 --> 0:17:53.320 can say with quite a lot of confidence that but 0:17:53.560 --> 0:17:56.879 in the next few months, sometime in almost certainly the 0:17:56.960 --> 0:18:00.879 end of January, Britain will have brexited. We will have left, 0:18:01.280 --> 0:18:04.480 but there will still be plenty of uncertainty about what 0:18:04.600 --> 0:18:07.200 our future relationships are going to be, well, pretty much 0:18:07.280 --> 0:18:15.560 with anybody. I mean. At the end of it looked possible, 0:18:15.640 --> 0:18:18.119 maybe not likely, but possible that the UK would be 0:18:18.160 --> 0:18:22.439 coming into with a radical left winger as Prime Minister, 0:18:22.680 --> 0:18:25.840 Jeremy Corbyn. That didn't happen, But at the end of 0:18:25.880 --> 0:18:28.320 this year we could have a US president about to 0:18:28.359 --> 0:18:33.119 take office with an agenda that's almost as radical as Corbin's. 0:18:34.240 --> 0:18:39.880 Looking at some of the democratic that the leading Democratic candidates. 0:18:40.240 --> 0:18:44.800 You know, assume one of those, say Elizabeth Warren has 0:18:44.840 --> 0:18:48.040 won the presidency, how do you think that would change 0:18:48.080 --> 0:18:51.200 how we would see the global economic outlook in the year. 0:18:52.400 --> 0:18:55.000 So I think there's a prior question there, Stephanie, and 0:18:55.080 --> 0:18:59.560 that's will the US Democratic Party look at what happened 0:18:59.640 --> 0:19:02.560 in the UK election and say, okay, there's a lesson 0:19:02.640 --> 0:19:07.000 here for us. The UK Labor Party tried a radical agenda. 0:19:07.280 --> 0:19:10.199 It didn't resonate the ballot box. Maybe we need to 0:19:10.200 --> 0:19:12.840 think about that when we're making a decision between a 0:19:12.920 --> 0:19:15.719 Biden and a Warren and Assanders. But let's say they 0:19:15.720 --> 0:19:17.520 go ahead. Let's say we get one of the more 0:19:17.560 --> 0:19:23.240 progressive Democrat leaders um coming into the twenty election and winning. 0:19:23.960 --> 0:19:27.639 If we think about the international aspect of it, the 0:19:27.680 --> 0:19:32.280 most important thing is trade policy. And my reading of 0:19:32.320 --> 0:19:35.000 the sort of the tea leaves the sort of initials 0:19:35.119 --> 0:19:39.399 policy statements from the Democratic candidates is actually, they're going 0:19:39.440 --> 0:19:42.399 to be as tough on trade as Donald Trump is. 0:19:42.960 --> 0:19:45.320 But I think it's also fair to say that they 0:19:45.320 --> 0:19:48.160 would be more predictable. There'd be a policy process, there'd 0:19:48.200 --> 0:19:52.479 be more transparency, there'd be announcements rather than tweets. And 0:19:52.520 --> 0:19:54.720 when we look at the drag from the trade war, 0:19:55.080 --> 0:19:57.000 a bunch of it has come from tariffs, but a 0:19:57.000 --> 0:19:59.360 bunch of it has come from uncertainty as well. If 0:19:59.359 --> 0:20:02.520 the uncertain he goes down, if the predictability goes up, 0:20:02.720 --> 0:20:06.479 that's going to be a positive for global growth. Second 0:20:06.520 --> 0:20:09.600 aspect of it is the domestic agenda. And here too 0:20:09.640 --> 0:20:13.640 there's a there's a prior question, which is Democrats might 0:20:13.640 --> 0:20:16.880 well win the presidency, do they win the Senate. If 0:20:16.880 --> 0:20:18.679 they don't win the Senate, it's going to be very 0:20:18.680 --> 0:20:22.160 difficult for them to push through any far reaching domestic 0:20:22.200 --> 0:20:25.160 policy reforms, and so I think we'd be looking very 0:20:25.200 --> 0:20:27.440 much at the kind of the status quo in terms 0:20:27.440 --> 0:20:31.160 of US tax policy. For example, if they do win 0:20:31.200 --> 0:20:33.919 the Senate, which is going to be a stretch, then 0:20:33.960 --> 0:20:36.040 I think we would be looking in a more ambitious 0:20:36.280 --> 0:20:39.800 domestic reform agenda. We'd be looking at changes in tax policy, 0:20:39.800 --> 0:20:42.320 we'd be looking at changes in healthcare policy. And I 0:20:42.320 --> 0:20:44.919 think one of the impacts of that would be margin 0:20:45.040 --> 0:20:48.440 compression for the US corporate sector, with pretty far reaching 0:20:48.480 --> 0:20:53.320 implications for the markets. Because it was interesting that there 0:20:53.359 --> 0:20:55.760 had not been a lot of discussion around the economic 0:20:55.880 --> 0:20:59.359 or the potential market impact of a Trump victory until 0:21:00.160 --> 0:21:03.560 he was actually elected, and then everyone claimed to be 0:21:03.640 --> 0:21:06.480 not at all surprised by the US stock markets, you know, 0:21:06.600 --> 0:21:10.280 soaring upwards. Um, you know, sometimes these things become obvious 0:21:10.320 --> 0:21:12.879 only only just after something has happened. So you know, 0:21:13.000 --> 0:21:14.920 we'll see. But Sean we if you looked at the 0:21:15.160 --> 0:21:18.960 booking odds right now, you would say a Trump victory 0:21:19.240 --> 0:21:21.879 was more likely than not, in part because the U 0:21:21.960 --> 0:21:24.680 s economy looks like it's going to continue to be okay, 0:21:24.680 --> 0:21:28.160 even with the uncertainty you talked about and the tariffs 0:21:28.160 --> 0:21:31.800 from the trade wars. You have spent a good chunk 0:21:32.240 --> 0:21:34.440 of I'm rather jealous. Actually, you've spent a good chunk 0:21:34.480 --> 0:21:37.200 of the last few months out in the field. We 0:21:37.480 --> 0:21:42.000 heard your discussion on stephonomics around the places you've been 0:21:42.000 --> 0:21:45.800 in North Carolina. You've been to Granite City, You've been 0:21:45.920 --> 0:21:49.959 on the Mississippi. When you cut through it all and 0:21:50.000 --> 0:21:52.400 you talk to these people, has the trade war been 0:21:52.440 --> 0:21:56.880 good or bad for Trump's chances of reelection? I think 0:21:57.280 --> 0:22:02.000 if there is one weakness in Trump's economic argument going 0:22:02.040 --> 0:22:06.399 into the election, it is the impact of his trade 0:22:06.440 --> 0:22:13.200 wars on swing states like Wisconsin, Michigan, Pennsylvania, even Ohio, 0:22:13.800 --> 0:22:16.479 And what we've seen in all of those places is 0:22:16.720 --> 0:22:20.840 a slow down in manufacturing growth and in some cases 0:22:21.160 --> 0:22:24.879 a the start of layoffs in manufacturing, some of which 0:22:25.160 --> 0:22:30.240 is tied directly to the trade wars and impact of 0:22:30.320 --> 0:22:34.560 everything from rising costs due to tariffs on inputs from 0:22:34.680 --> 0:22:40.280 China or steel, but also just the damper on demand 0:22:41.280 --> 0:22:46.360 that you've had, the retaliation that you've had from the Chinese, 0:22:46.440 --> 0:22:49.439 which means US exports to China are going down, and 0:22:49.480 --> 0:22:52.720 that you know, while the US exported less to China 0:22:53.000 --> 0:22:55.920 or exports less to China than it than it imports, 0:22:55.960 --> 0:23:00.199 that's still an important market for a lot of American companies. Uh. 0:23:00.320 --> 0:23:03.119 So you're starting to see that filter through the economy 0:23:03.240 --> 0:23:06.080 where you know, it started off in the agricultural sector. 0:23:06.240 --> 0:23:10.200 We saw it a lot in agricultural equipment suppliers early on. 0:23:10.600 --> 0:23:15.159 We're now seeing it in the trucking business. Uh. You know, 0:23:15.240 --> 0:23:19.280 a few years ago or a year ago even Uh, 0:23:19.480 --> 0:23:23.600 the you know, one great promise, Uh, if you were 0:23:23.640 --> 0:23:27.719 a young blue collar man who might support tunnel Trump 0:23:28.000 --> 0:23:30.920 in terms of employment, was signing up as a truck 0:23:31.000 --> 0:23:35.000 driver where they were offering good salaries and benefits, and 0:23:35.119 --> 0:23:38.240 trucking companies were shortening delivery routes so that they were 0:23:38.240 --> 0:23:41.320 more family friendly and so on. Well, trucking companies are 0:23:41.320 --> 0:23:44.200 starting to lay off people. We're seeing truck makers start 0:23:44.240 --> 0:23:47.600 to lay off people. We're seeing digital engine makers starting 0:23:47.640 --> 0:23:50.280 to lay off people. So that kind of industrial economy 0:23:50.560 --> 0:23:54.320 in America, a lot of which is is concentrated in 0:23:55.040 --> 0:24:00.000 those important swing states, is weakening. And how that carry 0:24:00.160 --> 0:24:03.600 is through in is going to be really important to 0:24:03.680 --> 0:24:06.120 the election prospects of Donald Trump. I mean, we need 0:24:06.160 --> 0:24:09.240 to remember that all of these swing states were states 0:24:09.240 --> 0:24:12.520 that Donald Trump won by not many votes. It's not 0:24:12.600 --> 0:24:15.840 like you take a five percent swing even in those 0:24:15.880 --> 0:24:18.800 states for a Democrat to win them. It could be 0:24:18.960 --> 0:24:21.679 less than one percent that swings. And if you have, 0:24:22.160 --> 0:24:25.720 you know, just enough people who are slightly disenchanted with 0:24:25.840 --> 0:24:30.920 Donald Trump's economic policies or more broadly, with his presidency, 0:24:31.800 --> 0:24:34.359