1
00:00:09,840 --> 00:00:13,800
Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily

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

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

4
00:00:23,640 --> 00:00:27,440
Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg. Right now,

5
00:00:27,480 --> 00:00:31,280
Speaker 1: we diverge to Kentucky. Tim Adams is with the Institute

6
00:00:31,280 --> 00:00:34,760
Speaker 1: of International Financier President, chief executive Officer. I will not

7
00:00:34,880 --> 00:00:38,360
Speaker 1: mince words. He has reinvigorated the institute. It was four

8
00:00:38,400 --> 00:00:41,199
Speaker 1: hundred guys standing around and suits and ties, and he

9
00:00:41,280 --> 00:00:44,199
Speaker 1: put a spirit into it last year of a debate

10
00:00:44,280 --> 00:00:47,600
Speaker 1: on our economics and the financial system around it. We're

11
00:00:47,600 --> 00:00:49,879
Speaker 1: thrilled he could join us today. Tim, what is it

12
00:00:49,960 --> 00:00:54,200
Speaker 1: like to pull off a virtual conference after the excellence

13
00:00:54,240 --> 00:00:59,360
Speaker 1: I personally observed last year? How do you do virtual? Yeah, Tamba,

14
00:00:59,400 --> 00:01:01,760
Speaker 1: thanks for having me. I've got up early this morning,

15
00:01:01,800 --> 00:01:03,960
Speaker 1: look really looking forward to being here with you today.

16
00:01:04,160 --> 00:01:07,319
Speaker 1: We've got seventy different sessions over five days, sixty hours

17
00:01:07,319 --> 00:01:10,160
Speaker 1: of programming. It's almost our own little network, so we're

18
00:01:10,240 --> 00:01:13,399
Speaker 1: learning by doing. We got great speakers, Jamie Diamond, Larry Fink.

19
00:01:13,560 --> 00:01:15,880
Speaker 1: Towards the end of the week, So it's all about content.

20
00:01:16,000 --> 00:01:19,240
Speaker 1: Just like you, Tom, It's all about content. I look

21
00:01:19,280 --> 00:01:23,520
Speaker 1: at your resume out of Kentucky, your work with Secretary Snow,

22
00:01:23,640 --> 00:01:28,360
Speaker 1: Secretary O'Neil, etcetera. And you've got the process in the

23
00:01:28,440 --> 00:01:34,080
Speaker 1: machinery of fiscal stimulus in you. You've executed that before.

24
00:01:34,720 --> 00:01:37,640
Speaker 1: Do you have an optimism that if or when we

25
00:01:37,720 --> 00:01:42,120
Speaker 1: get fiscal stimulus we can execute it better this time?

26
00:01:43,480 --> 00:01:45,880
Speaker 1: I certainly hope. So look what this town, when it

27
00:01:45,920 --> 00:01:49,000
Speaker 1: wants to can execute well. But it requires leadership at

28
00:01:49,000 --> 00:01:52,200
Speaker 1: the top where the messages we want to have flawless

29
00:01:52,320 --> 00:01:55,800
Speaker 1: professional execution. This town attracts a lot of really smart,

30
00:01:55,880 --> 00:01:58,360
Speaker 1: interesting people, and it populated with great people. We just

31
00:01:58,400 --> 00:02:00,639
Speaker 1: need to give the be given the of the task

32
00:02:00,800 --> 00:02:02,760
Speaker 1: to do it and do it well. Right now, the

33
00:02:02,800 --> 00:02:05,160
Speaker 1: I m F is holding their meetings in addition to

34
00:02:05,200 --> 00:02:08,520
Speaker 1: everything else going on. Does the developed world care enough

35
00:02:08,639 --> 00:02:10,880
Speaker 1: about the carnage going on in much of the emerging

36
00:02:10,919 --> 00:02:14,320
Speaker 1: markets right now? Oh? Absolutely. I've spent the last eight

37
00:02:14,360 --> 00:02:17,480
Speaker 1: weeks on the phone with finance mentors, just central bankers

38
00:02:17,480 --> 00:02:20,760
Speaker 1: from emerging markets. A lot of developing countries, specially substan

39
00:02:20,760 --> 00:02:23,680
Speaker 1: here in Africa. We are incredibly engaged with those countries.

40
00:02:23,720 --> 00:02:25,240
Speaker 1: We're listening to them and we will want to help

41
00:02:25,280 --> 00:02:28,400
Speaker 1: them all Right, so we've heard about debt relief. Are

42
00:02:28,440 --> 00:02:30,440
Speaker 1: we going to be hearing more and more about debt

43
00:02:30,440 --> 00:02:34,240
Speaker 1: forgiveness on a magnitude never before seen. I don't know

44
00:02:34,240 --> 00:02:37,640
Speaker 1: about magnitude never before seen, but certainly countries have an

45
00:02:37,639 --> 00:02:40,880
Speaker 1: opportunity and option to reach out to their creditors, official,

46
00:02:41,000 --> 00:02:44,840
Speaker 1: bilateral and private to find a way forward. Currently it's

47
00:02:44,840 --> 00:02:48,000
Speaker 1: a liquidity crisis, it's not yet a solvency crisis, but

48
00:02:48,120 --> 00:02:51,840
Speaker 1: we're working toward what a solvency adjustment may mean it

49
00:02:51,880 --> 00:02:54,520
Speaker 1: over the next couple of years. Absolutely, to me, Adams,

50
00:02:54,560 --> 00:02:56,760
Speaker 1: one of the themes we're seeing as we dive into

51
00:02:56,800 --> 00:02:59,919
Speaker 1: big bank earning season. Of course, the Institute of International

52
00:03:00,000 --> 00:03:03,320
Speaker 1: of Finance FOLKS is about the representation and the voice

53
00:03:03,880 --> 00:03:08,120
Speaker 1: of our larger financial institutions globally, tim Adams, is the

54
00:03:08,240 --> 00:03:12,640
Speaker 1: export of our banking skills and that the major banks

55
00:03:12,680 --> 00:03:15,520
Speaker 1: in America can go over to Europe and can compete.

56
00:03:15,840 --> 00:03:19,000
Speaker 1: They can go over to Asia and compete. Is our

57
00:03:19,080 --> 00:03:25,280
Speaker 1: government holding them back or can they constructively compete? Well,

58
00:03:25,720 --> 00:03:27,400
Speaker 1: to your point in time, we had great news out

59
00:03:27,400 --> 00:03:30,720
Speaker 1: of JPM Oregon City and black Rock today world class institutions.

60
00:03:30,720 --> 00:03:33,840
Speaker 1: They can compete, They are competing. They're getting access to

61
00:03:33,960 --> 00:03:36,200
Speaker 1: markets around the world, including China, which is a huge

62
00:03:36,240 --> 00:03:39,400
Speaker 1: opportunity for US institutions. Look, we need to see more

63
00:03:39,400 --> 00:03:42,840
Speaker 1: consolidation in the US, will see more consolidation across Europe.

64
00:03:43,520 --> 00:03:47,720
Speaker 1: Scale is your friend, and namely just because the technology spend.

65
00:03:48,080 --> 00:03:50,720
Speaker 1: But US and European institutions a world class they can

66
00:03:50,720 --> 00:03:54,040
Speaker 1: compete anywhere. Tim, But this is important. We have liberties

67
00:03:54,080 --> 00:03:57,400
Speaker 1: restricted in Hong Kong. What is the I I F

68
00:03:57,600 --> 00:04:02,880
Speaker 1: approach to allowing West during capitalism to work in China?

69
00:04:03,400 --> 00:04:09,880
Speaker 1: If China restricts those opportunities specifically in Hong Kong. You know, Tom,

70
00:04:10,040 --> 00:04:12,920
Speaker 1: the Chinese government, we have thirty five Chinese institutions. I

71
00:04:12,920 --> 00:04:15,920
Speaker 1: have an office in Beijing, have been very forthcoming and

72
00:04:16,279 --> 00:04:20,080
Speaker 1: attracting non Chinese financial institutions. They want to they want

73
00:04:20,120 --> 00:04:23,600
Speaker 1: the technical expertise, they want to foreign capital. And I've

74
00:04:23,640 --> 00:04:25,839
Speaker 1: been going to China for a close to thirty years.

75
00:04:26,120 --> 00:04:29,120
Speaker 1: There really is an open door for US financial institutions.

76
00:04:29,120 --> 00:04:31,560
Speaker 1: I think there's a very good relationship there. Okay, the

77
00:04:31,640 --> 00:04:34,919
Speaker 1: relationship is there, but how do we compromise with a

78
00:04:35,000 --> 00:04:39,800
Speaker 1: new tone from Beijing. Well, it's just gonna require greater diplomacy.

79
00:04:39,800 --> 00:04:41,680
Speaker 1: And whoever is in the White Health starting the third

80
00:04:41,680 --> 00:04:43,359
Speaker 1: week of January is going to have to hit the

81
00:04:43,400 --> 00:04:46,440
Speaker 1: reset button in find ways to work with President jimping

82
00:04:46,520 --> 00:04:49,120
Speaker 1: and look for ways where we do have a common theme,

83
00:04:49,160 --> 00:04:51,920
Speaker 1: and that is climate change. It's about pandemics, it's about

84
00:04:51,920 --> 00:04:54,240
Speaker 1: financial it's about energy. There are a whole host of

85
00:04:54,240 --> 00:04:56,640
Speaker 1: issues where we need to work together for a common

86
00:04:56,680 --> 00:04:59,880
Speaker 1: collective outcome. Tim, I've got to ask, we're in the

87
00:05:00,040 --> 00:05:02,920
Speaker 1: heat of the election season, twenty one days to the election.

88
00:05:03,600 --> 00:05:06,880
Speaker 1: I believe the senator from Kentucky has a win in hand.

89
00:05:06,960 --> 00:05:10,000
Speaker 1: I think that's what the polling out of Louisville tells me.

90
00:05:10,360 --> 00:05:14,479
Speaker 1: Give us an update on Kentucky politics. Yeah, I don't

91
00:05:14,520 --> 00:05:18,039
Speaker 1: ever vote against bet against Mitch McConnell. He's an incredibly

92
00:05:18,279 --> 00:05:21,280
Speaker 1: great politician. He's been doing this a long time. He's

93
00:05:21,320 --> 00:05:24,240
Speaker 1: also a good majority leader in the Senate. Uh and

94
00:05:24,640 --> 00:05:27,119
Speaker 1: I maybe he'll continue being a majority leader. Will see,

95
00:05:27,360 --> 00:05:30,120
Speaker 1: but never never bet against miss McConnell. He'll win this

96
00:05:30,200 --> 00:05:32,560
Speaker 1: race hand. Tim. If we do get and this is

97
00:05:32,600 --> 00:05:35,640
Speaker 1: an if, if we do get a President Biden. You

98
00:05:35,680 --> 00:05:40,120
Speaker 1: are associated with a Republican party removed from President Trump.

99
00:05:40,480 --> 00:05:44,080
Speaker 1: Does a Republican party shift back to the decades of

100
00:05:44,120 --> 00:05:47,760
Speaker 1: work you represented, or is a Trump is um forever?

101
00:05:49,120 --> 00:05:51,360
Speaker 1: Oh that's a great question, Tom. I hope that we

102
00:05:51,520 --> 00:05:54,200
Speaker 1: returned to a vision that I certainly worked for for

103
00:05:54,320 --> 00:05:57,680
Speaker 1: Ronald Reagan and George Bush and others, really about building

104
00:05:57,760 --> 00:06:00,880
Speaker 1: strong institutions about rule of law, about asiment globally to

105
00:06:00,920 --> 00:06:04,240
Speaker 1: solve common collective problems. I hope that's the case. If not,

106
00:06:04,360 --> 00:06:06,440
Speaker 1: I'm going to work with the Biden administration a whole

107
00:06:06,520 --> 00:06:10,279
Speaker 1: range of issues, including sustainable finance. Very good, Tim Adams,

108
00:06:10,320 --> 00:06:13,640
Speaker 1: thank you so much. Congratulations to the Institute of International

109
00:06:13,760 --> 00:06:17,200
Speaker 1: Finance this year virtual within those Washington meetings as we

110
00:06:17,240 --> 00:06:20,320
Speaker 1: have virtual World Bank, I m F and Milk and Institute.

111
00:06:20,400 --> 00:06:28,240
Speaker 1: It is that season of October. Christopher Harvey is with

112
00:06:28,320 --> 00:06:31,400
Speaker 1: Wells Fargo ahead of equity strategy. Chris, if we could

113
00:06:31,440 --> 00:06:33,440
Speaker 1: move from the bank, so let me start with the banks.

114
00:06:33,440 --> 00:06:35,800
Speaker 1: I don't want you to comment on Wells Fargo or

115
00:06:35,800 --> 00:06:39,479
Speaker 1: frankly individual stocks. I understand it's important. Do we get

116
00:06:39,480 --> 00:06:43,000
Speaker 1: a lift of financials along with the small cap lift?

117
00:06:43,520 --> 00:06:45,800
Speaker 1: Or is it still going to be growthiness out there

118
00:06:45,839 --> 00:06:50,239
Speaker 1: that reigns supreme sos. We month to date, we've already

119
00:06:50,279 --> 00:06:52,599
Speaker 1: gotten lift in small counts, We've already gotten a lift

120
00:06:52,640 --> 00:06:56,440
Speaker 1: in financials next couple of days. So far the numbers

121
00:06:56,520 --> 00:06:59,200
Speaker 1: look pretty good. So I would think that this is

122
00:06:59,240 --> 00:07:01,400
Speaker 1: a positive for financials in the short term. But you

123
00:07:01,480 --> 00:07:04,440
Speaker 1: also have news out of Apple, news out of Amazon,

124
00:07:04,520 --> 00:07:07,440
Speaker 1: which is helping push those thoughts higher. But longer term,

125
00:07:07,520 --> 00:07:10,120
Speaker 1: we are very positive on small caps, we are positive

126
00:07:10,120 --> 00:07:12,240
Speaker 1: on cyclicals, and we are positive on what we call

127
00:07:12,480 --> 00:07:16,040
Speaker 1: higher COVID beta plays, which include the financials. And I

128
00:07:16,080 --> 00:07:19,320
Speaker 1: think overall this is rather positive for your credit card companies.

129
00:07:19,400 --> 00:07:22,000
Speaker 1: When we talk about credit and we talk about reserves

130
00:07:22,000 --> 00:07:24,720
Speaker 1: and provisions, um, they don't have to deal with in

131
00:07:24,800 --> 00:07:28,040
Speaker 1: that interest margins that the banks have to. So a

132
00:07:28,080 --> 00:07:29,680
Speaker 1: lot of people agree with you, Chris. I know that

133
00:07:29,680 --> 00:07:31,800
Speaker 1: Morgan Stanley thinks that there's going to be this ongoing

134
00:07:31,880 --> 00:07:35,080
Speaker 1: rotation into the small caps, into the into the more

135
00:07:35,160 --> 00:07:37,880
Speaker 1: value names. So what the heck is going on with

136
00:07:37,880 --> 00:07:41,960
Speaker 1: the nazac um Again, you've seen some of the uber

137
00:07:42,000 --> 00:07:44,400
Speaker 1: camps really under per four month to date, you have

138
00:07:44,520 --> 00:07:47,080
Speaker 1: some really positive news or potentially positive news coming out

139
00:07:47,080 --> 00:07:49,960
Speaker 1: of some of your uber caps, whether it's Apple or Amazon,

140
00:07:50,520 --> 00:07:52,720
Speaker 1: and so they're beginning to balance. The other thing is

141
00:07:52,920 --> 00:07:55,040
Speaker 1: you still have a fair amount of retail money in

142
00:07:55,080 --> 00:07:59,280
Speaker 1: the marketplace, and those are names that are fairly um

143
00:07:59,480 --> 00:08:01,920
Speaker 1: well known on it and well loved by by the

144
00:08:01,960 --> 00:08:04,400
Speaker 1: retail names. And let's not forget yesterday it was a holiday,

145
00:08:04,600 --> 00:08:06,280
Speaker 1: so people make me have had a little bit more

146
00:08:06,280 --> 00:08:10,440
Speaker 1: time to treat their p a. Are you saying, Chris Harvey,

147
00:08:10,480 --> 00:08:13,440
Speaker 1: that the bond guys were away, so the equity trade

148
00:08:13,440 --> 00:08:18,400
Speaker 1: has had a little play. I wouldn't say it like that.

149
00:08:18,480 --> 00:08:20,760
Speaker 1: You're much more eloquent. Is that you said? Are you

150
00:08:20,800 --> 00:08:22,800
Speaker 1: trying to say the adults were out of the room

151
00:08:23,000 --> 00:08:25,160
Speaker 1: for a little bit? Is that what you're implying that, Chris,

152
00:08:25,200 --> 00:08:26,920
Speaker 1: I'm just trying to understand where you were going with

153
00:08:26,920 --> 00:08:31,800
Speaker 1: that line. Maybe possibly, Well, yesterday a lot of people

154
00:08:31,800 --> 00:08:34,440
Speaker 1: I was talking to some friends and they were I

155
00:08:34,480 --> 00:08:36,120
Speaker 1: was asking what they were doing. They're like, oh, I'm

156
00:08:36,120 --> 00:08:39,400
Speaker 1: treating my p A. And so people did have a

157
00:08:39,400 --> 00:08:42,800
Speaker 1: little bit more time to mess around and and maybe

158
00:08:42,840 --> 00:08:44,800
Speaker 1: push things that push things around a little bit. And

159
00:08:44,840 --> 00:08:46,760
Speaker 1: the other thing to talk about let's talk about let's

160
00:08:46,800 --> 00:08:49,160
Speaker 1: let's talk about messing around, Chris. It's a two chillion

161
00:08:49,200 --> 00:08:52,840
Speaker 1: dollar name. It's Apple. The stock was up six percent yesterday.

162
00:08:53,080 --> 00:08:55,800
Speaker 1: Let's see what it's doing this morning. Come on, it's ridiculous.

163
00:08:55,840 --> 00:08:58,800
Speaker 1: We're positive again. And you telling me this is about

164
00:08:58,840 --> 00:09:04,080
Speaker 1: an iPhone launched that we knew about months ago. Well, um,

165
00:09:04,320 --> 00:09:06,079
Speaker 1: there's a lot going on with Apple, and as we've

166
00:09:06,120 --> 00:09:08,200
Speaker 1: talked about in the past, Apple is one of the

167
00:09:08,240 --> 00:09:12,280
Speaker 1: most under owned or underweight names, uh in the institutional

168
00:09:12,280 --> 00:09:14,600
Speaker 1: bi side, and that has something to do with it.

169
00:09:14,679 --> 00:09:17,040
Speaker 1: The other thing is they have trailed. We are hearing

170
00:09:17,080 --> 00:09:19,360
Speaker 1: a lot of positive news what we think is happening.

171
00:09:19,720 --> 00:09:22,319
Speaker 1: You know, we had a pretty benign pre announcement season.

172
00:09:22,640 --> 00:09:25,360
Speaker 1: We think earnings are going to be better than expected.

173
00:09:25,400 --> 00:09:28,360
Speaker 1: We think the economy is better than many people expected,

174
00:09:28,480 --> 00:09:31,160
Speaker 1: and we think there's a turn and sentiment. And let's

175
00:09:31,200 --> 00:09:34,200
Speaker 1: not forget let's start looking at first half numbers. First

176
00:09:34,200 --> 00:09:37,000
Speaker 1: half numbers are pretty are pretty low. It's a pretty

177
00:09:37,000 --> 00:09:40,120
Speaker 1: low bar and maybe in a month, maybe in two,

178
00:09:40,120 --> 00:09:42,840
Speaker 1: maybe three, we'll have some sort of COVID solution. I'm sorry, Tom,

179
00:09:42,840 --> 00:09:45,360
Speaker 1: I cut out. No, no, Christie, this is thrilling. I'm

180
00:09:45,400 --> 00:09:48,360
Speaker 1: thrilled that you're on This is really, really, really important,

181
00:09:48,640 --> 00:09:50,920
Speaker 1: And that's the year end bail A. You talk about

182
00:09:51,000 --> 00:09:54,040
Speaker 1: Apple under owned? What else is under owned? And what

183
00:09:54,200 --> 00:09:57,520
Speaker 1: is the sweat out there of active managers who perhaps

184
00:09:57,600 --> 00:10:01,760
Speaker 1: have underperformed? It's October what ever, it is thirteen and

185
00:10:01,840 --> 00:10:04,640
Speaker 1: the sweat is odd to make that twelve thirty one

186
00:10:05,000 --> 00:10:08,800
Speaker 1: prospectives document look good? What's the sweat out there right

187
00:10:08,800 --> 00:10:12,160
Speaker 1: now to buy these companies? So so a couple of

188
00:10:12,160 --> 00:10:14,160
Speaker 1: things there and Tom, and what I would say is

189
00:10:14,240 --> 00:10:16,800
Speaker 1: a lot of active managers actually have had a pretty

190
00:10:16,840 --> 00:10:19,960
Speaker 1: good year. UM. A lot of the larger fundamentally driven

191
00:10:19,960 --> 00:10:22,640
Speaker 1: funds are out performing somewhere around a hundred basis points,

192
00:10:22,920 --> 00:10:25,840
Speaker 1: and much to our surprise, in the first two weeks

193
00:10:26,040 --> 00:10:29,880
Speaker 1: of the month, they've actually improved their relative performance. And

194
00:10:29,920 --> 00:10:32,520
Speaker 1: you would not expect that. Part of that is because

195
00:10:32,520 --> 00:10:35,440
Speaker 1: of their underweights in the the Apples and the Microsoft.

196
00:10:35,480 --> 00:10:37,320
Speaker 1: And the other issue is they do have a smaller

197
00:10:37,320 --> 00:10:40,400
Speaker 1: cap bias and that's been helping them as well. So

198
00:10:40,800 --> 00:10:42,439
Speaker 1: I don't think there's going to be a lot of

199
00:10:42,520 --> 00:10:44,600
Speaker 1: jockeying or position at this point in time. I think

200
00:10:44,600 --> 00:10:47,160
Speaker 1: people are pretty happy where they are and they're going

201
00:10:47,200 --> 00:10:50,480
Speaker 1: to be very interested spectators. And so this whole talk

202
00:10:50,520 --> 00:10:53,000
Speaker 1: about a data chase and people pushing their portfolios around,

203
00:10:53,520 --> 00:10:56,920
Speaker 1: I don't. I don't see it just yet, Hi, Chris,

204
00:10:56,960 --> 00:10:59,640
Speaker 1: always right to catch up. Thank you very much, Chris,

205
00:10:59,679 --> 00:11:01,920
Speaker 1: Abby that of was Fogg trying to stay out of

206
00:11:01,960 --> 00:11:08,599
Speaker 1: trouble on the lightness price action. Christopher Harvey is with

207
00:11:08,720 --> 00:11:11,800
Speaker 1: Will's Fargo ahead of equity strategy. Chris, if we could

208
00:11:11,840 --> 00:11:13,839
Speaker 1: move from the bank, so let me start with the banks.

209
00:11:13,880 --> 00:11:16,200
Speaker 1: I don't we have to comment on Wells Fargo or

210
00:11:16,200 --> 00:11:19,880
Speaker 1: frankly individual stocks. I understand it's important. Do we get

211
00:11:19,880 --> 00:11:23,400
Speaker 1: a lift of financials along with the small cap lift

212
00:11:23,960 --> 00:11:26,200
Speaker 1: or is it still going to be growthiness out there

213
00:11:26,240 --> 00:11:30,360
Speaker 1: that reigns supreme sounds We a month to day, we've

214
00:11:30,360 --> 00:11:32,640
Speaker 1: already gotten a lift in small camps. We've already gotten

215
00:11:32,640 --> 00:11:36,040
Speaker 1: a lift in financials next couple of days. So far

216
00:11:36,200 --> 00:11:39,319
Speaker 1: the numbers look pretty good. So I would think that

217
00:11:39,360 --> 00:11:41,560
Speaker 1: this is a positive poor financials in the short term,

218
00:11:41,559 --> 00:11:44,400
Speaker 1: but you also have news out of Apple, news out

219
00:11:44,400 --> 00:11:47,240
Speaker 1: of Amazon, which is helping push those stocks higher. The

220
00:11:47,280 --> 00:11:49,840
Speaker 1: longer term. We are very positive on small caps. We

221
00:11:49,880 --> 00:11:52,280
Speaker 1: are positive on cyclicals, and we are positive on what

222
00:11:52,320 --> 00:11:56,000
Speaker 1: we call higher COVID beta plays, which include the financials.

223
00:11:56,200 --> 00:11:58,760
Speaker 1: And I think overall this is rather positive for your

224
00:11:58,760 --> 00:12:01,640
Speaker 1: credit card companies. We talk about credit and we talk

225
00:12:01,679 --> 00:12:04,840
Speaker 1: about reserves and provisions. Um, they don't have to deal

226
00:12:04,920 --> 00:12:07,200
Speaker 1: with in that interest margins that the banks have to.

227
00:12:07,920 --> 00:12:09,880
Speaker 1: So a lot of people agree with you, Chris. I

228
00:12:09,880 --> 00:12:11,680
Speaker 1: know that Morgan Stanley thinks that there's going to be

229
00:12:11,679 --> 00:12:14,640
Speaker 1: this ongoing rotation into the small caps, into the into

230
00:12:14,640 --> 00:12:18,000
Speaker 1: the more value names. So what the heck is going

231
00:12:18,040 --> 00:12:22,000
Speaker 1: on with the nazac um Again, You've seen some of

232
00:12:22,000 --> 00:12:24,280
Speaker 1: the uber camps really under per four month to date,

233
00:12:24,559 --> 00:12:27,120
Speaker 1: you have some really positive news or potentially positive news

234
00:12:27,120 --> 00:12:29,400
Speaker 1: coming out of some of your uber caps, whether it's

235
00:12:29,440 --> 00:12:32,520
Speaker 1: Apple or Amazon, and so they're beginning to balance. The

236
00:12:32,520 --> 00:12:34,480
Speaker 1: other thing is you still have a fair amount of

237
00:12:34,520 --> 00:12:37,400
Speaker 1: retail money in the marketplace, and those are names that

238
00:12:37,440 --> 00:12:42,240
Speaker 1: are fairly um well known and well loved by by

239
00:12:42,240 --> 00:12:44,280
Speaker 1: the retail names. And let's not forget yesterday it was

240
00:12:44,280 --> 00:12:46,480
Speaker 1: a holiday, so people may have had a little bit

241
00:12:46,520 --> 00:12:50,080
Speaker 1: more time to trade their p A. Are you saying,

242
00:12:50,240 --> 00:12:53,160
Speaker 1: Chris Hovey that the bomb guys for away. So the

243
00:12:53,200 --> 00:12:58,400
Speaker 1: equity tried has had a little cly, I wouldn't say

244
00:12:58,440 --> 00:13:00,880
Speaker 1: it like that. You're much more equal. Is that you said?

245
00:13:00,920 --> 00:13:02,760
Speaker 1: Are you trying to say the adults were out of

246
00:13:02,760 --> 00:13:04,679
Speaker 1: the room for a little bit? Is that what you're

247
00:13:04,720 --> 00:13:06,880
Speaker 1: implying that, Chris. I'm just trying to understand where you

248
00:13:06,880 --> 00:13:11,599
Speaker 1: were going with that line. Maybe possibly, Well, yesterday a

249
00:13:11,640 --> 00:13:13,800
Speaker 1: lot of people I was talking to some friends and

250
00:13:14,120 --> 00:13:16,360
Speaker 1: they were I was asking what they were doing. They're like, oh,

251
00:13:16,360 --> 00:13:19,680
Speaker 1: I'm treating my p A And so people did have

252
00:13:19,720 --> 00:13:22,800
Speaker 1: a little bit more time to mess around and and

253
00:13:22,880 --> 00:13:25,160
Speaker 1: maybe push things that push things around a little bit.

254
00:13:25,160 --> 00:13:26,839
Speaker 1: And the other thing to talk about, let's talk about

255
00:13:26,960 --> 00:13:29,199
Speaker 1: let's let's talk about messing around, Chris. It's a two

256
00:13:29,240 --> 00:13:32,200
Speaker 1: chillion dollar name. It's Apple. The stock was up six

257
00:13:32,240 --> 00:13:35,440
Speaker 1: percent yesterday. Let's see what it's doing this morning. Come on,

258
00:13:35,480 --> 00:13:38,840
Speaker 1: it's ridiculous. We're positive again, and you telling me this

259
00:13:38,920 --> 00:13:44,439
Speaker 1: is about an iPhone launched that we knew about months ago. Well, um,

260
00:13:44,720 --> 00:13:46,520
Speaker 1: there's a lot going on with Apple. And as we've

261
00:13:46,520 --> 00:13:48,600
Speaker 1: talked about in the past, Apple is one of the

262
00:13:48,640 --> 00:13:53,160
Speaker 1: most under owned or underweight names in the institutional b side,

263
00:13:53,760 --> 00:13:55,360
Speaker 1: and that has something to do with it. The other

264
00:13:55,400 --> 00:13:57,760
Speaker 1: thing is they have trailed. We are hearing a lot

265
00:13:57,760 --> 00:14:00,320
Speaker 1: of positive news what we think is happening. You know,

266
00:14:00,360 --> 00:14:03,560
Speaker 1: we had a pretty benign pre announcement season. We think

267
00:14:03,679 --> 00:14:06,120
Speaker 1: earnings are going to be better than expected. We think

268
00:14:06,160 --> 00:14:09,120
Speaker 1: the economy is better than many people expected, and we

269
00:14:09,160 --> 00:14:12,120
Speaker 1: think there's a turn and sentiment and let's not forget

270
00:14:12,400 --> 00:14:15,240
Speaker 1: let's start looking at first half numbers. First half numbers

271
00:14:15,280 --> 00:14:17,760
Speaker 1: are pretty are pretty low. It's a pretty low bar.

272
00:14:18,480 --> 00:14:21,080
Speaker 1: And maybe in a month, maybe in two, maybe three,

273
00:14:21,160 --> 00:14:23,200
Speaker 1: we'll have some sort of COVID solution up. Sorry, Tom,

274
00:14:23,240 --> 00:14:25,560
Speaker 1: I cut you out. No, no, Christie, this is thrilling.

275
00:14:25,600 --> 00:14:28,760
Speaker 1: I'm thrilled that you're on. This is really, really, really important.

276
00:14:29,080 --> 00:14:31,360
Speaker 1: And that's the year end bail A. You talk about

277
00:14:31,400 --> 00:14:34,440
Speaker 1: Apple under owned? What else is under owned? And what

278
00:14:34,640 --> 00:14:38,000
Speaker 1: is the sweat out there of active managers who perhaps

279
00:14:38,000 --> 00:14:42,800
Speaker 1: have underperformed. It's October, whatever it is, and the sweat

280
00:14:43,040 --> 00:14:46,840
Speaker 1: is on to make that twelve thirty one prospectives document

281
00:14:47,040 --> 00:14:49,720
Speaker 1: look good? What's the sweat out there right now to

282
00:14:49,880 --> 00:14:53,320
Speaker 1: buy these companies? So so a couple of things there, Tom,

283
00:14:53,320 --> 00:14:55,360
Speaker 1: And what I would say is a lot of active

284
00:14:55,360 --> 00:14:58,360
Speaker 1: managers actually have had a pretty good year. UM A

285
00:14:58,400 --> 00:15:01,720
Speaker 1: lot of the larger fundamentally driven funds are outperforming somewhere

286
00:15:01,760 --> 00:15:04,720
Speaker 1: around a hundred basis points, and much to our surprise,

287
00:15:05,080 --> 00:15:08,280
Speaker 1: in the first two weeks of the month, they've actually

288
00:15:08,280 --> 00:15:11,640
Speaker 1: improved their relative performance and you would not expect that.

289
00:15:11,960 --> 00:15:14,360
Speaker 1: Part of that is because of their underweights in the

290
00:15:14,360 --> 00:15:16,720
Speaker 1: the Apples and the Microsoft, and the other issue is

291
00:15:16,720 --> 00:15:19,280
Speaker 1: they do have a smaller cap bias and that's been

292
00:15:19,280 --> 00:15:22,200
Speaker 1: helping them as well. So I don't think there's going

293
00:15:22,280 --> 00:15:24,080
Speaker 1: to be a lot of jockey or position at this

294
00:15:24,120 --> 00:15:26,360
Speaker 1: point in time. I think people are pretty happy where

295
00:15:26,360 --> 00:15:29,400
Speaker 1: they are and they're going to be very interested spectators.

296
00:15:29,720 --> 00:15:31,920
Speaker 1: And so this whole talk about a data chase and

297
00:15:31,920 --> 00:15:34,960
Speaker 1: people pushing their portfolios around, I don't I don't see

298
00:15:34,960 --> 00:15:39,000
Speaker 1: it just yet. Chris always grit to catch up. Thank

299
00:15:39,040 --> 00:15:41,480
Speaker 1: you very much, Chris, help me. That of was Fogg

300
00:15:41,640 --> 00:15:43,440
Speaker 1: trying to stay out of trouble on the likes its

301
00:15:43,520 --> 00:15:53,640
Speaker 1: price action. Catherine Man is one of our leading international

302
00:15:53,720 --> 00:15:58,240
Speaker 1: economisic economists with their academics in America, with their work

303
00:15:58,280 --> 00:16:01,040
Speaker 1: at O E C D and then now Citygroup Global

304
00:16:01,120 --> 00:16:04,400
Speaker 1: Chief economis were thrilled that she could join us at Catherine,

305
00:16:04,440 --> 00:16:05,960
Speaker 1: I want to go to your you know you've got

306
00:16:06,000 --> 00:16:09,640
Speaker 1: you're so good, Catherine. You've got like four sidecar industries,

307
00:16:10,120 --> 00:16:13,200
Speaker 1: and one of them is a deep understanding of how

308
00:16:13,480 --> 00:16:19,080
Speaker 1: China fits into all this. Can China be our international

309
00:16:19,240 --> 00:16:23,800
Speaker 1: GDP salvation? Can they be the one that prompts US

310
00:16:23,960 --> 00:16:27,680
Speaker 1: up and redirects US to growth in two thousand and

311
00:16:27,760 --> 00:16:31,520
Speaker 1: twenty two, Well, there's always a question about who's going

312
00:16:31,560 --> 00:16:33,680
Speaker 1: to be the global locomotive, and it always used to

313
00:16:33,760 --> 00:16:36,479
Speaker 1: be the case that the United States was the global locomotive,

314
00:16:36,560 --> 00:16:39,560
Speaker 1: that was the one who was importing, uh and supporting

315
00:16:39,680 --> 00:16:42,920
Speaker 1: the growth in other economies around the world. Well, you know,

316
00:16:43,480 --> 00:16:47,280
Speaker 1: even though the China statistics are the more most robust

317
00:16:47,400 --> 00:16:50,280
Speaker 1: of the economies that that we have as well in

318
00:16:50,360 --> 00:16:55,920
Speaker 1: our in our projections, Uh, they're exporting their way to growth. UH.

319
00:16:56,080 --> 00:16:59,480
Speaker 1: So they're not the global locomotive at this point. Uh,

320
00:16:59,520 --> 00:17:04,080
Speaker 1: they are taking advantage of the recovery that is very

321
00:17:04,080 --> 00:17:08,080
Speaker 1: sluggish in the global economy when we look at their statistics.

322
00:17:08,080 --> 00:17:11,760
Speaker 1: They did just come out with some new statistics today. Um,

323
00:17:11,920 --> 00:17:14,639
Speaker 1: the US is the one that's the global locomotive for

324
00:17:14,760 --> 00:17:19,040
Speaker 1: China the US. China exports to the US are very strong,

325
00:17:19,400 --> 00:17:22,639
Speaker 1: their exports to Europe and Japan have not recovered nearly.

326
00:17:23,400 --> 00:17:28,199
Speaker 1: Dr Man Navarro and Trumpian economics here would be it's

327
00:17:28,240 --> 00:17:32,800
Speaker 1: a zero sum games. So if China rebounds, we lose, etcetera, etcetera.

328
00:17:32,880 --> 00:17:35,600
Speaker 1: Do you have any optimism in the next year into

329
00:17:35,680 --> 00:17:40,000
Speaker 1: a pandemic recovery that we could see a true additive

330
00:17:40,160 --> 00:17:44,920
Speaker 1: demand away from the zero sum myth Well, it is

331
00:17:44,960 --> 00:17:47,679
Speaker 1: a zero sum myth um there is. But but the

332
00:17:47,760 --> 00:17:51,919
Speaker 1: challenges is that domestic demand uh in economies, which of

333
00:17:51,920 --> 00:17:55,440
Speaker 1: course has been you know, so hard hit by by COVID.

334
00:17:56,119 --> 00:18:00,480
Speaker 1: Until that is resolved, you will not have additive demand

335
00:18:00,600 --> 00:18:03,800
Speaker 1: coming from the trade channel. So you know, we really

336
00:18:03,800 --> 00:18:07,520
Speaker 1: need to get our consumers back on track, very serious

337
00:18:07,600 --> 00:18:11,920
Speaker 1: problem with business investment considered continuing to be very very

338
00:18:11,960 --> 00:18:15,080
Speaker 1: weak this year and into next year. So you know,

339
00:18:15,280 --> 00:18:17,920
Speaker 1: we have to get those two elements back on track

340
00:18:18,040 --> 00:18:20,800
Speaker 1: and then trade will you know, John, I really want

341
00:18:20,800 --> 00:18:23,520
Speaker 1: to stop the show here and say on radio and TV, John,

342
00:18:23,560 --> 00:18:27,439
Speaker 1: this is incredibly important. How a lot of the thinking

343
00:18:27,480 --> 00:18:31,240
Speaker 1: guests that we have pushed against zero sum concept, including

344
00:18:31,280 --> 00:18:34,399
Speaker 1: prime Minister Johnson, and we're going out to where we

345
00:18:34,480 --> 00:18:38,920
Speaker 1: get additive again. It's out there somewhere, John The Knights

346
00:18:38,960 --> 00:18:41,919
Speaker 1: are the positive spill over the from China's recovery. Catherine,

347
00:18:41,920 --> 00:18:45,080
Speaker 1: can you walk us through how that's changed now relative

348
00:18:45,119 --> 00:18:49,199
Speaker 1: to coming out of the last crisis. Very good question,

349
00:18:49,280 --> 00:18:52,000
Speaker 1: because it was the case not only the last crisis

350
00:18:52,000 --> 00:18:55,520
Speaker 1: of the global financial crisis, where China really implemented quite

351
00:18:55,520 --> 00:18:59,240
Speaker 1: a bit of UM fiscal policy and monetary policy to

352
00:18:59,240 --> 00:19:03,920
Speaker 1: to to bolster UH commodity demand as well as other

353
00:19:04,440 --> 00:19:07,480
Speaker 1: other demand throughout the global economy. They did it again

354
00:19:07,520 --> 00:19:10,879
Speaker 1: in sixteen. Of course they were part of the slowdown

355
00:19:10,920 --> 00:19:13,639
Speaker 1: then and then they know ramped up and we're part

356
00:19:13,680 --> 00:19:17,720
Speaker 1: of the global recovery this time around. UH. The export

357
00:19:17,840 --> 00:19:21,000
Speaker 1: channel is an important channel for them UH. And the

358
00:19:21,119 --> 00:19:25,320
Speaker 1: question mark is to what extent their choice of fiscal

359
00:19:25,359 --> 00:19:29,679
Speaker 1: policy instruments and monetary policy instruments are designed to focus

360
00:19:29,720 --> 00:19:35,280
Speaker 1: on internal demand versus UM bols, you know, getting exports

361
00:19:35,320 --> 00:19:40,000
Speaker 1: out the door and through that channel improving manufacturing. There

362
00:19:40,080 --> 00:19:42,400
Speaker 1: has been a pivot. I mean they talk about this

363
00:19:42,800 --> 00:19:46,879
Speaker 1: dual circulation meeting both the domestic economy and UM the

364
00:19:46,960 --> 00:19:50,240
Speaker 1: external economy so they have the language in there that

365
00:19:50,320 --> 00:19:53,679
Speaker 1: suggests that they're focusing on their domestic economy trying to

366
00:19:53,720 --> 00:19:57,720
Speaker 1: bolster that growth. And but right now we've got very

367
00:19:57,720 --> 00:20:01,679
Speaker 1: strong exports and that's an important ingredient for their GDP growth.

368
00:20:02,000 --> 00:20:04,560
Speaker 1: When the I m F comes out and they bring

369
00:20:04,640 --> 00:20:08,640
Speaker 1: down their expectations for growth next year, John Rightley pointed out,

370
00:20:08,680 --> 00:20:11,720
Speaker 1: the story is it is a shallower downturn now, it

371
00:20:11,800 --> 00:20:14,920
Speaker 1: is a slower return to some sort of normalcy. What

372
00:20:15,040 --> 00:20:17,920
Speaker 1: kind of unemployment rate can we expect in the new

373
00:20:17,960 --> 00:20:22,200
Speaker 1: normal given the uncertainty around fiscal support and given the

374
00:20:22,280 --> 00:20:25,439
Speaker 1: lack of growth from the developing world. So let me

375
00:20:25,520 --> 00:20:29,399
Speaker 1: say first, you know, our our forecast has been continued

376
00:20:29,480 --> 00:20:33,840
Speaker 1: to drift downward for global growth in twenty twenty. We've

377
00:20:33,880 --> 00:20:37,920
Speaker 1: continued to write that down. We have also written down

378
00:20:39,320 --> 00:20:41,679
Speaker 1: so we've got a little bit of a different profile

379
00:20:42,480 --> 00:20:45,000
Speaker 1: for our forecast than the I m F does. But

380
00:20:45,080 --> 00:20:47,320
Speaker 1: I have to say that neither one of them are positive.

381
00:20:47,960 --> 00:20:50,600
Speaker 1: We also ask our economists, you know, when do you

382
00:20:50,640 --> 00:20:53,120
Speaker 1: think your economy will return to the pre COVID level

383
00:20:53,200 --> 00:20:57,040
Speaker 1: of GDP? Thirty percent of global GDP continues to move

384
00:20:57,080 --> 00:21:00,320
Speaker 1: that out in terms of the calendar. Uh and you

385
00:21:00,359 --> 00:21:02,399
Speaker 1: know none of them have none of them have a

386
00:21:02,440 --> 00:21:06,440
Speaker 1: return to a pre COVID level of unemployment rates anytime

387
00:21:06,480 --> 00:21:10,520
Speaker 1: in the near term horizon. So you know, the unemployment part,

388
00:21:10,600 --> 00:21:16,240
Speaker 1: the the the bolstering of domestic demand through consumers. That's

389
00:21:16,280 --> 00:21:20,280
Speaker 1: really a very weak part of this story of recovery.

390
00:21:20,320 --> 00:21:22,920
Speaker 1: And it's not of recovery. It's it's we only get

391
00:21:22,960 --> 00:21:25,639
Speaker 1: back to where we were in January. That's just getting

392
00:21:25,640 --> 00:21:28,800
Speaker 1: out of the whole. That's not a recovery. Live on

393
00:21:28,840 --> 00:21:31,600
Speaker 1: Bloomberg TV and Radio with Katherine Man of City Group

394
00:21:31,640 --> 00:21:33,760
Speaker 1: on Bloomberg Surveillance. Catherine, I just want to tease out

395
00:21:33,800 --> 00:21:37,200
Speaker 1: some of your most recent research on inflation CPR America

396
00:21:37,280 --> 00:21:40,119
Speaker 1: out seven eight minutes ago Banking Life. You write a

397
00:21:40,240 --> 00:21:44,040
Speaker 1: really really interesting and important topic, the gap between consumers

398
00:21:44,080 --> 00:21:48,960
Speaker 1: perception of inflation, statistical measures of inflation, and financial market

399
00:21:49,000 --> 00:21:53,000
Speaker 1: pricing of inflation and where it leaves central banks. Catherine,

400
00:21:53,000 --> 00:21:55,880
Speaker 1: just build on it for us, right, So, I mean,

401
00:21:55,920 --> 00:21:58,399
Speaker 1: even if we look at the data for consumers, what

402
00:21:58,480 --> 00:22:00,560
Speaker 1: do they look at They look at like, um, they

403
00:22:00,560 --> 00:22:03,680
Speaker 1: look at food prices, they look at energy prices. Maybe

404
00:22:03,760 --> 00:22:06,480
Speaker 1: at this point they're looking at auto prices, and so

405
00:22:06,560 --> 00:22:10,800
Speaker 1: their perceptions of inflation are actually well above two percent. UH.

406
00:22:10,880 --> 00:22:15,080
Speaker 1: Financial markets up until the change in the monetary policy

407
00:22:15,160 --> 00:22:19,600
Speaker 1: framework by the Federal Reserve, the average inflation targeting financial

408
00:22:19,640 --> 00:22:23,800
Speaker 1: markets were very low in terms of their expectation for inflation.

409
00:22:24,080 --> 00:22:28,280
Speaker 1: Now it did bump up towards two percent when the

410
00:22:28,320 --> 00:22:31,439
Speaker 1: new monetary framework came out. But the problem with the

411
00:22:31,440 --> 00:22:35,240
Speaker 1: Federal Reserve they you know, they also have to deal

412
00:22:35,280 --> 00:22:40,159
Speaker 1: with financial market inflation, and of course those measures of

413
00:22:40,200 --> 00:22:44,840
Speaker 1: inflation with coaching about asset prices. If we included asset prices,

414
00:22:44,840 --> 00:22:47,440
Speaker 1: we would have a much higher rate of inflation than

415
00:22:47,520 --> 00:22:51,080
Speaker 1: we're observing for goods and services. So the challenge is

416
00:22:51,119 --> 00:22:55,520
Speaker 1: to balance you know, financial market and asset prices with

417
00:22:55,640 --> 00:22:58,480
Speaker 1: consumer prices. And right now the two of them are preformed.

418
00:23:00,000 --> 00:23:03,000
Speaker 1: Two years ago Katherin Man put out a small monograph.

419
00:23:03,160 --> 00:23:05,640
Speaker 1: The first time I heard about it when Lawrence Cudlow

420
00:23:05,720 --> 00:23:08,480
Speaker 1: yelled at me, shut up and read this monograph, and

421
00:23:08,520 --> 00:23:10,800
Speaker 1: I did. Kather Man. It was called as a trade

422
00:23:11,320 --> 00:23:15,679
Speaker 1: UH deficits sustainable. It was a classic immediately by doctor Man.

423
00:23:16,119 --> 00:23:19,879
Speaker 1: How about this, Katherine Man, is the twin deficit we

424
00:23:19,960 --> 00:23:25,080
Speaker 1: have created? Sustainable nobody believes it is. Do you believe

425
00:23:25,119 --> 00:23:28,840
Speaker 1: in a glide path to a regression that we're familiar with?

426
00:23:29,200 --> 00:23:33,760
Speaker 1: Are we an uncharted territory here? Well in terms of

427
00:23:33,760 --> 00:23:38,240
Speaker 1: the fiscal deficits and the debt profiles. Ever, Absolutely, we're

428
00:23:38,280 --> 00:23:42,399
Speaker 1: an uncharted territory. Um. We've never had a post you know,

429
00:23:42,520 --> 00:23:46,040
Speaker 1: a post World War type of territory anyway. Um, We've

430
00:23:46,040 --> 00:23:48,360
Speaker 1: never had these kinds of numbers before. We've never had

431
00:23:48,359 --> 00:23:52,240
Speaker 1: these trajectories, not just for sovereigns, but also for non

432
00:23:52,240 --> 00:23:54,760
Speaker 1: financial corporates. I mean, the only ones who seemed to

433
00:23:54,800 --> 00:23:56,679
Speaker 1: be in control at this point our households in the

434
00:23:56,720 --> 00:23:59,960
Speaker 1: United States at least. So this is a debt trajectory

435
00:24:00,080 --> 00:24:03,320
Speaker 1: that is unparalleled. Um. And you know, there's there's only

436
00:24:03,320 --> 00:24:05,520
Speaker 1: a couple of ways out of this. The good way out,

437
00:24:05,600 --> 00:24:09,679
Speaker 1: of course, is to have an innovation serve surge, have

438
00:24:09,760 --> 00:24:13,400
Speaker 1: a productivity surge, a support for the capacity of the

439
00:24:13,440 --> 00:24:17,679
Speaker 1: economy to repay its obligations. Same thing for companies. Um

440
00:24:17,720 --> 00:24:20,080
Speaker 1: that you know, that's that's a wish, that's an aspiration

441
00:24:20,119 --> 00:24:23,280
Speaker 1: at this point. Um, we could imagine maybe something coming

442
00:24:23,320 --> 00:24:27,720
Speaker 1: through with climate innovation and climate adaptation and mitigation. These

443
00:24:27,720 --> 00:24:30,719
Speaker 1: are ways in which we could get a productivity surge

444
00:24:31,040 --> 00:24:33,520
Speaker 1: that would be supportive of being able to repay the debt.

445
00:24:34,040 --> 00:24:38,080
Speaker 1: The other way, of course, is to inflate it away. Um,

446
00:24:38,119 --> 00:24:39,960
Speaker 1: a little bit of inflation would be a good thing.

447
00:24:40,040 --> 00:24:42,520
Speaker 1: The fet is made it clear that they are willing

448
00:24:42,560 --> 00:24:45,240
Speaker 1: to have inflation run above the two percent for for

449
00:24:45,280 --> 00:24:48,720
Speaker 1: a good period of time. Um. And first to what,

450
00:24:48,760 --> 00:24:50,919
Speaker 1: I'm just trying to give you a book to write.

451
00:24:51,000 --> 00:24:52,879
Speaker 1: Come on, I need you to write as a trade

452
00:24:52,920 --> 00:24:57,119
Speaker 1: deficit is a twin deficit sustainable? I'm gonna write it.

453
00:24:57,119 --> 00:24:59,760
Speaker 1: I'm gonna write another one, but this one is going

454
00:24:59,800 --> 00:25:02,600
Speaker 1: to be talking about both the capital count and the

455
00:25:02,680 --> 00:25:05,879
Speaker 1: current account because the other question that people ask is

456
00:25:06,320 --> 00:25:10,080
Speaker 1: when does the capital flow into the United States, which

457
00:25:10,119 --> 00:25:12,640
Speaker 1: of course is the counterpart to the current count deficit.

458
00:25:13,000 --> 00:25:17,120
Speaker 1: When does that capital account UH surplus start to erode?

459
00:25:17,440 --> 00:25:19,680
Speaker 1: And that of course has to do with sustain ability

460
00:25:19,720 --> 00:25:22,560
Speaker 1: of the dollar as a reserve currency, another big topic.

461
00:25:22,680 --> 00:25:25,720
Speaker 1: Katherine Grant to catch up. What's tremendously smile Katherine Man

462
00:25:25,800 --> 00:25:28,560
Speaker 1: that city Gregg. Thank you thanks for listening to the

463
00:25:28,560 --> 00:25:35,080
Speaker 1: Bloomberg Surveillance Podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,

464
00:25:35,440 --> 00:25:39,640
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at

465
00:25:39,680 --> 00:25:43,960
Speaker 1: Tom Keane Before the podcast. You can always catch us worldwide.

466
00:25:44,400 --> 00:25:45,480
Speaker 1: I'm Bloomberg Radio