1 00:00:00,040 --> 00:00:02,640 Speaker 1: Who you put your trust in matters. Investors have put 2 00:00:02,680 --> 00:00:07,000 Speaker 1: their trust and independent registered investment advisors to the two 3 00:00:07,280 --> 00:00:11,360 Speaker 1: four trillion dollars Why learn more at find your Independent 4 00:00:11,400 --> 00:00:26,960 Speaker 1: Advisor dot com. Welcome to the Bloomberg Surveillance Podcast. I'm 5 00:00:27,040 --> 00:00:30,920 Speaker 1: Tom Keene with David Gura. Daily we bring you insight 6 00:00:31,000 --> 00:00:35,560 Speaker 1: from the best in economics, finance, investment, and international relations. 7 00:00:35,960 --> 00:00:40,559 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 8 00:00:40,640 --> 00:00:48,440 Speaker 1: of course, on the Bloomberg. President elect Donald Trump spent 9 00:00:48,479 --> 00:00:51,520 Speaker 1: the weekend in Bedminster, New Jersey, about fifty miles west 10 00:00:51,560 --> 00:00:53,800 Speaker 1: of here, with Vice President elect Mike Pence and a 11 00:00:53,880 --> 00:00:57,760 Speaker 1: parade of potential presidential picks. Governor Chris Christie, former Government 12 00:00:57,920 --> 00:01:01,440 Speaker 1: Romney for Mayor Rooty Giuliani will be ross, David McCormick 13 00:01:01,480 --> 00:01:04,480 Speaker 1: of Bridgewater, Jonathan Gray of Blackstone. And that's where I 14 00:01:04,520 --> 00:01:06,120 Speaker 1: want to start this morning with Martin Feldstein. He is 15 00:01:06,160 --> 00:01:08,880 Speaker 1: Baker Professor of Economics at Harvard, President emeritus of the 16 00:01:08,959 --> 00:01:12,160 Speaker 1: National Bureau of Economic Research, and former chairman of President 17 00:01:12,240 --> 00:01:14,679 Speaker 1: Ronald Reagan's Council of Economic advis It's great to have 18 00:01:14,720 --> 00:01:17,800 Speaker 1: you with us here that let's start there he is, 19 00:01:17,840 --> 00:01:19,920 Speaker 1: he's talking to He is weighing whether or not to 20 00:01:19,959 --> 00:01:22,360 Speaker 1: pick many of these these men and women. Let's start 21 00:01:22,360 --> 00:01:24,600 Speaker 1: with the Treasury secretary in particular. What's he looking for? 22 00:01:24,680 --> 00:01:28,600 Speaker 1: What makes a good Treasury secretary? Uh, well, I don't 23 00:01:28,600 --> 00:01:32,600 Speaker 1: know what he's looking for. The Treasury secretaries over the 24 00:01:32,680 --> 00:01:36,800 Speaker 1: decades that I have followed this have been very different. Um. 25 00:01:36,880 --> 00:01:42,120 Speaker 1: In some cases, there are people who understand the politics 26 00:01:42,200 --> 00:01:44,280 Speaker 1: of how to deal with the Congress, can help the 27 00:01:44,319 --> 00:01:49,720 Speaker 1: president passes legislation. In some cases, they are the chief spokesman. 28 00:01:49,760 --> 00:01:52,720 Speaker 1: That's what Don Reagan, who was Treasury secretary when I 29 00:01:52,760 --> 00:01:55,520 Speaker 1: worked for Ronald Reagan, he said, I am the president's 30 00:01:55,600 --> 00:01:58,720 Speaker 1: chief economic spokesman. I will explain to the president, to 31 00:01:58,760 --> 00:02:01,960 Speaker 1: the world, to the pup American public what it is 32 00:02:02,000 --> 00:02:04,280 Speaker 1: that we're trying to do. So I think a president 33 00:02:04,360 --> 00:02:07,240 Speaker 1: can can seek different kinds of things. I think in 34 00:02:07,280 --> 00:02:11,720 Speaker 1: the current case, Um, Donald Trump has laid out broad 35 00:02:11,800 --> 00:02:14,840 Speaker 1: goals but not details of how he would achieve it, 36 00:02:15,200 --> 00:02:19,200 Speaker 1: and so I think he needs help on those details, 37 00:02:19,240 --> 00:02:22,480 Speaker 1: and he needs somebody who can work with the congressional leadership, 38 00:02:22,639 --> 00:02:27,480 Speaker 1: with Paul Ryan in particular on elect on passing those 39 00:02:27,680 --> 00:02:31,080 Speaker 1: those Uh, those policies explain what it is we're trying 40 00:02:31,080 --> 00:02:33,079 Speaker 1: to do. Here. We are two weeks out from the 41 00:02:33,200 --> 00:02:34,760 Speaker 1: from the election. Do we have a better sense of 42 00:02:34,800 --> 00:02:37,720 Speaker 1: that from these intervening two weeks. No, I don't think 43 00:02:37,720 --> 00:02:42,400 Speaker 1: we do. I think people critics of of of the 44 00:02:42,440 --> 00:02:46,679 Speaker 1: president elect have taken his some of the rhetoric and 45 00:02:46,760 --> 00:02:50,640 Speaker 1: the campaign to literally. I think the key thing is 46 00:02:50,680 --> 00:02:55,079 Speaker 1: to think about the goals that he's talking about, better jobs, 47 00:02:55,760 --> 00:02:59,880 Speaker 1: stronger growth, uh, and then how that's to be achieved. 48 00:03:00,000 --> 00:03:02,600 Speaker 1: That has to be worked out. As I said, with 49 00:03:02,680 --> 00:03:05,960 Speaker 1: the Congress, you've worked with somebody who was an outsider 50 00:03:05,960 --> 00:03:08,280 Speaker 1: who came into Washington. But he was a governor coming 51 00:03:08,320 --> 00:03:11,920 Speaker 1: to Washington. But how high is that barrier to entry 52 00:03:11,960 --> 00:03:14,200 Speaker 1: for somebody who builds himself as an outsider to come 53 00:03:14,200 --> 00:03:16,519 Speaker 1: into Washington and get things done. How difficult is it 54 00:03:17,320 --> 00:03:21,360 Speaker 1: you're talking about. He did it very very well. I 55 00:03:21,360 --> 00:03:25,880 Speaker 1: mean he came in and he passed remarkable legislation, and 56 00:03:25,919 --> 00:03:30,200 Speaker 1: he never had control over both houses of Congress, and 57 00:03:30,280 --> 00:03:34,480 Speaker 1: yet we got social security legislation, we got tax legislation, 58 00:03:34,560 --> 00:03:38,480 Speaker 1: we got trade legislation. So it's very impressive. Martin Fell 59 00:03:38,600 --> 00:03:41,000 Speaker 1: signed with us from Harvard University. Wonderful to meet with 60 00:03:41,080 --> 00:03:44,960 Speaker 1: him in this time of transition for the nation. It's 61 00:03:44,960 --> 00:03:47,160 Speaker 1: also wonderful to be back in New York. David Girl, 62 00:03:47,240 --> 00:03:52,400 Speaker 1: I forgot your Fortnum and Mason Smoky Gray because I 63 00:03:52,440 --> 00:03:58,160 Speaker 1: had the battle to get conversd. I came back empty 64 00:03:58,200 --> 00:04:01,920 Speaker 1: handed and it was the height of rude. Um. We'll 65 00:04:01,960 --> 00:04:04,960 Speaker 1: have to fix that day or two. David Gerin, Tom 66 00:04:05,040 --> 00:04:08,680 Speaker 1: Kane with Martin Feldstein helped me here with what was 67 00:04:08,760 --> 00:04:11,560 Speaker 1: almost my chart of the year, which is the Klein 68 00:04:11,680 --> 00:04:17,440 Speaker 1: in productivity. Sebastian Maloby talks about Alan Greenspan's wonderful observer 69 00:04:17,680 --> 00:04:22,440 Speaker 1: observance of good productivity fifteen years ago or so. Now 70 00:04:22,480 --> 00:04:26,560 Speaker 1: we're going the other way. Is it reversible? I think 71 00:04:26,600 --> 00:04:30,040 Speaker 1: the key thing about the productivity numbers and the growth numbers, 72 00:04:30,080 --> 00:04:33,240 Speaker 1: and I've been studying this in some detail recently, is 73 00:04:33,279 --> 00:04:37,279 Speaker 1: that the official numbers are just wrong. They just don't 74 00:04:38,120 --> 00:04:42,040 Speaker 1: in the miscounting. I don't believe in the miscounting as 75 00:04:42,080 --> 00:04:45,640 Speaker 1: an explanation of the recent slowdown. I don't know why 76 00:04:45,800 --> 00:04:48,839 Speaker 1: the numbers were high for a few years they're low again, 77 00:04:49,279 --> 00:04:51,320 Speaker 1: back to where they were in the past. What I 78 00:04:51,360 --> 00:04:54,320 Speaker 1: do know is that the official way in which we 79 00:04:54,400 --> 00:05:00,560 Speaker 1: measure real output and therefore productivity understates the grow in 80 00:05:00,600 --> 00:05:04,880 Speaker 1: this economy because the official numbers don't take into account 81 00:05:05,200 --> 00:05:08,800 Speaker 1: new products, and the official numbers don't take into account 82 00:05:08,839 --> 00:05:12,880 Speaker 1: in a sensible way and product improvements is our hedonic 83 00:05:13,080 --> 00:05:20,000 Speaker 1: pricing change. This technology revolution folded into how we value things? 84 00:05:20,080 --> 00:05:23,839 Speaker 1: Do we know how to do that? So the hedonic technique, 85 00:05:24,000 --> 00:05:31,160 Speaker 1: the use of statistical regressions to value products, and well, 86 00:05:31,200 --> 00:05:33,039 Speaker 1: I'll come back to the icon, but I mean to 87 00:05:33,720 --> 00:05:40,000 Speaker 1: value products like the the laptop computer is a very 88 00:05:40,080 --> 00:05:43,800 Speaker 1: small part of what the government does, so it's an improvement, 89 00:05:44,320 --> 00:05:48,839 Speaker 1: but there's still a big gap for most products. And 90 00:05:48,880 --> 00:05:54,360 Speaker 1: there's nothing for the impact on the value created by 91 00:05:54,440 --> 00:05:58,560 Speaker 1: new pharmacutic products. How do you respond, professor, then, to 92 00:05:58,640 --> 00:06:02,360 Speaker 1: a Trump supporter in battleground state that says, I don't 93 00:06:02,360 --> 00:06:05,800 Speaker 1: care about my kids iPhone. I need a real job 94 00:06:06,080 --> 00:06:09,720 Speaker 1: like we used to have. Uh, those real jobs are 95 00:06:09,800 --> 00:06:15,800 Speaker 1: going away. We are seeing we are seeing a a 96 00:06:15,920 --> 00:06:19,919 Speaker 1: change over the decades in the nature of employment in 97 00:06:19,960 --> 00:06:24,560 Speaker 1: the United States. Manufacturing production jobs are way under ten 98 00:06:24,640 --> 00:06:29,000 Speaker 1: percent of the labor force. I had a contentious, let's say, 99 00:06:29,000 --> 00:06:32,200 Speaker 1: interview with Wilbur Ross on this point, he disputes that 100 00:06:32,279 --> 00:06:34,800 Speaker 1: he thinks that we could see a resurgence of manufacturing 101 00:06:34,839 --> 00:06:38,160 Speaker 1: here UH in the US, not necessarily high tech manufacturing. 102 00:06:38,400 --> 00:06:40,520 Speaker 1: Any credence to that is, is there any any sense 103 00:06:40,520 --> 00:06:42,760 Speaker 1: that that's true? You could have some you know, if 104 00:06:42,800 --> 00:06:45,159 Speaker 1: you win from I don't know what the current number is, 105 00:06:45,480 --> 00:06:48,080 Speaker 1: seven percent to ten percent of the labor force. That 106 00:06:48,080 --> 00:06:50,719 Speaker 1: would be a fifty increase, but it would still be 107 00:06:50,800 --> 00:06:53,520 Speaker 1: a very small number. How do you think that the 108 00:06:53,560 --> 00:06:55,919 Speaker 1: Federal Reserve at this point regards the labor mark? We 109 00:06:55,960 --> 00:06:57,840 Speaker 1: talk a lot about whether or not we're at full 110 00:06:57,880 --> 00:07:00,080 Speaker 1: employment here, but but when they meet next month, there 111 00:07:00,080 --> 00:07:02,640 Speaker 1: are different There are different voices, of course on the 112 00:07:02,680 --> 00:07:09,479 Speaker 1: Open Market Committee, but it's hard to believe that we 113 00:07:09,560 --> 00:07:14,680 Speaker 1: are in essentially at full employment. Yes, there has been 114 00:07:14,720 --> 00:07:18,720 Speaker 1: a decline in labor force participation rates of a percentage 115 00:07:18,720 --> 00:07:21,560 Speaker 1: point or two. Some of that is because of the 116 00:07:21,600 --> 00:07:26,800 Speaker 1: aging of the population. But basically we are at full employment, 117 00:07:26,960 --> 00:07:30,360 Speaker 1: and that's why wages are rising more rapidly, and that's 118 00:07:30,360 --> 00:07:35,320 Speaker 1: why um prices inflation is beginning to rise. Let's use 119 00:07:35,360 --> 00:07:37,440 Speaker 1: that as the backdrop here to talk about this UH 120 00:07:37,720 --> 00:07:40,520 Speaker 1: fiscal stimulus, this infrastructure plan that is being bandied about 121 00:07:40,520 --> 00:07:44,120 Speaker 1: now in Washington. Do you think that the horses fall 122 00:07:44,280 --> 00:07:45,720 Speaker 1: far enough out of the barn here that that the 123 00:07:45,880 --> 00:07:48,320 Speaker 1: conversation of whether or not to do it is done? 124 00:07:48,440 --> 00:07:50,520 Speaker 1: Or are there still going to be a conversation about 125 00:07:50,520 --> 00:07:52,880 Speaker 1: whether now is the time to have this kind of spending. Well, 126 00:07:52,880 --> 00:07:55,400 Speaker 1: I think there should be a conversation about whether now 127 00:07:55,560 --> 00:07:58,520 Speaker 1: is the time, because now is not the time to 128 00:07:58,640 --> 00:08:04,800 Speaker 1: do it. It would be fiscal spending done right can 129 00:08:04,840 --> 00:08:07,800 Speaker 1: help to boost the economy when we're in a recession. 130 00:08:07,840 --> 00:08:10,200 Speaker 1: But we're certainly not in a recession now, so we 131 00:08:10,280 --> 00:08:13,920 Speaker 1: don't need it from a demand point of view. Uh, 132 00:08:14,080 --> 00:08:16,880 Speaker 1: we don't have the plans on the table to do 133 00:08:16,960 --> 00:08:22,480 Speaker 1: these things. Uh. Mr Trump has said that he wants 134 00:08:22,560 --> 00:08:25,960 Speaker 1: to do it with private money, So we don't have 135 00:08:26,000 --> 00:08:28,440 Speaker 1: a plan for how we're going to make that happen. 136 00:08:28,680 --> 00:08:34,360 Speaker 1: So it's it's way or in speculative land very quickly here, uh, 137 00:08:34,520 --> 00:08:39,319 Speaker 1: Mr Summers, Professor Harvard, President Harvard suggests there is stagnation 138 00:08:39,880 --> 00:08:43,600 Speaker 1: of a secular type. I would suggest Martin Feldstein pushes 139 00:08:43,640 --> 00:08:47,560 Speaker 1: against your steam colleague over coffee in the economics department. 140 00:08:47,640 --> 00:08:50,960 Speaker 1: So so Larry and I go back a long way, 141 00:08:51,480 --> 00:08:54,680 Speaker 1: and a few years ago, when the unemployment rate in 142 00:08:54,720 --> 00:08:58,400 Speaker 1: the US was around seven percent was coming down very slowly. 143 00:08:58,840 --> 00:09:01,600 Speaker 1: I said, well, you know, maybe Larry's right, and maybe 144 00:09:01,640 --> 00:09:05,000 Speaker 1: we have a shortage of demand and we need to 145 00:09:05,040 --> 00:09:09,280 Speaker 1: do some more spending and infrastructure might be a way 146 00:09:09,280 --> 00:09:11,760 Speaker 1: of doing it, and there may be plenty of time 147 00:09:11,800 --> 00:09:14,880 Speaker 1: to get there. But now we're at full employment, and 148 00:09:14,920 --> 00:09:18,240 Speaker 1: so I don't see the case for doing this. The 149 00:09:18,320 --> 00:09:21,680 Speaker 1: extent that that we do infrastructure, it's at the state 150 00:09:21,720 --> 00:09:24,079 Speaker 1: and local level. We are going to aggress right now. 151 00:09:24,120 --> 00:09:28,960 Speaker 1: Martin Feldstein with US who has profoundly changed academics in 152 00:09:28,960 --> 00:09:33,120 Speaker 1: America and particularly economic academics, and Professor David Kerr and 153 00:09:33,160 --> 00:09:37,920 Speaker 1: I UM came out of our own unique economic studies. 154 00:09:38,360 --> 00:09:40,880 Speaker 1: And one thing we know is there was a tradition 155 00:09:41,080 --> 00:09:43,439 Speaker 1: and the tradition has basically been shattered for a lot 156 00:09:43,480 --> 00:09:46,600 Speaker 1: of different reasons. You're gonna lecture in two weeks at 157 00:09:46,679 --> 00:09:53,000 Speaker 1: your Harvard University to a set of UM upperclassmen, undergraduate students, 158 00:09:53,040 --> 00:09:56,320 Speaker 1: but people with a little bit of experience. When you 159 00:09:56,920 --> 00:09:59,959 Speaker 1: go out there in front of the chalkboard, is trump 160 00:10:00,040 --> 00:10:03,320 Speaker 1: economics and the textbooks or are you gonna be lecturing 161 00:10:03,320 --> 00:10:07,319 Speaker 1: on a whole new America. No, there isn't a Trump economics. 162 00:10:07,920 --> 00:10:12,880 Speaker 1: There's a Trump set of goals strength and growth, improve 163 00:10:12,960 --> 00:10:16,480 Speaker 1: the quality of jobs, but there isn't a plan. There 164 00:10:16,559 --> 00:10:22,040 Speaker 1: isn't a path for getting there. So what they learned 165 00:10:22,080 --> 00:10:28,800 Speaker 1: in my class is about traditional economics, taxes, government spending, 166 00:10:29,040 --> 00:10:32,240 Speaker 1: budget control in the line. Every textbook is different, whether 167 00:10:32,280 --> 00:10:35,720 Speaker 1: it's Stanley Fisher and Rudy dorn Bush, whether it's Blanchard 168 00:10:35,960 --> 00:10:38,559 Speaker 1: Rick Michigan at Colombia has a back third of his 169 00:10:38,679 --> 00:10:44,280 Speaker 1: textbooks on policy. Can we affect policies to meet the 170 00:10:44,400 --> 00:10:48,079 Speaker 1: campaign promises of Mr Trump? More jobs for people that 171 00:10:48,200 --> 00:10:52,720 Speaker 1: have been looking for him for a lifetime. Policies can 172 00:10:54,040 --> 00:10:58,360 Speaker 1: deliver the kinds of goals that he talked about, But 173 00:10:58,480 --> 00:11:01,800 Speaker 1: it's not more jobs. You're essentially at full employment, so 174 00:11:01,880 --> 00:11:07,520 Speaker 1: it's quality of jobs, it's the growth of productivity. Those 175 00:11:07,559 --> 00:11:10,240 Speaker 1: are the kinds of things that good policies should be 176 00:11:10,280 --> 00:11:17,000 Speaker 1: able to deliver and deliver without creating uh large budget deficits. 177 00:11:17,640 --> 00:11:21,120 Speaker 1: Have we about growth? The four percent growth target he's 178 00:11:21,160 --> 00:11:23,160 Speaker 1: he's set out there. In any chance of that of 179 00:11:23,280 --> 00:11:29,720 Speaker 1: that happening, you know who knows, but what I do know? 180 00:11:30,280 --> 00:11:33,200 Speaker 1: Come on, I think there's a if anyone do you 181 00:11:33,320 --> 00:11:36,880 Speaker 1: think there's a fan distribution that includes four percent real 182 00:11:36,960 --> 00:11:41,200 Speaker 1: GDP grow? Not the way we make contain measure it today. 183 00:11:41,320 --> 00:11:43,560 Speaker 1: So but as I was saying to you earlier on 184 00:11:43,640 --> 00:11:48,320 Speaker 1: this program, I think the way the government measures real 185 00:11:48,400 --> 00:11:53,480 Speaker 1: GDP growth just gets it wrong. Uh So, when it 186 00:11:53,559 --> 00:11:59,000 Speaker 1: comes to product improvements, there's no attempt to say how 187 00:11:59,080 --> 00:12:03,160 Speaker 1: much is the Shears model worth to the consumer relative 188 00:12:03,240 --> 00:12:06,840 Speaker 1: to last year's And when new products come along, there's 189 00:12:06,920 --> 00:12:12,080 Speaker 1: no attempt to put into the calculations the value to 190 00:12:12,120 --> 00:12:16,680 Speaker 1: the consumer of those new products. So we're understating real 191 00:12:16,760 --> 00:12:20,080 Speaker 1: economic growth. So when we talk about two growth over 192 00:12:20,080 --> 00:12:23,400 Speaker 1: the last bunch of years, that's an understatement of what's 193 00:12:23,440 --> 00:12:27,040 Speaker 1: really happening. And it's unfortunate because it leads people to 194 00:12:27,160 --> 00:12:30,600 Speaker 1: think that somehow the economy is in terrible shape, when 195 00:12:30,600 --> 00:12:34,400 Speaker 1: in fact we're doing better than that. A lot of 196 00:12:34,400 --> 00:12:37,240 Speaker 1: talk of talk have tax reform, corporate tax form, personal 197 00:12:37,240 --> 00:12:41,360 Speaker 1: tax reform, repatriation holiday for for corporate profits overseas. Does 198 00:12:41,360 --> 00:12:44,000 Speaker 1: something like that makes sense to you? Offering a percent 199 00:12:44,760 --> 00:12:47,520 Speaker 1: rate here to bring profits back to you? Not a holiday, 200 00:12:47,520 --> 00:12:50,439 Speaker 1: it's not a temporary thing. I think that the mistake 201 00:12:50,520 --> 00:12:52,840 Speaker 1: that was made in the previous time when there was 202 00:12:52,920 --> 00:12:56,440 Speaker 1: a repatriation holiday was to make it a one shot 203 00:12:56,480 --> 00:13:00,400 Speaker 1: thing and to provide no incentives for the companies brought 204 00:13:00,440 --> 00:13:03,360 Speaker 1: money back to invest it in plant and equipment. So 205 00:13:03,440 --> 00:13:07,400 Speaker 1: I think the thing to do now is to permanently 206 00:13:07,440 --> 00:13:10,960 Speaker 1: lower our corporate tax rate. The British are talking about seventeen. 207 00:13:11,559 --> 00:13:15,240 Speaker 1: We're at thirty five. And also to join the rest 208 00:13:15,280 --> 00:13:18,600 Speaker 1: of the world with a so called territorial tax system 209 00:13:18,760 --> 00:13:22,240 Speaker 1: in which we tax profits that come back from abroad 210 00:13:22,280 --> 00:13:24,560 Speaker 1: at a low rate, so we don't have two plus 211 00:13:24,600 --> 00:13:29,160 Speaker 1: trillion dollars sitting outside the United States when those funds 212 00:13:29,160 --> 00:13:32,120 Speaker 1: could be invested here. We talk about the shovel readiness 213 00:13:32,160 --> 00:13:35,440 Speaker 1: of infrastructure projects. Is there a shovel ready tax plan 214 00:13:35,520 --> 00:13:40,640 Speaker 1: here ready to go? Uh? Not in great detail, but 215 00:13:40,880 --> 00:13:43,520 Speaker 1: overall yes. I would say that the Ways and Means 216 00:13:43,559 --> 00:13:47,959 Speaker 1: Committee and the House Republicans have been working on detailed 217 00:13:47,960 --> 00:13:50,960 Speaker 1: tax rules, which I think would be a very good 218 00:13:51,000 --> 00:13:55,600 Speaker 1: starting point for what the new president will want to do. 219 00:13:55,920 --> 00:13:57,959 Speaker 1: And you see a lot of of of of points 220 00:13:57,960 --> 00:14:00,200 Speaker 1: of agreement between the White House that the next White 221 00:14:00,200 --> 00:14:03,640 Speaker 1: House and Paul Ryan speak. It's hard to know. I 222 00:14:03,640 --> 00:14:07,960 Speaker 1: mean Trump has met with Ryan. At an earlier stage 223 00:14:08,040 --> 00:14:10,800 Speaker 1: during the campaign. He said he liked the ideas that 224 00:14:10,880 --> 00:14:13,560 Speaker 1: the House Republicans have put together, but I don't think 225 00:14:13,600 --> 00:14:17,160 Speaker 1: he has signed off on any of these details. Martin Folston, 226 00:14:17,200 --> 00:14:20,560 Speaker 1: thank you so much, Baker, Professor, Harvard University. A great 227 00:14:20,600 --> 00:14:22,720 Speaker 1: time to catch up here, X. I don't know. I 228 00:14:22,880 --> 00:14:24,840 Speaker 1: don't know how many days. It's sixty days to the 229 00:14:24,840 --> 00:14:28,200 Speaker 1: indulgation about right, yeah, we'll round up. Should we have 230 00:14:28,240 --> 00:14:30,640 Speaker 1: a sur we should we should have a surveillance transition 231 00:14:30,640 --> 00:14:33,520 Speaker 1: to you exactly, and maybe an inaugural ball, because yeah, 232 00:14:33,520 --> 00:14:36,280 Speaker 1: we should have a surveillance inaugural ball. It's not the 233 00:14:36,320 --> 00:14:52,520 Speaker 1: local watering well. I want to make three point six percent. 234 00:14:52,840 --> 00:14:55,480 Speaker 1: I can do that with a Polish tenure. I don't 235 00:14:55,480 --> 00:14:58,360 Speaker 1: know if that's a deal, Pabla Goldberg with us right 236 00:14:58,400 --> 00:15:01,600 Speaker 1: now with black Rock. I'm mentioned hockey stick. We've seen 237 00:15:01,720 --> 00:15:04,720 Speaker 1: hockey stick moves. Pablo in Yields. Do you load the 238 00:15:04,760 --> 00:15:07,240 Speaker 1: boat on this Monday with e M debt or do 239 00:15:07,280 --> 00:15:11,760 Speaker 1: you have to wait for further carnage? Neither of the two, 240 00:15:11,760 --> 00:15:13,880 Speaker 1: I would say. I think that um it is a 241 00:15:13,920 --> 00:15:16,440 Speaker 1: time of wait and see a little bit of what's happening. 242 00:15:16,840 --> 00:15:20,520 Speaker 1: We been news from the US. Obviously there's been an 243 00:15:20,480 --> 00:15:23,120 Speaker 1: astrid treashment and E M D, but a lot has 244 00:15:23,160 --> 00:15:27,880 Speaker 1: been reprised. I think that there's two variables here to watch. 245 00:15:27,960 --> 00:15:30,280 Speaker 1: The first one is duration, right, and duration has been 246 00:15:30,360 --> 00:15:33,320 Speaker 1: driving a sell of in emerging markets, but also as 247 00:15:33,320 --> 00:15:36,080 Speaker 1: all of in other fixing come instruments. And the other 248 00:15:36,120 --> 00:15:38,920 Speaker 1: one is the policy uncertain time that we have coming 249 00:15:38,920 --> 00:15:42,320 Speaker 1: out of Washington. Because for emerging markets, DOCTU mean a lot, 250 00:15:42,360 --> 00:15:45,920 Speaker 1: I mean a new sort of trade policy coming from 251 00:15:45,920 --> 00:15:49,680 Speaker 1: from Washington for some countries in emerging market could be 252 00:15:50,000 --> 00:15:52,320 Speaker 1: important head being. So we are a little bit in 253 00:15:52,320 --> 00:15:54,920 Speaker 1: a wait and c mode, but we're not, as I 254 00:15:54,960 --> 00:15:59,400 Speaker 1: would say, as as defensive as we wear. A week 255 00:15:59,440 --> 00:16:03,120 Speaker 1: ago we had the big trade summit in Lima, Peru. 256 00:16:03,200 --> 00:16:05,280 Speaker 1: Over the weekend. President Obama was there. There was a 257 00:16:05,320 --> 00:16:08,040 Speaker 1: meeting of him along with other TPP leaders as they 258 00:16:08,040 --> 00:16:11,480 Speaker 1: were called. I imagine it was a quiet and awkward 259 00:16:11,520 --> 00:16:13,640 Speaker 1: meeting for for the outgoing president of the United States, 260 00:16:13,640 --> 00:16:15,960 Speaker 1: who place so much of a bet on the passage 261 00:16:15,960 --> 00:16:20,360 Speaker 1: of that trade legislation. What's your sense here of what 262 00:16:20,480 --> 00:16:23,280 Speaker 1: happens with trade? We've certainly heard Donald Trump's rhetoric about 263 00:16:23,320 --> 00:16:26,200 Speaker 1: trade on the campaign trail. Is there a danger here 264 00:16:26,240 --> 00:16:28,440 Speaker 1: that we are left out like the lone tumbleweed on 265 00:16:28,440 --> 00:16:31,680 Speaker 1: the prairie, rolling along on our own here? But I 266 00:16:31,720 --> 00:16:34,040 Speaker 1: think the risk is I mean, and and and there's 267 00:16:34,040 --> 00:16:35,360 Speaker 1: just how much do you think that Trump is going 268 00:16:35,440 --> 00:16:37,880 Speaker 1: to be the Saint Trump that would had in the campaign? Right? 269 00:16:37,920 --> 00:16:39,600 Speaker 1: I mean, if if it's going to be forty five 270 00:16:41,080 --> 00:16:45,000 Speaker 1: uh import harres from China, if it's gonna be um, 271 00:16:45,040 --> 00:16:47,280 Speaker 1: you know, renegu in enough to that is a whole 272 00:16:47,280 --> 00:16:51,200 Speaker 1: different story. That oppressing that. Maybe we'll try to cut 273 00:16:51,240 --> 00:16:54,880 Speaker 1: some deals in some places where maybe the US got 274 00:16:54,920 --> 00:16:56,760 Speaker 1: the short end of a stick in trade, but it 275 00:16:56,800 --> 00:17:00,520 Speaker 1: will be way more case by case, maybe some anti dumping, 276 00:17:00,560 --> 00:17:04,200 Speaker 1: maybe some issues about the environment, but not a generalized 277 00:17:04,280 --> 00:17:07,080 Speaker 1: change of the rules of the game in trade. So 278 00:17:07,200 --> 00:17:09,840 Speaker 1: we're still trying to figure out what are we getting 279 00:17:09,880 --> 00:17:13,200 Speaker 1: and this means very different things for places like Mexico, 280 00:17:14,000 --> 00:17:17,320 Speaker 1: like China. But two things are important to have in mind. 281 00:17:17,320 --> 00:17:20,320 Speaker 1: The first one that there's a lot of investment of 282 00:17:20,440 --> 00:17:23,879 Speaker 1: US companies already established in Mexico, so just bringing that 283 00:17:23,960 --> 00:17:25,840 Speaker 1: back would be a problem. And also that there's a 284 00:17:25,840 --> 00:17:28,479 Speaker 1: lot of investment in US comparies in China. So if 285 00:17:28,520 --> 00:17:31,200 Speaker 1: all of a sudden all those investments will be exporting 286 00:17:31,240 --> 00:17:33,800 Speaker 1: into the US at different territis, there will be an 287 00:17:33,800 --> 00:17:37,679 Speaker 1: impact in the US as well. Do you find yield? 288 00:17:37,800 --> 00:17:40,960 Speaker 1: Lad you have to hedge the dollar movement. Part of 289 00:17:40,960 --> 00:17:43,760 Speaker 1: the game, folks, is a two part analysis. What do 290 00:17:43,800 --> 00:17:45,000 Speaker 1: you do with the e M what do you do 291 00:17:45,040 --> 00:17:47,800 Speaker 1: with a given country, etcetera. And the other thing is 292 00:17:47,800 --> 00:17:49,520 Speaker 1: then what do you do about the dollar? Is the 293 00:17:49,600 --> 00:17:52,680 Speaker 1: dollar the elephant in your room this morning, Pablo Goldberg, 294 00:17:53,800 --> 00:17:56,520 Speaker 1: I think that is an excellent question. We have been 295 00:17:56,600 --> 00:18:00,359 Speaker 1: hedging duration for a while already, I and then we 296 00:18:00,480 --> 00:18:03,199 Speaker 1: move into handing now more a little with the dollars 297 00:18:03,240 --> 00:18:07,280 Speaker 1: in the dollar story, uh EM can work okay with 298 00:18:07,400 --> 00:18:09,440 Speaker 1: the kind of yields that we think we're gonna get. 299 00:18:09,520 --> 00:18:12,320 Speaker 1: But if the dollar continues to have a significant strength, 300 00:18:12,680 --> 00:18:16,080 Speaker 1: local markets in emerging markets will have a very important 301 00:18:16,119 --> 00:18:18,880 Speaker 1: head wing and you need to hedge the dollar. These 302 00:18:18,880 --> 00:18:23,679 Speaker 1: are two different things, uh the duration risk and the 303 00:18:23,760 --> 00:18:27,160 Speaker 1: dollar risk. And here emerging market has two different asset classes. 304 00:18:27,160 --> 00:18:29,280 Speaker 1: You have the local markets, and you have the dollar 305 00:18:30,080 --> 00:18:32,960 Speaker 1: the dollar bonds. We we with the dollar bonds, you 306 00:18:32,960 --> 00:18:35,520 Speaker 1: need to be careful more about duration. With local markets, 307 00:18:35,520 --> 00:18:37,560 Speaker 1: you need to be careful more about dollars. So right 308 00:18:37,600 --> 00:18:40,159 Speaker 1: now we're more based into the hard currency because of that, 309 00:18:40,359 --> 00:18:42,520 Speaker 1: and that's it's great, folks, a perimeter there on the 310 00:18:42,600 --> 00:18:45,640 Speaker 1: two kinds of bonds in any given nation. We don't 311 00:18:45,640 --> 00:18:47,840 Speaker 1: have this problem in the United States. So so help 312 00:18:47,840 --> 00:18:50,600 Speaker 1: me with Turkey. I was taught the Turkey is maybe 313 00:18:50,600 --> 00:18:55,200 Speaker 1: the ultimate to currency bond market. What does Black Rock 314 00:18:55,240 --> 00:18:59,720 Speaker 1: do in Turkey now to make money to old months out? Well, 315 00:19:00,000 --> 00:19:02,159 Speaker 1: think in Turkey have as you said, two stories, and 316 00:19:02,200 --> 00:19:06,160 Speaker 1: that the story about Turkey is that, uh, these two 317 00:19:06,200 --> 00:19:09,840 Speaker 1: stories are somewhat somewhat link because the non financial corporate 318 00:19:09,840 --> 00:19:13,439 Speaker 1: sector in Turkey, these are your producers of goods. Not 319 00:19:13,680 --> 00:19:18,080 Speaker 1: the banks are actually quite indebted in dollars, so when 320 00:19:18,119 --> 00:19:22,400 Speaker 1: the currency move, their ability to pay also get somewhat hurt. 321 00:19:22,520 --> 00:19:25,240 Speaker 1: So the two markets in Turkey in particular way more 322 00:19:25,280 --> 00:19:28,080 Speaker 1: linked that in places like say Brazil. So what do 323 00:19:28,160 --> 00:19:30,919 Speaker 1: we do in Turkey? We're actually quite offensive in Turkey 324 00:19:30,920 --> 00:19:34,760 Speaker 1: with quite defensive in our currency. We are defensive in 325 00:19:34,840 --> 00:19:38,359 Speaker 1: the currens exposure. We're defensive on the rich exposure. So 326 00:19:38,400 --> 00:19:41,800 Speaker 1: this is one of the places where we particularly used 327 00:19:41,840 --> 00:19:45,080 Speaker 1: to hedge. The environment that we currently have that is 328 00:19:45,160 --> 00:19:49,960 Speaker 1: that of duration risks, and we are stronger dollar and 329 00:19:50,040 --> 00:19:53,040 Speaker 1: weaker currencies domestically. I look at the weakness of the 330 00:19:53,080 --> 00:19:57,080 Speaker 1: Mexican pace now slightly stronger than it was for most 331 00:19:57,119 --> 00:19:59,879 Speaker 1: of last week, But is there opportunity in Mexico right now? 332 00:20:00,080 --> 00:20:02,520 Speaker 1: You have the past so at that level, well, the 333 00:20:02,760 --> 00:20:05,360 Speaker 1: issue with Mexico right now is that you don't know 334 00:20:05,520 --> 00:20:08,919 Speaker 1: which economy you're getting in the future, and you know 335 00:20:09,200 --> 00:20:13,560 Speaker 1: when if you think about the previous state of the world, 336 00:20:13,680 --> 00:20:17,239 Speaker 1: right when we were not considering the possibility of the 337 00:20:17,359 --> 00:20:20,160 Speaker 1: end of NAFTA, if you're compared to where the pests today, 338 00:20:20,200 --> 00:20:23,960 Speaker 1: to that there's a sift premium now in the Mexican pest. 339 00:20:23,960 --> 00:20:26,880 Speaker 1: So but you don't know that going forward. You get 340 00:20:26,880 --> 00:20:29,439 Speaker 1: in an environment where you have a wall and you 341 00:20:29,480 --> 00:20:33,520 Speaker 1: don't have f d I because you have no NAFTA, 342 00:20:33,680 --> 00:20:36,440 Speaker 1: or you have a different situation. So we've been doing 343 00:20:36,480 --> 00:20:39,600 Speaker 1: a lot of work into trying to put numbers behind it. 344 00:20:39,640 --> 00:20:42,840 Speaker 1: But until you get more certainty of where we're going 345 00:20:43,200 --> 00:20:46,160 Speaker 1: it's hard to put a number on the pesto, so, 346 00:20:46,720 --> 00:20:48,879 Speaker 1: particularly in Mexico, is more of a weight and C 347 00:20:49,080 --> 00:20:51,679 Speaker 1: situation right now. Wait and C situation is is the 348 00:20:51,760 --> 00:20:55,200 Speaker 1: uncertainty entirely stemming from what's going to happen or may 349 00:20:55,200 --> 00:20:57,679 Speaker 1: happen in Washington, or is this a story about the 350 00:20:57,680 --> 00:21:01,320 Speaker 1: Mexican economy as well. It's combination of the two. And 351 00:21:01,400 --> 00:21:05,080 Speaker 1: that's a great point because we are overlapping policy uncertainty 352 00:21:05,119 --> 00:21:08,760 Speaker 1: in the US with policy uncertain with Mexico. We have 353 00:21:08,840 --> 00:21:12,520 Speaker 1: an election in Mexican two thousand and eighteen. The current 354 00:21:12,720 --> 00:21:16,399 Speaker 1: ruling party does not have too much popularity at this point, 355 00:21:16,680 --> 00:21:20,280 Speaker 1: and we might get potentially the ascendance of a less 356 00:21:20,440 --> 00:21:23,600 Speaker 1: market friendly candidate in two thousand and eighteen. So if 357 00:21:23,640 --> 00:21:27,040 Speaker 1: we have a situation that is very against Mexico from 358 00:21:27,080 --> 00:21:29,919 Speaker 1: the US, it might likely lead to a situation that 359 00:21:30,040 --> 00:21:32,440 Speaker 1: is living against the US Mexico. So you get these 360 00:21:32,480 --> 00:21:37,520 Speaker 1: two superposing risks, and the Mexican pestode today might be 361 00:21:37,600 --> 00:21:41,360 Speaker 1: very different if we have let's say, a soft Trump 362 00:21:41,800 --> 00:21:44,080 Speaker 1: or we we have a harsher Trump. More in line 363 00:21:44,080 --> 00:21:47,640 Speaker 1: with what people saying in the campaign, is Italy an 364 00:21:47,640 --> 00:21:52,480 Speaker 1: emerging market is public Goldberg gonna invest or study or 365 00:21:52,640 --> 00:21:57,879 Speaker 1: think about Italy a year out. Well, if that is 366 00:21:57,920 --> 00:22:02,760 Speaker 1: the case, if if it was to become an emerging market, 367 00:22:02,800 --> 00:22:04,840 Speaker 1: then I think that we will have other troubles because 368 00:22:04,840 --> 00:22:09,399 Speaker 1: this will be a world where um, where the developed 369 00:22:09,440 --> 00:22:13,159 Speaker 1: marketers and a significant amount of stress um. So to 370 00:22:13,200 --> 00:22:14,960 Speaker 1: answer your question, Shor, no, I don't think that it 371 00:22:15,119 --> 00:22:18,520 Speaker 1: leaves an investor and emerging market. I think in some 372 00:22:18,600 --> 00:22:24,119 Speaker 1: cases Greece has started to be studied, particularly the equity side, 373 00:22:24,320 --> 00:22:27,200 Speaker 1: by emerging market investors, but I think that it is 374 00:22:27,720 --> 00:22:30,919 Speaker 1: far away from the situation where Grice was public Goldberg 375 00:22:31,200 --> 00:22:33,560 Speaker 1: he had eight reasons to not come on today with 376 00:22:33,680 --> 00:22:37,240 Speaker 1: black Rock of course doing real money work with emerging 377 00:22:37,280 --> 00:22:40,520 Speaker 1: market debt as well. Pablo, I need a clinic right now. 378 00:22:40,600 --> 00:22:46,320 Speaker 1: An assigreen call a fifty, sixty and seventy year bonds. 379 00:22:46,760 --> 00:22:49,960 Speaker 1: They may be emerging market, usually they're more developed countries. 380 00:22:50,440 --> 00:22:53,760 Speaker 1: The latest love note, folks is from Austria, a bond 381 00:22:53,760 --> 00:22:57,320 Speaker 1: of two thousand eighty six. You've enjoyed giving up nine 382 00:22:57,440 --> 00:23:02,400 Speaker 1: years coupon and the latest hockeys move. Pablo, help me here? 383 00:23:02,480 --> 00:23:04,719 Speaker 1: Do I want to buy a fifty year or seventy 384 00:23:04,800 --> 00:23:08,360 Speaker 1: year bund. But I think it's very difficult to get 385 00:23:08,359 --> 00:23:12,679 Speaker 1: so out there. Um the current um you know, the 386 00:23:12,680 --> 00:23:17,320 Speaker 1: current dynamics of duration, right, I mean, Um, if there's 387 00:23:17,440 --> 00:23:21,040 Speaker 1: an area of the curve that is least a sponsored 388 00:23:21,080 --> 00:23:23,480 Speaker 1: by by central bank, that is a very very very 389 00:23:23,480 --> 00:23:28,640 Speaker 1: long end. We have the Japanese UM just having put 390 00:23:28,720 --> 00:23:31,600 Speaker 1: in order to unlimited buying in the three to five 391 00:23:31,680 --> 00:23:34,520 Speaker 1: year they have a targeted detain year. We have easyb 392 00:23:34,680 --> 00:23:38,520 Speaker 1: buying across the curve just going all the way out 393 00:23:38,600 --> 00:23:42,440 Speaker 1: there into the fifty year. That's where you have least 394 00:23:42,520 --> 00:23:45,560 Speaker 1: sponsorship from from central bank. So if there's any kind 395 00:23:45,600 --> 00:23:48,640 Speaker 1: of reflation trade happening in the market, that's what you're 396 00:23:48,640 --> 00:23:51,240 Speaker 1: going to feel it the most. So at this moment, 397 00:23:51,280 --> 00:23:53,240 Speaker 1: and this for us, and this is not that much 398 00:23:53,240 --> 00:23:56,160 Speaker 1: of an emerging market story, because there's very little emerging 399 00:23:56,200 --> 00:23:59,960 Speaker 1: market so far out. But I think that this is, 400 00:24:00,119 --> 00:24:02,560 Speaker 1: you know, this is the area where you carry probably 401 00:24:02,840 --> 00:24:05,879 Speaker 1: the highest risks, right, interseation problem. A few minutes going 402 00:24:05,920 --> 00:24:08,320 Speaker 1: to talk to Final Gate of Oppenheimer, Energy analyst at 403 00:24:08,320 --> 00:24:11,600 Speaker 1: Oppenheimer about what's happening with oil. Let me ask you, though, 404 00:24:11,640 --> 00:24:13,760 Speaker 1: to what extent the emerging market story right now is 405 00:24:13,800 --> 00:24:16,879 Speaker 1: an oil story, is an energy story. But all this 406 00:24:16,920 --> 00:24:18,520 Speaker 1: is a very important part. I mean, I will talk 407 00:24:18,520 --> 00:24:20,959 Speaker 1: about all commotism and not only oil is a very 408 00:24:21,000 --> 00:24:25,320 Speaker 1: important part of the emerging market fundamental construct. Uh. And 409 00:24:25,480 --> 00:24:28,840 Speaker 1: obviously in last January, when we have oil below thirty, 410 00:24:29,200 --> 00:24:33,520 Speaker 1: emerging markets and suffering with a rebound of oil, emerging 411 00:24:33,520 --> 00:24:35,399 Speaker 1: market did well. Where we are right now is more 412 00:24:35,400 --> 00:24:38,120 Speaker 1: of an arrange trade in somewhere between whatever forty five 413 00:24:38,200 --> 00:24:42,439 Speaker 1: and fifty. So the next meeting of OPEC would be 414 00:24:42,440 --> 00:24:46,119 Speaker 1: important for for the emerging markets. Any kind of sense 415 00:24:46,240 --> 00:24:50,040 Speaker 1: that suppliers are putting together some come of agreement to 416 00:24:50,080 --> 00:24:53,080 Speaker 1: support the oil price will be will be good news. 417 00:24:53,320 --> 00:24:56,159 Speaker 1: On the other hand, you know that um, everything that 418 00:24:56,240 --> 00:24:59,640 Speaker 1: might come from energy policy in the US indicates that's 419 00:24:59,680 --> 00:25:02,959 Speaker 1: going to be more facilities for the shale producers to supply. 420 00:25:03,600 --> 00:25:05,280 Speaker 1: That means that at the same time, we are a 421 00:25:05,280 --> 00:25:08,280 Speaker 1: little bit cupping the upset of all prices going forward, 422 00:25:08,560 --> 00:25:10,840 Speaker 1: as very quickly these suppliers can come through the market 423 00:25:10,880 --> 00:25:15,840 Speaker 1: and and and and and generate U you know, more production. Um. 424 00:25:15,920 --> 00:25:19,000 Speaker 1: All in all, I think the oil you know around 425 00:25:19,000 --> 00:25:22,760 Speaker 1: fifty will lower volatility is good news for emerging markets, 426 00:25:22,760 --> 00:25:24,800 Speaker 1: but it's not going to be a massive driver of 427 00:25:24,840 --> 00:25:28,399 Speaker 1: performance going forward. About in the in the metal space, 428 00:25:28,400 --> 00:25:30,760 Speaker 1: we've we've seen copper come down a little bit here. 429 00:25:30,800 --> 00:25:32,639 Speaker 1: But when you look at emerging markets and medals, what 430 00:25:32,680 --> 00:25:36,000 Speaker 1: are you seeing? Well, there is that when you look 431 00:25:36,000 --> 00:25:39,040 Speaker 1: at other things except oil, when you look at at copper, 432 00:25:39,080 --> 00:25:41,639 Speaker 1: when you look at iron ore, we look some of 433 00:25:41,680 --> 00:25:48,720 Speaker 1: the industrial materials. That's where the China story uh starts 434 00:25:48,720 --> 00:25:51,760 Speaker 1: to play and get in because China is the biggest 435 00:25:51,760 --> 00:25:54,200 Speaker 1: buyer in this market. So if you want to understand 436 00:25:54,200 --> 00:25:56,399 Speaker 1: where Chinese growth and property is going, you need to 437 00:25:56,440 --> 00:25:59,000 Speaker 1: look at these assets. This is great for other types 438 00:25:59,040 --> 00:26:03,159 Speaker 1: of countries, the Chill, the Peru, the brazils of the world, UH, 439 00:26:03,359 --> 00:26:06,440 Speaker 1: not necessarily the old producers and that and that and that. 440 00:26:06,560 --> 00:26:09,960 Speaker 1: The economy is allowing us to generate alpha by doing 441 00:26:09,960 --> 00:26:13,400 Speaker 1: relative value between some of these countries. So I think 442 00:26:13,440 --> 00:26:16,800 Speaker 1: that if you're looking for a label for emerging market 443 00:26:16,800 --> 00:26:20,880 Speaker 1: going forward, is about is about selectivity, is about alpha. 444 00:26:21,000 --> 00:26:22,879 Speaker 1: It's not the beta market that we have in the 445 00:26:22,920 --> 00:26:25,560 Speaker 1: first nine months of the year. Public, Thank you so much, 446 00:26:25,640 --> 00:26:28,119 Speaker 1: Public Goldburg. And update from black Rock on data and 447 00:26:28,200 --> 00:26:33,560 Speaker 1: alpha and selection of emerging market's usually easier easier said 448 00:26:33,600 --> 00:26:45,600 Speaker 1: than done. Who you put your trust in matters. Investors 449 00:26:45,960 --> 00:26:49,919 Speaker 1: have put their trust in independent registered investment advisors to 450 00:26:50,000 --> 00:26:53,000 Speaker 1: the tune of four trillion dollars. Why they see their 451 00:26:53,080 --> 00:26:56,560 Speaker 1: roles to serve, not sell. That's right. Charles Schwab is 452 00:26:56,560 --> 00:27:01,000 Speaker 1: committed to the success over seven thousand in dependent financial 453 00:27:01,000 --> 00:27:06,800 Speaker 1: advisors who passionately dedicate themselves to helping people achieve their 454 00:27:06,800 --> 00:27:18,240 Speaker 1: financial goals. Learn more and find your independent advisor dot com. 455 00:27:18,520 --> 00:27:22,760 Speaker 1: Diane Swunk with his DS economics. UM, Diane, thank you 456 00:27:22,840 --> 00:27:25,240 Speaker 1: so much for those Cubs tickets during the World Series. 457 00:27:26,440 --> 00:27:31,360 Speaker 1: We kept waiting, We kept waiting. It's the only one 458 00:27:31,359 --> 00:27:39,240 Speaker 1: you've gotten, right, Diane. UM, some of us are. I 459 00:27:39,320 --> 00:27:43,040 Speaker 1: lost my voice for today. It was very good. UM. 460 00:27:43,320 --> 00:27:46,560 Speaker 1: Some of us get lucky in our ata point where 461 00:27:46,600 --> 00:27:50,440 Speaker 1: history has made. You were outside the White House as 462 00:27:50,560 --> 00:27:53,760 Speaker 1: Mr Trump met with Mr Obama. What was it like 463 00:27:54,080 --> 00:27:57,920 Speaker 1: standing outside the symbol of the nation is the two 464 00:27:57,960 --> 00:28:01,439 Speaker 1: of them met? The whole trip was a bit surreal 465 00:28:01,480 --> 00:28:03,960 Speaker 1: because I was meeting with people across the aisle and 466 00:28:04,080 --> 00:28:07,040 Speaker 1: economists UM and off the record meetings for two days 467 00:28:07,359 --> 00:28:10,560 Speaker 1: in UM diplomats, the whole nine yards, and yeah, it 468 00:28:10,640 --> 00:28:13,399 Speaker 1: was a circus. Um the most important thing that was 469 00:28:13,440 --> 00:28:16,479 Speaker 1: just serendipity. I happened to be there, um going by, 470 00:28:16,520 --> 00:28:19,520 Speaker 1: They're going to another meeting. But the more important issue 471 00:28:19,640 --> 00:28:22,960 Speaker 1: was coming back from Washington and the whole kumbaya that 472 00:28:23,080 --> 00:28:24,920 Speaker 1: the financial markets should have felt in the wake of 473 00:28:25,000 --> 00:28:27,240 Speaker 1: the election of you know, a sweep which was a 474 00:28:27,240 --> 00:28:30,600 Speaker 1: surprise sweep by Republicans, was you know, the sense of 475 00:28:30,680 --> 00:28:33,400 Speaker 1: unity that maybe we finally have some immunity and government 476 00:28:33,480 --> 00:28:36,639 Speaker 1: that can move forward. And in Washington I was getting 477 00:28:36,680 --> 00:28:38,960 Speaker 1: just the opposite. Not only are Democrats to each other, 478 00:28:39,040 --> 00:28:41,520 Speaker 1: which we know, but the Republicans are angry at each 479 00:28:41,560 --> 00:28:44,440 Speaker 1: other and you're seeing that sort of seep up as well. 480 00:28:44,480 --> 00:28:47,080 Speaker 1: And that's, um, you know, a really important issue in 481 00:28:47,200 --> 00:28:49,680 Speaker 1: terms of policy going forward. If there's not quite the 482 00:28:49,800 --> 00:28:53,480 Speaker 1: unity people think you do great granular economics. I want 483 00:28:53,520 --> 00:28:56,920 Speaker 1: to get to the granular question which Martin Feldstein was 484 00:28:57,000 --> 00:29:00,840 Speaker 1: quite adamant about today. At some point the market vigilant. 485 00:29:01,000 --> 00:29:03,800 Speaker 1: Is it going to step in? Are we beginning to 486 00:29:03,840 --> 00:29:07,840 Speaker 1: see that now or is that something that awaits next year. Well, 487 00:29:07,920 --> 00:29:09,840 Speaker 1: we are seeing it certainly in the bond market. I 488 00:29:09,880 --> 00:29:13,280 Speaker 1: think the bond market was already overbought, and we're seeing 489 00:29:13,280 --> 00:29:15,280 Speaker 1: them move up in bond yields that I think was 490 00:29:15,360 --> 00:29:18,760 Speaker 1: poised to occur anyways. That said, I think there's a 491 00:29:18,840 --> 00:29:20,960 Speaker 1: larger issue than just the bond market, and what I 492 00:29:20,960 --> 00:29:24,480 Speaker 1: would caution against, it's something that Carmen Reinhardt has made 493 00:29:24,480 --> 00:29:27,280 Speaker 1: a counter argument about, is that we may not see 494 00:29:27,320 --> 00:29:29,680 Speaker 1: the vigilance that we want to see in terms of 495 00:29:30,120 --> 00:29:32,280 Speaker 1: if there were a large weather, is going to be 496 00:29:32,360 --> 00:29:34,719 Speaker 1: a large expansion in the deficit and the debt, in 497 00:29:35,320 --> 00:29:38,200 Speaker 1: particular in the debt, in the debt to GDP ratio 498 00:29:38,560 --> 00:29:40,360 Speaker 1: in the years to come, if we don't see fiscal 499 00:29:40,400 --> 00:29:43,040 Speaker 1: reforms that sort of deal with both our short term 500 00:29:43,040 --> 00:29:46,640 Speaker 1: and long term issues. And that's something that even though 501 00:29:46,640 --> 00:29:49,840 Speaker 1: it's occurring, it's to create a backdraft drop of more 502 00:29:49,840 --> 00:29:52,360 Speaker 1: global debt than we've ever had, and so one of 503 00:29:52,400 --> 00:29:56,560 Speaker 1: the caps on US interest rates could be that it's 504 00:29:56,640 --> 00:29:59,520 Speaker 1: that much worse than other developed economies. And something that's 505 00:29:59,520 --> 00:30:01,720 Speaker 1: something else that already felt spelled sign said to us 506 00:30:01,720 --> 00:30:03,160 Speaker 1: here a few moments ago, is this is not the 507 00:30:03,200 --> 00:30:05,440 Speaker 1: time for for the kind of stimulus package that's being 508 00:30:05,440 --> 00:30:07,239 Speaker 1: proposed right now. Do you agree with him on that 509 00:30:07,280 --> 00:30:10,360 Speaker 1: point that the conversation here now is about composition and size. 510 00:30:10,400 --> 00:30:12,480 Speaker 1: He's suggesting we shouldn't even be having the composition at 511 00:30:12,520 --> 00:30:14,880 Speaker 1: the conversation at this point. Well, I think we should 512 00:30:14,880 --> 00:30:18,040 Speaker 1: be having a productive conversation about infrastructure. This is a 513 00:30:18,320 --> 00:30:20,280 Speaker 1: This is something I think stan Fisher made the point 514 00:30:20,280 --> 00:30:23,400 Speaker 1: of today um Janet Yellen incident. You know it is interesting, 515 00:30:23,440 --> 00:30:25,000 Speaker 1: sort of backed off a little bit and said, you know, 516 00:30:25,120 --> 00:30:26,880 Speaker 1: full employment, do you really want to be doing this? 517 00:30:27,240 --> 00:30:29,120 Speaker 1: I think the real issue is if we have we 518 00:30:29,160 --> 00:30:33,560 Speaker 1: do need something on infrastructure that helps to raise productivity growth. 519 00:30:33,800 --> 00:30:35,320 Speaker 1: I do believe that, but it needs to be done 520 00:30:35,320 --> 00:30:39,480 Speaker 1: within the context of long term fiscal sustainability. No one's 521 00:30:39,480 --> 00:30:42,560 Speaker 1: on that third rail of entitlement and discussing that. In fact, 522 00:30:42,880 --> 00:30:47,960 Speaker 1: both parties have promised more benefits to um older workers 523 00:30:48,240 --> 00:30:51,360 Speaker 1: and not just existing older workers, older workers going forward. 524 00:30:51,400 --> 00:30:53,720 Speaker 1: And this is where I find the really tough stuff 525 00:30:53,760 --> 00:30:56,280 Speaker 1: is that you know, back in when we had that 526 00:30:56,400 --> 00:31:00,200 Speaker 1: bipartisan fiscal reduction sort of fiscal sustainability pack, it's just 527 00:31:00,240 --> 00:31:03,360 Speaker 1: Simpson Bowls package, which I did, you know, participating meetings 528 00:31:03,360 --> 00:31:05,719 Speaker 1: on that was about you know, having twenty eight year 529 00:31:05,720 --> 00:31:07,720 Speaker 1: olds maybe work to the age of six, and that 530 00:31:07,840 --> 00:31:10,479 Speaker 1: was considered outrageous. Man, these people made a live till 531 00:31:10,480 --> 00:31:12,840 Speaker 1: a hundred and thirty. It wasn't taking benefits away from 532 00:31:13,080 --> 00:31:16,560 Speaker 1: existing people today even though it's about to retire. And 533 00:31:16,600 --> 00:31:19,040 Speaker 1: I think not being able to have a grown up 534 00:31:19,080 --> 00:31:22,520 Speaker 1: conversation about long term fiscal sustainability is a real issue. 535 00:31:22,840 --> 00:31:25,680 Speaker 1: Then let me get one more question and too short 536 00:31:25,760 --> 00:31:29,240 Speaker 1: today with you help me with dollar dynamics. Derren Myer's 537 00:31:29,280 --> 00:31:31,800 Speaker 1: coming up with ASBC and they've got an outlier week 538 00:31:31,840 --> 00:31:34,920 Speaker 1: week Sterling, uh call, are we beginning to see a 539 00:31:34,960 --> 00:31:37,800 Speaker 1: brutal move in the dollar? And is that the adjustment 540 00:31:37,880 --> 00:31:40,840 Speaker 1: that Mr Trump will have to pay attention to. It 541 00:31:40,960 --> 00:31:43,120 Speaker 1: is a big adjudgment. And the question is again you 542 00:31:43,160 --> 00:31:45,960 Speaker 1: know what happens? Um does the ECB. It looks like 543 00:31:46,000 --> 00:31:47,960 Speaker 1: now they're not going to begin the tapering or talk 544 00:31:48,000 --> 00:31:51,440 Speaker 1: about tapering in December, so that will keep more pressure 545 00:31:51,600 --> 00:31:54,000 Speaker 1: on the dollar moving more towards unity with the Euro. 546 00:31:54,160 --> 00:31:56,719 Speaker 1: As a matter of fact, Um, and so I do 547 00:31:56,840 --> 00:31:59,320 Speaker 1: think that with the movement we are seeing are dramatic. 548 00:31:59,360 --> 00:32:01,640 Speaker 1: What is im worton is something that Leo brainerd has 549 00:32:01,640 --> 00:32:03,920 Speaker 1: brought up, and that is even small movements and interest 550 00:32:04,000 --> 00:32:07,240 Speaker 1: rates have outsized inpacts impacts on the dollar. And it's 551 00:32:07,240 --> 00:32:11,280 Speaker 1: not just you know, the sterling, euro and the developed economies, 552 00:32:11,280 --> 00:32:14,640 Speaker 1: it's the developing economies and they're an enormous amount of stress. 553 00:32:14,840 --> 00:32:16,840 Speaker 1: And this is the same time that China has already 554 00:32:16,880 --> 00:32:21,360 Speaker 1: seen a massive outflow, another massive outflow of capital, and 555 00:32:21,440 --> 00:32:24,000 Speaker 1: that's putting pressure on their currency. And it's not just 556 00:32:24,080 --> 00:32:27,600 Speaker 1: the collections, it's many factors combined. Dian sank, thank you 557 00:32:27,640 --> 00:32:30,840 Speaker 1: so much, DS Economics. This morning, too too quick a meeting. 558 00:32:30,920 --> 00:32:45,800 Speaker 1: We'll have to do something wrong. I turned to rage. 559 00:32:45,800 --> 00:32:49,040 Speaker 1: It worst span. We're in Heathrow, you're David. Were that 560 00:32:49,160 --> 00:32:52,800 Speaker 1: caviat bar just before the train tracks over to terminal five? 561 00:32:54,080 --> 00:32:57,040 Speaker 1: You know we're on our fifth plate of whatever it was, 562 00:32:57,160 --> 00:33:00,560 Speaker 1: and the bubbly was being poured. It said, get ryl Meyer, 563 00:33:00,800 --> 00:33:04,120 Speaker 1: just get do anything. Get derren Meyer joining us now 564 00:33:04,160 --> 00:33:07,880 Speaker 1: from HSBC. Derren Meyer, Derren there's a trench at sentence 565 00:33:07,920 --> 00:33:11,560 Speaker 1: in your new post Trump report where you continue sterling 566 00:33:11,640 --> 00:33:15,920 Speaker 1: at one ten. Why doesn't Donald Trump affect pounds sterling? 567 00:33:16,680 --> 00:33:19,240 Speaker 1: I think what what Donald Trump has done is give 568 00:33:19,320 --> 00:33:22,040 Speaker 1: us the second example of a currency that flips from 569 00:33:22,040 --> 00:33:25,280 Speaker 1: being a cyclical story determined by a central bank to 570 00:33:25,360 --> 00:33:27,880 Speaker 1: one that's determined by our politicians. So in a way, 571 00:33:27,920 --> 00:33:29,840 Speaker 1: for us, it just reaffirmed one time, like I guess 572 00:33:29,840 --> 00:33:32,120 Speaker 1: we could have been we could have been cheeky and 573 00:33:32,160 --> 00:33:34,040 Speaker 1: moved a little bit lower, But what was the point, Frank, 574 00:33:34,080 --> 00:33:35,840 Speaker 1: We're already the most bearish on the street. I think 575 00:33:35,880 --> 00:33:38,160 Speaker 1: it just made us more confident of anything that we're right. 576 00:33:38,320 --> 00:33:42,160 Speaker 1: David's got eight questions on this quickly emerging markets. I mean, 577 00:33:42,200 --> 00:33:45,680 Speaker 1: I hate this word route, but we are getting rowdy 578 00:33:45,720 --> 00:33:49,280 Speaker 1: in emerging markets. What's the tension there? They've been hit 579 00:33:49,280 --> 00:33:51,680 Speaker 1: pretty hard. I mean what's interesting here is they've been 580 00:33:51,760 --> 00:33:53,880 Speaker 1: hit pretty hard at the time when I said the 581 00:33:53,880 --> 00:33:56,160 Speaker 1: rest of the currency market is just fixating on the 582 00:33:56,160 --> 00:33:59,400 Speaker 1: good bit of the Trump story, which is fiscal stimulus 583 00:33:59,480 --> 00:34:03,120 Speaker 1: reflay s. We haven't really ventured down the protectionist route, 584 00:34:03,160 --> 00:34:05,640 Speaker 1: the immigration anti immigration route, all of these angles which 585 00:34:05,640 --> 00:34:09,080 Speaker 1: are potentially even more damaging for em So that's that's 586 00:34:09,080 --> 00:34:11,400 Speaker 1: the concern. You know, people have asked, has there been 587 00:34:11,440 --> 00:34:14,280 Speaker 1: an overshoot? I'd said, well, we're only beginning to digest 588 00:34:14,320 --> 00:34:16,680 Speaker 1: this Trump story. We're not getting the clarity yet, so 589 00:34:16,960 --> 00:34:19,600 Speaker 1: in a way still vulnerable. I would argue the politics 590 00:34:19,600 --> 00:34:22,919 Speaker 1: can be even more unpredictable than than financial markets. When 591 00:34:22,920 --> 00:34:24,839 Speaker 1: you look at currencies around the world, which which are 592 00:34:24,840 --> 00:34:27,680 Speaker 1: the currencies now not being driven by politics? It seems 593 00:34:27,719 --> 00:34:30,760 Speaker 1: like such an overarching, overwhelming little story. It's a shortlist, 594 00:34:30,760 --> 00:34:35,600 Speaker 1: and it's distressing because currency strategists generally hate forecasting economics, 595 00:34:35,600 --> 00:34:37,200 Speaker 1: but we do it and we've been doing it, but 596 00:34:37,480 --> 00:34:41,120 Speaker 1: we particularly hate forecasting politics and it makes it a 597 00:34:41,120 --> 00:34:44,480 Speaker 1: lot less transparent about about how you arrive at the 598 00:34:44,560 --> 00:34:48,240 Speaker 1: number which ones aren't? Do you know, I'm really struggling 599 00:34:48,239 --> 00:34:51,160 Speaker 1: to come up with any really struggling I maybe the Scandies, 600 00:34:51,200 --> 00:34:53,080 Speaker 1: maybe AUSSI, but even that, you know, even there you 601 00:34:53,080 --> 00:34:56,560 Speaker 1: can come up to your political angles. With David taught 602 00:34:56,640 --> 00:35:02,120 Speaker 1: for Stockholm fects. People talk like that. We do. We 603 00:35:02,440 --> 00:35:05,160 Speaker 1: like our jargon. We like our jargon. Tell me what's 604 00:35:05,320 --> 00:35:07,400 Speaker 1: going on with with the Chinese currency. We see it's 605 00:35:07,400 --> 00:35:11,640 Speaker 1: slightly stronger today at right now, but we saw plumbing 606 00:35:11,680 --> 00:35:14,200 Speaker 1: some real loads here over the last week or so. Yeah, 607 00:35:14,239 --> 00:35:16,960 Speaker 1: And I think it's always against what I mean, The 608 00:35:16,960 --> 00:35:20,839 Speaker 1: reality is, it's weaker against a much stronger dollar, But 609 00:35:20,880 --> 00:35:23,040 Speaker 1: if we look at the basket, that's not the case. 610 00:35:23,520 --> 00:35:25,600 Speaker 1: But look, this is the way the market behaves. The 611 00:35:25,680 --> 00:35:27,640 Speaker 1: Chinese authorities would love us all to look at the 612 00:35:27,680 --> 00:35:29,719 Speaker 1: basket every morning we come into work, but we don't. 613 00:35:29,760 --> 00:35:31,680 Speaker 1: We look at dollar rem and b So I think 614 00:35:31,680 --> 00:35:35,080 Speaker 1: in a way to interpret it is there's been, you know, 615 00:35:35,200 --> 00:35:38,080 Speaker 1: an appropriate degree of weakly of the currency against the 616 00:35:38,120 --> 00:35:40,680 Speaker 1: stronger dollar, but not one that I think points when 617 00:35:40,680 --> 00:35:42,680 Speaker 1: he lost the control or any capital flat at this 618 00:35:42,760 --> 00:35:44,520 Speaker 1: kind of angle that I know the markets would love 619 00:35:44,560 --> 00:35:46,920 Speaker 1: to find. It's just simply not there because they've been 620 00:35:46,960 --> 00:35:49,759 Speaker 1: able to maintain this relatively stable basket. How do you 621 00:35:49,800 --> 00:35:54,000 Speaker 1: begin to forecast what might happen with trade policy visa 622 00:35:53,760 --> 00:35:57,680 Speaker 1: the Chinese currency for example? Uh, could there be terrorifs? 623 00:35:57,719 --> 00:36:00,239 Speaker 1: Could there not be terrifs? What's what are you doing 624 00:36:00,239 --> 00:36:02,120 Speaker 1: at this point? This sort of forecast you're doing if 625 00:36:02,160 --> 00:36:04,960 Speaker 1: some butts and maybes, um and and that's all you 626 00:36:05,000 --> 00:36:07,520 Speaker 1: can do. I mean, I remember the glory day at 627 00:36:07,520 --> 00:36:09,360 Speaker 1: the beginning of the Internet, where you download a picture 628 00:36:09,600 --> 00:36:11,800 Speaker 1: and we'll take about five minutes to crystallize and be 629 00:36:11,800 --> 00:36:15,440 Speaker 1: all grainy. At the beginning and then Superci Yes, exactly, 630 00:36:15,560 --> 00:36:17,680 Speaker 1: and I still feel in the grainy pit bit of 631 00:36:17,760 --> 00:36:20,120 Speaker 1: that story. And so you do, you know, you make 632 00:36:20,239 --> 00:36:24,200 Speaker 1: judgments on well, what if the tariff structure jumps up, 633 00:36:24,239 --> 00:36:25,839 Speaker 1: and what does it do to important flesh all these 634 00:36:25,920 --> 00:36:29,120 Speaker 1: kind of elements, But you would say that the early 635 00:36:29,200 --> 00:36:31,400 Speaker 1: signs are at least encouraging in terms of, you know, 636 00:36:31,440 --> 00:36:35,480 Speaker 1: Trump's initial phone conversation with presidency. This indication was that 637 00:36:35,520 --> 00:36:38,320 Speaker 1: it was it was mutual respect. Let's see if that's sustained. 638 00:36:38,360 --> 00:36:40,720 Speaker 1: I want to go back to how do I make money? 639 00:36:41,160 --> 00:36:44,120 Speaker 1: I'm fascinated by It's the end of the year. Everybody's 640 00:36:44,160 --> 00:36:47,320 Speaker 1: been blown up. Alpha's drifted out the door, the bonuses 641 00:36:47,360 --> 00:36:51,520 Speaker 1: are evaporating, So I gotta make alpha an M. What's 642 00:36:51,560 --> 00:36:54,680 Speaker 1: the most intelligent way to do that. I still think 643 00:36:54,719 --> 00:36:57,160 Speaker 1: Max's is front and center on that one time. I mean, 644 00:36:57,880 --> 00:37:00,600 Speaker 1: it's it's actually done. Okay, Now I think it's the 645 00:37:00,600 --> 00:37:04,160 Speaker 1: best performing currency and wait, way okay, you know versus 646 00:37:04,200 --> 00:37:06,799 Speaker 1: e M of the last ten days. So that's where 647 00:37:06,800 --> 00:37:08,880 Speaker 1: I think the vulnerability is, because you know, as as 648 00:37:08,920 --> 00:37:11,560 Speaker 1: I mentioned, there seems to be this fascination just on 649 00:37:11,600 --> 00:37:14,360 Speaker 1: the wall on the good bed now on on on 650 00:37:14,400 --> 00:37:16,600 Speaker 1: the fiscal statements, on the refraction. If we begin to 651 00:37:16,600 --> 00:37:20,839 Speaker 1: worry about the wall, about immigration, about protections policy, pay 652 00:37:20,920 --> 00:37:23,759 Speaker 1: so weaker so for me and to the end of 653 00:37:23,800 --> 00:37:26,400 Speaker 1: the year, that's the vulnerability. Okay, Just as that as 654 00:37:26,480 --> 00:37:31,040 Speaker 1: one example, When does a weak currency have a wealth 655 00:37:31,239 --> 00:37:35,760 Speaker 1: effect on a nation and particularly the elites of that nation. 656 00:37:35,840 --> 00:37:37,920 Speaker 1: It can be Turkey, it can be We've talked a 657 00:37:37,920 --> 00:37:41,160 Speaker 1: lot about the Philippines this morning, but in Mexico eight 658 00:37:41,480 --> 00:37:45,799 Speaker 1: nine doom and gloom, debate, dynamics and all that. What's 659 00:37:45,840 --> 00:37:50,520 Speaker 1: your target. We've got two d When does it click 660 00:37:50,600 --> 00:37:54,719 Speaker 1: in and affect a nation as a whole, Well, well, 661 00:37:54,800 --> 00:37:56,880 Speaker 1: it can affect it pretty quickly, to be honest, I've 662 00:37:56,920 --> 00:37:59,759 Speaker 1: got three standard deviations, just like twenty two point five. 663 00:38:00,280 --> 00:38:03,400 Speaker 1: The language changes, it can affect it pretty quickly. And 664 00:38:03,440 --> 00:38:06,360 Speaker 1: that's why you you see policymakers trying to actually mitigate 665 00:38:06,440 --> 00:38:09,880 Speaker 1: the pace. You know, well, said David, Are we at 666 00:38:09,880 --> 00:38:12,279 Speaker 1: that point right now? Yeah. We saw fifty basis point 667 00:38:12,360 --> 00:38:15,319 Speaker 1: hike from the Central Bank um and I guess we'll 668 00:38:15,320 --> 00:38:17,200 Speaker 1: get more of the same. I think that there's a 669 00:38:17,239 --> 00:38:19,279 Speaker 1: readiness to go again before the end of this year. 670 00:38:19,440 --> 00:38:22,120 Speaker 1: You're just trying to control I think, the pace of 671 00:38:22,160 --> 00:38:24,440 Speaker 1: the move, rather than necessarily reverse the direction in a 672 00:38:24,520 --> 00:38:28,080 Speaker 1: lasting way. Jenny Yellen testified last week. We have minutes 673 00:38:28,120 --> 00:38:29,960 Speaker 1: coming out this week. We have the next FED meeting 674 00:38:29,960 --> 00:38:33,319 Speaker 1: in mid December. How much cognizance do you think the 675 00:38:33,320 --> 00:38:36,520 Speaker 1: FED has of the strength of the dollar right now? Well, look, 676 00:38:36,600 --> 00:38:41,200 Speaker 1: it's it's been a core part of their previously devish narrative. 677 00:38:41,280 --> 00:38:42,960 Speaker 1: It was the strength of the dollar has kept down 678 00:38:43,000 --> 00:38:45,160 Speaker 1: important inflation. It means we haven't had to raise rates 679 00:38:45,160 --> 00:38:47,400 Speaker 1: and the way we would otherwise, I've had done so. 680 00:38:47,400 --> 00:38:50,160 Speaker 1: So they on their metrics they say a four percent 681 00:38:50,200 --> 00:38:52,239 Speaker 1: moving the dollars like a twenty five basis point hike. 682 00:38:52,440 --> 00:38:55,080 Speaker 1: I mean, we've we've done a hike. The market is hiked, 683 00:38:55,920 --> 00:38:59,279 Speaker 1: which is remarkable, and you know, but obviously it's still 684 00:38:59,680 --> 00:39:02,160 Speaker 1: to hands. What do we actually get. Do we get 685 00:39:02,160 --> 00:39:04,680 Speaker 1: the stimulus? Does he get it through Congress? And does 686 00:39:04,719 --> 00:39:06,920 Speaker 1: the FED response? I suspect they will become reactive rather 687 00:39:06,920 --> 00:39:09,319 Speaker 1: than proactive because they have to wait to see what 688 00:39:09,360 --> 00:39:11,319 Speaker 1: we get on fiscal policy. What's your sense of how 689 00:39:11,360 --> 00:39:13,640 Speaker 1: long a digestive process this is going to going to be? 690 00:39:13,719 --> 00:39:14,880 Speaker 1: In other words in the near term. What are you 691 00:39:15,000 --> 00:39:18,279 Speaker 1: listening for that could give you some better indication of that. Well, 692 00:39:18,280 --> 00:39:19,799 Speaker 1: I guess what we're doing at the moment is looking 693 00:39:19,840 --> 00:39:23,640 Speaker 1: for the cabinet, looking for the personalities he picks to 694 00:39:23,640 --> 00:39:26,920 Speaker 1: try and drive his his his politics. That's the first thing. 695 00:39:27,000 --> 00:39:29,560 Speaker 1: And then you know, post end of January, let's see 696 00:39:29,560 --> 00:39:31,640 Speaker 1: what he actually delivers. I suspect there's gonna be a 697 00:39:31,680 --> 00:39:34,520 Speaker 1: bit of ascid reflux along the way and this digestion process. 698 00:39:34,600 --> 00:39:37,439 Speaker 1: But I won't name any any medicine in the case 699 00:39:37,440 --> 00:39:39,560 Speaker 1: we're branding. But I know that, look, it is going 700 00:39:39,600 --> 00:39:41,719 Speaker 1: to be hard from marks digests because we've never seen 701 00:39:41,719 --> 00:39:44,160 Speaker 1: this before. How do you respond to the Bank of 702 00:39:44,200 --> 00:39:49,279 Speaker 1: International Suttleman's paper last week that's strong dollar folds into 703 00:39:49,320 --> 00:39:54,839 Speaker 1: a challenged global financial system? Do you buy that idea? Well, look, 704 00:39:54,880 --> 00:39:56,960 Speaker 1: for the US, a strong dollar is a is a 705 00:39:57,000 --> 00:39:59,920 Speaker 1: tightening of financial conditions. I guess if it gets particularly strong, 706 00:40:00,000 --> 00:40:02,320 Speaker 1: it will resurrect. Remember those stories you had the beginning 707 00:40:02,320 --> 00:40:04,840 Speaker 1: of this year about em foreign currency debt. All the 708 00:40:04,880 --> 00:40:08,080 Speaker 1: usual suspects will get rolled out again. And so I 709 00:40:08,120 --> 00:40:10,399 Speaker 1: think the perception is when you get a swift move 710 00:40:10,480 --> 00:40:13,600 Speaker 1: and a stronger dollar move that it can be destabilizing 711 00:40:13,880 --> 00:40:16,799 Speaker 1: because it does have that adverse impact in those who 712 00:40:16,800 --> 00:40:20,160 Speaker 1: whole dollar debt derreminer with this HSBC and of course 713 00:40:20,160 --> 00:40:23,080 Speaker 1: the HSBC call has been I'm gonna I'm going to 714 00:40:23,200 --> 00:40:25,480 Speaker 1: say with respect and the outlier call a lot of 715 00:40:25,520 --> 00:40:30,160 Speaker 1: people extrapolating to one and even migrating down to one fifteen. 716 00:40:30,280 --> 00:40:33,520 Speaker 1: But HSBC has made clear the trend is your friend, 717 00:40:33,560 --> 00:40:37,080 Speaker 1: and the trend is to one ten in two thousand seventeen, 718 00:40:37,160 --> 00:40:40,880 Speaker 1: which is I mean, I don't think there's spoken to 719 00:40:40,920 --> 00:40:51,719 Speaker 1: the Prime Minister since call. Thanks for listening to the 720 00:40:51,719 --> 00:40:57,719 Speaker 1: Bloomberg Surveillance podcast. Subscribe and listen to interviews on iTunes, SoundCloud, 721 00:40:58,120 --> 00:41:02,000 Speaker 1: or whichever podcast platform whom you prefer. I'm out on 722 00:41:02,040 --> 00:41:05,839 Speaker 1: Twitter at Tom Keene. David Gura is at David Gura. 723 00:41:05,920 --> 00:41:09,759 Speaker 1: Before the podcast, you can always catch us worldwide. I'm 724 00:41:09,760 --> 00:41:25,400 Speaker 1: Bloomberg Radio. Who you put your trust in matters? Investors 725 00:41:25,400 --> 00:41:29,719 Speaker 1: have put their trust and independent registered investment advisors to 726 00:41:29,800 --> 00:41:33,120 Speaker 1: the two and four trillion dollars. Why Learn more at 727 00:41:33,239 --> 00:41:36,600 Speaker 1: find your Independent Advisor dot com