1 00:00:02,640 --> 00:00:05,560 Speaker 1: Welcome to the Bloomberg Penil podcast and Paul Sweeney, along 2 00:00:05,600 --> 00:00:08,080 Speaker 1: with my co host Lisa Brahma, each day we bring 3 00:00:08,119 --> 00:00:10,600 Speaker 1: you the most noteworthy and useful interviews for you and 4 00:00:10,760 --> 00:00:13,280 Speaker 1: your money, Whether at the grocery store or the trading floor. 5 00:00:13,400 --> 00:00:16,599 Speaker 1: Find a Bloomberg Penil podcast on Apple podcast or wherever 6 00:00:16,640 --> 00:00:21,040 Speaker 1: you listen to podcasts, as well as at Bloomberg dot com. 7 00:00:21,040 --> 00:00:25,160 Speaker 1: Earlier today, UBS CEO Sergio er Maati sounded the alarm 8 00:00:25,239 --> 00:00:29,320 Speaker 1: on fresh monetary easing, just as European policymakers appear poised 9 00:00:29,320 --> 00:00:33,320 Speaker 1: to deliver yet another helping of stimulus to the markets 10 00:00:33,320 --> 00:00:36,080 Speaker 1: that are expecting them. He was speaking with Bloomberg Television 11 00:00:36,159 --> 00:00:38,360 Speaker 1: asked whether he is concerned that we may be headed 12 00:00:38,400 --> 00:00:41,760 Speaker 1: towards bubble territory. Take a listen. Well, you know, I 13 00:00:41,760 --> 00:00:44,159 Speaker 1: think that you can see in the second in the 14 00:00:44,200 --> 00:00:48,080 Speaker 1: second quarter, yes, asset prices went top, but it's not 15 00:00:48,479 --> 00:00:52,040 Speaker 1: really correlated with investor sentiment and which is in my 16 00:00:52,120 --> 00:00:56,640 Speaker 1: point of view, of course, a very dangerous development. And 17 00:00:57,040 --> 00:00:59,800 Speaker 1: the only good things is that we observe is that 18 00:01:00,000 --> 00:01:03,680 Speaker 1: hash balances with clients is very high. Uh. What they 19 00:01:03,720 --> 00:01:05,679 Speaker 1: say is that they are willing to step into the 20 00:01:05,720 --> 00:01:09,640 Speaker 1: market if there is a major correction. But you know, 21 00:01:10,000 --> 00:01:13,840 Speaker 1: hasset levels at such high level are are not necessarily 22 00:01:13,840 --> 00:01:17,440 Speaker 1: correlated with investor sentiments. So this raises a question, are 23 00:01:17,520 --> 00:01:20,760 Speaker 1: we seeing bubbles starting to form joining us now? Mike Buchanan, 24 00:01:20,800 --> 00:01:24,360 Speaker 1: Deputy Chief investment Officer at Western Asset Management Co. Which 25 00:01:24,360 --> 00:01:27,360 Speaker 1: oversees about four dred and thirty billion dollars and focuses 26 00:01:27,480 --> 00:01:32,080 Speaker 1: on fixed income investing. Mike, you have decades of experience 27 00:01:32,160 --> 00:01:36,000 Speaker 1: dating back to focused on credit markets. Do you see 28 00:01:36,480 --> 00:01:41,560 Speaker 1: excesses starting to form that are looking a little bubble ishous? Um? 29 00:01:41,959 --> 00:01:44,800 Speaker 1: You know, I think when you look at the developed 30 00:01:44,880 --> 00:01:49,560 Speaker 1: credit markets, UM, we're not yet seeing those telltale signs 31 00:01:49,600 --> 00:01:52,520 Speaker 1: that that signal an end in the cycle or even 32 00:01:52,600 --> 00:01:55,280 Speaker 1: the you know kind of the the approaching doom and 33 00:01:55,360 --> 00:02:00,560 Speaker 1: turning point in the cycle. Obviously, performance UM and just 34 00:02:00,640 --> 00:02:04,320 Speaker 1: the longevity of this rally UM does make you anxious. 35 00:02:04,320 --> 00:02:07,520 Speaker 1: It makes you nervous. But when we look at you know, 36 00:02:07,520 --> 00:02:09,560 Speaker 1: a lot of the metrics that we try to track, 37 00:02:09,720 --> 00:02:12,079 Speaker 1: the signal you know, what is this market going to 38 00:02:12,160 --> 00:02:15,720 Speaker 1: look like fundamentally six months from now, a year from now, 39 00:02:16,080 --> 00:02:20,480 Speaker 1: We're not really seeing a lot of evidence that suggesting UM, 40 00:02:20,720 --> 00:02:25,200 Speaker 1: you know, bubble like territory. So, Mike, as we think 41 00:02:25,240 --> 00:02:28,040 Speaker 1: about if not bubble like territory, just kind of maybe 42 00:02:28,040 --> 00:02:29,680 Speaker 1: going the other way a little bit. I'm just thinking 43 00:02:29,720 --> 00:02:33,280 Speaker 1: about the global economic outlook. UM. Europe continues to be 44 00:02:33,400 --> 00:02:36,840 Speaker 1: very unsettled, with some real weakness developing even in Germany 45 00:02:37,080 --> 00:02:39,320 Speaker 1: and Brexit probably not going to be helpful. They're China 46 00:02:39,400 --> 00:02:42,480 Speaker 1: slowing but still very positive, and even the US slowing 47 00:02:42,520 --> 00:02:44,959 Speaker 1: a little bit. So as you think about the US market, 48 00:02:45,000 --> 00:02:48,000 Speaker 1: given some of our big trading partners, is recession in 49 00:02:48,160 --> 00:02:52,800 Speaker 1: your outlook for maybe the back half of it's not? UM, 50 00:02:53,080 --> 00:02:55,520 Speaker 1: we actually think that UM, we're in a in a 51 00:02:55,560 --> 00:02:57,880 Speaker 1: little bit when you think of all these fixed income 52 00:02:57,919 --> 00:03:01,280 Speaker 1: spread sectors and you think about the global economy, we're 53 00:03:01,320 --> 00:03:05,760 Speaker 1: in somewhat of an ideal situation UM in that growth 54 00:03:05,960 --> 00:03:10,080 Speaker 1: is slow UM yet positive, and even in Europe, where 55 00:03:10,200 --> 00:03:13,120 Speaker 1: UM there are some real challenges. Obviously you've got the 56 00:03:13,160 --> 00:03:16,200 Speaker 1: e c B providing a lot of accommodation to keep 57 00:03:16,280 --> 00:03:19,400 Speaker 1: things moving along. And we would argue that expectations are 58 00:03:19,440 --> 00:03:22,480 Speaker 1: so low in Europe that you're likely to see some 59 00:03:22,600 --> 00:03:26,400 Speaker 1: improvement just based on very very low expectations. So the 60 00:03:26,480 --> 00:03:30,120 Speaker 1: idea of a very slow growth economic backdrop with an 61 00:03:30,160 --> 00:03:34,600 Speaker 1: inflation outlook UM that is certainly challenged UM in terms 62 00:03:34,600 --> 00:03:38,400 Speaker 1: of achieving most central bank targets that should keep rates 63 00:03:38,480 --> 00:03:43,320 Speaker 1: pinned at these very or relatively low levels UM. And 64 00:03:43,320 --> 00:03:44,920 Speaker 1: then the flip side is, you know, I think you 65 00:03:44,920 --> 00:03:47,080 Speaker 1: look at a lot of the fundamentals in these spread 66 00:03:47,160 --> 00:03:51,880 Speaker 1: sectors and they look reasonably healthy to us. So uh 67 00:03:51,920 --> 00:03:54,600 Speaker 1: we we we think that that the market can continue 68 00:03:54,800 --> 00:03:57,280 Speaker 1: in the direction that it's been more recently, where it's 69 00:03:57,640 --> 00:04:00,400 Speaker 1: you know, not dramatic performance from here, but more of 70 00:04:00,440 --> 00:04:03,000 Speaker 1: a carry trade. And that's really the strategies that we 71 00:04:03,080 --> 00:04:06,880 Speaker 1: have echoed throughout our fixed income portfolios. So if it's 72 00:04:06,880 --> 00:04:08,400 Speaker 1: a carry trade, that means you want to go to 73 00:04:08,440 --> 00:04:10,760 Speaker 1: the assets that have the biggest carry. I'm looking right 74 00:04:10,760 --> 00:04:14,440 Speaker 1: now at how your bonds returning ten percent so far 75 00:04:14,640 --> 00:04:17,440 Speaker 1: year to date, even if they don't deliver that much more, 76 00:04:17,440 --> 00:04:19,479 Speaker 1: it's a pretty good year. Are you saying to people 77 00:04:19,880 --> 00:04:23,800 Speaker 1: buy high yield by emerging markets. Yeah, I think you've 78 00:04:23,800 --> 00:04:27,320 Speaker 1: got to be careful about UM where you're getting your carry, 79 00:04:27,680 --> 00:04:30,440 Speaker 1: And certainly this isn't a time to be greedy with 80 00:04:30,480 --> 00:04:33,359 Speaker 1: the carry trade. We think you can. UM, there's certainly 81 00:04:33,400 --> 00:04:36,719 Speaker 1: parts of those markets that you mentioned that are that 82 00:04:36,760 --> 00:04:40,640 Speaker 1: are still appealing. UM. I would say with with high yield, 83 00:04:40,839 --> 00:04:45,160 Speaker 1: our focus really has been on individual issue or selection. 84 00:04:45,240 --> 00:04:47,200 Speaker 1: We still think there's some you know, even if the 85 00:04:47,200 --> 00:04:51,640 Speaker 1: markets yielding now inside of six percent, we're still finding 86 00:04:51,760 --> 00:04:53,240 Speaker 1: in that sort of five and a half six and 87 00:04:53,279 --> 00:04:56,720 Speaker 1: a half percent range, some pretty good opportunities that fundamentally 88 00:04:56,880 --> 00:05:00,159 Speaker 1: and are moving in the right direction, they have the 89 00:05:00,279 --> 00:05:04,400 Speaker 1: right trajectory. UM in emerging markets, UH, probably being a 90 00:05:04,400 --> 00:05:07,920 Speaker 1: little more selective there, we think just emerging market rates 91 00:05:08,080 --> 00:05:11,800 Speaker 1: in general are one of the better opportunities, so you 92 00:05:11,839 --> 00:05:15,160 Speaker 1: can even hedge out the currency risk by local bonds 93 00:05:15,760 --> 00:05:18,960 Speaker 1: and take advantage of We think it's it's more of 94 00:05:19,000 --> 00:05:21,200 Speaker 1: a secular trend. If you think about what's happened in 95 00:05:21,320 --> 00:05:25,479 Speaker 1: developing markets UM with inflation where it is, with the 96 00:05:25,520 --> 00:05:30,040 Speaker 1: trend in real rates going lower, UM, emerging market local 97 00:05:30,080 --> 00:05:32,719 Speaker 1: still looks pretty compelling. So we think there's opportunity there. 98 00:05:32,800 --> 00:05:35,800 Speaker 1: When you talk about specific credit selection, I'm struck by 99 00:05:36,160 --> 00:05:39,279 Speaker 1: volumes in the higher bond market, how much trading there is, 100 00:05:39,320 --> 00:05:41,919 Speaker 1: and it's actually fallen so far. You're to date to 101 00:05:42,000 --> 00:05:45,919 Speaker 1: the lowest, and I'm wondering how difficult is it for 102 00:05:46,000 --> 00:05:51,760 Speaker 1: you to execute some of your company specific views. Yeah, 103 00:05:51,760 --> 00:05:54,760 Speaker 1: that's a that's a great observation and I think it's accurate. 104 00:05:54,800 --> 00:05:58,440 Speaker 1: I mean, liquidity, uh, and trading is definitely you know, 105 00:05:58,520 --> 00:06:01,600 Speaker 1: is it is it the summer, There's probably some contribution 106 00:06:01,760 --> 00:06:05,200 Speaker 1: coming from that. It's been a good year. UM. You know, 107 00:06:05,320 --> 00:06:09,400 Speaker 1: the volumes have definitely slowed down, UM, but it is 108 00:06:09,440 --> 00:06:11,719 Speaker 1: still I mean, we we ran run a very big 109 00:06:12,120 --> 00:06:14,359 Speaker 1: investment grade book, a very big high old book and 110 00:06:14,440 --> 00:06:18,479 Speaker 1: loan book, and we are still able to effectuate the 111 00:06:18,480 --> 00:06:21,680 Speaker 1: trades that we need to. UM. A little more challenging 112 00:06:21,720 --> 00:06:24,560 Speaker 1: for our traders, takes a little more patients, UM, but 113 00:06:24,560 --> 00:06:26,880 Speaker 1: we're still getting the things done that that we need to. 114 00:06:27,080 --> 00:06:29,160 Speaker 1: But I think you just got to be a little 115 00:06:29,200 --> 00:06:31,600 Speaker 1: more careful and have a little more forethought and how 116 00:06:31,640 --> 00:06:35,040 Speaker 1: you want to execute those and and be patient. UM. 117 00:06:35,160 --> 00:06:37,560 Speaker 1: I also think the idea that you can headge your 118 00:06:37,600 --> 00:06:41,520 Speaker 1: portfolio with UM not only c d X, which is 119 00:06:41,560 --> 00:06:45,280 Speaker 1: the portfolio product for these markets, but also options on 120 00:06:45,320 --> 00:06:49,920 Speaker 1: cd X. Those markets have become extremely liquid. Those allow 121 00:06:50,040 --> 00:06:53,599 Speaker 1: us to take risk off and put risk on opportunistically 122 00:06:53,720 --> 00:06:58,880 Speaker 1: without having to execute in cash bonds all the time. So, Mike, 123 00:06:58,920 --> 00:07:01,919 Speaker 1: just real quickly, I'm looking at your third quarter global outlook. 124 00:07:01,920 --> 00:07:04,880 Speaker 1: You've got this great graphic here about relative value by region. 125 00:07:05,080 --> 00:07:08,599 Speaker 1: Where globally are you seeing the best value right now? Well, 126 00:07:08,680 --> 00:07:11,320 Speaker 1: I think you know, hinted at one of these, but 127 00:07:11,320 --> 00:07:15,680 Speaker 1: but outside of developed markets, in the emerging markets, UM, 128 00:07:15,760 --> 00:07:18,840 Speaker 1: we think that's an attractive area for US. We've we've 129 00:07:18,880 --> 00:07:26,880 Speaker 1: been bullish there. Specifically, I would say Indonesia, Russia, Brazil, UM, Mexico, 130 00:07:27,160 --> 00:07:30,520 Speaker 1: those are probably are you know, top picks within emerging markets. 131 00:07:30,520 --> 00:07:34,000 Speaker 1: And again what we would say is just taking advantage 132 00:07:34,080 --> 00:07:37,880 Speaker 1: of high local rates. There is something that UM we 133 00:07:37,920 --> 00:07:42,120 Speaker 1: think is is a is a really attractive risk reward relationship. UM. 134 00:07:42,160 --> 00:07:46,480 Speaker 1: I think broadly staying in the US, where the economy 135 00:07:46,560 --> 00:07:50,960 Speaker 1: is is a little healthier. UM, you've got interest rate policy, 136 00:07:51,000 --> 00:07:54,240 Speaker 1: you've got uh the central bank policy that is clearly 137 00:07:54,720 --> 00:07:58,720 Speaker 1: pivoted towards a more dovish stance. UM. So we think 138 00:07:58,760 --> 00:08:01,360 Speaker 1: that's an area where we're going to have a US 139 00:08:01,440 --> 00:08:05,760 Speaker 1: biased portfolio. Mike, Thanks so thank you so much. Mike Buchanan, 140 00:08:05,960 --> 00:08:10,120 Speaker 1: Deputy Chief Investment Officer for Western Asset Management. We appreciate 141 00:08:10,120 --> 00:08:13,000 Speaker 1: you coming on. Based in Pasadena, California. They are really 142 00:08:13,000 --> 00:08:27,360 Speaker 1: one of the big the experts on the fixed income markets. Well, 143 00:08:27,440 --> 00:08:32,160 Speaker 1: tomorrow's special counsel, Robert Mueller, will testify before to congressional committees. 144 00:08:32,160 --> 00:08:34,440 Speaker 1: The question I think on most people's minds is will 145 00:08:34,520 --> 00:08:37,040 Speaker 1: he have any new information that was not contained in 146 00:08:37,080 --> 00:08:39,880 Speaker 1: the his report? To give us a sense of what 147 00:08:39,960 --> 00:08:43,400 Speaker 1: we might see tomorrow, we welcome Michael Zelden, Michael's former 148 00:08:43,440 --> 00:08:47,400 Speaker 1: federal prosecutor and was actually Robert Mueller's former special assistant 149 00:08:47,440 --> 00:08:50,000 Speaker 1: at the Department of Justice, and Michael is currently a 150 00:08:50,120 --> 00:08:53,600 Speaker 1: c and and legal analysts based on Washington, d C. Michael, 151 00:08:53,600 --> 00:08:56,640 Speaker 1: thanks so much for joining us again. You were Robert 152 00:08:56,720 --> 00:09:00,920 Speaker 1: Mueller's special assistant at the Department of Justice, know him well. 153 00:09:01,400 --> 00:09:06,840 Speaker 1: Do you expect him to disclose any new material information tomorrow? Well, 154 00:09:07,200 --> 00:09:12,920 Speaker 1: new is the keyword, because first, no, in a simple answer, 155 00:09:13,640 --> 00:09:16,400 Speaker 1: because I think he has said plainly that he's going 156 00:09:16,440 --> 00:09:19,960 Speaker 1: to stick to the report. But new, yes, in the 157 00:09:20,000 --> 00:09:23,000 Speaker 1: sense that I don't believe many people have read his report, 158 00:09:23,160 --> 00:09:26,240 Speaker 1: so it will be new to them if they tune in, 159 00:09:26,600 --> 00:09:29,480 Speaker 1: So the information will be that information which has already 160 00:09:29,520 --> 00:09:32,720 Speaker 1: been put out there, but because most people haven't read it, 161 00:09:32,880 --> 00:09:35,960 Speaker 1: I think it'll be new news to them. And that's 162 00:09:36,000 --> 00:09:38,679 Speaker 1: the hope I think of the committee and having him 163 00:09:38,720 --> 00:09:42,360 Speaker 1: testify orally too, if you will watch the movie rather 164 00:09:42,360 --> 00:09:45,439 Speaker 1: than read the books. Well, Michael, there's some controversy this 165 00:09:45,520 --> 00:09:48,320 Speaker 1: morning with Democrats pushing back in a Department of Justice 166 00:09:48,320 --> 00:09:51,160 Speaker 1: recommendation to Bob Mueller to stick to the script, to 167 00:09:51,200 --> 00:09:53,680 Speaker 1: stick to what's in the report. But this comes as 168 00:09:54,200 --> 00:09:57,760 Speaker 1: Uhbert Mueller actually asked them for guidance. Why would he 169 00:09:57,840 --> 00:10:01,840 Speaker 1: do that? Well, in the report word itself, before it 170 00:10:01,920 --> 00:10:06,320 Speaker 1: was released, there was information that was blacked out redacted 171 00:10:06,640 --> 00:10:10,880 Speaker 1: is the word, and that involved ongoing cases cases of 172 00:10:10,960 --> 00:10:17,640 Speaker 1: personal individuals, privacy rights, and some executive privilege related materials. 173 00:10:17,920 --> 00:10:21,160 Speaker 1: And so what Mueller said is, we worked out a 174 00:10:21,240 --> 00:10:25,400 Speaker 1: deal in terms of transmitting this report between the Justice 175 00:10:25,440 --> 00:10:30,040 Speaker 1: Department and Congress around these things, these redactions. Do you 176 00:10:30,080 --> 00:10:32,079 Speaker 1: want me to stick to that or am I free 177 00:10:32,120 --> 00:10:36,080 Speaker 1: to go beyond that which has been previously redacted? And 178 00:10:36,080 --> 00:10:39,680 Speaker 1: the Justpartment said, no, stick to our previous agreement. The 179 00:10:39,720 --> 00:10:42,959 Speaker 1: stuff that has been redacted should remain redacted. And you 180 00:10:43,000 --> 00:10:45,880 Speaker 1: shouldn't testify to it. So I think that's what the 181 00:10:46,040 --> 00:10:49,600 Speaker 1: essence of that letter was. So, Michael, if under questioning 182 00:10:49,960 --> 00:10:53,559 Speaker 1: tomorrow Mr Mueller's asked questions that are not included in 183 00:10:53,559 --> 00:10:56,280 Speaker 1: the report, maybe outside the purview of the actual report, 184 00:10:56,360 --> 00:10:58,720 Speaker 1: but he does know the answer, is he just going 185 00:10:58,800 --> 00:11:02,880 Speaker 1: to plead the fifth or just say I can't comment. Well, 186 00:11:02,920 --> 00:11:07,160 Speaker 1: he's free to speak to whatever he knows. He is 187 00:11:07,200 --> 00:11:10,200 Speaker 1: not a d J employee, and as long as it 188 00:11:10,240 --> 00:11:17,560 Speaker 1: does not involve privacy protected, executive privilege or ongoing investigation matters, 189 00:11:17,600 --> 00:11:20,440 Speaker 1: he's free to offer his opinion. So, for example, in 190 00:11:20,440 --> 00:11:23,440 Speaker 1: a silly hypothetical, if they asked him, Bob, what is 191 00:11:23,480 --> 00:11:26,720 Speaker 1: your favorite color that's not in the report, He's free 192 00:11:26,760 --> 00:11:30,560 Speaker 1: to say whatever his favorite color is. But if they 193 00:11:30,600 --> 00:11:34,960 Speaker 1: ask him, what is your opinion on whether or not 194 00:11:35,040 --> 00:11:38,920 Speaker 1: you would have indicted the president but for the Office 195 00:11:38,920 --> 00:11:42,360 Speaker 1: of Legal Counsel opinion that's not exactly in the report. 196 00:11:42,640 --> 00:11:45,640 Speaker 1: That's something he has knowledge of, and he is free 197 00:11:45,679 --> 00:11:49,160 Speaker 1: to answer that. I don't think he will, but Justice 198 00:11:49,200 --> 00:11:53,200 Speaker 1: forman cannot prevent him from offering his opinion about what 199 00:11:53,360 --> 00:11:56,360 Speaker 1: is in his report. Michael, have you read the report? 200 00:11:56,840 --> 00:11:59,520 Speaker 1: Of course, yes, okay, So what do you think is 201 00:11:59,600 --> 00:12:04,800 Speaker 1: the most shocking or sensational aspect that you think the 202 00:12:04,840 --> 00:12:07,959 Speaker 1: Democrats should home in on that perhaps people aren't as 203 00:12:08,000 --> 00:12:11,600 Speaker 1: aware of. Well, the fact there are two parts of 204 00:12:11,600 --> 00:12:15,920 Speaker 1: the port of course, there's the intelligence version, Volume one, 205 00:12:16,120 --> 00:12:19,720 Speaker 1: and that talks about collusion and conspiracy. And in that 206 00:12:20,360 --> 00:12:23,160 Speaker 1: what I think Adam Schiff and the Democrats on the 207 00:12:23,160 --> 00:12:27,319 Speaker 1: House Intelligence Committee want to get out is that even 208 00:12:27,360 --> 00:12:32,120 Speaker 1: though Mueller found no evidence of criminal conspiracy, he did 209 00:12:32,360 --> 00:12:39,400 Speaker 1: find a very willing Trump White campaign to receive help 210 00:12:39,679 --> 00:12:42,920 Speaker 1: from foreign countries. I think that's what the Democrats want 211 00:12:43,000 --> 00:12:45,959 Speaker 1: to get out. On the intelligence side. The Republicans want 212 00:12:46,000 --> 00:12:48,280 Speaker 1: to push back and say, yes, but there was no 213 00:12:48,400 --> 00:12:53,680 Speaker 1: criminal conspiracy hence no collusion. On the House Judiciary side. 214 00:12:53,760 --> 00:12:57,880 Speaker 1: Volume two, Mueller's, you know, sort of in under pound 215 00:12:57,880 --> 00:13:01,600 Speaker 1: guerilla line in the report is is if I could 216 00:13:01,640 --> 00:13:05,120 Speaker 1: have exonerated the president of criminal wrongdoing, I would have 217 00:13:05,280 --> 00:13:08,160 Speaker 1: done so. But I couldn't. And I think what the 218 00:13:08,200 --> 00:13:11,920 Speaker 1: Democrats want to drive home is why couldn't you? What 219 00:13:12,080 --> 00:13:16,320 Speaker 1: was it? What behavior did Trump engage in that you 220 00:13:16,520 --> 00:13:21,160 Speaker 1: felt could implicate criminal behavior? And have him go through 221 00:13:21,200 --> 00:13:27,199 Speaker 1: the report almost section by section where the report indicates 222 00:13:27,280 --> 00:13:31,520 Speaker 1: that Trump told McGann to fire Mueller, where Trump told 223 00:13:31,920 --> 00:13:36,520 Speaker 1: Sessions to tell Mueller not to investigate Trump. Those sort 224 00:13:36,559 --> 00:13:40,800 Speaker 1: of things are that which the Democrats want to drive 225 00:13:40,880 --> 00:13:43,920 Speaker 1: home UM as important as it is to their to 226 00:13:44,040 --> 00:13:47,160 Speaker 1: their message. The Republicans want to again push back and 227 00:13:47,200 --> 00:13:54,679 Speaker 1: say yes but no, no criminal behavior. And bar and Rosenstein, 228 00:13:54,760 --> 00:13:57,880 Speaker 1: the deputy Turney General and Attorney general at the time, 229 00:13:58,320 --> 00:14:03,760 Speaker 1: UM found no criminal offense. So, Michael, from a legal perspective, 230 00:14:03,880 --> 00:14:06,480 Speaker 1: do you think anything can come out of the hearing 231 00:14:06,520 --> 00:14:10,800 Speaker 1: tomorrow that could advance UM those in Congress that want 232 00:14:10,840 --> 00:14:14,400 Speaker 1: to move forward with impeachment. Well, it depends on how 233 00:14:15,200 --> 00:14:19,640 Speaker 1: well Mueller tells the story that he has written down. 234 00:14:19,920 --> 00:14:24,320 Speaker 1: His story in his report is really rather compelling with 235 00:14:24,400 --> 00:14:29,840 Speaker 1: respect to the obstructive acts or the attempted obstructive acts 236 00:14:29,960 --> 00:14:33,360 Speaker 1: that he found Trump to have engaged in. If he 237 00:14:33,400 --> 00:14:38,760 Speaker 1: can tell that story coherently in in movie like UM Dialogue, 238 00:14:39,400 --> 00:14:41,560 Speaker 1: and people hear it for the first time, they may 239 00:14:41,600 --> 00:14:45,960 Speaker 1: have an oh my moment in their appreciation of what 240 00:14:46,160 --> 00:14:49,240 Speaker 1: it is that Mueller found in his report. If he's 241 00:14:49,440 --> 00:14:53,320 Speaker 1: very legalistic and and and not a very compelling witness, 242 00:14:53,440 --> 00:14:57,080 Speaker 1: and sticks very much to yes and no answers. I 243 00:14:57,080 --> 00:14:59,760 Speaker 1: don't think this advances the ball in any way, which 244 00:15:00,120 --> 00:15:03,440 Speaker 1: it seems like it might be his tact based on 245 00:15:03,640 --> 00:15:07,000 Speaker 1: his reluctance, right, I mean, why is he so reluctant 246 00:15:07,000 --> 00:15:10,680 Speaker 1: to testify. He's a reluctant human being. You know, all 247 00:15:10,720 --> 00:15:13,440 Speaker 1: the years that I worked with him, what we used 248 00:15:13,440 --> 00:15:15,880 Speaker 1: to say about Bob all the time was he was 249 00:15:15,920 --> 00:15:19,520 Speaker 1: first and foremost a marine. He would asked questions, he 250 00:15:19,600 --> 00:15:23,360 Speaker 1: gave answers to those questions. He didn't elaborate, he didn't 251 00:15:23,400 --> 00:15:26,640 Speaker 1: offer opinions. And that's the way he if you watch 252 00:15:26,720 --> 00:15:29,400 Speaker 1: his testimony over the years when he was in the 253 00:15:29,480 --> 00:15:34,400 Speaker 1: FBI and otherwise, he is a very reluctant witness. He 254 00:15:34,520 --> 00:15:38,960 Speaker 1: is very different than Jim Comey, who talks, you know, 255 00:15:39,240 --> 00:15:43,440 Speaker 1: quite fluent, fluently with the media. That's not Bob. And 256 00:15:43,480 --> 00:15:47,200 Speaker 1: so I think that you'll find here that same reticent 257 00:15:47,440 --> 00:15:52,200 Speaker 1: personality coming through in the testimony. The only exception to that, 258 00:15:52,240 --> 00:15:57,600 Speaker 1: potentially is if the Republicans started attacking his integrity or 259 00:15:57,600 --> 00:16:02,360 Speaker 1: the integrity of his team. The angry Democrats mantra that 260 00:16:02,400 --> 00:16:05,240 Speaker 1: we hear a lot. He may take offense at that 261 00:16:05,360 --> 00:16:09,920 Speaker 1: and there you may see some you know, emotion. Yeah, 262 00:16:10,440 --> 00:16:12,320 Speaker 1: Michael Zelden, thank you so much for being with us. 263 00:16:12,880 --> 00:16:16,480 Speaker 1: Very illuminating. Michael Zelden, former federal prosecutor as well as 264 00:16:16,560 --> 00:16:20,480 Speaker 1: Robert Mueller's former special assistant while at the Department of Justice, 265 00:16:20,720 --> 00:16:25,040 Speaker 1: currently a CNN legal analysts, joining us from Washington, d C. 266 00:16:25,240 --> 00:16:29,080 Speaker 1: We will be taking those hearings tomorrow throughout the day 267 00:16:29,320 --> 00:16:32,160 Speaker 1: as we hear what Robert Mueller has to say and 268 00:16:32,240 --> 00:16:35,280 Speaker 1: what the Democrats and Republicans how they try to frame 269 00:16:35,640 --> 00:16:49,840 Speaker 1: the report. We're getting a slew of economic data throughout 270 00:16:49,880 --> 00:16:53,200 Speaker 1: the week from nations around the world. In the US, 271 00:16:53,320 --> 00:16:56,760 Speaker 1: we got today US previously owned home sales, and we're 272 00:16:56,760 --> 00:16:59,440 Speaker 1: gonna get of course, the GDP numbers on Friday. Joining 273 00:16:59,520 --> 00:17:02,000 Speaker 1: us here to talk about what we can expect and 274 00:17:02,040 --> 00:17:04,879 Speaker 1: how to understand what we're getting in terms of some 275 00:17:05,000 --> 00:17:07,720 Speaker 1: of these economic data points, Constance Hunter, we are so 276 00:17:07,760 --> 00:17:09,640 Speaker 1: glad to have you here with us in our Bloomberg 277 00:17:09,640 --> 00:17:14,120 Speaker 1: inter Active Broker Studios. Constants is chief Economistic KPMG. So 278 00:17:14,240 --> 00:17:16,439 Speaker 1: let's start with the data that we have, which is 279 00:17:16,440 --> 00:17:20,120 Speaker 1: the previously owned home sales which declined more than expected 280 00:17:20,200 --> 00:17:23,480 Speaker 1: in June, where are we in terms of the US 281 00:17:23,560 --> 00:17:27,359 Speaker 1: housing market. So to set the stage, we've actually had 282 00:17:27,520 --> 00:17:32,160 Speaker 1: five quarters of negative real estate investment, and uh, that 283 00:17:32,359 --> 00:17:36,720 Speaker 1: is usually a sign that your expansion is coming to 284 00:17:36,800 --> 00:17:39,359 Speaker 1: an end. It's one of the many signals that economists 285 00:17:39,359 --> 00:17:42,719 Speaker 1: look at when they think is an inflation coming? Right, 286 00:17:42,760 --> 00:17:45,320 Speaker 1: And obviously the one that people know about most is 287 00:17:45,440 --> 00:17:47,880 Speaker 1: the yield curve in version, But this is another one 288 00:17:47,920 --> 00:17:51,000 Speaker 1: that economists have in their arsenal. And so it's a 289 00:17:51,000 --> 00:17:55,879 Speaker 1: puzzle because usually it is it's a leading indicator. Jobs 290 00:17:55,880 --> 00:17:58,520 Speaker 1: are a concurrent indicator. But we've seen such a robust 291 00:17:58,600 --> 00:18:03,159 Speaker 1: jobs market that it is a puzzle. And and so 292 00:18:03,200 --> 00:18:05,399 Speaker 1: if we look at other factors around housing, right we 293 00:18:05,400 --> 00:18:08,960 Speaker 1: look at the affordability index. It's long term average is four. 294 00:18:09,280 --> 00:18:12,400 Speaker 1: We're above a hundred and fifty. So it's a puzzle. 295 00:18:12,640 --> 00:18:15,840 Speaker 1: And I think the puzzle comes down to supply and 296 00:18:16,240 --> 00:18:21,240 Speaker 1: enough um lower priced homes that it actually makes it 297 00:18:21,280 --> 00:18:23,840 Speaker 1: possible for first time homebuyers to join the market. Now, 298 00:18:23,880 --> 00:18:26,080 Speaker 1: we did see an uptick in first time homebuyers, it 299 00:18:26,119 --> 00:18:30,359 Speaker 1: went from thirty two percent. But but this this sluggish 300 00:18:30,400 --> 00:18:32,159 Speaker 1: housing market is a bit of a puzzle, and I 301 00:18:32,200 --> 00:18:36,240 Speaker 1: think it's one of the factors, even though Powell hasn't 302 00:18:36,320 --> 00:18:37,919 Speaker 1: cited it. I think it is one of the factors 303 00:18:37,960 --> 00:18:40,600 Speaker 1: in the back of the minds of economists at the 304 00:18:40,680 --> 00:18:43,320 Speaker 1: Federal Reserve System thinking about doesn't make sense to have 305 00:18:43,359 --> 00:18:46,280 Speaker 1: this insurance rate cut. So let's let's go there. Since 306 00:18:46,320 --> 00:18:49,520 Speaker 1: we're having to fed on the feet meeting. Um, you know, 307 00:18:49,720 --> 00:18:52,440 Speaker 1: kind of question of an insurance cut or preemptive cut. 308 00:18:52,800 --> 00:18:54,640 Speaker 1: Give us your thoughts about that. Is it are they 309 00:18:54,840 --> 00:18:57,199 Speaker 1: is it effective? What's the cost associated with that? All 310 00:18:57,240 --> 00:18:59,240 Speaker 1: all that kind of thing. Well, yeah, and Paul, you 311 00:18:59,280 --> 00:19:01,360 Speaker 1: bring up a good point, what is the cost? So 312 00:19:01,560 --> 00:19:03,760 Speaker 1: insurance is really good to have, but we all know 313 00:19:03,840 --> 00:19:07,199 Speaker 1: it's not free, right, So there is a cost um, 314 00:19:07,280 --> 00:19:10,479 Speaker 1: and especially the closer we are to the zero lower bound, 315 00:19:10,600 --> 00:19:13,960 Speaker 1: that cost goes up, right because there if they they 316 00:19:14,000 --> 00:19:16,720 Speaker 1: they have so much arsenal, and if they're using it 317 00:19:16,800 --> 00:19:18,960 Speaker 1: up now and it doesn't work, then they have less 318 00:19:19,080 --> 00:19:21,959 Speaker 1: arsenal to use later. But if we look back, so 319 00:19:22,000 --> 00:19:26,679 Speaker 1: there's two UH parallel situations from the nineties. So the 320 00:19:26,760 --> 00:19:32,320 Speaker 1: first is from UH nineteen four and ninety four. The 321 00:19:32,320 --> 00:19:34,600 Speaker 1: FED heights in November seventy five basis points in the 322 00:19:34,640 --> 00:19:37,000 Speaker 1: market wasn't expecting that. They weren't sure if we were 323 00:19:37,000 --> 00:19:39,520 Speaker 1: gonna get twenty five or fifty. Greenspan surprised with a 324 00:19:39,600 --> 00:19:43,240 Speaker 1: seventy five basis point rate increase, and if you recall 325 00:19:43,680 --> 00:19:46,040 Speaker 1: a mirror four weeks later, we started to have the 326 00:19:46,040 --> 00:19:49,320 Speaker 1: Tequila crisis at the end of nineteen four that bled 327 00:19:49,320 --> 00:19:53,160 Speaker 1: into n We ended up bailing out the Mexican because 328 00:19:53,200 --> 00:19:56,280 Speaker 1: of the Mexican bond crisis and sorry, thank you for 329 00:19:56,280 --> 00:19:59,480 Speaker 1: for everybody for for those everybody got threw up their 330 00:19:59,480 --> 00:20:06,560 Speaker 1: hands into the part. They probably did that too. So 331 00:20:06,920 --> 00:20:09,720 Speaker 1: the FED did some preemptive cuts or some insurance cuts 332 00:20:09,720 --> 00:20:14,280 Speaker 1: because it was external turbulence, uh, and it worked. Then 333 00:20:14,480 --> 00:20:18,399 Speaker 1: fast forward to we've had the Asian financial crisis that 334 00:20:18,560 --> 00:20:23,120 Speaker 1: sort of bled into the Russian default and devaluation, which 335 00:20:23,240 --> 00:20:26,440 Speaker 1: caused a bunch of purchasing of off the run treasuries, 336 00:20:27,119 --> 00:20:31,320 Speaker 1: which was not what long term capital management had planned for. 337 00:20:32,000 --> 00:20:35,240 Speaker 1: And so in conjunction with with the long term capital 338 00:20:35,240 --> 00:20:39,879 Speaker 1: management liquidity squeeze, the FED did another set of almost 339 00:20:39,920 --> 00:20:41,640 Speaker 1: a hundred basis points over the course of a year 340 00:20:41,720 --> 00:20:45,040 Speaker 1: preemptive cuts, and that allowed us to continue the expansion 341 00:20:45,080 --> 00:20:46,880 Speaker 1: to two thousand and one and right now, what we're 342 00:20:46,920 --> 00:20:50,119 Speaker 1: seeing is if you look at different indicators like the 343 00:20:50,200 --> 00:20:53,040 Speaker 1: yield curve that you talked about, it seems like markets 344 00:20:53,119 --> 00:20:56,879 Speaker 1: believe that the Federal Reserve will effectively stave off a 345 00:20:56,960 --> 00:21:00,639 Speaker 1: near term recession with the expected three rate us UH 346 00:21:00,800 --> 00:21:02,800 Speaker 1: that is currently being priced into the market. Do you 347 00:21:02,840 --> 00:21:05,760 Speaker 1: agree with that, Yeah, and economists broadly agree with that. 348 00:21:05,880 --> 00:21:08,840 Speaker 1: So the National Association for Business Economics NAME did a 349 00:21:08,880 --> 00:21:12,719 Speaker 1: survey UH recently and the percentage of people who expect 350 00:21:12,720 --> 00:21:15,199 Speaker 1: a recession has great in the second half of this year, 351 00:21:15,240 --> 00:21:19,200 Speaker 1: has greatly diminished from about twelve and then in the 352 00:21:19,240 --> 00:21:22,360 Speaker 1: first half of it's diminished, and so now people are 353 00:21:22,359 --> 00:21:25,520 Speaker 1: betting on second half of So people don't think we're 354 00:21:25,560 --> 00:21:28,840 Speaker 1: going to avoid a recession altogether, or at least that's 355 00:21:28,840 --> 00:21:31,920 Speaker 1: not what the most recent NAME survey shows, but they 356 00:21:31,920 --> 00:21:35,479 Speaker 1: do think it's going to prolong the expansion, and of 357 00:21:35,520 --> 00:21:38,600 Speaker 1: course that is that is, you know, consistent with the 358 00:21:38,600 --> 00:21:42,000 Speaker 1: Fed's mandate right try to get maximum employment and full 359 00:21:42,200 --> 00:21:45,280 Speaker 1: full GDP as long as possible. How concerned are you 360 00:21:45,280 --> 00:21:50,800 Speaker 1: about manufacturing globally continues to be sluggish, certainly versus the consumer. 361 00:21:51,359 --> 00:21:53,199 Speaker 1: When is that going to become a real problem for 362 00:21:53,200 --> 00:21:56,520 Speaker 1: where the US. For per se, well, I think it's 363 00:21:56,520 --> 00:22:00,320 Speaker 1: already somewhat of a problem for US in that UM 364 00:22:00,359 --> 00:22:03,480 Speaker 1: we're seeing the manufacture of the regional FED manufacturing indicries 365 00:22:03,560 --> 00:22:07,439 Speaker 1: more or less b be somewhat weak UM with somewhat 366 00:22:07,480 --> 00:22:09,240 Speaker 1: mixed in the in the latest that have come out. 367 00:22:09,280 --> 00:22:13,040 Speaker 1: But but globally that manufacturing cycle is really important and 368 00:22:13,080 --> 00:22:15,040 Speaker 1: it bleeds over into services. But if you see what 369 00:22:15,119 --> 00:22:18,000 Speaker 1: GETA Gopinath talked about this morning when the IMF released 370 00:22:18,040 --> 00:22:20,800 Speaker 1: its report, they have a whole chapter on this diversion 371 00:22:20,840 --> 00:22:25,919 Speaker 1: between UH, the services economy and the trade economy, and 372 00:22:25,960 --> 00:22:29,119 Speaker 1: we see that divergent also divergence also in price indusease. Right, 373 00:22:29,119 --> 00:22:33,600 Speaker 1: so the services prices are well in line with UM, 374 00:22:33,720 --> 00:22:35,600 Speaker 1: the Fed's goal of two percent, they're out or above 375 00:22:35,640 --> 00:22:38,439 Speaker 1: two percent, whereas it's good prices that are really dragging 376 00:22:38,480 --> 00:22:41,480 Speaker 1: down the overall index. So this is a dichotomy that 377 00:22:41,800 --> 00:22:44,960 Speaker 1: UM has so far hasn't affected the broad economy, but 378 00:22:45,040 --> 00:22:49,520 Speaker 1: certainly has the potential to bleed into the broader economy. Constanta, 379 00:22:49,560 --> 00:22:51,320 Speaker 1: thank you so much for joining us. Constance is a 380 00:22:51,359 --> 00:22:54,560 Speaker 1: chief economist for KPMG based here in New York City, 381 00:22:54,640 --> 00:22:58,840 Speaker 1: joining us in our Bloomberg Interactive Broker studio. One thing. 382 00:22:58,920 --> 00:23:01,920 Speaker 1: I'm just I'm still thinking about the housing market. I'm 383 00:23:01,960 --> 00:23:07,960 Speaker 1: just buy sell um. I'm an owner, so that I 384 00:23:07,960 --> 00:23:11,359 Speaker 1: do have invested interest full disclosure. But I do have 385 00:23:11,400 --> 00:23:14,080 Speaker 1: to wonder how much the weakness is due to a 386 00:23:14,160 --> 00:23:16,560 Speaker 1: lack of foreign investment in the United States. Are falling 387 00:23:16,640 --> 00:23:20,440 Speaker 1: investment from the from Europe and China? I don't know. 388 00:23:20,080 --> 00:23:22,760 Speaker 1: I just I mean, certainly in big cities, well, certainly 389 00:23:22,800 --> 00:23:25,040 Speaker 1: New York City. I mean, a lot of these mega 390 00:23:25,119 --> 00:23:26,960 Speaker 1: high rises that we see in mid midtown have been 391 00:23:27,240 --> 00:23:32,479 Speaker 1: you know, occupied primarily primarily by overseas customers, and so 392 00:23:32,520 --> 00:23:34,840 Speaker 1: it's just been propping up the high end of the market. 393 00:23:34,880 --> 00:23:36,880 Speaker 1: So I'm not sure if it's your side of the market, 394 00:23:36,680 --> 00:23:40,159 Speaker 1: don't know. Probably you're right, You're totally down there. This 395 00:23:40,320 --> 00:23:57,479 Speaker 1: is Bloomberg earlier today, Boris Johnson, the public face of 396 00:23:57,520 --> 00:24:00,760 Speaker 1: the Brexit campaign. One of the content has to succeed 397 00:24:00,800 --> 00:24:05,200 Speaker 1: Theresa May is British Prime Minister, maybe taking the country 398 00:24:05,240 --> 00:24:08,240 Speaker 1: closer to a no deal brexit. That's according to Moody's. 399 00:24:08,240 --> 00:24:11,000 Speaker 1: We want to get some insight from our Bloomberg opinion columnists. 400 00:24:11,480 --> 00:24:14,720 Speaker 1: Terra's Raphael joining us now from London, Bloomberg opinion editor 401 00:24:14,800 --> 00:24:19,439 Speaker 1: covering European politics and economics. Uh sores, what first do 402 00:24:19,480 --> 00:24:22,840 Speaker 1: you expect Boris Johnson to do when it comes to 403 00:24:22,960 --> 00:24:24,879 Speaker 1: Brexity has but I think a hundred days right to 404 00:24:25,200 --> 00:24:28,359 Speaker 1: come to some sort of uh determination and plan. Yeah. 405 00:24:28,440 --> 00:24:32,880 Speaker 1: So Boris has run a campaign that is very different 406 00:24:33,040 --> 00:24:36,199 Speaker 1: from the stance at Theresa May took on Brexit. So 407 00:24:36,240 --> 00:24:40,360 Speaker 1: whereas May originally threatened to leave without a deal if 408 00:24:40,359 --> 00:24:42,719 Speaker 1: she couldn't get a good deal, the threat was never credible. 409 00:24:42,960 --> 00:24:45,760 Speaker 1: Britain was not prepared. Boris has made clear from the 410 00:24:45,800 --> 00:24:49,880 Speaker 1: outset that a no deal exit is you know, not 411 00:24:49,920 --> 00:24:52,640 Speaker 1: only something he's willing to do, but something actually thinks 412 00:24:52,640 --> 00:24:56,040 Speaker 1: wouldn't be as disastrous for Britain as pretty much every 413 00:24:56,520 --> 00:24:59,800 Speaker 1: series economic analysis suggests it would be. So I think 414 00:25:00,000 --> 00:25:03,400 Speaker 1: of the first thing he's going to try to do is, uh, 415 00:25:03,600 --> 00:25:05,880 Speaker 1: he'll have to appoint a cabinet, and then he's going 416 00:25:05,920 --> 00:25:09,240 Speaker 1: to try to meet with EU leaders and see if 417 00:25:09,280 --> 00:25:12,440 Speaker 1: he can get some traction there, and and I would 418 00:25:12,440 --> 00:25:15,200 Speaker 1: expect him to have an early meeting in Ireland because 419 00:25:15,240 --> 00:25:17,520 Speaker 1: the key to this this whole thing is obviously the 420 00:25:17,520 --> 00:25:20,360 Speaker 1: Irish border issue. So tres, do you think he can 421 00:25:20,440 --> 00:25:22,800 Speaker 1: get the support for a no deal brexit. It seems 422 00:25:22,840 --> 00:25:26,679 Speaker 1: like the arguments are pretty consistent across many party lines 423 00:25:26,720 --> 00:25:30,880 Speaker 1: that it would in fact be very catastrophic for the UK. Yeah, 424 00:25:30,880 --> 00:25:32,880 Speaker 1: I mean, I guess that's two questions. Can he get 425 00:25:32,880 --> 00:25:35,640 Speaker 1: the support for it in Parliament? The answer to that 426 00:25:35,800 --> 00:25:39,240 Speaker 1: is is an emphatic no. Parliament is voted many times 427 00:25:39,280 --> 00:25:42,720 Speaker 1: against an odeal. They are still trying to prevent him 428 00:25:42,720 --> 00:25:46,520 Speaker 1: from uh, you know, from fulfilling that pledge. But the 429 00:25:46,520 --> 00:25:49,159 Speaker 1: other questions can he do it anyhow? And can he 430 00:25:49,240 --> 00:25:53,200 Speaker 1: win enough backing in public opinion to make the threat 431 00:25:53,240 --> 00:25:56,800 Speaker 1: seem credible? Um? And I think that's something EU leaders 432 00:25:56,800 --> 00:25:59,679 Speaker 1: are going to watch very closely. If it looks like Boris, 433 00:25:59,680 --> 00:26:02,640 Speaker 1: who is uh you know, let's face at a very skilled, 434 00:26:02,840 --> 00:26:07,119 Speaker 1: convincing communicator, can can convince the British public at large 435 00:26:07,160 --> 00:26:09,680 Speaker 1: that he has a plan, that it's credible that the 436 00:26:09,760 --> 00:26:12,239 Speaker 1: fears of an odeal brex that are not are you know, 437 00:26:12,840 --> 00:26:16,800 Speaker 1: are are somehow exaggerated, then EU leaders may may start 438 00:26:16,800 --> 00:26:18,760 Speaker 1: worrying that that's where he's going to take things and 439 00:26:18,760 --> 00:26:21,000 Speaker 1: if there is to be an early election, which many 440 00:26:21,160 --> 00:26:25,240 Speaker 1: think is quite likely, that he will lead the Conservatives 441 00:26:25,280 --> 00:26:27,000 Speaker 1: to victory. And then I think we start to see 442 00:26:27,000 --> 00:26:29,680 Speaker 1: some movement from the EU side, although the room, it 443 00:26:29,760 --> 00:26:33,199 Speaker 1: must be said, is very very small. I'm struggling. Just 444 00:26:33,280 --> 00:26:37,200 Speaker 1: let's take a step back. So Boris Johnson resigned at 445 00:26:37,240 --> 00:26:40,600 Speaker 1: one point. He is a very colorful character. He has 446 00:26:40,680 --> 00:26:44,520 Speaker 1: led a number of populist movements. How much popular support 447 00:26:44,600 --> 00:26:47,200 Speaker 1: does he have as he rises to be the Prime 448 00:26:47,240 --> 00:26:51,520 Speaker 1: Minister of UK. Well, here's the interesting thing about Boris 449 00:26:51,640 --> 00:26:55,280 Speaker 1: Johnson and public opinion. Um So, if there was a 450 00:26:55,280 --> 00:26:59,840 Speaker 1: commerce poll recently and when asked between the two Conservative 451 00:26:59,840 --> 00:27:03,840 Speaker 1: part the leadership candidates, which one would do better at 452 00:27:03,840 --> 00:27:07,280 Speaker 1: managing the economy? The answer came out Jeremy Hunt. Which 453 00:27:07,280 --> 00:27:09,560 Speaker 1: one would make a better prime minister? The answer came out, 454 00:27:09,680 --> 00:27:14,200 Speaker 1: Jeremy Hunt. Which one would be better at UH dealing 455 00:27:14,280 --> 00:27:16,880 Speaker 1: with foreign leaders? The answer came out Jeremy Hunt. When 456 00:27:16,960 --> 00:27:20,160 Speaker 1: you ask which one has a better chance of delivering Brexit, 457 00:27:20,280 --> 00:27:23,639 Speaker 1: it was Boris Johnson. Tax cuts, it's Boris Johnson. So 458 00:27:23,720 --> 00:27:26,920 Speaker 1: in a way, Johnson is the one that people UH 459 00:27:27,119 --> 00:27:30,240 Speaker 1: turned to UH for, you know, in a way, a 460 00:27:30,280 --> 00:27:34,480 Speaker 1: sort of ideological satisfaction. But I think opinion UH can 461 00:27:34,520 --> 00:27:36,199 Speaker 1: be very fickle when it comes to him, and if 462 00:27:36,240 --> 00:27:39,080 Speaker 1: he's the trust levels are low people you know that 463 00:27:39,200 --> 00:27:42,480 Speaker 1: the the pole after pole shows people don't trust him. 464 00:27:42,600 --> 00:27:45,399 Speaker 1: So I think if he breaches you know, the trust 465 00:27:45,480 --> 00:27:47,879 Speaker 1: that's been put on in him by the Conservative Party 466 00:27:47,880 --> 00:27:50,640 Speaker 1: early on, we could see a vote of no confidence 467 00:27:50,680 --> 00:27:54,480 Speaker 1: in Parliament. We could see another backlash. But you know, 468 00:27:54,560 --> 00:28:00,159 Speaker 1: he is uniquely skilled in appealing to the public and 469 00:28:00,200 --> 00:28:03,000 Speaker 1: I think that's the sort of X factor about Johnson 470 00:28:03,040 --> 00:28:06,320 Speaker 1: that's really hard to just dismiss. So treas if there 471 00:28:06,480 --> 00:28:09,320 Speaker 1: is if this impasse kind of results in another general 472 00:28:09,320 --> 00:28:11,880 Speaker 1: election in the near term, is that to any one 473 00:28:12,040 --> 00:28:15,520 Speaker 1: side benefit? You think, Well, I don't think it's to 474 00:28:15,800 --> 00:28:19,760 Speaker 1: Jeremy Corbyn Labor Party leaders benefit. Right now, his party is, 475 00:28:20,000 --> 00:28:23,960 Speaker 1: you know, has been adrift on Brexit UH, beset by 476 00:28:24,400 --> 00:28:27,439 Speaker 1: all sorts of internal wrangling, not not least and and 477 00:28:27,520 --> 00:28:31,399 Speaker 1: latest over anti Semitism UM. So I think the Labor 478 00:28:31,440 --> 00:28:34,600 Speaker 1: Party is now going to want to avoid UM an 479 00:28:34,600 --> 00:28:37,400 Speaker 1: early election. Be very interesting to see how the Liberal 480 00:28:37,480 --> 00:28:40,200 Speaker 1: Democrats take that they have a new leader, Joe Swinson, 481 00:28:40,320 --> 00:28:44,120 Speaker 1: very young dynamic UH leader and they have picked up 482 00:28:44,560 --> 00:28:47,560 Speaker 1: UH points in the polls after the European elections with 483 00:28:47,600 --> 00:28:52,080 Speaker 1: a very solid pro remain UH platform. So you know, 484 00:28:52,240 --> 00:28:55,120 Speaker 1: Boris may like his chances, but I think only if 485 00:28:55,160 --> 00:28:57,240 Speaker 1: he can get Britain out of the EU. I think 486 00:28:57,240 --> 00:29:00,160 Speaker 1: he would take a giant risk going to UH an 487 00:29:00,160 --> 00:29:03,959 Speaker 1: early election before he's delivered Brexit. Tores Raphael, thank you 488 00:29:04,040 --> 00:29:08,440 Speaker 1: so much. Tres As Bloomberg Opinion editor covering European politics economics, 489 00:29:08,480 --> 00:29:10,640 Speaker 1: joining us from the London bureau. You can read more 490 00:29:10,680 --> 00:29:13,280 Speaker 1: on this and other stories from Bloomberg Opinion at Bloomberg 491 00:29:13,360 --> 00:29:16,520 Speaker 1: dot com, Slash Opinion and of course on the terminal 492 00:29:16,520 --> 00:29:20,200 Speaker 1: by typing o p I n go for Bloomberg Opinion. 493 00:29:20,280 --> 00:29:22,040 Speaker 1: Some of our best work I think coming out of 494 00:29:22,040 --> 00:29:24,920 Speaker 1: Bloomberg News from great analysis. But it just this is 495 00:29:25,000 --> 00:29:28,760 Speaker 1: interesting to see, you know, with bar Boris Johnson, presumably 496 00:29:28,800 --> 00:29:31,800 Speaker 1: tomorrow will be named Prime minister. Um, you know what 497 00:29:32,080 --> 00:29:34,800 Speaker 1: is in his toolbox that he thinks he can get 498 00:29:34,800 --> 00:29:37,320 Speaker 1: this deal done that maybe Teresa May did did not? 499 00:29:37,560 --> 00:29:39,800 Speaker 1: Is it just his personality? Well? Is it just this 500 00:29:39,920 --> 00:29:42,040 Speaker 1: chaos theory, this idea that he will come in and 501 00:29:42,040 --> 00:29:44,239 Speaker 1: he'll say I will take a no deal brexit and 502 00:29:44,280 --> 00:29:46,880 Speaker 1: that's fine by me because that was not fine, uh 503 00:29:47,080 --> 00:29:50,240 Speaker 1: with with Teresa May. And so you would that threat 504 00:29:50,400 --> 00:29:52,680 Speaker 1: be enough for the E or will you not care? 505 00:29:52,880 --> 00:29:55,440 Speaker 1: They say all right, go ahead exactly. Just looking at 506 00:29:55,480 --> 00:29:58,600 Speaker 1: pounds sterling right here. Weaker on the day at one 507 00:29:58,640 --> 00:30:03,080 Speaker 1: point to four or four seven down slightly. Thanks for 508 00:30:03,120 --> 00:30:05,800 Speaker 1: listening to the Bloomberg pen L podcast. You can subscribe 509 00:30:05,800 --> 00:30:08,600 Speaker 1: and listen to interviews at Apple Podcasts or whatever podcast 510 00:30:08,680 --> 00:30:11,440 Speaker 1: platform you prefer. I'm Paul Sweeney. I'm on Twitter at 511 00:30:11,440 --> 00:30:13,880 Speaker 1: pt Sweeney. I'm Lisa abram Woy. It's I'm on Twitter 512 00:30:14,000 --> 00:30:16,600 Speaker 1: at Lisa abram boits one before the podcast, you can 513 00:30:16,640 --> 00:30:19,040 Speaker 1: always catch us worldwide. I'm Bloomberg Radio