Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: Welcome to Meren Talks Money, the podcast in which people
Speaker 2: who know the markets explain the markets.
Speaker 1: I'm Maren Sumset Web.
Speaker 2: This week we discussed the return of Donald Trump to
Speaker 2: the White House and what the strength of his victory
Speaker 2: means for the American economy and just as important for
Speaker 2: this program, possibly more important for this program, which is
Speaker 2: second term, could mean for the UK, for Europe, and
Speaker 2: for global markets. With me economists also and former advisor
Speaker 2: to US President George W. Bush, Pipper Malngram and Helen Thomas,
Speaker 2: founder and seer Blonde Money and Independent Service, which provides
Speaker 2: commentary on politics, macroeconomics and finance. Regular listeners to the
Speaker 2: podcast will note both of these brilliant people already. Hello, Helen, Hello, Popper, Hello, Hello.
Speaker 3: Now.
Speaker 2: One of the reasons we've asked you both on beyond
Speaker 2: your obvious brilliance, is that you both called this right
Speaker 2: in a world which most people were calling it wrong.
Speaker 2: You both predicted that Donald Trump would be POTUS forty seven.
Speaker 2: You were both correct. Now, I don't want to dwell
Speaker 2: on that. There's been an awful lot of broadcasting over
Speaker 2: the last day or so about how this happened, why
Speaker 2: he won, why the Democrats didn't want, what went wrong
Speaker 2: for them, what went right for him, etc.
Speaker 1: So I don't want folks on that.
Speaker 2: I just want to say to both of you, well done,
Speaker 2: and then move on to talking about what it actually means.
Speaker 2: So Pepper, you're in Washington, you're right there, scene of
Speaker 2: the crime. Tell us what your immediate expectations are for
Speaker 2: the UK economy as a whole as a result of this.
Speaker 4: Oh okay, well, first, that was a big question.
Speaker 1: I'm sorry that was a very big question. But it's
Speaker 1: just getting us going.
Speaker 4: No, I get it. The thing is, first we have
Speaker 4: to understand what just happened. And in a nutshell I
Speaker 4: would say, yes, Donald Trump won, but actually it's kind
Speaker 4: of a it's a tech broke coup of the country.
Speaker 4: So we now have the Silicon Valley tech bros are
Speaker 4: really going to be running things, and that was orchestrated
Speaker 4: by Robert F. Kennedy and Nicole Shanahan, who got zero
Speaker 4: coverage during this election. But it was their youth vote
Speaker 4: that swung the vote into Trump's camp. So once we understand, okay,
Speaker 4: their goal is to come in and to bring all
Speaker 4: of their high tech tools to the government databases and
Speaker 4: extract the maximum information so they can reveal what is
Speaker 4: really going on versus what is the perception of what
Speaker 4: is going on. And they are all over getting to
Speaker 4: innovation outcomes that would give us abundance. So we're going
Speaker 4: to see a much faster move into, for example, new
Speaker 4: forms of clean green energy, new ways of managing the
Speaker 4: budget and the deficit, with the knowledge that AI analysis
Speaker 4: brings with it. That's where we start. Now what does
Speaker 4: it mean for the UK? Well, it didn't help.
Speaker 2: Okay, hang on, hang up, Pep, But let me take
Speaker 2: you back one little bit, because that was really interesting.
Speaker 2: So what you're saying here is we haven't really got
Speaker 2: a Trump presidency. We've got a Musk presidency.
Speaker 4: We've got a Trump Musk presidency, and between the two
Speaker 4: of them, Musk is going to be much more important
Speaker 4: and influential on the actual outcomes.
Speaker 1: Okay.
Speaker 2: So that sounds from an economic point of view, incredibly positive.
Speaker 2: So we bring the tech bros in, you get that
Speaker 2: wave of innovation, you get I mean we're being very
Speaker 2: optimistic here, you get massive efficiency drive inside government. So
Speaker 2: maybe you end up with the smaller state, possibly not
Speaker 2: in terms of services, but certainly as a percentage of GDP,
Speaker 2: and that leads you, as it should, to very good
Speaker 2: economic growth.
Speaker 4: Indeed, and add to that, there's a really important element
Speaker 4: of this, which is Trump wants to move the United
Speaker 4: States away from income tax and back to what we
Speaker 4: used to have in the old days, which was revenue
Speaker 4: generated by tariffs and now value added tax. Now, the
Speaker 4: thing that's always prevented the US from having a VAT
Speaker 4: is that every single state argued about how much of
Speaker 4: it should go to them. But now with the sweep
Speaker 4: that we have, it's going to be easier to get
Speaker 4: a negotiated outcome of what's the split between federal and state.
Speaker 4: And so the market needs to think, what does America
Speaker 4: look like if it has less reliance on income tax
Speaker 4: and more reliance on a combination of tariffs and VAT.
Speaker 1: Okay, fascinating, Helen.
Speaker 2: Does that description of what's happened and where we are
Speaker 2: now resonate with you?
Speaker 5: It does, because I certainly agree on the optimism here
Speaker 5: on the macroeconomics about you know, higher growth and probably
Speaker 5: higher inflation. But the two of those going hand in
Speaker 5: hand are no bad thing. I think the key element
Speaker 5: here on this, As you say, we don't want to
Speaker 5: dwell on of what's gone before. But the important message
Speaker 5: to take is that there is a mandate. There is
Speaker 5: a mandate. Now we don't have all the results in,
Speaker 5: but obviously there has been a significant rise in the
Speaker 5: Republican vote across all different kinds of demographics, and that
Speaker 5: is significant because with the mandate you can start to
Speaker 5: do some of the revolutionary things you just heard Pipper
Speaker 5: talking about. This is so important when you take it
Speaker 5: in the context of how much bigger the state has
Speaker 5: become since COVID everywhere you know, everyone has incurred these
Speaker 5: massive amounts of debt. So you know, what are you
Speaker 5: going to do about that? When interest rates are higher
Speaker 5: and the interest you're paying on that debt is eating away?
Speaker 3: What the state can do? What should the state do?
Speaker 5: You know, we're having these really big questions that we
Speaker 5: had maybe thirty forty years ago that we thought had
Speaker 5: been solved, and now they're back. But where I'm optimistic
Speaker 5: for America as a result of this election, and look,
Speaker 5: I'm not. I don't have It doesn't matter what I
Speaker 5: think in terms of my particular politics. It's about the
Speaker 5: cold hard facts of what can be done. You have
Speaker 5: an administration now that he's going to be able to
Speaker 5: approach the economy in a more revolutionary way, that's for sure, okay.
Speaker 2: And that revolution will involve this technological invasion of government,
Speaker 2: and it will involve and that the tariffs are interesting.
Speaker 2: You both talk as though being able to put tariffs
Speaker 2: on important goods is a positive rather than a negative
Speaker 2: for America.
Speaker 1: That doesn't fit with global economic theory.
Speaker 4: No, no, no, it's not that it's a positive. It's
Speaker 4: just a fact that that is where Trump is going
Speaker 4: to go. And he sees tariffs as a negotiating tool,
Speaker 4: so you know, hit China with big tariffs, but if
Speaker 4: they agree to comply on other subjects, then he can
Speaker 4: always lift those And then they start to be a
Speaker 4: combination of not only a useful negotiating tool, but and
Speaker 4: they generate revenue. So I'm not saying, you know, tariffs
Speaker 4: and keep them in place. These will be used in
Speaker 4: a fluid method. And no, they're not great. Jeff Bezo
Speaker 4: sold a ton of his stock right before the election
Speaker 4: because you can see Amazon's going to get whacked by
Speaker 4: these tariffs, right. It's not great from a trade point
Speaker 4: of view. But it is where this president is, and
Speaker 4: it does matter if your revenue sources shift from income
Speaker 4: tax to more in the tariff camp. So I'm just
Speaker 4: saying this is happening, and not necessarily that it's good.
Speaker 4: It's just occurring.
Speaker 5: Also the case with tariffs, you know, they are a
Speaker 5: multi round game, so you know, in one round you
Speaker 5: could really benefit. And as Pip is saying, there, then
Speaker 5: it you know, the game keeps going and maybe it's shifts.
Speaker 5: And also you know there's some elements with the US
Speaker 5: where you know, perhaps if there is more bringing more
Speaker 5: manufacturing home, or there is more innovation done domestically, then
Speaker 5: it's one of those you know, this beg of our
Speaker 5: neighbor idea, But if you're the front runner, then you
Speaker 5: can you can gain some of the advantages. I mean,
Speaker 5: I would just I would broadly say that although yes,
Speaker 5: economic theory generally would suggest tariffs a battle round and
Speaker 5: we're all end up as net losers, some people will
Speaker 5: lose more than others, and the strength and the muscles
Speaker 5: of the US economy and someone who's prepared to do
Speaker 5: deals could well still see America be more of a
Speaker 5: benefiting from that than others.
Speaker 4: Okay, absolutely, I'd throw into that as well. We're in
Speaker 4: a very different world now where the US is able
Speaker 4: to manufacture competitively again, and China has lost its edge.
Speaker 4: It is no longer the cheapest and highest quality place
Speaker 4: to produce things. Mexico has become that location, and so
Speaker 4: the corridor between Mexico and the US that is the
Speaker 4: most important supply chain in the world. Now. It's funny
Speaker 4: because everybody talks about the immigration from Mexico being such
Speaker 4: a big problem, but nobody mentions all the people getting
Speaker 4: in private jets flying down to Mexico to complete what
Speaker 4: is the most sophisticated, highest quality, the most deeply integrated
Speaker 4: supply chain into US manufacturing. And Trump has been crystal
Speaker 4: clear about providing all kinds of government incentives for manufacturing
Speaker 4: to happen inside the US. So then the issue of
Speaker 4: tariffs is very different than it was ten years ago
Speaker 4: when the US had given away all of its manufacturing
Speaker 4: to outsourcing.
Speaker 1: I mean, you and I've talked about that on this
Speaker 1: podcast before. Bit brand.
Speaker 2: Over the years, it's been a relatively fast shift to
Speaker 2: the US fully revamping its industrial base.
Speaker 4: Well, you know, I was involved in manufacturing drones in
Speaker 4: the UK roughly ten years ago, and you know, everybody
Speaker 4: thought I was crazy, because you know, why would you
Speaker 4: even think about competing with the Chinese? And yet what
Speaker 4: I learned is that you can manufacture in the UK
Speaker 4: because the labor component of modern high tech goods is
Speaker 4: ever smaller all the time, So you're not really trying
Speaker 4: to work out the labor piece, you're trying to work
Speaker 4: out the intellectual property piece. And also, you know, there's
Speaker 4: an incentive to make things in the West. In a
Speaker 4: world where you're, let's say, not at war with China,
Speaker 4: but you're in a really hostile confrontation with China, you
Speaker 4: don't want to be reliant on stuff that's made there.
Speaker 4: And so suddenly the whole game shifted towards actually, we
Speaker 4: can manufacture again, and we are in the West.
Speaker 2: It's interesting you both were very clear on your belief
Speaker 2: that Trump was going to win this, and a lot
Speaker 2: of people believe that the Trump trade was to a
Speaker 2: degree in the price. But as the results became clear yesterday,
Speaker 2: markets moved very dramatically. So equity market moved very sharply.
Speaker 2: Bond markets also moved very sharply. Is this temporary or
Speaker 2: do you think we're about to see. Let's take equities
Speaker 2: first to market that we've been talking about for a while.
Speaker 2: It's much too expensive on every single historical measure, much
Speaker 2: too concentrated, and certainly on this podcast incorrectly we've been
Speaker 2: saying people must diversify away from America's sharpers. Are they're
Speaker 2: going to be in a whole pile of trouble because
Speaker 2: they're buying at the top of the market.
Speaker 1: Where does it go from here?
Speaker 5: Well, I would jump in and say again this you
Speaker 5: talk about the historical valuations, but the there is a
Speaker 5: historical moment here where we're having We've had the technological revolution.
Speaker 5: You're hearing from Pipper about how this is kind of
Speaker 5: going into a it's changing.
Speaker 3: Gears now under the under the new administration.
Speaker 5: So I think you can look once more at evaluations
Speaker 5: getting even more extended. To be honest with you, at
Speaker 5: least in the short term. I mean, I could you
Speaker 5: talk about it being in the price but not. I mean, no,
Speaker 5: it couldn't. It can't ever really be because there was
Speaker 5: so much other information being flown around there. I mean,
Speaker 5: I'm surprised at how people thought it was going to
Speaker 5: be close. We never thought that it would be particularly close,
Speaker 5: particularly in the electoral college results. But I think you
Speaker 5: know markets that they never go fully all in on something.
Speaker 5: Apart from that guy on the polymarket trades, the French trades,
Speaker 5: he loved it, but you know that, I think. And also,
Speaker 5: of course you had to see what was going to happen,
Speaker 5: and we still don't exactly know about the House representatives,
Speaker 5: but you know, you had to see the whole sweep
Speaker 5: happen and truly believe in it. So I think there's
Speaker 5: an element of it wasn't all in the price because
Speaker 5: it couldn't be. Some people didn't agree with it, some
Speaker 5: people use different data, and people are only just really
Speaker 5: coming to terms with what it actually means.
Speaker 2: Does this give you a newfound confidence in the US
Speaker 2: equity market and so in any particular areas.
Speaker 4: Yeah, I think that people have not understood what's coming.
Speaker 4: So for example, Trump was crystal clear that he is
Speaker 4: giving Kennedy the mandate to go after pharma and big
Speaker 4: food and he will do that aggressively. So there needs
Speaker 4: to be a repricing in that sector because people haven't
Speaker 4: understand what a big deal that is going to be.
Speaker 4: At the same time, he immediately said, but Bobby gets that,
Speaker 4: but I get to drill, baby, drill right. I'm going
Speaker 4: after the liquid gold, and so that gets repriised because
Speaker 4: we have a presidential commitment the oil sector. I think
Speaker 4: people haven't understood that the tech bros Are actually in
Speaker 4: charge now and therefore, I mean, yesterday the price of
Speaker 4: everything Elon Musk is involved with went up, and that
Speaker 4: makes sense because he's now on the inside of government effectively.
Speaker 4: So I think it's not just up or down, it's
Speaker 4: also within the market what things are overpriced and underpriced.
Speaker 4: I would say this too. This is a moment where
Speaker 4: artificial intelligence and the tools and the capabilities that it
Speaker 4: brings are now going to be unleashed on government efficiency,
Speaker 4: and therefore we're going to see some dramatic changes in
Speaker 4: government policy. People don't understand what those changes are going
Speaker 4: to be. That's a big thing. And a second factor
Speaker 4: is the Chevron decision which the Supreme Court gave us
Speaker 4: before the election, which basically said, whatever Congress passes legislation,
Speaker 4: it then is up to the agencies to interpret what
Speaker 4: the heck does it actually mean. Well, that administrative guidance,
Speaker 4: which has been central to the valuation of companies, is
Speaker 4: no longer permissible. The Supreme Court has said, you cannot
Speaker 4: interpret anymore. You have to go back to Congress and
Speaker 4: ask them what did you mean? And of course Congress
Speaker 4: is not going to reopen everything to answer administrative type questions,
Speaker 4: so there's going to be this blockage impasse as the
Speaker 4: private sector is like, wait, wait, what is the rule? Right?
Speaker 4: What do we actually do? What does this legislation mean?
Speaker 4: And I'm sure there are valuation changes that will arise
Speaker 4: from this new phenomena that people haven't thought through.
Speaker 2: Okay, but across the board, you now have what sounds
Speaker 2: like the perfect combo, which is going to be AI
Speaker 2: plus very cheap energy.
Speaker 3: Yeah, oh yeah.
Speaker 2: And this is one of the things that makes America special,
Speaker 2: certainly makes it special at the moment, is not just
Speaker 2: cheap energy, but a doubling down on cheap energy to
Speaker 2: drive to make it cheaper and cheaper. Of course, we
Speaker 2: think exactly the opposite in the in the UK, and
Speaker 2: we can come to that later. But you know, that
Speaker 2: combo sounds like it might be rather interesting.
Speaker 4: I think this is really an incredible moment in American history,
Speaker 4: again not because of Trump, but because of the door
Speaker 4: being open to technology. Being brought to bear on a
Speaker 4: very rickety, old fashioned, you know, non modernized architecture of government.
Speaker 4: If we can make all that more efficient, there are
Speaker 4: going to be incredible benefits. And this sort of attitude
Speaker 4: to the private sector of telling the American public go build,
Speaker 4: go build, go build anything that you think is going
Speaker 4: to work, and government's going to support that. It's going
Speaker 4: to be friendly to entrepreneurs, it's you know, going to
Speaker 4: be friendly to reshoring on shoring. Yeah, all that has
Speaker 4: to be reflected. And let me add one more thing. Also,
Speaker 4: we have a president who said I will cut a
Speaker 4: deal with the Russians on Ukraine and the war will end,
Speaker 4: and just before the election said again, the US doesn't
Speaker 4: have a national security interest in Taiwan, so let's cut
Speaker 4: a deal with the Chinese over Taiwan. Well, all of
Speaker 4: a sudden, and we've already had these announcements, which I
Speaker 4: keep wondering are they actually are accurate. And much as
Speaker 4: people might really dislike Trump, for no doubt many good reasons,
Speaker 4: this piece is probably the most valuable. If we end
Speaker 4: up in a peace dividend environment, markets are going to
Speaker 4: go up, no two ways about it.
Speaker 2: Okay, interesting, So let's go back a little bit to Helen.
Speaker 2: You were speaking about inflation earlier, about how you get
Speaker 2: growth like this, you will also get inflation.
Speaker 1: Does this idea of.
Speaker 2: A productivity boom alongside cheap energy, does that allay your
Speaker 2: fears in any way?
Speaker 3: Well, I was going to say yes.
Speaker 5: My note of caution will be of course the long
Speaker 5: end of the US bond market, because we're going to
Speaker 5: see a steeper yield curve. That's what you get in
Speaker 5: a reflationary environment. There is an awful lot I talked
Speaker 5: about debt. There's going to be even more debt.
Speaker 3: That is.
Speaker 5: That is the way that it goes when you know
Speaker 5: when you're in this environment. But what's quite interesting, and
Speaker 5: this is why the mandate element is interesting. Of what
Speaker 5: I was saying about about Trump is that if you've
Speaker 5: got a mandate to pursue productive growth, if you can
Speaker 5: credibly grow the productive capacity of your economy, you can
Speaker 5: deal with that debt because you can service it and
Speaker 5: you can grow it and everyone can share in that.
Speaker 3: This is if you like.
Speaker 5: This may raise a little eyebrow from listeners in the UK,
Speaker 5: but you know, this is sort of like the Trust budget,
Speaker 5: but with a mandate, and very importantly, with the dollar
Speaker 5: being the world's reserve currency, I mean, this is the thing. Right,
Speaker 5: people have to hold dollars, people will have to hold
Speaker 5: US treasuries. You know, they do have this ability to
Speaker 5: do it. So I think that is the real key
Speaker 5: to this. But having said having said that, the long
Speaker 5: end of the US bond market, it is a risk
Speaker 5: because with all of that debt issuance, if there is
Speaker 5: any sort of dip in this picture that we're both
Speaker 5: painting I think of a higher growth future, it's difficult
Speaker 5: to make a mistake because once you untether the long
Speaker 5: end of the bond market, then you have serious, big problems,
Speaker 5: and it won't just be a problem for America, be
Speaker 5: a problem for everybody.
Speaker 4: Actually, Helen, let me follow up on that, because I
Speaker 4: think you're right what's happening as America is going to
Speaker 4: attempt to grow its way out of its current debt problem.
Speaker 4: But people think that means government stimulus. They don't understand
Speaker 4: it can mean weightlifting. And what's happening is the leadership
Speaker 4: is saying we're now going to lift weights. We're going
Speaker 4: to get stronger by actually building stuff. Now, will that
Speaker 4: involve some stimulus in some way, no doubt, but that's
Speaker 4: not the reason why this will happen. And when interest
Speaker 4: rates go up, you know, I always say, it's it's like,
Speaker 4: you know, when interest rates are zero and free money
Speaker 4: is being given away, it's like you got to eat
Speaker 4: donuts for free for you know, that whole period, and
Speaker 4: everybody kind of gained weight. Then interest rates start to
Speaker 4: go up, and they're basically being told you've got to
Speaker 4: get on the running machine. And nobody likes it, but
Speaker 4: it makes them healthier. And the reality is the US
Speaker 4: has adjusted to higher interest rates extremely well, and markets
Speaker 4: have invested less in unicorns and more in what i'd
Speaker 4: call workhorses, companies that have genuine, unimpaired cash flows, that
Speaker 4: actually have customers that really make money. And is that
Speaker 4: healthier that we are spending less on the possibility of
Speaker 4: a maybe of some twenty two year old with an idea,
Speaker 4: and more on a business that actually is working. Yes,
Speaker 4: So people are afraid of higher interest rates, but the
Speaker 4: US has a history of being able to manage with
Speaker 4: extremely high interest rates at times. So should we be
Speaker 4: afraid if interest rates are going to go up a bit?
Speaker 4: On all this, the answer is not. If we learn
Speaker 4: to run on the running machine better and we will
Speaker 4: lift those weights better, you will end up stronger.
Speaker 1: Peppa, What do you think the main risks on here? Oh?
Speaker 6: Well, yeah, I don't want to mean it's into negative territory,
Speaker 6: but there has to be some pretty big risks of
Speaker 6: this optimistic view.
Speaker 4: Well yeah, I mean, of course, we still have a
Speaker 4: nation and a world that cannot comprehend what has just happened,
Speaker 4: and so there's a danger that we end up not
Speaker 4: in a civil war in the streets, but an uncivil
Speaker 4: war in terms of law fair and the parties, you know,
Speaker 4: the two sides of politics attacking each other. And I
Speaker 4: do think that fight is very real, but I would
Speaker 4: characterize it as we're no longer in a battle between
Speaker 4: the left and the right in America. We're in a
Speaker 4: battle between the old establishment and the new establishment and
Speaker 4: establishment which is you know, the tech guys but also
Speaker 4: the younger people in government circles. They want innovation and change,
Speaker 4: and the old guard is like, we don't want any changes.
Speaker 4: We got to protect the bureaucracy at all costs because
Speaker 4: that's what I built and that's what's protecting me. So
Speaker 4: that fight is very real. That's a war zone. Now,
Speaker 4: how much impact will it have on markets is a
Speaker 4: different question. I think it's one of those things where
Speaker 4: it's like an invisible war until some event happens and
Speaker 4: then suddenly you get visibility of it. It frightens you,
Speaker 4: markets go wobbly for a minute and then and then
Speaker 4: it goes away. So it's a volatility creator rather than
Speaker 4: a directional outcome creator.
Speaker 5: Yeah, I would, I would pick up on that because
Speaker 5: I've talked there about you know, many times about this mandate.
Speaker 5: But the fascinating element of the US political system is,
Speaker 5: you know, it's effectively it is two parties.
Speaker 3: I mean there are independent candidates.
Speaker 5: I'm sure Pip is going to say something about, you know,
Speaker 5: RFK with boring from the race. I mean, this is
Speaker 5: this is the If you want a trend that we
Speaker 5: have seen throughout electorates across the world, it has been
Speaker 5: a fragmentation where they don't feel that old establishment Pipper's
Speaker 5: talking about is working for them. Now, depending on your
Speaker 5: political system, you could get a whole new party turn up.
Speaker 5: And there's a whole new party is just emerged in
Speaker 5: Germany in January called BSW, who are currently polling at
Speaker 5: eight percent, and you know they are it's a left
Speaker 5: wing part. Well, it's so far left that there's a
Speaker 5: question of whether it joins back up with the right.
Speaker 5: But interestingly, you know that was founded by an academic
Speaker 5: who was saying that the left is no longer talking
Speaker 5: about working class people and it's obsessed by woke issues
Speaker 5: and it needs to get back to you know what matters.
Speaker 5: And well, as we're talking, of course, the German government
Speaker 5: has collapsed and we're headed for staff elections.
Speaker 3: So the interesting part, the fascinating part for me.
Speaker 5: Actually coming back to the sort of positive US story,
Speaker 5: is that their slightly more rigid system has kind of
Speaker 5: flexed to incorporate some of this and is you can
Speaker 5: still govern in it.
Speaker 3: I mean, look at France, look at Germany.
Speaker 5: I mean even in the UK where you know, with
Speaker 5: God's huge majority for a new government, they only won
Speaker 5: with thirty four percent of the vote, and you know
Speaker 5: there's all approval ratings are.
Speaker 3: Collapsing for the Prime minister. The budget had an impact
Speaker 3: on the bond market. It's again I.
Speaker 5: Actually think there's there's a there's a political risk premium
Speaker 5: that's rising everywhere that Pip has touched on there and
Speaker 5: but actually in the US, I think that it sort
Speaker 5: of solved a.
Speaker 3: Lot of the issues with this election. Amazingly to say.
Speaker 4: Amazingly, I agree with that, and it reminds me to
Speaker 4: throw into this mix. You ask about the risks, I'll
Speaker 4: tell you one that I think is really important, but
Speaker 4: it's going to sound a little out there, and it
Speaker 4: is that Trump said during the campaign that he was
Speaker 4: going to create a Presidential Commission on Presidential Assassinations, and
Speaker 4: he would declassify all of the JFK assassination papers, all
Speaker 4: the RFK so it's Robert Kennedy's father papers, plus open
Speaker 4: up the investigation into the now two assassination attempts on
Speaker 4: President Trump, which many people think have not been properly examined,
Speaker 4: And so Kennedy will be in charge of that. Now
Speaker 4: that is like, that is like opening up a long
Speaker 4: festering wound in the psyche of the American public. And
Speaker 4: a bunch of things I think are going to get
Speaker 4: revealed that are going to force force us all to
Speaker 4: question trust in government. How do we improve trust in government?
Speaker 3: Like?
Speaker 4: Who did what? Like there's a reason why Trump had
Speaker 4: said he would declassify them in his first term, but
Speaker 4: he didn't and now partly because he's so mad at
Speaker 4: being shot at a couple of times. He literally he's like,
Speaker 4: I'm releasing all.
Speaker 1: Of it, Okay. So I like the idea that there
Speaker 1: was a reason he didn't in his first term. Something
Speaker 1: changed his.
Speaker 4: Mind, something changed his mind. And we're getting more information
Speaker 4: about how he was advised not to release them because
Speaker 4: it would be so damaging to the government And You're like,
Speaker 4: what the heck is in there? So I don't know,
Speaker 4: but I think whatever that is, that is going to
Speaker 4: be a bit of an earthquake in Okay, America's nazing.
Speaker 2: The range of information you get on this podcast is
Speaker 2: pretty wide. Got to say, right, I need to move
Speaker 2: to as promised to our listeners, onto international markets and
Speaker 2: onto the UK.
Speaker 1: Helen, what does all this mean for us?
Speaker 3: Right?
Speaker 5: Well, of course, the thing about the UK is we
Speaker 5: have this sort of work between the US and Europe,
Speaker 5: so you know, sometimes that's benefit I think it will
Speaker 5: benefit us to a degree. Here you're hearing a big
Speaker 5: growth and reflation story which should have some of a
Speaker 5: boost to go onto the UK economy.
Speaker 3: But the problem is the debt of problem is the.
Speaker 5: Huge debt pile, and frankly, I think in the time
Speaker 5: since well I don't know when this is going to
Speaker 5: go out, Meren, but basically the fiscal headroom that Rachel
Speaker 5: Reeves built her budget around has pretty much been wiped
Speaker 5: out already by the move in guilds. And I was
Speaker 5: actually at the Treasury Select Committee yesterday when she was
Speaker 5: being quizzed, and she was asked, okay, so you know,
Speaker 5: given what's happened in the US, and you know, they
Speaker 5: looked at you know, growth forecasts are being changed immediately
Speaker 5: around the world, what do you think it means for Britain?
Speaker 5: And Rachel Reeves just said it's too early to tell,
Speaker 5: and I thought, well, I mean, politicians say all things,
Speaker 5: but it's a little bit disingenuous because you know that
Speaker 5: you're just hearing on this podcast now between all of us,
Speaker 5: and we don't have a treasury of thousands of civil servants, you,
Speaker 5: I'm sure can make some decent thoughts and predictions on
Speaker 5: what it is going to mean for the UK economy.
Speaker 3: And I just think it's going to.
Speaker 5: Get really really hard, really hard for us with this
Speaker 5: debt burden, and without growth is not going to be
Speaker 5: productive enough and when the Chancellor has said I don't
Speaker 5: want to come back.
Speaker 3: I never want to come back again and.
Speaker 5: Do a budget like this, that is I mean that
Speaker 5: would have been hostage to fortune anyway. But with this
Speaker 5: election in the US, I think that's become a lot
Speaker 5: more difficult.
Speaker 2: Okay, so we can be pretty sure that she's going
Speaker 2: to come back with another one of her horrible budgets,
Speaker 2: and we can also be pretty sure that for now,
Speaker 2: at least, we're not going to be following any of
Speaker 2: the things that we've been talking about in the US,
Speaker 2: any of the you know, nice productivity and growth enhancing policies.
Speaker 1: They're not coming to the UK in a hurry.
Speaker 3: It could be a change.
Speaker 5: I mean, Lord O'Neill, Jim O'Neill, who's been you know,
Speaker 5: talking to the government about this and everyone i'm sure
Speaker 5: will know him as the mister Bricks originally, but I mean,
Speaker 5: you know he's been talking about this, you know, productive growth.
Speaker 5: You know that it would be better perhaps to improve
Speaker 5: childcare and spend money on childcare that could then get
Speaker 5: you know, parents back to work, and that would improve
Speaker 5: productive capacity economy better than what may or may not
Speaker 5: need to be done.
Speaker 3: In hospitals and schools.
Speaker 5: But at the end of the day, I'm sure a
Speaker 5: lot of voters, well I'm sure everybody would like all
Speaker 5: of those things to happen and not have to be
Speaker 5: making these choices. And that is the difficulty that the
Speaker 5: you know, the Britain finds itself in.
Speaker 2: And of course what we really need to do is
Speaker 2: exactly what Trump has just suggested. We need to build, build, build,
Speaker 2: but we're not very good at that.
Speaker 1: It's not really our thing.
Speaker 5: Well, the labor government are, you know, they're doing a
Speaker 5: lot on planning reform. We've yet to see exactly what
Speaker 5: it is. I mean, I think I think part of
Speaker 5: the issue here is that the government it's a bit unfair,
Speaker 5: but it feels a bit slow, you know.
Speaker 3: It feels that then we knew that we were going
Speaker 3: to do planning.
Speaker 5: Rachel Reeves gave a Maze lecture in March this year
Speaker 5: saying it's all about planning to improve the economy. But
Speaker 5: you know, here we are in November. We haven't got
Speaker 5: anything yet, and you know, I get it.
Speaker 2: It is difficult, but she has It's also had plenty
Speaker 2: of time that either been in opposition a while.
Speaker 1: There's been time to think about this stuff.
Speaker 3: It's not trying to be even handed. Merin, I was
Speaker 3: trying to be even there.
Speaker 1: Don't bother, Helen, just tell us what you think.
Speaker 3: I think it's yeah, I think it's good to be
Speaker 3: extremely difficult.
Speaker 5: Oh so, but sorry, I started by saying that, you know,
Speaker 5: the UK, it's sort of you like, there's a high
Speaker 5: beata debt play onto what the US is doing without
Speaker 5: the growth. But then you come to Europe with its
Speaker 5: completely dysfunctional governments that we've just been talking about, big
Speaker 5: debt piles, in deflation, disinflationary things happening in Europe, and
Speaker 5: they've gotten the pid, have no chance of growth or
Speaker 5: chance of their government's passing anything. So perhaps it's the
Speaker 5: sort of least ugly world and in some respects the
Speaker 5: UK has some advantage over Europe.
Speaker 1: Okay, well, thank you for that optimistic take, Helen.
Speaker 4: So well, yeah, mine's not going to be as optimistic.
Speaker 4: So well, first of all, you know, things are off
Speaker 4: to a bad start because Donald Trump and his team
Speaker 4: believe the cure. Starmer and the Labor Party sent a
Speaker 4: bunch of volunteers over to help Kamala Harri in the election,
Speaker 4: and the idea that Britain, that America's closest defense ally
Speaker 4: would come over to so visibly be supporting, you know,
Speaker 4: domestic political outcomes inside America. This was like not a
Speaker 4: good start. And so I think you're going to hear that.
Speaker 4: I think Trump is going to cold shoulder Britain as
Speaker 4: long as Labor is in charge, just because of that.
Speaker 4: Just they're just offended right by that. But also, you know,
Speaker 4: Britain is still everybody's still agonizing one way or another
Speaker 4: over Brexit. And you know, I was in the UK
Speaker 4: during that period. I was an advisor to the Department
Speaker 4: of Trade and Industry on their board, so I had
Speaker 4: a front row seat on how that all went. And
Speaker 4: the thing is, the British keep being stuck in this
Speaker 4: mentality of we're a small nation and we don't have
Speaker 4: much influence in the world. And I'm like, guys, you're not.
Speaker 4: You're a big nation with huge influence in the world.
Speaker 4: And in the past you mainly did business with the
Speaker 4: EU just because it was easier under the EU relationship.
Speaker 4: But the fact is you have a long history of
Speaker 4: trading with the entire world. And I was literally on
Speaker 4: and I still am on the King's Enterprise Awards judging panel.
Speaker 4: So we look at a whole bunch of businesses across
Speaker 4: the UK and I saw it, like two years before Brexit,
Speaker 4: all those businesses were clocking that the whole relationship with
Speaker 4: the EU might change, and they started selling to China,
Speaker 4: to Japan, to the United States, to Latin America, to Africa.
Speaker 4: And I'm like, listen, the British are perfectly capable of
Speaker 4: figuring out where the profits are and they can sell internationally,
Speaker 4: not just to Europe. We don't, you know, we live
Speaker 4: in a world of you know, the Internet exists. So
Speaker 4: this idea of proximity to Europe was the key to
Speaker 4: success doesn't wash right. China built a massive economy with
Speaker 4: no proximity to anybody. So I do think there's a
Speaker 4: lack of imagination, a lack of belief. And you know,
Speaker 4: having lived there for most of my adult life, you know,
Speaker 4: I love Britain. I love Britain all of it, you know,
Speaker 4: And I'm not a typical Londoner. That's like those people
Speaker 4: in the countryside have no idea what they're talking about.
Speaker 4: I think there's wisdoms spread throughout the country. But I
Speaker 4: also think it is true that Britain's greatest export is pessimism.
Speaker 2: Okay, okay, well, on that note, our greatest export maybe
Speaker 2: pessimism is true. We're very good at that, and particularly
Speaker 2: on this podcast, by the way Marin talks money, really
Speaker 2: we excel in pessimism. But one thing we've been optimistic
Speaker 2: about for AGES is being the UK stock market. We said, look,
Speaker 2: it's cheap, it's grotesquely undervalued. We have great companies, there's
Speaker 2: no reason for us to trade at this discount to
Speaker 2: the US and to other global stock markets, and so
Speaker 2: we've been very positive. But John and I looking at
Speaker 2: what's happening in the US, and I were like, oh,
Speaker 2: it's kind of hard to be positive in the UK
Speaker 2: when you see what is possible elsewhere economically at least.
Speaker 2: So the question, then, I guess, is, does what we
Speaker 2: think might happen in the US, what you do think
Speaker 2: might happen in the US, doesn't make you less likely
Speaker 2: to want to invest in the UK than you might
Speaker 2: have been before.
Speaker 4: Well, there's an element of truth to that. But here's
Speaker 4: the thing is that of all nations in the world,
Speaker 4: the one that could most closely align itself with the
Speaker 4: uptick in the US economy is Britain. And look we
Speaker 4: see in the UK tech sector right it's like literally
Speaker 4: double Germany's tech sector three times larger than France. The
Speaker 4: UK venture capital market is still a multiple of what
Speaker 4: happens in continental Europe. So the question is what can
Speaker 4: be done to get those startups to scale. And part
Speaker 4: of the answer is you're seeing already alignment between British
Speaker 4: high tech startups and the American market, and those are
Speaker 4: worth betting on because they are clocking that they want
Speaker 4: to be where the growth is. But they're still British.
Speaker 4: So it's about the alliances. And similarly, if you look
Speaker 4: at Europe, as Helen quite rightly said, do you look
Speaker 4: at the Mario Draggy report that just came out on Europe,
Speaker 4: you know where the summary was forty pages. I still
Speaker 4: haven't got through the whole summary, but basically what the
Speaker 4: conclusion is is Europe is in such terrible shape. Something's
Speaker 4: got to change. And the thing that needs to change
Speaker 4: is industrial policy. Government is going to decide and tell
Speaker 4: us all where asset allocations are going to be made,
Speaker 4: so we will pick the winners. And I'm like, ah,
Speaker 4: we have a long history of knowing that governments don't
Speaker 4: do this very well. So if Europe is going into
Speaker 4: old fashioned communists central planning almost not quite sorry, that'll
Speaker 4: provoke a lot of people. I don't mean to say
Speaker 4: that in aggressive way.
Speaker 1: I think I think you meant it.
Speaker 4: If you're going there, then then Britain has got to
Speaker 4: look elsewhere for growth. And I think it's going to
Speaker 4: be easy for the British to do business with the Yanks.
Speaker 2: And I suppose the other thing says that one thing
Speaker 2: that the UK would benefit from and the old world
Speaker 2: would benefit from, if you're correct about Trump and Gea politics,
Speaker 2: that we might see this peace evidend. I mean, we've
Speaker 2: been talking for a long time, Pepper about World War
Speaker 2: three and about how it's already begun and it's just
Speaker 2: a silent war as opposed to a very obvious wole.
Speaker 2: And I think what you're suggesting is that we might
Speaker 2: be beginning as a world under this phrasing to wrote
Speaker 2: back from.
Speaker 4: That, Yes, that's exactly what I'm saying. That's why you
Speaker 4: know I wrote an article I think it was October
Speaker 4: twenty twenty one saying we are already in World War three,
Speaker 4: we just don't recognize it. And now just as people
Speaker 4: are like, oh my god, we're in World War three,
Speaker 4: I'm like, actually we were not. And it's starting to
Speaker 4: end right, But they're catching up with what's already occurred
Speaker 4: and not seeing that actually, we're all the superpowers are aligning.
Speaker 4: They're all saying, let's come to the negotiating table and
Speaker 4: cut a deal. She is saying that, Putin is saying that.
Speaker 4: It's a Lensky is saying that. And the only people
Speaker 4: who weren't coming to the table was the United States
Speaker 4: because frankly, the lights were on in the White House,
Speaker 4: but nobody was home. There was nobody to talk to.
Speaker 4: You couldn't talk to Biden because he's not basically one
Speaker 4: hundred percent, and you couldn't talk to Harris because she
Speaker 4: was out campaigning. By the way, that's why Jake Sullivan
Speaker 4: was in Beijing and Xijiping met with him personally, and
Speaker 4: you're like, wait, what the heck is the leader of
Speaker 4: China doing meeting with a staff person, And the answer is,
Speaker 4: there's nobody else to talk to about what is the
Speaker 4: deal we're going to strike so that we can all
Speaker 4: stop wasting our time and energy on warring and get
Speaker 4: back to the real issue, which is the race for
Speaker 4: the technological future, and that is the real competition between
Speaker 4: especially the US and China. And that is the race
Speaker 4: that you know, whoever wins that gets to the abundance
Speaker 4: that changes the future. So dramatic.
Speaker 2: Okay, now on the tech futua, the one thing that
Speaker 2: everybody's seem to think as a dead search to be
Speaker 2: the big winner out of the Trump regime is bitcoin.
Speaker 2: New high off the new high after new high.
Speaker 1: This is the Trump trade.
Speaker 2: And I'm assuming that you both think that there will
Speaker 2: be massive deregulation around this in an entirely different environment
Speaker 2: for cryptocurrencies, Helen, Does that make bitcoin to buy for you?
Speaker 3: Yeah? I think so.
Speaker 5: I mean i've I think last time was on your show, Mary,
Speaker 5: and I think is it the gold versus bitcoin question?
Speaker 3: I think bitcoin, funnily.
Speaker 5: Enough, I think I picked it then for safe haven purposes.
Speaker 5: I think you do it kind of amusingly, so now
Speaker 5: you know now to pick it for sort of risk
Speaker 5: positive purposes. I mean, look, it's sort of almost inexorable really,
Speaker 5: given the launch of the you know, the ETFs on bitcoin,
Speaker 5: the way that trad FI is you know, interacting with it.
Speaker 5: So yeah, I mean, it's it's just gonna accelerate this
Speaker 5: next stage of of its progress. But hey, I still
Speaker 5: don't fully understand it. I'm pepper Mano far more than me.
Speaker 2: All right, Pepper, is this under POTUS forty seven? Do
Speaker 2: we have a new age for in particular for a bitcoin.
Speaker 3: We do?
Speaker 4: And the reason why is because if you if here's
Speaker 4: what they're gonna do, They're gonna say bitcoin and crypto
Speaker 4: will be legal, but you have to declare it and
Speaker 4: you have to have it in your own name. You
Speaker 4: can't hold it anonymously, and a whole bunch of those
Speaker 4: guys are.
Speaker 5: Gonna go over.
Speaker 4: But the whole point was to try to escape the
Speaker 4: reach of US law. And I'm like, babe, you cannot
Speaker 4: escape the reach of you know, US law. So but
Speaker 4: what you can do is by making that legal, you
Speaker 4: bring the whole dark economy that it has embedded in
Speaker 4: it into the light and it makes it taxable. So
Speaker 4: it's the same idea as legalizing marijuana. It's not that
Speaker 4: your morals have changed, it's just that you're like, wow,
Speaker 4: we can tax it if it's legal, and that will
Speaker 4: generate a lot of revenue at a time when there's
Speaker 4: a budget problem, there's a spending problem. Plus, it's seen
Speaker 4: by some of the Republicans as a kind of modern
Speaker 4: substitute for a gold anchor. In other words, if you're
Speaker 4: going to have a president who really doesn't care about spending,
Speaker 4: because after all, he's a property guy, he's like, let's
Speaker 4: do that, right, that's great. If that's your approach, you
Speaker 4: need some kind of anchor to hold on to. That's
Speaker 4: a reference point that starts to tell you, uh, you're
Speaker 4: going a bit overboard. Guys. Bitcoin and crypto can be that,
Speaker 4: especially bitcoin, So I think that's how they view it's
Speaker 4: And Plus, by the way, the US has probably become,
Speaker 4: if not the largest holder of bitcoin, certainly one of
Speaker 4: the largest holders through confiscation. Well, if you confiscate enough
Speaker 4: of this, if you're the Department Justice and you're sitting
Speaker 4: on four billion dollars worth of bitcoin, you're like, that's
Speaker 4: our budget for like one hundred years. Why don't we
Speaker 4: find a way to be able to actually use that?
Speaker 4: And I think these are the motivations.
Speaker 2: Last question, Have both of you signed up to truth
Speaker 2: socials so you can see what Trump's thinking.
Speaker 4: I did it the day he launched it. For that reason.
Speaker 4: And again I've not been at all like in the
Speaker 4: Trump camp for a bunch of reasons. But look, in
Speaker 4: politics you have to have visible and if this is
Speaker 4: can I just say real quickly, it's not just that
Speaker 4: he launched it. It's that he launched an entirely new
Speaker 4: way of fundraising for politics, and the valuation of that
Speaker 4: platform and the capacity to spread his message. This should
Speaker 4: cause everyone else in politics to try to replicate that thing.
Speaker 4: But instead they don't see it that way. They just
Speaker 4: see it as you know, I don't know, they don't
Speaker 4: understand that technology platforms when in politics, not just messages.
Speaker 2: Okay, so you signed up Peppa and Helen, you're about
Speaker 2: to well yeah.
Speaker 3: But I'm going to Obviously we have to.
Speaker 2: We have to and look at much value will be
Speaker 2: adding for Envie as well.
Speaker 4: I tell you one thing with this racing towards innovation
Speaker 4: at a much faster pace, because the tech community now
Speaker 4: runs the White House will run the White House, we
Speaker 4: have to understand what are the implications so commodities, for example,
Speaker 4: because of supercomputing and AI and we've just seen the
Speaker 4: Nobel Prize awarded to Google founders of for Alpha folds well,
Speaker 4: that same thing is happening in materials. So if you're
Speaker 4: a guy who plays in copper and iron ore and
Speaker 4: all that stuff, the fact is we're able to build
Speaker 4: that stuff adam by Adam by adam, to produce entirely
Speaker 4: new materials that the world has never known. We have
Speaker 4: three hundred and eighty thousand new materials already produced by Google,
Speaker 4: Sycamore supercomputer, and two point two million crystals. I don't
Speaker 4: think the market has even begun to understand what can
Speaker 4: we build with that stuff that was in the past
Speaker 4: impossible and will make those traditional commodities no longer relevant.
Speaker 2: Brilliant Peppa Helen, thank you so much for making this
Speaker 2: awesome rather exciting.
Speaker 1: We appreciate that. We appreciate that.
Speaker 2: I think this is probably the only podcast it has
Speaker 2: managed to make the whole thing sound really very interesting,
Speaker 2: exciting and optimistic. Thanks for listening to this week's Maren
Speaker 2: Talks Money. If you like us, show, rate, review, and
Speaker 2: subscribe wherever you listen to podcasts, and keep sending questions
Speaker 2: or comments to Merrin Money at Bloomberg dot net. You
Speaker 2: can also follow me in John on Twitter or x
Speaker 2: I'm at Marinus w and John is John Underscores Epic.
Speaker 2: This episode was hosted by me Maren Sumset Web. It
Speaker 2: was produced by Samasadi, Production support by Moses and and
Speaker 2: special thanks of course to both our guests Helen and
Speaker 2: Pepper