WEBVTT - Why Trump’s Victory Is Musk’s ‘Tech-Bro Coup’ 0:00:03.080 --> 0:00:08.160 Bloomberg Audio Studios, Podcasts, radio news. 0:00:17.800 --> 0:00:20.319 Welcome to Meren Talks Money, the podcast in which people 0:00:20.320 --> 0:00:22.240 who know the markets explain the markets. 0:00:22.280 --> 0:00:23.400 I'm Maren Sumset Web. 0:00:23.600 --> 0:00:25.919 This week we discussed the return of Donald Trump to 0:00:25.960 --> 0:00:28.280 the White House and what the strength of his victory 0:00:28.320 --> 0:00:30.960 means for the American economy and just as important for 0:00:31.000 --> 0:00:33.839 this program, possibly more important for this program, which is 0:00:33.960 --> 0:00:36.720 second term, could mean for the UK, for Europe, and 0:00:36.800 --> 0:00:40.920 for global markets. With me economists also and former advisor 0:00:41.000 --> 0:00:44.760 to US President George W. Bush, Pipper Malngram and Helen Thomas, 0:00:44.760 --> 0:00:48.240 founder and seer Blonde Money and Independent Service, which provides 0:00:48.360 --> 0:00:52.720 commentary on politics, macroeconomics and finance. Regular listeners to the 0:00:52.720 --> 0:00:59.280 podcast will note both of these brilliant people already. Hello, Helen, Hello, Popper, Hello, Hello. 0:01:00.040 --> 0:01:00.200 Now. 0:01:00.240 --> 0:01:02.320 One of the reasons we've asked you both on beyond 0:01:02.360 --> 0:01:06.440 your obvious brilliance, is that you both called this right 0:01:06.640 --> 0:01:08.760 in a world which most people were calling it wrong. 0:01:09.000 --> 0:01:12.560 You both predicted that Donald Trump would be POTUS forty seven. 0:01:12.720 --> 0:01:15.520 You were both correct. Now, I don't want to dwell 0:01:15.560 --> 0:01:18.360 on that. There's been an awful lot of broadcasting over 0:01:18.360 --> 0:01:20.960 the last day or so about how this happened, why 0:01:21.000 --> 0:01:23.600 he won, why the Democrats didn't want, what went wrong 0:01:23.640 --> 0:01:24.880 for them, what went right for him, etc. 0:01:25.160 --> 0:01:26.280 So I don't want folks on that. 0:01:26.319 --> 0:01:28.440 I just want to say to both of you, well done, 0:01:28.760 --> 0:01:32.640 and then move on to talking about what it actually means. 0:01:32.640 --> 0:01:35.320 So Pepper, you're in Washington, you're right there, scene of 0:01:35.360 --> 0:01:38.399 the crime. Tell us what your immediate expectations are for 0:01:38.520 --> 0:01:40.760 the UK economy as a whole as a result of this. 0:01:41.200 --> 0:01:44.240 Oh okay, well, first, that was a big question. 0:01:44.319 --> 0:01:46.400 I'm sorry that was a very big question. But it's 0:01:46.440 --> 0:01:47.440 just getting us going. 0:01:48.160 --> 0:01:50.040 No, I get it. The thing is, first we have 0:01:50.120 --> 0:01:52.560 to understand what just happened. And in a nutshell I 0:01:52.560 --> 0:01:57.800 would say, yes, Donald Trump won, but actually it's kind 0:01:57.800 --> 0:02:01.360 of a it's a tech broke coup of the country. 0:02:01.960 --> 0:02:05.080 So we now have the Silicon Valley tech bros are 0:02:05.160 --> 0:02:08.440 really going to be running things, and that was orchestrated 0:02:08.520 --> 0:02:12.480 by Robert F. Kennedy and Nicole Shanahan, who got zero 0:02:12.560 --> 0:02:15.799 coverage during this election. But it was their youth vote 0:02:15.800 --> 0:02:20.720 that swung the vote into Trump's camp. So once we understand, okay, 0:02:21.120 --> 0:02:23.919 their goal is to come in and to bring all 0:02:24.000 --> 0:02:27.640 of their high tech tools to the government databases and 0:02:27.760 --> 0:02:31.360 extract the maximum information so they can reveal what is 0:02:31.480 --> 0:02:34.560 really going on versus what is the perception of what 0:02:34.720 --> 0:02:38.720 is going on. And they are all over getting to 0:02:39.240 --> 0:02:43.240 innovation outcomes that would give us abundance. So we're going 0:02:43.280 --> 0:02:47.840 to see a much faster move into, for example, new 0:02:47.919 --> 0:02:54.000 forms of clean green energy, new ways of managing the 0:02:54.040 --> 0:02:58.280 budget and the deficit, with the knowledge that AI analysis 0:02:58.360 --> 0:03:01.200 brings with it. That's where we start. Now what does 0:03:01.240 --> 0:03:03.239 it mean for the UK? Well, it didn't help. 0:03:03.280 --> 0:03:04.720 Okay, hang on, hang up, Pep, But let me take 0:03:04.760 --> 0:03:07.600 you back one little bit, because that was really interesting. 0:03:07.639 --> 0:03:10.399 So what you're saying here is we haven't really got 0:03:10.400 --> 0:03:13.079 a Trump presidency. We've got a Musk presidency. 0:03:13.639 --> 0:03:16.440 We've got a Trump Musk presidency, and between the two 0:03:16.480 --> 0:03:20.639 of them, Musk is going to be much more important 0:03:20.680 --> 0:03:23.560 and influential on the actual outcomes. 0:03:24.000 --> 0:03:24.320 Okay. 0:03:24.320 --> 0:03:28.680 So that sounds from an economic point of view, incredibly positive. 0:03:29.200 --> 0:03:32.079 So we bring the tech bros in, you get that 0:03:32.120 --> 0:03:35.280 wave of innovation, you get I mean we're being very 0:03:35.280 --> 0:03:40.200 optimistic here, you get massive efficiency drive inside government. So 0:03:40.280 --> 0:03:42.320 maybe you end up with the smaller state, possibly not 0:03:42.360 --> 0:03:45.160 in terms of services, but certainly as a percentage of GDP, 0:03:45.720 --> 0:03:49.560 and that leads you, as it should, to very good 0:03:49.600 --> 0:03:50.440 economic growth. 0:03:51.000 --> 0:03:56.160 Indeed, and add to that, there's a really important element 0:03:56.200 --> 0:03:58.480 of this, which is Trump wants to move the United 0:03:58.520 --> 0:04:02.080 States away from income tax and back to what we 0:04:02.200 --> 0:04:04.480 used to have in the old days, which was revenue 0:04:04.560 --> 0:04:09.720 generated by tariffs and now value added tax. Now, the 0:04:09.760 --> 0:04:12.920 thing that's always prevented the US from having a VAT 0:04:13.040 --> 0:04:15.760 is that every single state argued about how much of 0:04:15.800 --> 0:04:18.839 it should go to them. But now with the sweep 0:04:18.960 --> 0:04:21.240 that we have, it's going to be easier to get 0:04:21.279 --> 0:04:25.119 a negotiated outcome of what's the split between federal and state. 0:04:25.560 --> 0:04:28.040 And so the market needs to think, what does America 0:04:28.120 --> 0:04:31.960 look like if it has less reliance on income tax 0:04:32.040 --> 0:04:35.320 and more reliance on a combination of tariffs and VAT. 0:04:36.160 --> 0:04:37.640 Okay, fascinating, Helen. 0:04:37.720 --> 0:04:40.160 Does that description of what's happened and where we are 0:04:40.200 --> 0:04:40.960 now resonate with you? 0:04:41.880 --> 0:04:44.920 It does, because I certainly agree on the optimism here 0:04:44.920 --> 0:04:50.000 on the macroeconomics about you know, higher growth and probably 0:04:50.040 --> 0:04:52.359 higher inflation. But the two of those going hand in 0:04:52.400 --> 0:04:56.560 hand are no bad thing. I think the key element 0:04:56.640 --> 0:04:58.840 here on this, As you say, we don't want to 0:04:58.880 --> 0:05:02.960 dwell on of what's gone before. But the important message 0:05:03.000 --> 0:05:05.040 to take is that there is a mandate. There is 0:05:05.080 --> 0:05:06.920 a mandate. Now we don't have all the results in, 0:05:06.960 --> 0:05:10.599 but obviously there has been a significant rise in the 0:05:10.640 --> 0:05:15.599 Republican vote across all different kinds of demographics, and that 0:05:15.760 --> 0:05:19.040 is significant because with the mandate you can start to 0:05:19.080 --> 0:05:21.359 do some of the revolutionary things you just heard Pipper 0:05:21.480 --> 0:05:24.159 talking about. This is so important when you take it 0:05:24.200 --> 0:05:26.280 in the context of how much bigger the state has 0:05:26.360 --> 0:05:30.800 become since COVID everywhere you know, everyone has incurred these 0:05:30.839 --> 0:05:33.760 massive amounts of debt. So you know, what are you 0:05:33.760 --> 0:05:35.679 going to do about that? When interest rates are higher 0:05:35.680 --> 0:05:38.240 and the interest you're paying on that debt is eating away? 0:05:38.360 --> 0:05:40.560 What the state can do? What should the state do? 0:05:40.600 --> 0:05:42.279 You know, we're having these really big questions that we 0:05:42.360 --> 0:05:44.720 had maybe thirty forty years ago that we thought had 0:05:44.720 --> 0:05:48.560 been solved, and now they're back. But where I'm optimistic 0:05:48.600 --> 0:05:51.920 for America as a result of this election, and look, 0:05:52.040 --> 0:05:54.159 I'm not. I don't have It doesn't matter what I 0:05:54.160 --> 0:05:57.320 think in terms of my particular politics. It's about the 0:05:57.320 --> 0:06:00.440 cold hard facts of what can be done. You have 0:06:00.480 --> 0:06:02.640 an administration now that he's going to be able to 0:06:04.080 --> 0:06:07.320 approach the economy in a more revolutionary way, that's for sure, okay. 0:06:07.360 --> 0:06:12.600 And that revolution will involve this technological invasion of government, 0:06:13.040 --> 0:06:15.480 and it will involve and that the tariffs are interesting. 0:06:15.920 --> 0:06:19.240 You both talk as though being able to put tariffs 0:06:19.240 --> 0:06:22.240 on important goods is a positive rather than a negative 0:06:22.240 --> 0:06:23.720 for America. 0:06:23.880 --> 0:06:26.080 That doesn't fit with global economic theory. 0:06:26.480 --> 0:06:28.880 No, no, no, it's not that it's a positive. It's 0:06:29.040 --> 0:06:31.560 just a fact that that is where Trump is going 0:06:31.640 --> 0:06:35.640 to go. And he sees tariffs as a negotiating tool, 0:06:36.160 --> 0:06:39.040 so you know, hit China with big tariffs, but if 0:06:39.040 --> 0:06:43.640 they agree to comply on other subjects, then he can 0:06:43.680 --> 0:06:47.040 always lift those And then they start to be a 0:06:47.040 --> 0:06:50.680 combination of not only a useful negotiating tool, but and 0:06:50.760 --> 0:06:53.960 they generate revenue. So I'm not saying, you know, tariffs 0:06:54.040 --> 0:06:57.120 and keep them in place. These will be used in 0:06:57.160 --> 0:07:00.719 a fluid method. And no, they're not great. Jeff Bezo 0:07:00.839 --> 0:07:03.560 sold a ton of his stock right before the election 0:07:04.080 --> 0:07:06.480 because you can see Amazon's going to get whacked by 0:07:06.520 --> 0:07:10.520 these tariffs, right. It's not great from a trade point 0:07:10.560 --> 0:07:13.760 of view. But it is where this president is, and 0:07:13.800 --> 0:07:17.280 it does matter if your revenue sources shift from income 0:07:17.360 --> 0:07:20.200 tax to more in the tariff camp. So I'm just 0:07:20.360 --> 0:07:22.760 saying this is happening, and not necessarily that it's good. 0:07:22.880 --> 0:07:23.680 It's just occurring. 0:07:24.160 --> 0:07:26.240 Also the case with tariffs, you know, they are a 0:07:26.320 --> 0:07:30.840 multi round game, so you know, in one round you 0:07:30.840 --> 0:07:33.520 could really benefit. And as Pip is saying, there, then 0:07:33.560 --> 0:07:35.920 it you know, the game keeps going and maybe it's shifts. 0:07:37.000 --> 0:07:40.440 And also you know there's some elements with the US 0:07:40.480 --> 0:07:43.480 where you know, perhaps if there is more bringing more 0:07:43.480 --> 0:07:47.800 manufacturing home, or there is more innovation done domestically, then 0:07:48.240 --> 0:07:50.120 it's one of those you know, this beg of our 0:07:50.160 --> 0:07:52.360 neighbor idea, But if you're the front runner, then you 0:07:52.400 --> 0:07:54.640 can you can gain some of the advantages. I mean, 0:07:54.680 --> 0:07:56.760 I would just I would broadly say that although yes, 0:07:56.840 --> 0:07:59.680 economic theory generally would suggest tariffs a battle round and 0:07:59.680 --> 0:08:02.560 we're all end up as net losers, some people will 0:08:02.600 --> 0:08:07.880 lose more than others, and the strength and the muscles 0:08:07.960 --> 0:08:11.160 of the US economy and someone who's prepared to do 0:08:11.280 --> 0:08:14.600 deals could well still see America be more of a 0:08:15.120 --> 0:08:16.360 benefiting from that than others. 0:08:16.520 --> 0:08:20.520 Okay, absolutely, I'd throw into that as well. We're in 0:08:20.520 --> 0:08:23.280 a very different world now where the US is able 0:08:23.320 --> 0:08:27.800 to manufacture competitively again, and China has lost its edge. 0:08:27.840 --> 0:08:31.760 It is no longer the cheapest and highest quality place 0:08:31.840 --> 0:08:35.880 to produce things. Mexico has become that location, and so 0:08:36.000 --> 0:08:39.840 the corridor between Mexico and the US that is the 0:08:39.880 --> 0:08:43.000 most important supply chain in the world. Now. It's funny 0:08:43.040 --> 0:08:46.120 because everybody talks about the immigration from Mexico being such 0:08:46.120 --> 0:08:48.360 a big problem, but nobody mentions all the people getting 0:08:48.360 --> 0:08:52.160 in private jets flying down to Mexico to complete what 0:08:52.360 --> 0:08:57.040 is the most sophisticated, highest quality, the most deeply integrated 0:08:57.040 --> 0:09:00.800 supply chain into US manufacturing. And Trump has been crystal 0:09:00.800 --> 0:09:05.560 clear about providing all kinds of government incentives for manufacturing 0:09:05.559 --> 0:09:08.440 to happen inside the US. So then the issue of 0:09:08.559 --> 0:09:12.120 tariffs is very different than it was ten years ago 0:09:12.160 --> 0:09:15.240 when the US had given away all of its manufacturing 0:09:15.360 --> 0:09:16.559 to outsourcing. 0:09:16.920 --> 0:09:18.800 I mean, you and I've talked about that on this 0:09:18.960 --> 0:09:20.240 podcast before. Bit brand. 0:09:20.240 --> 0:09:23.240 Over the years, it's been a relatively fast shift to 0:09:23.320 --> 0:09:26.360 the US fully revamping its industrial base. 0:09:27.000 --> 0:09:31.360 Well, you know, I was involved in manufacturing drones in 0:09:31.440 --> 0:09:35.560 the UK roughly ten years ago, and you know, everybody 0:09:35.559 --> 0:09:39.040 thought I was crazy, because you know, why would you 0:09:39.080 --> 0:09:42.560 even think about competing with the Chinese? And yet what 0:09:42.600 --> 0:09:46.160 I learned is that you can manufacture in the UK 0:09:46.320 --> 0:09:50.560 because the labor component of modern high tech goods is 0:09:50.720 --> 0:09:54.160 ever smaller all the time, So you're not really trying 0:09:54.160 --> 0:09:56.520 to work out the labor piece, you're trying to work 0:09:56.559 --> 0:10:00.800 out the intellectual property piece. And also, you know, there's 0:10:00.840 --> 0:10:03.560 an incentive to make things in the West. In a 0:10:03.600 --> 0:10:06.559 world where you're, let's say, not at war with China, 0:10:06.640 --> 0:10:09.960 but you're in a really hostile confrontation with China, you 0:10:10.000 --> 0:10:12.920 don't want to be reliant on stuff that's made there. 0:10:13.320 --> 0:10:17.920 And so suddenly the whole game shifted towards actually, we 0:10:18.040 --> 0:10:21.080 can manufacture again, and we are in the West. 0:10:22.040 --> 0:10:25.360 It's interesting you both were very clear on your belief 0:10:25.360 --> 0:10:27.319 that Trump was going to win this, and a lot 0:10:27.360 --> 0:10:29.480 of people believe that the Trump trade was to a 0:10:29.559 --> 0:10:33.199 degree in the price. But as the results became clear yesterday, 0:10:33.440 --> 0:10:37.240 markets moved very dramatically. So equity market moved very sharply. 0:10:37.320 --> 0:10:40.960 Bond markets also moved very sharply. Is this temporary or 0:10:40.960 --> 0:10:43.800 do you think we're about to see. Let's take equities 0:10:43.800 --> 0:10:45.920 first to market that we've been talking about for a while. 0:10:46.000 --> 0:10:49.440 It's much too expensive on every single historical measure, much 0:10:49.440 --> 0:10:53.040 too concentrated, and certainly on this podcast incorrectly we've been 0:10:53.040 --> 0:10:55.880 saying people must diversify away from America's sharpers. Are they're 0:10:55.880 --> 0:10:57.160 going to be in a whole pile of trouble because 0:10:57.160 --> 0:10:58.439 they're buying at the top of the market. 0:10:59.440 --> 0:11:00.760 Where does it go from here? 0:11:01.120 --> 0:11:04.960 Well, I would jump in and say again this you 0:11:05.000 --> 0:11:08.040 talk about the historical valuations, but the there is a 0:11:08.160 --> 0:11:11.560 historical moment here where we're having We've had the technological revolution. 0:11:11.679 --> 0:11:13.720 You're hearing from Pipper about how this is kind of 0:11:13.720 --> 0:11:15.960 going into a it's changing. 0:11:15.640 --> 0:11:18.679 Gears now under the under the new administration. 0:11:18.840 --> 0:11:23.880 So I think you can look once more at evaluations 0:11:23.920 --> 0:11:26.360 getting even more extended. To be honest with you, at 0:11:26.440 --> 0:11:29.040 least in the short term. I mean, I could you 0:11:29.080 --> 0:11:31.040 talk about it being in the price but not. I mean, no, 0:11:31.320 --> 0:11:35.040 it couldn't. It can't ever really be because there was 0:11:35.120 --> 0:11:37.880 so much other information being flown around there. I mean, 0:11:37.920 --> 0:11:39.839 I'm surprised at how people thought it was going to 0:11:39.880 --> 0:11:43.280 be close. We never thought that it would be particularly close, 0:11:43.320 --> 0:11:46.640 particularly in the electoral college results. But I think you 0:11:46.679 --> 0:11:49.880 know markets that they never go fully all in on something. 0:11:49.960 --> 0:11:53.119 Apart from that guy on the polymarket trades, the French trades, 0:11:54.280 --> 0:11:57.120 he loved it, but you know that, I think. And also, 0:11:57.160 --> 0:11:58.640 of course you had to see what was going to happen, 0:11:58.640 --> 0:12:00.719 and we still don't exactly know about the House representatives, 0:12:00.720 --> 0:12:02.600 but you know, you had to see the whole sweep 0:12:02.600 --> 0:12:05.920 happen and truly believe in it. So I think there's 0:12:05.920 --> 0:12:07.960 an element of it wasn't all in the price because 0:12:07.960 --> 0:12:10.640 it couldn't be. Some people didn't agree with it, some 0:12:10.679 --> 0:12:14.120 people use different data, and people are only just really 0:12:14.160 --> 0:12:16.240 coming to terms with what it actually means. 0:12:17.520 --> 0:12:19.719 Does this give you a newfound confidence in the US 0:12:19.760 --> 0:12:23.439 equity market and so in any particular areas. 0:12:23.400 --> 0:12:27.360 Yeah, I think that people have not understood what's coming. 0:12:27.480 --> 0:12:31.679 So for example, Trump was crystal clear that he is 0:12:31.720 --> 0:12:36.520 giving Kennedy the mandate to go after pharma and big 0:12:36.559 --> 0:12:40.760 food and he will do that aggressively. So there needs 0:12:40.800 --> 0:12:44.600 to be a repricing in that sector because people haven't 0:12:44.679 --> 0:12:46.760 understand what a big deal that is going to be. 0:12:47.120 --> 0:12:50.640 At the same time, he immediately said, but Bobby gets that, 0:12:50.840 --> 0:12:53.760 but I get to drill, baby, drill right. I'm going 0:12:53.840 --> 0:12:58.160 after the liquid gold, and so that gets repriised because 0:12:58.160 --> 0:13:02.640 we have a presidential commitment the oil sector. I think 0:13:02.679 --> 0:13:05.680 people haven't understood that the tech bros Are actually in 0:13:05.800 --> 0:13:09.400 charge now and therefore, I mean, yesterday the price of 0:13:09.440 --> 0:13:13.240 everything Elon Musk is involved with went up, and that 0:13:13.320 --> 0:13:17.800 makes sense because he's now on the inside of government effectively. 0:13:18.559 --> 0:13:20.680 So I think it's not just up or down, it's 0:13:20.720 --> 0:13:24.920 also within the market what things are overpriced and underpriced. 0:13:25.480 --> 0:13:28.720 I would say this too. This is a moment where 0:13:29.040 --> 0:13:34.080 artificial intelligence and the tools and the capabilities that it 0:13:34.160 --> 0:13:39.040 brings are now going to be unleashed on government efficiency, 0:13:39.520 --> 0:13:43.440 and therefore we're going to see some dramatic changes in 0:13:43.480 --> 0:13:47.760 government policy. People don't understand what those changes are going 0:13:47.840 --> 0:13:51.079 to be. That's a big thing. And a second factor 0:13:51.240 --> 0:13:55.200 is the Chevron decision which the Supreme Court gave us 0:13:55.640 --> 0:14:01.119 before the election, which basically said, whatever Congress passes legislation, 0:14:01.440 --> 0:14:04.280 it then is up to the agencies to interpret what 0:14:04.320 --> 0:14:08.120 the heck does it actually mean. Well, that administrative guidance, 0:14:08.200 --> 0:14:12.480 which has been central to the valuation of companies, is 0:14:12.559 --> 0:14:16.600 no longer permissible. The Supreme Court has said, you cannot 0:14:16.720 --> 0:14:19.880 interpret anymore. You have to go back to Congress and 0:14:19.960 --> 0:14:22.720 ask them what did you mean? And of course Congress 0:14:22.760 --> 0:14:27.520 is not going to reopen everything to answer administrative type questions, 0:14:27.920 --> 0:14:31.280 so there's going to be this blockage impasse as the 0:14:31.320 --> 0:14:34.520 private sector is like, wait, wait, what is the rule? Right? 0:14:34.560 --> 0:14:37.080 What do we actually do? What does this legislation mean? 0:14:37.560 --> 0:14:41.200 And I'm sure there are valuation changes that will arise 0:14:41.920 --> 0:14:45.320 from this new phenomena that people haven't thought through. 0:14:46.160 --> 0:14:50.480 Okay, but across the board, you now have what sounds 0:14:50.520 --> 0:14:52.920 like the perfect combo, which is going to be AI 0:14:53.080 --> 0:14:54.360 plus very cheap energy. 0:14:54.440 --> 0:14:55.640 Yeah, oh yeah. 0:14:55.680 --> 0:14:58.520 And this is one of the things that makes America special, 0:14:58.640 --> 0:15:00.880 certainly makes it special at the moment, is not just 0:15:01.000 --> 0:15:03.360 cheap energy, but a doubling down on cheap energy to 0:15:03.440 --> 0:15:04.960 drive to make it cheaper and cheaper. Of course, we 0:15:05.080 --> 0:15:06.800 think exactly the opposite in the in the UK, and 0:15:06.840 --> 0:15:09.240 we can come to that later. But you know, that 0:15:09.360 --> 0:15:11.600 combo sounds like it might be rather interesting. 0:15:12.400 --> 0:15:16.080 I think this is really an incredible moment in American history, 0:15:17.560 --> 0:15:21.400 again not because of Trump, but because of the door 0:15:21.480 --> 0:15:25.200 being open to technology. Being brought to bear on a 0:15:25.400 --> 0:15:32.000 very rickety, old fashioned, you know, non modernized architecture of government. 0:15:32.040 --> 0:15:34.400 If we can make all that more efficient, there are 0:15:34.440 --> 0:15:38.480 going to be incredible benefits. And this sort of attitude 0:15:38.520 --> 0:15:41.560 to the private sector of telling the American public go build, 0:15:42.080 --> 0:15:44.480 go build, go build anything that you think is going 0:15:44.560 --> 0:15:47.240 to work, and government's going to support that. It's going 0:15:47.320 --> 0:15:50.920 to be friendly to entrepreneurs, it's you know, going to 0:15:51.000 --> 0:15:55.160 be friendly to reshoring on shoring. Yeah, all that has 0:15:55.200 --> 0:15:59.320 to be reflected. And let me add one more thing. Also, 0:15:59.600 --> 0:16:02.200 we have a president who said I will cut a 0:16:02.240 --> 0:16:04.840 deal with the Russians on Ukraine and the war will end, 0:16:05.440 --> 0:16:09.560 and just before the election said again, the US doesn't 0:16:09.600 --> 0:16:12.960 have a national security interest in Taiwan, so let's cut 0:16:12.960 --> 0:16:15.880 a deal with the Chinese over Taiwan. Well, all of 0:16:15.920 --> 0:16:19.200 a sudden, and we've already had these announcements, which I 0:16:19.280 --> 0:16:22.560 keep wondering are they actually are accurate. And much as 0:16:22.560 --> 0:16:26.840 people might really dislike Trump, for no doubt many good reasons, 0:16:27.560 --> 0:16:30.880 this piece is probably the most valuable. If we end 0:16:30.960 --> 0:16:34.040 up in a peace dividend environment, markets are going to 0:16:34.120 --> 0:16:36.160 go up, no two ways about it. 0:16:37.040 --> 0:16:41.560 Okay, interesting, So let's go back a little bit to Helen. 0:16:41.560 --> 0:16:43.960 You were speaking about inflation earlier, about how you get 0:16:43.960 --> 0:16:46.239 growth like this, you will also get inflation. 0:16:46.760 --> 0:16:48.040 Does this idea of. 0:16:48.040 --> 0:16:52.360 A productivity boom alongside cheap energy, does that allay your 0:16:52.360 --> 0:16:53.200 fears in any way? 0:16:53.720 --> 0:16:54.720 Well, I was going to say yes. 0:16:54.760 --> 0:16:57.120 My note of caution will be of course the long 0:16:57.240 --> 0:17:00.840 end of the US bond market, because we're going to 0:17:00.880 --> 0:17:03.640 see a steeper yield curve. That's what you get in 0:17:03.680 --> 0:17:06.320 a reflationary environment. There is an awful lot I talked 0:17:06.320 --> 0:17:08.280 about debt. There's going to be even more debt. 0:17:09.200 --> 0:17:09.720 That is. 0:17:09.840 --> 0:17:11.560 That is the way that it goes when you know 0:17:11.560 --> 0:17:13.679 when you're in this environment. But what's quite interesting, and 0:17:13.680 --> 0:17:16.639 this is why the mandate element is interesting. Of what 0:17:16.680 --> 0:17:19.400 I was saying about about Trump is that if you've 0:17:19.400 --> 0:17:22.560 got a mandate to pursue productive growth, if you can 0:17:22.640 --> 0:17:26.960 credibly grow the productive capacity of your economy, you can 0:17:27.320 --> 0:17:30.800 deal with that debt because you can service it and 0:17:30.800 --> 0:17:32.479 you can grow it and everyone can share in that. 0:17:32.760 --> 0:17:33.760 This is if you like. 0:17:33.880 --> 0:17:37.520 This may raise a little eyebrow from listeners in the UK, 0:17:37.680 --> 0:17:41.359 but you know, this is sort of like the Trust budget, 0:17:41.119 --> 0:17:46.280 but with a mandate, and very importantly, with the dollar 0:17:46.320 --> 0:17:48.879 being the world's reserve currency, I mean, this is the thing. Right, 0:17:48.880 --> 0:17:50.760 people have to hold dollars, people will have to hold 0:17:50.840 --> 0:17:53.040 US treasuries. You know, they do have this ability to 0:17:53.080 --> 0:17:56.000 do it. So I think that is the real key 0:17:56.000 --> 0:17:58.359 to this. But having said having said that, the long 0:17:58.440 --> 0:18:00.520 end of the US bond market, it is a risk 0:18:00.600 --> 0:18:02.919 because with all of that debt issuance, if there is 0:18:03.119 --> 0:18:06.720 any sort of dip in this picture that we're both 0:18:06.760 --> 0:18:12.600 painting I think of a higher growth future, it's difficult 0:18:12.600 --> 0:18:15.520 to make a mistake because once you untether the long 0:18:15.600 --> 0:18:18.679 end of the bond market, then you have serious, big problems, 0:18:18.680 --> 0:18:20.119 and it won't just be a problem for America, be 0:18:20.160 --> 0:18:21.080 a problem for everybody. 0:18:21.960 --> 0:18:24.119 Actually, Helen, let me follow up on that, because I 0:18:24.160 --> 0:18:28.080 think you're right what's happening as America is going to 0:18:28.280 --> 0:18:31.600 attempt to grow its way out of its current debt problem. 0:18:32.000 --> 0:18:36.880 But people think that means government stimulus. They don't understand 0:18:36.920 --> 0:18:42.160 it can mean weightlifting. And what's happening is the leadership 0:18:42.240 --> 0:18:44.960 is saying we're now going to lift weights. We're going 0:18:45.000 --> 0:18:50.360 to get stronger by actually building stuff. Now, will that 0:18:50.400 --> 0:18:53.360 involve some stimulus in some way, no doubt, but that's 0:18:53.400 --> 0:18:57.720 not the reason why this will happen. And when interest 0:18:57.760 --> 0:19:00.320 rates go up, you know, I always say, it's it's like, 0:19:00.560 --> 0:19:02.920 you know, when interest rates are zero and free money 0:19:02.960 --> 0:19:05.680 is being given away, it's like you got to eat 0:19:05.760 --> 0:19:08.840 donuts for free for you know, that whole period, and 0:19:08.880 --> 0:19:11.800 everybody kind of gained weight. Then interest rates start to 0:19:11.800 --> 0:19:13.800 go up, and they're basically being told you've got to 0:19:13.800 --> 0:19:17.080 get on the running machine. And nobody likes it, but 0:19:17.200 --> 0:19:20.040 it makes them healthier. And the reality is the US 0:19:20.119 --> 0:19:24.280 has adjusted to higher interest rates extremely well, and markets 0:19:24.320 --> 0:19:28.520 have invested less in unicorns and more in what i'd 0:19:28.520 --> 0:19:32.600 call workhorses, companies that have genuine, unimpaired cash flows, that 0:19:32.800 --> 0:19:36.320 actually have customers that really make money. And is that 0:19:36.440 --> 0:19:40.000 healthier that we are spending less on the possibility of 0:19:40.040 --> 0:19:42.640 a maybe of some twenty two year old with an idea, 0:19:42.680 --> 0:19:47.280 and more on a business that actually is working. Yes, 0:19:47.480 --> 0:19:50.280 So people are afraid of higher interest rates, but the 0:19:50.400 --> 0:19:52.560 US has a history of being able to manage with 0:19:52.640 --> 0:19:56.560 extremely high interest rates at times. So should we be 0:19:56.640 --> 0:19:58.680 afraid if interest rates are going to go up a bit? 0:19:58.800 --> 0:20:02.520 On all this, the answer is not. If we learn 0:20:02.600 --> 0:20:05.440 to run on the running machine better and we will 0:20:05.840 --> 0:20:09.160 lift those weights better, you will end up stronger. 0:20:09.440 --> 0:20:12.199 Peppa, What do you think the main risks on here? Oh? 0:20:12.280 --> 0:20:18.440 Well, yeah, I don't want to mean it's into negative territory, 0:20:18.520 --> 0:20:21.280 but there has to be some pretty big risks of 0:20:21.640 --> 0:20:22.720 this optimistic view. 0:20:23.080 --> 0:20:26.199 Well yeah, I mean, of course, we still have a 0:20:26.320 --> 0:20:31.000 nation and a world that cannot comprehend what has just happened, 0:20:31.600 --> 0:20:35.560 and so there's a danger that we end up not 0:20:35.800 --> 0:20:40.200 in a civil war in the streets, but an uncivil 0:20:40.280 --> 0:20:45.159 war in terms of law fair and the parties, you know, 0:20:45.240 --> 0:20:48.240 the two sides of politics attacking each other. And I 0:20:48.280 --> 0:20:50.520 do think that fight is very real, but I would 0:20:50.600 --> 0:20:52.960 characterize it as we're no longer in a battle between 0:20:53.000 --> 0:20:55.359 the left and the right in America. We're in a 0:20:55.400 --> 0:20:59.440 battle between the old establishment and the new establishment and 0:21:00.200 --> 0:21:03.879 establishment which is you know, the tech guys but also 0:21:04.080 --> 0:21:10.560 the younger people in government circles. They want innovation and change, 0:21:10.680 --> 0:21:13.440 and the old guard is like, we don't want any changes. 0:21:13.760 --> 0:21:16.560 We got to protect the bureaucracy at all costs because 0:21:16.680 --> 0:21:19.600 that's what I built and that's what's protecting me. So 0:21:19.720 --> 0:21:24.200 that fight is very real. That's a war zone. Now, 0:21:24.320 --> 0:21:27.560 how much impact will it have on markets is a 0:21:27.760 --> 0:21:30.440 different question. I think it's one of those things where 0:21:30.480 --> 0:21:33.320 it's like an invisible war until some event happens and 0:21:33.359 --> 0:21:35.800 then suddenly you get visibility of it. It frightens you, 0:21:36.280 --> 0:21:38.560 markets go wobbly for a minute and then and then 0:21:38.600 --> 0:21:41.520 it goes away. So it's a volatility creator rather than 0:21:41.520 --> 0:21:44.240 a directional outcome creator. 0:21:44.800 --> 0:21:46.840 Yeah, I would, I would pick up on that because 0:21:46.880 --> 0:21:49.480 I've talked there about you know, many times about this mandate. 0:21:49.560 --> 0:21:53.080