WEBVTT - Surveillance: Government Support With Boston Mayor 0:00:09.880 --> 0:00:13.840 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Leye. 0:00:13.960 --> 0:00:16.960 We bring you insight from the best in economics, finance, 0:00:17.040 --> 0:00:23.520 investment and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.319 Bloomberg dot Com and of course on the Bloomberg. Joining 0:00:27.360 --> 0:00:30.560 us now, Peter Robenheimer of Godman Sachs. Peter, always fantastic 0:00:30.560 --> 0:00:33.520 to catch up with you, the chief global equity strategist 0:00:33.920 --> 0:00:38.040 the UK. Beginning the huge vaccination program that's going to 0:00:38.080 --> 0:00:39.839 grip this country in the world, I hope in the 0:00:39.920 --> 0:00:42.040 coming months as well. Top of the line in the 0:00:42.080 --> 0:00:45.599 notes I've got for you, Peter by the UK by 0:00:45.640 --> 0:00:49.919 the foot see why Peter, Well, look, I mean very 0:00:49.920 --> 0:00:55.000 exciting news about about the vaccine um and uh. But 0:00:55.160 --> 0:00:58.400 separately from that, I think the UK economy has been 0:00:58.440 --> 0:01:01.200 one of the worst hit from this pandemic, partly because 0:01:01.200 --> 0:01:04.800 of the makeup of the economy very heavily geared towards services. 0:01:04.920 --> 0:01:09.440 Retail services fall of about eleven percent in GDP this 0:01:09.520 --> 0:01:13.000 year would be the worst annual downturn since the early 0:01:13.040 --> 0:01:16.600 seventeen hundreds, But at the same time we're expecting a 0:01:16.680 --> 0:01:20.200 very strong rebound in the US economy next year over 0:01:20.280 --> 0:01:25.319 seventh cent and at six percent or so alongside that, 0:01:25.360 --> 0:01:29.080 we should get quite a strong rebound in earnings. It's 0:01:29.080 --> 0:01:32.560 a very cheap market. It trades now at a discount 0:01:33.040 --> 0:01:36.640 to the US market on a twenty four month forward 0:01:36.680 --> 0:01:42.520 basis of about thirty you know, and uh with with 0:01:42.560 --> 0:01:46.040 a sort of strong cyclical recovery and a market that's 0:01:46.040 --> 0:01:49.600 heavily geared towards commodities and other cyclicals, and we're bullish 0:01:49.640 --> 0:01:52.480 of commodities. We think it should have produce rebound. They 0:01:52.640 --> 0:01:54.760 just brilliant. Peter Appen I might noted today of the 0:01:54.880 --> 0:01:58.400 w E I screen the basis point difference between standard 0:01:58.360 --> 0:02:00.720 and porters five hundred in the foot see okay, by 0:02:00.720 --> 0:02:02.920 straw hats in winter? You and I read our baroque 0:02:02.960 --> 0:02:05.720 We know that phrase, Peter, Where are the straw hats 0:02:05.760 --> 0:02:09.440 in Asia? Where is the foots? The equivalent opportunity on 0:02:09.480 --> 0:02:14.120 the Pacific rim. Well, we we've been very bullish for 0:02:14.720 --> 0:02:17.000 China for a long time. We're still overweights to China, 0:02:17.040 --> 0:02:20.359 but of course that's more of a growth orientated index, 0:02:20.400 --> 0:02:23.560 being a very heavily geared technology like the US, so 0:02:23.720 --> 0:02:26.360 we'd be tilting wa towards other parts of North Asia 0:02:26.480 --> 0:02:30.720 career for example in particular, you know, very cyclical would 0:02:30.760 --> 0:02:33.680 benefit a lot from a global economic recovery, and Japan 0:02:33.720 --> 0:02:36.480 too for that matter. U. These are markets that have 0:02:36.560 --> 0:02:40.520 tended to lag their more value orientated, more cyclical, and 0:02:40.560 --> 0:02:43.280 more sensitive to global growth. And for that reason, as 0:02:43.320 --> 0:02:46.680 you go into this inflection point of strong growth for 0:02:46.680 --> 0:02:49.560 the first time for many years, we should see the 0:02:49.639 --> 0:02:53.760 leadership shifting. So this is the macro story. I'm wondering 0:02:53.760 --> 0:02:58.519 the technical story, Peter. The composition of US equity indexes, 0:02:58.560 --> 0:03:02.639 have they made them less full of potential for gains 0:03:02.639 --> 0:03:06.040 based on the domination of the main company. Is the 0:03:06.080 --> 0:03:08.280 fact that it's so concentrated at the time. I'm looking 0:03:08.320 --> 0:03:10.960 today for example of Tesla's as they're going to sell shares, 0:03:11.200 --> 0:03:13.920 Tesla's shares fall pre market, and so does the entire 0:03:14.200 --> 0:03:18.120 SMP because now it's included in it. Yes, so in 0:03:18.240 --> 0:03:21.160 some senses, you know, the concentration of the market, which 0:03:21.200 --> 0:03:24.600 has been to its advantage because it's generally been led 0:03:24.600 --> 0:03:28.600 by very fast growing, very large companies, particularly in technology, 0:03:28.880 --> 0:03:32.000 which has been the dominant leading sector for so long, 0:03:32.360 --> 0:03:34.480 in a sense, becomes a little bit of a handicap. 0:03:34.639 --> 0:03:37.080 We're not negative on technology, we think it will still 0:03:37.120 --> 0:03:40.520 do well, but it doesn't have the same leverage to 0:03:41.120 --> 0:03:44.000 a positive inflection point in the global economy that we're 0:03:44.040 --> 0:03:47.720 expecting to see. So those value parts of the market 0:03:47.800 --> 0:03:52.280 that have been very depressed with higher dividend fields, those 0:03:52.360 --> 0:03:56.640 areas which are much more geared into economic growth, would 0:03:56.680 --> 0:03:59.040 tend to recover more quickly, and they tend to have 0:03:59.080 --> 0:04:02.440 a bigger waiting in other markets. Interesting for example, if 0:04:02.440 --> 0:04:05.080 you look at Europe, which has just had its best 0:04:05.280 --> 0:04:10.760 month ever, we saw Europe in November outperforming the US 0:04:11.240 --> 0:04:14.920 by about six percent. That the best relative performance since 0:04:15.200 --> 0:04:17.800 two thousand and nine, when we were last coming out 0:04:17.800 --> 0:04:20.960 of a very deep recession. So again a similar sort 0:04:21.000 --> 0:04:24.960 of pattern playing through and peter ugably with the data 0:04:25.000 --> 0:04:28.760 going in the wrong direction as well, with premys deeply 0:04:28.800 --> 0:04:31.120 stub fifty in the low forties and in some places 0:04:31.120 --> 0:04:33.880 in the thirties as well. How you expect that relationship 0:04:33.920 --> 0:04:38.400 between the economic data and the market to evolve well, 0:04:38.440 --> 0:04:41.960 when we look at the way that equity cycles evolved, 0:04:42.160 --> 0:04:44.520 the first phase of a new cycle, what we call 0:04:44.600 --> 0:04:48.480 the hope phase, is really all about expectations. It nearly 0:04:48.480 --> 0:04:52.359 always starts during a recession when profits are still falling, 0:04:52.920 --> 0:04:55.320 but for some reason investors start to get a little 0:04:55.320 --> 0:04:59.000 bit more optimistic about a recovery, usually because of policy support. 0:04:59.480 --> 0:05:01.800 In this case, it's been a combination of policy support 0:05:01.839 --> 0:05:06.760 and of course the very positive news on vaccines. But 0:05:07.360 --> 0:05:10.200 what we've seen since March is a big expansion of 0:05:10.279 --> 0:05:14.040 valuations across all markets. That's pretty common in that first 0:05:14.120 --> 0:05:17.520 hope phase of the cycle. Once we actually start to 0:05:17.560 --> 0:05:20.400 get the economic recovery coming through at a p m 0:05:20.520 --> 0:05:25.480 I data, stronger profits actually growing, I would expect the 0:05:25.520 --> 0:05:28.720 improvement in equities to slow a lot and valuations to 0:05:28.800 --> 0:05:32.840 start compressing. So many ball markets very front loaded. You've 0:05:32.880 --> 0:05:36.160 got to be in early as that expectation or shift 0:05:36.560 --> 0:05:40.080 really drives valuations higher, and then we would expect to 0:05:40.080 --> 0:05:43.479 see slower returns as we move forward, particularly when you 0:05:43.560 --> 0:05:46.720 consider that valuations are quite high and we're not going 0:05:46.720 --> 0:05:49.720 to have the tail wind in this cycle of ever 0:05:49.800 --> 0:05:53.240 lower interest rates, which we saw as a very dominant 0:05:53.240 --> 0:05:57.640 factor coming out of the financial crisis. We found that 0:05:57.680 --> 0:06:00.240 shift last month in a massive way. Peter Fans Acid 0:06:00.279 --> 0:06:02.360 of catch Up sa as oh I send up set 0:06:02.360 --> 0:06:04.440 a team at Goldman Peter Uppenheim, and had the chief 0:06:04.680 --> 0:06:11.760 global equity strategists. The great things we say with the 0:06:11.839 --> 0:06:15.080 vaccinations as they begin in the United Kingdom said against 0:06:15.080 --> 0:06:17.120 the fact that we haven't seen the worst of it 0:06:17.240 --> 0:06:20.799 yet in many places around the world, including the United States. 0:06:20.880 --> 0:06:22.560 Well we're here in the United States, and again the 0:06:22.560 --> 0:06:25.560 three factors, folks, are cases which I'm not a big 0:06:25.560 --> 0:06:28.839 fan of the mathematics there, but certainly the certitude of 0:06:28.880 --> 0:06:32.760 death and the reality of a hospitalization. Boston is one 0:06:32.760 --> 0:06:36.040 of the great hospital capitals of this nation. He is 0:06:36.080 --> 0:06:38.560 the mayor of the City of Boston. Martin walshon were 0:06:38.600 --> 0:06:41.400 thrilled that he could join us this morning. Marty Walsh, 0:06:41.480 --> 0:06:43.599 we get loads of things to talk about. Let me 0:06:43.640 --> 0:06:47.360 cut to the chase you needed from Washington long ago 0:06:47.480 --> 0:06:50.520 and far away, people like Joe Mowkeley or Tip O'Neill 0:06:50.880 --> 0:06:54.360 and Republicans like minded like them, maybe like Senator Burke 0:06:54.440 --> 0:06:58.279 and others were able to do money from Washington to 0:06:58.400 --> 0:07:02.800 help beleaguered cities. Why can't we do that now? It's 0:07:02.800 --> 0:07:06.720 really unfortunate, you know. Mitch McConnell has has made statements 0:07:06.760 --> 0:07:10.440 that um City should go bankrupt. You can't have that. 0:07:10.440 --> 0:07:12.600 I mean, I was on a conversation last night with 0:07:12.640 --> 0:07:16.160 Mays from around Massachusetts and the need for federal investment 0:07:16.320 --> 0:07:19.120 in in Boston and in the region of the Kalma. 0:07:19.160 --> 0:07:22.240 The Massachusetts is really incredible. But you and I talked 0:07:22.240 --> 0:07:25.560 to our fair about businesses being shut down, hotels not 0:07:25.640 --> 0:07:27.280 being open. We have the same thing here in the 0:07:27.280 --> 0:07:29.840 city of Boston. We are heading to what I think 0:07:29.960 --> 0:07:32.920 is looking like a second search. We're looking at potential 0:07:33.040 --> 0:07:35.320 for the pullbacks here in the city, in the comma 0:07:35.480 --> 0:07:38.000 the Massachusetts and around the country. And when we do that, 0:07:38.120 --> 0:07:41.560 quite honestly, your show is about business Boomberg business, the 0:07:41.600 --> 0:07:43.920 businesses in our city, in our state, in our country. 0:07:43.960 --> 0:07:46.360 Quite honestly, I'm not going to return from this. So 0:07:46.400 --> 0:07:48.720 the federal government needs to act now. The Senate needs 0:07:48.760 --> 0:07:51.280 that now. They need to stop playing politics. They have 0:07:51.360 --> 0:07:54.280 to stop playing partisan politics. Put the American people for us, 0:07:54.360 --> 0:07:57.480 put the American businesses first, put everybody first. And they're 0:07:57.480 --> 0:08:00.720 not doing that. My well, shall want to understand, and 0:08:00.720 --> 0:08:03.520 I want you to paint the picture really clearly. What 0:08:03.640 --> 0:08:07.320 you need from the federal government, not just money dollar amount. 0:08:07.440 --> 0:08:10.760 What you need from the federal government and what happens 0:08:10.800 --> 0:08:13.840 if you don't get it in the next few months. Well, 0:08:13.880 --> 0:08:16.200 first and foremost, we need directions in the federal government, 0:08:16.200 --> 0:08:19.880 I mean the Biden Harris administrations put together at COVID 0:08:19.960 --> 0:08:23.120 nineteen task for us. We need clear direction on which 0:08:23.120 --> 0:08:25.400 way we should go to push back and not pushed 0:08:25.440 --> 0:08:28.800 back on the COVID trices, but to address the COVID crisis. 0:08:29.240 --> 0:08:31.400 Most cities and states around the country have been on 0:08:31.440 --> 0:08:33.800 their own from the very beginning, whether it's been on testing, 0:08:33.800 --> 0:08:36.160 whether it's been on surche whether it's been on hospitalization. 0:08:36.440 --> 0:08:40.080 So in Boston right now, what we're experiencing is we 0:08:40.160 --> 0:08:43.040 can't call it necessarily a second surgeon. We're seeing increased 0:08:43.080 --> 0:08:47.000 numberge significantly increased numbers in Boston, Massachusetts. We are not 0:08:47.160 --> 0:08:50.840 seeing yet increase in hospitalization. We're seeing a number that 0:08:51.200 --> 0:08:53.320 hospitalization is going up, but not to the point where 0:08:53.320 --> 0:08:55.920 it was back in April and May and June where 0:08:55.960 --> 0:08:58.680 we had to cancel all elective surgeries. We're not seeing 0:08:58.720 --> 0:09:01.240 complete shutdowns where we shoul out our businesses down, where 0:09:01.320 --> 0:09:04.680 nobody's working anymore. But we are headed towards that again, 0:09:05.160 --> 0:09:07.199 and this is a failure in the federal government. So 0:09:07.240 --> 0:09:09.200 what the federal government needs to do is come up 0:09:09.240 --> 0:09:11.160 with a policy and what we need to do moving 0:09:11.160 --> 0:09:14.480 our country forward, working with experts like Dr Foci number one, 0:09:14.760 --> 0:09:16.960 number two. The federal government, what they need to do 0:09:17.240 --> 0:09:19.880 is come up with an economic stimulus package that that 0:09:20.080 --> 0:09:21.880 millions of Americans that are going to run out of 0:09:21.920 --> 0:09:25.360 unemployment benefits, small businesses that are gonna have to shut 0:09:25.360 --> 0:09:28.040 their doors permanently. Unless they come up with a package, 0:09:28.200 --> 0:09:30.079 we're gonna lose these businesses and they're not going to 0:09:30.160 --> 0:09:33.200 come back overnight. So the implications of what the coronavirus 0:09:33.240 --> 0:09:35.280 is going to do long term, the long term impact 0:09:35.400 --> 0:09:37.280 is going to have on a city like Boston could 0:09:37.280 --> 0:09:39.520 be detrimental. And it's not just question. You just take 0:09:39.559 --> 0:09:41.640 any city and you plug in the name. And that's 0:09:41.679 --> 0:09:44.080 the challenges that we're all facing across this country. May 0:09:44.160 --> 0:09:46.560 or it's not just the federal government, it's also closer 0:09:46.600 --> 0:09:51.560 to home. For example, your governor, Governor Jollie Baker coming 0:09:51.600 --> 0:09:54.239 out and actually not putting on some of the restrictions 0:09:54.240 --> 0:09:58.480 that people are suggesting are necessary to prevent that increase 0:09:58.520 --> 0:10:00.520 in hospitalizations that you talk a out, do you feel 0:10:00.559 --> 0:10:03.400 like you're being thrown under the bus to take preemptive 0:10:03.440 --> 0:10:07.160 measures that could be accused as being anti business in 0:10:07.240 --> 0:10:09.280 order to stave off to spread because of this political 0:10:09.280 --> 0:10:13.440 hot potato that perhaps isn't being dealt with in other places. Well, 0:10:13.480 --> 0:10:15.480 that's not how I'm not operating that way, and I 0:10:15.480 --> 0:10:17.240 want to be as pro business as possible. But I 0:10:17.240 --> 0:10:19.720 think that it's very important for me here in Boxton. 0:10:19.760 --> 0:10:22.080 We're gonna put the help of people first. But I 0:10:22.120 --> 0:10:24.200 had a conversation with the governor last night. We talked 0:10:24.240 --> 0:10:26.439 a lot about what the next steps need to be. 0:10:26.520 --> 0:10:28.880 We talked about the increase in numbers that we're seeing 0:10:29.080 --> 0:10:32.199 in the state. In Boston we're seeing again in Boston 0:10:32.280 --> 0:10:35.080 hospitals we're not seeing We're not at the capacity level 0:10:35.080 --> 0:10:38.559 where's concerning yet, but that that could change tomorrow. And 0:10:38.760 --> 0:10:41.400 so I'm expecting the government, working with the government, that 0:10:41.440 --> 0:10:44.040 it will come out and make some recommendations or some 0:10:44.080 --> 0:10:46.680 pullbacks pretty soon. Mayor want you to speak of the 0:10:46.720 --> 0:10:50.760 schools nationwide, whether it's the Mathers School, the oldest elementary 0:10:50.800 --> 0:10:54.480 school in this nation in Dorchester, or the Newman's School, 0:10:54.520 --> 0:10:56.760 and that red flag on Newberry Street that you know 0:10:56.920 --> 0:10:59.640 so well. Mayor, I want you to talk right now 0:11:00.040 --> 0:11:03.680 about are you the Blasio in six Republican mayors in 0:11:03.720 --> 0:11:08.440 the Midwest, how you're dealing with this virus and these schools. Well, 0:11:08.480 --> 0:11:10.160 thank you for giving a shout out to my my 0:11:10.240 --> 0:11:13.040 high school, Alm Out of Nomen School on Marvel Street. 0:11:13.080 --> 0:11:15.280 I appreciate that in the maths school right down the 0:11:15.280 --> 0:11:17.600 street from my house and dort sister. What we're doing 0:11:17.720 --> 0:11:20.040 right now in Boston is we have about a d 0:11:20.280 --> 0:11:23.960 eighty the highest needs students inside schools. We'll put a 0:11:23.960 --> 0:11:26.320 lot of lots of safety precautions from even the beginning 0:11:26.320 --> 0:11:27.840 when we opened schools, and then we had to shut 0:11:27.880 --> 0:11:30.240 them down. And we anticipate in the next week or 0:11:30.280 --> 0:11:33.000 so to bring other high needs students back into our 0:11:33.040 --> 0:11:37.120 district before the Christmas break, before the Christmas holidays, and 0:11:37.160 --> 0:11:39.600 then we're gonna come up with a plan for after Christmas. 0:11:39.640 --> 0:11:41.920 We get these numbers down after the holidays, they should say, 0:11:42.080 --> 0:11:44.800 we get these numbers down to try and get all 0:11:44.920 --> 0:11:47.840 most of our kids back into school. These are challenging times. 0:11:47.840 --> 0:11:50.960 Two thirds of our buildings we'll build previously to World 0:11:50.960 --> 0:11:53.199 War Two, so we don't have all of the safety 0:11:53.240 --> 0:11:55.560 ventilation that people would like to have in the building. 0:11:55.840 --> 0:11:58.280 But it is so important in the city of Boston 0:11:58.840 --> 0:12:00.679 that we get our kids back to school. I mean, 0:12:00.960 --> 0:12:02.520 most of our kids have been out of school since 0:12:02.600 --> 0:12:06.040 my sixteen earlier this year, Um, many of those kids, 0:12:06.320 --> 0:12:09.160 I mean, the achievement gap falling behind it is just 0:12:09.160 --> 0:12:12.719 gonna be detrimental for themselves. Infant educational system. We don't 0:12:12.720 --> 0:12:15.000 get them into school soon. Well, so gotta leave it that. 0:12:15.120 --> 0:12:17.480 Just getting some promising news from the FDI. Gotta let 0:12:17.480 --> 0:12:20.920 you go busting Matt Mossy Walsh, please come back soon, said, 0:12:20.960 --> 0:12:27.199 thank you very much. Any number of topics to speak 0:12:27.200 --> 0:12:29.920 of of Washington, John and Lisa right now, Leslie, Vinjamuri 0:12:30.000 --> 0:12:32.920 joins us some Chatham House with a very smart outlook 0:12:32.960 --> 0:12:36.520 from London on American politics. Leslie, We're at the point 0:12:36.640 --> 0:12:41.080 in every new administration where all their supporters figure out 0:12:41.120 --> 0:12:44.960 there's X number of slots and way, way, way more 0:12:45.000 --> 0:12:48.360 than x number of people that want those slots. How's 0:12:48.400 --> 0:12:50.920 that managed? What do you do when you've got only 0:12:51.040 --> 0:12:55.000 so many high visibility cabinet and the other jobs and 0:12:55.080 --> 0:12:59.079 everybody wants to climb on board. Well, and especially I 0:12:59.160 --> 0:13:01.760 think in this admin of Storation, where of course, people 0:13:02.320 --> 0:13:04.920 four years ago thought that they were coming in with 0:13:05.000 --> 0:13:08.119 Hillary Clinton and that didn't happen. They've been waiting in Washington, 0:13:08.720 --> 0:13:10.920 and of course there's certainly a lot of you know, 0:13:10.960 --> 0:13:14.079 moderate Republicans that wouldn't work for Donald Trump, that probably 0:13:14.120 --> 0:13:16.920 would like it. It doesn't look like that's happening. But 0:13:17.040 --> 0:13:20.199 what we are seeing is, you know, those disciplines being made. 0:13:20.240 --> 0:13:22.760 We heard the announcements earlier in the week about the 0:13:22.800 --> 0:13:27.280 economic team. Now it's rumored um that we are seeing 0:13:27.360 --> 0:13:31.520 in the Secretary of Defense and nominee coming soon, Lloyd Austin, 0:13:31.559 --> 0:13:34.720 who would be the first African American Secretary of Defense. 0:13:34.760 --> 0:13:38.920 Remember Tom, that forty three percent of America's active duty 0:13:38.920 --> 0:13:42.560 troops are people of color, and so that would be 0:13:42.600 --> 0:13:47.480 symbolically very important. And as Biden's looking ahead, he's thinking 0:13:47.520 --> 0:13:50.440 about and having experienced people there are plenty of those 0:13:50.440 --> 0:13:53.880 on offer, but about balancing women and men in gender 0:13:54.000 --> 0:13:56.720 and race and all those very important dynamics that have 0:13:56.760 --> 0:13:59.840 been central to his campaign. You mentioned the president elect 0:14:00.120 --> 0:14:04.679 looking ahead. Is his timeline different in a first term 0:14:04.720 --> 0:14:07.719 because of his age, because of the pieces that it's 0:14:07.760 --> 0:14:11.280 perceived he's picking up from President Trump. Is this first 0:14:11.400 --> 0:14:15.120 year the honeymoon and then after the first year, Is 0:14:15.160 --> 0:14:18.960 that timeline unique? I don't think, you know, usually we 0:14:19.040 --> 0:14:21.480 think about the first year the certainly the first one 0:14:21.920 --> 0:14:24.080 days being a honeymoon period. I don't think that we 0:14:24.120 --> 0:14:27.440 can even conceive of American politics in the same way 0:14:27.480 --> 0:14:30.320 anymore than four years of a lot of disruption, a 0:14:30.360 --> 0:14:34.200 lot of dysfunctionality. And now we're looking at the tragedy 0:14:34.280 --> 0:14:37.320 of more than two thousand Americans dying every single day, 0:14:37.360 --> 0:14:41.240 the virus not under control, the need for an economic recovery, 0:14:41.360 --> 0:14:45.440 this very significant question of when the vaccinations will be 0:14:45.520 --> 0:14:48.680 rolled out, So there's no honeymoon period for the Biden team. 0:14:48.680 --> 0:14:52.120 I think they're moving ahead very quickly UM And as 0:14:52.200 --> 0:14:55.640 you know, the Democrats and the Republicans remain in campaign 0:14:55.680 --> 0:15:00.000 mode because those January five elections in Georgia will determine 0:15:00.000 --> 0:15:03.080 and who controls the Senate, and that will be absolutely 0:15:03.160 --> 0:15:06.640 crucial to Biden's ability to govern. So I think it's 0:15:06.720 --> 0:15:10.160 really moving ahead very quickly, not only with the appointments, 0:15:10.200 --> 0:15:13.960 but also with UM beginning to get the agenda up 0:15:13.960 --> 0:15:16.200 and running. And I think we can see we will 0:15:16.240 --> 0:15:19.960 expect a number of very significant announcements on that January 0:15:20.040 --> 0:15:25.600 twenty a, President Biden taking the US back into Paris, 0:15:25.640 --> 0:15:28.160 back into the w h O, possibly back into the 0:15:28.200 --> 0:15:31.200 Iran Deal. And then there's a big question, of course, 0:15:31.240 --> 0:15:34.880 of how he manages the US China confrontation, and that's 0:15:34.880 --> 0:15:38.520 something that he has a lot of bipartisan support behind 0:15:38.680 --> 0:15:42.080 being very tough. And if Congress is not the Senate 0:15:42.200 --> 0:15:45.040 is not in his hands, I think China will be 0:15:45.160 --> 0:15:49.000 the foil for perhaps getting a lot of domestic legislation 0:15:49.080 --> 0:15:51.200 through the on the basis of the need that America 0:15:51.280 --> 0:15:57.240 needs to invest in its domestic economy to make it competitive. So, Leslie, 0:15:57.280 --> 0:15:59.920 let's be clear about this. This sounds very familiar, sound 0:16:00.040 --> 0:16:03.160 like what we've experienced over the last few years. Do 0:16:03.200 --> 0:16:05.240 you see a big difference between the approach of this 0:16:05.280 --> 0:16:10.760 administration and the next administration on the issue of China. Absolutely. 0:16:10.880 --> 0:16:13.240 I mean, you're right that people want to be tough 0:16:13.280 --> 0:16:16.840 on China. More than sevent Americans have an unfavorable view 0:16:16.880 --> 0:16:19.520 towards China. Nobody wants to go back to free and 0:16:19.560 --> 0:16:21.840 open trade and thinking that China is going to change. 0:16:22.080 --> 0:16:23.800 But I think we will see a different approach We're 0:16:23.800 --> 0:16:25.880 going to see a tougher approach. We're going to see 0:16:25.880 --> 0:16:29.160 a Biden administration that is going to push far beyond 0:16:29.280 --> 0:16:33.440 tariffs on structural reforms and market access, on questions of 0:16:33.480 --> 0:16:35.960 I P and technology transfer, all those things that we've 0:16:36.000 --> 0:16:39.080 been hearing about but not seeing a lot of movement on. 0:16:39.760 --> 0:16:42.800 And of course, as we've seen with those appointments of 0:16:42.840 --> 0:16:45.320 Tony B. Lincoln and Jake Sullivan, these are people who 0:16:45.360 --> 0:16:49.120 care a lot about the democracy question, the values question. 0:16:49.560 --> 0:16:55.240 B Lincoln talks about techno democracies and techno autocracies, and 0:16:55.280 --> 0:17:00.080 so that question of technology and the standards and rights 0:17:00.200 --> 0:17:04.439 um and norms that surround the use and exchange of 0:17:04.440 --> 0:17:07.200 technology is going to really one of the key items 0:17:07.200 --> 0:17:08.919 that I think that the Biden team is going to 0:17:08.960 --> 0:17:11.399 take on over the next four years. But even in 0:17:11.440 --> 0:17:13.960 the in the first in the first year, let's be 0:17:14.080 --> 0:17:15.920 great to catch up. We appreciate your time, and I'm sorry, 0:17:15.960 --> 0:17:18.440 it's sure. Let's leave Inja Murray, the channel house head 0:17:18.440 --> 0:17:24.600 of US and America's program. Do you realize you've got 0:17:24.680 --> 0:17:28.120 radio listeners nationwide turning off the station because you've done 0:17:28.160 --> 0:17:30.960 more Brexit in the last six seconds than you have 0:17:31.080 --> 0:17:33.680 in the last week. That's why I'm going to move 0:17:33.720 --> 0:17:37.040 on straight away rate with Michael Clotty of UBS. He's 0:17:37.040 --> 0:17:39.960 the head of US rate strategy. Michael, great to catch 0:17:40.040 --> 0:17:42.800 up with this. Walk me through this treasury market. I 0:17:42.840 --> 0:17:45.840 have to say, the division into next year isn't that great? 0:17:46.040 --> 0:17:48.119 Once twenty on a ten year yield seems to be 0:17:48.160 --> 0:17:50.560 the average forecast out there at the moment. Where are 0:17:50.600 --> 0:17:53.600 you on things, Michael, Yeah, I think we're gonna get 0:17:53.600 --> 0:17:55.640 a little cheaper than that. So one twenty isn't too 0:17:55.640 --> 0:17:59.240 far away from way the markets priced in right now. Um. 0:17:59.359 --> 0:18:01.640 And uh so we think we're going to get up 0:18:02.280 --> 0:18:04.960 closer to the one fifty by the end of the year. Um. 0:18:05.080 --> 0:18:08.360 I think that will get some you know continued. Uh. 0:18:08.800 --> 0:18:12.040 Good news on the vaccine front um. That's going to 0:18:12.160 --> 0:18:15.320 allow things to be bright enough for the Fed to 0:18:15.359 --> 0:18:17.480 start tapering. We lose a little bit of support to 0:18:17.520 --> 0:18:19.640 the back end of the curve and so we sell 0:18:19.720 --> 0:18:21.960 off a bit more than the forwards, but not a 0:18:22.000 --> 0:18:24.879 colossal sell off. Here are you hoping to get a 0:18:24.880 --> 0:18:28.600 green light from the Federal Reserve next week? So the 0:18:28.840 --> 0:18:32.040 big question with the Fed is whether they extend the 0:18:32.040 --> 0:18:34.760 maturity next of their purchases. So this year when the 0:18:34.800 --> 0:18:38.120 FED started buying, the treasure market was really broken. FED 0:18:38.200 --> 0:18:41.320 had to come in and buy shorter maturities to help 0:18:41.320 --> 0:18:44.160 with leave some of the same and the treasury market. Um, 0:18:44.240 --> 0:18:48.959 they're continuing to buy very short maturities, which doesn't make 0:18:49.000 --> 0:18:52.000 a lot of sense. Um. You know. The way that 0:18:52.359 --> 0:18:57.359 chewee helps is you're taking a asset with a longer 0:18:57.400 --> 0:18:59.440 maturity out of the market, You're replacing it with a 0:18:59.520 --> 0:19:03.360 reserve chat an overnight maturity um, so that it's really 0:19:03.400 --> 0:19:06.960 a maturity transfer. The way it's working well, you know, 0:19:07.040 --> 0:19:10.160 buying two year notes instead of ten year notes big 0:19:10.160 --> 0:19:13.280 difference than that maturity transfer. Um. You know. The question 0:19:13.320 --> 0:19:16.080 is when the FED stops buying the short stuff because 0:19:16.080 --> 0:19:18.880 the treasury market is not broken anymore, and starts focusing 0:19:18.880 --> 0:19:21.920 on the longer returnities, how much michael have longer term 0:19:22.000 --> 0:19:25.159 yields been well behaved because of the expectation of FED buying, 0:19:25.520 --> 0:19:28.200 in which case FED buying won't actually tip the tide 0:19:28.200 --> 0:19:30.959 in any way or make a difference. Yeah, I think 0:19:31.000 --> 0:19:32.919 you're right that. I think this is what's been holding 0:19:33.000 --> 0:19:36.640 us below one here. Expectations that the Fed will help 0:19:37.320 --> 0:19:40.560 next week, UM, you know, so I think that, you know, 0:19:40.640 --> 0:19:43.320 hard to achieve en up beyond one until we get 0:19:43.359 --> 0:19:45.720 past that meeting. And then as we go into next year, 0:19:46.040 --> 0:19:48.080 you know, even with a little bit of a maturity 0:19:48.080 --> 0:19:50.760 centerm the Fed, you know that what the Feds buying 0:19:50.960 --> 0:19:53.800 is still peanuts relative to what the Treasury issuing. You know, 0:19:53.840 --> 0:19:56.520 this year we've got a new twenty year note, massive 0:19:56.600 --> 0:20:00.760 increases and kind of thirties UM, So the fits taking 0:20:00.760 --> 0:20:03.359 out it's still tiny relative to what the Treasury is 0:20:03.400 --> 0:20:05.800 putting in. So we think, you know, he'll you'll still 0:20:05.800 --> 0:20:10.320 see that upward pressure on Michael Clady. Good morning, Tom Keenan, 0:20:10.359 --> 0:20:13.920 New York. It's outlook time where people have to game 0:20:13.960 --> 0:20:16.240 out movement of the tenure yield and use you know, 0:20:16.359 --> 0:20:20.679 with your legendary experience, everybody always gets it wrong. What's 0:20:20.680 --> 0:20:23.920 the color of getting it wrong this year? Is it 0:20:24.040 --> 0:20:27.880 undershooting or once again just gaming out higher interest rates 0:20:27.880 --> 0:20:32.560 that don't happen? So I think that, you know, I 0:20:32.600 --> 0:20:34.840 guess it, It depends. I think the greater pain in 0:20:34.880 --> 0:20:39.280 the rates world would be that we rally back down 0:20:39.720 --> 0:20:42.800 UM and get back to very low yields UM. You know, 0:20:42.840 --> 0:20:45.320 you can see a lot of stress on insurance companies, 0:20:45.359 --> 0:20:49.640 banks um in that low yield environment. Uh so I think, 0:20:49.840 --> 0:20:53.439 you know, for them, the risk is that uh you know, 0:20:53.520 --> 0:20:56.320 things are are not as good and we rally back. 0:20:57.680 --> 0:20:59.840 I's gonna get with today on some of the headlines 0:21:00.040 --> 0:21:01.679 us in the Bloomberg. It comes from the FDA. The 0:21:01.720 --> 0:21:04.600 FDA has posted the briefing documents on the FISER beyond 0:21:04.600 --> 0:21:08.640 Tech COVID vaccine. This is the report available available ahead 0:21:08.640 --> 0:21:11.040 of the December tenth Advisory Panels. So in a couple 0:21:11.080 --> 0:21:13.840 of days time, tom they take this report and they 0:21:13.880 --> 0:21:16.320 could possibly make a recommendation as to whether they will 0:21:16.320 --> 0:21:18.680 approve this vaccine in the same way that the UK 0:21:18.840 --> 0:21:21.640 has done. So that report has been posted by the FDA. 0:21:21.960 --> 0:21:24.120 They go on to say that FISER has given adequate 0:21:24.160 --> 0:21:27.280 information on vaccine quality according to this staff report. And 0:21:27.320 --> 0:21:29.840 some of these headlines are gonna dribble through drip, drip 0:21:29.920 --> 0:21:32.439 drip of the next hour or so ahead of that 0:21:32.560 --> 0:21:37.800 December tenth Advisory Panel meeting, and that's the important date Thursday. 0:21:37.840 --> 0:21:39.800 But we might get an indication as to where there's 0:21:39.840 --> 0:21:41.920