WEBVTT - Bloomberg Surveillance October 17 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.720 with Lisa Bromwitz and Amrie Hortern. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify, or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.440 Terminal and the Bloomberg Business App. Here's the lacest this morning. 0:00:37.440 --> 0:00:41.000 The Vice President putting some distance between herself and President Biden, 0:00:41.040 --> 0:00:43.559 with election day less than three weeks away, and new 0:00:43.560 --> 0:00:46.200 polling from Fox News showing Donald Trump leading Kamala Harris 0:00:46.400 --> 0:00:48.639 by two points. Joining us now to discuss a good 0:00:48.640 --> 0:00:51.240 friend of this program over the years, the Governor of Connecticut, 0:00:51.440 --> 0:00:51.960 Ned Lamont. 0:00:52.000 --> 0:00:52.280 Governor. 0:00:52.280 --> 0:00:53.720 It's good to see us, sir, I see you, and 0:00:53.760 --> 0:00:56.080 welcome back to the program. She's taking some risks, some 0:00:56.200 --> 0:00:58.560 risks that maybe this campaign wouldn't have taken maybe a 0:00:58.600 --> 0:01:00.000 month ago. Do you like what you see? 0:01:00.200 --> 0:01:02.840 Yeah, take those risks, go right into the lions. Den 0:01:02.920 --> 0:01:05.120 go right there with Brett Baer, go back and forth. 0:01:05.640 --> 0:01:08.440 You know, Donald Trump won't even debate again, and she's 0:01:08.480 --> 0:01:09.520 having a pretty good debate. 0:01:09.600 --> 0:01:10.360 I appreciate that. 0:01:10.800 --> 0:01:13.880 Is it too late though? Should she have done this 0:01:14.000 --> 0:01:16.840 interview two weeks a month ago the week. 0:01:16.920 --> 0:01:19.600 Been a candidate for ninety days. I think she's moving along. 0:01:19.680 --> 0:01:22.760 I mean, Donald Trump won't go on ABC without seeing them, 0:01:22.800 --> 0:01:24.759 So I think she's doing okay. 0:01:24.959 --> 0:01:28.000 Do you think she's evolving as a candidate? Then over 0:01:28.040 --> 0:01:30.520 the course we've seen since July, I. 0:01:30.400 --> 0:01:34.640 Think so everything has been so compressed for her and Tim. 0:01:35.040 --> 0:01:36.480 But now we're in the final stretch. 0:01:37.120 --> 0:01:41.040 So this weekend you're hosting a fundraiser for Governor Walls, 0:01:41.040 --> 0:01:44.360 her running mate. Have you been happy with his performance 0:01:44.440 --> 0:01:46.640 as her running mate? Supporting Kamala Harris? 0:01:47.120 --> 0:01:49.240 Look, I love Tim. He and I were elective at 0:01:49.280 --> 0:01:52.880 the same time, all the governors, both sides the aisle. 0:01:52.880 --> 0:01:56.120 He's so genuine and he's so real. We like governors 0:01:56.120 --> 0:01:58.240 by the way. You know, governors have to balance budgets 0:01:58.240 --> 0:02:00.000 and live in the real world, unlike these other guy. 0:02:01.080 --> 0:02:03.960 I think he's a going to be a great vice president. 0:02:04.240 --> 0:02:06.880 So you're praising some of his work. He used to 0:02:06.880 --> 0:02:09.200 be when he was in Congress, a blue dog Democrat, 0:02:09.360 --> 0:02:14.240 a moderate. As a governor, he's very liberal, legalizing marijuana 0:02:14.480 --> 0:02:19.520 licenses to undocument immigration immigrants in his state. Do you 0:02:19.639 --> 0:02:23.200 think that given his record as governor, he was the 0:02:23.280 --> 0:02:27.440 right choice for a general election when the Democratic Party 0:02:27.480 --> 0:02:30.240 needed to be seen as coming into the middle, especially 0:02:30.320 --> 0:02:34.040 after VP Harris's flop flops from her primary. 0:02:35.120 --> 0:02:35.480 I don't know. 0:02:36.680 --> 0:02:39.040 Legalizing marijuana does that make you liberal? I thought it 0:02:39.080 --> 0:02:41.280 was sort of libertarian. I think you see that happening 0:02:41.280 --> 0:02:43.880 in states across the country, you know, fighting for a 0:02:43.919 --> 0:02:47.200 woman's right to choose, that's about freedom. I don't think 0:02:47.240 --> 0:02:50.440 that's particularly liberal. Like I said, he balances budgets, so 0:02:50.480 --> 0:02:53.200 I think he's got a pretty good balance there. He's pragmatic. 0:02:53.600 --> 0:02:56.480 Well, there's a question here about how much the Harriswalds 0:02:56.520 --> 0:02:58.720 campaign is really going to reach out to business and 0:02:58.760 --> 0:03:00.720 Tim Wats is going to Benish Cantiquett, where he's. 0:03:00.600 --> 0:03:02.040 Going to be talked with a lot of business people. 0:03:02.320 --> 0:03:04.919 How are they responding to some of their concerns, whether 0:03:05.000 --> 0:03:09.560 it's about tax increases, whether it's about having a viable 0:03:09.800 --> 0:03:12.960 immigration policy, or frankly, when it comes to antitrust and 0:03:12.960 --> 0:03:15.239 the ability to understand whether or not Lina CON's canerman 0:03:15.280 --> 0:03:15.840 in the FTC. 0:03:17.320 --> 0:03:19.720 I like the fact they're reaching out the business, you know, 0:03:19.760 --> 0:03:22.280 I think the Biden administration was a little more ideological. 0:03:22.320 --> 0:03:26.200 I think Harris Waltz are much more pragmatic. I've seen 0:03:26.240 --> 0:03:29.080 that crypto. I've seen that what they want to do 0:03:29.080 --> 0:03:31.640 with capital gains and not do as much as President Biden. 0:03:31.919 --> 0:03:34.639 They take the deficit very seriously, as do I. Nobody 0:03:34.680 --> 0:03:37.680 else seems to. But I think their outreach makes sense, 0:03:37.720 --> 0:03:40.080 and I'm proud he's coming to Greenwich to tell a story. 0:03:40.320 --> 0:03:41.480 Do you have a sense of what they're going to 0:03:41.480 --> 0:03:42.560 do with any trust? 0:03:43.920 --> 0:03:46.400 I don't. That's not sort of an insight I have. 0:03:46.560 --> 0:03:49.800 My instinct is if they talk about price increases, they 0:03:49.800 --> 0:03:52.720 worry a little bit about monopoly pricing and pricing power, 0:03:53.040 --> 0:03:56.120 so probably they'll be strict when it comes. 0:03:56.000 --> 0:03:56.720 To anti trust. 0:03:57.040 --> 0:03:59.240 One thing that you've talked a lot about with US 0:03:59.480 --> 0:04:01.840 is this quest around immigration, and you're talking about how 0:04:01.840 --> 0:04:05.800 there are people coming to Connecticut. That made you really 0:04:05.880 --> 0:04:09.160 got check some of the assumptions. Do you think that 0:04:09.240 --> 0:04:12.560 there is anything further that they can do? Tim Walton 0:04:12.600 --> 0:04:16.200 and Kamala Harris campaign to sort of change the narrative 0:04:16.600 --> 0:04:19.880 that their immigration policies led to a lot of problems. 0:04:21.120 --> 0:04:22.920 I start with the fact that this is a country 0:04:22.960 --> 0:04:27.360 built on immigration, legal immigration, that's part of our economic strength, 0:04:27.520 --> 0:04:30.520 unlike other parts of the world, people keeping out. 0:04:31.000 --> 0:04:31.880 If they had asked me. 0:04:31.920 --> 0:04:34.159 The last night was difference between you and President Biden, 0:04:34.440 --> 0:04:37.359 I would have said, mister Briden, give me the tools 0:04:37.440 --> 0:04:39.680 I need to shut down the border to illegal immigration. 0:04:39.760 --> 0:04:41.400 I think that's what Kama should have said, and I 0:04:41.400 --> 0:04:42.520 think that's what she believes. 0:04:43.040 --> 0:04:44.760 Why do you think she won't say it? I think 0:04:44.760 --> 0:04:47.000 this is the problem that people have right now. A 0:04:47.080 --> 0:04:50.000 frame as follows. You say she's pragmatic. You say that 0:04:50.040 --> 0:04:52.480 both pragmatic. Other people might use a less kind phrase. 0:04:52.520 --> 0:04:54.920 They might say she's a shape shifter, she just wants 0:04:54.960 --> 0:04:58.000 to get elected. Untrustworthy. These are the values, the thoughts, 0:04:58.040 --> 0:05:00.200 the policies of just five years ago, and now some 0:05:00.440 --> 0:05:03.560 there overhea How can we trust them? What's the message 0:05:03.600 --> 0:05:05.000 to the electorate without in mind? 0:05:06.800 --> 0:05:10.799 What talk about a shape shifter? Talk about no principles. 0:05:10.839 --> 0:05:13.919 We're talking about Donald Trump there. Look, I think you 0:05:13.960 --> 0:05:15.800 know where she stands on these issues. Look, she was 0:05:15.800 --> 0:05:19.200 a vice president, Jonathan, vice president's not worth a war, 0:05:19.279 --> 0:05:23.000 buncket a spit, and so every saying, boy, you were 0:05:23.040 --> 0:05:25.680 on board with the Biden administration, that's tot of your 0:05:25.800 --> 0:05:28.640 job as vice president. Now she's been a candidate for 0:05:28.720 --> 0:05:30.680 ninety days and I think she's showing her stuff. 0:05:30.720 --> 0:05:33.680 But if you think the vice president's job is that important, 0:05:33.880 --> 0:05:36.440 then how is she qualified for this job? If she's 0:05:36.520 --> 0:05:39.800 running on some of her time in office as vice president. 0:05:42.040 --> 0:05:42.960 I think it's a pretty. 0:05:42.760 --> 0:05:46.400 Good training ground, don't you. I mean jd Vance stopped 0:05:46.400 --> 0:05:48.440 by the US Senate for a cup of coffee. You know, 0:05:48.520 --> 0:05:51.000 she's been a front and center as a senator. She's 0:05:51.000 --> 0:05:54.040 been front and center as vice president. I think she's 0:05:54.040 --> 0:05:55.960 got the training, the experience she needs to be a 0:05:56.000 --> 0:05:56.799 really good president. 0:05:57.040 --> 0:05:59.840 So some states are already voting. I know Connecticut and 0:05:59.880 --> 0:06:01.359 I you can go out and vote on Monday. I 0:06:01.400 --> 0:06:03.040 saw that you said you're going to vote on Monday, 0:06:03.080 --> 0:06:03.799 getting there early. 0:06:04.000 --> 0:06:05.240 What does she need to. 0:06:05.160 --> 0:06:09.160 Do as really people are already out and about voting. 0:06:09.480 --> 0:06:12.440 It's not like she has time before November fifth. The 0:06:12.520 --> 0:06:14.719 time is now, the election has already started. 0:06:16.880 --> 0:06:17.679 I'm just urging. 0:06:18.240 --> 0:06:20.359 Look, my friends, I'm a little worried, you know, the 0:06:20.400 --> 0:06:23.559 guys in sort of finance world that I know. Maybe 0:06:23.560 --> 0:06:26.440 it wasn't so bad under the Trump administration. Maybe I'll 0:06:26.440 --> 0:06:29.080 sit this one out like drunken Miller. No way, this 0:06:29.240 --> 0:06:32.800 is a transcendental of vote we've got coming up here 0:06:32.880 --> 0:06:35.840 right now. I came in the office under President Trump. 0:06:36.440 --> 0:06:38.520 The government was shut down. Remember every time you didn't 0:06:38.520 --> 0:06:40.320 get your own way, you shut down the government. 0:06:40.680 --> 0:06:40.880 You know. 0:06:40.960 --> 0:06:43.360 Then we had COVID and he said, we don't have 0:06:43.440 --> 0:06:45.200 a stockpal you don't have any stock. Oh, we had 0:06:45.200 --> 0:06:47.440 to go to China to buy our masks. It was 0:06:47.560 --> 0:06:49.839 dysfunctional there for two and a half years. 0:06:50.200 --> 0:06:51.640 This election is that important. 0:06:51.640 --> 0:06:54.560 I can't stand people saying, maybe i'll set this one out. 0:06:54.800 --> 0:06:56.520 Let's get into some of the issues. You could have 0:06:56.600 --> 0:06:58.960 very low unemployment right in a study of Connecticut, it's 0:06:58.960 --> 0:07:01.680 something around three and a half pounder finance because people 0:07:01.720 --> 0:07:03.080 have been leaving the state. 0:07:03.480 --> 0:07:04.719 We all want legal immigration. 0:07:04.800 --> 0:07:06.640 In fact, the former president of SOLF, Donald Trump, in 0:07:06.640 --> 0:07:08.760 a convers saction with essentially talked about that that he 0:07:08.839 --> 0:07:12.080 wants legal immigration. How are we going to achieve that 0:07:12.120 --> 0:07:14.160 as a country? It's something that I think a lot 0:07:14.160 --> 0:07:16.080 of us can agree on. That's what we want. I 0:07:16.120 --> 0:07:18.240 went through a very long process to be here. I 0:07:18.280 --> 0:07:20.480 know how difficult it is. How do we make it 0:07:20.520 --> 0:07:23.520 easy for people to come here legally to fill the 0:07:23.600 --> 0:07:26.200 job openings that you have in a state like Connecticut. 0:07:26.760 --> 0:07:28.800 Well, first of all, challenge your bretech. So we have 0:07:29.200 --> 0:07:31.480 a lower unemployment rate than the rest of the countries, 0:07:31.520 --> 0:07:33.200 not because people are leaving the state. In fact, for 0:07:33.240 --> 0:07:35.640 the first time in the generation, people are moving in 0:07:35.720 --> 0:07:37.760 the state. Some of them are coming from New York, 0:07:37.800 --> 0:07:38.440 and I'm. 0:07:38.320 --> 0:07:40.080 Really proud of that fact. 0:07:40.360 --> 0:07:42.720 How do you keep that economic momentum going? You know, 0:07:42.800 --> 0:07:46.720 for us manufacturing on shoring manufacturing, we have a lot 0:07:46.720 --> 0:07:47.840 in the defense trade. 0:07:48.040 --> 0:07:48.600 They're growing. 0:07:48.640 --> 0:07:51.760 It's a bigger piece of our economy. Fintech and life 0:07:51.800 --> 0:07:54.880 sciences sort of the next generation. We had a lot 0:07:54.920 --> 0:07:57.080 of old industries Jonathan, right, that was sort of our 0:07:57.160 --> 0:07:58.600 reputation no longer. 0:07:59.000 --> 0:08:01.400 Yeah, But you're talking about what policy is going forward? 0:08:01.760 --> 0:08:04.360 Can there be to be implemented that actually can be 0:08:04.800 --> 0:08:06.600 viable immigration policies? 0:08:06.800 --> 0:08:08.400 I guess the bigger takeaway is you. 0:08:08.320 --> 0:08:10.440 Said that a lot of your business friends and colleagues 0:08:10.760 --> 0:08:12.800 are on the fence, like Duck and Miller, don't want 0:08:12.800 --> 0:08:15.480 to vote necessarily feel like it's an equal chance between 0:08:15.480 --> 0:08:18.440 the two. What do you think is driving them to 0:08:18.480 --> 0:08:20.239 feel that way? What do you think is the most 0:08:20.240 --> 0:08:23.720 misunderstood policy that you kind of want to underscore and 0:08:23.760 --> 0:08:24.920 want them to understand. 0:08:26.800 --> 0:08:27.440 I think. 0:08:28.840 --> 0:08:31.400 For a lot of those folks, cut my taxes is 0:08:31.600 --> 0:08:34.200 kind of determinant of there, despite what it means to 0:08:34.240 --> 0:08:37.080 the deficits, despite what it means to make in investments. Look, 0:08:37.160 --> 0:08:39.320 you know what I like about commloss. She's not talking 0:08:39.360 --> 0:08:42.040 about handing out money to people. She's talking about opportunities. 0:08:42.080 --> 0:08:44.199 She's saying with daycare, I'm going to give you the 0:08:44.240 --> 0:08:47.559 opportunity to start your own business. It's an ownership economy. 0:08:47.559 --> 0:08:50.240 I think it's a different field than we had for 0:08:50.280 --> 0:08:51.160 the last four years. 0:08:51.320 --> 0:08:52.920 Governor, you're always generous with your time. 0:08:52.920 --> 0:09:01.800 It's going to see you against I did against sing 0:09:05.200 --> 0:09:07.120 Thank Scutty, join us nap for what thank good morning 0:09:07.160 --> 0:09:09.680 to you, good morning, John, good to you. Netflix reporting 0:09:09.679 --> 0:09:11.160 after the closed a little bit likes we won't do 0:09:11.200 --> 0:09:13.160 single names for you, but the emphasis starts to shift 0:09:13.160 --> 0:09:15.760 away from the financials and towards some of the media 0:09:15.840 --> 0:09:18.760 tech type players. How high is the bar for the 0:09:18.800 --> 0:09:20.560 rest of the market after what we've seen from the 0:09:20.600 --> 0:09:22.080 financials early in the last week. 0:09:22.280 --> 0:09:24.400 Well, we've gotten off to a great starter, as you 0:09:24.440 --> 0:09:27.319 know in the last week with banks and even seeing 0:09:27.320 --> 0:09:30.079 some of the consumer plays as well. So the bar 0:09:30.280 --> 0:09:32.840 is hi, Jonathan, And one thing we've been talking about 0:09:33.200 --> 0:09:36.360 is respecting that rotation since July and August. It has 0:09:36.400 --> 0:09:40.079 been fairly consistent since then that you've been seeing the 0:09:40.200 --> 0:09:43.559 value in cyclical sectors responding better to their earnings results. 0:09:43.600 --> 0:09:45.200 The tech story has been a mess. I think this 0:09:45.240 --> 0:09:48.680 week's a fantastic example of that. ASML drops, everyone's foot 0:09:48.720 --> 0:09:52.120 TSMC comes out, Everything's okay. Where is that trade now? 0:09:52.520 --> 0:09:53.760 It is a mixed bag. 0:09:53.840 --> 0:09:55.880 At the moment, it was the only game in town 0:09:56.000 --> 0:09:59.079 for eighteen months. So you're seeing the broadening out of 0:09:59.160 --> 0:10:02.559 earnings into other sectors. We talked about financials. Industrials is 0:10:02.559 --> 0:10:03.559 certainly another place. 0:10:03.760 --> 0:10:04.439 Materials. 0:10:04.679 --> 0:10:06.679 Let's see what happens with China, which I know we'll 0:10:06.720 --> 0:10:10.360 get into, but we're seeing better global growth potentially. So 0:10:10.400 --> 0:10:12.880 the reality is it is a higher bar. It's a 0:10:12.920 --> 0:10:16.160 mixed bag. The Magnificent seven itself has gone almost to 0:10:16.240 --> 0:10:19.160 like the dynamic duo or the dynamic two, So things 0:10:19.200 --> 0:10:20.120 have certainly changed. 0:10:20.320 --> 0:10:23.120 Yeah, well, you talk about the idea of growth outside 0:10:23.120 --> 0:10:25.160 of the US, and you talk about China, and yet 0:10:25.320 --> 0:10:27.000 you've been telling people not to buy into the Chinese 0:10:27.040 --> 0:10:29.720 equity rally, and frankly it's probably face on today's action, 0:10:29.760 --> 0:10:32.160 which is one day it seems to be where the 0:10:32.200 --> 0:10:35.480 mood is shifting. How much can the rotation continue if 0:10:35.520 --> 0:10:38.400 all of the pillars don't hold up. You have the earnings, 0:10:38.600 --> 0:10:41.080 you have FED rate cuts that people believe will be 0:10:41.120 --> 0:10:44.240 cutting down the pike, and China stimulus. Can you get 0:10:44.280 --> 0:10:46.559 some of those fall away and still have the rotation theme. 0:10:47.080 --> 0:10:49.720 It's a really really good question, Lisa, and in particular, 0:10:49.800 --> 0:10:53.160 we think as it pertains to the US leadership in 0:10:53.760 --> 0:10:58.320 large cap value fed cuts, more confirmation about a soft landing. 0:10:58.559 --> 0:11:01.040 We've seen that in services, but do we need to 0:11:01.080 --> 0:11:04.760 see more in manufacturing. Yes, manufacturing has lagged, so that's 0:11:04.800 --> 0:11:05.440 still to come. 0:11:05.679 --> 0:11:07.280 And then it's the earnings broadening out. 0:11:07.520 --> 0:11:10.400 So we think if you have enough domestic drivers that 0:11:10.400 --> 0:11:13.760 can still power the US trade, you're not necessarily as 0:11:13.840 --> 0:11:17.079 reliant on China. Continue to follow through with stimulus to 0:11:17.160 --> 0:11:17.520 get that. 0:11:17.640 --> 0:11:18.280 Trade to work. 0:11:18.400 --> 0:11:20.280 How excited can you be outside of the US, And 0:11:20.280 --> 0:11:22.319 I'm talking about Europe in particular. If you don't have 0:11:22.440 --> 0:11:23.480 China cooperating, you. 0:11:23.520 --> 0:11:24.560 Got to pick your spots. 0:11:24.640 --> 0:11:27.000 I mean, look at some of these countries like Germany 0:11:27.080 --> 0:11:30.440 as an example, that's been entirely reliant on autos for 0:11:30.440 --> 0:11:31.400 a long period of time. 0:11:31.720 --> 0:11:32.560 So not only are. 0:11:32.440 --> 0:11:35.720 There cyclical pressures there, there are structural pressures there with 0:11:35.800 --> 0:11:39.840 changes in the industry, with competition, new technologies, and so 0:11:39.920 --> 0:11:42.920 I think there's a lot of more bottom up idiosyncratic 0:11:43.040 --> 0:11:46.439 risk to those places. Then maybe most people discount Dan. 0:11:46.520 --> 0:11:51.280 Let's talk about the geopolitical and domestic politics. These risks 0:11:51.320 --> 0:11:53.600 you say are over the market. When you talk about 0:11:53.679 --> 0:11:56.440 the US election, you say the passing the election will 0:11:56.480 --> 0:11:59.360 be a clearing event with downsign volatility. What about if 0:11:59.360 --> 0:12:00.800 there's a contest. 0:12:00.200 --> 0:12:04.280 Election, So notably, Anne Marie, we didn't say election night, 0:12:04.559 --> 0:12:06.719 So we do subscribe to the fact that it will 0:12:06.760 --> 0:12:09.400 be more of an election week. So once we get 0:12:09.440 --> 0:12:12.719 past that week, we do think that it'll be a 0:12:12.800 --> 0:12:13.679 risk clearing event. 0:12:13.760 --> 0:12:16.440 We will accept a winner. And what's notable, and we've 0:12:16.480 --> 0:12:17.160 talked about it. 0:12:17.200 --> 0:12:20.280 Over the last several months, the market continues to climb 0:12:20.280 --> 0:12:23.360 this wall of worry. We think the election's one component 0:12:23.400 --> 0:12:26.520 of that. Two years ago, it was trying to disprove 0:12:26.559 --> 0:12:29.120 the recession. A year ago, it was what was the 0:12:29.160 --> 0:12:31.839 path of the Fed? Would they be proactive or reactive 0:12:32.120 --> 0:12:34.160 with rate cuts? We think the election is the last 0:12:34.200 --> 0:12:35.280 run on that wall of worry. 0:12:35.360 --> 0:12:39.079 But what if there's a Florida recount issue, what if 0:12:39.080 --> 0:12:41.400 it's that kind of contested election, It. 0:12:41.320 --> 0:12:44.960 Could certainly be a higher volatility environment, But we do 0:12:45.000 --> 0:12:46.440 think that it's going to be short lived. 0:12:46.679 --> 0:12:47.800 You can't wait to see the back of this. 0:12:47.880 --> 0:12:50.400 Can you cannot wait? I can find it, cannot wait. 0:12:50.400 --> 0:12:52.040 I think we're all in agreement on that. 0:12:51.920 --> 0:12:55.360 Possibility wishful thinking. Do you think this is that typical 0:12:55.360 --> 0:12:57.280 election that once the event is cleared, we're back to 0:12:57.360 --> 0:13:00.239 business or could we see some serious changes to policy 0:13:00.520 --> 0:13:02.479 that we all need to Passentien see. 0:13:02.240 --> 0:13:05.240 Well, it's an excellent point, and not to diminish this 0:13:05.320 --> 0:13:07.720 is the gravity of the moment. I think the one 0:13:07.800 --> 0:13:11.199 scenario that does present the most near term volatility is 0:13:11.240 --> 0:13:14.040 that red sweep scenario, which is over the last week 0:13:14.160 --> 0:13:16.760 or so been increasing in terms of the betting odds. 0:13:17.120 --> 0:13:18.520 Why is that more relevant? 0:13:18.559 --> 0:13:22.280 It's relevant because in Trump two point zero with a 0:13:22.400 --> 0:13:25.440 red Congress, debt to GDP is thirty percent higher than 0:13:25.480 --> 0:13:28.160 it was in sixteen. Interest rates are way higher than 0:13:28.200 --> 0:13:29.400 they were back then as well. 0:13:29.559 --> 0:13:31.160 It's a different backdrop. 0:13:31.559 --> 0:13:36.600 And so the idea of doing all this fiscal expansion, tariffs, trade, 0:13:36.880 --> 0:13:41.679 extreme trade policy, and potential changes to immigration policy, all 0:13:41.720 --> 0:13:44.480 of that throws a real wrinkle in this Goldilock soft 0:13:44.559 --> 0:13:46.080 landing disinflation thesis. 0:13:46.200 --> 0:13:48.520 Den sketty, appreciate your time, Thaank. You could see some 0:13:48.520 --> 0:14:01.440 big changes then, sketymoke and standing investment management. Let's get 0:14:01.440 --> 0:14:05.120 across the Jeremy stretch of CIPC. Jeremy, your innerial take 0:14:05.160 --> 0:14:06.760 on this, and then I want to get it into 0:14:07.120 --> 0:14:09.600 ultimately what is holding them back from pre committee to 0:14:09.600 --> 0:14:13.160 even more given how dreadful the bank drop is for European. 0:14:12.760 --> 0:14:18.680 Growth, Well, clearly the data backdrop has materially deteriorated. 0:14:18.040 --> 0:14:19.800 Since that September meeting. 0:14:20.240 --> 0:14:22.280 I think you've touched on the PMIS. I think the 0:14:22.680 --> 0:14:26.520 inflation downturn was obviously more aggressive than expected, Although if 0:14:26.560 --> 0:14:28.880 you were listened to the September press briefing, Madam Reguard 0:14:29.000 --> 0:14:31.680 tried to pre prepare the market for a downturn in 0:14:31.720 --> 0:14:34.120 September due to base effects. But I think it is 0:14:34.160 --> 0:14:37.320 still this sort of broader negative backdrop in terms of 0:14:37.760 --> 0:14:42.480 the global manufacturing sector, which really is amplifying the Eurozone downturn, 0:14:42.520 --> 0:14:45.960 which is warranting easier policy. But the problem from an 0:14:45.960 --> 0:14:48.880 ECB perspective is the nature of the composition of the Council, 0:14:49.120 --> 0:14:52.080 where you do have a whole range of policy members 0:14:52.200 --> 0:14:54.720 with very different perspectives, and you still have those very 0:14:54.760 --> 0:14:58.000 hawkish bias members from the core members of the European 0:14:58.080 --> 0:15:01.400 Union such as Germany and Austria, you are reluctant to 0:15:01.480 --> 0:15:04.720 sanction a very aggressive easing profile. So that leaves Madame 0:15:04.800 --> 0:15:07.200 Regarde with a very difficult balancing act, and so she 0:15:07.240 --> 0:15:09.760 continues to try and pursue that by this meeting by 0:15:09.800 --> 0:15:13.000 meeting data dependent approach. But I think it is still 0:15:13.080 --> 0:15:15.800 very much the case that so we're now moving towards 0:15:15.840 --> 0:15:19.200 a more sequential policy backdrop. So I suspect that it's 0:15:19.200 --> 0:15:21.800 going to be a case of the ECB maintaining a 0:15:21.880 --> 0:15:24.560 data dependent meeting by meeting approach. But I think we're 0:15:24.560 --> 0:15:27.160 probably going to be heading headlong towards other deposit rate, 0:15:27.160 --> 0:15:28.960 heading towards two percent by the middle of next year. 0:15:29.000 --> 0:15:30.960 There's a big wrinkle in that approach, though, Chemine. 0:15:31.000 --> 0:15:31.360 You know it. 0:15:31.840 --> 0:15:34.320 When Traaghi led the ECB, he had to convince the 0:15:34.360 --> 0:15:36.120 Germans to do things they did not want to do. 0:15:36.720 --> 0:15:38.960 This time around, though, the German economy is the weak link. 0:15:39.360 --> 0:15:41.320 And if I'm looking at the Euro this morning, here's 0:15:41.320 --> 0:15:43.880 my question to you in foreign exchange. Should the Euro 0:15:43.960 --> 0:15:47.600 be training on rate differentials or growth differentials banked up 0:15:47.640 --> 0:15:49.880 by an ECP that's willing to support growth in a 0:15:49.920 --> 0:15:51.600 material way. 0:15:52.360 --> 0:15:54.360 Well, I think at the moment we're looking at rate differentials. 0:15:54.400 --> 0:15:56.480 I think we've seen a clear crossover in terms of 0:15:56.480 --> 0:15:59.920 what's been priced for immediate policy action from the FED 0:16:00.080 --> 0:16:02.200 relative to the ECB over the course of the last month. 0:16:02.480 --> 0:16:05.320 That's really been constituent with this retreat in terms of 0:16:05.320 --> 0:16:07.400 Euro dollar over the course of the last two to 0:16:07.440 --> 0:16:09.600 three weeks. And if we are still going to see 0:16:09.640 --> 0:16:12.680 the ECB being very much biased, or the market interpretation 0:16:12.760 --> 0:16:15.680 the ECB being biased towards policy easing, then that does 0:16:15.720 --> 0:16:18.920 imply that the euro is going to continue to struggle somewhat, 0:16:19.080 --> 0:16:21.600 but I think we've got to a situation now where 0:16:21.680 --> 0:16:24.080 a lot of the real money eurolungs, I think have 0:16:24.120 --> 0:16:27.280 probably been cleared away. We're looking at a market which 0:16:27.320 --> 0:16:29.840 is now looking or increasingly looking a little bit over sold. 0:16:30.120 --> 0:16:31.280 So I think it is the case. 0:16:31.120 --> 0:16:32.920 That headwinds for are obvious. 0:16:33.440 --> 0:16:34.200 The risk of. 0:16:34.240 --> 0:16:37.160 Further activity from nec BE is evidential, But I think 0:16:37.160 --> 0:16:39.000 it may be the case that as we get near 0:16:39.080 --> 0:16:41.120 that sort of one oh eighth threshold, that might be 0:16:41.160 --> 0:16:44.520 an opportunity to expect some degree of slow down in 0:16:44.800 --> 0:16:47.720 terms of this retreat from those recent heavy highs of 0:16:47.760 --> 0:16:48.200 one twelve. 0:16:48.480 --> 0:16:52.360 Jeremy, how much does the ECB essentially have their hands 0:16:52.440 --> 0:16:55.080 tied as a result of the pace of the Fed. 0:16:55.160 --> 0:16:57.480 How much do they want to keep the euro in 0:16:57.560 --> 0:17:01.320 this sort of zone in order to prevent important inflation 0:17:01.440 --> 0:17:02.600 from really coming into play. 0:17:03.800 --> 0:17:06.760 Well, absolutely, the evaluation of the euro obviously has an 0:17:06.800 --> 0:17:09.000 impact via the import price dynamic. 0:17:09.080 --> 0:17:10.080 So in a sense you. 0:17:10.040 --> 0:17:13.600 Have nominal commodity prices which will always be evidential for 0:17:13.840 --> 0:17:17.560 the inflation backdrop, but the euro does amplify that if 0:17:17.560 --> 0:17:19.920 we were to see a substantial cheaping of the euro, 0:17:20.040 --> 0:17:22.639 So in a sense there is a recognition as to 0:17:22.680 --> 0:17:25.159 what the Fed is doing is relevant for the ECB. 0:17:25.280 --> 0:17:27.159 But I think the majority of the ECB members will 0:17:27.200 --> 0:17:30.600 try and look at the policy narrative in isolation. Look 0:17:30.640 --> 0:17:32.720 at that single mandate as you've touched upon. I think 0:17:32.760 --> 0:17:35.960 that is very notable, that single mandate of maintaining inflation, 0:17:36.240 --> 0:17:38.000 and that is how they will pursue policy. 0:17:38.240 --> 0:17:39.640 But if the Euro were. 0:17:39.480 --> 0:17:41.200 To cheap them back to one four one oh five, 0:17:41.400 --> 0:17:43.520 that's not our base case. But if that word happen, 0:17:43.760 --> 0:17:46.879 then obviously that would create greater inflationary pressures and that 0:17:46.920 --> 0:17:49.719 would prove to be problematic for the ECD policy narrative. 0:17:49.960 --> 0:17:52.639 Jeremy, appreciate the updates sir, and your reaction to an 0:17:52.680 --> 0:17:56.200 ACP rate reduction this morning. Genreally stretch there of CIBC. 0:17:56.880 --> 0:18:00.440 This is the Bloomberg Seventans podcast, bringing you the best 0:18:00.480 --> 0:18:03.760