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Speaker 1: Welcome to the Bloomberg Penel podcast. I'm Paul swing you

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Speaker 1: along with my co host Lisa Brahmas. Each day we

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Speaker 1: bring you the most noteworthy and useful interviews for you

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Speaker 1: and your money. Whether at the grocery store or the

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Speaker 1: trading floor. Find a Bloomberg Penl podcast on Apple podcast

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Speaker 1: or wherever you listen to podcasts, as well as that

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Speaker 1: Bloomberg dot com. There is so much going on right

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Speaker 1: now having to do with intelligence in the United States.

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Speaker 1: We have, of course, the amounting geopolitical risk city I

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Speaker 1: ran with China and North Korea, and then on the

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Speaker 1: home front, we have the ripple effects that have been

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Speaker 1: ongoing since the release of the Mala Report. Joining us

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Speaker 1: now is no other than Senator Angus King of Maine.

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Speaker 1: He is an independent and he sits on the Intelligence Committee,

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Speaker 1: which is at the epicenter of so much. Senator, we're

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Speaker 1: so pleased that you could join us today. Thank you

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Speaker 1: for taking the time. We really want to start with

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Speaker 1: understanding the domestic versus the international, and we do know

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Speaker 1: that the Intelligence Committee just issued a subpoena to Donald

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Speaker 1: Trump Junior, and we're trying to figure out, first of all,

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Speaker 1: what are you hoping to learn there today. Well, I

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Speaker 1: think it's important to put that into perspective. Our our

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Speaker 1: efforts to talk to Donald Trump JUNR go back several months. Uh.

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Speaker 1: The subpoena became public fairly recently, but it's it's been

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Speaker 1: sort of uh discussed as if it was a response

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Speaker 1: to Mitch McConnell saying the case is closed, and uh,

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Speaker 1: it really is. It went back before that date. We

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Speaker 1: just want to get some get to the bottom of

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Speaker 1: some inconsistencies between testimony that he had already given to

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Speaker 1: the committee and testimony that we received from Michael Cohen, Uh,

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Speaker 1: to some there there. I don't want to go any further,

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Speaker 1: but we're trying to tie up some loose ends and

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Speaker 1: inconsistencies in getting to the bottom of what actually happened.

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Speaker 1: It's important to clarify the role of the Intelligence Committee

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Speaker 1: investigation versus Mueller. Mueller is a prosecutor. He was looking

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Speaker 1: at violations of law. We're more focused on what actually happened,

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Speaker 1: what were the facts, not whether or not it was

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Speaker 1: a violation of law that can be proved beyond a

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Speaker 1: reasonable doubt and those kinds of things. But we're trying

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Speaker 1: to get it what happened, how did it happen with

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Speaker 1: the Russians, and most importantly, how do we prevent it

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Speaker 1: from happening again in the future. The Senator you mentioned

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Speaker 1: that Mr Mueller, do you expect him to appear before Congress?

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Speaker 1: Are you pushing for that? I think it's important that

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Speaker 1: he do so. Of course. His his report is four pages.

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Speaker 1: It's very clearly written. I commend it to people if

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Speaker 1: you have a weekend. It's it's really worth reading because

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Speaker 1: it's somewhat different than what Attorney General Barr represented. Uh,

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Speaker 1: And it's very detailed, and I think he should be

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Speaker 1: allowed to appear. I think he has an important voice.

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Speaker 1: Congress has a responsibility to do oversight and to get

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Speaker 1: to the bottom of some of these questions that I think, Uh,

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Speaker 1: it would be good to hear from him directly, as

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Speaker 1: opposed to a character as aation of what he said

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Speaker 1: or thought coming from other people. Certainly, well, the Mother

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Speaker 1: Report has been released and completed by the Independent Council

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Speaker 1: Robert Mueller. There are ongoing questions President Trump continuing to

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Speaker 1: slam the FBI in particular, as well as intelligence agencies

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Speaker 1: on Twitter. I'm wondering from your perspective. How concerned are

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Speaker 1: you that the sort of dispersion or the gap between

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Speaker 1: the president and the intelligence agencies will make it more

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Speaker 1: difficult for members of the intelligence community to do their jobs,

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Speaker 1: especially at a time of rising geopolitical risk. Well, I

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Speaker 1: think I think it is. It's a it's a serious

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Speaker 1: problem and an unfortunate one. We've got thousands of professionals

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Speaker 1: around the world whose job it is to try to

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Speaker 1: get the best information possible to the president. And there

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Speaker 1: are two problems. One is, if he doesn't listen to

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Speaker 1: that information. Uh, there's potential mistakes. You can you know,

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Speaker 1: you can make errors if you don't pay any attention

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Speaker 1: to the facts. And and and that's number one. Number two,

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Speaker 1: there's a subtle message and sometimes not so subtle message

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Speaker 1: that goes back to the intelligence agencies that says, tell

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Speaker 1: me what I want to hear. Uh, cook the data.

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Speaker 1: And if you look back in recent American history, some

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Speaker 1: of our most serious foreign policy disasters have been based

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Speaker 1: upon policymakers pushing the intelligence and military community to to

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Speaker 1: form the the story according to what the policymaker wants

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Speaker 1: where they wanted to come out. That is a is

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Speaker 1: a very serious danger. And it's one of the things

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Speaker 1: that really worries me about the President UH attacking and

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Speaker 1: and trying to push around the intelligence agencies. He ought

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Speaker 1: to listen to what they say. He doesn't have to

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Speaker 1: buy it necessarily, but to publicly detegrate what they what

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Speaker 1: these career professionals do is UH is harmful. As I say,

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Speaker 1: on two levels, Senator, let's switch gears a little bit

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Speaker 1: to cybersecurity. I that you and representative of Mike Gallagher,

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Speaker 1: announced last week that you will be leading a newly

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Speaker 1: established Cyberspace Salarium Commission. Talk to us a little bit

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Speaker 1: about this commission. What is its focus, what is its scope?

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Speaker 1: What do you hope to learn? Well, this was created,

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Speaker 1: the commission was created by the Congress and and and

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Speaker 1: signed by the President. Was in the National Defense Act

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Speaker 1: that passed last year. And the fundamental idea is that

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Speaker 1: we don't have a cyber doctrine or strategy in this country.

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Speaker 1: We have a multiplicity of agencies that are working on

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Speaker 1: it in various ways, but the bottom line is that

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Speaker 1: we're we're vulnerable. We're incredibly vulnerable, both in the private

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Speaker 1: sector and in the public sector, whether it's the energy grid,

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Speaker 1: the financial system. Uh. There there our election system. Uh.

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Speaker 1: And right now, as I say, we have no strategy,

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Speaker 1: we have no doctrine. Our adversaries feel that they can

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Speaker 1: attack us with impunity. And the purpose of the commission

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Speaker 1: is where there are four members of Congress, four or

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Speaker 1: five members from the executive branch, for from the private sector,

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Speaker 1: and we're going to try to come up with something

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Speaker 1: that will serve the country well into the future in

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Speaker 1: dealing with it with what I believe is now the

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Speaker 1: most serious threat facing the country. For example, I talked

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Speaker 1: to a CEO recently of a of a major company

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Speaker 1: who gets their company gets attacked three million times a day.

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Speaker 1: I've talked to small banks who get attacked a hundred

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Speaker 1: thousand times a day. Now, some of these are state actors,

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Speaker 1: some of them are garden variety crooks. But the point is,

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Speaker 1: this is a hugely uh dangerous and vulnerable situation for

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Speaker 1: this country and it's only going to be multiplied by

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Speaker 1: five g where everything's going to be interconnected vehicles and

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Speaker 1: microwaves and refrigerators and you name it, and that's going

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Speaker 1: to make us even more vulnerable. And so it's it's

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Speaker 1: urgent that we get on top of this and that

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Speaker 1: our adversaries understand that if they attack us, they're going

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Speaker 1: to pay a price. We just have about thirty seconds.

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Speaker 1: But why why did it take so long? Because it

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Speaker 1: seems like this has been a threat for a while,

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Speaker 1: it's been escalating, you know, damned if I know. I mean,

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Speaker 1: there's a small group of US who have been pounding

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Speaker 1: the table about this in intelligence and Armed Services for

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Speaker 1: four or five years. It's it's complicated, it's hard, it's

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Speaker 1: it's there's a lot to it, but it's something that's

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Speaker 1: really important. And finally, I think we're added in a

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Speaker 1: systematic way and hopefully we can bring some important policies

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Speaker 1: to the foe. Senator Angus King, thank you so much.

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Speaker 1: Senator King is the independent senator from the State of

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Speaker 1: Many also sits on the Intelligence Committee as well as

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Speaker 1: the Armed Services Committee. It does seem like there has

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Speaker 1: been a rapid escalation in geopolitical risk over the past

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Speaker 1: few weeks. We're really pleased to say that we have

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Speaker 1: joining US Admiral James Davitis. He's a columnist for Bloomberg

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Speaker 1: Opinion and of course, retired U S. Navy admiral and

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Speaker 1: former military commander of NATO Admiral, We're so pleased that

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Speaker 1: you could join us today. We have a whole host

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Speaker 1: of things that have happened over the past month, ending

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Speaker 1: the Iranian waivers, Kim Jong n At meeting with putin,

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Speaker 1: North Korea deploying a weapons test. Then you have the

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Speaker 1: whole situation in with Iran that seems to be escalating rapidly,

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Speaker 1: with Mike Pompeo leaving a meeting with Russia and going

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Speaker 1: over to deal with the situation, and and and and

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Speaker 1: and and ships from the US heading to the region.

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Speaker 1: Is there a connecting fiber between all of these events.

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Speaker 1: I don't think so, Losa um and good morning. I

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Speaker 1: do think that, as I've said elsewhere, this is kind

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Speaker 1: of the revenge of the politics. In other words, we've

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Speaker 1: had a relatively quiet almost a year really without any

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Speaker 1: major explosive event. And I think that the year started

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Speaker 1: when the fire and fury and North Korea kind of

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Speaker 1: moved on to the diplomatic track. But as we all know,

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Speaker 1: there's an inevitability of cycle to this kind of um,

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Speaker 1: this kind of uh, if you will, um volatility. And

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Speaker 1: I don't mean that in an economic sense, but in

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Speaker 1: the two political sense. The one connection I would watch

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Speaker 1: in all this. However, having said all that is China

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Speaker 1: and Russia, who are drawing closer together and are working

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Speaker 1: collectively on Iran, North Korea, Venezuela. There's a bit of

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Speaker 1: a shadow movement back there. That's the space to watch. So, Admiral,

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Speaker 1: just what if you could just step back a little

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Speaker 1: bit broadly speak, give us a sense of your assessment

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Speaker 1: of kind of our relationship with our traditional allies around

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Speaker 1: the world, you know, most notably NATO. How A would

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Speaker 1: you characterize that right now? As we you know, take

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Speaker 1: a look at a rising China and Russia continuing to

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Speaker 1: be an issue. I think it's uneven, Paul. So in

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Speaker 1: terms of UH US NATO relations um, we're not as

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Speaker 1: bad as some of the rhetoric and the tweets would indicate,

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Speaker 1: but we're seeing real separation between the US and the

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Speaker 1: allies on Iran, and that to me, of all of

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Speaker 1: the as you mentioned in the front piece here, I'd

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Speaker 1: worry most about Iran, and I'd worry specifically about the

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Speaker 1: Arabian Gulf. As you and your listeners will have seen, UH,

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Speaker 1: just over the last twenty four hours, we've seen reports

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Speaker 1: of sabotage attacks. Kind of unclear what's happening on both

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Speaker 1: Saudi tankers and UAE ships. Um. The Arabian Gulf is

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Speaker 1: a flashpoint US in our traditional European allies couldn't be

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Speaker 1: further apart on Iran. That's the one to worry about

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Speaker 1: the most Admiral walk us through a worst case scenario

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Speaker 1: or an escalation with Iran. What what is the outcome there? Um,

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Speaker 1: Certainly you've seen the opening salvos on both sides, which

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Speaker 1: are I think we will discover the there is Iranian

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Speaker 1: activity behind the attacks on these ships. Um. At the

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Speaker 1: same time, the US is moving a aircraft carrier strike group,

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Speaker 1: which includes the carrier Abraham Lincoln, into the Gulf. The

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Speaker 1: streams you really we don't want to cross here is

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Speaker 1: if Iran were to do something that they thought would

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Speaker 1: be below the radar, but then it was revealed that

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Speaker 1: they attacked the U S ship in the gulf, not

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Speaker 1: inconceivable at all. I think at that point we're off

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Speaker 1: to the races. UM. So a miscalculation in the maritime

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Speaker 1: space in the Gulf is the biggest worry I have

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Speaker 1: right now. What do you mean we're off to the races.

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Speaker 1: I think you would see US military strikes pretty significant

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Speaker 1: ones against Iranian targets and over response, and that's why

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Speaker 1: that carrier is sent there to deter Iran from doing

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Speaker 1: something that would cause a major set of strikes. Probably

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Speaker 1: what you would see his attacks on Iranian naval vessels,

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Speaker 1: imports like Bandara bas in the south of Iran. Adn't

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Speaker 1: let's switch gears a little bit to North korea missile

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Speaker 1: tests over the last couple of days and weeks. How

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Speaker 1: concerns should we and obviously our allies in the region.

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Speaker 1: B I feel um less concerned about what's happening with

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Speaker 1: North Korea. I think that one will stay on a

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Speaker 1: diplomatic track because the two major actors here are not

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Speaker 1: the US and North Korea. It's the US and China,

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Speaker 1: and both the US and China regardless of how the

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Speaker 1: trade war unfold, both US and China want to avoid

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Speaker 1: a war on the Korean peninsula. So look for that

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Speaker 1: as a zone of if you will, cooperation between the

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Speaker 1: US and China. I think that one stays on the

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Speaker 1: diplomatic track. Is there an alliance left that is strong

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Speaker 1: enough to continue through these Peo political risks with the

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Speaker 1: US and Europe UM. As long as the US and Europe,

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Speaker 1: particularly using the vehicle of NATO, stay aligned um, there

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Speaker 1: is plenty of capacity in the West to deal with

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Speaker 1: all of this. Just to give you some numbers, the

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Speaker 1: US spent six d billion dollars a year on defense,

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Speaker 1: the Europeans spent three billion dollars a year on defense.

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Speaker 1: China and Russia combined spend less than three hundred billions,

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Speaker 1: so we outpaced them three to one, even if they

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Speaker 1: start working very cohesively together. But the key, Lisa and Paul,

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Speaker 1: is keeping US European if you will NATO together to

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Speaker 1: face these global challenges. Admiral, we know you have a

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Speaker 1: new book out this year entitled Sailing the True North.

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Speaker 1: Ten Admirals and the Voyage of Character. Just about twenty

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Speaker 1: or thirty seconds give us a sense of what's really

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Speaker 1: key takeaway from that book is for you that leadership

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Speaker 1: is important, and leadership is what we do, what we

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Speaker 1: exert on others. But character is how we lead ourselves.

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Speaker 1: It's internal leadership. So what I tried to do in

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Speaker 1: the book I think Plutarch's Lives goes to see is

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Speaker 1: to examine ten naval figures over two thousand years, both

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Speaker 1: men and women, uh US Chinese admiral look internally at

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Speaker 1: character because I think as this century unfold, our political

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Speaker 1: leadership will begin to turn more on issues of character,

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Speaker 1: perhaps then it has before. That's what the books about.

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Speaker 1: Admiral James Drittas, thank you so much. He's a columnist

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Speaker 1: for Bloomberg Opinion and of course retired US Navy admiral

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Speaker 1: and former military commando from NATO. Joining us from Washington,

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Speaker 1: d C. All the major US industries are lower today,

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Speaker 1: but tech is getting specially hit. And in the tech universe,

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Speaker 1: Apple shares down more than five per cent. And there's

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Speaker 1: kind of a double whammy here joining us to talk

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Speaker 1: about this and all things tech. Tom Giles, executive editor

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Speaker 1: for Technology for Bloomberg, joining us here in our BLOOMBERGDA

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Speaker 1: Active Brokers Studios. Tom, So, let's start with Apple sort

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Speaker 1: of double whammy here? Can you lay out what's going on? Sure,

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Speaker 1: it started out bad for Apple when we got the

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Speaker 1: news about the retaliatory trade terroffs from China. Right, Um,

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Speaker 1: The concern is that that's just gonna affect the pricing,

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Speaker 1: the you know, the competitiveness of their products. Both directions um.

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Speaker 1: Trade war has been a constant, uh you know drag

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Speaker 1: on Apple stock for many months now, and and this

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Speaker 1: just brought it home even further. Then later in the morning,

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Speaker 1: we got the Supreme Court decision that essentially said consumers

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Speaker 1: can now sue Apple over pricing in the app store. Right. So,

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Speaker 1: when when an app, when an app developer, say Spotify,

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Speaker 1: wants to make its product available on the App Store, uh,

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Speaker 1: Apple charges them a thirty percent commission as it were,

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Speaker 1: this app store tax. Um. There's been this growing drumbeat

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Speaker 1: of opposition to this, Spotify taking it up with uh

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Speaker 1: you know European regulators. Um. Now you were seeing it

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Speaker 1: again in the Supreme Court. What that it's the concern

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Speaker 1: is that that's going to put added pressure on Apple

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Speaker 1: to reduce or maybe even do away with these fees

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Speaker 1: that it charges app developers. I don't think you're gonna

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Speaker 1: see a complete uh illumination of them, but certainly this

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Speaker 1: idea of is it fair for Apple to charge an

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Speaker 1: app developer a thirty percent commission if it wants to

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Speaker 1: sell its wares on their their marketplace. And remember that

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Speaker 1: really resonates right now with a growing political you know

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Speaker 1: discourse in this country about whether the big tech companies

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Speaker 1: are too big, too powerful. Liz Warren, for example, has

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Speaker 1: raised some of these same issues about the Amazons and

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Speaker 1: the Apples of the world. Is it legal? Is it

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Speaker 1: right for them to be able to compete with the

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Speaker 1: same players that operate on their marketplace. So in Amazon's case,

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Speaker 1: it's they run a marketplace, but Amazon is actually competing

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Speaker 1: with some of these people who sell their goods on

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Speaker 1: It's on its on its um on its on its platform,

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Speaker 1: And the same thing is happening here with Apple. And

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Speaker 1: then for Apple it's it's a particularly an issue because

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Speaker 1: they're trying to pivot their investment story away from hey,

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Speaker 1: we're just an iPhone. We want you to focus more

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Speaker 1: on our subscript our services business. That this hits right

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Speaker 1: at the hard that absolutely at a time when iPhone

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Speaker 1: demand is either stagnating or declining or certainly not having

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Speaker 1: the growth that we saw for that for a decade,

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Speaker 1: right this was the cash cow, and now Apple increasingly

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Speaker 1: wants you to think about them as a service provider company,

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Speaker 1: and a big part of those services are ones that

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Speaker 1: are available in the app Store, this huge platform where

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Speaker 1: we go to make purchases for all of these kinds

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Speaker 1: of products Netflix for example, um uh, Spotify as the

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Speaker 1: other example, and and what they're increasingly saying to Apple

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Speaker 1: is well, we shouldn't have to pay you this commission

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Speaker 1: to operate on your marketplace. So Apple definitely having a

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Speaker 1: bad day. And we really can't underplay the point that

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Speaker 1: trade really plays here to given how much Apple depends

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Speaker 1: on China. But we would be remiss if we didn't

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Speaker 1: get some comments from you on Uber and what's been

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Speaker 1: going on there. Shares down today nine point four percent

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Speaker 1: now trading at thirty seven dollars and sixty eight cents share.

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Speaker 1: Remember the i P last week forty five dollars, So

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Speaker 1: it's been a brutal opening. And again the real question

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Speaker 1: here is how much is this a ride sharing specific

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Speaker 1: story and how much is this a commentary on those unicorns,

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Speaker 1: on those private tech companies that they are overvalued and

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Speaker 1: are really have not that much upside? Yeah, great question.

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Speaker 1: So for Uber right now, they could not have gone

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Speaker 1: public at a worse time, right, this is the two

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Speaker 1: days when the trade concerns over trade have been the

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Speaker 1: absolute worst. So there is an element in fairness where

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Speaker 1: you would want to see how they be performing if

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Speaker 1: that weren't happening. That said, when you look at the

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Speaker 1: commentary right now that's coming out of Wall Street, it's

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Speaker 1: very clear in raising a great deal of skepticism about

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Speaker 1: the business model, the path the profitability. How long is

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Speaker 1: that going to take? And they're looking at Uber's S

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Speaker 1: one and lifts numbers. They just had their first quarter

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Speaker 1: results as well as a public traded company, and they're

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Speaker 1: looking at them and going, I don't see a clear

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Speaker 1: path to profitability. So I've got concerns about it. Tom,

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Speaker 1: thanks so much for joining us. You're based in San Francisco,

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Speaker 1: joining it. When when he comes to New York, he said,

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Speaker 1: we just gotta grab him and get him in studio

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Speaker 1: because so much going on just wrangled him from the hallway.

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Speaker 1: You gotta come, Tom Giles, executive out of her Bloomberg Technology.

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Speaker 1: I'll tell you the technology reporters, Tom, They've got in

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Speaker 1: San Francisco and New York and a run road. But

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Speaker 1: it's partically the ones. They are just doing fantastic work

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Speaker 1: keeping up the day with all the new companies, all

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Speaker 1: the new technologies, all the new policy issues of impacting

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Speaker 1: tech well, the rising trade tensions between the US and

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Speaker 1: China cannot be good for emerging markets. To get a

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Speaker 1: sense of how to view emerging markets in the current scenario,

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Speaker 1: return to Dr win Thin. Dr Thinness, global head of

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Speaker 1: Currency Strategy of Brown Brothers, Harriman and Company, joins us

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Speaker 1: on the phone from New York. Dr Thinn, thanks so

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Speaker 1: much for joining us. So how do you approach emerging

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Speaker 1: markets given the tear getting trade scenario that seems to

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Speaker 1: be developing over the last week or so. I, first

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Speaker 1: of all think so it's always a pleasure to come on. Um, honestly,

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Speaker 1: I've been negative on em all this year, and that's

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Speaker 1: really mainly due to the sort of slower global growth,

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Speaker 1: um simmering trade tension story. So to me, that this

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Speaker 1: latest flare up in the trade wars and just sort

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Speaker 1: of crystallizes those risks and and you know, sort of

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Speaker 1: doubles down on because face it, terras um a true

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Speaker 1: trade war between the two biggest world economies. Um, it

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Speaker 1: was one of those exhaugenist shocks that could I'm not

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Speaker 1: saying it will, that could trigger a serious downtowner in

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Speaker 1: the global economy. And that's not my base case, that's

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Speaker 1: tailor risk. But I think the tailor risk is growing.

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Speaker 1: My base cases that they still worked. They takes a while,

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Speaker 1: I can't take longer than we expected, but they work

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Speaker 1: on some sort of facetaving compromise over the next couple

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Speaker 1: of months. And you know, it's I think Marks disappointed

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Speaker 1: because all the comments were steering the market towards yeah, yeah, deal,

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Speaker 1: it is close. We're gonna get one in mayor June.

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Speaker 1: And and you know, Marks look like the word we're

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Speaker 1: hearing from both sides, both China and US. So this

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Speaker 1: was a real gut check, and I think it's you know,

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Speaker 1: if I take a while to get over it. Um.

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Speaker 1: You know, so where we left well, global trade will suffer,

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Speaker 1: global growth risk arising, and those are two things that

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Speaker 1: are very very very negative for e M and so

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Speaker 1: actually continued weakness, I would say, intensified weakness ahead. Okay,

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Speaker 1: so right now we are seeing the ms c I

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Speaker 1: Emerging Markets Currency Index actually poised for its worst day

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Speaker 1: since August two, eighteen. It's the lowest level now since January,

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Speaker 1: so at the beginning of January, so we've basically a

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Speaker 1: raised twenty nineteen gains. I guess the question is going forward,

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Speaker 1: how much more down? Said I mean you were saying

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Speaker 1: basically it could deepen. But are we talking about, you know,

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Speaker 1: a real sort of downturn that is devastating for all

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Speaker 1: the people who are long m earlier this year. Yes,

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Speaker 1: I say, you know, at the real state. If you're

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Speaker 1: looking at say we say we just pok at MSc,

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Speaker 1: I E M, just equise itself, Uh, then you have

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Speaker 1: to look at you know, possibly visiting the January low.

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Speaker 1: I mean, I think the currency you point out the

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Speaker 1: currency index, which is based on the equity index, it's

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Speaker 1: it's leading this movement's almost it's it's heading towards that way.

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Speaker 1: So my my feeling is that the currencies will most

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Speaker 1: likely dragged the equities lower. Um. I think that uh,

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Speaker 1: you know, for the ms C I E M, we

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Speaker 1: have a January low of uh somewhere around nine fifty

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Speaker 1: something and change. I think nine forty something. You know,

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00:22:28,359 --> 00:22:31,199
Speaker 1: I think that's totally within reach. Um. Again, part of

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Speaker 1: it's also how protracted this is. If it was gonna

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Speaker 1: be short and sweet, or you know, sort of short

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00:22:37,080 --> 00:22:38,959
Speaker 1: and sharp, then okay, then we can kind of get

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Speaker 1: over this. But just I think both sides are digging in.

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Speaker 1: I think I think what happened with Friday. People got

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Speaker 1: an optimistic oh hey, they're both making some constructive comments.

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Speaker 1: But over the weekend, you know, the sabers started rattling.

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Speaker 1: We started getting some sniping, and to me, it's it's

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Speaker 1: this is not the sort of the environment for gets

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Speaker 1: conduced to for a deal. We had that a couple

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Speaker 1: of weeks ago. But the way things have kind of

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Speaker 1: developed in this, you know, very very me a very

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Speaker 1: sharp escalation of trade threats and and and retaliation. I

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Speaker 1: don't think there's something that the two sides can get

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Speaker 1: over quickly. So what am I thinking? Maybe at least

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Speaker 1: a month or two before we can actually really talk

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Speaker 1: about They're I've been talking right now. They've been invited

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Speaker 1: back to China, but there's no dates set, so you know,

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Speaker 1: it's it's not gonna be easy. Again. My base case

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Speaker 1: is not that this turns into all out trade where

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Speaker 1: that lasts for months and months and months, But that

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Speaker 1: is the tailor rosk that I think markets are are

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Speaker 1: starting to price in. What about the U N because

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Speaker 1: I feel like China now has a greater incentive to

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Speaker 1: allow it evaluation of the Chinese currency, especially as trade

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Speaker 1: rhetoric heats up. I mean, how much is that kind

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Speaker 1: of factoring into your scenarios here. Well, that's always that,

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Speaker 1: you know, sort of a thesis that pops up from

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Speaker 1: time to time. But to me, the Chinese officials, despite

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Speaker 1: you know, all these tensions that throughout this last year, UM,

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Speaker 1: the Chinese ficial said, look, we're not going to weaponize

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Speaker 1: you on and I take them at the word. You know,

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Speaker 1: we had uh the last week sort of going through

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Speaker 1: the history of the of the exchange that process, but

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00:24:01,760 --> 00:24:03,639
Speaker 1: the last time they valued was I think August of

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Speaker 1: two fifteen, and it would cause mayhem not just in

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Speaker 1: global markets but in Chinese, especially in Chinese markets. Huge

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Speaker 1: capital outflows from China that that required an extense of

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Speaker 1: capital controls and it's very destabilized into China, not just

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Speaker 1: the global markets. And I don't think they want to

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00:24:19,400 --> 00:24:21,080
Speaker 1: go down that road. So I I really do take

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Speaker 1: them at the word. I don't think it will be weaponized. Yes,

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00:24:23,760 --> 00:24:25,879
Speaker 1: the yu Want is performing poorly, but it's within the

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00:24:25,920 --> 00:24:31,600
Speaker 1: context of a basically an e M meltdown. So UM,

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00:24:31,760 --> 00:24:34,200
Speaker 1: actually year to date, uh do you Want is actually

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00:24:34,240 --> 00:24:37,160
Speaker 1: flat right now, it's one of the top performers. UM,

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00:24:37,240 --> 00:24:40,760
Speaker 1: like the top five or six performers um flat, whereas

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00:24:40,800 --> 00:24:47,480
Speaker 1: the pace of Argentine paste down, etcetera, etcetera. So, uh,

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00:24:47,560 --> 00:24:49,159
Speaker 1: you know, if anything, I think they would like to

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00:24:49,240 --> 00:24:51,960
Speaker 1: kind of keep it on more stable side. But um,

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Speaker 1: it's funny if you do it. If you do UM correlation,

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00:24:55,160 --> 00:24:57,359
Speaker 1: I love this one of your functions on Bloomberg. You

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00:24:57,440 --> 00:25:00,800
Speaker 1: the correlation between c n Y cur C and m

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00:25:00,840 --> 00:25:05,520
Speaker 1: s c I E m f x UM index. You

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00:25:05,600 --> 00:25:09,080
Speaker 1: see the collations around point seven five, which means to me,

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00:25:09,240 --> 00:25:11,160
Speaker 1: tells me to look, you know, rather than sort of

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Speaker 1: um resisting market forces that the policy makes in China,

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Speaker 1: actually allowing that you wanted to trade more in line

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Speaker 1: with market sort of wider EM and market forces. So uh, look,

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Speaker 1: you know, people ask me where do I think you

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Speaker 1: want to go? And I said, well, where do you

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Speaker 1: think EM is going? If the EM is gonna weaken,

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Speaker 1: then then you want is gonna weaken as well. And

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Speaker 1: that's what we're seeing. Dr Wynton, thank you so much

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Speaker 1: for joining us on this day of of some skittishness

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00:25:33,280 --> 00:25:36,280
Speaker 1: in emerging markets and certainly the currencies there, where you're

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Speaker 1: seeing volatility pick up a lot more than you're seeing

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Speaker 1: in developed markets, Dr Winton, Global head of Currency Strategy

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Speaker 1: at Brown Brothers Harriman joining us from New York. Thanks

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Speaker 1: for listening to the Bloomberg p m L podcast. You

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00:25:48,320 --> 00:25:52,119
Speaker 1: can subscribe and listen to interviews at Apple Podcasts, SoundCloud,

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00:25:52,240 --> 00:25:55,680
Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm

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00:25:55,720 --> 00:25:59,960
Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramowitz.

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Speaker 1: One before the podcast, you can always catch us worldwide

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Speaker 1: on Bloomberg Radio