WEBVTT - Bloomberg Surveillance TV: December 3rd, 2024

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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<v Speaker 2>with Lisa Bromwitz and Amrie Hordern. Join us each day

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<v Speaker 2>for insight from the best in markets, economics, and geopolitics

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<v Speaker 2>from our global headquarters in New York City. We are

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<v Speaker 2>live on Bloomberg Television weekday mornings from six to nine

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<v Speaker 2>am Eastern. Subscribe to the podcast on Apple, Spotify or

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<v Speaker 2>anywhere else you listen, and as always on the Bloomberg

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<v Speaker 2>Terminal and the Bloomberg Business app. Two weeks away from

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<v Speaker 2>a Federal Reserve raid decision two weeks tomorrow, Lindsey Piegser

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<v Speaker 2>of Stiphail writing, the Fed should be on the verge

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<v Speaker 2>of a pause in policy adjustment. While Fed officials are

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<v Speaker 2>anxious to provide less firm policy after fourteen months at

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<v Speaker 2>peak levels, the risk of unwinding policy too soon or

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<v Speaker 2>too fast is a recognition of inflationary pressures and a

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<v Speaker 2>reversal of the progress already made.

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<v Speaker 3>Lindsay joins us now for more.

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<v Speaker 4>Lindsey Gimonic, good morning, Thank you for having me.

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<v Speaker 3>What did you make a governor Walla? Yes, well, I.

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<v Speaker 4>Think this is really the general theme of what we're

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<v Speaker 4>hearing from FED officials as of late. They're setting the

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<v Speaker 4>bar noticeably higher for a potential pause, saying it's no

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<v Speaker 4>longer about a strong or solid economy, but it's about

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<v Speaker 4>the data outperforming expectations, or as we heard from Goulesby

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<v Speaker 4>last week, it's about a potential economy overheating. So I

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<v Speaker 4>do think that the FED is gearing up and excuse

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<v Speaker 4>me to push through a third round rate cut in December.

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<v Speaker 4>But as we turn the calendar page next year, if

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<v Speaker 4>the data remains as strong as it is, if the

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<v Speaker 4>economy continues to prove remarkably solid, as Chairman Pouell described it,

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<v Speaker 4>I do think they're going to be backed into a

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<v Speaker 4>corner and forced to take a potential policy pause.

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<v Speaker 2>Near got to watch you what kind of data would

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<v Speaker 2>change the conversation. I think Governor Walla compared fighting inflation

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<v Speaker 2>to a UFC fight in the Ancticon yesterday. I'm not

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<v Speaker 2>sure how helpful that is for people or not. What

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<v Speaker 2>kind of number would it take?

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<v Speaker 4>Well, remember, looking out to Friday's non farm paywall reports,

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<v Speaker 4>the strength is going to be out sized, or at

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<v Speaker 4>least we expect that but that's going to be offsetting

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<v Speaker 4>the weakness that we saw the month prior. So even

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<v Speaker 4>a number two D two hundred and twenty thousand, I

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<v Speaker 4>don't think that's going to be enough to deter the

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<v Speaker 4>FED from pushing through that December rate cut.

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<v Speaker 3>MMA.

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<v Speaker 5>I think it was.

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<v Speaker 1>It was marginally yes, I think it was. Yeah, thank you,

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<v Speaker 1>that's good. I just I'm still trying to wrap my

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<v Speaker 1>head around the hard words that he had about getting

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<v Speaker 1>inflaced in a headlock and driving it to the ground

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<v Speaker 1>in the last round to the actual.

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<v Speaker 3>Okay, we're still going to cut rates.

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<v Speaker 1>I mean, it sort of raises this question, how much

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<v Speaker 1>do you think that they are still underestimating the inflationary

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<v Speaker 1>pressure in an economy where it's not about the labor

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<v Speaker 1>market as much anymore as the inflation read that we

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<v Speaker 1>get the following week.

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<v Speaker 4>Well, that's exactly right. The concern of this emerging weakness

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<v Speaker 4>in the labor market prompted that outsize fifty bases point

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<v Speaker 4>cut in September. We didn't see that weakness come to fruition,

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<v Speaker 4>and so then they followed through with another twenty five

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<v Speaker 4>simply because I think they were worried about having egg

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<v Speaker 4>on their face or admitting a policy error being too

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<v Speaker 4>aggressive the month prior. But to your point, they don't

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<v Speaker 4>have inflation in a choke hold. They need to keep

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<v Speaker 4>their eye on the ball because the past several months

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<v Speaker 4>inflation has really moved to the sideways with no further

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<v Speaker 4>improvement to speak of. So at this point, yes, we

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<v Speaker 4>have made discernible progress down from peak levels, but we

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<v Speaker 4>still have that last mile to go, and now is

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<v Speaker 4>not the time for the FED to give up on

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<v Speaker 4>that goal.

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<v Speaker 1>Jum was asking earlier about this discussion arou our neutral rate,

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<v Speaker 1>saying that there is quite a ways to go before

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<v Speaker 1>you actually get to truly a neutral rate. At the

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<v Speaker 1>same time that some of us are struggling to see

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<v Speaker 1>the restrictiveness in terms of rates other than a couple

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<v Speaker 1>of pockets for a couple of segments of the population,

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<v Speaker 1>do you see us as anywhere close to restrictive.

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<v Speaker 4>So that's a good distinction that we need to be made,

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<v Speaker 4>because right now policy still is very firm and changing conditions.

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<v Speaker 4>Further improvement and disinflation does warrant less firm policy as

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<v Speaker 4>we move towards neutral and the data normalize, but we

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<v Speaker 4>need to do so at a very slow and tempered pace.

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<v Speaker 4>So I don't think the question is do we justify

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<v Speaker 4>further rate cuts. I do see further rate cuts on

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<v Speaker 4>the horizon, but the pathway, the pace to that lower

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<v Speaker 4>level of FED funds needs to be very controlled as

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<v Speaker 4>to not overshoot or undermine the progress that we've already

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<v Speaker 4>seen made on the inflation front.

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<v Speaker 6>So how many cuts can you actually see next year

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<v Speaker 6>when they have to recalibrate for potentially tariffs, tax cuts,

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<v Speaker 6>and a whole host of new policies coming out of Washington.

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<v Speaker 4>Well, assuming they do push through the December cut, that's

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<v Speaker 4>the third round cut, I see three more cuts in

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<v Speaker 4>twenty five on a quarterly basis, so one twenty five

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<v Speaker 4>basis point cut per quarter, getting us to three and

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<v Speaker 4>three quarters by the third quarter. And I think that's

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<v Speaker 4>a reasonable neutral level. Now, of course, some policy issues

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<v Speaker 4>may limit the downside potential if we do see tariffs

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<v Speaker 4>or sizeable tax cuts lead to further inflationary pressures. But

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<v Speaker 4>that's a big question mark. The inflationary pressures that we're

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<v Speaker 4>assuming under those scenarios could very easily be offset if

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<v Speaker 4>we saw sizable reductions in government spending or other areas,

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<v Speaker 4>and so it still is questionable the net outcome from

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<v Speaker 4>the incoming administration. But right now, ceteris parabis, I do

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<v Speaker 4>expect three additional rate cuts next year, taking us to

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<v Speaker 4>a neutral rate of about three seventy five if.

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<v Speaker 6>We get the December cut. How hawkish do you think

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<v Speaker 6>the tone might be from Powell, because he's looking into

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<v Speaker 6>a lot of unknowns for next year.

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<v Speaker 4>How much more hawkish you mean? At this point, he's

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<v Speaker 4>talking about a remarkably solid economy, remarkably strong labor market,

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<v Speaker 4>So he's really laid the groundwork for a pretty solid

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<v Speaker 4>assessment of current conditions, again keeping that door wide open

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<v Speaker 4>for a near term policy pause as soon as they

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<v Speaker 4>deem it appropriate.

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<v Speaker 3>And again if.

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<v Speaker 4>December data comes in within expectations, I think the Fed

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<v Speaker 4>continues to follow through with a third round cut, but

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<v Speaker 4>they've already set the table for potential pause given the

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<v Speaker 4>strength that we're seeing in the consumer, in business investment,

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<v Speaker 4>even in housing, and that sticky nature of inflation.

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<v Speaker 1>So John has been trying to draw a parallel between

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<v Speaker 1>JJ and Ping and rowpower today, a single.

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<v Speaker 3>Parallel, one similarity. Okay, carry on, would you want me

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<v Speaker 3>to explain that similarity?

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<v Speaker 2>No, it's Okay, if you just join it, I'm not insane,

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<v Speaker 2>you might think I am. There is one similarity. They've

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<v Speaker 2>got to wait to calibrate policy, to work out what

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<v Speaker 2>the policy changes will be in the United States.

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<v Speaker 3>That's the single similarity.

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<v Speaker 1>Do they and that's my question, Lindsey, do they have

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<v Speaker 1>to Does j Powell have to wait to understand what

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<v Speaker 1>the policies are similar to Jijiinping, who has to wait

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<v Speaker 1>to understand what.

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<v Speaker 5>Policies are well calendar to wait.

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<v Speaker 4>I think that's been part why they want to push

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<v Speaker 4>through this policy, this third round reduction in December before

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<v Speaker 4>we get some of the details of these policies that

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<v Speaker 4>will be associated with the incoming administration. But again, when

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<v Speaker 4>that calendar page turns to twenty twenty five, if we're

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<v Speaker 4>still talking about the strength that the data, that's where

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<v Speaker 4>the patience needs to come in. That's where we need

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<v Speaker 4>to see the FED take a pause, move to the sidelines,

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<v Speaker 4>and allow the data to continue to evolve to dictate

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<v Speaker 4>the best course of policy.

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<v Speaker 2>It's also not obvious to me how inflationary terrorists will

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<v Speaker 2>actually be given the first round experience, how they be

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<v Speaker 2>calibrated this time. West Fargo put out their outlook for

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<v Speaker 2>twenty twenty five this morning has said the most concerning

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<v Speaker 2>effective TARIFST is on growth and not necessarily inflation. Working

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<v Speaker 2>that out is actually not that obvious for next year

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<v Speaker 2>and beyond.

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<v Speaker 1>There are a number of arguments that are legitimate saying

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<v Speaker 1>that actually terrorists are disinflationary and that actually the more

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<v Speaker 1>inflationary impulse is going to come from the immigration if

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<v Speaker 1>there are a significant deportation. So it's a policy mix,

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<v Speaker 1>it's a sequencing. It's just in terms of how they

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<v Speaker 1>actually are carried out, all have a very big difference

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<v Speaker 1>depending on how it goes.

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<v Speaker 3>Lindy, it's good to see you, catch up. Good to

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<v Speaker 3>have you in New York. Thank you, Lindsay PX. The

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<v Speaker 3>ho staful just tend to retail.

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<v Speaker 2>Let's squeeze this in adn't be explaining a cyber Monday

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<v Speaker 2>splurge forecast and consumers spend thirteen zero point five billion

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<v Speaker 2>dollars Oliver Chain of TD Coments saying, well, we see

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<v Speaker 2>some selective opportunity for consumer holiday spending this year by

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<v Speaker 2>and launch. The consumer remains choiceful and it is carefully

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<v Speaker 2>balancing needs versus once. Olivi Chan joins US now for more. Oliver,

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<v Speaker 2>Welcome to the program, sir. I want to start with luxury,

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<v Speaker 2>as we often do with you. I want to ask

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<v Speaker 2>you a simple question. If luxury goes on sale, is

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<v Speaker 2>it even luxury?

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<v Speaker 7>Well, that is a good, great question in terms of

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<v Speaker 7>the balance of luxury and exclusivity. The best brands john

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<v Speaker 7>don't go on sale, and those include Louis Vuitton and

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<v Speaker 7>d Or so that brand does not go on sale.

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<v Speaker 7>Other brands that have been struggling, including Gucci, we are

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<v Speaker 7>seeing markdowns in the department store channel has been under pressure,

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<v Speaker 7>so we're not recommending those stocks, which include Macy's and

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<v Speaker 7>Nordstrom and others, and that's been something to watch.

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<v Speaker 5>The consumer remains focused on value.

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<v Speaker 7>As you know, Walmart has been a top idea and

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<v Speaker 7>Walmart is really executing well with lots of great deals

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<v Speaker 7>across food and consumables. Luxury is something to watch still,

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<v Speaker 7>and as you mentioned earlier, the situation in China is

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<v Speaker 7>more anemic growth as well, and that's something to consider,

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<v Speaker 7>and consumer confidence has been volatile. On the one hand,

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<v Speaker 7>we have very low unemployment as well as a trillion

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<v Speaker 7>dollars of savings on the sidelines, but consumers are being

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<v Speaker 7>choiceful and watching and not buying everything in sight, really

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<v Speaker 7>looking for the best bargains, and the best luxury brands

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<v Speaker 7>do remain full price.

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<v Speaker 2>I appreciate your ability to jump between Gucci and Walmart.

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<v Speaker 2>If we can just stay on Gucci, Oliver, and then

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<v Speaker 2>we can move on. I want to sit on Gucci.

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<v Speaker 2>I think this is important. I'm going to get in

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<v Speaker 2>some hot water here, but here goes the kind of

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<v Speaker 2>people that buy Gucci, the kind of people that want

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<v Speaker 2>you to know they've bought Gucci, and I think that's

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<v Speaker 2>really important. They want the beut with a big Gucci

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<v Speaker 2>emblem on it, and I just wonder how incompatible South

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<v Speaker 2>wealth and quiet luxury is with that particular brand.

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<v Speaker 5>Well, we got to have both.

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<v Speaker 7>What's really happening at Gucci now is a return to

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<v Speaker 7>timelessness and also elevation with a new designer.

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<v Speaker 5>We really like what he's doing.

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<v Speaker 7>However, these turnarounds take time, and we think it'll take

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<v Speaker 7>a year in terms of rebooting the brand and also

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<v Speaker 7>harmonizing service levels across the globe. They're also adding a

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<v Speaker 7>lot of creative john to this. They'll be bigger and

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<v Speaker 7>better shows and storytelling.

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<v Speaker 5>That's what really needs to happen at Gucci at the moment.

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<v Speaker 7>Quiet luxury, thinking about timelessness, elevated materials, that's really working

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<v Speaker 7>in a way that luxury consumer is looking for value

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<v Speaker 7>and items that they can use throughout.

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<v Speaker 5>But it's a little bit boring.

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<v Speaker 7>And conversely, a quiet luxury can be an excuse for

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<v Speaker 7>no innovation.

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<v Speaker 5>What if that's true? So we really need to have both.

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<v Speaker 7>We need to have the exuberance and we need to

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<v Speaker 7>have the fashion, and we need to have the quiet luxury.

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<v Speaker 7>So a little bit of logo in the future be

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<v Speaker 7>quite positive for Gucci.

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<v Speaker 5>Love it a little bit of logo.

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<v Speaker 1>So from logo back to Walmart, I'll talk about that.

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<v Speaker 1>I am curious about how you have seen this outperformance

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<v Speaker 1>and an ongoing basis this holiday shopping season from the

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<v Speaker 1>online systems, and basically this has been the trend for

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<v Speaker 1>a long time. How does this challenge companies at a

0:11:20.320 --> 0:11:22.560
<v Speaker 1>time when it is less profitable for them to sell

0:11:22.600 --> 0:11:26.320
<v Speaker 1>online where they have big physical stores that aren't necessarily

0:11:26.360 --> 0:11:28.440
<v Speaker 1>getting the same kind of foot traffic as they have

0:11:28.880 --> 0:11:29.720
<v Speaker 1>in prior years.

0:11:30.800 --> 0:11:33.720
<v Speaker 7>Retailers have to do everything everywhere, all at once. So

0:11:33.760 --> 0:11:37.600
<v Speaker 7>the name of the game is channels such as curbside pickup,

0:11:38.160 --> 0:11:40.040
<v Speaker 7>where you're doing more of the work in terms of

0:11:40.080 --> 0:11:40.839
<v Speaker 7>the last mile.

0:11:41.320 --> 0:11:42.480
<v Speaker 5>Also, as you think.

0:11:42.320 --> 0:11:45.840
<v Speaker 7>About technology at large, the future of retail includes digital

0:11:45.920 --> 0:11:49.880
<v Speaker 7>advertising as well as artificial intelligence, and then growing these

0:11:49.920 --> 0:11:54.280
<v Speaker 7>marketplace models to have third party sellers, very similarly to Amazon.

0:11:54.679 --> 0:11:56.800
<v Speaker 5>So you're retaining a lot.

0:11:56.679 --> 0:12:00.120
<v Speaker 7>Of the productivity of the box and you're becoming less

0:12:00.200 --> 0:12:04.560
<v Speaker 7>unprofitable and online, and that's happening at Walmart over time.

0:12:04.960 --> 0:12:08.640
<v Speaker 7>It's a bigger challenge at Target, which is losing money online.

0:12:09.080 --> 0:12:12.840
<v Speaker 7>The prospect for Walmart to become e commerce profitable that

0:12:12.920 --> 0:12:16.040
<v Speaker 7>will happen within one to two years, in part because

0:12:16.080 --> 0:12:20.680
<v Speaker 7>they have so much scale in their increasing delivery density. Also,

0:12:20.960 --> 0:12:24.000
<v Speaker 7>consumers of all kinds are choosing to pay.

0:12:23.800 --> 0:12:25.240
<v Speaker 5>For express shipping.

0:12:25.600 --> 0:12:28.760
<v Speaker 7>That's happening as well, and Walmart's getting a higher household

0:12:28.840 --> 0:12:32.440
<v Speaker 7>income consumer. So this really is difficult, but it all

0:12:32.480 --> 0:12:36.000
<v Speaker 7>needs to work together. And digital advertising is a very

0:12:36.080 --> 0:12:38.720
<v Speaker 7>high margin business seventy percent plus margins.

0:12:39.040 --> 0:12:41.520
<v Speaker 1>I'll big of an advantage do the likes of Walmart

0:12:41.559 --> 0:12:44.000
<v Speaker 1>and am as at another large retailers that have these

0:12:44.040 --> 0:12:47.000
<v Speaker 1>sort of multi channel businesses have When it comes to

0:12:47.040 --> 0:12:50.080
<v Speaker 1>the likes of tariffs, which pretty much universally we're expecting

0:12:50.080 --> 0:12:53.720
<v Speaker 1>to hear about early next year to have them implemented.

0:12:54.240 --> 0:12:55.280
<v Speaker 5>Across the sector.

0:12:55.320 --> 0:12:57.920
<v Speaker 7>In terms of the analysis, the earnings per share hits

0:12:57.960 --> 0:13:00.160
<v Speaker 7>will be mid to high single digits.

0:13:00.400 --> 0:13:01.040
<v Speaker 5>In terms of.

0:13:01.080 --> 0:13:03.920
<v Speaker 7>Themes and stocks to play, you know you own those

0:13:03.960 --> 0:13:07.640
<v Speaker 7>with the most scale. Walmart also has a history of

0:13:07.720 --> 0:13:13.120
<v Speaker 7>working quite aggressively with suppliers on managing prices, so we

0:13:13.320 --> 0:13:16.200
<v Speaker 7>like the prospects of Walmart. The big question and the

0:13:16.200 --> 0:13:20.480
<v Speaker 7>big opportunity and the big unintended consequence of terroriffs will

0:13:20.480 --> 0:13:24.840
<v Speaker 7>be passing this cost on to consumers, which may yield inflation,

0:13:25.280 --> 0:13:26.040
<v Speaker 7>So we'll see.

0:13:26.600 --> 0:13:27.920
<v Speaker 5>We think as much as.

0:13:27.760 --> 0:13:30.360
<v Speaker 7>Fifteen to ninety percent will need to be passed on

0:13:30.400 --> 0:13:32.240
<v Speaker 7>to consumers, and it's something to watch.

0:13:32.600 --> 0:13:35.000
<v Speaker 5>But you're gonna want to own those with scale and.

0:13:35.000 --> 0:13:38.000
<v Speaker 7>Walmart and Costco definitely failed the bill here.

0:13:37.960 --> 0:13:40.000
<v Speaker 6>Oliver, I'd love to talk about department stores. I know

0:13:40.360 --> 0:13:43.440
<v Speaker 6>you're not too excited about Macy's. Are there any department.

0:13:43.120 --> 0:13:43.840
<v Speaker 5>Stores you like?

0:13:44.360 --> 0:13:46.080
<v Speaker 6>And do you think they're going to have to lean

0:13:46.080 --> 0:13:48.240
<v Speaker 6>into more sales leading up to Christmas? I mean, open

0:13:48.280 --> 0:13:50.640
<v Speaker 6>my email this morning and I got burdof Goodman saying

0:13:50.679 --> 0:13:53.840
<v Speaker 6>extended one more day for the cyber sale. Does Cyber

0:13:53.880 --> 0:13:56.480
<v Speaker 6>Monday even exist anymore? Is it just cyber Week?

0:13:57.520 --> 0:14:01.440
<v Speaker 7>Well, it's definitely the cyber month and T minus forty

0:14:01.480 --> 0:14:04.800
<v Speaker 7>in terms of the events have started earlier and they're

0:14:04.800 --> 0:14:08.600
<v Speaker 7>more spread out and people aren't trampling each other anymore.

0:14:08.640 --> 0:14:11.000
<v Speaker 5>It's not as exciting as it used to be, so

0:14:11.280 --> 0:14:12.240
<v Speaker 5>that's happening.

0:14:12.280 --> 0:14:16.080
<v Speaker 7>And also lots of markdowns on the markdowns definitely. As

0:14:16.080 --> 0:14:18.920
<v Speaker 7>we think about department stores, we like Nord from Rack,

0:14:19.040 --> 0:14:21.480
<v Speaker 7>but what does that mean. It means department stores are

0:14:21.560 --> 0:14:25.080
<v Speaker 7>changing to be more off price and offer value there

0:14:25.120 --> 0:14:28.000
<v Speaker 7>and Nord from Rac did a pretty good job. We're hopeful,

0:14:28.080 --> 0:14:31.800
<v Speaker 7>but the big problem is getting younger customers in stores

0:14:31.880 --> 0:14:35.120
<v Speaker 7>and store traffic. The other nature of competition is changing

0:14:35.240 --> 0:14:39.080
<v Speaker 7>rapidly in apparel with Shean and TMU and ultra fast

0:14:39.160 --> 0:14:43.520
<v Speaker 7>fashion in the tiktokification of retail. Thinking about social selling,

0:14:43.600 --> 0:14:47.120
<v Speaker 7>that's something department stores are facing. The future is more

0:14:47.240 --> 0:14:51.800
<v Speaker 7>exclusive products, so Macy's is upgrading their private brands. That

0:14:51.840 --> 0:14:55.040
<v Speaker 7>should be a positive for getting younger consumers as well

0:14:55.040 --> 0:14:56.960
<v Speaker 7>as older consumers back in store.

0:14:57.480 --> 0:15:00.880
<v Speaker 2>Ali appreciate your time, sir, OUTIVI Chen there a TD Cowan,

0:15:11.320 --> 0:15:13.720
<v Speaker 2>Steve England are of standard charted rights. And the following

0:15:13.960 --> 0:15:16.280
<v Speaker 2>the question is what is core Trump and what is

0:15:16.320 --> 0:15:19.000
<v Speaker 2>tactical Trump. Core Trump is not wanting to see US

0:15:19.080 --> 0:15:22.360
<v Speaker 2>prestige and US interests put at risk. Tactical Trump is

0:15:22.400 --> 0:15:25.520
<v Speaker 2>a threat of tariffs to see what concessions he can obtain.

0:15:25.880 --> 0:15:28.600
<v Speaker 2>Steve joined us now for more save let's talk about

0:15:28.600 --> 0:15:32.160
<v Speaker 2>those threats. Are they credible threats? And do you and

0:15:32.160 --> 0:15:34.160
<v Speaker 2>to the people that you speak to every single day,

0:15:34.480 --> 0:15:36.560
<v Speaker 2>believe that he'd follow through on them.

0:15:37.240 --> 0:15:39.560
<v Speaker 8>I believe and I think they believe that will follow

0:15:39.640 --> 0:15:43.800
<v Speaker 8>through on them if he doesn't get satisfaction, you know,

0:15:43.840 --> 0:15:47.400
<v Speaker 8>in terms of changing policies and getting some visible concessions

0:15:47.440 --> 0:15:51.440
<v Speaker 8>from from other countries. The question does does he actually

0:15:51.520 --> 0:15:55.840
<v Speaker 8>want to slap on the tariffs on Canada, Mexico other

0:15:55.920 --> 0:15:58.240
<v Speaker 8>allies or does he he just does he just want

0:15:58.280 --> 0:16:02.720
<v Speaker 8>them to adjust their policies and kind of be more

0:16:02.720 --> 0:16:07.040
<v Speaker 8>friendly towards buying US products. And that's probably the case,

0:16:07.280 --> 0:16:13.280
<v Speaker 8>I think, you know, more than protectionism. He's probably doing

0:16:13.320 --> 0:16:16.280
<v Speaker 8>what you could call a protection racket, which is going

0:16:16.360 --> 0:16:20.560
<v Speaker 8>to them in advance of his being in power and saying, look, if.

0:16:21.360 --> 0:16:23.520
<v Speaker 9>You want to avoid trouble, this is what you've got

0:16:23.520 --> 0:16:23.760
<v Speaker 9>to do.

0:16:24.040 --> 0:16:26.600
<v Speaker 8>And if you you know, if you cooperate, then you

0:16:26.600 --> 0:16:27.720
<v Speaker 8>know things will be fine.

0:16:28.120 --> 0:16:29.920
<v Speaker 9>And I think that that's his preferred direction.

0:16:30.000 --> 0:16:33.320
<v Speaker 8>We'll have to see how, you know, how far they

0:16:33.320 --> 0:16:36.480
<v Speaker 8>are willing to go, and exactly what he does once

0:16:36.800 --> 0:16:40.840
<v Speaker 8>he gets into into office, and whether you know, he

0:16:40.920 --> 0:16:46.160
<v Speaker 8>focuses on you know, countries that are large trading partners,

0:16:46.200 --> 0:16:49.280
<v Speaker 8>or whether he focuses on China more directly because of

0:16:49.320 --> 0:16:52.000
<v Speaker 8>the national security ISSUECCS.

0:16:52.000 --> 0:16:54.640
<v Speaker 1>See how strong is too strong for the dollar given

0:16:54.680 --> 0:16:57.200
<v Speaker 1>some of the policies that we've heard from President elect

0:16:57.240 --> 0:16:59.360
<v Speaker 1>Donald Trump. And I say this as we already see

0:16:59.760 --> 0:17:03.400
<v Speaker 1>some at sports from the US really fall off significantly,

0:17:03.440 --> 0:17:06.440
<v Speaker 1>and at a time where this has been a president

0:17:06.600 --> 0:17:08.880
<v Speaker 1>who has waffled a bit when it comes to whether

0:17:08.920 --> 0:17:10.879
<v Speaker 1>he wants a strong or a week dollar.

0:17:12.720 --> 0:17:15.520
<v Speaker 8>Yeah, and I think there's a reason to waffle because

0:17:16.000 --> 0:17:20.359
<v Speaker 8>on the one hand, you you, dollar dominance is a

0:17:20.400 --> 0:17:24.160
<v Speaker 8>tremendous privilege and a trevendous advantage and enhances the US's

0:17:24.400 --> 0:17:28.919
<v Speaker 8>role both financially and politically in the world. You know,

0:17:29.040 --> 0:17:31.880
<v Speaker 8>everyone talks about service of reaction to the tariff threat.

0:17:31.920 --> 0:17:34.280
<v Speaker 8>But if I was a US exporter or even a

0:17:34.359 --> 0:17:37.439
<v Speaker 8>US farmer and seeing the dollar, you know, run up

0:17:37.440 --> 0:17:38.920
<v Speaker 8>to one o five, you know, it was one o

0:17:39.080 --> 0:17:42.600
<v Speaker 8>nine against the the euro before you know Trump election

0:17:42.640 --> 0:17:44.840
<v Speaker 8>at started going up. And if I was a manufacturer

0:17:44.880 --> 0:17:47.600
<v Speaker 8>who is depending on exports, I'd say, where, you know,

0:17:48.000 --> 0:17:51.080
<v Speaker 8>where's my tariff or where's my subsidy? Where's my protection?

0:17:51.680 --> 0:17:54.119
<v Speaker 8>Because that segment is going to be damaged. So I

0:17:54.160 --> 0:17:58.560
<v Speaker 8>think that there, you know, everybody, I think there's something

0:17:58.600 --> 0:18:00.920
<v Speaker 8>to be said for a strong dollar, you know, and

0:18:01.119 --> 0:18:04.720
<v Speaker 8>often it's a sign, a positive sign that capital is

0:18:04.720 --> 0:18:08.240
<v Speaker 8>flowing into your country for good reasons. But I think

0:18:08.240 --> 0:18:11.679
<v Speaker 8>that that remains to be seen. And just to finish

0:18:11.680 --> 0:18:16.200
<v Speaker 8>this thought, I think the judgment on the Trump economic

0:18:16.240 --> 0:18:18.480
<v Speaker 8>policy is not going to be done on the basis

0:18:18.520 --> 0:18:19.080
<v Speaker 8>of tariffs.

0:18:19.119 --> 0:18:21.240
<v Speaker 9>It's going to be done on the basis of.

0:18:21.160 --> 0:18:25.080
<v Speaker 8>How successful they are in terms of cutting governments spending

0:18:25.200 --> 0:18:29.439
<v Speaker 8>and doing the sort of structural and productivity enhancing reforms

0:18:29.480 --> 0:18:33.440
<v Speaker 8>that the Scott Bessant and the dilg team are promising.

0:18:33.480 --> 0:18:37.240
<v Speaker 8>Because if they're successful in that, the dollar will be strong.

0:18:37.480 --> 0:18:40.119
<v Speaker 8>But it won't matter if they're unsuccessful, then that the

0:18:40.200 --> 0:18:42.200
<v Speaker 8>dollar will be weak and it won't matter.

0:18:42.520 --> 0:18:44.200
<v Speaker 6>Can we talk about the other side of the euro

0:18:44.320 --> 0:18:46.880
<v Speaker 6>dollar tree when it comes to the euro. Now we're

0:18:46.920 --> 0:18:50.800
<v Speaker 6>facing a French government on the brink of collapse. Germany

0:18:50.840 --> 0:18:53.240
<v Speaker 6>will have fresh elections at the start of next year.

0:18:53.560 --> 0:18:57.000
<v Speaker 6>Are you concerned about contagion to the rest of the Eurozone.

0:18:59.040 --> 0:19:03.240
<v Speaker 9>Well, you know there's contagion, but the issue is real.

0:19:03.280 --> 0:19:05.520
<v Speaker 8>It's not like it's you know, it wouldn't be there

0:19:05.600 --> 0:19:08.480
<v Speaker 8>if Germany won't have these problems, if if France didn't

0:19:08.560 --> 0:19:12.639
<v Speaker 8>or the other way around. The issue is that, you know,

0:19:12.840 --> 0:19:15.080
<v Speaker 8>Europe has had bad luck. You know, they're one of

0:19:15.119 --> 0:19:20.080
<v Speaker 8>their major trading partners, China. You know, domestic mand consumer demand,

0:19:20.200 --> 0:19:25.520
<v Speaker 8>demand for luxury goods has really dropped, you know, you know,

0:19:25.920 --> 0:19:28.359
<v Speaker 8>the tragedy of the war in the Ukraine has really

0:19:29.280 --> 0:19:35.760
<v Speaker 8>you know, damaged their growth prospects. Structural policy has gone nowhere,

0:19:37.240 --> 0:19:39.160
<v Speaker 8>and they're left with the ECB is the only game

0:19:39.240 --> 0:19:42.119
<v Speaker 8>in town. And that's kind of what the market is

0:19:42.160 --> 0:19:44.600
<v Speaker 8>looking at and sort of saying, either you're going to

0:19:44.920 --> 0:19:48.880
<v Speaker 8>compromise on your fiscal goals, you know, with no hope

0:19:48.880 --> 0:19:51.800
<v Speaker 8>in sight that the budgets will be balanced or you know,

0:19:52.080 --> 0:19:54.720
<v Speaker 8>be put on a sustainable path, or you're going to

0:19:54.760 --> 0:19:57.959
<v Speaker 8>have to depreciate the euro through monetary policy. And that's

0:19:58.160 --> 0:20:01.280
<v Speaker 8>you know, so depending on which is emphasized, the pressure

0:20:01.359 --> 0:20:02.960
<v Speaker 8>or either be seen in the rates market or on

0:20:03.119 --> 0:20:03.880
<v Speaker 8>the Europe.

0:20:03.920 --> 0:20:05.720
<v Speaker 2>Hi Steve got to hear from Miss Steve England and

0:20:05.760 --> 0:20:09.960
<v Speaker 2>there a standard Chanta. This is the Bloomberg Surveillance podcast,

0:20:10.080 --> 0:20:14.000
<v Speaker 2>bringing you the best in markets, economics, and geopolitics. You

0:20:14.000 --> 0:20:16.800
<v Speaker 2>can watch the show live on Bloomberg TV weekday mornings

0:20:16.800 --> 0:20:19.760
<v Speaker 2>from six am to nine am Eastern. Subscribe to the

0:20:19.760 --> 0:20:23.280
<v Speaker 2>podcast on Apple, Spotify or anywhere else you listen, and

0:20:23.320 --> 0:20:26.199
<v Speaker 2>as always on the Bloomberg Terminal and the Bloomberg Business

0:20:26.200 --> 0:20:26.440
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