WEBVTT - Eaton Vance Head of Fixed Income: Keyed on Cyclical Rotation Trade 0:00:01.400 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.240 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.360 we bring you interviews from CEOs, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.600 along with essential market moving news. Find the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple Podcasts or wherever you listen to podcasts, 0:00:17.000 --> 0:00:19.880 and on Bloomberg dot com. If we're gonna take a 0:00:19.880 --> 0:00:21.799 look at the bond markets, we're gonna do that with 0:00:21.920 --> 0:00:26.800 Eric Stein, chief investment officer for fixed income at Eaton Vance. Eric, 0:00:26.800 --> 0:00:28.600 thanks so much for joining us here. We had some 0:00:28.880 --> 0:00:32.440 pretty big political news that we're digesting today. It appears 0:00:32.760 --> 0:00:37.159 it's not already called, but it appears that the Democrats 0:00:37.320 --> 0:00:42.240 will win both seats uh Senate seats in Georgia. Um, 0:00:42.280 --> 0:00:45.239 what does that mean do you think for markets? We're 0:00:45.240 --> 0:00:48.120 seeing a big move in the treasury market here with 0:00:48.120 --> 0:00:52.440 a tenure trading above one, you know, above one percent, 0:00:52.520 --> 0:00:54.880 close to one point zero five percent. What's it mean 0:00:54.920 --> 0:00:56.480 to you as it relates to the bond markets and 0:00:56.480 --> 0:01:00.880 a Democrat in the White House and perhaps controlling the Senate. Yeah, well, 0:01:00.960 --> 0:01:02.800 first off, thanks thanks for having me on. I guess 0:01:02.840 --> 0:01:06.040 you know, before the presidential election and the congressional election. 0:01:06.080 --> 0:01:07.880 We had an early November, everyone was talking about a 0:01:07.880 --> 0:01:09.800 blue wave and it didn't happen. And now it's you know, 0:01:09.840 --> 0:01:11.840 I'd say we're kind of having a blue wave light 0:01:11.959 --> 0:01:14.080 if you will. Uh So, certainly, you know, if you 0:01:14.080 --> 0:01:16.880 look at the market reaction today, the selloff and Treasury 0:01:17.000 --> 0:01:19.800 is the steepening of the yield curve, sectors like the 0:01:19.840 --> 0:01:22.840 banking sector, you know, outperforming. I think, you know, markets 0:01:22.840 --> 0:01:26.520 are focused on the potential for more fiscal stimulus coming 0:01:26.560 --> 0:01:29.360 from the Democrats, you know, assuming that that the second 0:01:29.400 --> 0:01:32.160 race you know, holds and off Off wins with thet 0:01:32.240 --> 0:01:35.520 split and Kemla Harris having the tie breaking vote control 0:01:35.520 --> 0:01:37.240 of the Senate. And you know, to me, the real 0:01:37.319 --> 0:01:40.640 question is, you know, how much should markets and focus 0:01:40.680 --> 0:01:43.520 on the fiscal stimulus versus the potential for higher taxes 0:01:43.720 --> 0:01:46.919 and more regulation. And my prior would be it's probably 0:01:46.920 --> 0:01:48.680 gonna be more of the fiscal stimulus, which is more 0:01:48.720 --> 0:01:51.560 of a positive than the regulation and tax increases, just 0:01:51.600 --> 0:01:54.400 because of the razor thin margin UH in both the 0:01:54.400 --> 0:01:57.040 House and UH and certainly in the Senate. But you know, 0:01:57.080 --> 0:01:59.160 I think that's what markets are focused on. That's why 0:01:59.160 --> 0:02:01.120 we have the steeping of the yield curve, you know 0:02:01.240 --> 0:02:03.600 right now. So what's the next move for the yield curve? 0:02:03.720 --> 0:02:05.560 Would be time to load the vote on ten years 0:02:05.560 --> 0:02:09.280 and beyond or or look, I know to me, this 0:02:09.360 --> 0:02:11.400 is where you know, what the FED does is going 0:02:11.440 --> 0:02:13.720 to be particularly interesting. So if you think about the 0:02:14.040 --> 0:02:15.760 FED policy, and we saw it, you know, over the 0:02:15.800 --> 0:02:18.600 summer with the virtual Jackson hole and then more comments 0:02:18.600 --> 0:02:20.680 from Powell and the rest of the FOMC, if this 0:02:20.760 --> 0:02:24.359 average inflation targeting concept where the Fed, you know, it 0:02:24.560 --> 0:02:27.480 is kind of committed to not let bygones be bygones. 0:02:27.520 --> 0:02:29.960 So if they're missing to the downside, which they have 0:02:30.040 --> 0:02:32.440 been on their inflation target, to run easy policy and 0:02:32.480 --> 0:02:35.600 so you know, I think we're assuming all holds with 0:02:35.600 --> 0:02:38.400 with the vaccine rollout and we get this cyclical recovery 0:02:38.400 --> 0:02:40.720 that I think very likely will happen, but you don't 0:02:40.720 --> 0:02:43.000 know what until it really happens and you get more 0:02:43.000 --> 0:02:46.120 fiscal stimulus, you'll have some pressure on the back end 0:02:46.560 --> 0:02:48.520 of the curve, and I think the FED will be 0:02:48.560 --> 0:02:53.079 okay with that if it's because of recoveries, recovering the 0:02:53.120 --> 0:02:56.280 economy and because higher inflation, So real rates aren't going 0:02:56.360 --> 0:02:58.200 up a lot. Where I think the FED might step 0:02:58.200 --> 0:03:01.520 in and buy more bonds, you know, would be if 0:03:01.600 --> 0:03:04.080 real rates are going up and if financial conditions are 0:03:04.080 --> 0:03:06.600 getting tighter preemptively in their view. So I think it's 0:03:06.600 --> 0:03:09.720 gonna be really important to watch the Fed's reaction going 0:03:09.760 --> 0:03:12.880 forward and how that interacts with both fiscal policy and 0:03:13.240 --> 0:03:15.560 you know, hopefully a cyclical recovery you know, post the 0:03:15.639 --> 0:03:18.760 vaccine rollout. So ered, what what is your view on 0:03:18.919 --> 0:03:21.880 inflation here? We're seeing a tick up a little bit recently. 0:03:21.880 --> 0:03:23.160 What are your what are you thinking? Is you think 0:03:23.200 --> 0:03:26.360 about your I think there's a lot of conditions in 0:03:26.400 --> 0:03:29.440 place for an increase in inflation. Um, you know, as 0:03:29.440 --> 0:03:32.040 I said, you mentioned before, the whole the point of 0:03:32.080 --> 0:03:35.520 FED policy right now, you know, the FED policy over 0:03:35.560 --> 0:03:37.839 the past you know, six months or so, as we've 0:03:37.840 --> 0:03:41.400 had this recovery uh in markets. But obviously the economy 0:03:42.280 --> 0:03:44.400 things are a little better, but still mostly on hold 0:03:44.440 --> 0:03:47.240 with with covid um. The Feds you know, been at 0:03:47.320 --> 0:03:49.240 zero and not doing much, which isn't you know and 0:03:49.400 --> 0:03:52.080 say is doing so much for the economy, but it's 0:03:52.120 --> 0:03:54.800 doing something. When the economy starts to take off. If 0:03:54.840 --> 0:03:57.280 the FED really does keep rates at low and you know, 0:03:57.320 --> 0:03:59.240 at zero and tries to stay behind the curve, that's 0:03:59.240 --> 0:04:02.920 an impulse for inflation. If there's a cyclical pickup, that's 0:04:02.920 --> 0:04:05.920 an impulse for inflation. Even you know, forgetting the FED 0:04:05.960 --> 0:04:08.280 policy which is which is going to be easier, and 0:04:08.320 --> 0:04:12.000 then you get fiscal and potentially more more government spending 0:04:12.000 --> 0:04:14.160 and you see commodity prices and other things start to 0:04:14.160 --> 0:04:16.640 go up. I think there's a lot of things lining 0:04:16.720 --> 0:04:19.480 up to get more inflation, and we're starting to see 0:04:19.480 --> 0:04:23.120 that priced into two various asset markets. How is the 0:04:23.160 --> 0:04:27.400 weakening dollar index changing how you're looking at bond markets 0:04:27.400 --> 0:04:31.000 around the world argon and where you're placing your bets. Yes, 0:04:31.040 --> 0:04:33.000 so you know, I certainly think that you know, we 0:04:33.040 --> 0:04:36.480 will continue to see a weakening dollar, you know from here. 0:04:37.160 --> 0:04:39.320 You know, if you're a U. S. Dollar based investor, 0:04:39.720 --> 0:04:43.720 it makes non non dollar assets, you know, more attractive. 0:04:43.800 --> 0:04:45.600 So you know, I think you know, in our let's say, 0:04:45.720 --> 0:04:49.400 advanced global macro strategy, looking for non dollar currencies going 0:04:49.400 --> 0:04:52.960 along currencies against the the US dollar, And you know, 0:04:54.120 --> 0:04:58.880 coronavirus is all over the world and you can't discount yeah, correct, 0:04:58.920 --> 0:05:01.039 And you know there's there's there's there's some places that 0:05:01.080 --> 0:05:04.200 are you know, more more attractive than than others, you know, 0:05:04.320 --> 0:05:06.800 for for sure. Um, you know, I think of you know, 0:05:07.160 --> 0:05:09.960 one place from both a bond and a currency perspective, 0:05:10.000 --> 0:05:11.920 I'll say is China. And you talk about the place 0:05:11.960 --> 0:05:14.960 that that has had the corona even the coronavirus originated there, 0:05:15.000 --> 0:05:17.520 certainly has had it more under control. You know, you 0:05:17.560 --> 0:05:21.520 have significantly more attractive government bond yield stuff. Then you 0:05:21.600 --> 0:05:23.960 get in the US and frankly, you know a lot 0:05:23.960 --> 0:05:26.480 of other places not only developed but the emerging world, 0:05:26.880 --> 0:05:28.719 and you know, to some extent, and we'll have to 0:05:28.760 --> 0:05:32.599 see how you know, US policy is visa vach China 0:05:32.720 --> 0:05:34.640 with the Biden administration, I think that's you probably do 0:05:34.640 --> 0:05:36.720 the whole whole segment on that. But I think you know, 0:05:36.760 --> 0:05:40.400 the Chinese are okay with with running a fairly strong 0:05:40.600 --> 0:05:42.960 uan policy. And so if you have a uh, you know, 0:05:43.040 --> 0:05:45.920 week dollar environment, which I think we're in and we'll 0:05:45.920 --> 0:05:48.280 continue to be in. Uh And you also have the 0:05:48.360 --> 0:05:51.880 Chinese policymakers that are okay with the yuan getting stronger. Uh. 0:05:52.000 --> 0:05:54.360 You know, I think being invested in Chinese government bonds 0:05:54.400 --> 0:05:57.520 both from an interest rate perspective quite attractive, but also 0:05:57.560 --> 0:06:00.800 from a US dollar investment perspect div I think the 0:06:00.880 --> 0:06:04.720 Uan will will appreciate versus the US dollar. ERED love 0:06:04.760 --> 0:06:07.040 to get your thoughts on kind of the credit quality 0:06:07.080 --> 0:06:10.080 out there you're seeing perhaps in your portfolio. I mean, we're, 0:06:10.120 --> 0:06:12.200 you know, ten eleven months into this pandemic and the 0:06:12.240 --> 0:06:15.839 economic fallout. Are you starting to really see it in 0:06:15.960 --> 0:06:19.160 credit quality? Yeah? You know, Look, look when we talk, 0:06:19.200 --> 0:06:21.440 you know, I think of you know, eating vance fixed income. 0:06:21.520 --> 0:06:23.279 Really it's our our bread and butter. Is our you know, 0:06:23.320 --> 0:06:26.280 bank loan and high yield, investment grade credit or credit shop. 0:06:26.360 --> 0:06:28.880 And you also sovereign a musicipal credit, uh, you know 0:06:28.960 --> 0:06:30.800 as well. And you know, I certainly think in the 0:06:30.839 --> 0:06:32.760 more leverage parts of the market and bank loans and 0:06:32.839 --> 0:06:35.440 high yield. For sure, you've had higher default rates, you know, 0:06:35.480 --> 0:06:37.359 the past twelve months, and then you had you know, 0:06:37.400 --> 0:06:40.120 the previous twelve months in two thousand nineteen, But a 0:06:40.120 --> 0:06:42.479 lot of those default rates aren't nearly as high as 0:06:42.640 --> 0:06:45.520 as beefore. Certainly thinking about March of last year in 0:06:45.560 --> 0:06:47.919 the kind of heart of the of the pandemic, and 0:06:47.960 --> 0:06:49.720 we you know, we started to see recovery and more 0:06:49.720 --> 0:06:51.840 of the COVID sensitive names, and so I think the 0:06:52.160 --> 0:06:56.080 best thing, um, you know, for for credit markets right now, 0:06:56.120 --> 0:06:58.159 you know, it's really two things. One is if the 0:06:58.160 --> 0:07:01.280 economy picks up, that helps you cash flows for businesses 0:07:01.320 --> 0:07:03.560 and it makes them um more credit worthy. But you 0:07:03.600 --> 0:07:05.240 know the other thing we're seeing is the bond markets 0:07:05.240 --> 0:07:07.600 are just open for issuance. I mean you get emails 0:07:07.720 --> 0:07:10.800 record issuance, and the investment grade market kind of markets 0:07:10.800 --> 0:07:13.240 off and off and running with you know, with lots 0:07:13.280 --> 0:07:16.640 of issuance. And so capital markets are open. Uh. And 0:07:16.680 --> 0:07:20.240 if companies or or sovereigns or municipalities can take advantage 0:07:20.240 --> 0:07:23.239 of those, that kind of by construction makes them better 0:07:23.280 --> 0:07:26.840 credits because they're they're paying relatively low interest rates and 0:07:27.040 --> 0:07:30.080 have you know, you know, relatively good terms to issue debt. 0:07:30.160 --> 0:07:33.640 So I think we're certainly kind of in this sweet spot, uh, 0:07:33.960 --> 0:07:36.320 in that regards with capital markets open and with the 0:07:36.320 --> 0:07:41.280 economy hopefully it looks like but again very vaccine dependent. Uh, 0:07:41.320 --> 0:07:43.720 you know, about to take a cyclical increase, you know 0:07:43.840 --> 0:07:46.800 at some point once once the rolla happens. Eric, how 0:07:46.840 --> 0:07:49.560 disciplined have you been how much drive powder or easily 0:07:49.560 --> 0:07:52.720 accessible powder. Let's say, do you have at your disposal 0:07:52.800 --> 0:07:56.000 percentage wise? Yeah, there was a great question, I'd say, 0:07:56.040 --> 0:07:57.640 you know, to me. To me, the great thing about 0:07:57.640 --> 0:07:59.760 how we're structured to eat advance is all of our 0:07:59.800 --> 0:08:02.520 differ and investment teams invest differently. So there's not there's 0:08:02.520 --> 0:08:04.920 not one particular number. You know, we have multiple different 0:08:04.920 --> 0:08:08.120 funds on multiple different teams. Um you know where where 0:08:08.160 --> 0:08:11.080 cash is different, you know, percentages across those, So there's 0:08:11.080 --> 0:08:13.880 not there's not one you know, perfect answer to that. 0:08:13.920 --> 0:08:16.160 But but i'd say, you know, in general, you know, 0:08:16.200 --> 0:08:18.920 we're a place looking for kind of relative value across 0:08:19.000 --> 0:08:22.200 markets as opposed to just timing markets with with having 0:08:22.240 --> 0:08:24.280 cash and and and dry powder. Although that you know, 0:08:24.320 --> 0:08:28.280 certainly various strategy by strategy. Eric, you know, we've seen 0:08:28.360 --> 0:08:31.720 in the equity markets a rotation trade, if you will, 0:08:31.840 --> 0:08:34.360 from some of the tried and true high growth tech 0:08:34.440 --> 0:08:37.960 names into some of the more cyclical areas of the market, 0:08:38.000 --> 0:08:41.079 anticipating you know, the other side of this pandemic and 0:08:41.480 --> 0:08:45.000 economic reopening and rebound beginning arguably some time in the 0:08:45.040 --> 0:08:49.240 middle of this year. Have you been doing something similar 0:08:49.400 --> 0:08:53.000 with your fixed income portfolios. Yes, so I think it's 0:08:53.000 --> 0:08:55.000 a great question. To me, it's it's the number one 0:08:55.040 --> 0:08:57.600 thing I'm I'm watching from a you know, from a 0:08:57.600 --> 0:09:00.520 financial market perspective, is does this rotation trade that you 0:09:00.520 --> 0:09:03.400 know kind of started, uh you November of last year 0:09:03.480 --> 0:09:05.959 kind of post election, post those two mondays that that 0:09:06.040 --> 0:09:08.440 we had the good vaccine news. Uh. And you know, 0:09:08.679 --> 0:09:11.559 obviously I think it's it's you know, growth stocks to cyclical, 0:09:11.760 --> 0:09:14.880 but it's also you know, US to non us um. 0:09:14.920 --> 0:09:16.520 But I think it's you know, a setonymous from a 0:09:16.559 --> 0:09:19.800 bond market perspective, with with a steeper yield curve with 0:09:19.920 --> 0:09:23.880 COVID credits, um, you know, the COVID hit credits outperforming 0:09:23.880 --> 0:09:25.240 and things like that. And so I think when you 0:09:25.280 --> 0:09:28.800 look at broad markets, obviously, you know, broad market valuations, 0:09:28.880 --> 0:09:32.560 pe ratios, spreads and whatnot, you know, could look fairly stressed, 0:09:32.600 --> 0:09:35.200 you know, stretched or at least fully valued. But I 0:09:35.240 --> 0:09:37.559 think the you know, that cyclical trade, I think is 0:09:37.559 --> 0:09:40.520 probably where there's still some value left across financial markets. 0:09:40.520 --> 0:09:43.199 And assuming again assuming I'll reiterate this again, that the 0:09:43.240 --> 0:09:46.280 vaccine rollout goes well, I expect money to continue to 0:09:46.280 --> 0:09:48.440 flow there. So yeah, I think, you know, selectively, we've 0:09:48.440 --> 0:09:50.640 been adding in some of the COVID related credits and 0:09:50.679 --> 0:09:53.400 also you know, inflation break evens and they used to 0:09:53.440 --> 0:09:55.880 continue to go up. But I think, you know, markets 0:09:55.920 --> 0:09:59.360 that will benefit from um, you know, inflation going up, 0:09:59.360 --> 0:10:01.720 so inflation break even trades or other you know types 0:10:01.760 --> 0:10:03.640 of trades that will benefit from a steeper reel curve. 0:10:03.800 --> 0:10:05.439 You know we have we do have some of those 0:10:05.480 --> 0:10:07.640 in our portfolios for sure. Alright, I'm sure you how 0:10:07.679 --> 0:10:10.199 to call this morning. Was there any sort of target 0:10:10.200 --> 0:10:15.040 on the tenure yield? I don't have a particular call, 0:10:15.480 --> 0:10:17.280 you know on the tenure. Yeah, I would think that 0:10:17.360 --> 0:10:19.040 it you know, it probably goes up a little bit 0:10:19.080 --> 0:10:21.480 from here. To me, the most important thing will be, 0:10:21.840 --> 0:10:24.400 you know, what is the what is the FED respond 0:10:24.480 --> 0:10:26.320 How does the FED respond to it? And again I 0:10:26.320 --> 0:10:28.839 think if it's if it's because we're getting cyclical growth, 0:10:28.880 --> 0:10:31.080 it's because we're getting higher inflation, they're okay with it. 0:10:31.280 --> 0:10:33.640 If real rates start to go up a lot and 0:10:33.640 --> 0:10:36.280 that tightens financial conditions, then I think the Fed, the 0:10:36.320 --> 0:10:38.800 FED jumps in. So to me, that's the most important 0:10:38.840 --> 0:10:41.280 thing to watch when thinking about the ten year treasury. 0:10:41.280 --> 0:10:43.120 But my bias would be that it probably goes up 0:10:43.200 --> 0:10:46.360 a little bit from here. So, Eric, where is the 0:10:46.400 --> 0:10:50.800 best value that you're seeing in the market right here? Yeah? 0:10:50.840 --> 0:10:52.600 So I think you know a couple of places, you know, 0:10:53.040 --> 0:10:56.200 emerging market local currencies I think are good value. I 0:10:56.240 --> 0:10:59.000 think bank loans are good value. I think parts of 0:10:59.000 --> 0:11:03.760 the you know, securitized market clos are good value. UM. 0:11:03.920 --> 0:11:06.800 And I think they're they're certainly selective opportunities, you know, 0:11:06.880 --> 0:11:10.880 across across those uh, those markets, you know, as well 0:11:10.920 --> 0:11:13.000 as trades that have been on a steeper yield curve 0:11:13.080 --> 0:11:16.360 or better been on higher inflation, so things in the 0:11:16.440 --> 0:11:20.719 recovery UM kind of bucket. I would think that, you know, 0:11:20.760 --> 0:11:23.840 there's probably the best value out there, but again, nothing 0:11:23.920 --> 0:11:25.920 is the value of what it was, you know, post 0:11:25.960 --> 0:11:28.400 that mark sell off, even back the summer markets have 0:11:28.520 --> 0:11:30.600 moved a lot. But but I still think there's there's 0:11:30.640 --> 0:11:34.200 some selective areas of opportunity for sure. All right, Eric, 0:11:34.280 --> 0:11:37.120 thank you so much for joining today, and excellent day 0:11:37.160 --> 0:11:38.839 to be speaking with us, and for us to be 0:11:38.880 --> 0:11:41.520 speaking with you, I should say rather. Eric Stein is 0:11:41.720 --> 0:11:46.559 chief investment officer for fixed income at the massive, humongous 0:11:46.640 --> 0:11:53.320 Boston based to eat in Vans. The calculus could potentially 0:11:53.360 --> 0:11:57.960 be changing given induction results in Georgia. We haven't got 0:11:57.960 --> 0:12:01.160 the absolute final figures yet, but one thing we did 0:12:01.240 --> 0:12:03.520 have today was a DP employment change which showed a 0:12:03.600 --> 0:12:08.560 drop of one three thousand private sector payrolls. Economists were 0:12:08.559 --> 0:12:10.240 looking for that to be a positive figure of seventy. 0:12:11.120 --> 0:12:15.839 So let's bring in Carl Weinberger finder and High Frequency 0:12:15.360 --> 0:12:19.480 Economics chief economists to explain to us how the calculus 0:12:19.520 --> 0:12:22.360 for him has changed over the last twenty four hours. Literally, 0:12:22.440 --> 0:12:27.480 Carl Vannie, good morning. Um, yeah, it's an exciting night 0:12:27.640 --> 0:12:31.679 overnight for anyone watching the US economic and budget prospects. 0:12:32.240 --> 0:12:37.640 We see likely wins, although still not confirmed by Democratic candidates, 0:12:37.720 --> 0:12:41.320 and um, the Georgia runoff. Everybody knows that already. That 0:12:41.440 --> 0:12:43.560 opens up the door to getting more done under the 0:12:43.559 --> 0:12:48.959 Biden administration, probably not a full blown new green economic deal, 0:12:49.559 --> 0:12:52.959 but putting together a package that can appeal to most 0:12:53.000 --> 0:12:55.440 of the center of the road Democrats and maybe drawing 0:12:55.720 --> 0:12:58.520 some of the center of the road Republicans and pulled 0:12:58.559 --> 0:13:02.120 together a coalition and to send it to enable Biden 0:13:02.160 --> 0:13:05.200 to realize some of his goals. That probably means some 0:13:05.280 --> 0:13:08.560 reversal of some of the Trump tax increases. It probably 0:13:08.640 --> 0:13:13.400 means more support for incomes of people. UH. And again 0:13:13.440 --> 0:13:16.640 tweaks here and there on the Trump program to bring 0:13:16.720 --> 0:13:19.520 up more inline democratic thinking. I don't think we get 0:13:19.600 --> 0:13:23.560 radical results out of it, but we will see change. Carl, 0:13:23.600 --> 0:13:27.680 what kind of spending bill do you believe UH has 0:13:27.800 --> 0:13:31.200 perhaps the most bipartisan support in what looks like to 0:13:31.240 --> 0:13:34.400 be this new Congress, and and and what will have 0:13:34.440 --> 0:13:38.840 the biggest impact on the economy. Yeah, so I think 0:13:38.880 --> 0:13:41.640 that the first word that comes to mind his income support. 0:13:41.880 --> 0:13:43.960 And we're going to get some increase in the package 0:13:44.240 --> 0:13:48.360 that that we've seen UH that was put out so far. 0:13:48.840 --> 0:13:51.520 The American households need that kind of support right now, 0:13:51.760 --> 0:13:53.520 and this is the time to go to the trenches 0:13:53.679 --> 0:13:57.880 and get it. Number two infrastructure, all right, great depression alright, 0:13:57.880 --> 0:14:00.240 ifd are sending people out to dig dig is in 0:14:00.320 --> 0:14:02.800 the build ugly roads in New Jersey and ugly bridges 0:14:03.000 --> 0:14:05.840 that are still standing today out of concrete. Um, we 0:14:05.920 --> 0:14:08.480 have to put people to work, and infrastructure projects or 0:14:08.480 --> 0:14:11.000 a way to do that. I think that infrastructure is 0:14:11.000 --> 0:14:13.600 something that even Republicans who are trying to get themselves 0:14:13.600 --> 0:14:17.120 reelected and as soon as two years have to be 0:14:17.160 --> 0:14:19.840 able to agree with the Democrats on and number three, 0:14:19.880 --> 0:14:21.800 I think taxes. I think this is a big cry 0:14:21.800 --> 0:14:24.960 among the Democrats. We're going to see some unrolling at 0:14:25.000 --> 0:14:27.560 least of some of the higher income tax breaks that 0:14:27.600 --> 0:14:32.120 came out of the Trump administration's tax efforts. We'll see 0:14:32.160 --> 0:14:36.760 probably a restoration of the state and local tax deductions, um, 0:14:36.880 --> 0:14:40.080 and things like that. Yeah, I mean, that's a huge 0:14:40.080 --> 0:14:44.800 agenda if Chuck Schumer does actually display Republican leader Mitch 0:14:44.880 --> 0:14:47.640 McConnell of the centers thereby deciding on what can come 0:14:47.680 --> 0:14:51.720 before the chamber for a full vote. And you know, 0:14:51.840 --> 0:14:54.880 Joe Biden has Kamala Harris to sort of cast a 0:14:54.920 --> 0:14:58.800 tie breaking vote. Just how to the left will Joe 0:14:58.840 --> 0:15:01.480 Biden go with as legislation. And I mean a lot 0:15:01.520 --> 0:15:06.040 of Democrats that are elected are pretty moderate too. Yeah, well, Bunnie, 0:15:06.120 --> 0:15:09.040 let's remember how we got the president stimulus bill done 0:15:09.320 --> 0:15:11.560 just to look for a third way. Um, if I 0:15:11.600 --> 0:15:15.000 can borrow that phrase from somebody else. Um. We saw 0:15:15.200 --> 0:15:19.360 moderate Republicans joined together with moderate Democrats to get fifty 0:15:19.360 --> 0:15:21.280 one votes in the Senate to bring the bill to 0:15:21.320 --> 0:15:26.440 the floor, going around Mitch McConnell's view that objections to 0:15:26.480 --> 0:15:28.640 bringing it to the floor at all. And this is 0:15:28.640 --> 0:15:31.760 another way that this can move forward, alright, movement towards 0:15:31.800 --> 0:15:34.960 the center on ideas that appeal to both moderate Democrats 0:15:34.960 --> 0:15:37.560 and moderate Republicans. This is the way things used to 0:15:37.600 --> 0:15:39.720 work in Congress. You know, we'd find a place in 0:15:39.760 --> 0:15:42.880 the middle that everybody could get to with each side 0:15:42.920 --> 0:15:45.560 is being willing to make compromises. I think you can't 0:15:45.640 --> 0:15:47.520 rule that out as a way that this is going 0:15:47.560 --> 0:15:50.800 to go, that it's going to be the center as 0:15:50.920 --> 0:15:53.120 much as the majority leader who's going to be driving 0:15:53.120 --> 0:15:56.000 the agenda in the Senate. Corl Let's switch gears a 0:15:56.000 --> 0:15:58.520 little bit to China. We've had some news today about 0:15:58.560 --> 0:16:01.640 the delisting appears to be off on some of these 0:16:01.680 --> 0:16:05.120 China telecom names. What do you what is your expectation 0:16:05.320 --> 0:16:10.280 for um trade under a Biden administration? How do you 0:16:10.440 --> 0:16:14.320 expect this administration will uh address a trade and just 0:16:14.360 --> 0:16:18.240 broad at tensions issues with China? Paul, I thought you 0:16:18.280 --> 0:16:21.800 were going to ask me about inflation on China. All Right, 0:16:21.960 --> 0:16:25.880 We're going to see I think not such a big 0:16:26.280 --> 0:16:29.120 We'll see a change in attitude and an approach, but 0:16:29.240 --> 0:16:32.360 not such a big series of concessions coming right out 0:16:32.400 --> 0:16:35.880 of the gun. The Trump administration has left a lot 0:16:35.920 --> 0:16:38.760 of chips on the table for the Biden administration to play. 0:16:39.040 --> 0:16:41.560 I think the Biden administration will be tough on China, 0:16:41.760 --> 0:16:44.120 although perhaps coming at it from a more balanced point 0:16:44.120 --> 0:16:47.280 of view, and they're not going to unwind tariffs and 0:16:47.360 --> 0:16:50.720 sanctions unless they get something back for it. The test 0:16:50.760 --> 0:16:52.880 of that theory will be whether the Chinese think it's 0:16:52.920 --> 0:16:56.440 important anymore to play cade American interest, but whether they're 0:16:56.440 --> 0:16:59.520 completing a pivot toward Europe that gives Europe a role 0:16:59.560 --> 0:17:02.240 on China, this geo strategy that the US might have 0:17:02.320 --> 0:17:04.520 had but now won't have. So there's a lot of 0:17:04.560 --> 0:17:07.720 potential dynamics there. But I don't think the Biden administration 0:17:07.800 --> 0:17:10.439 is going to come out making nice nice with the 0:17:10.440 --> 0:17:13.920 government in China. I think that any rolling back of 0:17:14.000 --> 0:17:18.320 trade restrictions is going to be um uh sast over time. 0:17:18.600 --> 0:17:21.679 One other point, despite all the sanctions and all the 0:17:21.680 --> 0:17:25.960 other things, goodness gracious, China book the record trade surface 0:17:26.080 --> 0:17:28.560 with the United States on record exports in the last 0:17:28.560 --> 0:17:32.000 monthly report. It's not killing them. What the Trump administration 0:17:32.040 --> 0:17:35.399 has been doing. Hey, Carl, thanks so much for joining us. 0:17:35.400 --> 0:17:39.480 We always appreciates your thoughts. UH and out LA Carl Winberg, 0:17:39.560 --> 0:17:43.080 founder and chief International Economists for High Frequency Economics, based 0:17:43.119 --> 0:17:47.240 in New York City. Another fascinating story we've been following 0:17:47.280 --> 0:17:49.480 for the last several days is the New York Stocks 0:17:49.600 --> 0:17:53.200 Change UH and its dealings with some of these Chinese 0:17:53.200 --> 0:17:56.479 telecom companies and the n y SC surprise markets. Again 0:17:56.560 --> 0:17:59.920 today it's reverting to its original plan to de lish 0:18:00.000 --> 0:18:03.560 shares of three Chinese companies. From where we bring advance 0:18:03.640 --> 0:18:07.679 reporter Lenan Newon in New York. Lennon, I've been getting 0:18:07.760 --> 0:18:11.159 whip sale, like I'm sure many investors have by the 0:18:11.160 --> 0:18:14.119 New York Soacker Change and it's listing delisting of these 0:18:14.200 --> 0:18:18.240 Chinese companies. What's the latest. So, the latest, Paul, which 0:18:18.280 --> 0:18:21.320 is something that we um we're reporting on sources yesterday, 0:18:21.720 --> 0:18:25.160 is that NYC will go ahead with the listing through 0:18:25.160 --> 0:18:28.320 the Chinese companies. Now, what it has done is gotten 0:18:28.720 --> 0:18:32.399 specific guidance from the Treasury Department that these companies and 0:18:32.400 --> 0:18:35.520 those securities are in scope, and so it's decided to 0:18:35.560 --> 0:18:40.480 proceed again with the listing right so you know, you 0:18:40.480 --> 0:18:43.280 you sort of answer my next question to certain extend 0:18:43.320 --> 0:18:47.040 Treasury Secretary Steven Mnuchen calling on n YSC President Stacy 0:18:47.119 --> 0:18:51.639 Conningham to say he opposed the Shock announcements to grant 0:18:51.680 --> 0:18:55.360 the company's a reprieve. So how much do pause explain 0:18:55.480 --> 0:18:58.560 to the saga how much are they allowed to? I 0:18:58.680 --> 0:19:02.119 think there's a lot of politics already embedded in that question, body, 0:19:02.200 --> 0:19:06.000 And this is a highly highly political story here. So 0:19:06.520 --> 0:19:09.359 obviously we can't look at this without looking at the 0:19:09.560 --> 0:19:12.320 context of the U. S. And China trade tensions and 0:19:12.480 --> 0:19:15.679 you know, trade war that we're in Wisconsin right now, 0:19:15.800 --> 0:19:19.200 and so obviously, um, you know, a U S Stock 0:19:19.240 --> 0:19:24.520 exchange deciding to delist securities of Chinese companies is highly political, 0:19:24.760 --> 0:19:28.959 highly contentious. Obviously, it was criticized in China. Those companies 0:19:29.000 --> 0:19:31.439 are kind of watching the situation closely, and also it's 0:19:31.520 --> 0:19:34.680 being watched very closely by the US business community as well. 0:19:35.080 --> 0:19:38.920 Many US firms, including the biggest US banks, are trying 0:19:39.000 --> 0:19:41.560 to expand in China, and so you know, this kind 0:19:41.600 --> 0:19:45.280 of puts things in a sort of contentious um and 0:19:45.520 --> 0:19:50.480 and tense environment. So I kind of was surprised. I 0:19:50.560 --> 0:19:53.240 guess it was most surprising was yesterdays announcement or they 0:19:53.240 --> 0:19:56.400 announced by the n y s E to uh suspend 0:19:56.560 --> 0:19:59.480 the delisting if you will. Did they kind of go 0:19:59.720 --> 0:20:05.560 row there yesterday? It's very unclear. A lot of our 0:20:05.680 --> 0:20:08.600 sources are still scratching their heads. There are a lot 0:20:08.640 --> 0:20:11.320 of questions about what happened behind the scenes here, Paul, 0:20:11.440 --> 0:20:14.399 So unfortunately I can't answer that question too directly, but 0:20:14.520 --> 0:20:16.639 what I can say is that, um, you know, it 0:20:16.800 --> 0:20:19.480 sounds like this was messy on both sides. It sounds 0:20:19.520 --> 0:20:21.159 like it was messy in terms of, um, you know, 0:20:21.400 --> 0:20:24.520 how how it was handled and decided within government and 0:20:24.600 --> 0:20:28.520 also how it was rolled out by NYC. Obviously, big 0:20:28.720 --> 0:20:32.280 U S companies don't tend to you know, take action, 0:20:32.520 --> 0:20:35.520 reverse and then reverse again. Um. And so obviously there 0:20:35.680 --> 0:20:37.320