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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along

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Speaker 2: with Paul Sweeney. Join us each day for insight from

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Speaker 2: the best in economics, finance, investment, and international relations. You

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Speaker 2: can also watch the show live on YouTube. Visit the

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Speaker 2: Bloomberg Podcast channel on YouTube to see the show weekday

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Speaker 2: mornings from seven to ten am Eastern from our global

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Speaker 2: headquarters in New York City. Subscribe to the podcast on Apple, Spotify,

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Speaker 2: or anywhere else you listen and always i Bloomberg Radio,

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Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. We are

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Speaker 2: thrilled to have joined us. Now we are commercial free.

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Speaker 2: In this hour, We're going to use as much time

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Speaker 2: with her as we can. Liz Anne Saunders is with

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Speaker 2: Charles Schwab and she has earned the ability not to

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Speaker 2: work on the Friday after fourth of July, but she's

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Speaker 2: a trooper. She's here. Plus the Gordon guy, I mean,

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Speaker 2: you know, like he wants the job. Let's be honest, Paul,

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Speaker 2: I mean.

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Speaker 3: He's shame on the BLS for doing that.

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Speaker 4: Yeah, Fourth, what an interesting market.

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Speaker 2: Listen.

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Speaker 4: There's a lot of people.

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Speaker 2: They're on the deck they've got the light tonic, they've

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Speaker 2: got the gin, they got the umbrella in the drink whatever,

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Speaker 2: and they're going, what in God's name do we do now?

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Speaker 2: What is the action allocation of Charles Schwab into the

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Speaker 2: end of the year.

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Speaker 3: Well, Tom, we have talked about this a lot, just

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Speaker 3: the beautiful discipline that is rebalancing, and I think that

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Speaker 3: helps when you have a concentration problem like you do now.

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Speaker 3: But the concentration problem is exacerbated by the huge underperformance

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Speaker 3: outside of the small handful of megacap names. The nasdaq's

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Speaker 3: average member maximum drawdown is almost forty percent this year.

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Speaker 3: That also breeds opportunities, and it wouldn't surprise me if

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Speaker 3: we see some consolidation and some convergence where you get

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Speaker 3: some profit taking episodes up the cap spectrum into those

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Speaker 3: leadership names. But opportunities present themselves in other areas of

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Speaker 3: the market. We've seen some cyclical leadership crop up in

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Speaker 3: the last week or two. That's kind of interesting, but

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Speaker 3: I think really key, you still have to stay up

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Speaker 3: in quality. Just the profitability differentially, particularly within Internet's like

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Speaker 3: the Russell two thousand is a twenty percentage point spread

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Speaker 3: in the past year between not profitable and profitable, strong

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Speaker 3: balance sheet, high interest coverage. So that's our message for

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Speaker 3: within the equity asset class.

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Speaker 2: This is what surveillance is about. Lindsay pigs where us

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Speaker 2: liz En Saunder's with us. In ten minutes, Neil Dutta

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Speaker 2: scheduled to join us. Now we've got him on a

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Speaker 2: He's on a ferry to one of the islands.

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Speaker 4: I don't know which one's we'll get Dota cell phones.

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Speaker 2: I mean, Saunders is working today exactly, even though the backdrop,

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Speaker 2: you know, it's amazing how they can put that backdrop

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Speaker 2: wherever she technology goes with.

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Speaker 5: Me exactly, Lizen. So what's the catalyst for this market

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Speaker 5: going forward? If there's any life left in this market

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Speaker 5: for over the next six months or so. Is it

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Speaker 5: FED driven? Is it Earning's driven? A combination? Is it

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Speaker 5: a rotation as you were suggesting, maybe into some other sectors.

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Speaker 3: I think it is a combination. We've seen less of

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Speaker 3: a correlation in terms of the expectations around FED policy.

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Speaker 3: You know, the sort of parlor game of when will

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Speaker 3: they start by how much? Even just with the jobs

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Speaker 3: report today was probably knee jerk on the payrolls with

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Speaker 3: it before digesting the additional information. You actually saw a

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Speaker 3: move down in terms of expectations for September start to

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Speaker 3: rate cuts. I think it's more on the rate side

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Speaker 3: of things. I think yields is the more important driver.

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Speaker 3: Now there's a relationship obviously between what's going on with

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Speaker 3: treasury yields and expectations for FED policy. But I think

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Speaker 3: a calming in some of these sort of shots higher

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Speaker 3: and yields would help the equity market. Obviously, earnings is

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Speaker 3: a big part of that, and we're sort of at

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Speaker 3: the prove it to me moment in the equity market,

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Speaker 3: given that even for the magnificent seven of the top

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Speaker 3: ten names, you've seen more price appreciation than you have

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Speaker 3: earnings appreciation in terms of consensus estimates. So I think

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Speaker 3: earning season will be incredibly important the combination of top

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Speaker 3: line bottom line, but also the protection of profit margins,

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Speaker 3: and whether that is across the board or still in

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Speaker 3: a small handful of names.

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Speaker 5: And Lizanie, you start off our discussion here talking about

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Speaker 5: the top heavy nature of this market. How unusual are

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Speaker 5: we today in terms of that market concentration versus maybe

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Speaker 5: some past cycles.

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Speaker 3: Well, the largest ten names as a share of the

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Speaker 3: S and P is up around thirty eight percent right now.

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Speaker 3: That well exceeds what we saw back in two thousand.

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Speaker 3: But there were periods back in the sixties and even

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Speaker 3: in the I think late twenties or early thirties where

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Speaker 3: you had similar concentration. Now, in the case of the

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Speaker 3: early thirties, of course, that was a less sophisticated market

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Speaker 3: backdrop and there were not as many companies. There were

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Speaker 3: some of those dominant companies, But I think that the

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Speaker 3: concentration problem becomes more acute when you have a large

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Speaker 3: share of the index underperforming the index over whatever rolling

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Speaker 3: period you want to look. It's only about seventeen percent

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Speaker 3: of the SMP that has that performed the parent index

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Speaker 3: over the past year, and it's lower for an index

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Speaker 3: like the Nasdaq. So it's the combination of leadership up

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Speaker 3: the cap spectrum, dominating performance of a cap weighted indexes,

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Speaker 3: but the lack of participation in other parts of the market.

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Speaker 3: It's that combination that tends to suggest risk is elevated.

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Speaker 5: And I'd love to be one of those folks. I

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Speaker 5: think I'm the smartest person in the room and saying

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Speaker 5: I'm going to start looking for value outside of those

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Speaker 5: big ten seven names. But boy, you have to have

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Speaker 5: courage to do that, don't you.

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Speaker 3: Well. But here's the other funny thing. When we talk

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Speaker 3: about the performance up the cap spectrum in the megacap names,

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Speaker 3: whether it's the Largest ten or the Mags seven, actually

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Speaker 3: only one of the Magnificent seven is in the top

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Speaker 3: ten best performers within the S and P. We're so

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Speaker 3: focused on the contribution that they represent, which is price

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Speaker 3: times capitalization equals contribution to the S and P. But

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Speaker 3: there are a lot of names, in addition to not

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Speaker 3: performing very well, that are performing incredibly well. In fact,

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Speaker 3: last time I looked at it by sector, there were

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Speaker 3: three in the top ten that were utilities stocks ge

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Speaker 3: in the top ten. So there are opportunities outside of

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Speaker 3: the Largest ten or the Magnificent seven or the Fab five,

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Speaker 3: whatever terminology you want to use. And I think that

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Speaker 3: gets lost in so much focus on those names. It's

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Speaker 3: the cap piece of it that has been so additive

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Speaker 3: to contribution to overall S and P returns.

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Speaker 2: We continue with lyz Ane Sonder Charles schwabneil to on deck.

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Speaker 2: He'll be with us here in about four minutes. We've

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Speaker 2: got to lift to the market much less than i'd

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Speaker 2: expect off a jobs repoard has something to do with

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Speaker 2: this Friday, this special Friday across the nation and Nasdaq

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Speaker 2: up two tens of a percent green and the screen

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Speaker 2: twelve point twenty three is the vix. The yield space

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Speaker 2: moves but within range. The ten year at real yield

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Speaker 2: two point zero three percent is decidedly not broken down

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Speaker 2: off of a huge revision that we saw, a negative

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Speaker 2: revision to nonfarm payrolls after the last sixty months. Lizanne,

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Speaker 2: I want you to talk to a given Schwab account.

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Speaker 2: Don't give me this monarchy. Oh what age are they?

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Speaker 2: Where are they in their life? And all that blowning, Lizann,

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Speaker 2: They're up to their eyeballs in cash. What is the

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Speaker 2: Saunders process to lighten up on cash?

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Speaker 3: Well, but Tom, I am going to push back on

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Speaker 3: that because it and it's not just age, but it's

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Speaker 3: risk tolerance, its need for income. What is the what

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Speaker 3: is sort of the purpose of your portfolio? For some

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Speaker 3: people earning five percent on cash, that's perfectly comfortable for them,

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Speaker 3: if they're income oriented, if they've already saved their nest

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Speaker 3: egg and they don't want to lose any of the

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Speaker 3: principle associated with it. But for investors that have a

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Speaker 3: higher risk tolerance, it does go back to those disciplines.

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Speaker 3: It's dollar cost averaging, it's used factor screening. There's still

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Speaker 3: too much focus on monolithic decision making at the sector level,

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Speaker 3: at the index level, at the style of which factor matters?

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Speaker 2: Now? Which factor on indisvitrial.

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Speaker 3: Idology sheet, strength of balance really profitability. Yeah, if you

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Speaker 3: look at you know Goldman has the strong balance sheet

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Speaker 3: Week balance sheet indexes on Bloomberg, a huge performance spread

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Speaker 3: in favor of strong balance sheet within the Russell two thousand,

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Speaker 3: the non profitable companies over the past year down thirteen percent.

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Speaker 3: The profitable companies are up seven percent. Twenty percentage point

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Speaker 3: difference interest coverage, which really matters if yields stay sticky

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Speaker 3: on the high side, if we don't have a FED

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Speaker 3: that's imminently looking to start to ease policy. So those

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Speaker 3: would be three of the top ones I think you

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Speaker 3: want to focus on and apply that across the spectrum

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Speaker 3: of sectors, not just in the aggregate, but that can

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Speaker 3: be applied within individual sectors as well.

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Speaker 2: Luzanne Saunders, thank you so much for joining us on

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Speaker 2: this Friday. I hope you get out to see Robert

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Speaker 2: plant and Allison crouse'sur as a nation. She is with

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Speaker 2: at Schwab of verat Cuts. We begin in the United

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Speaker 2: Kingdom with Marcus Ashurst. Marcus, thank you so much for

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Speaker 2: taking time out after an exhausting two days. The United

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Speaker 2: Kingdom needs investment. Where will it come from.

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Speaker 6: Well, it's going to come from internally, there's lots of

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Speaker 6: savings since the pandemic. It's going to come from America

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Speaker 6: and the rest of the world because we are strong

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Speaker 6: and sable. We've got an amazing reaction to a very

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Speaker 6: low turnout, but we are a United Kingdom because importantly

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Speaker 6: through this the Scottish National Party got beat heavily. Labor

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Speaker 6: has taken control of Scotland again. The talk of Scottish

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Speaker 6: independence is going to go much well, it's going to disappear, hopefully.

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Speaker 6: At the same time, we've had a very strange election.

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Speaker 6: Tactical voting is dominated. The Labor Party has won two

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Speaker 6: thirds of the seats out of six hundred and fifty seats.

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Speaker 6: They've got two thirds of notes. So we've also had

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Speaker 6: this third party, Liberal Democrats doing seven times more seats,

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Speaker 6: but no change in their votes.

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Speaker 2: But you know that's how we Americus if to explain

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Speaker 2: to our American audience across this fourth of July nation

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Speaker 2: the distinction here in the Reform in some of the

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Speaker 2: more blue collar labor philic districts came in second place,

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Speaker 2: a strong second. But does Nigel Farage member of Parliament

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Speaker 2: in his Reform party, do they have any voice in

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Speaker 2: the process in the coming twelve months.

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Speaker 6: Well, the interesting thing is the three sets of new

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Speaker 6: parties have come to out of nowhere. We've got the

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Speaker 6: Greens with four seats. We've got Reformed there by Nigel

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Speaker 6: Frage with four seats importantly to himself, his chair Richard Tice,

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Speaker 6: and one of two well known other people, not not

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Speaker 6: that some of the other lunatics he's had. So that's

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Speaker 6: a proper platform for Nigel Farage too. He got four

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Speaker 6: million votes and only four MPs, so he's going to

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Speaker 6: feel pretty raw about that. But he's got a pulpit

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Speaker 6: now in the House of Commons. He's going to get

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Speaker 6: legitimate media attention rather than just of unnecessary that he's

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Speaker 6: had so far. And we've also got a pretty strong

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Speaker 6: Poe Palestine platform as well four MPs beating Labor, including

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Speaker 6: the old Labor leader Jeremy Corwyn. So the smaller parties

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Speaker 6: have done very well here, almost like a European type

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Speaker 6: feel to some of the results are very strong tactical vote.

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Speaker 6: But yes we've got populism. It's embedded now with Nigel Farage,

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Speaker 6: and he has said very clearly he's destroyed the Tory slayer.

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Speaker 6: You know, he's taken basically the Tory vote down the half.

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Speaker 6: The Toy's lost two thirds of their seats, most of

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Speaker 6: that two thirds of that because of reform. He has

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Speaker 6: had an incredible the outside reaction. As you said, he

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Speaker 6: came second in ninety eight seats. That's the big populism

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Speaker 6: threat hanging over not just the Tory Party now but

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Speaker 6: the new Labor government who won on a third of

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Speaker 6: the votes. A huge majority, but it's not necessarily a

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Speaker 6: very deep majority and strength and power he's got.

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Speaker 4: It's wide but not deep Marcus.

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Speaker 5: In reality, you know, what does the Labor Party want

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Speaker 5: to do Visa A VI the European Union? What can

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Speaker 5: it do to the extent it wants to get closer

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Speaker 5: to the EU?

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Speaker 6: I don't think the Europeans really want to know much

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Speaker 6: about us at the moment. They don't want to get

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Speaker 6: out of anything to do with the European Court of

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Speaker 6: Justice or anything to do with free moment, it's there, Shivelus.

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Speaker 6: I think it's going to be disappointing for Labor. I

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Speaker 6: hope they've learned that lesson that the well, actually what

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Speaker 6: Richie Snac did with I think all the windsor framework

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Speaker 6: and getting Northern Ireland back into some form of political

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Speaker 6: uh you know, life being broken from being out the

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Speaker 6: completing suspension, he's done a pretty good job as best

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Speaker 6: he could. Richie sat with a poor hand. He's paid

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Speaker 6: that poorhand very poorly politically. But now I think the

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Speaker 6: Europeans are going to be maybe a little bit nicer.

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Speaker 4: But it me very much.

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Speaker 6: You show us what you want to give us and

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Speaker 6: then we'll think about it. You left the golf club,

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Speaker 6: you ain't getting back.

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Speaker 2: In Marcus, thirty seconds is all I got. They got

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Speaker 2: to get to Jane Foley on this job's reporting foreign

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Speaker 2: exchange a Marcus ash for there's a special relationship between

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Speaker 2: France and the United Kingdom. So Prime Minister Sturmer is

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Speaker 2: going to meet wherever with who in France.

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Speaker 6: Well, it's still President Mackron because you know, that's how

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Speaker 6: the Fifth Republic works, and it depends who he chooses

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Speaker 6: to be his prime minister. And he looks like he's

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Speaker 6: going to have more of a choice than it would

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Speaker 6: have been after the first round. I think the second

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Speaker 6: round will show there will be no clear French you

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Speaker 6: know block who he can run it on its own

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Speaker 6: a government. The prime minister has a lot less powers.

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Speaker 6: In fact, that French president's got more powers than any

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Speaker 6: other Western leader by quite some way. I don't think

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Speaker 6: it matters either side. I don't think the French care

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Speaker 6: much about the UK, and I think the UK care

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Speaker 6: much about France. To be brutally honest, and I think

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Speaker 6: they've all got our problems. There will be some rapprochml,

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Speaker 6: but it won't be inst.

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Speaker 2: That's French rapush. Move marcuson, he talks, he talks French,

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Speaker 2: Marcus Ashruth, thank you, thank you, thank you so much.

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Speaker 2: Lots of other action in economics, finance, investment, in politics.

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Speaker 2: Politics takes a French election on Sunday and also in

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Speaker 2: a US election in November. Terry Haines joins US now

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Speaker 2: to pick up the pieces and piece together. I guess

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Speaker 2: the second week of July in Washington. I don't know

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Speaker 2: if he's capable of doing that. Terry Haynes with Pangaea

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Speaker 2: joins us. Terry right now after the bizarreness of this weekend,

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Speaker 2: the uniqueness in American history, Terry Haynes's unknown unknown.

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Speaker 1: Well, very simply, it's Uh, it's it's whether Biden's up

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Speaker 1: to the job or not, and whether he can prove

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Speaker 1: it or not. I mean, we've been a citizens have

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Speaker 1: been misinformed about the president's condition, to put it kindly, uh,

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Speaker 1: and much of the news media not this network, but

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Speaker 1: much of the news media has has willfully ignored it.

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Speaker 1: Now they're over compensating. The question is whether he's up

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Speaker 1: to it or not. I mean, I wouldn't put a

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Speaker 1: lot of I wouldn't put a lot of money on

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Speaker 1: it in Vegas. But at the same time, you know,

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Speaker 1: you've had situations where he's he's gone out in public

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Speaker 1: a few times and just shown fire and shown the

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Speaker 1: ability to talk. And he's got Stephanopolis coming up tonight.

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Speaker 1: It may be a huge moment for the campaign and

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Speaker 1: we'll have.

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Speaker 2: To see that. Bloomberg, of course, will be synthesizing the questions,

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Speaker 2: edited and edited at ABC. Terry, excuse me choking on

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Speaker 2: a fifth hot dog? I didn't do Nathan's, but I

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Speaker 2: got up to five hot dogs?

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Speaker 4: What can I say, Terry Haynes, What is.

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Speaker 2: The probability, the likelihood the ability of the Democratic Party

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Speaker 2: to squeeze into.

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Speaker 4: X number of weeks a.

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Speaker 2: Diverse campaign process of four, five, six, seven candidates to

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Speaker 2: get to a smoke filled convention.

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Speaker 1: Oh, by what you mean? Replaced Biden? Is that where

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Speaker 1: we're going?

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Speaker 2: Yeah, well, replaced Biden. But to go beyond just the

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Speaker 2: idea of the vice president will take over?

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Speaker 1: Yeah, well, you know, it depends on whether we're talking

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Speaker 1: about him leaving the presidentcy or leaving his candidacy or both.

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Speaker 1: And you know that's a little more finally judged than

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Speaker 1: I think the company wanted. But the answer is, you

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Speaker 1: know that, Yeah, they can absolutely get a situation where

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Speaker 1: this virtual nomination process they're going to try to pull

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Speaker 1: in a couple of weeks, you know, might get short

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Speaker 1: circuited by a number of the delegates themselves, who will

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Speaker 1: who may well insist on our rewriting of the rules.

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Speaker 1: You know, there's an awful lot of disas dissatisfaction out there,

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Speaker 1: but there's not a lot of ability by those who

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Speaker 1: are most dissatisfied with being able to do something about it.

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Speaker 1: This is still pretty tightly controlled. And I think certainly,

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Speaker 1: I think Biden's trying to brazen it out right now.

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Speaker 5: So Terry, obviously it's it's really up to President Biden

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Speaker 5: where this whole thing goes here, what's your sense of

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Speaker 5: timing when do you think that president really has to

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Speaker 5: make a decision of whether he is in it or not?

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Speaker 1: Probably between now, almost certainly balled between now and the

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Speaker 1: convention in mid August. But uh, you know, but then

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Speaker 1: there's this trip wire where where the virtual convention happens

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Speaker 1: in sometime in mid July late July. So uh, you

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Speaker 1: know what they're what they're trying to do right now

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Speaker 1: is you know, we're going to wrap up the party regulars,

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Speaker 1: make it all but impossible for the convention itself to

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Speaker 1: remove him, which makes it even more in his judgment

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Speaker 1: about whether he wants to continue or not.

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Speaker 5: And and Terry X, I guess the question for a

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Speaker 5: lot of folks within the Democratic Party is if he

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Speaker 5: were to say I'm going to step aside for this

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Speaker 5: next election. Is there any sense of what the process

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Speaker 5: might be. Would there be a series of debates among

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Speaker 5: party leaders? Would it just be handed to vice president?

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Speaker 2: How how would it work out?

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Speaker 5: Do you think?

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Speaker 4: Well?

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Speaker 1: I think that you know, there's a there's a group

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Speaker 1: that wants it handed to Harris. Uh. You know, but Biden,

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Speaker 1: of course is using Uh, is using Harris, I think

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Speaker 1: is as a backstop for his own ambitions to stay.

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Speaker 1: I think what ends up happening is you have a

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Speaker 1: you have a change to the party rules that releases

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Speaker 1: delegates from their releases delegates from their first ballot commitment

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Speaker 1: to Biden, and you actually have, as we had before

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Speaker 1: nineteen seventy two, actually have an open convention where the

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Speaker 1: delegates actually get to decide who they want. And in

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Speaker 1: that situation, you'd have nominations by different people, you'd have speeches,

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Speaker 1: you'd have unruliness galore, just like you used to have.

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Speaker 2: This is I mean, obviously you know the media that's exciting.

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Speaker 2: I mean, we're talking our book, which is we want

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Speaker 2: a crazy convention. But Terry Haynes, I want you to

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Speaker 2: take us right now to four thirty South Capitol Streets,

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Speaker 2: Southeast Washington, d C to the headquarters of the Democratic

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Speaker 2: National Party. I guess Jamie Harrison, Chris Cork, Jason Ray

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Speaker 2: and others, does the president routinely, any Democratic president, do

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Speaker 2: they just control the d n C or does the

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Speaker 2: DNC have a vote to get to that convention we

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Speaker 2: all want.

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Speaker 1: They control the d n C, particularly in the months

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Speaker 1: and year leading up to the election. That's been standard

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Speaker 1: in both parties for quite a while. And when you

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Speaker 1: combine that with the fact that the parties as party

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Speaker 1: organizations have been have been a trophying over the past

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Speaker 1: several decades, you know, it's it's interesting to talk about

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Speaker 1: it today because I'm sitting in London. You've just had

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Speaker 1: conversations about the UK elections. The party organizations are very

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Speaker 1: strong in the UK, whereas they're very weak in the

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Speaker 1: United States, and nowhere weaker or no when weaker than

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Speaker 1: the year of a presidential election. So Jamie Harrison's taking

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Speaker 1: orders from the White.

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Speaker 2: House to sum this up to Paul's good question, the

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Speaker 2: President of the United States really is going to decide

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Speaker 2: the process of his future, in this party's future in

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Speaker 2: the coming days and weeks, maybe to get to a

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Speaker 2: Donnybrook that gets us to Chicago. Is that right? Yeah?

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Speaker 7: I think so.

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Speaker 1: You know, they've they've exercised huge control over this process

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Speaker 1: from day one, you know, basically making it a primary

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Speaker 1: free process, you know, exercising a grip on the on

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Speaker 1: the party controls, exercising a grip on the on the money.

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Speaker 1: As people are now starting to figure out, you know,

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Speaker 1: the money gets the Biden Harris money gets dispersed away

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Speaker 1: unless it's anybody but Biden or Harris at the top

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Speaker 1: of the ticket. So there's a lot of considerations mechanical

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Speaker 1: for Democrats to go through, much less the fundamental question

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Speaker 1: of whether Biden ought to be their nominee and whether

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Speaker 1: we ought to remain as president.

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Speaker 2: Terry Haynes, thank you so much for right now one

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Speaker 2: more shot on the trilemma of the UK election. Ancient history,

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Speaker 2: a French election Sunday in an America turned upside down.

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Speaker 2: He was riveting the last time he was in our studios,

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Speaker 2: and we are so honored that Holger Schmiedting could join

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Speaker 2: us this morning. He is with Behrenberg Bank, but a

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Speaker 2: huge perspective on the economic politics of his EU.

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Speaker 4: Holger Schmieting Howell Brussels for that matter. How will Paris,

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Speaker 4: in a fractured nation looking for a Sunday election, how

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Speaker 4: will they study interpret except the United Kingdom election.

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Speaker 7: Well, the UK election, of course, for Europe is a

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Speaker 7: bit of a relief. The Brexiteers, who cause a lot

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Speaker 7: of trouble and cause significant damage to the UK economy

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Speaker 7: are out of power. That is good. The UK will

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Speaker 7: of course not return into the Common Market. The UK

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Speaker 7: is not going to have anything like a debate about

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Speaker 7: rejoining the U. Far to divisive. But the EU can

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Speaker 7: now look forward to pragmatic relations with a good friend

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Speaker 7: across the channel. And well, what we have seen in

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Speaker 7: the UK, namely a turn towards the moderate center left,

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Speaker 7: is not a bad thing by European standards.

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Speaker 5: And Holger, I mean I think that's I guess the

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Speaker 5: hope and expectation of a lot of observers here, given

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Speaker 5: what's happened with this UK election. To what extent do

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Speaker 5: you believe that Europe is open to any type of

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Speaker 5: reproachment in terms of some of these economic policies.

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Speaker 7: Well, Europe is open to a pragmatic handling of things.

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Speaker 7: But Europe is of course not open to any approach

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Speaker 7: as to the UK drawing very close to the Common Market.

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Speaker 7: There is no cherry picking, but when it comes, say

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Speaker 7: to the exact amo amount of paperwork that needs to

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Speaker 7: be filled in for goods to cross the border. On

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Speaker 7: these things, when it's about the alignment of standards here

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Speaker 7: and there, the EU may take a bit of a

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Speaker 7: more pragmatic approach with a labor government that is not

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Speaker 7: to blame for the Brexit mass, rather than the EU

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Speaker 7: was willing to worse a conservative government that basically was

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Speaker 7: responsible for the Brexit mass doctor training.

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Speaker 2: In the constricted time that we have, what is the

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Speaker 2: Behrenberg Bank real GDP growth the annual real GDP growth

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Speaker 2: forward of all these contested areas the United Kingdom, France,

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Speaker 2: a staggering Germany. What does a GDP feel feel like?

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Speaker 7: Well, next year we'll probably have about one point six

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Speaker 7: to one point seven percent growth in the UK. Having

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Speaker 7: lost out against the continental Europe, the UK has now

435
00:24:54,560 --> 00:24:59,400
Speaker 7: a bit of potential to catch up somewhat. For France,

436
00:24:59,520 --> 00:25:02,439
Speaker 7: we are looking looking for one point four percent growth.

437
00:25:02,520 --> 00:25:05,080
Speaker 7: We had cut our forecast from one point six to

438
00:25:05,119 --> 00:25:09,160
Speaker 7: one point four on account of the uncertain political situation.

439
00:25:09,320 --> 00:25:12,720
Speaker 7: The risk to France is clearly to the downside for Germany,

440
00:25:13,080 --> 00:25:17,000
Speaker 7: which has this fiscal strait jacket, the outlook is more

441
00:25:17,040 --> 00:25:20,199
Speaker 7: for growth just slightly above one percent, but all of

442
00:25:20,240 --> 00:25:23,560
Speaker 7: Europe look forward to a bit of an economic normalization,

443
00:25:23,680 --> 00:25:24,840
Speaker 7: to more normal growth.

444
00:25:24,960 --> 00:25:26,280
Speaker 2: Again, I gotta get this question.

445
00:25:26,480 --> 00:25:28,920
Speaker 4: Paul's got like six questions, but with what.

446
00:25:28,760 --> 00:25:32,080
Speaker 2: You just said, is the outcome of what I saw

447
00:25:32,160 --> 00:25:36,760
Speaker 2: on sky and ITV in Bloomberg, Francine LaQuan, Stephanie Flanders.

448
00:25:37,480 --> 00:25:38,920
Speaker 4: Is this the beginning of.

449
00:25:38,920 --> 00:25:43,119
Speaker 2: A lesser austerity across a broader Europe?

450
00:25:45,520 --> 00:25:49,000
Speaker 7: That is a big word. In the UK, not really.

451
00:25:49,040 --> 00:25:52,240
Speaker 7: There's a very little fiscal space for the new government,

452
00:25:52,600 --> 00:25:56,800
Speaker 7: so that would be a marginal, marginal lessening of austerity.

453
00:25:57,359 --> 00:26:00,480
Speaker 7: In Germany, we have just seen the government agreeing on

454
00:26:00,520 --> 00:26:03,600
Speaker 7: a budget for next year which is half au steer,

455
00:26:04,119 --> 00:26:07,280
Speaker 7: but which does include a few measures, small measures to

456
00:26:07,320 --> 00:26:13,040
Speaker 7: improve growth. So what I would say Germany, UK marginal

457
00:26:13,280 --> 00:26:17,600
Speaker 7: marginal easing of austerity in the UK not much in Germany.

458
00:26:17,880 --> 00:26:20,760
Speaker 7: And as to France, we will probably see some fiscal

459
00:26:20,800 --> 00:26:23,760
Speaker 7: slippage under any new government after this election.

460
00:26:24,280 --> 00:26:27,760
Speaker 5: So Holger, what is the market discounting in terms of

461
00:26:27,800 --> 00:26:28,480
Speaker 5: the French election?

462
00:26:28,720 --> 00:26:32,240
Speaker 7: This Sunday market the market is discounting that there will

463
00:26:32,240 --> 00:26:35,159
Speaker 7: be hung parliament, that no side will win, and then

464
00:26:35,280 --> 00:26:38,360
Speaker 7: hung parliament. The advantage is not much gets done, but

465
00:26:38,480 --> 00:26:42,280
Speaker 7: not much gets broken any either one. Also, but I'm

466
00:26:42,320 --> 00:26:46,200
Speaker 7: afraid that the markets are a bit underappreciating the longer

467
00:26:46,320 --> 00:26:49,280
Speaker 7: term risks that come in France from the end of

468
00:26:49,440 --> 00:26:55,880
Speaker 7: Macranz's roke Growth reformed drive. My until recently quite positive

469
00:26:55,880 --> 00:26:59,760
Speaker 7: outlook on France has darkened now that we will likely

470
00:26:59,800 --> 00:27:04,400
Speaker 7: have the right wing as the strongest party in government,

471
00:27:04,760 --> 00:27:08,440
Speaker 7: the left also being more strongly represented, and no longer

472
00:27:08,720 --> 00:27:12,440
Speaker 7: a majority for would pro reform centrisk Middlegirl.

473
00:27:12,160 --> 00:27:13,280
Speaker 4: Holgard, Thank you so much.

474
00:27:13,600 --> 00:27:16,800
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475
00:27:16,800 --> 00:27:21,600
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