WEBVTT - Bloomberg Surveillance TV: November 29, 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 Hortenn. 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 3>We begin this hour with Michael Green. He is the

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<v Speaker 3>chief strategist at Simplify Asset Management. Michael, thanks for joining

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<v Speaker 3>us here on this Black Friday. We'll let you get

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<v Speaker 3>to shopping in just a second, but I do want

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<v Speaker 3>to start before we get to the broader market. I

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<v Speaker 3>do want to start with cryptocurrency for a big here,

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<v Speaker 3>because this really has been one of the big barometers

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<v Speaker 3>of the risk on sentiment that we've seen over the

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<v Speaker 3>past few weeks. Kind of started even before the election,

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<v Speaker 3>but of course picked up a lot of steam once

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<v Speaker 3>people got a look at what is going to be

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<v Speaker 3>a new Trump administration. In January. You see this momentum continuing, well, I.

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<v Speaker 4>Think the real question is does the buying continue right.

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<v Speaker 5>So, we've seen extraordinary inflows into products like black Rocks,

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<v Speaker 5>Spittwein ETF. We've seen an incredible innovation in Quote's right,

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<v Speaker 5>the classic financial innovation with the single stock ETFs that

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<v Speaker 5>have powered entities like micro Strategy. Over the past month

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<v Speaker 5>or so, those seem to be running out of gas

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<v Speaker 5>and the financing costs associated with them, I think kind

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<v Speaker 5>of give lie to this idea that financial conditions are

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<v Speaker 5>affected in any way, shape or form by what the

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<v Speaker 5>Federal Reserve is doing right now.

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<v Speaker 4>But this is clearly one of these things that is

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<v Speaker 4>indicative of both.

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<v Speaker 5>People's expectations that the craziness is only kind of going

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<v Speaker 5>to accelerate as it relates to government spending or inflation

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<v Speaker 5>or the risks associated with a Trump administration.

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<v Speaker 3>And as people sort of take a look at that,

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<v Speaker 3>Michael and they try to sort of make bets in

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<v Speaker 3>the cryptos, We've seen a lot of people looking for

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<v Speaker 3>proxies to do that. MicroStrategy, of course, was the proxy

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<v Speaker 3>for quite some time. We started to see ETFs come

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<v Speaker 3>into this space, and we started to see more of

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<v Speaker 3>an embrace not only by retail investors, but by the

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<v Speaker 3>institutional set as well. Do you expect that to continue?

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<v Speaker 3>Do you expect the embrace of crypto to be much

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<v Speaker 3>more through these proxy vehicles rather than through the actual

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<v Speaker 3>crypto asset itself.

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<v Speaker 5>Well, I think this actually tells you something about the

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<v Speaker 5>space right which is that there's still is very little

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<v Speaker 5>utility associated with the actual tokens themselves. Ultimately, this idea

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<v Speaker 5>of digitally native securities is incredibly important. It really is

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<v Speaker 5>an incredible innovation to think about changing away from our

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<v Speaker 5>still paper based financial system to one that's really built

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<v Speaker 5>around digitization and securities that are capable of having complex

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<v Speaker 5>instruction sets embedded inside them.

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<v Speaker 4>But right now, we're basically just.

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<v Speaker 5>Trying to build enthusiasm for the space, and that is

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<v Speaker 5>clearly being driven by promotional activity. We see that across

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<v Speaker 5>space everywhere, from Blackrock on down to the extremes of

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<v Speaker 5>the Michael Sailors.

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<v Speaker 6>Well, let's talk a little bit about these micro strategies

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<v Speaker 6>single stock leverage, ETF. So I want to jump right

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<v Speaker 6>into the weeds here, because, as reported by Bloomberg's Wildna Hirich,

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<v Speaker 6>you're seeing this really interesting dynamic where they can't get

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<v Speaker 6>their exposure through swaps anymore. They have to basically tap

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<v Speaker 6>the options market and buy these call options, and there's

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<v Speaker 6>been a lot of concern about that. But I want

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<v Speaker 6>to ask why, what is the end effect on the

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<v Speaker 6>end client or is this more a problem for the issuers?

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<v Speaker 4>So those two separate components associated with it.

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<v Speaker 5>One is it is clearly an issue for the issuers

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<v Speaker 5>themselves in that their prospectuses do not disclose the use

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<v Speaker 5>of options, and so by attempting to maintain their investment

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<v Speaker 5>mandate moving away from swaps into options, they are incurring

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<v Speaker 5>costs and pursuing their investment strategies that are not fully

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<v Speaker 5>disclosed to their investors that potentially creates liability at some

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<v Speaker 5>point in the future or should these.

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<v Speaker 4>Begin to underperform.

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<v Speaker 5>By my calculations, the financing costs are somewhere in the

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<v Speaker 5>range of five to ten percent per month at this point.

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<v Speaker 5>So while we sit here debating the idea should the

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<v Speaker 5>FED cut by twenty five basis points, we're seeing areas

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<v Speaker 5>of the market they're being propelled by speculation with interest

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<v Speaker 5>rates closer to one hundred percent, So it really is

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<v Speaker 5>not anything to do with the FED at this point,

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<v Speaker 5>I would would argue the second issue that you have

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<v Speaker 5>is that financing costs, because it ultimately means that these

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<v Speaker 5>vehicles are facing a bleed associated with a failure of

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<v Speaker 5>those options to go further into the money or deliver

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<v Speaker 5>against their volatility. That means that the carrying costs of

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<v Speaker 5>these products are also in that kind of five percent

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<v Speaker 5>plus ten percent area, meaning that the bitcoin market and

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<v Speaker 5>the micro strategy market has to continue to rise it

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<v Speaker 5>nearly one hundred percent a year in order for these

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<v Speaker 5>products to break even. That's a very you know, that

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<v Speaker 5>is an incredible headwind, and a lot of the behavior

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<v Speaker 5>that we're seeing in these in these single stock levered ETFs,

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<v Speaker 5>I think ultimately we're going to find out we'll be

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<v Speaker 5>treated as various forms of manipulation, and in all likelihood

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<v Speaker 5>we'll see this stuff pulled off the market at some

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<v Speaker 5>point in the future.

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<v Speaker 1>Well, we'll see that would certainly be dramatic.

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<v Speaker 6>But to put it simply, of course, these are not

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<v Speaker 6>meant to be buy and hold investments.

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<v Speaker 1>The issuers themselves would tell you that.

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<v Speaker 6>But I want to talk to about the relationship between

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<v Speaker 6>these leveraged single stock micro strategy ets and what it

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<v Speaker 6>means for the actual micro Strategy underlying stock because you

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<v Speaker 6>see micro Strategy treating at a record premium I believe

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<v Speaker 6>to bitcoin itself, and there are some theories out there

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<v Speaker 6>that it's actually these leverage single stock vehicles that are

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<v Speaker 6>driving that.

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<v Speaker 5>Yeah, I don't think there's any question about that. If

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<v Speaker 5>you look at the increasing premium that occurred. It happened

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<v Speaker 5>almost simultaneously with the launch of the largest of these

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<v Speaker 5>levered ETFs, MSTU being the ticker there. That actually very

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<v Speaker 5>clearly power or the separation. There's very little to actually

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<v Speaker 5>debate around that. That's allowed it to push itself beyond Bitcoin. Now,

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<v Speaker 5>what that's created is something similar to what happened with

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<v Speaker 5>gray scale bitcoin trusts a year ago, in which are

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<v Speaker 5>two years ago, in which a premium that it developed

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<v Speaker 5>for grey scale bitcoin trust created demand for bitcoin.

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<v Speaker 4>This is working almost in reverse.

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<v Speaker 5>The premium for micro Strategy is leading to micro Strategy

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<v Speaker 5>being able to issue shares and in turn by bitcoin.

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<v Speaker 5>It's a far less direct route, but it's the same

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<v Speaker 5>underlying effect that continues to power both both the stock

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<v Speaker 5>and the coin.

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<v Speaker 4>The token higher at.

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<v Speaker 3>This point and just real quickly Michael I am curious

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<v Speaker 3>that when we start, we're talking about this in the

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<v Speaker 3>context specifically within the cryptosphere to some of that optimism mode.

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<v Speaker 3>Does that bleed out into the broader market? I mean,

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<v Speaker 3>can we take cues from what's going on in the

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<v Speaker 3>cryptosphere for the rest of the market.

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<v Speaker 5>I think it's hard not to assume that there are

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<v Speaker 5>going to be implications associated with this, right, So you

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<v Speaker 5>have individuals who are investors in bitcoin who are feeling

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<v Speaker 5>flush in the environment that will lead to them increasing

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<v Speaker 5>their purchasing activity, et cetera.

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<v Speaker 4>So there are real world feedbacks to this.

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<v Speaker 5>There's also very real world feedbacks and the kind of

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<v Speaker 5>the classic George Soros reflexivity component. This type of price

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<v Speaker 5>activity facilitates micro strategy going out and raising real cash

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<v Speaker 5>in the form of convertible debt, which is more issuance

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<v Speaker 5>of shares, which in turn is used to purchase that bitcoin.

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<v Speaker 5>They could theoretically hold on to that cash and use

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<v Speaker 5>it for alternative corporate purchases, as we saw with stocks

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<v Speaker 5>like GameStop or with MC Entertainment. So far, Sailor seems

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<v Speaker 5>to be much more aggressive in this process.

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<v Speaker 3>All right, Michael, great stuff, going to leave it. There

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<v Speaker 3>have a wonderful rest of your week and weekend. Michael

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<v Speaker 3>Green over at Simplify Asset Management.

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<v Speaker 1>Let's keep the conversation going with Jill Sanders.

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<v Speaker 6>She is head of retail over at it Center Global,

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<v Speaker 6>joining us now and Jill, I want to go to

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<v Speaker 6>this line in your notes. You're right that retailers have

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<v Speaker 6>good reason to be cautiously optimistic, which is interesting because

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<v Speaker 6>we talk about all of these headwinds potentially coming at

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<v Speaker 6>retailers next year.

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<v Speaker 1>What is the case for optimism right now?

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<v Speaker 7>Well, in our survey, which we did right before a holiday,

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<v Speaker 7>basically people said they're going to spend upwards of four

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<v Speaker 7>percent more this year compared to last year. So that's

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<v Speaker 7>the optimism. The causes is about the fact that everyone's

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<v Speaker 7>looking for a deal. I mean, you heard any other

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<v Speaker 7>correspondence point everyone's out there for Black Friday because they

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<v Speaker 7>know that there's sales.

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<v Speaker 1>On today, sales on today.

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<v Speaker 6>But we were joking earlier that Black Friday it's really

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<v Speaker 6>a state of mind.

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<v Speaker 1>It never ends.

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<v Speaker 6>I was actually out and about on Tuesday getting great

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<v Speaker 6>deals as well. I mean this bleeding out of the

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<v Speaker 6>bounds of Black Friday. What does that ultimately mean for

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<v Speaker 6>retailers because it seems like it's just persistent discounting.

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<v Speaker 7>Well, Listen, agility is being put to the test this

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<v Speaker 7>year because shoppers have only one less week compared to

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<v Speaker 7>last year because it's where Thanksgiving fell. So retailers are

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<v Speaker 7>really smart. They said, listen, I'm going to start doing

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<v Speaker 7>my discounting early so I can get people to start

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<v Speaker 7>shopping early.

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<v Speaker 4>And listen.

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<v Speaker 7>AI has been on the pitch for a long time

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<v Speaker 7>in retail where retailers were planning out when to put

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<v Speaker 7>things on sale so that hopefully will help them make

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<v Speaker 7>sure that they don't lose margin over this period. It's

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<v Speaker 7>all being worked out through advanced technology, which is great

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<v Speaker 7>to see.

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<v Speaker 3>I'm curious just about how much some of these retailers

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<v Speaker 3>can sort of prod the consumer into buying certain things.

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<v Speaker 3>I mean, some of us, Jill, we have a hard

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<v Speaker 3>time figuring out what to buy people, what the buy

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<v Speaker 3>for our loved ones, you know, what gifts do they

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<v Speaker 3>really want? And I know some retailers have taken a

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<v Speaker 3>more creative approach kind of to really put out these

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<v Speaker 3>gifts guys and create other experiences whether they're in their store,

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<v Speaker 3>to sort of plant those seeds in your head, probably

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<v Speaker 3>for the more expensive stuff, but still, what are they doing?

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<v Speaker 7>Yeah, listen, this year is the year of curation and recommendation.

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<v Speaker 7>Retailers know that people are getting inspiration from all different sources.

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<v Speaker 7>Whether that's Instagram or Meta or Facebook, you name it.

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<v Speaker 7>There's a bunch of places where people are getting suggestion.

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<v Speaker 7>Some of the curation is happening not just in the

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<v Speaker 7>store with really smart people working the store saying here's

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<v Speaker 7>what you should buy. It's also happening with technology. So

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<v Speaker 7>think about if you're online and all of a sudden,

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<v Speaker 7>this little pop up comes that says, hey, do you

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<v Speaker 7>need any help? Who are you buying for? What are

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<v Speaker 7>you looking for? What's your budget? Those types of recommendations

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<v Speaker 7>is going to be what the future looks like in retail.

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<v Speaker 7>So instead of you trying to search, people are trying

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<v Speaker 7>to help you, trying to make.

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<v Speaker 4>It easier on you.

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<v Speaker 3>I am curious too with regards to physical stores and

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<v Speaker 3>the idea of a lot of these physical stores trying

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<v Speaker 3>to find ways to get people back in. We were

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<v Speaker 3>just checking in with Macy's in Harold Square here in

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<v Speaker 3>New York, which of course just really decks out a store.

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<v Speaker 3>I mean, you go to that store just to see

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<v Speaker 3>the displays and hopefully you buy something along the way.

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<v Speaker 3>I know Bloomingdale's right across from Bloomberg headquarters here also

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<v Speaker 3>has these pretty expansive displays. Are we seeing these stores

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<v Speaker 3>embrace that more because there have been some stores that

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<v Speaker 3>said they're actually pulling back. Sach said they're not doing

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<v Speaker 3>their normal light show this year.

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<v Speaker 7>Yeah, you know, stores are back this year, which is fantastic.

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<v Speaker 7>You heard that stat that said there's a bunch of

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<v Speaker 7>folks that are going to be shopping in stores this year,

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<v Speaker 7>and so there is that retail shopping fund where you

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<v Speaker 7>get together with your friends and you go to the stores.

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<v Speaker 7>It's not so much about the decorations as much as

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<v Speaker 7>it is about that feeling on Black Friday over Cyber Monday,

0:11:36.720 --> 0:11:39.160
<v Speaker 7>going in and going shopping. I think the key for

0:11:39.240 --> 0:11:43.199
<v Speaker 7>retailers this year is going to be all about again curation, recommendation,

0:11:43.480 --> 0:11:46.720
<v Speaker 7>and then let's not forget the store staff. Frontline workers

0:11:46.800 --> 0:11:49.959
<v Speaker 7>have been really part of the equation. I always say,

0:11:49.960 --> 0:11:53.360
<v Speaker 7>you can have the best discount, the best promotions, the

0:11:53.400 --> 0:11:56.440
<v Speaker 7>best curation, the best assortment, but if that person behind

0:11:56.440 --> 0:11:58.960
<v Speaker 7>the till is not in a good mood, it could

0:11:59.000 --> 0:12:02.440
<v Speaker 7>really really change your opinion of that retailer. So frontline

0:12:02.440 --> 0:12:04.839
<v Speaker 7>work is is also something that retailers are taking care

0:12:04.880 --> 0:12:05.360
<v Speaker 7>of this year.

0:12:05.559 --> 0:12:08.160
<v Speaker 1>Yeah, it's a great point that service matters.

0:12:08.200 --> 0:12:09.600
<v Speaker 6>I want to go to another line in your note

0:12:09.600 --> 0:12:12.319
<v Speaker 6>because I thought this was interesting that retailers are focusing

0:12:12.760 --> 0:12:17.360
<v Speaker 6>on inspirational content, which actually can improve sales according to

0:12:17.400 --> 0:12:17.800
<v Speaker 6>your data.

0:12:17.920 --> 0:12:20.120
<v Speaker 1>What is inspirational content though?

0:12:21.160 --> 0:12:23.800
<v Speaker 7>Well, listen, I talked a little bit about AI, and

0:12:23.920 --> 0:12:27.360
<v Speaker 7>AI has been used a lot of times with figuring

0:12:27.400 --> 0:12:30.360
<v Speaker 7>out again your assortment, figuring out how that's to make

0:12:30.400 --> 0:12:32.600
<v Speaker 7>sure that the supply is right, also how to get

0:12:32.600 --> 0:12:33.480
<v Speaker 7>it to the store.

0:12:34.120 --> 0:12:34.600
<v Speaker 4>And then of.

0:12:34.559 --> 0:12:37.880
<v Speaker 7>Course you're using all sorts of AI for doing curation

0:12:38.280 --> 0:12:42.840
<v Speaker 7>around your ads and your promotions. But now because of

0:12:42.880 --> 0:12:46.800
<v Speaker 7>advanced technology, now the way that you advertise is also

0:12:46.880 --> 0:12:50.680
<v Speaker 7>being inspirational, so you can have more tailored advertising to

0:12:50.760 --> 0:12:54.319
<v Speaker 7>consumers now, which is fantastic a lot because of gen AI.

0:12:55.080 --> 0:13:02.000
<v Speaker 7>So that's what I mean by inspirational and also gift ideas, suggestions, recommendations.

0:13:02.080 --> 0:13:05.000
<v Speaker 4>That's on the pitch this year. It's the year of curation.

0:13:06.360 --> 0:13:08.640
<v Speaker 7>You know. I always like to say where do people

0:13:08.679 --> 0:13:11.320
<v Speaker 7>get their inspiration. Do they get it from, you know,

0:13:11.400 --> 0:13:13.760
<v Speaker 7>looking at Instagram? Do they get it from going on

0:13:13.800 --> 0:13:17.160
<v Speaker 7>the website of the retailer. Most retailers are saying, listen,

0:13:17.200 --> 0:13:19.839
<v Speaker 7>I've got to play a big role of making sure

0:13:19.880 --> 0:13:21.240
<v Speaker 7>that eyeballs.

0:13:20.640 --> 0:13:23.040
<v Speaker 4>Come to my website. How do I get them there?

0:13:23.480 --> 0:13:26.199
<v Speaker 7>Maybe I do have some ads on Instagram to get

0:13:26.200 --> 0:13:28.000
<v Speaker 7>you to click through to come to my website.

0:13:28.120 --> 0:13:31.679
<v Speaker 3>Absolutely all about tantalizing folks. Jill Standish over at at

0:13:31.720 --> 0:13:32.600
<v Speaker 3>a Centric.

0:13:42.280 --> 0:13:44.520
<v Speaker 1>Let's keep the conversation going now with Judy Dempsey.

0:13:44.600 --> 0:13:47.959
<v Speaker 6>She is non Resident Senior Fellow for Carnegie Europe, joining

0:13:48.040 --> 0:13:49.439
<v Speaker 6>us now and it's great to.

0:13:49.360 --> 0:13:53.000
<v Speaker 1>Have you with us. Judy put us into the shoes.

0:13:52.559 --> 0:13:56.760
<v Speaker 6>Of European leadership right now, confronting the possibility of less

0:13:56.800 --> 0:14:01.160
<v Speaker 6>American support for Ukraine, the possibility of increased terriffs here.

0:14:01.480 --> 0:14:02.719
<v Speaker 1>How does one prepare for that?

0:14:04.880 --> 0:14:07.760
<v Speaker 8>It's very difficult. I mean, there's so many own predictabilities.

0:14:07.800 --> 0:14:11.600
<v Speaker 8>But clearly the present elect Trump wants to move very quickly.

0:14:11.679 --> 0:14:16.040
<v Speaker 8>He's actually chosen former general to be his envoid, General

0:14:16.440 --> 0:14:19.480
<v Speaker 8>Kellog to be the special envoy in Ukraine who will

0:14:19.520 --> 0:14:22.760
<v Speaker 8>try to conduct negotiations. But the Europeans they say they

0:14:22.840 --> 0:14:24.720
<v Speaker 8>want to say the table, will I'm not so sure

0:14:24.720 --> 0:14:27.400
<v Speaker 8>they're going to get one. And secondly, if the Trump

0:14:27.440 --> 0:14:31.600
<v Speaker 8>administration does actually reduce its military support for Ukraine, will

0:14:31.640 --> 0:14:34.680
<v Speaker 8>the Europeans be ready. There's a shortage of material already.

0:14:35.000 --> 0:14:37.400
<v Speaker 8>Some countries such as the Nordic countries are supplying as

0:14:37.480 --> 0:14:40.720
<v Speaker 8>much as they can, and some other countries are running short,

0:14:40.920 --> 0:14:43.360
<v Speaker 8>and some other countries of the EU are a little

0:14:43.400 --> 0:14:47.480
<v Speaker 8>bit reluctant, so they're not really prepared, but they have

0:14:47.600 --> 0:14:51.640
<v Speaker 8>been warned of the day after when Donald Trump enters

0:14:51.640 --> 0:14:53.920
<v Speaker 8>the White House, and maybe Ukraine is depending on the

0:14:53.960 --> 0:14:56.960
<v Speaker 8>Europeans for more military support. It's going to be very

0:14:56.960 --> 0:14:58.600
<v Speaker 8>difficult to muster this very quickly.

0:14:59.080 --> 0:15:01.120
<v Speaker 6>And we'll talk about the past stability of tariffs here

0:15:01.160 --> 0:15:03.680
<v Speaker 6>because you know, we make jokes about French wine and

0:15:03.800 --> 0:15:06.880
<v Speaker 6>German cars for example, but you think about the balance

0:15:06.960 --> 0:15:10.760
<v Speaker 6>of the European economy right now, and particularly the car

0:15:10.840 --> 0:15:14.680
<v Speaker 6>industry for example, which has been under some pressure here, I.

0:15:14.640 --> 0:15:17.680
<v Speaker 1>Mean, how much would tariffs hurt? How should we be

0:15:17.720 --> 0:15:18.520
<v Speaker 1>thinking about that?

0:15:20.360 --> 0:15:26.520
<v Speaker 8>Parents are an enormous worry for the outgoing German government

0:15:26.520 --> 0:15:29.680
<v Speaker 8>particularly and the incoming one whoever that will be The

0:15:30.080 --> 0:15:35.240
<v Speaker 8>real issue is that Donald Trump has a kind of

0:15:35.960 --> 0:15:39.920
<v Speaker 8>difficult relationship with Germany. He sort of resents its huge

0:15:39.920 --> 0:15:43.920
<v Speaker 8>expert circlus and the tariffs ten percent tariff is very

0:15:44.040 --> 0:15:48.400
<v Speaker 8>very high. At the moment, trade between the Eurozone and

0:15:48.440 --> 0:15:50.840
<v Speaker 8>the United States is about weakness. To got four hundred

0:15:50.840 --> 0:15:53.520
<v Speaker 8>and fifty billion a year, and this has actually increased

0:15:53.600 --> 0:15:57.480
<v Speaker 8>over the COVID times when trade with between Europe and

0:15:57.840 --> 0:16:02.520
<v Speaker 8>China sort of declined. The Europeans are increasingly relying on

0:16:02.560 --> 0:16:05.560
<v Speaker 8>the US market. So you slap tariffs on and you

0:16:05.600 --> 0:16:07.760
<v Speaker 8>still want to export, it's going to be very, very

0:16:07.760 --> 0:16:08.480
<v Speaker 8>difficult for them.

0:16:08.960 --> 0:16:09.960
<v Speaker 1>The other key.

0:16:09.800 --> 0:16:15.280
<v Speaker 8>Point is that how the German automobile industry will react.

0:16:15.440 --> 0:16:18.920
<v Speaker 8>We've seen announced closures in Volkswagen, We've seen the steel

0:16:18.960 --> 0:16:21.680
<v Speaker 8>industry going to lay off six or seven thousand workers.

0:16:21.880 --> 0:16:26.160
<v Speaker 8>What will happen to avoid tariffs? German manufacturer who will

0:16:26.200 --> 0:16:28.640
<v Speaker 8>probably go over to the United States, which is exactly

0:16:28.960 --> 0:16:32.160
<v Speaker 8>what Johnald Trump would like. But if that happens, it

0:16:32.200 --> 0:16:34.960
<v Speaker 8>could have a negative spin off effect for the economies

0:16:35.000 --> 0:16:37.640
<v Speaker 8>of Europe because we've mean more job losses and probably

0:16:37.720 --> 0:16:38.440
<v Speaker 8>less competition.

0:16:38.760 --> 0:16:42.080
<v Speaker 3>Judy, I'm curious. I'm not unsympathetic to the challenges that

0:16:42.160 --> 0:16:46.080
<v Speaker 3>Europe faces in the face of a new Donald Trump administration.

0:16:46.440 --> 0:16:48.600
<v Speaker 3>But there are a lot of questions, at least from

0:16:48.640 --> 0:16:51.880
<v Speaker 3>the US lens as so why Europe wasn't better prepared

0:16:51.960 --> 0:16:54.400
<v Speaker 3>for this. They've had time, they knew this was a

0:16:54.400 --> 0:16:57.960
<v Speaker 3>big possibility, and now here we are talking about what,

0:16:58.280 --> 0:17:01.680
<v Speaker 3>at least on the contour, seems like a surprise to them.

0:17:02.480 --> 0:17:05.520
<v Speaker 8>You're talking in the sense of the Ukraine issue.

0:17:05.760 --> 0:17:08.520
<v Speaker 3>A Ukraine issue terrafs everything.

0:17:08.760 --> 0:17:13.320
<v Speaker 8>Yes, their cries. Yes, to use a terrible phrase, the

0:17:13.320 --> 0:17:17.040
<v Speaker 8>writing has been on the wall. But the Europeans, they

0:17:17.040 --> 0:17:20.080
<v Speaker 8>do talk an awful lot, and they talk about competitiveness

0:17:20.160 --> 0:17:25.320
<v Speaker 8>and diversification from China, but they are really not prepared

0:17:25.359 --> 0:17:26.119
<v Speaker 8>for the tariffs.

0:17:26.880 --> 0:17:28.800
<v Speaker 1>Firstly. Secondly, I think.

0:17:29.000 --> 0:17:33.040
<v Speaker 8>We really have to remember that the European economies are

0:17:33.119 --> 0:17:36.399
<v Speaker 8>not only going to be hit by the tariffs, they

0:17:36.440 --> 0:17:40.040
<v Speaker 8>are actually going through a period of d industrialization as

0:17:40.080 --> 0:17:44.360
<v Speaker 8>a lot of fast pace, largely because of the China influence.

0:17:44.480 --> 0:17:46.880
<v Speaker 8>Of course China has done to the electric cars, for instance,

0:17:47.200 --> 0:17:51.840
<v Speaker 8>but also the whole element of digitization AI and others use.

0:17:51.960 --> 0:17:55.440
<v Speaker 8>The Europeans have incredibly slow to embrace these and that's

0:17:55.480 --> 0:17:59.960
<v Speaker 8>another contributing factor for being unprepared for this new kind

0:17:59.960 --> 0:18:01.480
<v Speaker 8>of transatlantic relationship.

0:18:01.560 --> 0:18:05.720
<v Speaker 3>And it raises another question too about just how common,

0:18:05.800 --> 0:18:08.960
<v Speaker 3>if you will, the common Eurozone is. I mean, this

0:18:09.040 --> 0:18:11.199
<v Speaker 3>is a collection of countries that I don't think have

0:18:11.320 --> 0:18:14.440
<v Speaker 3>really acted in commonality for quite some time. I don't

0:18:14.440 --> 0:18:16.439
<v Speaker 3>think they ever did, but they at least managed to

0:18:16.440 --> 0:18:18.119
<v Speaker 3>put up a good facade for some time. But I

0:18:18.160 --> 0:18:20.480
<v Speaker 3>think we've seen with regards to the Russians in France,

0:18:20.520 --> 0:18:22.920
<v Speaker 3>Germany and of course what's going on in the Eastern Europe,

0:18:23.240 --> 0:18:25.159
<v Speaker 3>that there just isn't a lot of consensus. So how

0:18:25.160 --> 0:18:26.240
<v Speaker 3>do you get to a solution.

0:18:29.840 --> 0:18:33.119
<v Speaker 8>It's very difficult. And what we've seen over the last

0:18:33.400 --> 0:18:37.119
<v Speaker 8>say ten years is the increasing role of the member states.

0:18:37.400 --> 0:18:40.280
<v Speaker 8>This is the role of the Executive, the European Commission,

0:18:40.720 --> 0:18:43.640
<v Speaker 8>and now the member states for this, France, for this, Germany,

0:18:43.680 --> 0:18:46.680
<v Speaker 8>for the the Netherlands, where the Supportic countries. They're all

0:18:46.800 --> 0:18:49.400
<v Speaker 8>looking after the national interests. And if you look after

0:18:49.480 --> 0:18:53.200
<v Speaker 8>national interests, you actually downgrade or make the whole idea

0:18:53.320 --> 0:18:56.400
<v Speaker 8>of the European Union weaker. There's no talk any more

0:18:56.400 --> 0:18:59.800
<v Speaker 8>about integration, there's not even any discussion. But what's really

0:18:59.840 --> 0:19:04.159
<v Speaker 8>necessary is completing monetary unions such as a banking union,

0:19:04.520 --> 0:19:07.560
<v Speaker 8>and so in some ways the European Union as an

0:19:07.600 --> 0:19:12.240
<v Speaker 8>economic project and as a political project has really slowed down,

0:19:12.480 --> 0:19:15.760
<v Speaker 8>and there's no leadership either in Berlin or Paris and

0:19:15.880 --> 0:19:19.359
<v Speaker 8>other countries to say, let's put our national interest behind

0:19:19.440 --> 0:19:22.360
<v Speaker 8>us and try to integrate the European Union further so

0:19:22.400 --> 0:19:25.440
<v Speaker 8>that we can deal with the new challenges coming from Washington,

0:19:25.560 --> 0:19:27.840
<v Speaker 8>from China and of course Russia and India.

0:19:28.400 --> 0:19:29.760
<v Speaker 1>All right, Judy got to leave it there.

0:19:29.800 --> 0:19:32.080
<v Speaker 6>I really appreciate you taking the time great to get

0:19:32.119 --> 0:19:32.879
<v Speaker 6>your perspective.

0:19:32.880 --> 0:19:35.840
<v Speaker 1>That is Julie Densey of Carnegie Europe.

0:19:36.320 --> 0:19:39.840
<v Speaker 2>This is the Bloomberg Surveillance Podcast, bringing you the best

0:19:39.920 --> 0:19:43.480
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0:19:46.600 --> 0:19:50.359
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