Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene
Speaker 1: Jay Lee. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg Nalie
Speaker 1: Bassett dropping by a studio here in New York, Bloomberg's
Speaker 1: investment banking reporter to get us up to speed on
Speaker 1: the numbers Shale. Let's just start with a tough tough
Speaker 1: quarter for the capital markets business. It was really tough,
Speaker 1: especially given that JP Morgan is one of the biggest
Speaker 1: bond trading houses across the world. He didn't say much.
Speaker 1: Jamie Diamond didn't say much in the press release yet
Speaker 1: about what the forward looking guidances for this business, but
Speaker 1: he definitely was hurt by the fixed income business and
Speaker 1: Goodies was pretty much in line with an all us expected.
Speaker 1: It definitely wasn't enough to help trading revenues overall. Q
Speaker 1: four's ancient history. Now we expected it to be bad.
Speaker 1: The only thing that's happened is is it's coming worse
Speaker 1: than many people expected it to be. Similar story with
Speaker 1: City Group yesterday City Group traded lower on the numbers.
Speaker 1: Then as the earning school started and we started to
Speaker 1: look forward through to Q one, enthusiasm built up. What
Speaker 1: does look like and could we see a similar story
Speaker 1: today with JP Morgan. We could see a similar story
Speaker 1: with JP Morgan. But at the first glance, at least
Speaker 1: the lending figures are kind of weak. We're gonna want
Speaker 1: to see what Jimmy Diamond says about the strength of
Speaker 1: the economy moving forward. At City Group, they were saying
Speaker 1: trade wars and all this geopolitical turmoil might not hurt
Speaker 1: until the fourth quarter of this year or later in
Speaker 1: the year, So a couple of quarters of stability might
Speaker 1: be really good for these banks. So walk me through
Speaker 1: the long growth story at the moment, because one thing
Speaker 1: that jumps out to a lot of analysts in the
Speaker 1: early part of the release was just the credit provisions,
Speaker 1: more money set aside to cover potentially souring loans. What's
Speaker 1: the story. You're sanctionally within the numbers, right, the provisions
Speaker 1: for credit losses higher is really a problem. Our colleagues
Speaker 1: on top Live point out that it's mostly from the
Speaker 1: credit card business, which is good news that it's not
Speaker 1: all from the mortgages, especially because mortgages have been having
Speaker 1: a tough market, both at JP Morgan and at City Group.
Speaker 1: So you know, we're gonna want to see color about
Speaker 1: the strength of the American consumer, both in the mortgage markets,
Speaker 1: and then how much JP Morgan is extending loans in
Speaker 1: the small business just working our way through the rest
Speaker 1: of the bank. For the investment bank. A thing that's
Speaker 1: emerging at the moment is M and A Advisory is
Speaker 1: doing okay. Debt underwriting is terrible what you'd expect given
Speaker 1: what happened with leverage loans and fixed income in terms
Speaker 1: of supply going into the year end. Just in terms
Speaker 1: of M and A, is a good pipeline here, a
Speaker 1: good story to sell for the pipeline. He's going to
Speaker 1: have to comment on it right now because the SEC
Speaker 1: is not even taking deals and so the first quarter
Speaker 1: of this year there is a bit of a backlog.
Speaker 1: There's a lot of turmoil, and you know, people don't
Speaker 1: like to do deals when the stock market is moving
Speaker 1: all over the place. You don't know what you're paying,
Speaker 1: And we're gonna want to see what he has to
Speaker 1: say about that, and we're gonna want to see equity
Speaker 1: and debt underwriting figures turn around. They're both down at
Speaker 1: the end of the last year. Right to have us
Speaker 1: with us this morning. Brian Levitt, jointing US Openhama Fun
Speaker 1: Senior Investment Strategistic, joined us on the phone here in
Speaker 1: New York. Brian, it's another big consensus over White. We
Speaker 1: saw this story plan in as well. How does it
Speaker 1: plan for you? So? I think the big story in
Speaker 1: is that we're actually having a slowing economy but probably
Speaker 1: a more a better environment for rates and inflation. So
Speaker 1: I actually think the markets will have a good year
Speaker 1: in but it goes back to the point where investors
Speaker 1: are going to be favoring true growth companies over you know,
Speaker 1: more of the cyclical names in the United States or
Speaker 1: names that are more value oriented. So it's a shift.
Speaker 1: I mean, last year was all about better growth but
Speaker 1: not great policy. This year is going to be about
Speaker 1: slower growth. We suspect better policy, but that takes us
Speaker 1: back to an environment where investors, in our mind bid
Speaker 1: up the true growth companies. So, Brom, what does that
Speaker 1: mean for the nation's banks here in America? As we
Speaker 1: get the earnings yesterday from Steady Group and today from
Speaker 1: JP Morgan and both of them, just in terms of
Speaker 1: the numbers for Q four, which we had expectations come
Speaker 1: in for already disappointing. Yeah, I mean I would. I
Speaker 1: would think that in a slowing growth environment and environment
Speaker 1: where the the yield curve remains relatively flat, that's not
Speaker 1: typically an environment where the financial sector of the nation's
Speaker 1: banks um are among the leaders in the market. I
Speaker 1: don't I don't expect that we're going into an environment where,
Speaker 1: you know, financials are a significant drag on the market,
Speaker 1: But I just suspect market leadership will from elsewhere. Brian.
Speaker 1: Fascinating to me that the market is already getting ahead
Speaker 1: of whether the data is coming through. And what I
Speaker 1: mean by that if you just look at the recent
Speaker 1: survey from Bank America, like this fund manager survey showing
Speaker 1: GDP and earnings growth expectations totally plummeting. You see the
Speaker 1: numbers coming out of China absolutely terrible. But what I'm
Speaker 1: seeing is a market adjusting for maybe a rebound later
Speaker 1: this year. I'm looking at the high yield story in
Speaker 1: Asia and China, the junk bond story. A lot more
Speaker 1: people constructive on that. That's a market that's bid Brian,
Speaker 1: Is that a little bit of a head fake? Is
Speaker 1: that the market going too far ahead of the data
Speaker 1: or is that a story you get behind. Now that's
Speaker 1: a story I would get behind, like I think that.
Speaker 1: What's what's transpired is, you know, the US, we had
Speaker 1: a lot of stimulus, the US decoupled from the rest
Speaker 1: of the world. That led to a strengthening dollar, money
Speaker 1: being sucked out of other parts of the world into
Speaker 1: the United States, oil process collapsing, and that all kind
Speaker 1: of fed on itself, and the FED compounded it by
Speaker 1: suggesting they were going to raise interest it's multiple times.
Speaker 1: We're now seeing the flip side of that, in which
Speaker 1: the US is slowing back to trend. Yeah, China, Um,
Speaker 1: China is weakening, but um, you're starting to see some
Speaker 1: stimulus come through. New credit growth looks favorable, So basically
Speaker 1: a stimulant. The catalyst for the rest of the world
Speaker 1: is the US moving back towards a trend level of growth,
Speaker 1: the rest of the world generally hanging in the dollar moderating.
Speaker 1: That's actually a better environment than what we had in
Speaker 1: eighteen when there was really good growth in the United States,
Speaker 1: but policy that was pretty disruptive to the rest of
Speaker 1: the world. There seems to be a hope, Brian, that
Speaker 1: the stimulus coming through from China will be enough to
Speaker 1: stabilize the economy. It was very incremental to me, and
Speaker 1: there seems to be a shift as well over what
Speaker 1: they want to stimulate the economy with, moving away from
Speaker 1: infrastructure spending, moving away from leaning on monetary policy too heavily,
Speaker 1: and leaning into things like tax cuts. Now, have the
Speaker 1: incremental moves been enough, Will they be enough to turn
Speaker 1: the story around? It's a great point because what you
Speaker 1: had in twenty fifteen and twenty sixteen was significant investment
Speaker 1: that led to significant Chinese growth that lifted up growth
Speaker 1: all around the world, and that was the catalyst. We're
Speaker 1: not getting that this time. So in essence, what you're
Speaker 1: getting is um efforts to stabilize Chinese growth near a
Speaker 1: trend level. And so the catalyst for the rest of
Speaker 1: the world and these higher yielding markets that you're talking
Speaker 1: about is not going to be massive Chinese stimulus. It's
Speaker 1: gonna be what we call stimulus light. So that happens,
Speaker 1: that stabilization happens as the US slows towards trend. It
Speaker 1: doesn't look exactly like fifteen and sixteen, but markets could
Speaker 1: play out similarly because similar to the twenty sixteen UM,
Speaker 1: emerging markets have been beaten up UM and you know,
Speaker 1: investor sentiment has gotten really weak, the dollars pretty strong,
Speaker 1: and you know this this stimulus light at it China
Speaker 1: could be the catalyst to unlock some of that volumee,
Speaker 1: said Brian. Final final question for a lot of investors
Speaker 1: out there who are waiting for the data to confirm
Speaker 1: the turnaround, are you saying that by the time they've
Speaker 1: got that, they're going to miss the big chunk of
Speaker 1: the upside. Yeah, I mean that's how it goes. I
Speaker 1: UM like, I don't think that this cycle ends anytime soon.
Speaker 1: There's really not inflation anywhere in the world. I don't
Speaker 1: see significant excess anywhere in the world. So I suspect
Speaker 1: this is a cycle that goes on longer than people expect.
Speaker 1: I think concerns of recession or hyperbole UM investors should
Speaker 1: be investing. This is one of those big bull markets,
Speaker 1: long term secular bowl markets that we get in our lives.
Speaker 1: I've been told you get three of them when you're
Speaker 1: too young, when you're too old to take advantage of
Speaker 1: the one in the middle, and and that's that's what
Speaker 1: I think investors need to be doing. Hey, Brian, always
Speaker 1: great to catch out with you, Ma up and hand
Speaker 1: a fund senior investment strategist to run us through the
Speaker 1: markets and respond to the latest earnings with us now,
Speaker 1: kenn Ley on c f R A, he's been wonderful
Speaker 1: about giving his bank perspective. Kennon looking at the big
Speaker 1: k X of Keith brianton Wood's bank index down. Maybe
Speaker 1: it's worse now down a nice bounce. Frankly, folks, it's
Speaker 1: an elegant chart showing south Ken Can you be long
Speaker 1: banks right now? You have to be cautious. So um,
Speaker 1: these stocks are beaten up the bowl case if you
Speaker 1: are long, would be there trading below book value. The
Speaker 1: return of capital is significant for buybacks and dividends. Um.
Speaker 1: Some of the businesses are stable, but it was a
Speaker 1: risk class environment. It hurt them in the fourth quarter,
Speaker 1: with them significantly in December. Okay, I'm looking at the
Speaker 1: size and folks. One of the things I always get
Speaker 1: upset about media coverage of the banks is we forget
Speaker 1: how large these companies are. For example, JP Morgan's only
Speaker 1: a hundred gazillion dollars it comes in, they take thirty
Speaker 1: six cents UH down to the operating income line. Their
Speaker 1: net income would make GM blush. Net income is extraordinary, Ken.
Speaker 1: Within trading, how much of it is a variable cost
Speaker 1: and how much is it a fixed cost? Is they
Speaker 1: rationalize out two and three years trading to total net
Speaker 1: revenues for JP Morgan is important. It's just under of
Speaker 1: total net revenues UM. You have to feed the beasts
Speaker 1: the infrastructure for both equity and separately fixed income currency UM.
Speaker 1: So essentially, if you don't have that volume, and we
Speaker 1: didn't have that volume in the sixth income side, even
Speaker 1: with some of the ratcheting down over the last six
Speaker 1: seven years with Dodd Frank Uh, still there wasn't enough activity.
Speaker 1: That hurt. And also you've got to get the trade
Speaker 1: right in terms of the higher riskier areas of fixed
Speaker 1: ink on the derivatives. The big story in Q four
Speaker 1: was that it was bad. The debate, I guess, Ken,
Speaker 1: is to what degree was it bad? We're finding out
Speaker 1: it was worse than a lot of people thought. Fine.
Speaker 1: Q four ancient history. Let's get into a lot of
Speaker 1: people are looking for a window into the broader economy,
Speaker 1: show me the loan growth. How's that story progressing? Do
Speaker 1: you see some positive signs so far? From city group?
Speaker 1: From JP Morgan Kent, the first quarter is very important,
Speaker 1: typically one of the strongest quarters of the year for
Speaker 1: JP Morgan. Um, what comes in reliably has been the
Speaker 1: consumer loans up three and fourth quarter driven mostly by
Speaker 1: consumer and credit card. Commercial lending was down two. Um,
Speaker 1: that's mostly on a down tick on construction real estate loans.
Speaker 1: But UM, yeah, I mean long growth, which is of
Speaker 1: large base in terms of revenues, has to do better. Uh.
Speaker 1: You know. The other factor, and Tom gets at this,
Speaker 1: is that you've got two buckets loans banking, and then
Speaker 1: you also got net interest income. Um. And we don't
Speaker 1: have these steep ascension of rates, which means net interest
Speaker 1: income will grow. But the non parts, as you're addressing here,
Speaker 1: loans has to do a little bit better. In two
Speaker 1: thousand nineteen, credit provisions is a story for this morning
Speaker 1: as well. Can the numbers in JP Morgan suggested a
Speaker 1: bit of a provision build. What are your thoughts on that?
Speaker 1: What do you see in the numbers? Um? Too hard
Speaker 1: to go through every one of the segments. I think
Speaker 1: it's kind of mixed. Um, I didn't see there was
Speaker 1: nothing episodic in Q four two eighteen to say that
Speaker 1: they're behind the curve in terms of provisions allowance for
Speaker 1: doubtful accounts or higher reserves. It's another way, of course.
Speaker 1: Also they get better net income. It's just, you know,
Speaker 1: be too aggressive in the old days, Ken, I'd ask
Speaker 1: you this question. So in honor of the old days,
Speaker 1: le'sk it right now agony brings mergers and acquisitions. Are
Speaker 1: we going to see a new consolidation in various sundry banks?
Speaker 1: So M and A in two thousand eighteen was a
Speaker 1: significant year, but it's concentrated to large deals. Large deals
Speaker 1: if they get done from announced to complete, it take
Speaker 1: twelve to eighteen months. Um. That would be I think
Speaker 1: the story in two thousand nineteen as well. It's mostly
Speaker 1: the America's in Europe. Not to worry about Asia for
Speaker 1: M and A. But to be firing on all cylinders
Speaker 1: on JP Morgan today, in City yesterday, they got to
Speaker 1: get fire up higher growth out of equity underwriting. The
Speaker 1: dead underwriting is kind of fading because that was used
Speaker 1: with tax benefits no longer there to fund stock repurchases.
Speaker 1: He can great to catch up with you. Busy morning
Speaker 1: for you. I'm so so thank you very much for
Speaker 1: giving us your time. Kenley on Global Director of Research.
Speaker 1: It see our a so if that Jp Morgan, we
Speaker 1: have had City. We wait on Goldman over the next
Speaker 1: couple of days and Tom, I think Goldmen will be fascinating.
Speaker 1: I keep calling it a non bank. I know that
Speaker 1: that upsets Mr Solomon and Mr blank find but there
Speaker 1: it is, John the Green today Westminster bells ringing drums.
Speaker 1: I couldn't even hear the guests next to us. It was.
Speaker 1: It was on the edge of John bonhom of of
Speaker 1: led Zeppelin. It was drumming John Bontom at Westminster. John,
Speaker 1: you know this is a band from you know, Jimmy
Speaker 1: Page and Plantifs from the Midlands and John no Zeppelin.
Speaker 1: I thought you were gonna give me the history to Zeppelin.
Speaker 1: Oh great album of all time. Don't tell Robert plants
Speaker 1: out of London and John. Now we have Victoria Houston
Speaker 1: with us on the Institute of Economic Affair, Senior Council,
Speaker 1: the International Trade and Competition Unit. Victoria, you are away
Speaker 1: from the politics. You are away from the actual voting
Speaker 1: tonight and on into tomorrow and the next day. At
Speaker 1: what risk is the UK trade right now? What is
Speaker 1: the single thing that the United Kingdom will give up
Speaker 1: in trade with any kind of defeat for Prime Minister
Speaker 1: may Well, let's be here. A defeat for the Prime
Speaker 1: Minister and for the whistaal agreement at this point only
Speaker 1: means that at this point they have to come back
Speaker 1: with another plan um in um three sitting days time.
Speaker 1: So while I'm sure if the vote were to to
Speaker 1: reject the deal today there would be some repercussions in
Speaker 1: market sentiment, it wouldn't in and of itself mean anything. However,
Speaker 1: if it meant that ultimately the deal was rejected and
Speaker 1: the Prime Minister wasn't able to bring it back to
Speaker 1: the House in any renegotiated form, and so the deal
Speaker 1: ultimately couldn't be agreed at all, and come the twenty
Speaker 1: ninth of March and leave the European Union without overstore agreement,
Speaker 1: then you know that's when that's when the possible disruptions
Speaker 1: to trade would kick in. I mean the disruption to
Speaker 1: trade in the messaging and all the newspapers this morning,
Speaker 1: is this measurement of how long the pain will be
Speaker 1: the leave people say, yes, there's going to be pain,
Speaker 1: will get over it and we'll move on. In the
Speaker 1: remaining people in four differentiates from what I can tell
Speaker 1: say no, there's going to be a permanent disruption to
Speaker 1: trade for an eye the nation. Where do you stand
Speaker 1: on that? Well, I think there's two different sort of sides.
Speaker 1: So that there's the question of the immediate disruption at
Speaker 1: the ports because we've introduced we would have to introduce
Speaker 1: a new range of administrative requirements to import and export goods,
Speaker 1: and there are fears being raised of huge queues and
Speaker 1: tailbacks on the roads leading into Dover and Kelley, the
Speaker 1: main cross channel trade ports. And then there's the aspect
Speaker 1: of the more long term structural impact on our trade.
Speaker 1: And I think the first side, the immediate practical steps,
Speaker 1: I think most people probably acknowledge that that would only
Speaker 1: last a couple of months at worst, while businesses adapt
Speaker 1: and the government believedly starts making the necessary steps that
Speaker 1: it should really have been making, um since immediately after
Speaker 1: the referendum to to make the trade flow. Okay, well,
Speaker 1: the government, the government will take quote unquote necessary steps,
Speaker 1: but on a microeconomic basis, almost a microcosm basis, every
Speaker 1: single business will adapt and adjust in the United Kingdom,
Speaker 1: in Ireland, in Scotland, in Europe and around the world
Speaker 1: to the reality of London just separating away from Europe
Speaker 1: or do you doubt that that will happen. Well, we're
Speaker 1: not leaving the continent of Europe or leaving a set
Speaker 1: of political institutions called the European Union. And in fact,
Speaker 1: the number of businesses in the United Kingdom that trades
Speaker 1: with the European Union is extremely small, um in in
Speaker 1: you know, in aggregate terms, there's only a small percentage,
Speaker 1: maybe six per cent of all businesses in in the
Speaker 1: United Kingdom actually do any trade with CEU. And interesting
Speaker 1: doesn't account for that much of our our GDP. Actually,
Speaker 1: um alth, it's a it's a serious and material part
Speaker 1: of our GP. I think it's about ten ten percent
Speaker 1: of our GP is a constitute of trade with the EU.
Speaker 1: So the idea that we can't survive and the economy
Speaker 1: will will fall off a cliff and um everyone will
Speaker 1: you end up scavenging on the streets for food is
Speaker 1: really quite mistaste. Now some of that is out there
Speaker 1: to say the least victory, Thank you so much, greatly
Speaker 1: greatly appreciated this morning a fair senior council to the
Speaker 1: International Trading Competition Unit. We greatly appreciate that. Paul Sweeney
Speaker 1: in New York. I'm Tom Keenan London and with us
Speaker 1: John Taylor, Stanford University, Professor Taylor. I've had the honors
Speaker 1: speaking to you any number of times about this, but
Speaker 1: let's revisit Taylor nine eight. John, this is a few
Speaker 1: years ago. You were sixteen a protege. You remember this well,
Speaker 1: and you and Gary mcelvo talking about sticky price's nominal
Speaker 1: rigidities in wage, in price stickiness, and to bring that
Speaker 1: forward to where we are now, Professor Taylor, the conundrum
Speaker 1: for America has been wages that wouldn't go up. How
Speaker 1: sticky are wages right now? That's thanks for bringing that
Speaker 1: research up, but people still talking about it all after
Speaker 1: all these years. And I think the reason is that
Speaker 1: stickiness really had to reflect underlying fundamentals over time. So
Speaker 1: if you don't have productivity, growth, if you don't have
Speaker 1: the things that earnings, you don't get the wages. That's
Speaker 1: that's what's all about. And this is important from London,
Speaker 1: Professor Taylor, because if I go back to Clement Atlee,
Speaker 1: World War Two, the mystery that Kane's faced of ugly unemployment,
Speaker 1: this election, to this vote tonight. Rather hearkens back to
Speaker 1: the twenties in England, which weren't like the twenties in America.
Speaker 1: We had an industrial revolution. Then maybe they didn't in England,
Speaker 1: Ramsey Donald and the sum of this is, we've been
Speaker 1: here before, haven't we. Yes, Uh, there's an up and
Speaker 1: down similarities in the cycle. I think the big decision
Speaker 1: in uh London right now is key. I think they've
Speaker 1: laid it out. I don't know what's going to happen.
Speaker 1: You're you're closer than I am. But you did have
Speaker 1: some good times in the twenties. They didn't last. Theories
Speaker 1: were terrible on all over the world, Professor. We're experiencing
Speaker 1: this country something you know, I guess a little bit unique.
Speaker 1: That is a partial government shutdown. Do you expect this
Speaker 1: shutdown to have any impact on the economy. The markets
Speaker 1: seem to be, you know, pretty much shrugging it off. Yeah,
Speaker 1: I don't think so. At this point, people talking about
Speaker 1: the FETs not getting the data coming in, but they
Speaker 1: have less of ways to understand what the data is.
Speaker 1: I think there's certain people that are are hurting, that's
Speaker 1: for sure, But the overall economy, UH, thus far, it's
Speaker 1: doing fine. I think there's other other factors, of course
Speaker 1: in the economy that people are talking about, which tend
Speaker 1: to be bigger than the shutdown in terms of the
Speaker 1: overall economy. And what are some of those out on
Speaker 1: the top of your list. Well, I've actually been positive
Speaker 1: that some of the changes we had in the last
Speaker 1: year and a half, the tax reform, regulatory reform. We
Speaker 1: talked about the FED already that the concerns are are
Speaker 1: are just doesn't want to us forever. And we've got
Speaker 1: a lot of alto in the markets, and people are
Speaker 1: talking about the history. John Taylor from and this is
Speaker 1: Stan Fisher, I believe in seventies seven and goes on
Speaker 1: to Manqueu and others. Is if we look at wages
Speaker 1: in the overlays. You mentioned earlier productivity and technology one
Speaker 1: of the new themes, and folks, this is a strange
Speaker 1: word that's not spoken too often. There are monopxanistic tendencies
Speaker 1: within our companies and within the dominance of companies where
Speaker 1: they control the wage now like they used to not
Speaker 1: to do you buy the idea that it's a different
Speaker 1: wage calculus now because of the dominance of business. I
Speaker 1: think there's some evidence, uh that people have pointed to
Speaker 1: about Monopsony orle Ashtonfelder is one of them at Princeton.
Speaker 1: I don't think it's affecting the overall trend and wages.
Speaker 1: I think that really is more productive and that's more
Speaker 1: the basic economy. But yeah, you can find elements of this,
Speaker 1: elements of probably just the differences from competition all the time.
Speaker 1: That's why I have more competitive markets, just because the
Speaker 1: time Paul Sweenia and I Professor Taylor have to switch
Speaker 1: to the acclaim of rules versus discretion. Where are the
Speaker 1: rules right now? Is there a rule book for Chairman
Speaker 1: Paul Well, you know they've written a lot and in
Speaker 1: the last year and a half about rules. In their
Speaker 1: Monterey report, he's talked about it. The new vice chair
Speaker 1: Ric Claren has done fun and metal work about out.
Speaker 1: They're referring to it in there in their speeches, so
Speaker 1: I think they're they're trying to get back to this.
Speaker 1: It's it's never rocket science, but there's some good degree
Speaker 1: of predictability. They emphasize a lot, whether it's the balance
Speaker 1: sheet actions or interest rate actions. So we've been off
Speaker 1: for this for a while, so it's not easy to
Speaker 1: get back. But I think you're seeing some signs. So
Speaker 1: Professor just following up on that, particularly on the FED
Speaker 1: and it's unwinding of its balance sheet. How aggressive do
Speaker 1: you believe the Fed should be going forward with this
Speaker 1: balance sheet? You know, I think they've done a good
Speaker 1: job since the old tapeer tantrum, which was quite chaotic,
Speaker 1: remember back to five years ago, but they learned from
Speaker 1: that and have been quite clear about what they're trying
Speaker 1: to do. It's Uh, it's predictable, and that's that's what's good.
Speaker 1: I think there's lots of debate about its impact. I
Speaker 1: don't see much impact on the markets at this point
Speaker 1: because it's predictable and understandable. I hope they continue it
Speaker 1: that way. Of course, they'll be adjusting it and there's
Speaker 1: a big decision they're making this year about where they're
Speaker 1: going eventually with the balance sheet. So Professor is a
Speaker 1: former Treasury official. We would love to get your thoughts
Speaker 1: on trade. Uh, it looks like this administration is much
Speaker 1: more comfortable with UM unilateral UH and bilateral type negotiations.
Speaker 1: And after the renegotiation, how do you feel or how
Speaker 1: do you view this administration's view towards trade and how
Speaker 1: do you think that's going to contribute or hinder the
Speaker 1: global economy. So it's it's quite different. And they've ever
Speaker 1: redone aft, of course, and there's more discussions with Europe
Speaker 1: in different ways. And the big question now is China.
Speaker 1: I think what they've pointed to is there's some some
Speaker 1: trade practices in China they're trying to adjust. I think
Speaker 1: of the Chinese response to that it will be like
Speaker 1: what happened with the new after what happened with Europe.
Speaker 1: But we're not there yet. I think it's it's different.
Speaker 1: The strategy is different. I don't think the goal is
Speaker 1: different quite frankly, the goal is to reduce trade barriers
Speaker 1: around the world, but the strategy to get there what's
Speaker 1: happening is different than in the past. Well, you mentioned China.
Speaker 1: How concerned are you buy maybe just the rhetoric that
Speaker 1: we're seeing going back and forth between the US and China.
Speaker 1: Is this something that the Chinese, from their perspective, need
Speaker 1: to get something done with the U? S How do
Speaker 1: you how do you think that's going to play out. Yeah,
Speaker 1: I think the Chinese do need to get something done.
Speaker 1: There's there's various things, Uh, there's tariffs, there's a restrictions
Speaker 1: owner ownership. There's various things they could do. And I
Speaker 1: think the more that there's a focus on those details. Unfortunately,
Speaker 1: details are hard to focus on. But the more there is,
Speaker 1: the better that will be and you'll take away some
Speaker 1: of this clamoring. Let's not be strangers this year, Professor Taylor,
Speaker 1: thank you so much. John Taylor is at Stanford University.
Speaker 1: His public service at Treasury during two thousand one and
Speaker 1: two thousand two is noted, and of course his work
Speaker 1: in monetary theory UH needs no introduction or review. John
Speaker 1: Taylor of Stand for That University, Thanks for listening to
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