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Speaker 1: Who you put your trust in matters. Investors have put

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Speaker 1: their trust and independent registered investment advisors to the two

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Speaker 1: and four trillion dollars. Why learn more at find your

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Speaker 1: Independent Advisor dot com. Welcome to the Bloomberg Surveillance Podcast.

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Speaker 1: I'm Tom Keane with David Gura. Daily we bring you

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Speaker 1: insight from the best in economics, finance, investment, and international relations.

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Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and

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Speaker 1: of course on the Bloomberg. This is an important moment

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Speaker 1: where this is a Nelson David Rockefeller sitting your fellow

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Speaker 1: at the Council on Foreign Relations, Shannon O'Neill, truly one

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Speaker 1: of our experts on Latin American, particularly in Mexico. And

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Speaker 1: a lot of people won't know this about Nelson Rockefeller,

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Speaker 1: who you know, people will perceive as a governor of

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Speaker 1: New York forty one vice president the United States. He

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Speaker 1: cut his teeth in Latin America. He was I remember

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Speaker 1: as a kid, he was way out front on the

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Speaker 1: courage of America to look self and build relationships. A

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Speaker 1: lot of people equate President elect Trump to Rockefeller vision

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Speaker 1: and Rockefeller politics domestically. Do you see any indication we

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Speaker 1: can get Nelson Rockefeller with President Trump to your Latin America,

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Speaker 1: I think, unfortunately not. I don't think he has a

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Speaker 1: lot of interest in the region. He's never expressed a

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Speaker 1: lot of interest in the region, and really very few

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Speaker 1: of the people that he's actually appointed so far that

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Speaker 1: he's nominated so far have any knowledge or interest in

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Speaker 1: the region. So I don't think we're gonna see that

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Speaker 1: turned south that we saw with the Rockefellers. What lessons

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Speaker 1: can we learn from the populist movements in Latin America

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Speaker 1: as we look at the rise of populism here in

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Speaker 1: the US and around the world. He is there a

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Speaker 1: continue between the two. You know, there are very big differences,

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Speaker 1: and we have here the biggest challenge in Latin America.

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Speaker 1: From me, we have economic populism, we have overspending, the like,

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Speaker 1: That's what we usually think about. But the really biggest

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Speaker 1: challenge of population brings to me is the undermining of

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Speaker 1: political institutions, the undermining of the checks and balances that

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Speaker 1: make democracy work. And while we here have two hundred

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Speaker 1: plus years of democracy, we probably we have much stronger institutions.

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Speaker 1: Many of the things that we rely on are not

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Speaker 1: actually rules or legislation their norms, and that I think

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Speaker 1: is the challenge. We could see a rolling back of

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Speaker 1: some of these checks and balances that really make our

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Speaker 1: democracy vibrant with a new administration, if they so chose.

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Speaker 1: Before we look ahead to that new administration, let's look

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Speaker 1: back at what the Obama administration can say about their

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Speaker 1: achievements here in Latin America over the last eight years.

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Speaker 1: I've traveled with the Treasury Secretary to Brazil, Buenos Aires,

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Speaker 1: and Bogata, and it struck me that, um, the administration

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Speaker 1: could sort of trumpets its success bring some more emphasis

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Speaker 1: on free markets to those countries. Did did the abdministration

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Speaker 1: do which with regard to to Latin America, What can

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Speaker 1: they say that they did? You know, we saw a

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Speaker 1: lot of bilateral cooperation more than say a regional cooperation.

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Speaker 1: So we saw economic ties, security ties deep in with

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Speaker 1: Mexico over the last eight years. We saw similar back

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Speaker 1: and forth with many of the Southern Cone countries. And

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Speaker 1: one thing we have seen particularly the last year plus

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Speaker 1: is a turn in Latin America to a much more

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Speaker 1: US friendly and market friendly types regimes, whether it's Brazil, Argentina,

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Speaker 1: Peru or others, So that really is something they did themselves,

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Speaker 1: but a real accomplishment. And finally, I would say one

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Speaker 1: thing Obama did in the region was take the challenge

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Speaker 1: in the issue of Cuba off the table, which had

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Speaker 1: always deviled overall US Latin America relations. What we were

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Speaker 1: doing in Cuba. How much of that is is at risk?

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Speaker 1: I wonder if we had the death of of del Castro.

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Speaker 1: Of course we have the change administration here in the US.

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Speaker 1: UH president of MoMA did so much is that at

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Speaker 1: risk of changing with a new president? Like so many policies,

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Speaker 1: It's hard to know what Trump will do, but he

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Speaker 1: has come out and many within the Republican Party are

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Speaker 1: staunch hardliners. They want to roll back and set up

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Speaker 1: real divisions between the United States and Cuba. Perhaps we'll

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Speaker 1: see Trump not nominate a ambassador, which is now we

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Speaker 1: have normal relations there, but we may not see a

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Speaker 1: person there. And I doubt we'll see a continue opening

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Speaker 1: to to UH to Cuba, particularly as long as Castro

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Speaker 1: is there. The stereotype there, well, there's not one stereotype.

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Speaker 1: There's so many stereotypes of Latin America. Which one do

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Speaker 1: you want to destroy? Most I mean, it's commodity based.

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Speaker 1: It's a long ways away. Bla. What's the one you

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Speaker 1: want to destroy most, you know, the one I'd like

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Speaker 1: to destroy most is the sort of image we have

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Speaker 1: that Latin America is full of tumbleweeds and donkeys walking

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Speaker 1: down the main stream exactly. And I don't know what

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Speaker 1: they say about Bolivia, but there's that famous line exactly.

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Speaker 1: So that is no longer Latin America. It has its challenges,

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Speaker 1: but it really has vibrant economies, it has a burgeoning

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Speaker 1: middle class, and it is connected with the rest of

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Speaker 1: the world. It's the global players today. I went to

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Speaker 1: a dinner last night at cocktail party. Was a cocktail party, David.

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Speaker 1: That's what you do. When the cocktail party is a

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Speaker 1: good one, you called a dinner. There you go so

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Speaker 1: no one knows. You say, I went to a cocktail

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Speaker 1: party last night with a lovely woman from Uruguay who

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Speaker 1: said I mispronounced it. But that's a different story. How's

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Speaker 1: Uruguay doing. Uruguay is doing fairly well. This is a

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Speaker 1: little Switzerland. It is like a little Switzerland. It's about

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Speaker 1: three million people, so it's about the size of the

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Speaker 1: upper East Side of New York City. Um, but it's

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Speaker 1: doing fairly well. It has a broad social safety net,

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Speaker 1: there's jobs being created, it's very open to the rest

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Speaker 1: of the world, and it has a lot of political

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Speaker 1: consensus to do so. It's also very US friendly. So

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Speaker 1: this is a country that has found a balance and

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Speaker 1: makes things work. Okay, you've made things work here today, shanonil,

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Speaker 1: thank you so much with the consolt foreign relations. I

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Speaker 1: want to bring in Steve Whiting now he's the chief

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Speaker 1: global strategistic City Private Bank HUD enough to join us

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Speaker 1: here in New York this morning. Morning, Steve, good morning.

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Speaker 1: Let's start with that ECB meeting yesterday. Get your sense

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Speaker 1: of of that decision a taper in all but name,

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Speaker 1: I suppose this is sort of a very very successful,

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Speaker 1: uh you know, approach, communications approach around what is a

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Speaker 1: a program that they've managed, and they've had a long

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Speaker 1: time to think about ways of making it more flexible,

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Speaker 1: the potential to reshape the yield curve to make the

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Speaker 1: most of what will be a smaller amount of absolute purchases. So, uh,

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Speaker 1: you know, they did everything they could and succeeded in

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Speaker 1: the marketplace in many respects other than you know, the

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Speaker 1: fact that we did see higher bond yields at the

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Speaker 1: long end in the Aurozone, but the currency weekend inequities

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Speaker 1: moved up despite a what we won't call a taper

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Speaker 1: according to Mario Druggi, but what is a smaller amount

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Speaker 1: of absolute asset purchases forward. Yeah, he indicated there's a

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Speaker 1: willingness to buy assets below interest rates, and then during

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Speaker 1: the Q and I that followed, he seemed to indicate

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Speaker 1: that they weren't there yet, that the committee was there

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Speaker 1: to study that it could do it. What's been the

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Speaker 1: market effect of that of the ECB expressing some willingness

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Speaker 1: to buy assets that would be below the interest right,

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Speaker 1: there's a well, certainly the steepening of the yield curve UH,

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Speaker 1: the notion that policy is still open for business, that

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Speaker 1: this is not kurt tailing or you know, the beginning

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Speaker 1: of the end UH to UH stimulus in Europe. I

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Speaker 1: certainly think that for the rest of this decade, you know,

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Speaker 1: rates will be zero or below at the base level

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Speaker 1: in the Eurozone. Unfortunately, that's not the whole story in

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Speaker 1: the Eurozone. That you know, what monetary policy has done,

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Speaker 1: what policy to harmonize bank regulation, to create a variety

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Speaker 1: of risk mitigating steps politics can undo. And that's a

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Speaker 1: little bit of our focus too. But yesterday he certainly

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Speaker 1: ruled today politics driving so much. We certainly saw the

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Speaker 1: result of the referendum on Sunday. Uh. There's obviously the

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Speaker 1: banking crisis continues in Italy. What are the next steps there?

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Speaker 1: We look for a sort of caretaker prime minister in Italy.

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Speaker 1: What's the result of the steps to the resolutions? You

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Speaker 1: see with regards it's it's these are still open questions.

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Speaker 1: And you know, you look back in Spain without a

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Speaker 1: government manage pretty well and you know, you you wonder though,

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Speaker 1: do populist victories work everywhere every time? Uh? And you know,

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Speaker 1: so we don't know do we have early elections? Where

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Speaker 1: will the five star movement play into this? Uh? You

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Speaker 1: know when I look at the political calendar next year,

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Speaker 1: I just see you know, agony over what will the

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Speaker 1: results be? You know, where will we be you know

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Speaker 1: in maybe in the second round election in France for example.

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Speaker 1: So we don't know will there be early elections or

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Speaker 1: caretaker government in terms of Italy. Uh? And you know,

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Speaker 1: I would just be careful that in sort of these

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Speaker 1: year end market periods where professionals need to make their year. Uh.

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Speaker 1: And the direction of markets have been up. You know,

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Speaker 1: folks are not fighting it, They're buying in and we

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Speaker 1: will have, particularly in Europe generally, lots of concerns about

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Speaker 1: politics and uncertainties. And I'm just not convinced yet that

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Speaker 1: markets actually like uncertainty. How different is this year end

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Speaker 1: market period from those in the past, and light of

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Speaker 1: what we saw first in the UK the US election

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Speaker 1: here is positioning somehow different this year than it has

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Speaker 1: been in the past. Well, I think a couple of points.

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Speaker 1: You know, last year, I would point out that we

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Speaker 1: had very difficult positioning the first FED tightening of a

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Speaker 1: cycle in the month of December, which December tightening steps

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Speaker 1: are unusual, changing the course of monetary policy as unusual.

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Speaker 1: How far the Fed would go as a question, Uh,

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Speaker 1: you know, we were vulnerable in the petroleum markets, we

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Speaker 1: were vulnerable, vulnerable in the Chinese currency. Uh. And these

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Speaker 1: sorts of things made for an unusual turn of the

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Speaker 1: year period which is normally seasonally quite strong. You know

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Speaker 1: what we're seeing now where the best equity returns of

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Speaker 1: the year, uh, you know are seen late in the

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Speaker 1: year into the beginning of the new year. Is the

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Speaker 1: normal seasonal pattern. But when you look at all that

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Speaker 1: the FED was, your face is how how sure is

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Speaker 1: Janet Yellen going to be when she answers questions on

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Speaker 1: on on Wednesday of next week of the direction of

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Speaker 1: the Fed under a new administration. You know, she's just

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Speaker 1: so extremely careful not to over extend herself and not

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Speaker 1: take risks uh and uh in some cases not answer

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Speaker 1: those questions right now, Stephen winding with this City Bank,

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Speaker 1: We've had a wonderful morning with Mr Wroyd. A lot

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Speaker 1: of value add here, and I guess to circle back

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Speaker 1: to the United States. You've always been diligent about saying

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Speaker 1: nominal GDP links in the revenue. I'm assuming you look

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Speaker 1: for a revenue pop across a broad corporate America. Given

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Speaker 1: the enthusiasm for the president elect. Well, look, if you

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Speaker 1: have tax cuts alone, forget infrastructure spending, that amount to

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Speaker 1: three percent of GDP probably the turn of the year, maybe,

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Speaker 1: and this was achieved under uh the second Bush administration.

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Speaker 1: Maybe early lier than that with changing with holding tables,

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Speaker 1: if they can possibly get that through earlier. You're talking about,

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Speaker 1: you know, substantial fiscal stimulus H the larger budget deficit,

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Speaker 1: more borrowing, but a smaller tax take even with high

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Speaker 1: savings rates for upper income taxpayers. That's a really that's

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Speaker 1: certainly no timid fiscal policy. Uh. And that will mean

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Speaker 1: faster nominal growth leaks out to the the world, but

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Speaker 1: will a lot will substantially get spent to the United States.

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Speaker 1: How much has your your outlook changed since the election?

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Speaker 1: And maybe more than that, have you changed allocation since

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Speaker 1: since the election? We have? We went into the election

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Speaker 1: neutral on global equities, underweight on fixed income. We took

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Speaker 1: down our international equity weights. So the global UH position

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Speaker 1: is now more overweight on cash UH inequities. And UH.

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Speaker 1: Certainly this is not about you know, the year in

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Speaker 1: seasonal rally we talked about, but about the strong US

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Speaker 1: dollar and the political risks and next year. But this

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Speaker 1: goes to the heart of the matter for next year

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Speaker 1: and frankly even for now. Does city groups see a

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Speaker 1: correlation and normal relationship between bond dynamics and equity dynamics

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Speaker 1: or is it distorted? And you will wait for normal? Well,

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Speaker 1: it's important is that there's only one economic outlook and

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Speaker 1: if you look um, this is maybe a little bit

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Speaker 1: inside baseball, as you would say. But if you look

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Speaker 1: at implied volatility in the fixed income market, it's expected

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Speaker 1: to be very high employed volatility and equities expected to

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Speaker 1: be quite low. And the only way you get this

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Speaker 1: is if this is smooth sailing to stronger economic growth.

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Speaker 1: So policy has to strengthen the economy more than bond

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Speaker 1: yields have risen in many respects, and so again you

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Speaker 1: need smooth sailing on the trade front, international relations, all

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Speaker 1: these sorts of things, um, inflation expectations, growth expectations have risen.

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Speaker 1: They've done the same in the UK after Brexit. But

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Speaker 1: you know, as you saw in the case of Brexit

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Speaker 1: three months later, there's news, there's things that haven't been

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Speaker 1: priced incomplete, like you know, including what you know, whether

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Speaker 1: it's hard Brexit so called they're depending on, uh, the

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Speaker 1: position of London as a financial center. Uh. And you

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Speaker 1: know there will be more things to learn here about

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Speaker 1: an administration that's forming about these choices. I will say,

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Speaker 1: when you heard, you know, comments from Wilbur Ross, for example,

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Speaker 1: that trade sanctions are the last thing that you want

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Speaker 1: and that's the last way that you improve American exports.

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Speaker 1: You know that substantially more optimistic view of things than

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Speaker 1: we heard during the election campaign. Items like a lot

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Speaker 1: of people have made bets here on the promise of possibility. Uh.

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Speaker 1: When you look at at what policy could happen, people

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Speaker 1: have bet that it's going to You saw that, you know,

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Speaker 1: the hope for this infrastructure spending package among some What

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Speaker 1: is that going to give way to to more reality?

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Speaker 1: In other words, is that going to last? What is

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Speaker 1: the reality? You know, that's that's the key question here.

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Speaker 1: You know, unified government spells action. Uh. And you know,

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Speaker 1: we think that Republicans and the new president will work

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Speaker 1: fast to make sure that maximize what they can get done.

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Speaker 1: Worried about there's some fracturing still in the Republican party

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Speaker 1: in the House, but I think that should be a worry.

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Speaker 1: And you know, I think to be clear that you know,

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Speaker 1: what we know now, a lot of Republican strategists could

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Speaker 1: tell us everything Hillary and the Republican Congress would do

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Speaker 1: probably you know, get nothing done together. They could be

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Speaker 1: very very clear about that. You know, here markets are

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Speaker 1: forced to forecast with greater uncertainty, and that's one of

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Speaker 1: the reasons why we just have this overweight in cash

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Speaker 1: at the moment, just our confidence level that we know

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Speaker 1: what will happen as opposed to assume is is different

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Speaker 1: now under in this new policy regime, do the personnel

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Speaker 1: picks instill confidence to they instill clarity the people that

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Speaker 1: he's picked for his countet, Donald Trump has picked for

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Speaker 1: his cabinet, that they give you any more clarity about

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Speaker 1: the policy directions of his administration. I think it's one

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Speaker 1: in the direction of deregulation and whether you know good

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Speaker 1: or bad deregulation. We know that regulation can be costly

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Speaker 1: in some cases. But I think the major story here

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Speaker 1: is that the risks uh that we were most worried about,

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Speaker 1: disruption to trade, disruptions to labor markets and and labor

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Speaker 1: market mobility, these types of risks have been diminished. And uh,

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Speaker 1: we think that the picks have installed more confidence in

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Speaker 1: that regard is investment picked up? Well, we we haven't

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Speaker 1: even had a new administration yet. You know what's funny

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Speaker 1: is that, you know, the last three days we just

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Speaker 1: exactly you know, earlier you showed on tv A, you

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Speaker 1: showed the consumer confidence chart, which is very interesting and

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Speaker 1: telling that there was this latent ability for consumer confidence

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Speaker 1: to rise even more. I'm gonna be very interested in

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Speaker 1: what business confidence readings do. You know, what does the

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Speaker 1: n f I BE reading do when you think about,

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Speaker 1: you know, the cost of healthcare, when you think about

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Speaker 1: the cost regular you nail and the folks the chart

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Speaker 1: was mourning in America. How we've come back on the

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Speaker 1: edge of Ronald Reagan expectations and good feeling Steve Whiting.

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Speaker 1: What is critical here is the two businesses. There's the

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Speaker 1: blue chip advisors in the roundtable business round table, and

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Speaker 1: that's big companies with endless debt available, endless credit available.

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Speaker 1: And then there's small business America. The n f I

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Speaker 1: B survey right which it's sort of kind of like

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Speaker 1: come back. You need to see that before you get

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Speaker 1: more enthusiastic. No, I think that there's a good chance

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Speaker 1: that domestic small business will feel more optimistic in the

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Speaker 1: outlook going forward. That that that would be my prediction.

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Speaker 1: I think that there is a bit of trepidation in

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Speaker 1: international business if there's any sort of disruptions, you know,

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Speaker 1: to supply chains across uh, you know, countries. I think

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Speaker 1: you know, you know, just look at the auto industry.

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Speaker 1: If you have some reason why you can't you know,

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Speaker 1: put on a door handle from an American produced car

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Speaker 1: because you know that part was made in Canada or Mexico,

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Speaker 1: then you don't get that sale. These are the sorts

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Speaker 1: of tail risks that I think people worry about on

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Speaker 1: the international business side, and uh importers generally, UH you know,

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Speaker 1: are going to be concerned about relations with China, for example.

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Speaker 1: But I think that the domestic small business sector, which

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Speaker 1: has been hampered in a lot of ways UH and

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Speaker 1: has had incomplete recovery as you just suggested, I think

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Speaker 1: we'll have more of one. You travel widely, and I

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Speaker 1: imagine that a question you're going to get is about

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Speaker 1: trade and how real the threat of tariff's are you at?

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Speaker 1: Wilbur Ross hedging a little bit here saying that we're

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Speaker 1: misunderstanding trade policy Trump trade policy. If we think that

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Speaker 1: tariffs are gonna be at the top of the agenda,

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Speaker 1: there there at the bottom. What's very comfortable? Do you

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Speaker 1: hear that? Exactly? What do you say though, to those

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Speaker 1: those clients and others who who ask about how how

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Speaker 1: much clarity there is about Donald Trump's trade policy and

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Speaker 1: what that could mean here for the economy. We're at

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Speaker 1: the very beginning these are uh, individuals that haven't taken

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Speaker 1: their seats in government yet. Um. I think that from

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Speaker 1: the range of different picks, there are going to be

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Speaker 1: a wide variety of influences on becoming new president. And uh,

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Speaker 1: some of these things are specific two countries. You know,

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Speaker 1: when you think about Mexico, which exports in the neighborhood

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Speaker 1: of ten percent of its GDP to the United States,

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Speaker 1: and the US which exports less than one percent of

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Speaker 1: its GDP to Mexico, you know, you have very different

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Speaker 1: trading and bargaining position is at the starting point. Now

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Speaker 1: you've also had very big exchange rate adjustments, and you know,

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Speaker 1: we have to to say that, uh, this can actually

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Speaker 1: add detention. We can't look at this and just say

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Speaker 1: that this is going to be smooth, smooth sailing from

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Speaker 1: here from all the good things that we've heard so far.

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Speaker 1: Are there opportunities in US equities right now? Absolutely, And

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Speaker 1: you know, a couple of a couple of things, I'd say, UM,

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Speaker 1: we're a little bit more cautious on sort of chasing

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Speaker 1: the rallies that have been driven by expectations, not that

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Speaker 1: they can't work out, but it's been a lot pretty fast. Uh.

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Speaker 1: And then there have been well positioned sectors. You know,

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Speaker 1: you think about financials, were the cheapest sector at a

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Speaker 1: large discount of the broader market heading into the situation

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Speaker 1: in the face of higher interest rates. How you get

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Speaker 1: the higher interest rates should normally matter. But when you're

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Speaker 1: the cheapest sector in terms of valuation and you've had

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Speaker 1: these large liquidity buffers and interest paid on reserves, things

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Speaker 1: that are unique to the cycle that make you know

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Speaker 1: large financials geared positively to interest rates, you go with it. Stephen,

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Speaker 1: Thank you so much, Stephen, you have a lot perspective

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Speaker 1: today and particularly Yeah, I'm sort of David were that's

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Speaker 1: what we need right now because you look at the

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Speaker 1: data screen in one moment, it's correlated and like you

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Speaker 1: look twenty two minutes later and it's like, wait a minute,

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Speaker 1: what are bonds of equities doing? And some of that's

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Speaker 1: like end of year. I mean, we're getting to that

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Speaker 1: point without question. The story of the last sixty minutes

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Speaker 1: is weaker Euro one oh five fifty five, no parody watch,

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Speaker 1: but nevertheless it gives it up as maybe we look

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Speaker 1: to Italian banking, we continue stay with us. This is

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Speaker 1: Bloomberg who you put your trust in matters. Investors have

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Speaker 1: put their trust in independent registered investment advisors to the

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Speaker 1: two and of four trillion dollars. Why they see their

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Speaker 1: roles to serve, not sell. That's right. Charles Schwab is

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Speaker 1: committed to the success over seven thousand independent financi Chill

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Speaker 1: advisors who passionately dedicate themselves to helping people achieve their

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Speaker 1: financial goals. Learn more and find your independent advisor dot com.

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Speaker 1: What a joy it was yesterday to talk to Michael Lewis.

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Speaker 1: I can't say enough about his new book on uh

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Speaker 1: Amos Tversky and Daniel Khneman. Uh. It's gonna be another

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Speaker 1: giant hit for Michael Lewis, and you know that with

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Speaker 1: the success. But there were sort of a first book

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Speaker 1: by Michael Lewis where you went oh and then boom.

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Speaker 1: That's the way it was for Russia. Sharma. He brought

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Speaker 1: up Breakout Nations in pursuit of the next economic Miracles,

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Speaker 1: and it was like another blur of emerging market books

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Speaker 1: and then you picked it up, David and looked at

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Speaker 1: it and you went, oh, just like Michael Lewis, Ruscha

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Speaker 1: Sharma joins us now, of course with his new book

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Speaker 1: Out as well the rise and fall of nations and

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Speaker 1: again Russia. Scharma with Morgan Stanley on commodities. Wonderful speak

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Speaker 1: to you too short today because of the news, and

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Speaker 1: Coca cola is the commodity bear market over and you

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Speaker 1: can you say for commodity e M the boat, the

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Speaker 1: sea is rising, the boats will lift. I wait, um,

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Speaker 1: wait to be with you on tom um. Now. I

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Speaker 1: think that as far as commodity prices, the concern, if

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Speaker 1: history is any guide, what it really shows is that

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Speaker 1: you typically tend to get a big bust and then

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Speaker 1: you know, some sort of an echo bubble after that.

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Speaker 1: But but for many years, possibly even a decade or two,

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Speaker 1: commodity prices after a bus tend to sort of trade

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Speaker 1: in a very broad range. So therefore the price of

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Speaker 1: oil I think about the barrel is the is the

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Speaker 1: price range were likely to be for the foreseeable future.

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Speaker 1: And in fact, uh, there is one expert dimension to

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Speaker 1: this commodity rarely currently that that the liquidity in China

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Speaker 1: has now found its way into many commodities, and that's

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Speaker 1: partly leading to these bubble like conditions back in some

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Speaker 1: commodity market places. I mean in China, some of these

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Speaker 1: commodity prices that are up a lot of the rampant

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Speaker 1: speculation going on without demand having actually recovered that much.

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Speaker 1: So I would say that we have to really trade

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Speaker 1: with caution here, given the fact that the huge bounce

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Speaker 1: you've seen in commodities off the lows is being really

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Speaker 1: led by rampant speculation in China. I know that you

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Speaker 1: cautioned against it talking about emerging markets as a block,

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Speaker 1: so forgive me for for doing so here. But if

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Speaker 1: we see the disintegration of these multilateral trade deals, if

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Speaker 1: we see a movement towards more bilateral trade deals, if

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Speaker 1: the US becomes more inwardly focused, more inward looking, what

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Speaker 1: does that mean for again, forgive me emerging markets? Yeah,

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Speaker 1: I think that you know, we are in an era

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Speaker 1: of the globalization, and in that era, I think that

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Speaker 1: the old emerging market model of exporting your way to

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Speaker 1: prosperity is under serious threat because historically, if you looked

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Speaker 1: at the progress of emerging markets, many of them, particularly

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Speaker 1: in East Asia founded u found their way to prosperity

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Speaker 1: by exporting manufactured goods to the developers. That's a model

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Speaker 1: which was started by Japan and followed right through by Korea,

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Speaker 1: Taiwan up to China. I think that model is under

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Speaker 1: very serious threat now because that was done in an

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Speaker 1: error of globalization where global trade was booming, capital flows

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Speaker 1: were UH financing a lot of the trade, and you

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Speaker 1: also had free movement of people between borders, or at

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Speaker 1: least free a movement of people. I think that all

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Speaker 1: those three traditional aspects of globalization are now in reverse,

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Speaker 1: and this model of exporting a way to prosperities under

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Speaker 1: serious threat. I was in Mexico earlier this week, and

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Speaker 1: you know, the feeling there in Mexico is like the

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Speaker 1: fifty first state just being kicked out of the Union.

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Speaker 1: So I think that this is a very serious uh

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Speaker 1: disruption of the traditional emerging market growth model. A few

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00:23:51,119 --> 00:23:53,000
Speaker 1: weeks back, we had Neil Ferguson on the show and

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00:23:53,280 --> 00:23:56,639
Speaker 1: he said, these are not the nineteen thirties. There the

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00:23:56,640 --> 00:24:00,440
Speaker 1: parallel doesn't work when when you're when you're looking a history,

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Speaker 1: for example, is there an analog? Yeah, I mean, I'd

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Speaker 1: say that is the most extreme example of what of

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00:24:08,800 --> 00:24:11,400
Speaker 1: what happened. But you know, but generally, if you look

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00:24:11,400 --> 00:24:14,760
Speaker 1: at the history of development, what we've seen is that

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00:24:14,840 --> 00:24:18,280
Speaker 1: you have long ways of globalization followed by equally long

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00:24:18,320 --> 00:24:22,480
Speaker 1: ways of deglobalization, and deglobalization doesn't have to be of

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00:24:22,560 --> 00:24:25,480
Speaker 1: the sinister variety that we saw in the nineteen thirties,

448
00:24:25,760 --> 00:24:29,080
Speaker 1: but something just sort of grows, uh like over time.

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00:24:29,160 --> 00:24:32,879
Speaker 1: So I'd say that history has parallels, but maybe not

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00:24:33,280 --> 00:24:36,280
Speaker 1: the exact parallel of what we're seeing just now. But

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Speaker 1: are you seeing a different deglobalization with the president elect? Yeah,

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00:24:42,520 --> 00:24:45,439
Speaker 1: I think that the trend seems to be accelerating, right,

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Speaker 1: So that's what we've seen this year. In fact, in

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00:24:47,640 --> 00:24:52,520
Speaker 1: the post crisis world, deglobalization was already creeping in sort

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00:24:52,520 --> 00:24:56,000
Speaker 1: of slump and trade flows, capital flows even the slowdown,

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00:24:56,040 --> 00:24:59,920
Speaker 1: and immigration flows, all those things were already in play

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00:25:00,440 --> 00:25:04,000
Speaker 1: even before this year. Now, this year, uh, the political

458
00:25:04,080 --> 00:25:07,080
Speaker 1: mood has really sort of shown itself to be in

459
00:25:07,119 --> 00:25:10,640
Speaker 1: favor of the globalization, whether it's Brexit or what happened

460
00:25:10,640 --> 00:25:13,480
Speaker 1: here in the US a month ago. So I'd say

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Speaker 1: that the train seems to be on the accelerating and uh,

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Speaker 1: I don't see that that train sort of shifting in

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00:25:20,560 --> 00:25:23,560
Speaker 1: the fourth table future here, let me ask the question

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Speaker 1: everybody wants to ask him, want to toss you off

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Speaker 1: the show when's the next book come out? Listen? I

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00:25:29,600 --> 00:25:32,200
Speaker 1: just I just came out with this book. Uh, and

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Speaker 1: luckily it's sort of you know, found a good reception.

468
00:25:34,840 --> 00:25:36,680
Speaker 1: So I'd rather write on this as you know well

469
00:25:36,760 --> 00:25:40,880
Speaker 1: that writing books is a bit of a tall order.

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00:25:41,000 --> 00:25:44,479
Speaker 1: So I'm just happy to sort of think about the

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00:25:44,480 --> 00:25:46,560
Speaker 1: theories and this, as I said, the globalizations on the

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00:25:46,600 --> 00:25:48,840
Speaker 1: big aspects that I've covered in this book. But to

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Speaker 1: be the most important thing, really, what I've tried to

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00:25:50,720 --> 00:25:52,959
Speaker 1: do in this new book of mine is to basically

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00:25:53,000 --> 00:25:56,399
Speaker 1: speak about why is the global economy today just not

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Speaker 1: being able to grow at the rate that it was

477
00:25:59,160 --> 00:26:01,879
Speaker 1: last decade or or the tacade before that. So for me,

478
00:26:01,880 --> 00:26:04,800
Speaker 1: I've spent a lot of time on on that team.

479
00:26:04,800 --> 00:26:07,720
Speaker 1: And then okay, if that is the world, what is

480
00:26:07,760 --> 00:26:10,240
Speaker 1: the new math for economic success? And then which countries

481
00:26:10,280 --> 00:26:12,520
Speaker 1: I'd like you to do well or not? You're in

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00:26:12,560 --> 00:26:15,159
Speaker 1: the new math? Richard Charmoan, thank you so much. I

483
00:26:15,200 --> 00:26:16,800
Speaker 1: make a joke of it, but he puts so much

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00:26:16,920 --> 00:26:19,600
Speaker 1: work into the books. But hey, two thousand seventeens in

485
00:26:19,640 --> 00:26:22,800
Speaker 1: new year, maybe we'll see something year. Mr Scharman is

486
00:26:22,840 --> 00:26:27,240
Speaker 1: with Morgan Stanley his books are truly definitive on emerging market.

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00:26:34,600 --> 00:26:38,960
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and

488
00:26:39,040 --> 00:26:44,080
Speaker 1: listen to interviews on iTunes, SoundCloud, or whichever podcast platform

489
00:26:44,240 --> 00:26:47,760
Speaker 1: you prefer. I'm out on Twitter at Tom Keene. David

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00:26:47,800 --> 00:26:51,480
Speaker 1: Gura is at David Gura. Before the podcast, you can

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Speaker 1: always catch us worldwide. I'm Bloomberg Radio. Ye. Who you

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00:27:07,520 --> 00:27:10,280
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