WEBVTT - Surveillance: We're Entering Deglobalization Era, Sharma Says 0:00:00.040 --> 0:00:02.640 Who you put your trust in matters. Investors have put 0:00:02.680 --> 0:00:07.040 their trust and independent registered investment advisors to the two 0:00:07.040 --> 0:00:10.680 and four trillion dollars. Why learn more at find your 0:00:10.760 --> 0:00:26.360 Independent Advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 0:00:26.760 --> 0:00:30.480 I'm Tom Keane with David Gura. Daily we bring you 0:00:30.520 --> 0:00:35.560 insight from the best in economics, finance, investment, and international relations. 0:00:35.960 --> 0:00:40.559 Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 0:00:40.640 --> 0:00:48.440 of course on the Bloomberg. This is an important moment 0:00:48.440 --> 0:00:51.240 where this is a Nelson David Rockefeller sitting your fellow 0:00:52.120 --> 0:00:56.400 at the Council on Foreign Relations, Shannon O'Neill, truly one 0:00:56.440 --> 0:01:00.680 of our experts on Latin American, particularly in Mexico. And 0:01:00.720 --> 0:01:03.360 a lot of people won't know this about Nelson Rockefeller, 0:01:03.440 --> 0:01:06.080 who you know, people will perceive as a governor of 0:01:06.120 --> 0:01:09.280 New York forty one vice president the United States. He 0:01:09.360 --> 0:01:11.959 cut his teeth in Latin America. He was I remember 0:01:12.000 --> 0:01:14.440 as a kid, he was way out front on the 0:01:14.520 --> 0:01:18.880 courage of America to look self and build relationships. A 0:01:18.920 --> 0:01:23.119 lot of people equate President elect Trump to Rockefeller vision 0:01:23.120 --> 0:01:28.120 and Rockefeller politics domestically. Do you see any indication we 0:01:28.160 --> 0:01:32.480 can get Nelson Rockefeller with President Trump to your Latin America, 0:01:32.880 --> 0:01:35.520 I think, unfortunately not. I don't think he has a 0:01:35.640 --> 0:01:37.920 lot of interest in the region. He's never expressed a 0:01:37.959 --> 0:01:40.880 lot of interest in the region, and really very few 0:01:40.880 --> 0:01:43.039 of the people that he's actually appointed so far that 0:01:43.200 --> 0:01:46.320 he's nominated so far have any knowledge or interest in 0:01:46.360 --> 0:01:48.640 the region. So I don't think we're gonna see that 0:01:48.720 --> 0:01:52.240 turned south that we saw with the Rockefellers. What lessons 0:01:52.280 --> 0:01:55.480 can we learn from the populist movements in Latin America 0:01:55.600 --> 0:01:57.280 as we look at the rise of populism here in 0:01:57.280 --> 0:01:58.680 the US and around the world. He is there a 0:01:58.680 --> 0:02:02.240 continue between the two. You know, there are very big differences, 0:02:02.280 --> 0:02:05.040 and we have here the biggest challenge in Latin America. 0:02:05.120 --> 0:02:07.680 From me, we have economic populism, we have overspending, the like, 0:02:07.760 --> 0:02:10.400 That's what we usually think about. But the really biggest 0:02:10.440 --> 0:02:13.480 challenge of population brings to me is the undermining of 0:02:13.520 --> 0:02:16.800 political institutions, the undermining of the checks and balances that 0:02:16.840 --> 0:02:20.000 make democracy work. And while we here have two hundred 0:02:20.000 --> 0:02:23.160 plus years of democracy, we probably we have much stronger institutions. 0:02:23.760 --> 0:02:25.680 Many of the things that we rely on are not 0:02:25.760 --> 0:02:29.560 actually rules or legislation their norms, and that I think 0:02:29.639 --> 0:02:31.919 is the challenge. We could see a rolling back of 0:02:32.040 --> 0:02:34.160 some of these checks and balances that really make our 0:02:34.600 --> 0:02:38.280 democracy vibrant with a new administration, if they so chose. 0:02:38.400 --> 0:02:40.639 Before we look ahead to that new administration, let's look 0:02:40.639 --> 0:02:42.920 back at what the Obama administration can say about their 0:02:42.919 --> 0:02:45.720 achievements here in Latin America over the last eight years. 0:02:45.720 --> 0:02:48.600 I've traveled with the Treasury Secretary to Brazil, Buenos Aires, 0:02:48.639 --> 0:02:51.880 and Bogata, and it struck me that, um, the administration 0:02:51.919 --> 0:02:55.520 could sort of trumpets its success bring some more emphasis 0:02:55.560 --> 0:02:59.680 on free markets to those countries. Did did the abdministration 0:02:59.720 --> 0:03:01.560 do which with regard to to Latin America, What can 0:03:01.600 --> 0:03:04.000 they say that they did? You know, we saw a 0:03:04.120 --> 0:03:08.480 lot of bilateral cooperation more than say a regional cooperation. 0:03:08.600 --> 0:03:12.440 So we saw economic ties, security ties deep in with 0:03:12.560 --> 0:03:15.760 Mexico over the last eight years. We saw similar back 0:03:15.800 --> 0:03:18.880 and forth with many of the Southern Cone countries. And 0:03:18.919 --> 0:03:21.480 one thing we have seen particularly the last year plus 0:03:21.680 --> 0:03:24.000 is a turn in Latin America to a much more 0:03:24.240 --> 0:03:28.840 US friendly and market friendly types regimes, whether it's Brazil, Argentina, 0:03:29.200 --> 0:03:33.239 Peru or others, So that really is something they did themselves, 0:03:33.320 --> 0:03:35.640 but a real accomplishment. And finally, I would say one 0:03:35.640 --> 0:03:39.000 thing Obama did in the region was take the challenge 0:03:39.000 --> 0:03:41.000 in the issue of Cuba off the table, which had 0:03:41.040 --> 0:03:44.800 always deviled overall US Latin America relations. What we were 0:03:44.840 --> 0:03:46.960 doing in Cuba. How much of that is is at risk? 0:03:47.000 --> 0:03:49.280 I wonder if we had the death of of del Castro. 0:03:49.320 --> 0:03:51.440 Of course we have the change administration here in the US. 0:03:51.960 --> 0:03:54.240 UH president of MoMA did so much is that at 0:03:54.360 --> 0:03:58.560 risk of changing with a new president? Like so many policies, 0:03:58.560 --> 0:04:00.760 It's hard to know what Trump will do, but he 0:04:00.880 --> 0:04:03.680 has come out and many within the Republican Party are 0:04:03.760 --> 0:04:06.600 staunch hardliners. They want to roll back and set up 0:04:06.840 --> 0:04:09.720 real divisions between the United States and Cuba. Perhaps we'll 0:04:09.760 --> 0:04:12.760 see Trump not nominate a ambassador, which is now we 0:04:12.800 --> 0:04:14.680 have normal relations there, but we may not see a 0:04:14.720 --> 0:04:17.800 person there. And I doubt we'll see a continue opening 0:04:17.839 --> 0:04:21.320 to to UH to Cuba, particularly as long as Castro 0:04:21.360 --> 0:04:24.360 is there. The stereotype there, well, there's not one stereotype. 0:04:24.360 --> 0:04:27.040 There's so many stereotypes of Latin America. Which one do 0:04:27.120 --> 0:04:30.760 you want to destroy? Most I mean, it's commodity based. 0:04:31.120 --> 0:04:34.599 It's a long ways away. Bla. What's the one you 0:04:34.640 --> 0:04:37.279 want to destroy most, you know, the one I'd like 0:04:37.320 --> 0:04:39.240 to destroy most is the sort of image we have 0:04:39.480 --> 0:04:42.480 that Latin America is full of tumbleweeds and donkeys walking 0:04:42.480 --> 0:04:47.359 down the main stream exactly. And I don't know what 0:04:47.400 --> 0:04:50.640 they say about Bolivia, but there's that famous line exactly. 0:04:50.680 --> 0:04:53.839 So that is no longer Latin America. It has its challenges, 0:04:53.920 --> 0:04:57.560 but it really has vibrant economies, it has a burgeoning 0:04:57.600 --> 0:05:00.479 middle class, and it is connected with the rest of 0:05:00.480 --> 0:05:03.080 the world. It's the global players today. I went to 0:05:03.120 --> 0:05:06.119 a dinner last night at cocktail party. Was a cocktail party, David. 0:05:06.120 --> 0:05:07.839 That's what you do. When the cocktail party is a 0:05:07.839 --> 0:05:09.719 good one, you called a dinner. There you go so 0:05:09.760 --> 0:05:12.320 no one knows. You say, I went to a cocktail 0:05:12.360 --> 0:05:16.279 party last night with a lovely woman from Uruguay who 0:05:16.360 --> 0:05:19.400 said I mispronounced it. But that's a different story. How's 0:05:19.520 --> 0:05:23.440 Uruguay doing. Uruguay is doing fairly well. This is a 0:05:23.960 --> 0:05:26.560 little Switzerland. It is like a little Switzerland. It's about 0:05:26.600 --> 0:05:28.400 three million people, so it's about the size of the 0:05:28.440 --> 0:05:31.200 upper East Side of New York City. Um, but it's 0:05:31.240 --> 0:05:34.640 doing fairly well. It has a broad social safety net, 0:05:34.760 --> 0:05:37.080 there's jobs being created, it's very open to the rest 0:05:37.120 --> 0:05:39.160 of the world, and it has a lot of political 0:05:39.240 --> 0:05:42.159 consensus to do so. It's also very US friendly. So 0:05:42.200 --> 0:05:44.599 this is a country that has found a balance and 0:05:44.720 --> 0:05:48.640 makes things work. Okay, you've made things work here today, shanonil, 0:05:48.680 --> 0:06:01.960 thank you so much with the consolt foreign relations. I 0:06:02.000 --> 0:06:03.520 want to bring in Steve Whiting now he's the chief 0:06:03.520 --> 0:06:06.359 global strategistic City Private Bank HUD enough to join us 0:06:06.400 --> 0:06:08.599 here in New York this morning. Morning, Steve, good morning. 0:06:08.960 --> 0:06:12.280 Let's start with that ECB meeting yesterday. Get your sense 0:06:12.360 --> 0:06:14.839 of of that decision a taper in all but name, 0:06:15.160 --> 0:06:19.680 I suppose this is sort of a very very successful, 0:06:20.480 --> 0:06:24.480 uh you know, approach, communications approach around what is a 0:06:24.480 --> 0:06:27.240 a program that they've managed, and they've had a long 0:06:27.279 --> 0:06:29.360 time to think about ways of making it more flexible, 0:06:30.120 --> 0:06:34.159 the potential to reshape the yield curve to make the 0:06:34.240 --> 0:06:39.480 most of what will be a smaller amount of absolute purchases. So, uh, 0:06:39.600 --> 0:06:41.560 you know, they did everything they could and succeeded in 0:06:41.600 --> 0:06:44.000 the marketplace in many respects other than you know, the 0:06:44.040 --> 0:06:47.320 fact that we did see higher bond yields at the 0:06:47.360 --> 0:06:51.080 long end in the Aurozone, but the currency weekend inequities 0:06:51.320 --> 0:06:54.640 moved up despite a what we won't call a taper 0:06:54.680 --> 0:06:58.720 according to Mario Druggi, but what is a smaller amount 0:06:58.720 --> 0:07:01.880 of absolute asset purchases forward. Yeah, he indicated there's a 0:07:01.880 --> 0:07:04.440 willingness to buy assets below interest rates, and then during 0:07:04.440 --> 0:07:06.480 the Q and I that followed, he seemed to indicate 0:07:06.520 --> 0:07:08.640 that they weren't there yet, that the committee was there 0:07:08.640 --> 0:07:10.680 to study that it could do it. What's been the 0:07:10.680 --> 0:07:13.200 market effect of that of the ECB expressing some willingness 0:07:13.240 --> 0:07:15.560 to buy assets that would be below the interest right, 0:07:16.120 --> 0:07:19.120 there's a well, certainly the steepening of the yield curve UH, 0:07:19.400 --> 0:07:23.360 the notion that policy is still open for business, that 0:07:23.480 --> 0:07:27.480 this is not kurt tailing or you know, the beginning 0:07:27.560 --> 0:07:31.200 of the end UH to UH stimulus in Europe. I 0:07:31.240 --> 0:07:33.240 certainly think that for the rest of this decade, you know, 0:07:33.320 --> 0:07:36.240 rates will be zero or below at the base level 0:07:36.560 --> 0:07:39.800 in the Eurozone. Unfortunately, that's not the whole story in 0:07:39.840 --> 0:07:43.320 the Eurozone. That you know, what monetary policy has done, 0:07:43.360 --> 0:07:49.000 what policy to harmonize bank regulation, to create a variety 0:07:49.040 --> 0:07:52.520 of risk mitigating steps politics can undo. And that's a 0:07:52.560 --> 0:07:55.160 little bit of our focus too. But yesterday he certainly 0:07:55.240 --> 0:07:58.760 ruled today politics driving so much. We certainly saw the 0:07:59.040 --> 0:08:03.040 result of the referendum on Sunday. Uh. There's obviously the 0:08:03.040 --> 0:08:05.760 banking crisis continues in Italy. What are the next steps there? 0:08:05.920 --> 0:08:08.600 We look for a sort of caretaker prime minister in Italy. 0:08:09.400 --> 0:08:11.400 What's the result of the steps to the resolutions? You 0:08:11.440 --> 0:08:14.000 see with regards it's it's these are still open questions. 0:08:14.000 --> 0:08:15.920 And you know, you look back in Spain without a 0:08:15.960 --> 0:08:20.080 government manage pretty well and you know, you you wonder though, 0:08:20.680 --> 0:08:25.880 do populist victories work everywhere every time? Uh? And you know, 0:08:25.960 --> 0:08:28.600 so we don't know do we have early elections? Where 0:08:28.600 --> 0:08:31.800 will the five star movement play into this? Uh? You 0:08:31.840 --> 0:08:34.400 know when I look at the political calendar next year, 0:08:34.440 --> 0:08:36.640 I just see you know, agony over what will the 0:08:36.679 --> 0:08:39.160 results be? You know, where will we be you know 0:08:39.360 --> 0:08:43.200 in maybe in the second round election in France for example. 0:08:43.440 --> 0:08:45.839 So we don't know will there be early elections or 0:08:45.880 --> 0:08:49.000 caretaker government in terms of Italy. Uh? And you know, 0:08:49.320 --> 0:08:50.960 I would just be careful that in sort of these 0:08:51.040 --> 0:08:55.559 year end market periods where professionals need to make their year. Uh. 0:08:55.559 --> 0:08:57.880 And the direction of markets have been up. You know, 0:08:57.920 --> 0:09:00.920 folks are not fighting it, They're buying in and we 0:09:00.960 --> 0:09:05.319 will have, particularly in Europe generally, lots of concerns about 0:09:05.320 --> 0:09:08.160 politics and uncertainties. And I'm just not convinced yet that 0:09:08.200 --> 0:09:12.000 markets actually like uncertainty. How different is this year end 0:09:12.000 --> 0:09:14.040 market period from those in the past, and light of 0:09:14.040 --> 0:09:17.480 what we saw first in the UK the US election 0:09:17.559 --> 0:09:20.040 here is positioning somehow different this year than it has 0:09:20.040 --> 0:09:22.600 been in the past. Well, I think a couple of points. 0:09:22.640 --> 0:09:25.679 You know, last year, I would point out that we 0:09:25.800 --> 0:09:28.680 had very difficult positioning the first FED tightening of a 0:09:28.760 --> 0:09:31.840 cycle in the month of December, which December tightening steps 0:09:31.840 --> 0:09:35.880 are unusual, changing the course of monetary policy as unusual. 0:09:36.160 --> 0:09:38.439 How far the Fed would go as a question, Uh, 0:09:38.480 --> 0:09:41.400 you know, we were vulnerable in the petroleum markets, we 0:09:41.400 --> 0:09:44.559 were vulnerable, vulnerable in the Chinese currency. Uh. And these 0:09:44.600 --> 0:09:47.559 sorts of things made for an unusual turn of the 0:09:47.640 --> 0:09:51.200 year period which is normally seasonally quite strong. You know 0:09:51.240 --> 0:09:54.320 what we're seeing now where the best equity returns of 0:09:54.360 --> 0:09:56.760 the year, uh, you know are seen late in the 0:09:56.840 --> 0:09:58.600 year into the beginning of the new year. Is the 0:09:58.640 --> 0:10:02.680 normal seasonal pattern. But when you look at all that 0:10:02.720 --> 0:10:04.400 the FED was, your face is how how sure is 0:10:04.480 --> 0:10:06.680 Janet Yellen going to be when she answers questions on 0:10:06.679 --> 0:10:09.120 on on Wednesday of next week of the direction of 0:10:09.160 --> 0:10:11.920 the Fed under a new administration. You know, she's just 0:10:12.000 --> 0:10:17.040 so extremely careful not to over extend herself and not 0:10:17.160 --> 0:10:20.600 take risks uh and uh in some cases not answer 0:10:20.640 --> 0:10:23.559 those questions right now, Stephen winding with this City Bank, 0:10:23.600 --> 0:10:25.559 We've had a wonderful morning with Mr Wroyd. A lot 0:10:25.559 --> 0:10:30.280 of value add here, and I guess to circle back 0:10:30.320 --> 0:10:33.959 to the United States. You've always been diligent about saying 0:10:34.000 --> 0:10:37.760 nominal GDP links in the revenue. I'm assuming you look 0:10:37.800 --> 0:10:42.160 for a revenue pop across a broad corporate America. Given 0:10:42.280 --> 0:10:46.680 the enthusiasm for the president elect. Well, look, if you 0:10:46.760 --> 0:10:50.840 have tax cuts alone, forget infrastructure spending, that amount to 0:10:50.920 --> 0:10:55.240 three percent of GDP probably the turn of the year, maybe, 0:10:55.679 --> 0:10:59.199 and this was achieved under uh the second Bush administration. 0:10:59.320 --> 0:11:02.280 Maybe early lier than that with changing with holding tables, 0:11:02.320 --> 0:11:05.720 if they can possibly get that through earlier. You're talking about, 0:11:05.760 --> 0:11:10.520 you know, substantial fiscal stimulus H the larger budget deficit, 0:11:10.720 --> 0:11:14.400 more borrowing, but a smaller tax take even with high 0:11:14.440 --> 0:11:17.839 savings rates for upper income taxpayers. That's a really that's 0:11:17.840 --> 0:11:21.319 certainly no timid fiscal policy. Uh. And that will mean 0:11:21.360 --> 0:11:24.600 faster nominal growth leaks out to the the world, but 0:11:24.720 --> 0:11:27.080 will a lot will substantially get spent to the United States. 0:11:27.679 --> 0:11:30.920 How much has your your outlook changed since the election? 0:11:31.120 --> 0:11:33.439 And maybe more than that, have you changed allocation since 0:11:33.440 --> 0:11:36.920 since the election? We have? We went into the election 0:11:37.160 --> 0:11:42.640 neutral on global equities, underweight on fixed income. We took 0:11:42.760 --> 0:11:48.120 down our international equity weights. So the global UH position 0:11:48.280 --> 0:11:52.320 is now more overweight on cash UH inequities. And UH. 0:11:52.400 --> 0:11:55.040 Certainly this is not about you know, the year in 0:11:55.080 --> 0:11:58.520 seasonal rally we talked about, but about the strong US 0:11:58.600 --> 0:12:00.800 dollar and the political risks and next year. But this 0:12:00.880 --> 0:12:03.080 goes to the heart of the matter for next year 0:12:03.120 --> 0:12:06.760 and frankly even for now. Does city groups see a 0:12:07.000 --> 0:12:12.520 correlation and normal relationship between bond dynamics and equity dynamics 0:12:13.040 --> 0:12:16.520 or is it distorted? And you will wait for normal? Well, 0:12:16.559 --> 0:12:19.280 it's important is that there's only one economic outlook and 0:12:19.320 --> 0:12:21.760 if you look um, this is maybe a little bit 0:12:21.800 --> 0:12:24.000 inside baseball, as you would say. But if you look 0:12:24.040 --> 0:12:27.600 at implied volatility in the fixed income market, it's expected 0:12:27.600 --> 0:12:30.240 to be very high employed volatility and equities expected to 0:12:30.280 --> 0:12:32.720 be quite low. And the only way you get this 0:12:32.800 --> 0:12:35.840 is if this is smooth sailing to stronger economic growth. 0:12:36.160 --> 0:12:40.160 So policy has to strengthen the economy more than bond 0:12:40.240 --> 0:12:43.440 yields have risen in many respects, and so again you 0:12:43.440 --> 0:12:46.160 need smooth sailing on the trade front, international relations, all 0:12:46.200 --> 0:12:50.640 these sorts of things, um, inflation expectations, growth expectations have risen. 0:12:50.720 --> 0:12:53.760 They've done the same in the UK after Brexit. But 0:12:53.800 --> 0:12:55.560 you know, as you saw in the case of Brexit 0:12:55.880 --> 0:12:59.160 three months later, there's news, there's things that haven't been 0:12:59.200 --> 0:13:02.120 priced incomplete, like you know, including what you know, whether 0:13:02.160 --> 0:13:05.120 it's hard Brexit so called they're depending on, uh, the 0:13:05.160 --> 0:13:08.120 position of London as a financial center. Uh. And you 0:13:08.120 --> 0:13:10.640 know there will be more things to learn here about 0:13:10.679 --> 0:13:14.360 an administration that's forming about these choices. I will say, 0:13:15.040 --> 0:13:17.880 when you heard, you know, comments from Wilbur Ross, for example, 0:13:18.160 --> 0:13:21.040 that trade sanctions are the last thing that you want 0:13:21.080 --> 0:13:24.319 and that's the last way that you improve American exports. 0:13:24.520 --> 0:13:27.120 You know that substantially more optimistic view of things than 0:13:27.120 --> 0:13:29.120 we heard during the election campaign. Items like a lot 0:13:29.160 --> 0:13:33.520 of people have made bets here on the promise of possibility. Uh. 0:13:33.720 --> 0:13:35.800 When you look at at what policy could happen, people 0:13:35.800 --> 0:13:37.400 have bet that it's going to You saw that, you know, 0:13:37.640 --> 0:13:42.120 the hope for this infrastructure spending package among some What 0:13:42.280 --> 0:13:43.840 is that going to give way to to more reality? 0:13:43.880 --> 0:13:47.240 In other words, is that going to last? What is 0:13:47.280 --> 0:13:49.800 the reality? You know, that's that's the key question here. 0:13:49.880 --> 0:13:53.400 You know, unified government spells action. Uh. And you know, 0:13:53.480 --> 0:13:56.720 we think that Republicans and the new president will work 0:13:56.840 --> 0:13:59.760 fast to make sure that maximize what they can get done. 0:14:00.040 --> 0:14:02.920 Worried about there's some fracturing still in the Republican party 0:14:02.920 --> 0:14:04.520 in the House, but I think that should be a worry. 0:14:04.640 --> 0:14:07.560 And you know, I think to be clear that you know, 0:14:07.679 --> 0:14:10.720 what we know now, a lot of Republican strategists could 0:14:10.720 --> 0:14:13.280 tell us everything Hillary and the Republican Congress would do 0:14:13.400 --> 0:14:15.520 probably you know, get nothing done together. They could be 0:14:15.640 --> 0:14:18.400 very very clear about that. You know, here markets are 0:14:18.440 --> 0:14:22.120 forced to forecast with greater uncertainty, and that's one of 0:14:22.120 --> 0:14:24.720 the reasons why we just have this overweight in cash 0:14:24.760 --> 0:14:27.960 at the moment, just our confidence level that we know 0:14:28.240 --> 0:14:31.280 what will happen as opposed to assume is is different 0:14:31.280 --> 0:14:34.520 now under in this new policy regime, do the personnel 0:14:34.560 --> 0:14:38.160 picks instill confidence to they instill clarity the people that 0:14:38.160 --> 0:14:39.920 he's picked for his countet, Donald Trump has picked for 0:14:39.960 --> 0:14:41.920 his cabinet, that they give you any more clarity about 0:14:41.960 --> 0:14:44.800 the policy directions of his administration. I think it's one 0:14:44.840 --> 0:14:49.040 in the direction of deregulation and whether you know good 0:14:49.120 --> 0:14:52.240 or bad deregulation. We know that regulation can be costly 0:14:52.320 --> 0:14:55.680 in some cases. But I think the major story here 0:14:55.920 --> 0:14:59.240 is that the risks uh that we were most worried about, 0:14:59.280 --> 0:15:03.640 disruption to trade, disruptions to labor markets and and labor 0:15:03.680 --> 0:15:07.600 market mobility, these types of risks have been diminished. And uh, 0:15:07.720 --> 0:15:10.640 we think that the picks have installed more confidence in 0:15:10.760 --> 0:15:14.600 that regard is investment picked up? Well, we we haven't 0:15:14.600 --> 0:15:16.480 even had a new administration yet. You know what's funny 0:15:16.520 --> 0:15:18.400 is that, you know, the last three days we just 0:15:18.760 --> 0:15:21.040 exactly you know, earlier you showed on tv A, you 0:15:21.080 --> 0:15:23.520 showed the consumer confidence chart, which is very interesting and 0:15:23.560 --> 0:15:27.520 telling that there was this latent ability for consumer confidence 0:15:27.520 --> 0:15:29.520 to rise even more. I'm gonna be very interested in 0:15:29.560 --> 0:15:32.160 what business confidence readings do. You know, what does the 0:15:32.240 --> 0:15:34.440 n f I BE reading do when you think about, 0:15:34.520 --> 0:15:36.520 you know, the cost of healthcare, when you think about 0:15:36.640 --> 0:15:39.080 the cost regular you nail and the folks the chart 0:15:39.160 --> 0:15:41.240 was mourning in America. How we've come back on the 0:15:41.360 --> 0:15:46.520 edge of Ronald Reagan expectations and good feeling Steve Whiting. 0:15:46.600 --> 0:15:51.080 What is critical here is the two businesses. There's the 0:15:51.080 --> 0:15:55.240 blue chip advisors in the roundtable business round table, and 0:15:55.280 --> 0:15:59.640 that's big companies with endless debt available, endless credit available. 0:16:00.000 --> 0:16:02.800 And then there's small business America. The n f I 0:16:02.920 --> 0:16:05.920 B survey right which it's sort of kind of like 0:16:06.080 --> 0:16:09.160 come back. You need to see that before you get 0:16:09.240 --> 0:16:12.000 more enthusiastic. No, I think that there's a good chance 0:16:12.160 --> 0:16:16.560 that domestic small business will feel more optimistic in the 0:16:16.600 --> 0:16:19.880 outlook going forward. That that that would be my prediction. 0:16:20.400 --> 0:16:22.360 I think that there is a bit of trepidation in 0:16:22.360 --> 0:16:26.160 international business if there's any sort of disruptions, you know, 0:16:26.240 --> 0:16:29.760 to supply chains across uh, you know, countries. I think 0:16:29.760 --> 0:16:31.800 you know, you know, just look at the auto industry. 0:16:32.000 --> 0:16:34.800 If you have some reason why you can't you know, 0:16:35.120 --> 0:16:38.520 put on a door handle from an American produced car 0:16:38.680 --> 0:16:41.160 because you know that part was made in Canada or Mexico, 0:16:41.480 --> 0:16:43.480 then you don't get that sale. These are the sorts 0:16:43.520 --> 0:16:45.920 of tail risks that I think people worry about on 0:16:45.960 --> 0:16:50.480 the international business side, and uh importers generally, UH you know, 0:16:50.560 --> 0:16:53.680 are going to be concerned about relations with China, for example. 0:16:54.040 --> 0:16:57.440 But I think that the domestic small business sector, which 0:16:57.480 --> 0:16:59.880 has been hampered in a lot of ways UH and 0:17:00.040 --> 0:17:02.800 has had incomplete recovery as you just suggested, I think 0:17:02.840 --> 0:17:05.399 we'll have more of one. You travel widely, and I 0:17:05.400 --> 0:17:07.679 imagine that a question you're going to get is about 0:17:07.800 --> 0:17:10.960 trade and how real the threat of tariff's are you at? 0:17:11.000 --> 0:17:13.680 Wilbur Ross hedging a little bit here saying that we're 0:17:13.720 --> 0:17:16.639 misunderstanding trade policy Trump trade policy. If we think that 0:17:16.800 --> 0:17:18.320 tariffs are gonna be at the top of the agenda, 0:17:18.320 --> 0:17:20.879 there there at the bottom. What's very comfortable? Do you 0:17:20.960 --> 0:17:22.960 hear that? Exactly? What do you say though, to those 0:17:23.040 --> 0:17:25.679 those clients and others who who ask about how how 0:17:25.760 --> 0:17:28.040 much clarity there is about Donald Trump's trade policy and 0:17:28.040 --> 0:17:29.800 what that could mean here for the economy. We're at 0:17:29.800 --> 0:17:34.080 the very beginning these are uh, individuals that haven't taken 0:17:34.400 --> 0:17:37.480 their seats in government yet. Um. I think that from 0:17:37.560 --> 0:17:39.600 the range of different picks, there are going to be 0:17:39.640 --> 0:17:44.400 a wide variety of influences on becoming new president. And uh, 0:17:44.800 --> 0:17:47.439 some of these things are specific two countries. You know, 0:17:47.520 --> 0:17:51.280 when you think about Mexico, which exports in the neighborhood 0:17:51.280 --> 0:17:53.399 of ten percent of its GDP to the United States, 0:17:53.400 --> 0:17:55.760 and the US which exports less than one percent of 0:17:55.760 --> 0:17:58.480 its GDP to Mexico, you know, you have very different 0:17:58.480 --> 0:18:01.400 trading and bargaining position is at the starting point. Now 0:18:01.440 --> 0:18:04.600 you've also had very big exchange rate adjustments, and you know, 0:18:04.640 --> 0:18:07.800 we have to to say that, uh, this can actually 0:18:07.840 --> 0:18:10.240 add detention. We can't look at this and just say 0:18:10.280 --> 0:18:12.760 that this is going to be smooth, smooth sailing from 0:18:12.800 --> 0:18:14.520 here from all the good things that we've heard so far. 0:18:15.400 --> 0:18:18.760 Are there opportunities in US equities right now? Absolutely, And 0:18:18.840 --> 0:18:21.480 you know, a couple of a couple of things, I'd say, UM, 0:18:21.520 --> 0:18:23.880 we're a little bit more cautious on sort of chasing 0:18:23.920 --> 0:18:26.919 the rallies that have been driven by expectations, not that 0:18:26.960 --> 0:18:30.320 they can't work out, but it's been a lot pretty fast. Uh. 0:18:30.320 --> 0:18:32.159 And then there have been well positioned sectors. You know, 0:18:32.200 --> 0:18:35.840 you think about financials, were the cheapest sector at a 0:18:35.960 --> 0:18:40.399 large discount of the broader market heading into the situation 0:18:40.480 --> 0:18:42.879 in the face of higher interest rates. How you get 0:18:42.960 --> 0:18:45.239 the higher interest rates should normally matter. But when you're 0:18:45.280 --> 0:18:47.760 the cheapest sector in terms of valuation and you've had 0:18:47.760 --> 0:18:50.960 these large liquidity buffers and interest paid on reserves, things 0:18:50.960 --> 0:18:52.919 that are unique to the cycle that make you know 0:18:53.000 --> 0:18:57.560 large financials geared positively to interest rates, you go with it. Stephen, 0:18:57.600 --> 0:19:00.639 Thank you so much, Stephen, you have a lot perspective 0:19:00.680 --> 0:19:04.160 today and particularly Yeah, I'm sort of David were that's 0:19:04.160 --> 0:19:06.600 what we need right now because you look at the 0:19:06.640 --> 0:19:09.879 data screen in one moment, it's correlated and like you 0:19:10.000 --> 0:19:12.480 look twenty two minutes later and it's like, wait a minute, 0:19:12.480 --> 0:19:15.240 what are bonds of equities doing? And some of that's 0:19:15.280 --> 0:19:17.040 like end of year. I mean, we're getting to that 0:19:17.560 --> 0:19:21.159 point without question. The story of the last sixty minutes 0:19:21.240 --> 0:19:24.840 is weaker Euro one oh five fifty five, no parody watch, 0:19:25.240 --> 0:19:28.240 but nevertheless it gives it up as maybe we look 0:19:28.280 --> 0:19:31.399 to Italian banking, we continue stay with us. This is 0:19:31.440 --> 0:19:45.199 Bloomberg who you put your trust in matters. Investors have 0:19:45.320 --> 0:19:49.240 put their trust in independent registered investment advisors to the 0:19:49.240 --> 0:19:52.160 two and of four trillion dollars. Why they see their 0:19:52.240 --> 0:19:55.680 roles to serve, not sell. That's right. Charles Schwab is 0:19:55.720 --> 0:20:00.200 committed to the success over seven thousand independent financi Chill 0:20:00.200 --> 0:20:05.960 advisors who passionately dedicate themselves to helping people achieve their 0:20:05.960 --> 0:20:16.720 financial goals. Learn more and find your independent advisor dot com. 0:20:16.720 --> 0:20:19.080 What a joy it was yesterday to talk to Michael Lewis. 0:20:19.119 --> 0:20:21.760 I can't say enough about his new book on uh 0:20:21.840 --> 0:20:25.439 Amos Tversky and Daniel Khneman. Uh. It's gonna be another 0:20:25.480 --> 0:20:28.560 giant hit for Michael Lewis, and you know that with 0:20:28.640 --> 0:20:31.400 the success. But there were sort of a first book 0:20:31.400 --> 0:20:35.720 by Michael Lewis where you went oh and then boom. 0:20:35.760 --> 0:20:38.400 That's the way it was for Russia. Sharma. He brought 0:20:38.440 --> 0:20:41.959 up Breakout Nations in pursuit of the next economic Miracles, 0:20:42.600 --> 0:20:44.920 and it was like another blur of emerging market books 0:20:44.920 --> 0:20:46.560 and then you picked it up, David and looked at 0:20:46.600 --> 0:20:50.359 it and you went, oh, just like Michael Lewis, Ruscha 0:20:50.440 --> 0:20:52.960 Sharma joins us now, of course with his new book 0:20:52.960 --> 0:20:55.239 Out as well the rise and fall of nations and 0:20:55.480 --> 0:20:59.760 again Russia. Scharma with Morgan Stanley on commodities. Wonderful speak 0:20:59.760 --> 0:21:01.800 to you too short today because of the news, and 0:21:01.960 --> 0:21:06.040 Coca cola is the commodity bear market over and you 0:21:06.160 --> 0:21:09.959 can you say for commodity e M the boat, the 0:21:10.000 --> 0:21:14.080 sea is rising, the boats will lift. I wait, um, 0:21:14.200 --> 0:21:16.520 wait to be with you on tom um. Now. I 0:21:16.640 --> 0:21:18.760 think that as far as commodity prices, the concern, if 0:21:19.080 --> 0:21:21.600 history is any guide, what it really shows is that 0:21:22.280 --> 0:21:24.520 you typically tend to get a big bust and then 0:21:24.960 --> 0:21:27.080 you know, some sort of an echo bubble after that. 0:21:27.560 --> 0:21:31.520 But but for many years, possibly even a decade or two, 0:21:31.800 --> 0:21:34.760 commodity prices after a bus tend to sort of trade 0:21:34.800 --> 0:21:37.639 in a very broad range. So therefore the price of 0:21:37.680 --> 0:21:41.919 oil I think about the barrel is the is the 0:21:41.960 --> 0:21:44.560 price range were likely to be for the foreseeable future. 0:21:44.960 --> 0:21:48.679 And in fact, uh, there is one expert dimension to 0:21:48.760 --> 0:21:54.159