WEBVTT - Blockchain is the Game Changer, Dr. Alankar Says 0:00:09.840 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily 0:00:13.960 --> 0:00:17.560 we bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:30.720 Bloomberg dot Com, and of course on the Bloomberg We're 0:00:30.760 --> 0:00:32.800 gonna rip up the script here right now. We've got 0:00:32.840 --> 0:00:38.800 a wonderful expert, a true expert with ubs on emerging markets. 0:00:38.840 --> 0:00:41.599 But I'm going to go right to China and the 0:00:41.720 --> 0:00:47.520 domestic China Jeff Dennis, that you know, in their predilection 0:00:47.840 --> 0:00:52.519 towards reminiscence of a stock operator, they seem to like 0:00:52.800 --> 0:01:01.240 their investment fads within China, and China has a very 0:01:01.360 --> 0:01:07.160 large bitcoin interest, doesn't. Yes, yes, it does a pretty 0:01:07.200 --> 0:01:12.440 large bitcoin interest. UM. I think the fad with investment 0:01:12.560 --> 0:01:18.640 in China is though fading gradually over time. Your listeners 0:01:18.680 --> 0:01:22.000 will know that pretty much half the economy at one 0:01:22.080 --> 0:01:27.000 stage was investment that is starting to come lower. The 0:01:27.040 --> 0:01:30.560 economy in China is beginning to rebalance there for away 0:01:30.600 --> 0:01:34.320 from investment, back towards consumer I know, back towards towards 0:01:34.400 --> 0:01:39.640 consumer spending, towards services and less manufacturing. And I think 0:01:39.720 --> 0:01:41.760 that's a long term trend. So although they've had this 0:01:41.840 --> 0:01:44.280 love affair with investment, and I'm sure bitcoin is part 0:01:44.319 --> 0:01:48.280 of that. UM, the long term fate, so to speak, 0:01:48.440 --> 0:01:50.640 outlook for the Chinese economy is going to be much 0:01:50.680 --> 0:01:54.120 more driven by the resilience and the growth of consumer 0:01:54.160 --> 0:01:57.800 spending as as Chinese people, as indeed in a lot 0:01:57.800 --> 0:02:01.240 of countries, get wealthier. Jeff, I'm going to take a 0:02:01.320 --> 0:02:04.560 leaf from my colleagues book. Tom is always interested in 0:02:04.640 --> 0:02:07.720 where the money flows, right, where does it go? Because 0:02:07.760 --> 0:02:11.079 there's smart money out there, and it seems as though 0:02:11.200 --> 0:02:13.720 there's a lot of money that's going into Asia, but 0:02:13.800 --> 0:02:17.320 it's not going into Japan and it's not going into 0:02:17.440 --> 0:02:20.880 exchange traded funds. Is that accurate? And what does that 0:02:20.919 --> 0:02:24.119 tell you? Um? I'm not sure that's entirely accurate. First 0:02:24.160 --> 0:02:26.679 of all, of course, the Japanese market has been very 0:02:26.680 --> 0:02:29.520 strong recently, and it's a market that we've we've favored 0:02:29.520 --> 0:02:33.079 our strategies to favor that at the global level. UM. 0:02:33.160 --> 0:02:39.000 And although we've seen tremendous inflow into emerging market funds 0:02:39.040 --> 0:02:41.800 this year over fifty five billion dollars, which is pretty 0:02:41.840 --> 0:02:44.480 much the best year we've ever had except two thousand 0:02:44.560 --> 0:02:48.880 and ten UM. About seventy of that is still gone 0:02:49.440 --> 0:02:52.359 through the e t f UM channel, so to speak. 0:02:52.400 --> 0:02:55.720 So let's call that twelve billion dollars has gone to 0:02:56.120 --> 0:02:58.799 I've gone into active em funds, which is certainly a 0:02:58.840 --> 0:03:01.600 big improvement in recent years. And it's very interesting because 0:03:01.639 --> 0:03:04.200 this year has been so disparate in terms of performance. 0:03:04.200 --> 0:03:06.679 Have you've been long technology and long growth, you've done 0:03:06.760 --> 0:03:10.440 very well. And if you've gone more the value way 0:03:10.520 --> 0:03:14.680 towards the commodity sectors energy and materials and also financials, 0:03:14.760 --> 0:03:16.320 you've done much less well. So it has been a 0:03:16.320 --> 0:03:19.920 good year for active managers. But UM money has gone 0:03:19.960 --> 0:03:23.240 to Asia, has gone to Japan, but above all, in 0:03:23.320 --> 0:03:26.800 my world this year money has gone to Asian technology, 0:03:26.960 --> 0:03:28.960 which is of course blown the doors off in terms 0:03:28.960 --> 0:03:31.200 of price performance. Does that mean that you believe it 0:03:31.200 --> 0:03:35.000 will continue or is it time to rotate financial stocks? 0:03:35.040 --> 0:03:37.760 For example the regulation in the United States. We've got 0:03:37.800 --> 0:03:40.120 an interview with Lloyd blank Find of Golment Sex coming up. 0:03:40.200 --> 0:03:43.040 We we think the story is much more plain villa. 0:03:43.080 --> 0:03:47.040 In terms of financials, we've about over fifty of the 0:03:47.080 --> 0:03:50.200 market in them. The index is financials and Technology so 0:03:50.200 --> 0:03:52.960 you've got to make a relative bet about them. We 0:03:53.040 --> 0:03:56.160 are arguing to our investors now that you should be 0:03:56.160 --> 0:03:59.360 a little bit more careful about being long technology. It's 0:03:59.400 --> 0:04:03.160 not my sively expensive, it's just very, very over owned. 0:04:03.520 --> 0:04:06.320 And we want people to rotate a bit more into financials, 0:04:06.360 --> 0:04:09.240 where you begin to see US colity improvements begin, see 0:04:09.240 --> 0:04:12.480 loans growth cycles beginning to pick up. And indeed, if 0:04:12.480 --> 0:04:14.680 you are going to see a modest rise in bond 0:04:14.720 --> 0:04:16.760 deals around the world in two thousand nineteen, which is 0:04:16.760 --> 0:04:18.679 all cool, you may even have a bit of an 0:04:18.760 --> 0:04:21.800 interest margin story in financials as well. I mean, I mean, 0:04:21.839 --> 0:04:23.360 I'm looking, folks, as the way you do this in 0:04:23.440 --> 0:04:25.800 the Bloomberg you got to w E I go and 0:04:26.440 --> 0:04:29.080 it's got so much wonderful information and then you can 0:04:29.080 --> 0:04:32.880 currency adjust. Let's adjust this. I don't even know what 0:04:32.920 --> 0:04:36.440 this exchange is. The whole cheat men's stock market. I'm 0:04:36.440 --> 0:04:40.200 guessing Vietnam very and you're still using w E I. 0:04:40.279 --> 0:04:43.240 You don't do the launch launchpad. You know more than 0:04:43.279 --> 0:04:46.320 I do. But I'm looking at the whole cheatman stock 0:04:46.360 --> 0:04:51.760 market up dollar based. Every single person Jeff Dennis and 0:04:51.760 --> 0:04:55.560 the Jeff Dennis world knows these puppies revert to the mean. 0:04:56.640 --> 0:05:00.120 Is there a trend there that's discernible? Um? I mean, 0:05:00.200 --> 0:05:03.440 first of all, for upside in Vietnam, which is a 0:05:03.520 --> 0:05:07.200 frontier market according to the index provider, is actually not 0:05:07.520 --> 0:05:10.320 wildly out of line. It's not wildly strong. China is 0:05:10.320 --> 0:05:14.800 above the Hong Kong China Enterprise Index, which is the 0:05:14.839 --> 0:05:17.040 way we look at China in terms of foreign investment. 0:05:17.440 --> 0:05:19.960 Career has been very strong. You've seen some tremendous games 0:05:20.000 --> 0:05:22.720 this year. The really important thing has happened in emerging 0:05:22.760 --> 0:05:25.239 markets this year. You've seen a sharp drop in the dollar, 0:05:25.560 --> 0:05:28.000 You've seen a nice rebounded commodity price, you've seen a 0:05:28.000 --> 0:05:33.000 boom in the technology sector. And you've seen a consequence 0:05:33.000 --> 0:05:35.320 of all of that, or or consequence of some of that, 0:05:35.800 --> 0:05:39.320 you've had a really big explosion of earnings growth in them, 0:05:39.360 --> 0:05:41.200 which looks like it's going to be well north of 0:05:41.880 --> 0:05:44.320 growth this year, best year since two thousand and ten. 0:05:44.680 --> 0:05:47.200 So although EM has done very well this year, it 0:05:47.320 --> 0:05:49.680 is not actually got that much more expensive because the 0:05:49.680 --> 0:05:52.240 earning story has been very good. So the issue is 0:05:52.560 --> 0:05:54.960 if EM has got a little richer and the valuations 0:05:55.000 --> 0:05:57.720 are somewhat high, does the cost of capital stay low 0:05:57.800 --> 0:06:00.760 du bon less say low to justify those moves. So 0:06:00.839 --> 0:06:02.560 we're not worried that some of these markets are a 0:06:03.880 --> 0:06:07.080 it's really been broadly justified by a very strong recovery 0:06:07.120 --> 0:06:09.240 and earnings growth. Well, let's pick up on something that 0:06:09.360 --> 0:06:13.240 time focused on, having to do with dollar denominated returns. 0:06:13.279 --> 0:06:15.160 You think the dollar is going to remain weak or 0:06:15.240 --> 0:06:18.280 get weaker. Our view is the dollar will go down 0:06:18.320 --> 0:06:21.120 again in two thousand and eighteen, not as much as 0:06:21.160 --> 0:06:23.760 it's gone down this year. We've got the dollar euro 0:06:23.960 --> 0:06:27.359 ending two thousand and eighteen at one five. It's about 0:06:27.360 --> 0:06:29.960 one eighteen today, so nothing, not as big a move 0:06:30.000 --> 0:06:34.120 as as um as this year. What is interesting is, 0:06:34.160 --> 0:06:36.480 although the dollar has been weak this year, emerging mark 0:06:36.480 --> 0:06:39.479 currencies have not gone up that much against the dollar. 0:06:39.880 --> 0:06:42.680 We've gone up about four percent, whereas dollars gone down 0:06:42.680 --> 0:06:45.200 a long way against the euro. But the bottom line is, 0:06:45.200 --> 0:06:47.640 even if you don't get much translation effect for EM 0:06:47.680 --> 0:06:50.520 returns because the dollar is is that week against some 0:06:50.560 --> 0:06:53.039 of these EM currencies, what you get is when the 0:06:53.080 --> 0:06:55.599 dollar goes down to liquidity comes out of the US 0:06:56.000 --> 0:06:58.800 and chases yield and chases risk overseas so you've got 0:06:58.839 --> 0:07:01.839 a very beneficial uidity effect. And if the dollar goes 0:07:01.839 --> 0:07:04.240 down again next year, which is the U B S cool, 0:07:04.920 --> 0:07:07.600 that liquidity is going to continue at the margin to 0:07:07.680 --> 0:07:09.840 come towards em and it's going to give us a 0:07:09.880 --> 0:07:12.400 decent year again next year. Jeff Dennis with the UBS 0:07:33.760 --> 0:07:36.560 right now on oil, And let me just get this 0:07:36.640 --> 0:07:38.400 out of the way. We're not going to send out 0:07:38.440 --> 0:07:41.800 to you the Short Report, and it's gorgeous venusia on 0:07:42.000 --> 0:07:45.720 veils and pistons and pumps, because we protect the copyright 0:07:45.800 --> 0:07:48.760 of our guests. Contact Mr Short when he's not watching 0:07:49.000 --> 0:07:53.800 the Tenant one Philadelphia Eagles. Stephen, good morning, Good morning. 0:07:54.760 --> 0:07:57.600 What is the distinctive feature here at the top of 0:07:57.640 --> 0:07:59.960 the home on the range. We're right up against the 0:08:00.120 --> 0:08:03.360 range on w T I in Brent. What's the thing 0:08:04.200 --> 0:08:08.480 you're watching as we hit this range peak right now? 0:08:08.560 --> 0:08:12.320 It's that big magical sixty number. There's nothing special about it, Tom, 0:08:12.440 --> 0:08:15.080 It's just the fact that it's a psychological number. The 0:08:15.120 --> 0:08:19.480 next handle in the iteration. But to that point, we're 0:08:19.520 --> 0:08:24.160 getting up and we're pushing up eight dollars. Momentum is 0:08:24.240 --> 0:08:27.240 starting to stall, and in fact, some of the technical indicators, 0:08:27.240 --> 0:08:31.320 momentum oscillators so forth indicate that the market has peaked, 0:08:31.840 --> 0:08:35.120 at least for a short term. That is to say, 0:08:35.160 --> 0:08:39.280 we did get the announcement, Uh not unexpected that we're 0:08:39.280 --> 0:08:42.880 going to get the extension with OPEC and the quotas 0:08:43.600 --> 0:08:45.840 all right now. There really isn't any kind of follow 0:08:45.960 --> 0:08:49.960 through on the NOMI strikes. This question came up like 0:08:50.040 --> 0:08:57.520 four times today. Does Vienna matter to American oil analysis? Uh? No, 0:08:57.679 --> 0:09:01.000 it's actually it's an excellent point. We essentially for the 0:09:01.040 --> 0:09:03.240 past ten years have I had a fiber caded markets 0:09:03.880 --> 0:09:08.160 in that the US now becoming a powerhouse with regard 0:09:08.240 --> 0:09:12.199 to its own entry production and becoming a significant exporter 0:09:13.000 --> 0:09:16.280 on the refined products and a burgeoning exporter in the 0:09:16.360 --> 0:09:21.440 crudel market. Essentially, we're having two different market areas here. 0:09:21.800 --> 0:09:25.800 So you have the United States, North America essentially Canada 0:09:26.040 --> 0:09:30.079 and the United States. Unfortunately Mexico, given their infrastructure issues, 0:09:30.320 --> 0:09:32.880 is not part of that. But and then you have, 0:09:32.960 --> 0:09:36.119 of course the global market and the growth with Asian refiners. 0:09:36.320 --> 0:09:39.120 Pim Fox were here by pause a listener in London, 0:09:40.000 --> 0:09:43.600 Brandon emails in wait. The eagles are ten and one 0:09:44.120 --> 0:09:47.960 question mark best Inlite. Question Mark, thank you for listening 0:09:47.960 --> 0:09:53.360 on Radio London this morning. Absolutely, we're here in Philadelphia, 0:09:53.400 --> 0:09:58.320 as shocked as anyone that about anyone that sounds like 0:09:58.360 --> 0:10:01.319 you're from Philadelphia A Steven. I want to put you 0:10:01.400 --> 0:10:03.360 back on track here having to do with oil and 0:10:03.360 --> 0:10:06.079 and perhaps something that I know I missed over the weekend. 0:10:06.080 --> 0:10:10.200 On Sunday, there was a big conclave in Saudi Arabia. UH, 0:10:10.400 --> 0:10:15.040 the Crown Prince Mohammed bin Salmon. He brought together forty 0:10:16.000 --> 0:10:21.240 other islam Islamic countries and they are in a agreement 0:10:21.280 --> 0:10:24.920 of a counter terrorism alliance. I'm wondering if you could 0:10:24.920 --> 0:10:28.120 just speak about that and the calls by the Crown 0:10:28.240 --> 0:10:31.280 Prince to introduce what he describes as a more moderate 0:10:31.800 --> 0:10:38.040 form of Islam into Saudi Arabia and whether that will 0:10:38.080 --> 0:10:41.280 in some way change the dynamic of you know, Iran 0:10:41.640 --> 0:10:47.240 Saudi Arabia, because we'll get the geopolitics in a second. Yeah, absolutely, 0:10:47.320 --> 0:10:52.000 yeah him, And we essentially saw back when the bear 0:10:52.120 --> 0:10:55.920 market in oil began, it was prompted by Saudi Arabia's 0:10:56.080 --> 0:10:59.360 refusal to take oil off of the market. UH. And 0:10:59.440 --> 0:11:03.080 that had and three Thanksgivings ago when A ministers met 0:11:03.160 --> 0:11:06.720 indianna Um. What was left on set is the previous 0:11:06.800 --> 0:11:11.800 Monday UH back in Vienna, the West sat down with 0:11:11.840 --> 0:11:15.319 Iran with reguards to the nuclear ambitions of Turan, and 0:11:15.400 --> 0:11:18.800 Tahurran got up and walked away from the table. UH. 0:11:18.880 --> 0:11:23.800 That simply, in my estimation, UH prompted Saudi Arabia to 0:11:24.040 --> 0:11:26.920 go into an economic warfare with with Iran, and hence 0:11:26.960 --> 0:11:29.480 we had oil plunge from seventy five dollars down to 0:11:29.600 --> 0:11:33.560 about twenty five dollars a barrel. However, shortly thereafter be 0:11:33.679 --> 0:11:37.480 not exacquiesced and struck a deal with Iran. So that 0:11:37.600 --> 0:11:41.040 kind of put a Saudi Arabia's plans on hold, but 0:11:41.200 --> 0:11:45.360 certainly with the growing tension UH with a Saudi Arabia 0:11:45.400 --> 0:11:49.800 and Guitar essentially pushing potentially Quitar into Iran's arms, right 0:11:49.840 --> 0:11:55.199 because Iran and Qatar were not invited to this summit. Yeah, exactly. So, 0:11:55.200 --> 0:12:00.480 So it's the age old soony shea ripped within Opec UH, 0:12:00.480 --> 0:12:04.280 and that is certainly the black Swan event out there 0:12:04.360 --> 0:12:06.360 for the new year. All right, So if that's the 0:12:06.400 --> 0:12:08.960 black Swan, how would you trade that You're at crewe 0:12:09.000 --> 0:12:14.720 to fifty seven and change right now. Absolutely, I'm yeah, 0:12:14.800 --> 0:12:16.600 I think that we are on the top of the 0:12:16.720 --> 0:12:20.839 range at this point. Uh. This is a level high 0:12:20.880 --> 0:12:25.120 fifties for North American producers, mid sixties, uh, for the 0:12:25.120 --> 0:12:29.880 global producers. Opportunities to hedge. And what what you always 0:12:29.920 --> 0:12:32.720 want to look at, guys, is who's been doing the buying, 0:12:32.880 --> 0:12:35.720 who's been doing the selling? And right now the buyer 0:12:35.800 --> 0:12:39.880 has been a speculator Wall Street very short term view. 0:12:40.600 --> 0:12:43.720 More importantly, it's he's been doing the seller. To keep 0:12:43.720 --> 0:12:46.240 in mind that a crude all producer has to sell. 0:12:46.320 --> 0:12:48.240 He's the only one who has to sell his barrel. 0:12:48.559 --> 0:12:51.520 And we look at the hedging activity, we're looking at 0:12:51.559 --> 0:12:56.240 hedging at an all time high at these levels. Yes, well, 0:12:56.240 --> 0:13:00.240 that's a one way that you're you're predicting lower right, Uh, yeah, 0:13:00.240 --> 0:13:02.040 I think we're at there. I think we are are 0:13:02.120 --> 0:13:04.280 really pushing up against the top of the market, and 0:13:04.280 --> 0:13:08.000 I would expect to see moderation uh into the new year. Okay, 0:13:08.080 --> 0:13:11.240 but why don't we go to Stephen short barrel or 0:13:11.280 --> 0:13:13.880 whatever you're predicting a year ago? I mean, is is 0:13:13.920 --> 0:13:16.080 it just because demand is kicked in to put a 0:13:16.120 --> 0:13:20.079 floor under the range. Yeah, we're essentially you know, we 0:13:20.120 --> 0:13:23.840 we yell yoed in between that that low forty dollar range, 0:13:23.920 --> 0:13:27.640 mid fifty dollar range over the past year. Uh. Certainly 0:13:27.679 --> 0:13:31.640 we've had a significant rally UH in the market or 0:13:31.840 --> 0:13:35.079 fall since post Harvey. Actually uh, and then you had 0:13:35.080 --> 0:13:38.680 to disconnect, um to be expected between the Brent market 0:13:38.880 --> 0:13:42.199 and the oil market given the impact that they had 0:13:42.240 --> 0:13:46.400 on the storms had on logistics in North America. So 0:13:46.520 --> 0:13:49.120 at this point, yes, there there is demand. But let's 0:13:49.200 --> 0:13:53.560 keep in mind also that speculators have certainly come into 0:13:53.559 --> 0:13:57.440 the market recently. For the latest update from the c FPC, 0:13:58.200 --> 0:14:01.320 Wall Street is now sitting on already six week high 0:14:01.880 --> 0:14:06.120 in their long position UH, and they've cut their short 0:14:06.120 --> 0:14:10.200 position to a thirty week glow. So certainly when you're 0:14:10.200 --> 0:14:13.960 cutting your short position, you're buying back the market, and 0:14:14.000 --> 0:14:16.440 that certainly has been in impetus to some of the 0:14:16.440 --> 0:14:18.520 strength in the market. Steven S, thank you so much. 0:14:18.520 --> 0:14:38.320 The short report greatly appreciated. Ashwin Alan Carr joins us. 0:14:38.360 --> 0:14:42.680 He is, of course, said right, Jannis Henderson, Global Asset 0:14:42.720 --> 0:14:48.680 Allocation and Risk Management. And you know Ashwin, Tom during 0:14:48.680 --> 0:14:52.920 the break, we were talking about how fear and emotion 0:14:53.720 --> 0:14:58.200 can change the way you trade risk. And you mentioned 0:14:58.280 --> 0:15:02.720 something earlier that I just want you to maybe expand 0:15:02.760 --> 0:15:06.680 on having to do with people that are not experts 0:15:06.760 --> 0:15:12.720 or veterans of trading risk now participating in this market. 0:15:13.080 --> 0:15:16.880 Could they be the weak link where things go bad? 0:15:17.520 --> 0:15:20.480 I think you're exactly right. I think they because they're 0:15:20.520 --> 0:15:23.800 not experienced. If fear is going to set in, it's 0:15:23.840 --> 0:15:28.200 going to set in first with those who are uncomfortable 0:15:28.600 --> 0:15:34.560 or exploring an unknown territory. And there are many, many investors, 0:15:34.600 --> 0:15:40.320 from very risk averse institutional investors to even retail investors 0:15:41.000 --> 0:15:45.480 who have jumped on this bandwagon of selling volatility, whether 0:15:45.520 --> 0:15:48.600 it be interest rate volatility, whether it be currency volatility, 0:15:48.600 --> 0:15:52.200 whether it be equity volatility, the first sign of stress. 0:15:52.680 --> 0:15:55.000 Who are the first people to jump off the train? 0:15:55.360 --> 0:15:59.560 It's those who are not who are inexperienced, who haven't 0:15:59.600 --> 0:16:02.760 gone through these ebbs and flows before. So that is 0:16:02.800 --> 0:16:07.600 the weak link. UM that link drops, the whole chain 0:16:07.720 --> 0:16:10.200 is going to get impacted. UM. This is not only 0:16:10.240 --> 0:16:14.760 going to impact volatility levels, this will also impact the 0:16:14.800 --> 0:16:18.680 flattening we see in the term structure of interest rates UM. 0:16:18.720 --> 0:16:22.120 So those holders and everyone is moving into the long 0:16:22.240 --> 0:16:25.960 end of the curve um. Risk comes back term premium 0:16:26.000 --> 0:16:30.760 by definition must come back term structure. Stephens. One of 0:16:30.800 --> 0:16:34.640 the biggest crowds today is long the long end of 0:16:34.680 --> 0:16:37.480 the curve um and underweight the short end of the 0:16:38.080 --> 0:16:40.920 What happens when that reverses, We'll have to see. I 0:16:40.960 --> 0:16:42.480 want to rip up the script or ash and I 0:16:42.480 --> 0:16:44.840 don't want to use in trouble with Mr gross or 0:16:44.840 --> 0:16:47.760 with a general council of Janice Anderson. But I've got 0:16:47.760 --> 0:16:52.680 to ask with your mathematics about the auction process, the 0:16:52.680 --> 0:16:57.800 bid asque process of bitcoin. We've all seen this before. 0:16:58.440 --> 0:17:01.000 Market pros are like, how many times have we been 0:17:01.040 --> 0:17:05.760 down this road? And so much of this is not 0:17:05.920 --> 0:17:09.080 only the mystery of who's on the bid and who's 0:17:09.119 --> 0:17:14.320 on the asked, but the small set of people or institutions. 0:17:14.560 --> 0:17:17.640 Do I have that right? Do you exactly have that right? 0:17:17.720 --> 0:17:21.840 That bitcoin? A lot of people, in my opinion, are 0:17:22.080 --> 0:17:26.760 misinterpreting the bitcoin as the block chain. The blockchain has 0:17:26.840 --> 0:17:30.800 tremendous value to it because it's a ledger um. It's 0:17:30.840 --> 0:17:37.399 a real time authentic um apparently bulletproof ledger, distributed ledger. 0:17:37.840 --> 0:17:42.000 It's a distributed ledger um. The bitcoin, however, is just 0:17:42.200 --> 0:17:46.960 one key to that ledger. There are many cryptocurrencies, there's 0:17:47.040 --> 0:17:51.560 many keys to the that that vault that the blockchain provides. 0:17:52.200 --> 0:17:56.320 Um So, Bitcoin by itself, it's not clear what value 0:17:56.320 --> 0:18:00.000 it has. It's very clear the blockchain has tremendous value. 0:18:00.040 --> 0:18:04.119 You the blockchain is a game changer, but bitcoin is 0:18:04.240 --> 0:18:10.560 just one key to that chain. Um So, people should 0:18:10.600 --> 0:18:14.639 be wary of bitcoin. I don't believe bitcoin presents systemic 0:18:14.760 --> 0:18:17.680 risk for exactly the reasons you said, Tom right that 0:18:17.800 --> 0:18:20.679 a small group of people who are participating, um so, 0:18:20.760 --> 0:18:24.880 it's not a systemic event. But seeing me is going 0:18:24.920 --> 0:18:28.960 to launch futures on bitcoin. Um as more and more 0:18:28.960 --> 0:18:33.440 people have access to cryptocurrencies, and these people, once again 0:18:33.480 --> 0:18:38.040 are inexperience. They're not technologists, they don't really understand truly 0:18:38.480 --> 0:18:41.600 the intricacies of what a cryptocurrency are. Just like the 0:18:41.640 --> 0:18:46.400 inexperienced people who are selling volatility today. It creates a 0:18:46.480 --> 0:18:49.920 dangerous recipe. This has been hugely valuable actually occur with 0:18:50.000 --> 0:19:11.800 us with Janis Henderson, Thank you so much. The single 0:19:11.800 --> 0:19:14.359 best essay of the day, and Marvin good Friend has 0:19:14.400 --> 0:19:16.800 been Mr Emmons of Intellectists of course for years at 0:19:17.080 --> 0:19:19.560 Pimco as well. Ben, I'm going to go right to 0:19:19.600 --> 0:19:23.000 the punchline, which is, with Mr good Friend coming on, 0:19:23.600 --> 0:19:27.040 it makes the Stanley Fisher's slot, the vice chair slot, 0:19:27.600 --> 0:19:31.200 that much more important. How does it change the who 0:19:31.240 --> 0:19:34.159 of the vice chair? Hi, good morning, Tolum, Thanks for 0:19:34.200 --> 0:19:38.080 having me. Um, Well, it changes because good friends. You know, 0:19:38.119 --> 0:19:41.640 as you've been described montros econumnists, you know that vice 0:19:41.720 --> 0:19:44.200 chair is really the person that brings it all in 0:19:44.280 --> 0:19:47.200 balance right against the others and um, you know sort 0:19:47.200 --> 0:19:51.240 of so that is an important critical boymans. So if 0:19:51.240 --> 0:19:54.440 that would be someone was also a more monitors view 0:19:54.640 --> 0:19:58.360 of fat policy, then we really are shifting next year. 0:19:59.119 --> 0:20:01.679 This is almost like the Supreme Court in that I 0:20:01.720 --> 0:20:04.919 guess if you get five to four monitors versus Keynesian, 0:20:05.359 --> 0:20:09.520 that's a big deal. How close equivalent is the f 0:20:09.720 --> 0:20:14.600 O m C process to a five four Supreme Court? 0:20:14.800 --> 0:20:19.240 Either way? Yeah, I think it's changing. My sense from 0:20:19.240 --> 0:20:22.479 this is that the you know, with power coming on 0:20:22.600 --> 0:20:25.720 this chair, that we are seeing somewhat of a shift 0:20:25.760 --> 0:20:27.639 of the agenda. At least, you know, there's there's a 0:20:27.720 --> 0:20:30.400 focus on growth. I thought that testimony that power was 0:20:30.560 --> 0:20:34.240 emphasizing that this is my interpretation. So I think we 0:20:34.320 --> 0:20:36.760 are you know, as you described the Supreme Court's way, 0:20:37.280 --> 0:20:40.119 like yeah, you get this balance of different people on 0:20:40.200 --> 0:20:42.960 the board. You know, it's just expressing your view about 0:20:42.960 --> 0:20:45.800 the economy in a different way than before. The change 0:20:45.880 --> 0:20:47.840 in view that I think is the f has followed 0:20:47.880 --> 0:20:50.480 the law of the last number of years, maybe shifting. 0:20:50.560 --> 0:20:53.280 It may not be pure monitors, but it's that has 0:20:53.280 --> 0:20:55.520 a certain tone in there. But then I just want 0:20:55.560 --> 0:20:57.000 to follow up on what you said having to do 0:20:57.080 --> 0:20:59.679 with with growth, as if the current makeup of the 0:20:59.680 --> 0:21:03.560 Federal Reserve is not focused on growth, it seems to 0:21:03.600 --> 0:21:06.040 be doing everything they can in order to maintain growth, 0:21:06.040 --> 0:21:08.640 whether it's you know, maintaining that nice big balance sheet 0:21:08.680 --> 0:21:13.440 although the runoff is beginning, or accommodative interest rates now 0:21:13.440 --> 0:21:15.560 that's rooping. I mean, it's it's it's it's not like 0:21:15.640 --> 0:21:18.280 they actually are adverse to growth. But I think the 0:21:18.280 --> 0:21:20.840 point about it is more it is is that you know, 0:21:20.880 --> 0:21:23.000 we're a full employment on air and that's sort of 0:21:23.000 --> 0:21:26.040 the conclusion. We know inflation remains on the target, but 0:21:26.359 --> 0:21:29.240 you know what's missing has been growth, really right, I mean, 0:21:29.240 --> 0:21:32.200 we have been you know, two percentage sort of growth, 0:21:32.320 --> 0:21:35.000 so that the way the fat can stimulate that is 0:21:35.040 --> 0:21:37.560 really about this coordination with the government right of what 0:21:37.680 --> 0:21:39.800 the type of reforms need to take place, whether it's 0:21:39.800 --> 0:21:43.600 through regulation or labor market reforms, in order to get 0:21:43.600 --> 0:21:46.560 the growth really back on track. I think that's the 0:21:46.640 --> 0:21:49.840 key critical element which came It was a lot of 0:21:50.240 --> 0:21:53.440 that discussion in the Powell testimony. I think that's that's 0:21:53.480 --> 0:21:56.199 the change here. I mean, obviously, low interest rates have 0:21:56.240 --> 0:21:59.359 stimulated the economy to an extent, but not to degree 0:21:59.400 --> 0:22:01.679 that you would have expected that would have happened normally, right, 0:22:01.720 --> 0:22:04.320 that growth would have rebound aboff trend that only has 0:22:04.320 --> 0:22:09.800 happened temporarily two and two fourteen. So really looking at 0:22:09.880 --> 0:22:13.119 something I think the Feathers focused on working with the 0:22:13.119 --> 0:22:15.600 government on the right amount of reforms in labor market 0:22:15.640 --> 0:22:19.040 and bank regulation. You're bringing a smile to to Tom's 0:22:19.160 --> 0:22:22.760 to Tom's face here, yeah, I'm glad to hear that, 0:22:22.840 --> 0:22:25.760 because you know, it would be great if it actually 0:22:25.760 --> 0:22:28.480 works right And as of course, yeah that actually you know, 0:22:28.600 --> 0:22:31.600 if those those are difficult words when you're talking about 0:22:31.600 --> 0:22:34.520 the future of the economy, I just want to post 0:22:34.560 --> 0:22:36.600 you one one question here having to do with this 0:22:36.920 --> 0:22:42.000 appointment and growth is blowing a hole in the federal deficit? 0:22:42.480 --> 0:22:45.320 Is that a way to do this? Yeah? And so 0:22:45.600 --> 0:22:48.359 there's a point about that that needed that deficits and 0:22:48.400 --> 0:22:51.560 recession or closely closely links, right, I mean that it's 0:22:51.560 --> 0:22:54.560 been the pass like that before. Right. That's that's critical 0:22:54.600 --> 0:22:57.080 of course, Like how can the depth shit that you 0:22:57.200 --> 0:23:01.560 increase really generators growth that avoid the recession? Right? That 0:23:01.560 --> 0:23:04.560 that's what we're going to be challenged with. You know, 0:23:04.760 --> 0:23:07.560 the the yuker flattening that we've had this year could 0:23:07.600 --> 0:23:10.040 be interpreted shot shot that you know, it is not 0:23:10.080 --> 0:23:12.720 a streaming price in the yuker for the deficit rater. 0:23:13.520 --> 0:23:16.359 The market interprets the increases the deficit as a as 0:23:16.400 --> 0:23:19.480 an probability of a recession increasing over the number of 0:23:19.720 --> 0:23:23.120 next number of years. That's an opposing view to the 0:23:23.400 --> 0:23:25.080 point east that we're getting now on the board. Right. 0:23:25.119 --> 0:23:27.560 That's with this more GDP focus, I want to get 0:23:27.720 --> 0:23:30.920 the phrases right here as we go to the nomination process, 0:23:30.920 --> 0:23:33.280 and what I would suggest will be important scrutiny of 0:23:33.400 --> 0:23:36.879 Professor good Friend. You keep using the word monitorius. Marvin 0:23:36.920 --> 0:23:39.280 good Friend is out of Union College connected a good 0:23:39.320 --> 0:23:43.960 morning Mohawk Valley and Brown University, which is the land 0:23:43.960 --> 0:23:47.480 of Bill Pool. I mean huge influence decades ago. The 0:23:47.520 --> 0:23:51.680 former president of the St. Louis FED. Is Marvin good 0:23:51.720 --> 0:23:56.879 Friend a monitoriust like M one, M two, M three 0:23:57.200 --> 0:24:01.119 and Mr Pool? Or is he a deaf kind of 0:24:01.240 --> 0:24:05.400 moderist in a modern age? So I think the monterist 0:24:05.560 --> 0:24:08.359 idea of that is that you and referring to his 0:24:08.440 --> 0:24:12.840 paper at the Kansas Fat where he was focused on, 0:24:13.600 --> 0:24:16.320 you know, taking away the lower zero bounds because that's 0:24:16.320 --> 0:24:20.320 a constraint of multipolicy. Um. You know, that speaks to 0:24:20.880 --> 0:24:23.600 the view about price stability more thans opposed to the 0:24:23.720 --> 0:24:27.520 target right. And I think that idea is about that 0:24:28.000 --> 0:24:31.440 that the ECB that has I think from that perspective 0:24:31.440 --> 0:24:35.040 of monsters view that Monterrey transmission works better on our 0:24:35.080 --> 0:24:38.480 price stability than then this target right because it sets 0:24:38.520 --> 0:24:42.640 too much of a numerical level on inflation as opposed 0:24:42.680 --> 0:24:46.440 to having you know, around about in faction at two 0:24:46.520 --> 0:24:50.920 or two. So I think that's really the idea other 0:24:50.960 --> 0:24:53.720 than they did a freedment view of about mount policy 0:24:53.840 --> 0:24:58.000