WEBVTT - Short-Term Debt Is Best Fixed-Income Bet: BlackRock’s Rosenberg 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Bramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:33.720 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Where 0:00:33.720 --> 0:00:35.960 have we come from and where are we going? Within 0:00:36.080 --> 0:00:39.559 the fixed income markets? Here to tell us Jeffrey Rosenberg, 0:00:39.680 --> 0:00:43.279 chief fixed income strategist at black Rock, talking about their 0:00:44.520 --> 0:00:47.000 mid year investment outlook. Jeffrey, thank you so much for 0:00:47.040 --> 0:00:50.240 being with us. I want to start with a statistic 0:00:50.280 --> 0:00:53.760 that got my attention that the trading range of the 0:00:53.840 --> 0:00:57.680 tenure treasury yield is currently the narrowest that it's been 0:00:57.880 --> 0:01:00.760 in more than four decades. In other words, it's not moving. 0:01:00.840 --> 0:01:03.560 We have a flat line. Does this indicate that we're 0:01:03.560 --> 0:01:06.880 about to break out with yields rising sharply or falling 0:01:06.920 --> 0:01:09.840 sharply in the next few months, You know, it's an 0:01:09.840 --> 0:01:13.640 interesting question. You're talking about the trend line of the 0:01:13.720 --> 0:01:17.039 ten year interest rates and if we've had a breakout, 0:01:17.080 --> 0:01:20.080 and if there's really a breakout to talk about. It's 0:01:20.120 --> 0:01:22.479 not the ten year interest rate, It's it's what's happening 0:01:22.480 --> 0:01:25.360 on the shorter end of the curve. And there, Uh, 0:01:25.440 --> 0:01:30.400 you had had remarkably low volatility. How low you had 0:01:30.520 --> 0:01:34.039 zero volatility because it was zero interest rate policy, and 0:01:34.120 --> 0:01:36.959 so you had this anchoring of interest rates, and now 0:01:37.280 --> 0:01:41.120 you're significantly breaking out. You have the two year well 0:01:41.160 --> 0:01:43.839 above two and a half preyway. I'm sorry to break in, Jeffy, 0:01:44.040 --> 0:01:45.640 but what I'm trying to figure out is the ten 0:01:45.720 --> 0:01:47.960 year treasury out because as we are seeing more volatility 0:01:47.960 --> 0:01:50.440 and a breakout and doubling of two year treasury yields 0:01:50.480 --> 0:01:52.880 in the past year, I'm just wondering. I mean, people 0:01:52.880 --> 0:01:54.720 are looking at that ten year benchmark is sort of 0:01:54.720 --> 0:01:56.760 an indicator of global growth and of sort of the 0:01:57.200 --> 0:01:59.680 view of the U. S economy right now and inflation, 0:02:00.040 --> 0:02:02.320 and it's going nowhere, and I'm just wondering, what's the 0:02:02.400 --> 0:02:05.280 setting us up for. Well, so where we're kind of 0:02:05.560 --> 0:02:08.360 between me wanting to focus on the two year and 0:02:08.400 --> 0:02:11.079 you wanting to focus on the tenure, we're ending up 0:02:11.120 --> 0:02:13.520 talking about the yield curve, which I was hoping to 0:02:13.560 --> 0:02:15.520 avoid because that's the only thing people want to talk about. 0:02:15.639 --> 0:02:17.960 Let's talk about it because it's it's important. And so, yes, 0:02:18.080 --> 0:02:19.400 you and I thought you were going to split the 0:02:19.440 --> 0:02:22.160 difference and talk about the five year. We could do that. 0:02:23.120 --> 0:02:25.280 We can certainly do that too, But there is a difference, 0:02:25.400 --> 0:02:27.320 and and and the flattening has got a lot of 0:02:27.360 --> 0:02:29.880 attention and and you know, one of the important points 0:02:29.880 --> 0:02:32.440 and Powell raised this in his testimony, and the set 0:02:32.440 --> 0:02:33.919 has been been talking about this for a while, and 0:02:33.919 --> 0:02:36.480 it's important for the listeners because you know, people get 0:02:36.520 --> 0:02:39.480 focused on the what's happening to the ten year and 0:02:39.520 --> 0:02:42.120 the ten years going lower and the two years going higher? 0:02:42.360 --> 0:02:45.120 And is that a sign of imminent recession? And the 0:02:45.240 --> 0:02:47.600 level of the difference, which is part of your question, 0:02:47.639 --> 0:02:51.639 you know, it's highly influenced. It's much lower in today's 0:02:51.760 --> 0:02:56.240 environment because of the role of unconventional monetary policy that 0:02:56.400 --> 0:02:58.760 is happening the world over. And so we want to 0:02:58.800 --> 0:03:02.440 just take that level of the difference in the curve 0:03:02.520 --> 0:03:04.799 and put a little asterix on it and say, yes, 0:03:04.880 --> 0:03:07.440 it's important, but we also have to recognize it's very 0:03:07.520 --> 0:03:11.320 different than what we've seen historically because of that unconventional 0:03:11.320 --> 0:03:15.520 monetary policy. Quantitative easing the world over, which the point 0:03:15.560 --> 0:03:19.040 of which was to flatten that relationship. So we want 0:03:19.080 --> 0:03:22.680 to just sort of think about that. It decreases some 0:03:22.840 --> 0:03:25.720 of the concerns, doesn't eliminate them, but it it takes 0:03:25.720 --> 0:03:28.160 the temperature down a bit. Phim I hear what Jeffrey 0:03:28.240 --> 0:03:31.800 is trying to say, very very politely, that yes, yield 0:03:31.800 --> 0:03:33.680 curve matters, but perhaps not as much as it has 0:03:33.680 --> 0:03:38.000 in the past. Jeffrey, I want to ask you about 0:03:38.440 --> 0:03:43.880 liquidity and specifically the relationship between the rising value of 0:03:43.920 --> 0:03:48.160 the US dollar, the repatriation of corporate profits that have 0:03:48.240 --> 0:03:57.000 been sitting overseas, and any constraints on dollar funding. Any thoughts. Yeah, so, um, Well, 0:03:57.280 --> 0:04:00.720 for first, the dollar strength is big deal. It's a 0:04:00.760 --> 0:04:04.400 big story. We've seen this before. It's an important development, 0:04:04.400 --> 0:04:08.960 and you're seeing part of that about growth differentials the US. 0:04:09.200 --> 0:04:12.040 We're gonna get second quarter GDP next week. In the 0:04:12.120 --> 0:04:17.160 first iteration, you see the tracking estimates somewhere up towards 0:04:17.320 --> 0:04:20.240 five percent. That's not a sustainable level, but the U 0:04:20.320 --> 0:04:23.600 s economy is powering ahead and the rest of the 0:04:23.640 --> 0:04:26.200 world's economies are not doing so well. Part of that 0:04:26.279 --> 0:04:29.120 economic growth of confidence again he heard it from Powell 0:04:29.360 --> 0:04:33.680 that just re emphasizes the outlook that US interest rates 0:04:33.839 --> 0:04:38.240 are going to continue an upward drift. UH short interest rates, 0:04:38.279 --> 0:04:41.599 the Fed policy rates, and that interest rate differential to 0:04:41.640 --> 0:04:45.120 the rest of the world is another factor behind dollar strength. 0:04:45.200 --> 0:04:49.560 One factor that is not behind dollar strength is repatriation. 0:04:49.839 --> 0:04:56.919 It's a very misunderstood notion that repatriating UH foreign corporate 0:04:56.960 --> 0:05:01.839 earnings results in dollar perch just is and the source 0:05:01.880 --> 0:05:05.560 of the misunderstanding is that most of the foreign held 0:05:06.279 --> 0:05:10.240 UH earnings are held in dollars. The notion of them 0:05:10.240 --> 0:05:13.680 being foreign is not the currency, but rather the legal entity, 0:05:13.800 --> 0:05:16.760 and so it doesn't really create a bid for for 0:05:16.760 --> 0:05:19.000 for dollars. So that's a little bit misunderstood. The big 0:05:19.480 --> 0:05:22.600 fundamental drivers behind the dollar appreciation, there's really those two 0:05:22.640 --> 0:05:25.080 that growth in that intra st rate piece. So Jeffrey, 0:05:25.080 --> 0:05:26.480 look into the Chrystal ball for us, what do you 0:05:26.520 --> 0:05:28.080 think is going to be the best performing asset the 0:05:28.120 --> 0:05:31.360 fixed income world in the second half. You know, It's 0:05:31.400 --> 0:05:34.480 where I was kind of taking the conversation. We we 0:05:34.680 --> 0:05:37.680 really like the front end of the yield curve, so 0:05:37.760 --> 0:05:41.440 we're talking about shorter maturities. I'll bracket that one of 0:05:41.480 --> 0:05:44.080 the three year kind of maturities. You can leak out 0:05:44.080 --> 0:05:47.040 the curve a little bit, but as you do, duration 0:05:47.160 --> 0:05:49.520 starts to perhaps become a little bit of a drag. 0:05:49.600 --> 0:05:51.760 And if I add a bit of investment grade credit, 0:05:51.960 --> 0:05:54.159 where spreads of widen and we and we don't see 0:05:54.160 --> 0:05:57.159 a lot of credit risk in the next six months. 0:05:57.200 --> 0:06:00.320 To undermine that outlook, you're looking at three three and 0:06:00.320 --> 0:06:04.479 a half kind of yields. That's on an annual basis um, 0:06:04.560 --> 0:06:06.560 so certainly six months returns will be lower than that, 0:06:06.600 --> 0:06:10.080 but that will probably be one of the best performing 0:06:10.080 --> 0:06:12.520 asset classes, and it's certainly one of the areas we 0:06:12.520 --> 0:06:15.360 we think is the most attractive in the fixed income universe. 0:06:16.200 --> 0:06:18.640 Jeff Rosenberg, thank you very much for being with us. 0:06:18.720 --> 0:06:21.600 Jeff Rosenberg is the chief fixed income strategist for a 0:06:21.640 --> 0:06:26.200 black Rock Investment Institute, giving us details about the black 0:06:26.320 --> 0:06:49.960 Rocksen midyear investment outlook. Helsinki Summit trade negotiations Russians. Let's 0:06:49.960 --> 0:06:54.000 bring in Richard Kahn. He is managing partner of Eurasia Advisors, 0:06:54.720 --> 0:06:58.240 formally serving as an advisor to major Russian companies for 0:06:58.279 --> 0:07:03.120 initial public offerings, also sourcing financing for Russian real estate 0:07:03.160 --> 0:07:06.520 development of fluent Russian speaker, so he has a background 0:07:06.520 --> 0:07:09.680 and understanding exactly the relationship between the United States and 0:07:09.720 --> 0:07:12.760 Russia on a business level as well as politics. Richard, 0:07:12.800 --> 0:07:15.480 thank you very much for coming into this studio. What 0:07:15.640 --> 0:07:19.160 can you tell us based on your experience about the 0:07:19.240 --> 0:07:23.400 Russian reaction to the Helsinki Summit. I think from the 0:07:23.480 --> 0:07:28.640 Russian perspective, they are truly thrilled. They witnessed the our 0:07:28.720 --> 0:07:32.800 goalie continually kicking the ball into his own goal. Um. 0:07:32.880 --> 0:07:35.920 And I think at some point they're probably concerned that 0:07:36.720 --> 0:07:38.640 people on the team are gonna wonder whose side he 0:07:38.720 --> 0:07:42.240 is on. But from their perspective, this has been a 0:07:42.240 --> 0:07:47.040 a major propaganda victory for Putin himself. He cemented control 0:07:47.080 --> 0:07:49.320 in Russia and nobody there can possibly take him on. 0:07:49.360 --> 0:07:50.920 At this stage. He has a free hand to go 0:07:51.000 --> 0:07:55.120 after the opposition. But more importantly, they see the weakness 0:07:55.120 --> 0:07:57.640 of the US. They see that, you know, what Trump 0:07:57.680 --> 0:07:59.960 has done has put us at odds with our ally, 0:08:00.040 --> 0:08:01.680 as is shown, he's not going to stand up for 0:08:01.680 --> 0:08:04.720 our values. Um. All of that is is a huge 0:08:04.720 --> 0:08:07.960 win for Russia as they try to assert greater leadership 0:08:07.960 --> 0:08:10.360 in the Middle East and in the world generally. So 0:08:10.520 --> 0:08:13.440 President Trump has said repeatedly it's good for the US 0:08:13.480 --> 0:08:16.040 to have a constructive relationship with Russia or the two 0:08:16.080 --> 0:08:21.800 biggest nuclear superpowers. We don't want war. Was anything achieved 0:08:21.880 --> 0:08:26.000 that was positive for the US in the summit? Well, 0:08:26.040 --> 0:08:29.679 first of all, I I fully agree with those goals personally, 0:08:29.720 --> 0:08:32.680 we and I've spent my life working to help resolve 0:08:32.800 --> 0:08:34.840 issues between Russia and the US and to bring the 0:08:34.840 --> 0:08:38.720 countries closer together. But that's a long term process. It 0:08:38.760 --> 0:08:41.480 has to be based on reality and on a recognition 0:08:41.520 --> 0:08:44.240 of our different values. And that's what your age advisors 0:08:44.280 --> 0:08:47.240 is about as well. Uh. And every president I think 0:08:47.679 --> 0:08:49.480 you know, and certainly since the Cold War, has been 0:08:49.480 --> 0:08:53.280 trying to achieve that too. Uh. But I never heard 0:08:53.320 --> 0:08:56.720 anything articulated by this current president in terms of what 0:08:56.840 --> 0:08:59.760 his goals actually were in the summit, other than saying 0:08:59.760 --> 0:09:03.079 he wanted to have low expectations. Um. I think his 0:09:03.160 --> 0:09:05.560 goals were achieved, which was to have a one on 0:09:05.559 --> 0:09:09.880 one communication with his co conspirator regarding what took place 0:09:10.200 --> 0:09:12.280 during the election, and to figure out how to handle 0:09:12.320 --> 0:09:15.360 things now in a manner that helps Trump protect himself 0:09:17.200 --> 0:09:21.280 give us some idea of the actual strength and weaknesses 0:09:21.559 --> 0:09:26.920 of the Russian economy. Look, the base aggression economy is 0:09:26.960 --> 0:09:30.120 out of of an oil and gas state. It has 0:09:30.200 --> 0:09:34.600 other natural resources, but uh, the best way to think 0:09:34.640 --> 0:09:37.720 of it is that although it tries to expand into 0:09:37.760 --> 0:09:42.640 other areas, including high tech industries, it doesn't have the 0:09:42.679 --> 0:09:47.679 infrastructure legally and culturally to allow people to safely invest 0:09:48.559 --> 0:09:52.320 and develop businesses. Uh. So it really is run more 0:09:52.440 --> 0:09:55.080 like a what I would call either a medieval empire 0:09:55.200 --> 0:09:57.920 or a mafia state, where certain assets are of the 0:09:57.960 --> 0:10:02.800 state are controlled by clicks and those who cooperate with 0:10:02.880 --> 0:10:07.800 them do well, and the rest are either eliminated in 0:10:07.960 --> 0:10:13.120 some fashion or they are basically, um invited to leave 0:10:13.120 --> 0:10:15.760 the country. You're allowed to leave a country. So, Richard, 0:10:15.800 --> 0:10:17.320 I want to go back to something you said that 0:10:17.920 --> 0:10:22.080 President Trump was meeting with his quote co conspirator, Uh, 0:10:22.280 --> 0:10:25.480 with respect to what happened during the Russian election. Obviously 0:10:25.520 --> 0:10:27.920 this has not been proven yet. Uh. This is very 0:10:28.000 --> 0:10:31.400 much what Robert Muller is investigating. So we don't know 0:10:31.480 --> 0:10:34.440 that for a fact in any way. UM, But I 0:10:34.480 --> 0:10:36.760 do want to get to something, which is the broader 0:10:36.760 --> 0:10:39.520 political implication of this where you have a hardening of 0:10:39.559 --> 0:10:43.680 people who are anti the president, who are trying to say, look, 0:10:43.720 --> 0:10:45.880 this just shows that he's not fit for office. And 0:10:45.880 --> 0:10:48.120 then you have a supporters coming out and saying, look, 0:10:48.120 --> 0:10:51.120 he's trying to create peace. Uh, you don't have anything 0:10:51.240 --> 0:10:54.560 on him yet. At some point this will come to 0:10:54.640 --> 0:10:58.360 a head. The sides are getting increasingly angry and agitated, 0:10:58.400 --> 0:11:00.600 and I'm trying to figure out, you know, what's the 0:11:00.760 --> 0:11:04.400 risk that we have some kind of dnue mall that 0:11:04.520 --> 0:11:09.400 is somewhat damaging on many levels here. Well, look, first, 0:11:09.640 --> 0:11:14.000 you know, I make that statement regarding co conspiracy because 0:11:14.000 --> 0:11:16.120 I think one we saw some of that playing out 0:11:16.520 --> 0:11:19.400 in the summit itself. I also think there is plenty 0:11:19.400 --> 0:11:21.880 of evidence of that in emails and other communications that 0:11:21.880 --> 0:11:23.840 took place during the campaign, as well as in the 0:11:23.840 --> 0:11:26.280 indictments that we've seen. I think it's going to be 0:11:26.320 --> 0:11:30.640 extremely difficult for Trump and his supporters to contend that 0:11:30.720 --> 0:11:32.840 he was not at the very least of where and 0:11:32.960 --> 0:11:37.320 receiving support and conjunction with the campaign and cooperating with that. 0:11:38.320 --> 0:11:40.240 But look, of course we're gonna wait for the Muller 0:11:40.280 --> 0:11:43.839 indictments to come down and We'll see how all those 0:11:43.880 --> 0:11:45.679 play out and what all the details are. But I've 0:11:45.679 --> 0:11:48.880 certainly seen enough and have lived a life involved with 0:11:48.960 --> 0:11:51.480 Russia to know what this is about at this stage. 0:11:51.480 --> 0:11:54.040 And I see the conduct of our president and giving 0:11:54.120 --> 0:11:58.520 up critical US positions and also undermining our country and 0:11:58.559 --> 0:12:01.880 our alliances, all all serving as I see, at the 0:12:01.920 --> 0:12:05.559 interests only of Russia in this um So where does 0:12:05.559 --> 0:12:09.439 this play out look? There will always be people who 0:12:09.800 --> 0:12:12.840 will pay attention only to the tweets from this president 0:12:13.360 --> 0:12:16.960 and will take his side. UH. The Russians are also 0:12:17.120 --> 0:12:20.760 very effective at building additional support, whether it's through the 0:12:20.880 --> 0:12:24.400 n r A, religious organizations are the groups to support 0:12:24.480 --> 0:12:27.560 this president. I am very concerned that at the end 0:12:27.600 --> 0:12:30.839 of the day, regardless of what happens, he is going 0:12:30.880 --> 0:12:33.200 to take things right to the line in terms of 0:12:33.280 --> 0:12:36.920 undermining our institutions, as long as he doesn't cross over 0:12:36.960 --> 0:12:39.920 it to the point where he's obviously acting in a 0:12:39.960 --> 0:12:42.400 traitor of his fashion. That's what happened at the summit, 0:12:42.440 --> 0:12:46.560 where he was pushing and pushing, trying to appease and 0:12:46.720 --> 0:12:50.280 UH and please the Russians and protect himself by doing that. 0:12:50.760 --> 0:12:53.400 But he got the backlash and realized that, Boy, I've 0:12:53.440 --> 0:12:56.240 gone over the line now and my base is starting 0:12:56.240 --> 0:12:58.800 to see who I really am, what I'm really about. 0:12:59.320 --> 0:13:01.120 So I think it the end of the day, Uh, 0:13:01.559 --> 0:13:04.320 we will probably find ourselves in a position where we 0:13:04.400 --> 0:13:08.319 have strong indictments coming down and we're at that point 0:13:08.360 --> 0:13:11.760 going to face I think some real issues about the 0:13:11.840 --> 0:13:15.079 strength of our of our institutions in dealing with the President, 0:13:15.120 --> 0:13:17.920 who I do not think, Uh, we'll hold back and 0:13:17.960 --> 0:13:21.199 doing anything you possibly can to maintain power. Do you 0:13:21.240 --> 0:13:26.520 have any comments on the idea that their Germans are 0:13:26.559 --> 0:13:32.079 held captive by the new pipeline, the North Stream to 0:13:32.240 --> 0:13:37.160 pipeline that would bring natural gas to Germany from Russia 0:13:37.200 --> 0:13:39.880 that the President alluded to. I do have a view 0:13:39.880 --> 0:13:43.960 on that. In my experience, Andrew Merkel and her team 0:13:44.040 --> 0:13:48.679 have integrity and ethics, and I think that they understand 0:13:48.720 --> 0:13:51.520 that although they have to have dealings with Russia, that 0:13:51.520 --> 0:13:54.440 that does not mean that they need to give up 0:13:54.480 --> 0:13:58.360 their ethical framework in terms of how they deal with Russia. Uh. 0:13:58.480 --> 0:14:02.079 Having said that, I understand and that UH, certainly the 0:14:02.480 --> 0:14:05.920 creating alternatives to the pipeline, you know, it might be 0:14:05.960 --> 0:14:09.320 a good idea in terms of diminishing Russia's influence. But 0:14:09.400 --> 0:14:12.240 that's just a again more of a business type of issue. 0:14:12.280 --> 0:14:16.120 I'm not worried about that German leadership becoming like like 0:14:16.360 --> 0:14:20.200 our current leadership. Richard thirty seconds. Russia's horde of US 0:14:20.240 --> 0:14:24.040 treasuries plummeted in two months, ended in the end of May. Uh. 0:14:24.080 --> 0:14:27.960 Do you know why I wouldn't. I wouldn't say that. 0:14:28.000 --> 0:14:31.120 I know why. I have my suspicions why I think 0:14:31.160 --> 0:14:33.520 that there is concerned that there's going to be a 0:14:33.600 --> 0:14:39.080 greater round of sanctions against Russia. I think that, Uh, 0:14:39.120 --> 0:14:42.400 there's a point at which Putin and Trump and those 0:14:42.440 --> 0:14:46.320 around Trump are are overplaying their hand and they have 0:14:46.440 --> 0:14:48.440 to expect to backlash. And we saw some of that 0:14:48.480 --> 0:14:52.560 backlash after the summit. Richard Khn. We could go on 0:14:52.880 --> 0:14:55.840 four hours, Richard con managing partner of eur Asia Advisors, 0:14:56.280 --> 0:14:59.520 joining us on the fallout from the Russia U S 0:14:59.520 --> 0:15:18.840 summit by President Trump and President of Vladimir Putin in 0:15:18.880 --> 0:15:23.760 focus today very much the Chinese un It's been falling dramatically. 0:15:23.760 --> 0:15:28.240 Today's fall is accelerating against the dollar now at the lowest, 0:15:28.280 --> 0:15:31.640 the weakest versus the green back in about a year. 0:15:31.720 --> 0:15:33.880 Joining US now is win Thin Global Head of Emerging 0:15:33.880 --> 0:15:36.560 Markets ffx UH and when we're so glad that you 0:15:36.560 --> 0:15:39.760 could join us. This is really an important story for today. 0:15:39.840 --> 0:15:44.920 How concerned should investors be about this decline? And frame 0:15:44.920 --> 0:15:46.840 it for us? Is this a is this a tool 0:15:46.880 --> 0:15:50.240 in the trade war? Is this? Uh? Something more significant 0:15:50.280 --> 0:15:53.040 about a slowdown in the Chinese economy and easing to 0:15:53.080 --> 0:15:57.280 respond to it? Well, first all, thanks for having It's 0:15:57.280 --> 0:16:00.200 always a pleasure. Um. There's lots of lots of of 0:16:00.480 --> 0:16:03.560 factors rolling the markets right now. But I'm gonna try 0:16:03.560 --> 0:16:05.440 and be the sort of voice of reason and say, look, 0:16:06.080 --> 0:16:08.320 there a lot of things to worry about, but Chinese 0:16:08.360 --> 0:16:10.520 evaluations is simply just not one of the major things 0:16:10.560 --> 0:16:14.280 we should be worried about. Um. Why is that? Well? Look, um, 0:16:14.360 --> 0:16:16.800 if the longest time over the year's last several years, 0:16:16.800 --> 0:16:20.320 not decades, the US UH I m F also the 0:16:20.320 --> 0:16:23.600 Western powers of press China to give a greater market 0:16:23.680 --> 0:16:26.720 role to the exchange rate and lo and behold that's 0:16:26.720 --> 0:16:29.840 what we're seeing. If you look at the UM You're 0:16:30.080 --> 0:16:32.000 wonderful w c RS page. If you look over the 0:16:32.040 --> 0:16:35.720 last twelve months, UM, the Chinese want is actually one 0:16:35.720 --> 0:16:38.200 of the better uh, performing EM currencies. So if you 0:16:38.200 --> 0:16:40.520 look at year to date, it's smacked in the middle 0:16:40.520 --> 0:16:43.720 of the impact, down four percent year to date. My 0:16:43.880 --> 0:16:46.480 view and as and as this for a long time, 0:16:46.560 --> 0:16:49.040 is that that the recent weakness and you want to 0:16:49.120 --> 0:16:53.160 simply reflecting a broad based dollar rally, EM sell off, 0:16:53.240 --> 0:16:55.520 it's it's really trading with the rest of EM and 0:16:55.560 --> 0:16:57.280 I think that's the sort of what we should be saying. 0:16:57.280 --> 0:17:01.840 It's it's more market based, uh more UM being driven 0:17:01.880 --> 0:17:05.320 by by global factors. Could you speak a little bit 0:17:05.440 --> 0:17:09.560 about the shadow banking system that exists in China and 0:17:09.640 --> 0:17:12.480 the efforts on the part of the Chinese government to 0:17:12.560 --> 0:17:17.080 try to spur economic growth, specifically among small and medium 0:17:17.200 --> 0:17:21.720 sized businesses. Yeah, you know, listen, this is you know, 0:17:21.880 --> 0:17:23.840 we have seen this kind of going back and forth 0:17:23.880 --> 0:17:26.159 for the last several years. So you know, look, we 0:17:26.200 --> 0:17:30.520 know I mentioned the factors going on. China's particulous juggling 0:17:30.520 --> 0:17:33.760 a lot of balls. Uh. They're trying to deal with 0:17:33.800 --> 0:17:37.560 the slowdown and economy as well as sort of stresses 0:17:37.600 --> 0:17:39.240 in the financial sector, and they've been trying to de 0:17:39.359 --> 0:17:42.000 leverage the last several quarters. The time that we always 0:17:42.000 --> 0:17:45.280 see is when they try and deleverage loan. Behold the 0:17:45.520 --> 0:17:48.440 constats weekend, they get nervous and they start pushing UH 0:17:48.760 --> 0:17:51.800 loan growth up again. So it's sort of like two 0:17:51.840 --> 0:17:54.880 steps forward, one step back my bottom lines. I think 0:17:54.920 --> 0:17:56.760 that you know, it's it's a sort of black box. 0:17:56.800 --> 0:18:00.359 The financial system is understressed. We've had just had a 0:18:00.480 --> 0:18:03.919 huge I think the fault UM one of the Chinese issuers. 0:18:03.960 --> 0:18:06.320 I think you guys carry that story overnight. Right Well, 0:18:06.520 --> 0:18:09.879 they're they're like twenty they've been twenty corporate bond the 0:18:09.880 --> 0:18:13.639 faults so far in the No. I mean interestingly, I 0:18:13.680 --> 0:18:15.159 think we want to see that cost EM. You know, 0:18:15.200 --> 0:18:17.280 it's not just China, you know, EM and Channel took 0:18:17.320 --> 0:18:20.840 advantage of low barring cost globally. They issued debt like 0:18:20.880 --> 0:18:23.400 there's no tomorrow and now sort of the it's time 0:18:23.440 --> 0:18:26.880 to pay the piper. So, Um, do I think there's 0:18:26.880 --> 0:18:29.280 gonna be a systemic problem. No. I think that the 0:18:29.320 --> 0:18:31.960 system is in stresses, But I don't see something sort 0:18:32.000 --> 0:18:34.760 of huge sort of uh leave a moment for for 0:18:34.800 --> 0:18:37.560 the China or for for the global economy. Um, when 0:18:37.600 --> 0:18:40.560 I understand what you're saying with respect to China being 0:18:40.800 --> 0:18:42.880 sort of lumped in with the rest of emerging markets, 0:18:42.880 --> 0:18:44.440 and that its currency is actually one of the better 0:18:44.440 --> 0:18:50.679 performers against developed marker competitors, or basically appears. But what 0:18:50.760 --> 0:18:54.640 I'm struggling with is China is the world's second biggest economy. 0:18:54.880 --> 0:18:58.280 It can't really be lumped in with much lesser economies 0:18:58.320 --> 0:19:01.000 based on how significant it is for the world economy. 0:19:01.000 --> 0:19:03.880 And meanwhile, you have the trade war or at least 0:19:03.880 --> 0:19:06.960 the threat of an escalating trade or with the US, 0:19:07.200 --> 0:19:11.480 and China is uh easing policies. It's sort of backtracking 0:19:11.520 --> 0:19:13.480 on some of the tightening that had done based on 0:19:13.520 --> 0:19:15.560 what you were talking about and pain was talking about. 0:19:15.800 --> 0:19:18.400 I guess what I'm trying to understand is because as 0:19:18.440 --> 0:19:21.680 you were saying, China such a black box. Could this 0:19:21.920 --> 0:19:25.200 be that China's economy is slowing much more than official 0:19:25.280 --> 0:19:27.560 data are letting on and they feel the need to 0:19:27.560 --> 0:19:31.720 reverse policy now to counter that, Well, you know, we 0:19:31.800 --> 0:19:33.440 go back to the age old debate. But how reliable 0:19:33.440 --> 0:19:35.560 are there Chinese data? And something I've always looked at 0:19:35.680 --> 0:19:39.000 as more qualitative assessment. Look, we know, maybe it's not 0:19:39.040 --> 0:19:42.000 really growing tacks and um, but we can't sort of 0:19:42.400 --> 0:19:44.359 use benchmarks as well it's it's a little bit slower 0:19:44.359 --> 0:19:47.000 than was a year ago, you know, and so comparedive 0:19:47.160 --> 0:19:51.959 of uh matters now you know to me, um, and 0:19:52.000 --> 0:19:54.440 you're right that because it's such a large economy, it 0:19:54.440 --> 0:19:56.200 does take a special place in that sense. It makes 0:19:56.200 --> 0:19:58.080 me believe that they will not do anything that's going 0:19:58.080 --> 0:20:00.840 to upset or the royal markets. You know, we saw 0:20:00.840 --> 0:20:04.000 that back in the talks fifteen they devalued and uh, 0:20:04.119 --> 0:20:07.200 not only the domestic investors flee and we had to 0:20:07.280 --> 0:20:09.159 you know, had cap ouphas out of China, but you know, 0:20:09.760 --> 0:20:13.320 the developed markets emerge, other emerging marketstop markets really felt 0:20:13.359 --> 0:20:16.440 the pain. And I think China doesn't want to go 0:20:16.480 --> 0:20:18.080 down that path again. You know, they've seen that it's 0:20:18.080 --> 0:20:22.119 a very dangerous path to go through again. They're already, um, 0:20:22.160 --> 0:20:24.320 you know, dealing with all sorts of different stresses in 0:20:24.359 --> 0:20:26.680 the economy. I think some sort of currency crisis is 0:20:27.000 --> 0:20:28.320 sort of the last thing they want to deal with 0:20:28.400 --> 0:20:32.040 right now. So again, I don't see the human lines 0:20:32.080 --> 0:20:33.800 out of line, out of you know, sort of out 0:20:33.840 --> 0:20:36.600 of line with the moves of the rest of the world. Um. 0:20:36.640 --> 0:20:39.520 I think they will continue to manage the currency. Remember, 0:20:39.560 --> 0:20:42.240 it's not a floating currency. It's managed currency, but they'll 0:20:42.280 --> 0:20:44.439 manage it within these parameters and that will they'll prevent 0:20:44.520 --> 0:20:47.720 any sort of mass hysterical move of some sort. And 0:20:47.800 --> 0:20:50.919 in global markets, can you do Turkey and twenty seconds 0:20:51.000 --> 0:20:55.560 or less? H yes, I would stay stay away. Um. 0:20:55.600 --> 0:20:58.320 You know we had Urdwan when he was VICTI, but 0:20:58.359 --> 0:21:00.000 he put his soun in law in charge of the treasury. 0:21:00.000 --> 0:21:03.800 In finance industry, E clipped the central bank independence. So 0:21:03.840 --> 0:21:05.840 it's going down to pastoral, which I think is bad. 0:21:06.320 --> 0:21:10.040 Next week we're very tunneling. Central bank meets inflation jumped 0:21:10.119 --> 0:21:11.680 up in June. They need to hike at least a 0:21:11.720 --> 0:21:13.800 hundred fifty basis points. Let's see if they do it 0:21:13.800 --> 0:21:15.439 and they don't, I think we go back up. We 0:21:15.680 --> 0:21:19.480 take dollar you want to dollar era above five? He 0:21:19.560 --> 0:21:22.760 did it. Win Thin, Global Head of Emerging Markets FX 0:21:23.160 --> 0:21:26.800 speaking to us about the Chinese yuan and the Turkish lira. 0:21:27.320 --> 0:21:43.879 He's with Brown Brothers Harriman the Future of healthcare and 0:21:43.960 --> 0:21:47.359 healthcare costs. Joining us now is Susan Duvore, the chief 0:21:47.400 --> 0:21:51.560 executive of Premier Inc. They are based in Charlotte, North Carolina. 0:21:51.640 --> 0:21:54.480 Susan joins us here in our eleven three, Oh studios. 0:21:54.720 --> 0:21:58.439 Thank you very much for being here. Before we begin 0:21:58.640 --> 0:22:01.000 in this sort of general content next of what's happening 0:22:01.000 --> 0:22:04.280 with healthcare and healthcare pricing. Could you just offer an 0:22:04.280 --> 0:22:07.000 example of some of the work that you're doing, and 0:22:07.040 --> 0:22:11.480 I'm thinking most recently maybe of the Physician Enterprise Collaborative 0:22:12.200 --> 0:22:16.160 and how Premiere works with healthcare providers, because I think 0:22:16.200 --> 0:22:21.040 it's more than thirty eight hundred hospitals around the country. Yeah, 0:22:21.080 --> 0:22:24.560 so Premiere works with plus and a hundred fifty other 0:22:24.600 --> 0:22:27.800 providers like doctors, nursing home, surgery centers, this kind of thing. 0:22:28.280 --> 0:22:32.320 Think about us as a national network of providers, the 0:22:32.480 --> 0:22:36.760 people delivering healthcare to patients um and we are in 0:22:36.880 --> 0:22:41.040 infrastructure to help them lower their costs, improve their quality, 0:22:41.080 --> 0:22:45.160 improve their safety, improve their outcomes. And so in the 0:22:45.240 --> 0:22:49.800 pharma world, for example, we aggregate their buying of drugs, 0:22:49.880 --> 0:22:54.679 We create competitive friction between suppliers, and the inflation in 0:22:54.800 --> 0:22:57.600