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Speaker 1: This is the Bloomberg Surveillance Podcast.

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Speaker 2: I'm Tom Keene, along with Jonathan Farroh and Lisa Abramowitz.

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Speaker 2: Join us each day for insight from the best an economics, geopolitics,

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Speaker 2: finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple,

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Speaker 2: Spotify and anywhere you get your podcasts, and always on

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Speaker 2: Bloomberg dot Com, the Bloomberg Terminal and the Bloomberg Business App.

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Speaker 3: Mohammed al aerin Oft, Bloomberg Opinion and Queen's College, Cambridge,

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Speaker 3: amongst many other things as well.

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Speaker 4: Mohammick, good morning, good morning, Thank you for having me.

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Speaker 3: Thanks for being with a Central Bank triple header next week.

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Speaker 3: What are you focused on at those three decisions?

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Speaker 4: So all three are going to hike by twenty five

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Speaker 4: basis points, but that's where the communality will end. I

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Speaker 4: think the FED will come across as dubvish, the Bank

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Speaker 4: of England will still be quite hawkish, and the ECB

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Speaker 4: will be in the middle in terms of their forward

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Speaker 4: politic guidance.

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Speaker 3: And donal motor comt is a question we keep laming

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Speaker 3: going where are you on that now?

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Speaker 4: So the framing matters. If I go to your framing,

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Speaker 4: which is to adopt the excessive data dependency, which is

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Speaker 4: where the FED is today, and if I stick to

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Speaker 4: a two percent inflation target, then they will keep open

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Speaker 4: the possibility of a September hike. If I go to

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Speaker 4: a different framing, which is a much longer term framing

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Speaker 4: that looks at how the US economy functions, then it

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Speaker 4: should be one and done. The trouble is that we

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Speaker 4: have all been pushed into this very short term framing

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Speaker 4: where it's almost absurd that we talk about data dependency

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Speaker 4: with policies that act with a long and variable lag.

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Speaker 4: But that's where we are.

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Speaker 2: We're long and variable lag. But what we really are

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Speaker 2: is trying to measure some form of algebraic plugins that

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Speaker 2: lead us to a phrase restrictive or dominant constanmate Missuo says,

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Speaker 2: super restrictive?

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Speaker 1: Are we super restrictive? Right now?

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Speaker 4: We are restrictive. We're not super restrictive, but we are restrictive.

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Speaker 4: But tom it brings you back over and over again

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Speaker 4: to a question that hardly anybody wants to talk about

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Speaker 4: for understandable reasons, which is what is the right inflation

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Speaker 4: target for the world we're living in today? For a

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Speaker 4: world that I believe is a world of deficient aggregate supply,

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Speaker 4: not a world of deficient aggregate demand where we had been.

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Speaker 4: So that's where it comes down to, ultimately, do you

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Speaker 4: want to talk about that issue or do you want

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Speaker 4: to push it back as long as you can? And

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Speaker 4: I think Central Bank is for understandable reason, because they've

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Speaker 4: been missing that target for so long, don't want to

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Speaker 4: talk about this now.

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Speaker 2: Does that mean in our analysis we can't aggregate in

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Speaker 2: that each society, each nation has to disaggregate into the halves,

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Speaker 2: and they have nots.

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Speaker 4: So there are two aspects here. First, it doesn't make

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Speaker 4: sense for so many countries to follow the same inflation target.

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Speaker 4: It's as if I declare to everybody in this building,

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Speaker 4: you should have the same weight target. We are different

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Speaker 4: looking at me, these countries differ fundamentally.

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Speaker 1: Intrust the Egyptian humor there.

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Speaker 3: Started now seriously, Mahammed, carry on if you can.

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Speaker 1: I thought bage was slimming.

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Speaker 4: But the second issue, you and John, that's something about

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Speaker 4: your base suit that John wants to pick on. But

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Speaker 4: I'm not going to. I'm not going down.

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Speaker 3: Mamma said anything about these suits whole morning.

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Speaker 4: I know that's royalty. Thank you, And and you said

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Speaker 4: earlier we deep into the summer somehow was on deep?

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Speaker 2: Did you see he made with the rent increases in London?

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Speaker 2: His Royal Highness has had a thirty four million dollar

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Speaker 2: pop in his real estate properties.

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Speaker 1: Did you see that?

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Speaker 4: You expect if you want to see what inflation is,

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Speaker 4: We're gonna rip up.

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Speaker 2: We're gonna stop the show right now. This is very cool.

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Speaker 2: You're doing all your fancy finance stuff. You go over

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Speaker 2: and put a shingle out at a university and the Queen,

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Speaker 2: her Majesty showed up to greet you at Queen's College.

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Speaker 1: What was that like?

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Speaker 4: It was incredible. She she we were honored to have

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Speaker 4: her as our patroness and she was absolutely wonderful.

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Speaker 3: You mentioned if you want to experience inflation out of

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Speaker 3: the UK, describe it for people. What's it like right

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Speaker 3: now in the UK?

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Speaker 4: So, food inflation at seventeen percent, Labor understandably pushing back hard.

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Speaker 4: So right now the senior doctors aren't strike. We've had

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Speaker 4: a tube strike called off. We've had trained strikes, we've

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Speaker 4: had nurses strikes, we've had teacher strikes. You feel the

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Speaker 4: real weight resistance and you feel the government in the

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Speaker 4: Bank of England torn between on the one hand accommodating

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Speaker 4: the price weight spiral, which they don't want to do,

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Speaker 4: and on the other hand understanding the distributional impact of

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Speaker 4: what has been a huge inflation shock.

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Speaker 3: So we can't just have a different inflation target for

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Speaker 3: a different country every year. That's going to be chaos.

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Speaker 3: But based on the structure of the UK economy right

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Speaker 3: now and the way you see the United States, what

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Speaker 3: with those inflation targets look like if you could change

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Speaker 3: them right now, if Mohammad had all the pound you

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Speaker 3: wrote down those targets, now, what would they be.

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Speaker 4: So first of all, no one ever talks about changing

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Speaker 4: an inflation target every year. That will be absurd. You

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Speaker 4: might as well not have one, sure, But the question is,

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Speaker 4: if you look forward for the next five to ten years,

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Speaker 4: where's the right inflation target? And I suspect that the

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Speaker 4: right inflation target is much nearer to three percent than

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Speaker 4: it is to two percent. Now that may not sound

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Speaker 4: like a big difference, but it actually is a big

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Speaker 4: difference over.

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Speaker 3: Time in the States, and what about the UK?

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Speaker 4: And in the UK as well. Europe is the only

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Speaker 4: one where two percent still makes sense. And Japan, which

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Speaker 4: is an interesting one that we don't talk about enough

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Speaker 4: because they have a major exit coming up which they

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Speaker 4: are denying for now, the exit from Yelkurve control there.

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Speaker 4: It's probably also two percent.

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Speaker 2: So in gentlemen, he talked about this the former Italian

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Speaker 2: Prime minister in Europe as well. I'm going to keep

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Speaker 2: Europe away from it right now, because I think our

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Speaker 2: audience really wants to understand your debate on our start.

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Speaker 2: John Williams reframes to a lower our start. Ian Lingoln

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Speaker 2: of BEMO Capital Markets.

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Speaker 1: Agrees with that.

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Speaker 2: Others agree with that we're going to step at us.

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Speaker 2: I'm hearing from you. You brilliantly called higher interest rates

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Speaker 2: to come. Do you see in our star that sets

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Speaker 2: above where President Williams is or can it even be higher?

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Speaker 2: Roguof suggesting even out to a higher new set for

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Speaker 2: our start.

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Speaker 4: Yeah, I mean it's a fascinating debate if you're an economist.

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Speaker 4: You mentioned Ken Rogoff, I've mentioned Larry Summers, I'd mentioned

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Speaker 4: Olivier Blanchard. I mean, a very active debate among people

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Speaker 4: who basically come from the same camp, and they're having

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Speaker 4: this debate I'm more on the our star is higher

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Speaker 4: than it has been in the past, so more on

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Speaker 4: the Ken Rogoff Larry Summers end of the debate.

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Speaker 2: I mean, I look at it as you spent too

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Speaker 2: much time out in California, and you may actually understand

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Speaker 2: other factors. As Professor Blunchard talks about. This is not

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Speaker 2: some neat economic surveillance Babbel, folks. There's a lot of

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Speaker 2: other factors here, and one of them is a technological impulse.

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Speaker 2: Over five ten years, do we completely underestimate technology is

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Speaker 2: out relays or on our financial system?

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Speaker 4: So here we could have a five hour discussion.

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Speaker 1: We're doing that. You're here at eleven am.

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Speaker 4: Okay, think of technology that we're going through, the innovations

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Speaker 4: doing this the following. If you think of whatever distribution

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Speaker 4: you thought of future growth and future productivity, some of

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Speaker 4: these technological innovations in science and AI move the distribution

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Speaker 4: to the right. That's good, but fatten details enormously, and

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Speaker 4: it is how do you manage those father tails that's

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Speaker 4: coming in in this discussion.

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Speaker 3: I wanted to pick up on something you said earlier

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Speaker 3: in the conversation. That's a big difference between two and

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Speaker 3: three percent. It's a lot of people listening thinking, what

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Speaker 3: are you talking about. There's not much difference between two

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Speaker 3: and three percent, so why is the difference so large?

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Speaker 4: Compounding makes a huge difference over time, and it's what

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Speaker 4: you target to. My big worry, and you know this,

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Speaker 4: is that if the FED focuses on two percent in

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Speaker 4: a relatively rapid timeframe, we will end up in a recession.

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Speaker 4: And I keep on repeating. You've heard me say this

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Speaker 4: for the last year. There's no reason for your economy

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Speaker 4: to fall into recession. The endigenous elements of this economy

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Speaker 4: are strong enough to power through this period. So the

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Speaker 4: big risk is that we follow the wrong inflation target

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Speaker 4: and end up dipping this economy into recession. And it

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Speaker 4: matters because you have the vulnerable segments of the population

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Speaker 4: that have already seen that purchasing power eroded. Now you're

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Speaker 4: going to add income and security to that. And that's

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Speaker 4: why I think.

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Speaker 1: You know, it's great here.

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Speaker 2: I thought Elarian showed up just to see us.

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Speaker 3: You know what's pass Jersey.

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Speaker 2: He's here for the sold out jets, you know, pre

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Speaker 2: training summer camps that pick up as rogers. Look at

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Speaker 2: this summer head, John that he's going to pick up here.

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Speaker 2: I mean, you know, the bucket that's more than a bucket.

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Speaker 1: That's like a Wimbledon that is more than a bucket.

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Speaker 3: It's like fancy.

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Speaker 1: I cann't afford that.

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Speaker 4: It's fancy, you know, So tell me, Tom, do you

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Speaker 4: buy into this is the season the Jets make it

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Speaker 4: to the playoffs, deep into the playoffs.

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Speaker 2: I say they make it in deep to the playoffs

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Speaker 2: because we underestimated name of when he showed up, and

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Speaker 2: you know, Aaron Rodgers is going to get a second

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Speaker 2: you know, life here and all that. I'm actually pretty constructive.

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Speaker 3: On you're a Jets fan this year? Is that on

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Speaker 3: the record.

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Speaker 1: No, I don't want to go that far. I'm a

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Speaker 1: Tots fan. I mean that's enough.

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Speaker 3: Pain, different sport.

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Speaker 4: Do you have a Jets bow tie? No?

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Speaker 1: I do not have a Don't you dare? Don't you

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Speaker 1: I got in Atlanta Braves, I got aware.

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Speaker 4: Now I know what I'm going to get you.

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Speaker 1: Oh you're killing me?

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Speaker 3: Is there going to bring us any much?

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Speaker 1: I hope?

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Speaker 2: So we find that as I'm with Neil Millington at

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Speaker 2: the Lanesboro Hotel and he's just Tom, this is a

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Speaker 2: once in a lifetime opportunity.

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Speaker 3: MAM's going to stick with us in place to say.

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Speaker 1: We're going to dive into this right now.

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Speaker 2: And for Global Wall Street and a Friday, we're distracted

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Speaker 2: by the silliness of Barbie or this, that and the

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Speaker 2: other thing.

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Speaker 1: Well, guess what.

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Speaker 2: There are serious themes ahead and they are by definition complex.

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Speaker 2: Joining us now out of Columbia his work for years

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Speaker 2: at Brown Brothers harrim and his doctor Wyn thin Head

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Speaker 2: a currency strategy on Japan. When I need a clinic

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Speaker 2: right now, we'd go to Robbie Feldman at Morgan Stanley

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Speaker 2: or you at Brown Brothers Harriman.

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Speaker 1: About what they have wrought in Japan.

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Speaker 2: Was it a cultural decision in Japan to rip up

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Speaker 2: the textbooks you studied at Columbia? Was it a cultural

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Speaker 2: decision to impute an inflation into the system.

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Speaker 5: Well, Hi, Tom and Jonathan, thanks again for having me.

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Speaker 5: I don't know if it's culture as more just of

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Speaker 5: pure pragmatism. I remember Japan has been fighting deflation for decades,

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Speaker 5: and I think they're really quite gunshy about removing accommodation.

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Speaker 5: I think Marcus kind of got ahead of themselves about

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Speaker 5: either a tweak and Yielker control or eventual lift off.

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Speaker 6: It's clear from the Bank.

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Speaker 5: Of Japan comments and from police making Japan that are very,

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Speaker 5: very concerned.

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Speaker 6: The numbers are starting to turn over right now, not.

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Speaker 5: Only domestically, but obviously you know, globally, and so they

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Speaker 5: are really really reluctant, and so I think that's the

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Speaker 5: signal that's coming. Of course, Look, they can surprise us

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Speaker 5: next week. They love to surprise us, but this is

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Speaker 5: not a time for surprises to me, I mean, I

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Speaker 5: think there's so much going on, Tom, to your point, this

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Speaker 5: is a really crucial quarter or maybe half a year

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Speaker 5: for global markets right now.

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Speaker 2: On an algebraic process, there has to be constraints on

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Speaker 2: whatever the variable is, whatever the process is, whatever the

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Speaker 2: derivative is within the function. To me, the constraint is

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Speaker 2: they want to own the bonds, but they can't become

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Speaker 2: the bond market. Is the Japanese government become the bond market.

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Speaker 2: The ownership of the bonds is by the government and

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Speaker 2: with the government.

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Speaker 1: Where the algebra doesn't work anymore.

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Speaker 6: Tom, I have to be honest.

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Speaker 5: I get anytime, like a young economists are doing analyst,

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Speaker 5: ask me about what's going on Japan.

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Speaker 6: I really start get a headache because it's hard to explain.

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Speaker 5: Yes, the Bank Japan owns about half of jgb's in

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Speaker 5: the market, and it's just it's just on something.

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Speaker 6: It's hard to explain, right, I mean, you don't see

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Speaker 6: that anywhere else. And I think the big.

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Speaker 5: Difference is that Japan's the nation of savers, not to

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Speaker 5: depend on foreign savings. So it's sort of this almost

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Speaker 5: like a little domestic, little bubble of an experiment that

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Speaker 5: that's so far is working. But again, I think they're

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Speaker 5: very very worried about how to get out of this.

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Speaker 6: They've been stuck in.

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Speaker 5: This mode buying and easing for so long that I

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Speaker 5: think it's very very scared.

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Speaker 2: Must precisely the point they want to do an action,

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Speaker 2: which is to get out of it.

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Speaker 1: And they have this massive constraint that they own the

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Speaker 1: bomb mark.

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Speaker 3: They dominates it that anyone else does. When the problem, though,

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Speaker 3: I think that you could get, is the kind of

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Speaker 3: spillover effects from anything they do, say to the European

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Speaker 3: bond market, to treasuries. When how would that work? What

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Speaker 3: would the dynamic be? Would it be Japanese investors coming

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Speaker 3: back home again? How would you think that would work.

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Speaker 5: Yeah, John, I think there's quite a few channels, but

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Speaker 5: the main thing would be obviously, if they abandoned Yulker control,

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Speaker 5: JDB yields would would most likely shoot up, and you

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Speaker 5: would have a spill effect of I think, pushing up

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Speaker 5: US treasury yields and German Bund yields, et cetera. You know,

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Speaker 5: they've been again the outliers Rankapans the sole outler, every

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Speaker 5: other brank is h aggressively and it's the third biggest

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Speaker 5: economy in the world, So it's to me it's there.

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Speaker 5: There's just a very potential negative spillover to bond markets. Now,

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Speaker 5: in terms of currency markets, we would see the opposite.

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Speaker 5: We would see the dollar in most likely knee jerk

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Speaker 5: go down if there's any sort of removal accommodation. Again,

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Speaker 5: that would have spillover effects on the regional economies. Again,

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Speaker 5: this is such a crucial time for global markets, especially Japan.

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Speaker 5: I really think that caution is sort of the watch

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Speaker 5: road right now. I don't think they're going to surprise anyone.

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Speaker 5: I don't think they can take any kind of drastic action.

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Speaker 5: That said, again, they love to surprise us, so we'll

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Speaker 5: know more A week from now.

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Speaker 3: We're going to find out in a week when I

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Speaker 3: want to finish on Europe. In the experience we had there,

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Speaker 3: for many people, including myself, I had my dubts about

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Speaker 3: the ability of the ac B to high interest rates,

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Speaker 3: to back away from QA. Given developments over the last

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Speaker 3: ten years in places like Italy, Spain, Portugal, Greece, they've

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Speaker 3: been somewhat successful taken away that stimulus and not seeing

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Speaker 3: big accidents to develop in the European bond market. Do

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Speaker 3: you think Japan can take that as an example where

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Speaker 3: you could find some success. You can get that handoff

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Speaker 3: away from central banks owning everything and then handing it

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Speaker 3: back off.

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Speaker 6: Well two things.

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Speaker 5: I think Japan is such an extreme example. But yes,

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Speaker 5: I think there is some hope that they can manage this.

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Speaker 5: But again I think the best time to have done

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Speaker 5: this when markets were doing okay. You know, in a sense,

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Speaker 5: I think the Bank Japan was a little bit too

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Speaker 5: late by wading so long. The other thing I would

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Speaker 5: say about the Germans that there are even some cracks there.

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Speaker 5: You know, you've probably been covering how noted hawks not

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Speaker 5: and another one just have been backing off about a

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Speaker 5: September hike, And that's the first time I've heard the

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Speaker 5: hawks are really really sort of back off from this

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Speaker 5: really intense tightening cycle. And I think that's because countries

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Speaker 5: are pripheral country like Italy Portugal starting to complain they

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Speaker 5: are seeing cracks form in the Eurozone. I think that's

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Speaker 5: something that's helped the euro sort of top out in

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Speaker 5: recent days.

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Speaker 2: Is a Bundesbank, the Bundesbank we know in I mean,

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Speaker 2: is the bundess Bank the court, the inner court that

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Speaker 2: Martin Feldstein would talk about for years. Are they still

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Speaker 2: interanged in an inflation worry?

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Speaker 6: Yes?

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Speaker 5: Absolutely, And then I just curtained me that mister Nagel,

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Speaker 5: the bundess Bank president, is the other hawk slipped my

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Speaker 5: mind there.

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Speaker 6: He was also one of the ones that crack.

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Speaker 5: So it's interesting, if anything else, that the bundess Bank

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Speaker 5: has gotten I think at least changes rule of people

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Speaker 5: that they realize it's not just all about Germany. There

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Speaker 5: are other countries that have to be sort of within

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Speaker 5: the calculus of the ECB. And I think when the

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Speaker 5: East to We first started, they were still locked into

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Speaker 5: that nineteen eighties nineteen nineties mentality. Uh, And I think

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Speaker 5: they were seeing a subtle shift. Well again, we'll know

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Speaker 5: we're next week. We have the Fed Wednesday, easty b Thursday,

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Speaker 5: Bank Japan Friday. To me, I think what's going to

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Speaker 5: come out of this is that the US dollar, the

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Speaker 5: Fed remains king ECB Banking Tom start to sort of

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Speaker 5: blink perhaps, and I think that we can get a

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Speaker 5: little bit higher in the dollar in the coming weeks.

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Speaker 3: Interesting within thin of Brown Brothers, Harriman Win, thank you sir.

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Speaker 2: Speaking of pain. It has been a difficult week in Ukraine.

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Speaker 2: One of the great voices there is with Adam Posing

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Speaker 2: and Olivia Blanchard at the Peterson Institute. Elena Riberkova not

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Speaker 2: only has encyclopedic understanding of hurt Ukraine, but double barrels

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Speaker 2: it with data science from the University of Virginia, and

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Speaker 2: she follows on in our tradition here to keep Pharaoh happy,

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Speaker 2: we're having University of Warwick July. We have to speak

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Speaker 2: to anybody we can who's got parchment from the University

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Speaker 2: of Warwick. We dragged Skodolski in here on a day

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Speaker 2: by day basis if we could get them. But Elena Riberkova,

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Speaker 2: with economics from Warwick, is the kind of person we

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Speaker 2: wanted to drop.

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Speaker 1: W No, I'm doing that. I've done that.

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Speaker 4: I'm just done it.

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Speaker 1: Just if you're nice to me, I'll made you do this.

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Speaker 3: You can do this. Elena joins us now, Elena Riberkova, Elena,

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Speaker 3: wonderful to have you with us. I want to start

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Speaker 3: with this in the commodity Thank you so much, thank you.

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Speaker 3: It's an honor for us as well. In the commodity market,

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Speaker 3: we're trying to figure around just how how much Russian

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Speaker 3: crewed is still in this market? Can we start there?

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Speaker 3: How much Russian oil is on this market now globally

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Speaker 3: compared to where it was before this.

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Speaker 6: War about the same.

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Speaker 7: You know, I think we had this oil price cap

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Speaker 7: which had dual objective which I'm afraid I have to

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Speaker 7: compare was having a cake and eating it tool a

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Speaker 7: little bit. So we wanted to have the Russian oil

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Speaker 7: on the market, but at the same time lower Russian revenues. Well,

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Speaker 7: we achieved the first objective. Rusian oil is on the

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Speaker 7: market on the lowing over the revenues. That is a

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Speaker 7: bit more nuanced and complicated.

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Speaker 3: Tell me, why just give me the maths around that?

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Speaker 3: Why is that so much more nuance and complicated.

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Speaker 6: Well, we're in Bloomberg.

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Speaker 7: It's economic incentives on Russian side, about ten dollars per

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Speaker 7: barrel for a year means a difference of about twenty

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Speaker 7: billion dollars in revenues for the companies and for the

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Speaker 7: budget as well. So it's a twenty billion dollars incentives

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Speaker 7: to circumvent the oil price cap. They're putting everything that

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Speaker 7: got in it to be able to do so. If

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Speaker 7: we are not the same on our side, of course,

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Speaker 7: there are difficulties. So if we think about the cap,

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Speaker 7: we still have provisions of the G seven shipping and

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Speaker 7: insurance services to Russia and the limitations, and it's a

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Speaker 7: very very small you know, I can put it attestation

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Speaker 7: saying I have seen the contract and I promise to

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Speaker 7: you it is below the cap. Imagine if we we're

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Speaker 7: filing taxes the same way I have seen my income

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Speaker 7: and I promise you it's very low.

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Speaker 1: And that's what we do.

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Speaker 2: Elena, bouncing off your work at City Group on Russia,

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Speaker 2: you've really got an encyclopedic knowledge on this. What would

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Speaker 2: you be your to do list for the Allies and

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Speaker 2: particularly for the White House to make this more strident

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Speaker 2: more forceful with mister Putin.

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Speaker 7: Well, if we wanted to be really ambitious, I would

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Speaker 7: say we go for a run style as pro account,

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Speaker 7: where we say everything has to go through one account,

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Speaker 7: and then it will still have challenges, but at least

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Speaker 7: we'll remove these complications attestations who are shipping where you know, transshipment.

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Speaker 7: I think that will definitely busier. Failing that, we have

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Speaker 7: to tighten the attestation regime. We have to go most seriously.

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Speaker 7: We have to say you have to keep the paperwork.

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Speaker 7: We do risk based audits, and if we find that

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Speaker 7: the company is still shipping Russian well above the cap,

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Speaker 7: we're not saying we stuff your hand and we prevent

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Speaker 7: you from ninety days. We're actually put a proper fine.

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Speaker 2: I mean, Alina, I don't know the details here, but

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Speaker 2: I'm going to assume you summered in Odessa as a child.

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Speaker 2: What is your belief of the fragility of the Black

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Speaker 2: Sea right now? With wheat, with oil, with the new

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Speaker 2: battles there, How fragile is the Black Sea territory this weekend?

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Speaker 7: It's absolute devastation. You know from Ukraine, more than ninety

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Speaker 7: percent of all shipment including grain that we're talking about

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Speaker 7: this weeks went through from.

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Speaker 3: Through the seas.

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Speaker 7: So the four key ports account for ninety percent of

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Speaker 7: Ukrainian exports. Of course, there is no infrastructure to move elsewhere,

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Speaker 7: and this is one of the absolutely key ports. Then

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Speaker 7: the dam that was recently destroyed, you know, that flashed

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Speaker 7: out a lot of you know, a lot of dirt

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Speaker 7: from the ground, you know, a lot of sort of sewage,

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Speaker 7: and it all were and minds actually it all went

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Speaker 7: into the Black Sea. So an absolutely devastated situation, and

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Speaker 7: it will take years for us to move forward. You know,

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Speaker 7: one year of war. I think it's more than five

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Speaker 7: years of demining.

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Speaker 2: I look at the de mining and I guess that

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Speaker 2: comes to the military. And I understand your mandates a

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Speaker 2: bit off the military here, but you do follow the

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Speaker 2: funding of the weapons. We're distracted in America by cluster

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Speaker 2: bombs in their horror. What are you focused on is

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Speaker 2: the next step to provide Ukraine with offense?

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Speaker 7: Well, I think the next step is for us to

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Speaker 7: prevent Russia from getting our own equipment from Intel Texas instruments.

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Speaker 7: Also some of the European companies to assemble that into

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Speaker 7: their military production and use it against Ukraine. So we

440
00:20:57,560 --> 00:21:00,919
Speaker 7: recently put out a study where Ukrainian Defense Ministry this

441
00:21:01,000 --> 00:21:03,840
Speaker 7: attemp both more than sixty items and it's kinjals and

442
00:21:04,160 --> 00:21:06,400
Speaker 7: it's all kinds of pediatary equipment that we all hope

443
00:21:06,440 --> 00:21:08,919
Speaker 7: never to become experts in, but we are so. And

444
00:21:09,000 --> 00:21:11,879
Speaker 7: they found that two thirds of the components in this

445
00:21:12,000 --> 00:21:15,639
Speaker 7: equipment comes from the US headquartered companies. And what we

446
00:21:15,760 --> 00:21:18,520
Speaker 7: also find that Russia continues to import. In fact, the

447
00:21:18,600 --> 00:21:21,159
Speaker 7: levels of the imports are at the same as the

448
00:21:21,200 --> 00:21:23,960
Speaker 7: way before the war. How does that happen when we're

449
00:21:24,000 --> 00:21:26,959
Speaker 7: just for Chairman Yellen talk well, the Head of Treasury

450
00:21:27,040 --> 00:21:30,560
Speaker 7: Yell talk about the sort of the French shoring and

451
00:21:31,000 --> 00:21:35,159
Speaker 7: on shoring. But unfortunately China uses US equipment, US parts,

452
00:21:35,240 --> 00:21:38,320
Speaker 7: produces that and ships it to Russia. Or we have

453
00:21:38,400 --> 00:21:41,600
Speaker 7: countries on shipping, you know, saying maybe Turkyo or Yue

454
00:21:41,800 --> 00:21:44,359
Speaker 7: or others buying it from the US and against shipping

455
00:21:44,359 --> 00:21:46,800
Speaker 7: it to Russia. So unfortunately, on one hand, we're supporting

456
00:21:46,920 --> 00:21:49,880
Speaker 7: Ukraine was everything that we've got. Unfortunately, on the other hand,

457
00:21:49,960 --> 00:21:53,639
Speaker 7: Russia is getting our own equipment to use against Ukraine.

458
00:21:53,960 --> 00:21:56,800
Speaker 3: Chare Yellen, Vice chair Yellen take care I confused that

459
00:21:56,920 --> 00:21:59,880
Speaker 3: for years. My Treasury Secretary Janney Yellen.

460
00:22:00,560 --> 00:22:02,480
Speaker 1: Adam Posen's never done that in his life.

461
00:22:02,560 --> 00:22:05,200
Speaker 3: Elena Ribecadam and nails at every time. The pit Uson

462
00:22:05,240 --> 00:22:08,400
Speaker 3: Institute for International Economics, Lyda, thank you, thanks for bam with.

463
00:22:08,359 --> 00:22:18,040
Speaker 2: This on inflation now and this is the conversation of

464
00:22:18,080 --> 00:22:21,560
Speaker 2: the day on price change in America. He invented it,

465
00:22:21,680 --> 00:22:24,520
Speaker 2: the analysis of it, I should say, with Bob Ferrell

466
00:22:24,600 --> 00:22:27,520
Speaker 2: years ago at Marylanch. David Rosenberg joins us in Toronto.

467
00:22:27,840 --> 00:22:32,600
Speaker 2: He is with Rosenberg Research. David, you slice and dices.

468
00:22:32,640 --> 00:22:35,280
Speaker 2: I want you to speak to Jerome Powell right now.

469
00:22:35,840 --> 00:22:37,640
Speaker 2: Is the deflationary vector?

470
00:22:38,200 --> 00:22:39,119
Speaker 1: Is it in force?

471
00:22:39,400 --> 00:22:44,000
Speaker 2: And will we stay with disinflation into twenty twenty four?

472
00:22:45,280 --> 00:22:48,679
Speaker 8: Well, I think that this inflation trend, tom will be

473
00:22:48,720 --> 00:22:51,720
Speaker 8: the primary trend. We're going to have a bit of

474
00:22:51,720 --> 00:22:54,240
Speaker 8: a bump though, in the next month or two because

475
00:22:55,240 --> 00:22:59,600
Speaker 8: the CRB has taken like an eight percent jump since

476
00:22:59,600 --> 00:23:02,919
Speaker 8: the end of May for the reasons that you folks

477
00:23:02,920 --> 00:23:06,119
Speaker 8: were talking about. And the question is you know how

478
00:23:06,160 --> 00:23:08,480
Speaker 8: the Fed's going to treat that and whether it's going

479
00:23:08,520 --> 00:23:11,480
Speaker 8: to be temporary or permanent. This run up we've had

480
00:23:11,960 --> 00:23:17,000
Speaker 8: really across food prices in the commodity markets, and also

481
00:23:18,160 --> 00:23:21,159
Speaker 8: what's happening with oil coming off the bottom. If this

482
00:23:21,280 --> 00:23:22,960
Speaker 8: is happening with a four and a half to five

483
00:23:23,000 --> 00:23:25,920
Speaker 8: percent of employment rate and we got excess apply in

484
00:23:25,960 --> 00:23:28,119
Speaker 8: the economy, not a problem. But at a time of

485
00:23:28,760 --> 00:23:32,359
Speaker 8: full employment, this bounce we've had in commodity markets and

486
00:23:32,440 --> 00:23:34,560
Speaker 8: in the context of the weight settlements we're seeing, I

487
00:23:34,560 --> 00:23:37,439
Speaker 8: think has to be on the Fed's mind. So I

488
00:23:37,440 --> 00:23:40,119
Speaker 8: would say that that the primary trend is going to

489
00:23:40,119 --> 00:23:43,560
Speaker 8: be towards disinflation into the next twelve months, But I

490
00:23:43,600 --> 00:23:45,679
Speaker 8: would say that the next couple of months is going

491
00:23:45,720 --> 00:23:46,600
Speaker 8: to challenge that view.

492
00:23:46,800 --> 00:23:50,960
Speaker 2: Are we beyond the pandemic? Are we doing traditional economics now?

493
00:23:51,000 --> 00:23:53,879
Speaker 2: Whether you believe in ISLM dynamics or you believe in

494
00:23:53,920 --> 00:23:57,760
Speaker 2: factor dynamics, whatever you know, microeconomic foundations, whatever it is,

495
00:23:57,840 --> 00:23:59,959
Speaker 2: Are we beyond pandemic analysis?

496
00:24:01,320 --> 00:24:05,160
Speaker 8: I don't think so, Tom. I think that we're still

497
00:24:05,160 --> 00:24:07,600
Speaker 8: seeing a lot of the after effects. It's one of

498
00:24:07,600 --> 00:24:10,439
Speaker 8: the reasons why look yesterday, nobody seemed to care too

499
00:24:10,520 --> 00:24:14,520
Speaker 8: much that the Conference boards leading economic indicator declined for

500
00:24:14,560 --> 00:24:17,720
Speaker 8: the fifteen month in a row. It's already gone down

501
00:24:17,960 --> 00:24:20,840
Speaker 8: enough and far enough from the peak of December twenty

502
00:24:20,880 --> 00:24:24,400
Speaker 8: twenty one that the recession should have started. The inverted

503
00:24:24,440 --> 00:24:26,720
Speaker 8: eel curve has been more than a year. It's very deep.

504
00:24:27,040 --> 00:24:29,560
Speaker 8: The dispersion across all eel curves would be telling you

505
00:24:29,640 --> 00:24:32,399
Speaker 8: that the recession should be starting. And we have this

506
00:24:32,480 --> 00:24:34,080
Speaker 8: debate as to whether or not there's even going to

507
00:24:34,080 --> 00:24:37,399
Speaker 8: be a recession. And so what's happened is that this

508
00:24:37,560 --> 00:24:39,959
Speaker 8: was the energizer bunny. The gift that kept on giving

509
00:24:40,520 --> 00:24:44,760
Speaker 8: were those stimulus checks from the Biden budgetbuster and March

510
00:24:44,840 --> 00:24:50,560
Speaker 8: of twenty twenty one, and those excess savings which historically

511
00:24:50,680 --> 00:24:53,879
Speaker 8: Americans would spend half in safe half. But we live

512
00:24:53,920 --> 00:24:57,160
Speaker 8: in a much more narcissistic society today, right, I don't

513
00:24:57,160 --> 00:25:00,560
Speaker 8: remember before this cycle, Like you're asking me about, is

514
00:25:00,600 --> 00:25:03,080
Speaker 8: the COVID effect behind us, the worst of the COVID

515
00:25:03,119 --> 00:25:05,720
Speaker 8: health issues behind us, But the COVID effects on the economy.

516
00:25:06,040 --> 00:25:08,600
Speaker 8: I mean, we're developing new acronyms like yolo. You know,

517
00:25:08,640 --> 00:25:11,399
Speaker 8: you only live once. So all the stimulus got spent

518
00:25:11,840 --> 00:25:16,359
Speaker 8: and that's what's basically clogged up the monetary channel. What

519
00:25:16,400 --> 00:25:19,119
Speaker 8: that has done to the real economy, and that might

520
00:25:19,160 --> 00:25:21,439
Speaker 8: be ending right now. But it's one of the reasons

521
00:25:21,480 --> 00:25:24,879
Speaker 8: why people calling for a session like yours truly have

522
00:25:24,960 --> 00:25:28,520
Speaker 8: been frustrated is because of the lagged impact of all

523
00:25:28,560 --> 00:25:31,159
Speaker 8: that fiscal stimulus, you know, which was a product of

524
00:25:31,280 --> 00:25:31,760
Speaker 8: the pandemic.

525
00:25:31,920 --> 00:25:33,960
Speaker 2: What's interesting about this, John, is you know you only

526
00:25:34,040 --> 00:25:37,160
Speaker 2: live once. Rosenberg's going to see Barbie twice this weekend.

527
00:25:36,960 --> 00:25:38,600
Speaker 3: Is support retail.

528
00:25:40,119 --> 00:25:41,680
Speaker 8: I'd bet against that, David.

529
00:25:41,720 --> 00:25:43,720
Speaker 2: I want to dive here into my book of the

530
00:25:43,800 --> 00:25:47,200
Speaker 2: Summer Blanchard and the ur Star debate. Blenchard feels it

531
00:25:47,280 --> 00:25:49,960
Speaker 2: over time we will return to some form of quiesce

532
00:25:50,000 --> 00:25:52,920
Speaker 2: in our start. John Williams has staked out the high

533
00:25:52,960 --> 00:25:55,119
Speaker 2: ground saying we will return to our start.

534
00:25:55,720 --> 00:25:57,160
Speaker 1: Others go the other way.

535
00:25:57,760 --> 00:25:59,600
Speaker 2: Are we going to be in a two percent is

536
00:26:00,080 --> 00:26:03,359
Speaker 2: FED range out five years, ten years, or does David

537
00:26:03,480 --> 00:26:08,119
Speaker 2: Rosenberg have to set to a legitimate societal reflation?

538
00:26:09,400 --> 00:26:11,639
Speaker 8: Well, and I think you're referring to two percent funds

539
00:26:11,680 --> 00:26:16,120
Speaker 8: rate in nominal terms as being that baseline. And Tom,

540
00:26:16,160 --> 00:26:19,560
Speaker 8: what's very interesting is that you know, through all the

541
00:26:19,680 --> 00:26:24,159
Speaker 8: pandemic and all the distortions around the pandemic, that the

542
00:26:24,240 --> 00:26:28,000
Speaker 8: FED never once has changed its long run estimate of

543
00:26:28,200 --> 00:26:30,840
Speaker 8: where the nominal neutral funds rate is. It's been stuck

544
00:26:30,840 --> 00:26:33,800
Speaker 8: at two and a half percent. The work that's been

545
00:26:33,840 --> 00:26:36,600
Speaker 8: done normally, our star refers to the real neutral rate.

546
00:26:36,760 --> 00:26:38,760
Speaker 8: And let's assume that we get to that holy grail

547
00:26:38,800 --> 00:26:42,520
Speaker 8: of of you know, two percent inflation. And then you

548
00:26:42,600 --> 00:26:45,240
Speaker 8: have John Williams, by the way, our work has corroborated

549
00:26:45,320 --> 00:26:47,879
Speaker 8: his work, that there's a risk that are Star in

550
00:26:47,960 --> 00:26:51,720
Speaker 8: real terms goes negative in the years ahead. And that's

551
00:26:51,720 --> 00:26:54,639
Speaker 8: supported by what, well, what has been the what did

552
00:26:54,840 --> 00:26:57,960
Speaker 8: COVID not change or the policies around COVID not change

553
00:26:58,440 --> 00:27:02,600
Speaker 8: is aging demographics. Demographics has been and remains a dead

554
00:27:02,640 --> 00:27:03,840
Speaker 8: weight drag on the.

555
00:27:04,040 --> 00:27:07,720
Speaker 1: Eject jilspe every day, continued mister rosenbreg And.

556
00:27:08,200 --> 00:27:12,560
Speaker 8: The constraints of excess of debt is another consideration. And

557
00:27:12,680 --> 00:27:15,000
Speaker 8: then we look, we had something. Look, this has been

558
00:27:15,040 --> 00:27:17,080
Speaker 8: wonderful for the growth stocks and the tech sector.

559
00:27:17,960 --> 00:27:19,159
Speaker 6: And it seems as though, you know.

560
00:27:19,320 --> 00:27:22,080
Speaker 8: In Nvidia back in May, with that you know, truly

561
00:27:22,240 --> 00:27:26,040
Speaker 8: you know, bombshell earnings report almost felt like Pfizer Monday,

562
00:27:26,200 --> 00:27:29,720
Speaker 8: you know, back in November of twenty twenty. I'm not

563
00:27:29,760 --> 00:27:31,720
Speaker 8: going to say this is bigger than the Internet, but

564
00:27:31,840 --> 00:27:34,159
Speaker 8: it's certainly bigger than three D printing, and it's going

565
00:27:34,240 --> 00:27:37,600
Speaker 8: to have monumental impacts on structural shifts to the labor market,

566
00:27:38,160 --> 00:27:41,480
Speaker 8: labor saving technology. That again is going to be a

567
00:27:41,680 --> 00:27:46,560
Speaker 8: I think from a labor market perspective, a significant disinflationary force,

568
00:27:46,800 --> 00:27:48,760
Speaker 8: just like the Internet was not on the same scale,

569
00:27:49,240 --> 00:27:50,760
Speaker 8: but it doesn't have to be in the same scale

570
00:27:50,840 --> 00:27:53,480
Speaker 8: to be a truly disinflationary force and an impact on

571
00:27:53,560 --> 00:27:55,480
Speaker 8: our star down the road, David, I.

572
00:27:55,560 --> 00:27:57,440
Speaker 3: Just want to squaze in an extra question on that then,

573
00:27:57,760 --> 00:27:59,720
Speaker 3: and this is really sort of like out there thinking

574
00:28:00,200 --> 00:28:02,680
Speaker 3: ten twenty years. But how on earth the politician is

575
00:28:02,680 --> 00:28:04,080
Speaker 3: going to deal with this, David. If we start to

576
00:28:04,119 --> 00:28:07,119
Speaker 3: see that kind of job replacement from this kind of boom.

577
00:28:08,520 --> 00:28:11,560
Speaker 8: Well it's going to be a big problem because with

578
00:28:11,720 --> 00:28:15,639
Speaker 8: the Asian demographics comes with that higher dependency rates, and

579
00:28:15,760 --> 00:28:18,560
Speaker 8: that puts added pressure on fiscal finances at a time

580
00:28:18,640 --> 00:28:21,920
Speaker 8: when governments around the world have been so profligated on

581
00:28:22,000 --> 00:28:23,760
Speaker 8: the spending side. So this is going to be a

582
00:28:24,040 --> 00:28:26,640
Speaker 8: very big fiscal problem. Some people say the only way

583
00:28:26,680 --> 00:28:29,040
Speaker 8: out of this is we have to inflate, we have

584
00:28:29,160 --> 00:28:31,960
Speaker 8: to inflate a way out of this debt problem. But

585
00:28:32,080 --> 00:28:34,600
Speaker 8: the problem with inflation, and the reason why J. Powell

586
00:28:34,920 --> 00:28:37,600
Speaker 8: has been fighting inflation and with cover from the White House,

587
00:28:37,760 --> 00:28:40,720
Speaker 8: is that inflation is a tax on the poor and

588
00:28:40,800 --> 00:28:43,040
Speaker 8: the elderly. So people say, well, we have to solve

589
00:28:43,080 --> 00:28:46,320
Speaker 8: the debt problem, you know, with inflation, No, because it

590
00:28:46,440 --> 00:28:49,480
Speaker 8: creates other social problems. Ultimately, we're going to have to

591
00:28:49,520 --> 00:28:53,520
Speaker 8: have a revamping of the entire fiscal system, means testing

592
00:28:53,720 --> 00:28:58,000
Speaker 8: on entitlements. And the bottom line is that this dirty

593
00:28:58,600 --> 00:29:01,240
Speaker 8: five letter word called tax are going to have to

594
00:29:01,320 --> 00:29:03,920
Speaker 8: go up. And that's why I think that you know,

595
00:29:03,960 --> 00:29:05,960
Speaker 8: when you're taking a look at why have bond yields

596
00:29:06,080 --> 00:29:09,600
Speaker 8: not swored? I mean, even with what's happened with food

597
00:29:09,600 --> 00:29:12,480
Speaker 8: stuffs and energy in the past few days, the Fed

598
00:29:12,680 --> 00:29:14,320
Speaker 8: about to pin the fund rate at five and a

599
00:29:14,440 --> 00:29:17,200
Speaker 8: quarter to five and a half, the stock market booming.

600
00:29:18,920 --> 00:29:21,120
Speaker 8: Why isn't the ten year note have a five handle?

601
00:29:21,800 --> 00:29:23,719
Speaker 8: Why are we at three to eighty on the ten

602
00:29:23,800 --> 00:29:25,920
Speaker 8: year note? With all this, so, the bond market's telling

603
00:29:25,960 --> 00:29:28,880
Speaker 8: you something, As it comes back to Tom's initial question,

604
00:29:29,040 --> 00:29:33,480
Speaker 8: the bond market is telling you something about that disinflationary future.

605
00:29:34,640 --> 00:29:36,760
Speaker 8: So I think that in terms of how governments deal

606
00:29:36,840 --> 00:29:39,400
Speaker 8: with it, I think this era right now that we're

607
00:29:39,440 --> 00:29:43,520
Speaker 8: seeing a fiscal rectitude is going to have to switch

608
00:29:43,600 --> 00:29:46,880
Speaker 8: towards fiscal tiding down the road because this is not sustainable.

609
00:29:47,400 --> 00:29:49,600
Speaker 8: I'm looking at this thinking, if you told everybody was

610
00:29:49,640 --> 00:29:54,960
Speaker 8: happening with a stock market fiscal deficits, you know everything

611
00:29:54,960 --> 00:29:57,000
Speaker 8: that we're talking about right now, we have to ask

612
00:29:57,040 --> 00:29:59,000
Speaker 8: the question the biggest anomally is not what the stock

613
00:29:59,080 --> 00:30:02,280
Speaker 8: market's doing. It's what the bond market is not doing.

614
00:30:02,600 --> 00:30:03,880
Speaker 4: Interesting, what's that message?

615
00:30:04,000 --> 00:30:07,480
Speaker 3: We'll keep asking that question, David, This was fun, deeply thoughtful.

616
00:30:07,640 --> 00:30:11,040
Speaker 3: Thank you, sir David Rosenberg. There of Rosenberg Research and

617
00:30:11,080 --> 00:30:23,320
Speaker 3: enjoyed the movies this weekend. I can't believe we've got

618
00:30:23,320 --> 00:30:26,280
Speaker 3: a Tottenham fan seeing opposite the arsenal CEO I Vncate

619
00:30:26,440 --> 00:30:28,560
Speaker 3: Sham joins us now vinn I great to see. It's

620
00:30:28,600 --> 00:30:33,160
Speaker 3: a big game tomorrow against Manchester United at MetLife Stadium.

621
00:30:33,200 --> 00:30:34,800
Speaker 3: Before we get to all of that, let's just start

622
00:30:34,880 --> 00:30:37,640
Speaker 3: with why here. I see a lot of Spanish clubs

623
00:30:37,640 --> 00:30:39,640
Speaker 3: come to the United States now, A lot of Italian

624
00:30:39,720 --> 00:30:41,960
Speaker 3: teams do their preseason tour here. Why is this so

625
00:30:42,040 --> 00:30:43,440
Speaker 3: important for Arsenal Football Club?

626
00:30:43,800 --> 00:30:44,000
Speaker 4: Sure?

627
00:30:44,080 --> 00:30:46,120
Speaker 9: Well, firstly, thank you for having me on the show today.

628
00:30:47,160 --> 00:30:50,520
Speaker 9: The US has become our number one international market and

629
00:30:50,640 --> 00:30:53,200
Speaker 9: we see that anecdotally every time we come to the US.

630
00:30:53,240 --> 00:30:55,400
Speaker 9: We come every couple of years. We can see the

631
00:30:55,480 --> 00:30:58,400
Speaker 9: games growing and we can see Arsenal's popularities growing, and

632
00:30:58,480 --> 00:31:01,200
Speaker 9: we also see it in the numbers. Last season with

633
00:31:01,440 --> 00:31:05,479
Speaker 9: NBC Sports, we had the record audience for Arsenal Manchester United.

634
00:31:05,840 --> 00:31:08,600
Speaker 9: We see our social media following growing really fast. Twenty

635
00:31:08,640 --> 00:31:11,240
Speaker 9: percent of our retail business is in the US, and

636
00:31:11,320 --> 00:31:13,880
Speaker 9: we played the MLS All Star Game in Washington, jam

637
00:31:14,000 --> 00:31:16,440
Speaker 9: pack full and jam pack full of Arsenal fans, which

638
00:31:16,520 --> 00:31:17,240
Speaker 9: was great to see.

639
00:31:17,320 --> 00:31:19,200
Speaker 3: Great to see lots of money in it. I'm sure

640
00:31:19,240 --> 00:31:21,200
Speaker 3: you're also spending lots of cash as well, and I'm

641
00:31:21,200 --> 00:31:22,560
Speaker 3: sure a lot of Arsenal fans want us to go

642
00:31:22,680 --> 00:31:25,880
Speaker 3: straight there. How much have you spent this summer on

643
00:31:26,000 --> 00:31:29,640
Speaker 3: football talent? Well, so, I guess the story about this

644
00:31:29,720 --> 00:31:31,960
Speaker 3: summer really starts with looking back at last season. So

645
00:31:32,120 --> 00:31:34,800
Speaker 3: last season we had what we considered to be a

646
00:31:35,000 --> 00:31:38,480
Speaker 3: successful season. We took the title race right until the

647
00:31:38,600 --> 00:31:41,320
Speaker 3: last weeks in the end, we finished second rather than

648
00:31:41,320 --> 00:31:43,760
Speaker 3: the first that we were fighting for. But we have

649
00:31:43,920 --> 00:31:45,960
Speaker 3: one of the youngest squads in the Premier league, so

650
00:31:46,080 --> 00:31:48,880
Speaker 3: this season they're going to be another year more experienced.

651
00:31:49,240 --> 00:31:51,840
Speaker 3: And what we've done this summer is supplement that fantastic

652
00:31:51,880 --> 00:31:54,840
Speaker 3: squad with three new signings. The three positions we want

653
00:31:54,880 --> 00:31:57,360
Speaker 3: to strengthen the three players we wanted and we were

654
00:31:57,440 --> 00:32:00,479
Speaker 3: delighted to get them right at the start of the windows.

655
00:32:00,520 --> 00:32:01,880
Speaker 3: So we have them here with us on tour in

656
00:32:01,960 --> 00:32:04,160
Speaker 3: the US and it means they can assimilate in the squad.

657
00:32:04,200 --> 00:32:07,320
Speaker 3: And it was a heavy, significant investment, and that investment

658
00:32:07,440 --> 00:32:09,720
Speaker 3: really shows the ambition of our ownership group. You know,

659
00:32:09,880 --> 00:32:12,760
Speaker 3: they have had an enormous success with their franchises in

660
00:32:12,800 --> 00:32:17,400
Speaker 3: the US over recent years, winning the Super Bowl, winning

661
00:32:17,480 --> 00:32:19,680
Speaker 3: the Stanley Cup and then winning the NBA Championships. So

662
00:32:19,720 --> 00:32:22,160
Speaker 3: they've really invested behind the team and they have really

663
00:32:22,160 --> 00:32:24,760
Speaker 3: supported us this window, so we will be ready for

664
00:32:24,840 --> 00:32:25,720
Speaker 3: the fight this season.

665
00:32:26,480 --> 00:32:29,720
Speaker 4: Thank you for making last season so interesting till the

666
00:32:29,880 --> 00:32:32,400
Speaker 4: very end, and congratulations on your purchases. But let me

667
00:32:32,600 --> 00:32:34,520
Speaker 4: let me put you in a tough Spotify may sure

668
00:32:34,880 --> 00:32:39,040
Speaker 4: there's two views as to what model should major sports run.

669
00:32:39,440 --> 00:32:42,880
Speaker 4: One is the UK model where you don't have forced equalization,

670
00:32:43,560 --> 00:32:46,960
Speaker 4: where you have relegation. One is the US model, where

671
00:32:46,960 --> 00:32:51,280
Speaker 4: you don't have relegation, you have forced equalization. If you

672
00:32:51,360 --> 00:32:56,000
Speaker 4: had to create the Premiership from the from scratch, would

673
00:32:56,040 --> 00:32:58,560
Speaker 4: you keep the current model that allows a few Cup

674
00:32:58,800 --> 00:33:01,320
Speaker 4: teams to dominate all the time or would you go

675
00:33:01,440 --> 00:33:04,000
Speaker 4: to more like a US model that allows for far

676
00:33:04,120 --> 00:33:04,960
Speaker 4: more equalization.

677
00:33:05,680 --> 00:33:07,400
Speaker 9: I keep the model that we have at the moment,

678
00:33:07,600 --> 00:33:09,600
Speaker 9: and I think it's proven. The Premier League is the

679
00:33:09,640 --> 00:33:12,800
Speaker 9: world's biggest league in the world's biggest sport. And I

680
00:33:12,880 --> 00:33:14,600
Speaker 9: think one of the reasons the Premier League is so

681
00:33:15,240 --> 00:33:18,160
Speaker 9: successful is the broadcast distribution in the Premier League is

682
00:33:18,160 --> 00:33:21,120
Speaker 9: actually relatively equal, So the top club in the Premier

683
00:33:21,200 --> 00:33:24,360
Speaker 9: League gets roughly one point eight times the bottom club

684
00:33:24,440 --> 00:33:26,080
Speaker 9: in the Premier League. So we try and keep the

685
00:33:26,160 --> 00:33:29,000
Speaker 9: revenue distribution as equal as we can to make sure

686
00:33:29,040 --> 00:33:31,240
Speaker 9: the league is as competitive as it can be, and

687
00:33:31,320 --> 00:33:33,080
Speaker 9: it goes in cycles. Sometimes you have a period where

688
00:33:33,120 --> 00:33:35,560
Speaker 9: teams dominate and sometimes you have a cycle where it's

689
00:33:35,560 --> 00:33:36,160
Speaker 9: more competitive.

690
00:33:36,240 --> 00:33:40,440
Speaker 2: I'm for Sheffield United, Sheffield Sheffield United, me and Joe Elliot,

691
00:33:40,520 --> 00:33:41,720
Speaker 2: it's destined.

692
00:33:42,000 --> 00:33:44,200
Speaker 4: So being a QPR supporter and just looking up to

693
00:33:44,240 --> 00:33:47,800
Speaker 4: the Premiership, you'll understand how we feel about our inability

694
00:33:47,880 --> 00:33:52,800
Speaker 4: to ever penetrate because of what happens above us. But

695
00:33:52,960 --> 00:33:54,600
Speaker 4: let me ask a question. So you're seeing all this

696
00:33:55,080 --> 00:33:58,760
Speaker 4: US support come to Arsenal and I'm hearing there's a

697
00:33:58,880 --> 00:34:01,040
Speaker 4: lot more interest in in soccer as they call it

698
00:34:01,160 --> 00:34:04,480
Speaker 4: here on there is this a pull fact or a

699
00:34:04,520 --> 00:34:07,160
Speaker 4: push factor? Is this people being pulled by the fact

700
00:34:07,160 --> 00:34:10,200
Speaker 4: that NBC's covering more games or is it the fans

701
00:34:10,239 --> 00:34:14,760
Speaker 4: that are pushing people to talk more about UK soccer,

702
00:34:14,880 --> 00:34:16,279
Speaker 4: including Tom and John.

703
00:34:16,760 --> 00:34:17,960
Speaker 3: I think it's a little bit of both.

704
00:34:18,000 --> 00:34:20,160
Speaker 9: I think NBC have done a fantastic job for the

705
00:34:20,200 --> 00:34:23,480
Speaker 9: Premier League over a long period, both in terms of

706
00:34:23,560 --> 00:34:25,880
Speaker 9: how they promote the game and how they've also educated

707
00:34:25,960 --> 00:34:29,000
Speaker 9: the audience around around all things football, and we see

708
00:34:29,000 --> 00:34:31,400
Speaker 9: it in their viewers numbers. I think NBC's viewership numbers

709
00:34:31,640 --> 00:34:34,080
Speaker 9: last season we're twenty percent higher than the season before.

710
00:34:34,640 --> 00:34:38,000
Speaker 9: We've got our game tomorrow at MetLife. It's going to

711
00:34:38,040 --> 00:34:40,439
Speaker 9: be a sellout. It's going to be our biggest ever

712
00:34:41,480 --> 00:34:44,160
Speaker 9: game from revenue perspective, that we've ever played in the US.

713
00:34:44,200 --> 00:34:46,080
Speaker 9: And I think it's going to be Metlife's biggest ever

714
00:34:46,160 --> 00:34:48,440
Speaker 9: soccer game that they've had in their stadium as well

715
00:34:48,480 --> 00:34:50,719
Speaker 9: from a revenue perspective, So the demand is really, really,

716
00:34:50,800 --> 00:34:53,360
Speaker 9: really there and it's growing really quickly.

717
00:34:53,680 --> 00:34:55,560
Speaker 3: Got to talk to you about sally involvement in the

718
00:34:55,600 --> 00:34:59,200
Speaker 3: game increasing and increasing through this summer, particularly of the

719
00:34:59,280 --> 00:35:01,920
Speaker 3: last couple of years with that purchase of Newcastle. More recently,

720
00:35:02,480 --> 00:35:04,040
Speaker 3: what does it feel like as a CEO of a

721
00:35:04,080 --> 00:35:08,840
Speaker 3: football club to be competing with a country, not a

722
00:35:08,920 --> 00:35:11,920
Speaker 3: single person, but a nation. What does that feel like?

723
00:35:12,040 --> 00:35:14,160
Speaker 3: Do you feel like you're doing that now this summer?

724
00:35:14,719 --> 00:35:16,800
Speaker 9: Well, this is the Premier League. One of the reasons

725
00:35:16,840 --> 00:35:19,200
Speaker 9: the Premier League has been so successful is because it's

726
00:35:19,239 --> 00:35:25,359
Speaker 9: so unbelievably competitive, and you know, Newcastle are another team

727
00:35:25,400 --> 00:35:27,360
Speaker 9: that is stepping forward in that competition. They had a

728
00:35:27,480 --> 00:35:30,919
Speaker 9: very successful season last season. They're they're in the Champions League.

729
00:35:30,960 --> 00:35:35,000
Speaker 9: So it's a it's always a dynamically changing market. Another

730
00:35:35,080 --> 00:35:37,920
Speaker 9: big change that everybody's been talking about this summer has

731
00:35:37,960 --> 00:35:40,720
Speaker 9: been the number of players that actually transferred to Saudi

732
00:35:41,040 --> 00:35:43,600
Speaker 9: So that's another interesting development in the game. It's new,

733
00:35:43,920 --> 00:35:46,440
Speaker 9: it's a little bit too early to know how that's

734
00:35:46,480 --> 00:35:48,520
Speaker 9: going to affect the Premier League, if at all, and

735
00:35:48,600 --> 00:35:49,760
Speaker 9: we'll all be watching with interest.

736
00:35:50,200 --> 00:35:53,480
Speaker 2: Long ago in my youth, I saw the Rochester Lancers

737
00:35:53,520 --> 00:35:55,360
Speaker 2: and a wonderful guy named Charlie Chian.

738
00:35:55,440 --> 00:35:56,760
Speaker 1: I'll try to make this happen.

739
00:35:57,160 --> 00:35:58,960
Speaker 2: And the fact is it was perceived by me and

740
00:35:59,040 --> 00:36:02,280
Speaker 2: everybody else in a Mayer America is minor league football.

741
00:36:02,760 --> 00:36:06,640
Speaker 2: What is the symbolism of Messy going to MLS now?

742
00:36:06,760 --> 00:36:09,880
Speaker 2: Does he take them from minor league football to something

743
00:36:10,000 --> 00:36:10,640
Speaker 2: new and different?

744
00:36:11,239 --> 00:36:14,200
Speaker 9: Well, the MLS has been on, as I understand, a

745
00:36:14,239 --> 00:36:17,399
Speaker 9: good growth trajectory over many years. The league's expanded. There's

746
00:36:17,400 --> 00:36:20,880
Speaker 9: been a number of expansion franchises for us at Arsenal.

747
00:36:21,000 --> 00:36:24,279
Speaker 9: We want football or soccer as we may call it here,

748
00:36:24,680 --> 00:36:27,120
Speaker 9: to grow in popularity. So we want there to be

749
00:36:27,400 --> 00:36:32,360
Speaker 9: a vibrant, healthy, domestic league in the MLS. Messi is

750
00:36:33,040 --> 00:36:37,200
Speaker 9: a generational talent. To have him in MLS playing in Miami,

751
00:36:37,560 --> 00:36:40,799
Speaker 9: I think we'll have a really really positive effect. At

752
00:36:40,840 --> 00:36:43,959
Speaker 9: the same time, the new Apple TV deal is going

753
00:36:44,000 --> 00:36:46,200
Speaker 9: live as well, so we're really hopeful that that will

754
00:36:46,239 --> 00:36:49,440
Speaker 9: help continue to grow MLS. And we've seen in the

755
00:36:49,480 --> 00:36:51,400
Speaker 9: few days we've been here, how much coverage there has

756
00:36:51,480 --> 00:36:54,279
Speaker 9: been around Messi and how many people have been talking

757
00:36:54,320 --> 00:36:56,160
Speaker 9: to us about Messi And that's what we want. We want,

758
00:36:56,200 --> 00:36:57,080
Speaker 9: we want that conversation.

759
00:36:57,160 --> 00:36:59,320
Speaker 1: Do you think Harry King could come to MLS?

760
00:37:00,000 --> 00:37:01,799
Speaker 3: Sure that AR would like Harry Kane to get out

761
00:37:01,800 --> 00:37:03,520
Speaker 3: of the Premier League. To be honest with them, I

762
00:37:03,520 --> 00:37:07,040
Speaker 3: won't ask him directly. The Apple deal, I've got forty

763
00:37:07,080 --> 00:37:09,239
Speaker 3: five seconds, but I want to squeeze this in. The

764
00:37:09,320 --> 00:37:12,799
Speaker 3: Apple deal is huge for a football player to get

765
00:37:12,840 --> 00:37:16,120
Speaker 3: a slice of the TV money directly like that. Do

766
00:37:16,160 --> 00:37:17,160
Speaker 3: you see more of that happening?

767
00:37:18,960 --> 00:37:21,080
Speaker 9: Well, I don't know the details of the Messi deal,

768
00:37:21,160 --> 00:37:23,920
Speaker 9: so I just read what everybody else reads. But I

769
00:37:23,960 --> 00:37:26,080
Speaker 9: think Messi. All I really say is I think Messi

770
00:37:26,200 --> 00:37:29,879
Speaker 9: can have a really, really significant impact on the game.

771
00:37:29,960 --> 00:37:31,839
Speaker 9: And I'm sure here in this country, and I'm sure

772
00:37:31,840 --> 00:37:33,520
Speaker 9: it was a really competitive process to get him to

773
00:37:33,520 --> 00:37:35,480
Speaker 9: play here, because there's lots of people that would love

774
00:37:35,520 --> 00:37:37,719
Speaker 9: Messi playing in their league, and I'm sure and had

775
00:37:37,760 --> 00:37:40,120
Speaker 9: to work really hard and really creatively to get here here.

776
00:37:40,320 --> 00:37:42,359
Speaker 9: And they've been successful because he's here and he's driving

777
00:37:42,360 --> 00:37:43,400
Speaker 9: a whole lot of interest.

778
00:37:43,360 --> 00:37:45,520
Speaker 3: The Saudis were one of those. Weren't they trying to

779
00:37:45,600 --> 00:37:47,799
Speaker 3: drag him over? This was great, Let's do this again.

780
00:37:47,840 --> 00:37:48,560
Speaker 3: Good luck tomorrow.

781
00:37:48,640 --> 00:37:49,680
Speaker 1: September twenty four.

782
00:37:49,920 --> 00:37:52,920
Speaker 3: What's that North London. We're trying to get tickets?

783
00:37:53,280 --> 00:37:53,840
Speaker 4: I was going to do that.

784
00:37:55,480 --> 00:38:02,480
Speaker 3: You comes to the Amirates. Well right now you're talking.

785
00:38:02,640 --> 00:38:04,600
Speaker 3: Now you're talking, and I thank you. This was great,

786
00:38:04,760 --> 00:38:06,200
Speaker 3: Thank you, buddy, and good luck tomorrow.

787
00:38:06,320 --> 00:38:06,560
Speaker 4: Thank you.

788
00:38:06,800 --> 00:38:10,600
Speaker 2: Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify, and

789
00:38:10,760 --> 00:38:14,880
Speaker 2: anywhere else you get your podcasts. Listen live every weekday

790
00:38:15,239 --> 00:38:18,680
Speaker 2: starting at seven am Easter. I'm Bloomberg dot Com, the

791
00:38:18,840 --> 00:38:23,320
Speaker 2: iHeartRadio app, tune In, and the Bloomberg Business app. You

792
00:38:23,400 --> 00:38:27,440
Speaker 2: can watch us live on Bloomberg Television and always. I'm

793
00:38:27,480 --> 00:38:31,400
Speaker 2: the Bloomberg Terminal. Thanks for listening. I'm Tom Keen, and

794
00:38:31,600 --> 00:38:33,120
Speaker 2: this is Bloomberg