1 00:00:10,039 --> 00:00:13,720 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Always 2 00:00:14,000 --> 00:00:17,560 Speaker 1: with Michael McKee. Daily we bring you insight from the 3 00:00:17,560 --> 00:00:22,760 Speaker 1: best in economics, finance, investment, and international relations. Find Bloomberg 4 00:00:22,840 --> 00:00:27,240 Speaker 1: Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and of course 5 00:00:27,760 --> 00:00:34,160 Speaker 1: on the Bloomberg. What an interesting statement from the Bank 6 00:00:34,200 --> 00:00:38,519 Speaker 1: of Japan. Did they simply blink No, I don't think 7 00:00:38,560 --> 00:00:41,239 Speaker 1: they blinked. I think they did something very interesting. They 8 00:00:41,240 --> 00:00:44,279 Speaker 1: put out measures that were smaller than we had been expecting, 9 00:00:44,520 --> 00:00:46,479 Speaker 1: but they put out some signals that were actually a 10 00:00:46,479 --> 00:00:48,960 Speaker 1: little bit stronger the measures. I think you've already gone 11 00:00:49,000 --> 00:00:51,120 Speaker 1: over with the e t f s and things like that, 12 00:00:51,159 --> 00:00:53,640 Speaker 1: but the signals were quite quite important. One was that 13 00:00:53,680 --> 00:00:57,080 Speaker 1: they are going to reconsider their policies in a special 14 00:00:57,360 --> 00:01:00,880 Speaker 1: uh uh session at the regular or monetary meetings, but 15 00:01:00,920 --> 00:01:04,760 Speaker 1: a special initiative in September. The Bank stocks rallied on 16 00:01:04,880 --> 00:01:06,920 Speaker 1: the view that maybe that means they're going to pull 17 00:01:07,000 --> 00:01:10,240 Speaker 1: away from the negative interest rate policy. That's not what 18 00:01:10,280 --> 00:01:12,400 Speaker 1: they said in the statement, and they could actually even 19 00:01:12,480 --> 00:01:14,680 Speaker 1: go the other way. But the notion that it's on 20 00:01:14,720 --> 00:01:17,759 Speaker 1: the table was a very very interesting signal. The second 21 00:01:17,760 --> 00:01:20,160 Speaker 1: one was the signal that they're trying to be very 22 00:01:20,160 --> 00:01:24,360 Speaker 1: close with the government, something also repeated by Fineman Finance minister. 23 00:01:24,400 --> 00:01:29,119 Speaker 1: Also two very big signals. Dr Feldman, I believe Toyota 24 00:01:29,280 --> 00:01:33,600 Speaker 1: needs obonomics. Is Toyota and the rest of corporate Japan 25 00:01:34,240 --> 00:01:36,800 Speaker 1: speaking with the government and speaking with the Bank of 26 00:01:36,880 --> 00:01:42,160 Speaker 1: Japan about their urgency. Well, I can't comment on individual companies, 27 00:01:42,480 --> 00:01:45,920 Speaker 1: but the corporate sector is actually a very diverse sector. Uh. 28 00:01:45,959 --> 00:01:50,400 Speaker 1: They some of them are export oriented and like a weekend, 29 00:01:51,280 --> 00:01:54,680 Speaker 1: but large global corporations often will have a lot of 30 00:01:54,680 --> 00:01:57,600 Speaker 1: production facilities around the world, so a weekly end is 31 00:01:57,640 --> 00:02:01,560 Speaker 1: not necessarily good if it goes too far, even for 32 00:02:01,640 --> 00:02:04,960 Speaker 1: large exporters like some of the auto companies and the contrary, 33 00:02:04,960 --> 00:02:06,920 Speaker 1: there are also some some locals as well. So all 34 00:02:07,000 --> 00:02:10,600 Speaker 1: the authorities in physical policy monetary policy trying to stay 35 00:02:10,600 --> 00:02:12,960 Speaker 1: in very close touch with the corporates, and they talked 36 00:02:12,960 --> 00:02:15,240 Speaker 1: to them all the time. There is not a lot 37 00:02:15,280 --> 00:02:18,200 Speaker 1: of pushback on the end at the level it's in 38 00:02:18,440 --> 00:02:22,200 Speaker 1: right now. Uh, importers gain exporters. It was a little bit, 39 00:02:22,240 --> 00:02:24,000 Speaker 1: but there's not a lot of pushback at the moment. 40 00:02:24,360 --> 00:02:27,920 Speaker 1: Are we going to see Robbie Governor Corona surprise the 41 00:02:27,960 --> 00:02:30,760 Speaker 1: markets in coming months, because this seems to be what 42 00:02:30,919 --> 00:02:33,200 Speaker 1: he's good at. He wants to surprise either on the 43 00:02:33,280 --> 00:02:37,200 Speaker 1: upside or the down side. Well, um, it's obviously a 44 00:02:37,200 --> 00:02:39,400 Speaker 1: good thing off his surprises to the upside, but the 45 00:02:39,520 --> 00:02:42,360 Speaker 1: surprise that he came up with in January with the 46 00:02:42,400 --> 00:02:44,600 Speaker 1: negative interest rates so sort of work the work the 47 00:02:44,680 --> 00:02:48,400 Speaker 1: wrong way. Um. So I think that was one issue 48 00:02:48,440 --> 00:02:50,959 Speaker 1: that people have been worried about. Also, inside the Bank 49 00:02:51,000 --> 00:02:54,840 Speaker 1: of Japan there is now some view that continual large 50 00:02:54,840 --> 00:02:59,640 Speaker 1: surprises are actually destabilizing for expectations, and so what they 51 00:02:59,680 --> 00:03:03,640 Speaker 1: need now was a consistent, clear on track policy, which 52 00:03:03,680 --> 00:03:07,200 Speaker 1: is understandable how they link information with action. I think 53 00:03:07,320 --> 00:03:09,520 Speaker 1: BOJ is sort of moving a little bit more in 54 00:03:09,560 --> 00:03:13,120 Speaker 1: that direction rather than let's think of new surprises. It 55 00:03:13,160 --> 00:03:16,120 Speaker 1: seems to be that they're trying to improve the called 56 00:03:16,200 --> 00:03:20,799 Speaker 1: the forward lookingness of expectations by calming down a little bit. 57 00:03:21,320 --> 00:03:24,440 Speaker 1: So Hans, overall, what's your your grade if it were 58 00:03:24,440 --> 00:03:27,440 Speaker 1: a report card, what would you give ebonomics? I think 59 00:03:27,720 --> 00:03:32,040 Speaker 1: ibonomics it was a brilliant concept and it uh, you know, 60 00:03:32,120 --> 00:03:34,760 Speaker 1: to see errow system work very well at the starting 61 00:03:34,800 --> 00:03:37,400 Speaker 1: point of it. But we should have seen a little 62 00:03:37,400 --> 00:03:40,200 Speaker 1: bit more structural reform that would have been productivity enhancing 63 00:03:40,240 --> 00:03:42,120 Speaker 1: and that would have first ball as an over time 64 00:03:42,200 --> 00:03:45,400 Speaker 1: supported inflation expectations. I guess there was a shortcoming on 65 00:03:45,440 --> 00:03:48,760 Speaker 1: that site, not being built enough on structural reform. Hopefully 66 00:03:49,080 --> 00:03:52,080 Speaker 1: we are still seeing the increase in inflation they called 67 00:03:52,280 --> 00:03:56,440 Speaker 1: inflation expectations, because when we go through our yen analysis, 68 00:03:56,520 --> 00:03:58,360 Speaker 1: you know and think what is really the driver for 69 00:03:58,520 --> 00:04:01,720 Speaker 1: the agen? It is all about inflation expectations. You need 70 00:04:01,760 --> 00:04:04,080 Speaker 1: to lift inflation expectations and then you can get a 71 00:04:04,160 --> 00:04:09,240 Speaker 1: week again. And without that then yeah, deflation ary increase 72 00:04:09,320 --> 00:04:13,040 Speaker 1: in real yield differentials working in favor of Japan, in 73 00:04:13,120 --> 00:04:17,719 Speaker 1: favor of noted favor of Japan. Dr Feldman, you've talked 74 00:04:17,800 --> 00:04:21,960 Speaker 1: about Elizabeth gray vining her book on the on the Emperor, 75 00:04:22,360 --> 00:04:25,280 Speaker 1: and I think a Ruth Benedict and the Chrysanthemum and 76 00:04:25,320 --> 00:04:30,080 Speaker 1: the Sword, which is about the generational change a generation ago. 77 00:04:30,839 --> 00:04:35,680 Speaker 1: What's the demographic and social backdrop to this new frustration 78 00:04:35,760 --> 00:04:39,839 Speaker 1: over nominal GDP and animal spirit in Japan? Is there 79 00:04:39,839 --> 00:04:43,480 Speaker 1: a generational shift now that Mr Kuroda has to deal with? 80 00:04:44,080 --> 00:04:46,360 Speaker 1: There are a lot of elements in the demographics that 81 00:04:46,400 --> 00:04:49,359 Speaker 1: are pushing the economy in many directions. I think the 82 00:04:49,400 --> 00:04:53,640 Speaker 1: most important one is that the upward shift of female 83 00:04:53,680 --> 00:04:58,159 Speaker 1: participation is probably over and likely to be overwhelmed in 84 00:04:58,200 --> 00:05:00,279 Speaker 1: the next couple of years by a lot of aging 85 00:05:00,360 --> 00:05:04,200 Speaker 1: of the population. UH in the fifties, sixty and seventy 86 00:05:05,000 --> 00:05:08,240 Speaker 1: year old age group. It will be very difficult to 87 00:05:08,400 --> 00:05:11,960 Speaker 1: raise the labor force in the face of this very 88 00:05:12,040 --> 00:05:15,640 Speaker 1: large demographic group moving out of the basically the sixties 89 00:05:15,880 --> 00:05:20,280 Speaker 1: age age, and in that context that means the unemployment 90 00:05:20,360 --> 00:05:23,760 Speaker 1: rate will be pushed down much, much further. Hans's point 91 00:05:23,760 --> 00:05:26,960 Speaker 1: earlier about globalization is very important. But when you have 92 00:05:27,279 --> 00:05:29,919 Speaker 1: something like about a million people coming out of the 93 00:05:30,000 --> 00:05:33,279 Speaker 1: labor force over the next five years, if the upward 94 00:05:33,320 --> 00:05:36,960 Speaker 1: shift of that profile doesn't happen, that's a very large 95 00:05:37,040 --> 00:05:38,760 Speaker 1: number and it should put a lot of pressure on 96 00:05:38,839 --> 00:05:42,880 Speaker 1: the labor market and that would impact prices. So that's 97 00:05:42,880 --> 00:05:45,960 Speaker 1: the thing much is most important in the demographics for 98 00:05:46,080 --> 00:05:58,719 Speaker 1: monetary policy. So investors have a lot to focus on 99 00:05:58,760 --> 00:06:00,880 Speaker 1: in different parts of the world. The man who is 100 00:06:00,920 --> 00:06:03,719 Speaker 1: paid to keep track of it all is our friend, 101 00:06:03,800 --> 00:06:10,760 Speaker 1: Adam posing the President of the Peterson Institute for International Economics, Adam. 102 00:06:10,960 --> 00:06:13,000 Speaker 1: The question, if you ask somebody is which are your 103 00:06:13,080 --> 00:06:16,120 Speaker 1: children do you love the most of the none of them? 104 00:06:16,160 --> 00:06:20,200 Speaker 1: Of the two crises, uh sort of underway here of 105 00:06:20,200 --> 00:06:23,640 Speaker 1: faith in either Japan or Italy. Which worries you the most? 106 00:06:25,240 --> 00:06:28,680 Speaker 1: Actually my goal the answer is somebody else's child worries 107 00:06:28,720 --> 00:06:31,839 Speaker 1: me more than my own. So it's it's Brexit and 108 00:06:32,000 --> 00:06:35,599 Speaker 1: Poland that worry me. Italy, as you've just rightly said, 109 00:06:36,080 --> 00:06:38,080 Speaker 1: we're going to get some kind of resolution on Monte 110 00:06:38,160 --> 00:06:41,520 Speaker 1: depasci to Sienna, and even if we don't in the 111 00:06:41,560 --> 00:06:45,640 Speaker 1: short term, it's not a systemic risk. Japan, as we discussed. 112 00:06:46,200 --> 00:06:48,320 Speaker 1: You know, they are having problems with the end, but 113 00:06:48,440 --> 00:06:51,320 Speaker 1: the major exporters in Japan can survive with the end 114 00:06:51,400 --> 00:06:54,520 Speaker 1: over a hundred it's it's going to be okay. But 115 00:06:54,680 --> 00:06:59,120 Speaker 1: you look at Poland, which is repudiating the very neoliberal 116 00:06:59,520 --> 00:07:01,919 Speaker 1: free mark kit policies that made them a success for 117 00:07:02,000 --> 00:07:05,920 Speaker 1: thirty years. And you look at Brexit, where everybody looks 118 00:07:05,920 --> 00:07:08,039 Speaker 1: at some short term dat and says this really isn't 119 00:07:08,120 --> 00:07:11,560 Speaker 1: so bad and deludes themselves. So it's somebody else's kids 120 00:07:11,600 --> 00:07:13,800 Speaker 1: I worry about we'll get to what you were just saying, 121 00:07:13,880 --> 00:07:15,720 Speaker 1: A saying I want to go back to the Italian question, 122 00:07:15,760 --> 00:07:18,800 Speaker 1: because yes, it's not systemic in terms of the banks immediately, 123 00:07:18,840 --> 00:07:23,640 Speaker 1: but you've got Mateo Renzy trying to modify the Italian 124 00:07:23,680 --> 00:07:27,400 Speaker 1: constitution to make reforms easier in the long run. The 125 00:07:27,520 --> 00:07:30,840 Speaker 1: Bank's threatened that significantly. If he can't do that, his 126 00:07:30,920 --> 00:07:35,080 Speaker 1: government falls. There's talk that Italy maybe in big trouble 127 00:07:35,080 --> 00:07:38,880 Speaker 1: which drags down the Eurozone. Is that Is that a 128 00:07:38,960 --> 00:07:42,880 Speaker 1: threat or a symptom? Uh. It's a really good point 129 00:07:42,920 --> 00:07:45,040 Speaker 1: on your part, Michael, because that is what's driving this, 130 00:07:45,200 --> 00:07:47,520 Speaker 1: and that's part of the reason why I or my 131 00:07:47,600 --> 00:07:51,240 Speaker 1: colleague Nicholas Varone, who covers European finance for US, I 132 00:07:51,240 --> 00:07:53,920 Speaker 1: think there's going to be a resolutionist because everybody's looking 133 00:07:53,920 --> 00:07:57,280 Speaker 1: around and saying, if Ramsey loses this referendum, which will 134 00:07:57,320 --> 00:08:01,080 Speaker 1: probably be late October, the alternatives go from power vacuum 135 00:08:01,080 --> 00:08:04,320 Speaker 1: to terrible and nobody wants that. But if you do 136 00:08:04,400 --> 00:08:07,240 Speaker 1: a bail in of I don't know a million or 137 00:08:07,320 --> 00:08:11,440 Speaker 1: more retail investors and banks and in Italy, he will 138 00:08:11,480 --> 00:08:13,520 Speaker 1: lose that friend, or at least they worry he will. 139 00:08:13,800 --> 00:08:16,200 Speaker 1: So that's why part of perversely, that's part of the 140 00:08:16,200 --> 00:08:18,080 Speaker 1: reason why I think there will be a resolution in 141 00:08:18,120 --> 00:08:21,360 Speaker 1: Italy in the near term. I think, however, we got 142 00:08:21,360 --> 00:08:25,320 Speaker 1: to keep some historical perspective. Remember, Italy went through periods 143 00:08:25,320 --> 00:08:29,760 Speaker 1: in the seventies of outright terrorist violence, of repeated government 144 00:08:30,000 --> 00:08:34,040 Speaker 1: overthrows in both the democratic sense but also just turmoil. 145 00:08:34,280 --> 00:08:37,080 Speaker 1: This is not like that. Uh. There are large parts 146 00:08:37,120 --> 00:08:40,280 Speaker 1: of Italy, particularly the north, that are perfectly well functioning. 147 00:08:41,080 --> 00:08:45,040 Speaker 1: Even southern Italy, the tourist economy is perfectly well functioning. 148 00:08:45,600 --> 00:08:50,000 Speaker 1: So again it's understandable that people are focused on not 149 00:08:50,120 --> 00:08:53,439 Speaker 1: having another major economy leader in Europe fall to an 150 00:08:53,440 --> 00:08:57,640 Speaker 1: anti EU party, but it's more stable and people give 151 00:08:57,640 --> 00:08:59,360 Speaker 1: it credit for dr pos And I want to talk 152 00:08:59,400 --> 00:09:03,520 Speaker 1: about a math word optimal, and the modern theory is 153 00:09:03,559 --> 00:09:07,000 Speaker 1: that we come up with an optimal set, a choice set, 154 00:09:07,320 --> 00:09:10,840 Speaker 1: we have optionality. As we move forward through time, have 155 00:09:10,960 --> 00:09:14,959 Speaker 1: we backed ourselves into a post crisis corner where we're 156 00:09:14,960 --> 00:09:20,160 Speaker 1: gonna need a lot more careful static analysis, which is 157 00:09:20,559 --> 00:09:22,920 Speaker 1: one step forward and a cloud of dust sit there, 158 00:09:23,320 --> 00:09:26,599 Speaker 1: see what's happening. Another rate increase forward, a cloud of 159 00:09:26,679 --> 00:09:30,000 Speaker 1: dust sit there and see what's happening or can we 160 00:09:30,080 --> 00:09:34,280 Speaker 1: really keep with the theories that we've been using as usual. Tom, 161 00:09:34,320 --> 00:09:39,959 Speaker 1: you're you're hiding in your math some very profound questions. Um. 162 00:09:40,000 --> 00:09:41,920 Speaker 1: I think there's two points to come out of what 163 00:09:42,040 --> 00:09:45,480 Speaker 1: you say. The first is that the theories that macroeconomics 164 00:09:45,520 --> 00:09:48,600 Speaker 1: has relied on and perhaps to certainly in fact too 165 00:09:48,600 --> 00:09:52,319 Speaker 1: heavily for the last thirty years, have been too concerned 166 00:09:52,360 --> 00:09:55,960 Speaker 1: with the long run and with assuming things equilibrate or 167 00:09:56,080 --> 00:09:58,600 Speaker 1: get to get to something optimal in the long run, 168 00:09:59,040 --> 00:10:02,560 Speaker 1: and that people are forward looking. And that's clearly not 169 00:10:02,720 --> 00:10:06,880 Speaker 1: only unrealistic as an assumption, but it's led to unrealistic 170 00:10:06,880 --> 00:10:09,840 Speaker 1: policy choices. And so there has to be a much 171 00:10:09,880 --> 00:10:12,800 Speaker 1: more major rethink in macro than we've seen, and that 172 00:10:12,880 --> 00:10:15,400 Speaker 1: means that you don't end up with these determined outcomes 173 00:10:15,440 --> 00:10:19,120 Speaker 1: that here is the precisely optimal policy. The second thing 174 00:10:19,240 --> 00:10:21,440 Speaker 1: is what you raise about, like with interest rates, make 175 00:10:21,480 --> 00:10:23,400 Speaker 1: a quarter point hike or like the b O J, 176 00:10:23,640 --> 00:10:26,880 Speaker 1: make a small move and see what happens. And to me, 177 00:10:27,120 --> 00:10:30,439 Speaker 1: it's less about the huge uncertainties now, although those exist, 178 00:10:30,520 --> 00:10:36,520 Speaker 1: it's more about again that you fundamentally strategically I don't 179 00:10:36,600 --> 00:10:39,320 Speaker 1: want to be worrying so much about manipulating the long term. 180 00:10:39,320 --> 00:10:41,280 Speaker 1: You want to be sure you're doing stuff that's robust 181 00:10:41,320 --> 00:10:43,800 Speaker 1: in the short term. And this I think is the 182 00:10:43,840 --> 00:10:47,160 Speaker 1: underlying strategic problem for the FED is and I've been 183 00:10:47,160 --> 00:10:48,719 Speaker 1: saying this to you actually for its close to a 184 00:10:48,760 --> 00:10:53,040 Speaker 1: year now, is the move away from inflation targeting at 185 00:10:53,040 --> 00:10:57,840 Speaker 1: a forward looking to your horizon to inflation targeting as 186 00:10:57,920 --> 00:11:01,880 Speaker 1: it goes, waiting to see how turns out. And Charlie Evans, 187 00:11:01,920 --> 00:11:04,800 Speaker 1: president of Chicago FED, raised this as well last month. 188 00:11:05,080 --> 00:11:07,160 Speaker 1: And Mike, I mean, you've been so far out Frond, 189 00:11:07,200 --> 00:11:09,840 Speaker 1: Mike McKee, honest, I mean it almost goes to Bullard's 190 00:11:09,880 --> 00:11:13,480 Speaker 1: idea of regime is a more static, jumping approach to 191 00:11:13,520 --> 00:11:16,800 Speaker 1: the next step versus the mumbo jumbo that we've been 192 00:11:17,000 --> 00:11:19,400 Speaker 1: and and and Mike. To be clear, Claria has been 193 00:11:19,440 --> 00:11:22,560 Speaker 1: outstanding on this, Richard Clarid has been real clear on this. 194 00:11:22,679 --> 00:11:24,679 Speaker 1: One of one of the issues and we've only got 195 00:11:24,679 --> 00:11:27,400 Speaker 1: about thirty seconds, Adam, is that the FETE seems very 196 00:11:27,840 --> 00:11:33,119 Speaker 1: much too reactive to minute to minute changes in financial markets. Yeah. 197 00:11:33,280 --> 00:11:35,800 Speaker 1: Now I agree, and they sense that they It gives 198 00:11:35,840 --> 00:11:38,320 Speaker 1: the impression that they feel constrained and they feel scared, 199 00:11:38,760 --> 00:11:40,840 Speaker 1: and I don't think they should or have to do 200 00:11:40,960 --> 00:11:43,120 Speaker 1: that way. And so in a in a in an 201 00:11:43,120 --> 00:11:46,240 Speaker 1: ironic twist, if you committed to the idea that you 202 00:11:46,280 --> 00:11:50,199 Speaker 1: were waiting for results to come out, say on inflation, 203 00:11:50,240 --> 00:11:53,199 Speaker 1: before acting, you would free yourself from some of these 204 00:11:53,200 --> 00:11:56,080 Speaker 1: short term constraints of chasing the market. Michael McKee and 205 00:11:56,080 --> 00:11:58,920 Speaker 1: I watched the festivities last night, but we had one 206 00:11:59,000 --> 00:12:02,839 Speaker 1: eye on the Japanese news flow. Michael, discuss the news 207 00:12:02,840 --> 00:12:05,640 Speaker 1: flow and go to dr pos and please the news 208 00:12:05,679 --> 00:12:08,280 Speaker 1: flow is fairly light. The Bank of Japan met, the 209 00:12:08,280 --> 00:12:10,640 Speaker 1: Bank of Japan decided not to make any kind of 210 00:12:10,679 --> 00:12:14,000 Speaker 1: major efforts. Uh Kronas on under a lot of pressure 211 00:12:14,040 --> 00:12:19,160 Speaker 1: to deliver something, gave a small increase in QQ either 212 00:12:19,360 --> 00:12:23,439 Speaker 1: they're bond buying asset buying program and said they would 213 00:12:23,480 --> 00:12:27,360 Speaker 1: study other options. Adam posing as the president of the 214 00:12:27,360 --> 00:12:30,000 Speaker 1: Peterson Institute. Adam, they don't have a lot. I mean 215 00:12:30,000 --> 00:12:31,680 Speaker 1: they have options, but they don't have a lot of 216 00:12:31,720 --> 00:12:36,440 Speaker 1: options that anybody thinks are particularly going to do much 217 00:12:36,559 --> 00:12:40,520 Speaker 1: from a monetary policy stance now to boost inflation or growth. 218 00:12:40,720 --> 00:12:43,160 Speaker 1: They're kind of at the end if they want to 219 00:12:43,160 --> 00:12:47,200 Speaker 1: do something, it's going to be up to Prime Minister Abbey. Yeah. 220 00:12:47,280 --> 00:12:49,800 Speaker 1: I think that's largely fair. Michael. I mean you've got 221 00:12:50,280 --> 00:12:52,760 Speaker 1: but I think that's not something specific to Japan or 222 00:12:52,840 --> 00:12:55,800 Speaker 1: the b J Governor Krota. That's a general point that 223 00:12:55,960 --> 00:13:00,000 Speaker 1: monetary policy works best, is most effective when you've got 224 00:13:00,000 --> 00:13:02,839 Speaker 1: a liquidity problem, when you've got a panic, when you've 225 00:13:02,880 --> 00:13:07,000 Speaker 1: got a crisis, or when you're trying to disinflate. UH, 226 00:13:07,080 --> 00:13:11,640 Speaker 1: monetary policy doesn't work as well when you are at 227 00:13:11,640 --> 00:13:14,760 Speaker 1: the zero lower bound and you're trying to inflate and 228 00:13:14,800 --> 00:13:17,680 Speaker 1: there isn't a panic, and there is no panic in Japan. 229 00:13:17,760 --> 00:13:20,040 Speaker 1: There is no lack of liquidity in Japan, there is 230 00:13:20,080 --> 00:13:24,120 Speaker 1: no crash of asset prices in Japan. So fiscal policy 231 00:13:24,200 --> 00:13:25,800 Speaker 1: is the way to go. But I just want to 232 00:13:25,800 --> 00:13:29,600 Speaker 1: emphasize Japan deserves credit because they're actually going to do 233 00:13:29,720 --> 00:13:32,720 Speaker 1: some fiscal policy. And in fact, my gather that the 234 00:13:32,760 --> 00:13:36,199 Speaker 1: stimulus package ABE is about to present is more structurally 235 00:13:36,200 --> 00:13:39,040 Speaker 1: sound than a lot of past Japanese stimulus packages. The 236 00:13:39,120 --> 00:13:41,280 Speaker 1: question is why isn't the rest of the G seven 237 00:13:41,280 --> 00:13:44,760 Speaker 1: the one doing something. Well, let's take let's unpack that 238 00:13:44,920 --> 00:13:48,600 Speaker 1: what is more structurally sound mean fewer bridges to nowhere, 239 00:13:48,679 --> 00:13:53,720 Speaker 1: more return on investment kind of projects. Yes, but even 240 00:13:53,760 --> 00:13:57,880 Speaker 1: more so um looking at issues of the labor market, 241 00:13:57,920 --> 00:14:00,880 Speaker 1: how do you support the long term development the labor market? 242 00:14:01,280 --> 00:14:03,840 Speaker 1: I mean, one of the big successes of abeconomics that 243 00:14:04,559 --> 00:14:07,000 Speaker 1: people mentioned but doesn't still doesn't get as much recognition 244 00:14:07,040 --> 00:14:09,800 Speaker 1: as it should is the huge increase in female labor 245 00:14:09,800 --> 00:14:13,160 Speaker 1: force participation in Japan over the last three years. And 246 00:14:13,320 --> 00:14:16,040 Speaker 1: it's up over eight hunder fifty people, which means up 247 00:14:16,080 --> 00:14:19,000 Speaker 1: over one percent of the workforce. That's a very big number, 248 00:14:19,360 --> 00:14:23,120 Speaker 1: and that came from some judicious fiscal moves in terms 249 00:14:23,160 --> 00:14:26,440 Speaker 1: of cutting taxes they should cut more, but cutting taxes 250 00:14:26,440 --> 00:14:30,600 Speaker 1: on second incomes for married couples, investing in public childcare. 251 00:14:31,120 --> 00:14:33,200 Speaker 1: There are a lot of things in that area where 252 00:14:33,240 --> 00:14:37,920 Speaker 1: you can spend on enabling the labor market, enabling families 253 00:14:37,960 --> 00:14:43,160 Speaker 1: to cope better, and that improves your labor supply and flexibility. 254 00:14:43,200 --> 00:14:48,560 Speaker 1: Now they're going to be spending according to the Prime 255 00:14:48,600 --> 00:14:53,680 Speaker 1: Minister or something like two sixty seven billion additions billion dollars. 256 00:14:53,840 --> 00:14:56,040 Speaker 1: I almost said the word additional. The question is how 257 00:14:56,120 --> 00:14:58,360 Speaker 1: much of that is additional? How much of it is 258 00:14:58,360 --> 00:15:01,520 Speaker 1: what you like to call fresh water exactly, And this 259 00:15:01,600 --> 00:15:04,160 Speaker 1: has always been a question. So the headline number they've 260 00:15:04,200 --> 00:15:08,120 Speaker 1: leaked or released is seven trillion yen, which is a 261 00:15:08,200 --> 00:15:11,600 Speaker 1: very big number. It's it's close to five percent of GDP, 262 00:15:12,160 --> 00:15:15,440 Speaker 1: and they're not going to spend that much in one 263 00:15:15,520 --> 00:15:19,640 Speaker 1: year's time. Um. But I think the usual rule of 264 00:15:19,680 --> 00:15:24,280 Speaker 1: thumb has been the actual real water is usually less 265 00:15:24,280 --> 00:15:27,400 Speaker 1: than fifty percent of the headline number. My opinion is 266 00:15:27,520 --> 00:15:30,280 Speaker 1: that in this case it's going to be closer to 267 00:15:31,080 --> 00:15:36,000 Speaker 1: above fift closer that number, so still a a very 268 00:15:36,080 --> 00:15:39,000 Speaker 1: good two plus percentage GDP over the next year or two. 269 00:15:39,480 --> 00:15:42,680 Speaker 1: And um. Part of the reason I think it's gonna 270 00:15:42,680 --> 00:15:45,320 Speaker 1: be more real water is when they built those bridges 271 00:15:45,360 --> 00:15:48,160 Speaker 1: to nowhere and things like that. In Japan, like in 272 00:15:48,200 --> 00:15:51,360 Speaker 1: the US, they have a system where local and regional 273 00:15:51,360 --> 00:15:52,960 Speaker 1: governments have to put a part of the money for 274 00:15:53,000 --> 00:15:56,440 Speaker 1: construction projects, and politicians try to claim credit for stuff 275 00:15:56,480 --> 00:15:59,280 Speaker 1: that's already happened, and so that's part of the reason 276 00:15:59,480 --> 00:16:02,120 Speaker 1: the real numbers are not as big. If they do 277 00:16:02,200 --> 00:16:06,400 Speaker 1: this kind of social spending direct tax cuts, then there's 278 00:16:06,400 --> 00:16:09,600 Speaker 1: no question what the real numbers. Sorry, no, then don't 279 00:16:09,600 --> 00:16:12,240 Speaker 1: be sorry. Let me ask a question. I say this 280 00:16:12,320 --> 00:16:16,920 Speaker 1: with immense respect. What would Fred I mean? The answer 281 00:16:17,080 --> 00:16:21,800 Speaker 1: for Peterson Institute was free markets have an awful lot 282 00:16:21,840 --> 00:16:26,840 Speaker 1: to do to solve international economic challenges. Can we do 283 00:16:26,880 --> 00:16:29,520 Speaker 1: that now? Or is it so messed up that the 284 00:16:29,560 --> 00:16:33,960 Speaker 1: Fred Burkston solution won't work well? To be fair to Fred, 285 00:16:34,400 --> 00:16:37,360 Speaker 1: who's the founder of the institute, my predecessor, he was 286 00:16:37,400 --> 00:16:40,520 Speaker 1: always very interventionoust and currency markets. Remember he was a 287 00:16:40,560 --> 00:16:43,600 Speaker 1: big architect backer of the Plaza and Louver according the 288 00:16:43,640 --> 00:16:48,840 Speaker 1: eighties and he thank you William. Yes, Bill Klein as 289 00:16:48,920 --> 00:16:51,760 Speaker 1: indeed my colleague has been part of that UM and 290 00:16:51,840 --> 00:16:54,760 Speaker 1: he and Bill Klein and Joe Daniel from the Institute 291 00:16:54,800 --> 00:16:58,120 Speaker 1: now are all pushing for various kinds of currency measures 292 00:16:58,160 --> 00:17:01,240 Speaker 1: that would make TPP more palatable of people and in 293 00:17:01,320 --> 00:17:04,320 Speaker 1: their view, make it more fair. So it's not we've 294 00:17:04,359 --> 00:17:06,840 Speaker 1: never been all about nothing but free market. But I 295 00:17:06,880 --> 00:17:08,840 Speaker 1: will say since I took over a few years ago, 296 00:17:08,840 --> 00:17:10,879 Speaker 1: and that it's less to do with me and partly 297 00:17:10,920 --> 00:17:16,160 Speaker 1: reflecting reality, we've had to think about more aggressive fiscal interventions, 298 00:17:16,280 --> 00:17:21,160 Speaker 1: more so called unconventional monetary interventions, and ideally more coordination 299 00:17:21,800 --> 00:17:24,480 Speaker 1: UM again, Fred was always in favor of coordination, but 300 00:17:24,800 --> 00:17:27,280 Speaker 1: what we're talking about now is more behind the border 301 00:17:27,359 --> 00:17:30,440 Speaker 1: kinds of coordination, like on fiscal policy, like on labor ranks. 302 00:17:31,119 --> 00:17:35,240 Speaker 1: And that is reflecting both the state and knowledge we've earned. 303 00:17:36,080 --> 00:17:38,639 Speaker 1: Uh not we the institute, but we the profession. If 304 00:17:38,680 --> 00:17:41,320 Speaker 1: for people who are paying attention and the state of 305 00:17:41,359 --> 00:17:44,879 Speaker 1: the world, that it's not about just sort of dabbling 306 00:17:44,960 --> 00:17:47,440 Speaker 1: with exchange rates at the extremes. You've got to get 307 00:17:47,480 --> 00:17:50,560 Speaker 1: more in your hands. Mess here twenty seconds. Are there 308 00:17:50,600 --> 00:17:54,720 Speaker 1: any countries that are going to do what you suggest? 309 00:17:56,080 --> 00:18:00,919 Speaker 1: Canada and Japan? Uh US possibly if Linton wins and 310 00:18:01,080 --> 00:18:04,959 Speaker 1: we get a substantial shift in the House, all right, 311 00:18:04,960 --> 00:18:06,960 Speaker 1: we gotta get Adam posing back and we'll talk about 312 00:18:07,440 --> 00:18:11,600 Speaker 1: what kind of fiscal policies um would work, particularly in 313 00:18:11,600 --> 00:18:15,040 Speaker 1: the United States. We've had wonderful guests this week. It's 314 00:18:15,040 --> 00:18:29,560 Speaker 1: just great, just great. Well, the focus of the morning's 315 00:18:29,600 --> 00:18:33,520 Speaker 1: trade is what happened or didn't happen in Japan or 316 00:18:33,600 --> 00:18:37,400 Speaker 1: the Bank of Japan did the minimum basically uh six 317 00:18:37,440 --> 00:18:41,040 Speaker 1: trillion additional e t F purchases for their q q 318 00:18:41,280 --> 00:18:44,840 Speaker 1: E program, not much more than that. We're also keeping 319 00:18:44,840 --> 00:18:46,320 Speaker 1: an eye on the stress test that will be later 320 00:18:46,359 --> 00:18:50,840 Speaker 1: today in the United States after the market's closed, we'll 321 00:18:50,880 --> 00:18:53,399 Speaker 1: get the results for European banks. So let's focus at 322 00:18:53,400 --> 00:18:56,359 Speaker 1: the moment on Japan. Bob Sinch is a chief Global 323 00:18:56,359 --> 00:19:01,199 Speaker 1: strategistic for Amherst Pierpont Securities and spends a lot of 324 00:19:01,200 --> 00:19:03,959 Speaker 1: his time studying what's happening in the currency market, and 325 00:19:04,000 --> 00:19:06,399 Speaker 1: that's where we're seeing the real reaction today. A hundred 326 00:19:06,760 --> 00:19:10,600 Speaker 1: one oh three point three four for your en right now, 327 00:19:11,160 --> 00:19:14,040 Speaker 1: it was as low as one oh two seventy one. 328 00:19:15,560 --> 00:19:19,159 Speaker 1: Does it continue to go much lower? Five times in 329 00:19:19,200 --> 00:19:22,600 Speaker 1: the last several decades we've seen the end hit a 330 00:19:22,720 --> 00:19:25,760 Speaker 1: hundred and two times it went below that, and when 331 00:19:25,760 --> 00:19:28,879 Speaker 1: it breaks a hundred, it tends to go much farther down. 332 00:19:29,359 --> 00:19:31,320 Speaker 1: So do we get to a hundred and then does 333 00:19:31,359 --> 00:19:34,320 Speaker 1: that scare the heck out of Coronason and the folks 334 00:19:34,359 --> 00:19:37,440 Speaker 1: at them off as well? I think if it goes further, 335 00:19:37,520 --> 00:19:39,840 Speaker 1: I think it would raise some concerns. You know, a 336 00:19:39,880 --> 00:19:42,200 Speaker 1: lot of times when you get those big breaks, though, 337 00:19:42,640 --> 00:19:45,960 Speaker 1: it's when the market has has been significantly short the 338 00:19:46,160 --> 00:19:49,920 Speaker 1: end uh and had to switch positions or or suddenly 339 00:19:49,920 --> 00:19:53,520 Speaker 1: started buying yet assets. Um, I don't think that's the case. 340 00:19:53,560 --> 00:19:56,000 Speaker 1: I think the spectative positions are a lot smaller this 341 00:19:56,040 --> 00:19:58,199 Speaker 1: time around. I think this is a more of a 342 00:19:58,240 --> 00:20:01,159 Speaker 1: slow moving train. And we've talked before about how Japan 343 00:20:01,280 --> 00:20:04,359 Speaker 1: is back to running a fairly large current account surplus, 344 00:20:04,800 --> 00:20:08,080 Speaker 1: and so you really need capital outflow from Japan in 345 00:20:08,160 --> 00:20:11,159 Speaker 1: order to keep the upward pressure, keep off the upward 346 00:20:11,160 --> 00:20:13,439 Speaker 1: pressure on the currency. And I just think in this 347 00:20:13,520 --> 00:20:16,440 Speaker 1: global environment, you're not seeing a lot of capital outflow 348 00:20:16,480 --> 00:20:20,000 Speaker 1: from Japan. UM. Certainly, I think the Japanese authorities would 349 00:20:20,040 --> 00:20:21,960 Speaker 1: be happy to see that, but so far it's it's 350 00:20:22,000 --> 00:20:25,240 Speaker 1: really not materializing. I think if the Fed show signs that, 351 00:20:25,280 --> 00:20:27,200 Speaker 1: in fact, they are going to be moving on rates, 352 00:20:27,840 --> 00:20:30,560 Speaker 1: that's probably the best remedy right now for dollar yen 353 00:20:30,640 --> 00:20:34,160 Speaker 1: and and keeping it above a hundred. Well, at this point, uh, 354 00:20:34,200 --> 00:20:37,480 Speaker 1: what can the Bank of Japan, if anything, do about 355 00:20:37,520 --> 00:20:39,760 Speaker 1: the currency. I mean, it makes me think they should 356 00:20:40,000 --> 00:20:44,520 Speaker 1: just buy treasuries. Well, indirectly, they'd love to be able 357 00:20:44,560 --> 00:20:47,080 Speaker 1: to do that through intervention. Unfortunately they've got this G 358 00:20:47,200 --> 00:20:51,200 Speaker 1: seven commitment which has really restricted their ability to uh 359 00:20:51,000 --> 00:20:54,320 Speaker 1: uh to do that, and certainly fiscal policy stimulus one 360 00:20:54,320 --> 00:20:57,000 Speaker 1: would think, um, you know, based on sort of a 361 00:20:57,080 --> 00:21:00,359 Speaker 1: theoretical construct that a tighter or or a c easy 362 00:21:00,440 --> 00:21:03,359 Speaker 1: monetary policy and a more stimultive fiscal policy is actually 363 00:21:03,359 --> 00:21:06,320 Speaker 1: positive for a currency. So I don't think there's much 364 00:21:06,480 --> 00:21:08,679 Speaker 1: left for the b o J to to to do. 365 00:21:08,840 --> 00:21:12,920 Speaker 1: I think, in fact, central banks around the world are 366 00:21:13,440 --> 00:21:15,439 Speaker 1: in my view, running on empty and they're starting to 367 00:21:15,480 --> 00:21:18,320 Speaker 1: signal it. Both Kuroda, I think we've heard that a 368 00:21:18,600 --> 00:21:22,080 Speaker 1: VCB president Droggy. I just don't think there's much left 369 00:21:22,119 --> 00:21:24,160 Speaker 1: for the central banks to do. Personally, I don't think 370 00:21:24,160 --> 00:21:25,960 Speaker 1: the Bank of England is going to be very aggressive 371 00:21:25,960 --> 00:21:27,600 Speaker 1: in cutting rates. I don't think they want to go 372 00:21:27,680 --> 00:21:31,040 Speaker 1: near the zero bound. So it's really shifting now to 373 00:21:31,280 --> 00:21:34,960 Speaker 1: fiscal policy around the world has to take up the mantel, 374 00:21:35,040 --> 00:21:38,280 Speaker 1: and I think central bankers are becoming more aggressive in 375 00:21:38,359 --> 00:21:41,120 Speaker 1: signaling that in their in their statements and their actions. 376 00:21:41,280 --> 00:21:43,600 Speaker 1: You're a strategist, You're paid to think big thoughts. You've 377 00:21:43,600 --> 00:21:45,879 Speaker 1: been around on Wall Street for a very long time. 378 00:21:45,920 --> 00:21:50,040 Speaker 1: But your whole construct, there is there any hope that 379 00:21:50,080 --> 00:21:52,560 Speaker 1: gets adopted on trading desks are going We're going to 380 00:21:52,560 --> 00:21:55,639 Speaker 1: see panic when things don't happen saying the Bank of 381 00:21:55,680 --> 00:21:58,840 Speaker 1: England or Bank of Japan. You know, I think markets 382 00:21:58,840 --> 00:22:01,520 Speaker 1: are beginning to adjust to that, but certainly these markets 383 00:22:01,520 --> 00:22:05,920 Speaker 1: are priced I think for continued monetary accommodation, UH, both 384 00:22:05,960 --> 00:22:08,120 Speaker 1: in the fixed income and equity market. So I think 385 00:22:08,160 --> 00:22:11,000 Speaker 1: there could could be an adjustment process ahead if if 386 00:22:11,000 --> 00:22:13,639 Speaker 1: the reality sets in that a number of central banks 387 00:22:13,640 --> 00:22:16,639 Speaker 1: aren't going to be easing further and we do eventually 388 00:22:16,680 --> 00:22:19,240 Speaker 1: have that FED hike. In December, we just had an 389 00:22:19,240 --> 00:22:21,919 Speaker 1: earnings report that is of interest to those of you 390 00:22:22,000 --> 00:22:25,280 Speaker 1: who are on the um economic part of our economics 391 00:22:25,320 --> 00:22:29,840 Speaker 1: finance markets. UM. You know, try focus here on Bluebirgs 392 00:22:30,000 --> 00:22:35,080 Speaker 1: Triathlon Briathlon UPS. Second quarter earnings dollar forty three. The 393 00:22:35,160 --> 00:22:39,840 Speaker 1: estmint was a dollar forty three. Revenue is UH fourteen 394 00:22:39,880 --> 00:22:42,960 Speaker 1: point six three billion, the consensus fourteen point six five. 395 00:22:43,320 --> 00:22:47,520 Speaker 1: I guess, UH twenty million dollars. You still in transit 396 00:22:47,600 --> 00:22:51,400 Speaker 1: or something like that. Here's the interesting thing, UM, what 397 00:22:51,440 --> 00:22:53,440 Speaker 1: we always want to do is see what their package 398 00:22:53,520 --> 00:22:57,520 Speaker 1: volume is. Are more companies, more people sending more stuff? 399 00:22:58,119 --> 00:23:01,120 Speaker 1: And they say yes, At least in the United States, 400 00:23:01,240 --> 00:23:05,639 Speaker 1: average package volume increased two and a half percent, and 401 00:23:05,840 --> 00:23:08,280 Speaker 1: next day air was up five point six percent, ground 402 00:23:08,320 --> 00:23:11,000 Speaker 1: products two point four percent. And they tell you those 403 00:23:11,040 --> 00:23:13,959 Speaker 1: who study these things that, Um, if you're seeing the 404 00:23:14,000 --> 00:23:17,440 Speaker 1: next day stuff rise faster than the ground stuff, that 405 00:23:17,480 --> 00:23:21,480 Speaker 1: means businesses are needing to get stuff more quickly. And 406 00:23:21,760 --> 00:23:25,280 Speaker 1: that's a good thing. Bob Sinch's Chief Goal Strategistic am 407 00:23:25,320 --> 00:23:29,119 Speaker 1: Herst Peer Punt Securities. UM, does that give you some 408 00:23:29,160 --> 00:23:32,879 Speaker 1: hope to that? Uh, you know, we're shipping more stuff 409 00:23:33,000 --> 00:23:35,399 Speaker 1: right now. As far as the outlook for the for 410 00:23:35,440 --> 00:23:37,960 Speaker 1: the economy, well, it's not a bad it's not a 411 00:23:37,960 --> 00:23:39,800 Speaker 1: bad sign certainly, but you know, we need to keep 412 00:23:39,800 --> 00:23:43,720 Speaker 1: in mind the microeconomic developments here right People are buying 413 00:23:43,760 --> 00:23:46,040 Speaker 1: a lot more online than they are in the in 414 00:23:46,080 --> 00:23:49,040 Speaker 1: the stores themselves, So you'd expect to see shipments continue 415 00:23:49,080 --> 00:23:54,280 Speaker 1: to to rise given the growth and consumer spending that 416 00:23:54,280 --> 00:23:58,280 Speaker 1: that actually isn't a terribly impressive number. I think so again, 417 00:23:58,320 --> 00:24:01,399 Speaker 1: I think it suggests an economy that's cruis any along 418 00:24:01,440 --> 00:24:05,600 Speaker 1: and about two uh growth on a fairly steady basis. 419 00:24:05,640 --> 00:24:08,120 Speaker 1: That's okay, but not great. We're talking about Bob Sinchi's 420 00:24:08,160 --> 00:24:12,320 Speaker 1: Global Black Cloud for Ever Spear Button Security. UM, we 421 00:24:12,359 --> 00:24:16,159 Speaker 1: are going to get GDP today and everybody was relatively 422 00:24:16,160 --> 00:24:21,160 Speaker 1: optimistic until yesterday. And uh and we saw a surgeon 423 00:24:21,280 --> 00:24:24,520 Speaker 1: imports that has a knocked down everybody's thoughts about growth 424 00:24:24,520 --> 00:24:27,520 Speaker 1: in the second quarter. How worried should we be? You 425 00:24:27,520 --> 00:24:30,240 Speaker 1: know about the number? Whether it's Mike, to be clear, 426 00:24:30,320 --> 00:24:33,280 Speaker 1: this is the first look, it's second quarter GDP? Is 427 00:24:33,320 --> 00:24:35,720 Speaker 1: that right? Yes? This first time we get a second 428 00:24:35,760 --> 00:24:40,120 Speaker 1: quarter the number is that? Is that? Like Mike? How 429 00:24:40,160 --> 00:24:43,120 Speaker 1: squishy is that number we're going to get? Well, obviously 430 00:24:43,440 --> 00:24:46,040 Speaker 1: it can be very squishy. The first look at first 431 00:24:46,080 --> 00:24:48,720 Speaker 1: quarter GDP doubled by the time we got to the 432 00:24:48,760 --> 00:24:53,080 Speaker 1: third the third look, yeah, there's there's there's quite a 433 00:24:53,080 --> 00:24:56,000 Speaker 1: bit of of adjustment and further data to come in. 434 00:24:56,080 --> 00:24:58,720 Speaker 1: Unlike China, which has their data all locked down two 435 00:24:58,760 --> 00:25:00,359 Speaker 1: weeks after the end of the quarter. How do they 436 00:25:00,400 --> 00:25:03,160 Speaker 1: do that? Uh? Yeah, they get together and say what 437 00:25:03,160 --> 00:25:05,000 Speaker 1: what what is GDP? And they say what would you 438 00:25:05,000 --> 00:25:10,440 Speaker 1: like it to be? Exactly? Look, Steve Stanley, my colleague, 439 00:25:10,440 --> 00:25:13,000 Speaker 1: is looking for actually a number just above three percent. 440 00:25:13,119 --> 00:25:14,640 Speaker 1: He had been all the way up at three three 441 00:25:15,119 --> 00:25:17,240 Speaker 1: scale that back a couple of tents based on that 442 00:25:17,600 --> 00:25:20,439 Speaker 1: trade number yesterday, although some of that we think was 443 00:25:20,520 --> 00:25:24,840 Speaker 1: price from from higher energy costs translating through into both 444 00:25:24,920 --> 00:25:28,000 Speaker 1: higher exports and imports in the US. So we think 445 00:25:28,000 --> 00:25:29,920 Speaker 1: it's a it's about a three percent number. You put 446 00:25:29,960 --> 00:25:31,720 Speaker 1: that together with about a one percent number in the 447 00:25:31,760 --> 00:25:34,240 Speaker 1: first quarter. Guess what, you're back to two percent or so. 448 00:25:34,240 --> 00:25:37,239 Speaker 1: So I think that's still the operable trend. What And 449 00:25:37,280 --> 00:25:40,119 Speaker 1: I know this never happens, and Steve, if you're listening, 450 00:25:40,160 --> 00:25:42,359 Speaker 1: I'm just going to use it as a for instance. 451 00:25:42,480 --> 00:25:45,960 Speaker 1: But what if Steve's wrong. It seems like markets have 452 00:25:46,080 --> 00:25:51,000 Speaker 1: been banking on the idea that growth has significantly picked 453 00:25:51,080 --> 00:25:54,199 Speaker 1: up from a lousy first quarter. Well, you know, the 454 00:25:54,240 --> 00:25:57,439 Speaker 1: consensus I think is somewhere around two and a half UM. 455 00:25:57,600 --> 00:26:01,880 Speaker 1: So you know, I think his view is it's above consensus. Uh, 456 00:26:02,240 --> 00:26:04,679 Speaker 1: and I think that's very reasonable. You know, the the 457 00:26:04,680 --> 00:26:07,679 Speaker 1: the consumer came back in in very strong fashion in 458 00:26:07,720 --> 00:26:10,800 Speaker 1: the second quarter. UM. I think the numbers in general 459 00:26:10,840 --> 00:26:12,879 Speaker 1: have been more upbeat in the last couple of weeks. 460 00:26:12,880 --> 00:26:15,080 Speaker 1: And I think that was reflected in the FEDS assessment 461 00:26:15,760 --> 00:26:19,119 Speaker 1: earlier this week that some of their worst worst fears 462 00:26:19,119 --> 00:26:23,280 Speaker 1: had not materialized. Uh. Certainly, I think the fears about 463 00:26:23,280 --> 00:26:26,040 Speaker 1: braggs that have been overdone. We've we've felt that all along, 464 00:26:26,520 --> 00:26:28,920 Speaker 1: So I think we're just setting a more stable tone. 465 00:26:28,960 --> 00:26:30,480 Speaker 1: And I think we'll add to that with the GDP 466 00:26:30,640 --> 00:26:33,360 Speaker 1: report this morning. The question, Bob, since you got last night, 467 00:26:33,560 --> 00:26:36,399 Speaker 1: and I've asked this question Mike McKee at least forty 468 00:26:36,400 --> 00:26:40,080 Speaker 1: two times, why not rounded up to forty three? If 469 00:26:40,119 --> 00:26:46,920 Speaker 1: they raised rates? What would happen? Yeah, people are dazzled 470 00:26:47,880 --> 00:26:51,280 Speaker 1: by the three of us sitting in this room, Angstein 471 00:26:51,520 --> 00:26:54,120 Speaker 1: over rased. They're like, what would happen to my life? 472 00:26:55,480 --> 00:26:58,520 Speaker 1: I don't think a lot. You might actually start getting 473 00:26:58,520 --> 00:27:01,719 Speaker 1: a little bit of yield on your on your savings deposits. 474 00:27:02,240 --> 00:27:04,600 Speaker 1: But I think that is the surprise here. The the 475 00:27:04,600 --> 00:27:08,359 Speaker 1: anks that the FED shows in in raising rates by 476 00:27:08,400 --> 00:27:10,879 Speaker 1: a quarter of a percent when they're still below one percent, 477 00:27:11,080 --> 00:27:14,200 Speaker 1: is in a longer term context, kind of mind boggling. It. 478 00:27:14,200 --> 00:27:18,000 Speaker 1: It's really not clear to me why they think that's 479 00:27:18,000 --> 00:27:21,320 Speaker 1: so terrible. Obviously they're concerned about it transmitting through the 480 00:27:21,359 --> 00:27:25,600 Speaker 1: economy through financial conditions, but put it off. The longer 481 00:27:25,680 --> 00:27:27,760 Speaker 1: you put it off, the worst it's going to be. 482 00:27:28,119 --> 00:27:30,960 Speaker 1: The currency. I think right now we've seen some weakness 483 00:27:30,960 --> 00:27:34,240 Speaker 1: in the dollar. Certainly the biggest acceleration of the dollar 484 00:27:34,359 --> 00:27:37,000 Speaker 1: was in late two thousand fourteen and two thousand fifteen, 485 00:27:37,520 --> 00:27:39,399 Speaker 1: and I think that's past and I think, you know, 486 00:27:39,440 --> 00:27:41,040 Speaker 1: we're starting to see that show up in some of 487 00:27:41,080 --> 00:27:43,200 Speaker 1: the U S data. So I don't think they should 488 00:27:43,200 --> 00:27:47,040 Speaker 1: be terribly afraid of what it does to the dollar. UM. 489 00:27:47,119 --> 00:27:49,159 Speaker 1: I don't think they should be terribly afraid of what 490 00:27:49,200 --> 00:27:52,320 Speaker 1: it does. The financial markets are eventually going to have to, um, 491 00:27:52,400 --> 00:27:54,879 Speaker 1: you know, stand on their own two feet. Uh. You know. 492 00:27:54,920 --> 00:27:56,720 Speaker 1: Our view is they should just get on with it. 493 00:27:56,760 --> 00:27:59,359 Speaker 1: But this is this is not the that, that's not 494 00:27:59,400 --> 00:28:04,440 Speaker 1: this fent. Get on with it. Uh, raise rates September 495 00:28:04,560 --> 00:28:08,679 Speaker 1: and then what no, I think Steve thinks they'll you know, 496 00:28:08,760 --> 00:28:11,800 Speaker 1: this is the Yellen Fed. They'll probably hold off till December, 497 00:28:12,160 --> 00:28:14,119 Speaker 1: and then I think they really they're really going to 498 00:28:14,200 --> 00:28:16,120 Speaker 1: take a good look at inflation, because if you look 499 00:28:16,160 --> 00:28:20,080 Speaker 1: at at service inflation, the non tradeable goods part of 500 00:28:20,240 --> 00:28:24,760 Speaker 1: the economy, UH, core services inflation is increasing over three 501 00:28:25,160 --> 00:28:27,680 Speaker 1: or prices are increasing over three percent year over year. 502 00:28:28,119 --> 00:28:31,400 Speaker 1: It's quietly starting to creep up. And and I think 503 00:28:31,440 --> 00:28:34,280 Speaker 1: there's a too strong a focus on the good side 504 00:28:34,280 --> 00:28:37,000 Speaker 1: of the economy. Or what we call the tradeable, tradeable 505 00:28:37,040 --> 00:28:39,280 Speaker 1: good side of the economy, where prices are still weak 506 00:28:39,320 --> 00:28:43,120 Speaker 1: from global competition, but in the domestic market definitely, there's 507 00:28:43,120 --> 00:28:46,640 Speaker 1: some upward pressure on pricing on the services side of 508 00:28:46,640 --> 00:28:50,040 Speaker 1: the economy where you don't have that international competition you 509 00:28:50,080 --> 00:28:52,920 Speaker 1: mentioned earlier. And we've had a nice fun with yan 510 00:28:53,080 --> 00:28:56,760 Speaker 1: Ran Minby and Brutal Moves. I just did a twenty 511 00:28:56,800 --> 00:29:02,280 Speaker 1: years study about quickly the push against obionomics has occurred 512 00:29:03,360 --> 00:29:05,680 Speaker 1: on a one year basis, the rated change has never 513 00:29:05,720 --> 00:29:09,040 Speaker 1: occurred in twenty years and two decades. What is the 514 00:29:09,080 --> 00:29:14,040 Speaker 1: effect of the failure of obionomics on China? You know, 515 00:29:14,160 --> 00:29:17,400 Speaker 1: I think China was would certainly hope that Japan would 516 00:29:17,400 --> 00:29:21,000 Speaker 1: be a market for them in which they can can export. 517 00:29:21,400 --> 00:29:24,480 Speaker 1: Um Now, we don't have a strong consumer sector in Japan. 518 00:29:24,520 --> 00:29:28,720 Speaker 1: It's a very Asian consumer sector in Japan, but certainly, um, 519 00:29:28,760 --> 00:29:31,680 Speaker 1: those are the two biggest economies across Asia, and they 520 00:29:31,680 --> 00:29:34,640 Speaker 1: would like to be supporting one another right now. The 521 00:29:34,680 --> 00:29:37,600 Speaker 1: only thing Japan, I think, is getting from China's disinflation. 522 00:29:37,680 --> 00:29:39,960 Speaker 1: You know, we just saw the core inflation readings for 523 00:29:40,040 --> 00:29:44,000 Speaker 1: Japan out for June last night. Most core inflation member 524 00:29:44,360 --> 00:29:47,520 Speaker 1: numbers in the in the developed world are stable to hire. 525 00:29:48,040 --> 00:29:51,000 Speaker 1: In Japan, it was point nine percent late last year. 526 00:29:51,000 --> 00:29:53,000 Speaker 1: It's all the way down to point four percent year 527 00:29:53,040 --> 00:29:55,640 Speaker 1: over year. Uh, it's heading in the wrong direction, and 528 00:29:55,680 --> 00:29:58,160 Speaker 1: I think they need a really a real rethink of 529 00:29:58,200 --> 00:30:02,040 Speaker 1: what they can do to get inflation pressure stabilized in Japan. 530 00:30:02,520 --> 00:30:04,400 Speaker 1: And like, this goes to something I used to think 531 00:30:04,440 --> 00:30:09,040 Speaker 1: about over the weekend, which is this deflationary and disinflationary 532 00:30:09,080 --> 00:30:14,320 Speaker 1: impulse that upsets assumptions, models, and certitude. The whole issue 533 00:30:14,360 --> 00:30:18,000 Speaker 1: of helicopter money is you spend more fiscally and then 534 00:30:18,200 --> 00:30:20,120 Speaker 1: you figure out a way to keep it off the books. 535 00:30:20,520 --> 00:30:22,320 Speaker 1: This is what it kind of comes down to, give it. 536 00:30:22,480 --> 00:30:27,040 Speaker 1: That's the smartest definition of their debt to GDP ratio 537 00:30:27,120 --> 00:30:30,840 Speaker 1: is two percent. Anything going to happen on the fiscal 538 00:30:30,880 --> 00:30:34,400 Speaker 1: side that could change that inflation calculate disinflation calculation you 539 00:30:34,440 --> 00:30:36,600 Speaker 1: talk about, I don't really think so. I think a 540 00:30:36,680 --> 00:30:38,959 Speaker 1: lot of it is is demographic around the world, and 541 00:30:39,000 --> 00:30:43,880 Speaker 1: particularly demographic factor of an aging population in Japan. Um. 542 00:30:43,920 --> 00:30:46,920 Speaker 1: You know, I'm not sure, um why they necessarily think 543 00:30:47,000 --> 00:30:49,280 Speaker 1: higher inflation is good for an economy with a with 544 00:30:49,320 --> 00:30:52,560 Speaker 1: an aging population on fixed incomes. But that sort of 545 00:30:52,600 --> 00:30:56,480 Speaker 1: has become the objective of central banks around the world. Um. 546 00:30:56,520 --> 00:31:00,840 Speaker 1: But I think in in general, um, you know, Japanese 547 00:31:00,840 --> 00:31:04,040 Speaker 1: consumers are kind of doing okay. Inflation is very low. 548 00:31:04,080 --> 00:31:07,640 Speaker 1: They'd probably like a little bit higher return on their investments, 549 00:31:08,200 --> 00:31:10,840 Speaker 1: particularly in the government bond market. But in terms of 550 00:31:10,880 --> 00:31:13,920 Speaker 1: helicopter money, I mean, look, if there's fiscal stimulus and 551 00:31:13,960 --> 00:31:18,440 Speaker 1: the b o J is buying up assets very aggressively effectively, 552 00:31:18,520 --> 00:31:21,720 Speaker 1: that is helicopter money. I think we're just basically, you know, 553 00:31:21,840 --> 00:31:25,440 Speaker 1: toying around with definitions. But but central banks around the 554 00:31:25,440 --> 00:31:28,280 Speaker 1: world have been buying government bonds and if there's fool 555 00:31:28,280 --> 00:31:31,680 Speaker 1: spending to go with it, that's that's the result. Bob Sinch, 556 00:31:32,120 --> 00:31:33,960 Speaker 1: thank you very generous for you to be with us 557 00:31:34,040 --> 00:31:48,800 Speaker 1: this morning with Ammer's pierpont. If you are fortunate, pass 558 00:31:48,840 --> 00:31:52,960 Speaker 1: the duck pond in Wellesley in Downrods sixteen. Tucked away 559 00:31:53,000 --> 00:31:55,760 Speaker 1: there is Wellesley High School and if you go to 560 00:31:55,800 --> 00:31:58,760 Speaker 1: Old Wellesley High School, the only old there's only one 561 00:31:58,800 --> 00:32:01,160 Speaker 1: Wellesley High School. It was like on it And if 562 00:32:01,200 --> 00:32:03,960 Speaker 1: you don't pay attention to the Dana Hall girls, you 563 00:32:04,040 --> 00:32:07,080 Speaker 1: maybe do well academically, end up in Luxembourg, go to 564 00:32:07,160 --> 00:32:11,440 Speaker 1: Boston College, then Johns Hopkins, and begin an extinguished career 565 00:32:11,480 --> 00:32:15,800 Speaker 1: in foreign policy. That would be Nicholas Burns, Ambassador, good morning, 566 00:32:16,880 --> 00:32:19,720 Speaker 1: good morning, great to be with you. You know, I 567 00:32:19,800 --> 00:32:23,680 Speaker 1: look back at your history and your path of your 568 00:32:23,800 --> 00:32:27,120 Speaker 1: excellence and foreign policy, and you must witness now the 569 00:32:27,200 --> 00:32:31,760 Speaker 1: foreign policy debate of the United States of America, and 570 00:32:31,800 --> 00:32:35,400 Speaker 1: I can only think, Nick Burns cries, how do we 571 00:32:35,600 --> 00:32:41,160 Speaker 1: get our foreign policy debate back on track? Well, actually, 572 00:32:41,200 --> 00:32:43,280 Speaker 1: I think it's going to be one of the big 573 00:32:43,320 --> 00:32:45,600 Speaker 1: issues in this election. I'm as you know, I'm supporting 574 00:32:45,640 --> 00:32:49,600 Speaker 1: Hillary Clinton and I'm advising her. It's the first presidential 575 00:32:49,640 --> 00:32:52,800 Speaker 1: campaign I've worked on since I was at Wellesley High School, 576 00:32:53,320 --> 00:32:55,680 Speaker 1: and um, that's because I was a career diplomat for 577 00:32:55,680 --> 00:32:58,120 Speaker 1: a long time with the US government. I think, you know, 578 00:32:58,360 --> 00:33:00,280 Speaker 1: the big debate is going to be our we an 579 00:33:00,320 --> 00:33:04,000 Speaker 1: open society or we a closed society. Donald Trump wants 580 00:33:04,000 --> 00:33:06,560 Speaker 1: to build wall a wall against Mexico, wants to keep 581 00:33:06,680 --> 00:33:09,800 Speaker 1: Muslins out of the country. He wants to abandon the 582 00:33:09,880 --> 00:33:12,320 Speaker 1: NATO Alliance, and he's questioned whether or not we should 583 00:33:12,320 --> 00:33:14,760 Speaker 1: even be allied with Japan and South Korea. To me, 584 00:33:15,680 --> 00:33:19,680 Speaker 1: these are fundamental building blocks of American success and American 585 00:33:19,760 --> 00:33:23,040 Speaker 1: strength in the world. I work for Republican presidents and 586 00:33:23,080 --> 00:33:26,040 Speaker 1: I work for Democratic presidents. All of our presidents since 587 00:33:26,080 --> 00:33:28,760 Speaker 1: Harry Truman, every single one of them, Republican and Democrat, 588 00:33:28,840 --> 00:33:30,920 Speaker 1: have believed that we should not go it alone in 589 00:33:30,920 --> 00:33:34,240 Speaker 1: the world. We cannot be isolationists. We've got to lead, 590 00:33:34,400 --> 00:33:36,760 Speaker 1: and we've got to have friends in the world because 591 00:33:37,160 --> 00:33:40,000 Speaker 1: we don't want our taxpayers to shoulder the burden for 592 00:33:40,080 --> 00:33:42,880 Speaker 1: international engagement alone, and we don't want our soldiers to 593 00:33:42,920 --> 00:33:45,280 Speaker 1: have to do that. That's why we have friends. And 594 00:33:45,280 --> 00:33:47,600 Speaker 1: I'll just say this very briefly. I was American Ambassador 595 00:33:47,600 --> 00:33:51,040 Speaker 1: to NATO on nine eleven, and then day after nine eleven, 596 00:33:51,360 --> 00:33:54,040 Speaker 1: early in the morning of September twelve, all of the 597 00:33:54,080 --> 00:33:57,000 Speaker 1: NATO allies, every single one of the Europeans in Canada, 598 00:33:57,040 --> 00:33:59,320 Speaker 1: came to us, to me and said, we want to 599 00:33:59,360 --> 00:34:03,200 Speaker 1: fight with you against Osama bin Laden. We invoked Article 600 00:34:03,240 --> 00:34:05,680 Speaker 1: five of a NATO treaty. That's that's an attack on 601 00:34:05,680 --> 00:34:07,440 Speaker 1: one of us is an attack on all of us. 602 00:34:07,800 --> 00:34:10,960 Speaker 1: All of those countries went to Afghanistan with us, all 603 00:34:11,000 --> 00:34:13,120 Speaker 1: of us, all of them are still there. That's the 604 00:34:13,200 --> 00:34:15,600 Speaker 1: value of an alliance. And for Donald Trump to question 605 00:34:15,800 --> 00:34:18,160 Speaker 1: whether we should belong to it when we're a leader, 606 00:34:18,200 --> 00:34:20,800 Speaker 1: I think it's fundamental. So your question is the right question. 607 00:34:21,160 --> 00:34:24,000 Speaker 1: Who are we as Americans? I think we're internationally minded. 608 00:34:24,640 --> 00:34:26,920 Speaker 1: We want to keep our commitments, and we want to 609 00:34:26,920 --> 00:34:28,759 Speaker 1: be strong at home, and part of being strong at 610 00:34:28,800 --> 00:34:31,120 Speaker 1: home in the twenty one century is having friends and 611 00:34:31,160 --> 00:34:34,120 Speaker 1: alliances around the world. I don't want to imply that 612 00:34:34,160 --> 00:34:36,600 Speaker 1: down Toup knows what he's talking about, but I do 613 00:34:36,680 --> 00:34:39,399 Speaker 1: want to ask you, since you're an expert on this 614 00:34:39,440 --> 00:34:44,319 Speaker 1: and Um, when questions are raised about our alliances, particularly 615 00:34:45,160 --> 00:34:49,759 Speaker 1: UH NATO, it's not unfair to say doesn't work the 616 00:34:49,760 --> 00:34:52,120 Speaker 1: way it should and how can we improve it? And 617 00:34:52,120 --> 00:34:55,000 Speaker 1: I'm wondering what you what you think of that argument 618 00:34:55,080 --> 00:34:58,680 Speaker 1: that maybe NATO does need some repair work. Oh, I 619 00:34:58,719 --> 00:35:01,440 Speaker 1: think it does. I think that's fair. Um, you know, 620 00:35:01,480 --> 00:35:04,880 Speaker 1: we're an alliance, were countries and NATA right now, and 621 00:35:04,880 --> 00:35:06,719 Speaker 1: what we say is that every one of us should 622 00:35:06,760 --> 00:35:09,720 Speaker 1: spend at least two percent of gross domestic product on defense. 623 00:35:09,760 --> 00:35:12,160 Speaker 1: The US, for a long time after nine eleven, was 624 00:35:12,160 --> 00:35:14,359 Speaker 1: spending over four percent, but the problem was a lot 625 00:35:14,360 --> 00:35:17,800 Speaker 1: of the big European countries, Germany, Italy, Spain, we're spending 626 00:35:17,880 --> 00:35:20,560 Speaker 1: well below two percent. So it's very fair to say 627 00:35:20,680 --> 00:35:24,200 Speaker 1: to the Europeans you all need to do more to 628 00:35:24,360 --> 00:35:27,400 Speaker 1: shoulder the burden. But the problem with the way Trump 629 00:35:27,440 --> 00:35:30,480 Speaker 1: has done it is it's almost like a Tony Soprano 630 00:35:30,600 --> 00:35:33,839 Speaker 1: protection racket. If you don't pay up by Monday morning, 631 00:35:33,880 --> 00:35:35,759 Speaker 1: I'm going to cut you off. And that's not how. 632 00:35:36,000 --> 00:35:38,520 Speaker 1: It doesn't work with angular Merkell, it doesn't work with 633 00:35:38,560 --> 00:35:41,279 Speaker 1: the Italian Prime minister. So you have to push them. 634 00:35:41,600 --> 00:35:43,960 Speaker 1: But I think we're better off pushing them, not by 635 00:35:44,080 --> 00:35:47,760 Speaker 1: threatening to walk away from them, but by by appealing 636 00:35:47,800 --> 00:35:51,200 Speaker 1: to their self interest. Now, since Vladimir Putin invaded Ukraine 637 00:35:51,200 --> 00:35:54,560 Speaker 1: in two thousand and fourteen, we've seen twenty of Allies 638 00:35:54,600 --> 00:35:58,120 Speaker 1: increased defense spending. I was in Berlin three weeks ago 639 00:35:58,680 --> 00:36:01,880 Speaker 1: and Angela Merkel announced that week that Germany was going 640 00:36:01,920 --> 00:36:04,360 Speaker 1: to engage in a major expansion of its defense and 641 00:36:04,680 --> 00:36:06,920 Speaker 1: defense spending. So I think they're going in the right direction. 642 00:36:07,320 --> 00:36:10,360 Speaker 1: It's good to push them, even publicly by some of 643 00:36:10,400 --> 00:36:13,439 Speaker 1: our politicians, but to threaten to walk away I think 644 00:36:13,440 --> 00:36:16,640 Speaker 1: that's got everyone really concerned in Europe about the basic 645 00:36:16,680 --> 00:36:20,600 Speaker 1: credibility of the US. Let's ask about that. He suggested 646 00:36:20,800 --> 00:36:24,560 Speaker 1: in a interview with David Sayer the New York Times 647 00:36:24,680 --> 00:36:28,279 Speaker 1: that he's willing to let the Baltics go. What does 648 00:36:28,320 --> 00:36:32,759 Speaker 1: that imply for the United States. I think that would 649 00:36:32,840 --> 00:36:35,359 Speaker 1: end American credibility in Europe. And here's what I mean 650 00:36:35,440 --> 00:36:39,439 Speaker 1: by that. The Baltic countries Estonia, Latvia, and Lithuania are 651 00:36:39,440 --> 00:36:41,759 Speaker 1: members of the Native Alliance. They came in formally in 652 00:36:41,800 --> 00:36:45,640 Speaker 1: two thousand four under George W. Bush's privacy, and we 653 00:36:45,719 --> 00:36:49,200 Speaker 1: have pledged to defend them, and they've pledged to defend us. 654 00:36:49,200 --> 00:36:50,919 Speaker 1: And I already said they all came to our eight 655 00:36:50,920 --> 00:36:54,560 Speaker 1: at nine eleven. If Vladimir Putin were to attack one 656 00:36:54,560 --> 00:36:58,239 Speaker 1: of the Baltic states and NATO did not respond, then 657 00:36:58,239 --> 00:37:01,160 Speaker 1: I think NATO's finished, and it would just encourage Putin 658 00:37:01,320 --> 00:37:05,160 Speaker 1: to do what he does, which is to ship away 659 00:37:05,160 --> 00:37:08,200 Speaker 1: at people's borders and try to expand Russia's influence. Now 660 00:37:08,239 --> 00:37:12,960 Speaker 1: he's rational, He's not irrational if we say to him, look, 661 00:37:13,080 --> 00:37:15,360 Speaker 1: here's the red line in Europe and don't cross it. 662 00:37:15,560 --> 00:37:17,719 Speaker 1: If he believes that were strong he won't cross it. 663 00:37:18,200 --> 00:37:20,520 Speaker 1: The Soviet leaders did not do that during the Cold War. 664 00:37:20,600 --> 00:37:23,400 Speaker 1: So if Donald Trump says I may not defend the 665 00:37:23,400 --> 00:37:25,759 Speaker 1: Baltic stage, which is exactly what he said to David 666 00:37:25,800 --> 00:37:29,520 Speaker 1: Sanger in that New York Times interview last week, then 667 00:37:29,560 --> 00:37:33,560 Speaker 1: I think he really smashes American credibility. He introduces a 668 00:37:33,640 --> 00:37:37,279 Speaker 1: doubt about whether we'll keep our words. That that's fundamental 669 00:37:37,320 --> 00:37:39,520 Speaker 1: influence policy, and I think it was a big mistake 670 00:37:39,560 --> 00:37:43,520 Speaker 1: of judgment by Donald Trump. Nick Burns um, it would 671 00:37:43,560 --> 00:37:45,799 Speaker 1: be rude of us to ask you your politics. We're 672 00:37:45,840 --> 00:37:47,480 Speaker 1: not going to do that. What I am going to 673 00:37:47,600 --> 00:37:50,080 Speaker 1: say as you grew up in Amelia where there were 674 00:37:50,120 --> 00:37:55,200 Speaker 1: four Democrats in Wellesley, three in Weston, in seven in Lexington, 675 00:37:55,280 --> 00:37:58,440 Speaker 1: and that was about the extent, and the world revolved 676 00:37:58,480 --> 00:38:02,280 Speaker 1: around someone my grandparents. It's worshiped Edward Brooke, a senator 677 00:38:02,680 --> 00:38:06,600 Speaker 1: from Massachusetts who did a lot. First, do you see 678 00:38:06,640 --> 00:38:13,000 Speaker 1: any reality that Republicans will vote for Secretary Clinton? Well, 679 00:38:13,400 --> 00:38:15,520 Speaker 1: first of all, thank you for all the shoutouts to Wellesley, 680 00:38:15,560 --> 00:38:17,160 Speaker 1: mass because I love I know a little bit of 681 00:38:19,080 --> 00:38:23,160 Speaker 1: I grew up with Republican parents, um, but parents who 682 00:38:23,280 --> 00:38:25,960 Speaker 1: my my mom and dad Um. I think because of 683 00:38:26,000 --> 00:38:27,680 Speaker 1: the end of the Vietnam War, and certainly in the 684 00:38:27,680 --> 00:38:32,160 Speaker 1: case my dad, the Watergate became very disillusioned with Um, 685 00:38:32,160 --> 00:38:35,080 Speaker 1: with the Republican Party. And I grew up as a 686 00:38:35,120 --> 00:38:39,200 Speaker 1: teenager at well behind self described as a Democrat in 687 00:38:39,000 --> 00:38:40,880 Speaker 1: the in the mid nineteen seventies. But when I went 688 00:38:40,880 --> 00:38:43,640 Speaker 1: into the Foreign Service at the age of I think 689 00:38:43,640 --> 00:38:47,359 Speaker 1: I went to the Foreign Service, I of course had 690 00:38:47,400 --> 00:38:49,600 Speaker 1: to be neutral because I was a civil servant for 691 00:38:49,600 --> 00:38:52,439 Speaker 1: the United States, and throughout my entire career I serve 692 00:38:52,520 --> 00:38:55,600 Speaker 1: Republican presidents as well as Democrats, and we cannot be 693 00:38:55,680 --> 00:38:59,000 Speaker 1: involved in politics. There's a law that prevents h and 694 00:38:59,040 --> 00:39:01,840 Speaker 1: that's the right law. Since I've left government, I have 695 00:39:01,960 --> 00:39:05,480 Speaker 1: come back and I'm I'm register of the Democrat and 696 00:39:05,480 --> 00:39:09,000 Speaker 1: I'm working for Hillary Clinton. But I'm bipartisan, and I 697 00:39:09,000 --> 00:39:12,239 Speaker 1: think there is room in this election for a lot 698 00:39:12,239 --> 00:39:15,880 Speaker 1: of Republicans to support Hillary Clinton. I have a number 699 00:39:15,880 --> 00:39:20,080 Speaker 1: of Republican friends who are completely disillusioned with Donald Trump well, 700 00:39:20,320 --> 00:39:23,279 Speaker 1: and I think IDA will silently support Hillary Clinton or 701 00:39:23,320 --> 00:39:25,520 Speaker 1: public Okay, Nix, We're gonna have to cut it off there. 702 00:39:25,600 --> 00:39:27,319 Speaker 1: The next time we talk to you, I want you 703 00:39:27,360 --> 00:39:32,080 Speaker 1: to fix Red Sox relief pitching, Nick Burns a Wellesley, Massachusetts, 704 00:39:32,120 --> 00:39:34,720 Speaker 1: and of course, with his public service to the nation. 705 00:39:37,200 --> 00:39:41,319 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 706 00:39:41,360 --> 00:39:46,760 Speaker 1: listen to interviews on iTunes, SoundCloud, or whichever podcast platform 707 00:39:46,840 --> 00:39:50,960 Speaker 1: you prefer. I'm on Twitter at Tom Keane, Michael McKee 708 00:39:51,000 --> 00:39:54,600 Speaker 1: is at Economy Before the podcast. You can always catch 709 00:39:54,680 --> 00:40:00,440 Speaker 1: us worldwide. I'm Bloomberg Radio.