1 00:00:00,040 --> 00:00:02,640 Speaker 1: Who you put your trust in matters. Investors have put 2 00:00:02,680 --> 00:00:07,000 Speaker 1: their trust and independent registered investment advisors to the two 3 00:00:07,280 --> 00:00:11,360 Speaker 1: four trillion dollars Why Learn more at find your Independent 4 00:00:11,400 --> 00:00:26,960 Speaker 1: Advisor dot com. Welcome to the Bloomberg Surveillance Podcast. I'm 5 00:00:27,040 --> 00:00:30,920 Speaker 1: Tom Keene with David Gura. Daily we bring you insight 6 00:00:31,000 --> 00:00:35,560 Speaker 1: from the best in economics, finance, investment and international relations. 7 00:00:35,960 --> 00:00:40,559 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 8 00:00:40,640 --> 00:00:48,480 Speaker 1: of course on the Bloomberg We're back with David Folgers Landau. 9 00:00:48,600 --> 00:00:51,560 Speaker 1: He's Deutsche Bank chief economist. David, when I look, first 10 00:00:51,560 --> 00:00:55,360 Speaker 1: of all, your Mario draggy right, and you've done everything 11 00:00:55,400 --> 00:00:57,960 Speaker 1: you could with your mandate to try and reflect the 12 00:00:57,960 --> 00:01:00,920 Speaker 1: economy or at least show us to your recovery. You've 13 00:01:00,960 --> 00:01:04,679 Speaker 1: taken risk out of yields because that's exactly what you wanted, 14 00:01:04,720 --> 00:01:07,480 Speaker 1: so that there are no bond vigilantes. But actually, how 15 00:01:07,520 --> 00:01:09,440 Speaker 1: do you deal with the Donald Trump presidency? Is it 16 00:01:09,640 --> 00:01:12,680 Speaker 1: much more uncertainty? Again he's dealing with the exit of 17 00:01:13,000 --> 00:01:15,520 Speaker 1: the UK from the European Union and we don't know 18 00:01:15,600 --> 00:01:20,360 Speaker 1: what comes next. But continental Europe has been a challenged 19 00:01:20,400 --> 00:01:23,760 Speaker 1: continent in economic terms for some time now. In that 20 00:01:23,840 --> 00:01:26,240 Speaker 1: we have a central bank that's basically run out of 21 00:01:26,440 --> 00:01:30,200 Speaker 1: ammunition and and overshot it's it's not it's mandate, but 22 00:01:30,240 --> 00:01:34,560 Speaker 1: overshot its policy tools quite a bit, ending up with 23 00:01:34,600 --> 00:01:37,640 Speaker 1: a couple of chilion balance sheet pretty soon. We have 24 00:01:38,400 --> 00:01:42,280 Speaker 1: a government securities markets that don't properly signal risk anymore 25 00:01:42,400 --> 00:01:47,720 Speaker 1: because of m and others. Uh. And we've got plus unemployment, 26 00:01:47,800 --> 00:01:52,600 Speaker 1: youth unemployment, frances regular unemployment. Uh and we've just marked 27 00:01:52,600 --> 00:01:55,000 Speaker 1: down growth to almost half we had it's just six 28 00:01:55,040 --> 00:01:58,720 Speaker 1: months ago. This election has a tremendous impact on Europe, 29 00:01:58,720 --> 00:02:03,520 Speaker 1: tremendously negative. Um think of defense. Think of defense in 30 00:02:03,560 --> 00:02:06,559 Speaker 1: the sense that Europe basically doesn't have a proper defense 31 00:02:06,600 --> 00:02:12,040 Speaker 1: posture except for NATO. If the President elect chooses to 32 00:02:12,080 --> 00:02:14,919 Speaker 1: reduce his contributions to NATO, that will impose the tremendous 33 00:02:14,919 --> 00:02:16,880 Speaker 1: burning Europeans. But can it be a wake up call? 34 00:02:16,960 --> 00:02:19,600 Speaker 1: And in certain you know this US election result will 35 00:02:19,680 --> 00:02:23,080 Speaker 1: shift European values or will it just spur the politicians 36 00:02:23,080 --> 00:02:25,840 Speaker 1: attack that That is the big worry that people like 37 00:02:25,919 --> 00:02:27,560 Speaker 1: me have, in the sense that yes, it should be 38 00:02:27,600 --> 00:02:29,080 Speaker 1: a wake up call. It could be a wake up 39 00:02:29,120 --> 00:02:32,440 Speaker 1: called Europe has the correct lead potential to catch up. 40 00:02:33,160 --> 00:02:36,680 Speaker 1: The question is the political arrangements are so entrenched and 41 00:02:36,760 --> 00:02:39,080 Speaker 1: it's so difficult to get changed done in Europe and 42 00:02:39,120 --> 00:02:42,720 Speaker 1: to get policy reactions done quickly that I'm very pessimistic 43 00:02:42,720 --> 00:02:44,280 Speaker 1: about that. Well, well then that let's care that for 44 00:02:44,400 --> 00:02:46,440 Speaker 1: bring up the charter, Anthony, if you would in London. 45 00:02:46,480 --> 00:02:49,160 Speaker 1: This is the Italian tenure and I requested back to 46 00:02:49,200 --> 00:02:52,240 Speaker 1: two thousand eleven. And it's amazing off that red line, 47 00:02:52,760 --> 00:02:55,360 Speaker 1: the leg the move up. If I talk about Italy 48 00:02:55,440 --> 00:02:58,600 Speaker 1: as an emerging market to the rescue, it is supposed 49 00:02:58,639 --> 00:03:02,040 Speaker 1: to come European fed realism. I don't observe it. Is 50 00:03:02,040 --> 00:03:04,800 Speaker 1: it there? So what? It definitely is there? So here 51 00:03:04,880 --> 00:03:07,880 Speaker 1: we have a country um that there has a hundred 52 00:03:08,520 --> 00:03:12,920 Speaker 1: plus death the GDP ratio zero growth runs a deficit 53 00:03:12,960 --> 00:03:16,320 Speaker 1: of three percent, so it keeps accumulating that um and 54 00:03:16,400 --> 00:03:20,840 Speaker 1: it was trading a hundred PEPs above bond. Completely distorted. Now, 55 00:03:21,240 --> 00:03:24,800 Speaker 1: given that the referendum is outcome is in doubt. You 56 00:03:24,840 --> 00:03:26,840 Speaker 1: see it all sund going up behund. The basis points 57 00:03:27,040 --> 00:03:29,560 Speaker 1: My worry is that as we come closer to the 58 00:03:29,600 --> 00:03:33,480 Speaker 1: referendum date and as Trump's changes make themselves felt that 59 00:03:33,520 --> 00:03:36,880 Speaker 1: you're going to see external investors pulling back completely and 60 00:03:36,920 --> 00:03:38,880 Speaker 1: instead of getting a hundred paces point, but we're gonna 61 00:03:38,880 --> 00:03:41,160 Speaker 1: go to four percent and then you're going to have 62 00:03:41,160 --> 00:03:43,560 Speaker 1: an impact on the banking system in Italy and the 63 00:03:43,600 --> 00:03:46,840 Speaker 1: rest of Europe. So for me, Italy is the country 64 00:03:46,840 --> 00:03:49,000 Speaker 1: that I would I would worry about as a flash 65 00:03:49,000 --> 00:03:52,040 Speaker 1: point for additional European princing jump in here? But what's 66 00:03:52,040 --> 00:03:54,280 Speaker 1: so critical here? And you had Joe Stiglets is your 67 00:03:54,280 --> 00:03:57,680 Speaker 1: morning mustard? This morning? There was a Stiglet's equation that 68 00:03:57,800 --> 00:04:00,400 Speaker 1: even the most arch conservative ac car and a Mr 69 00:04:00,520 --> 00:04:03,600 Speaker 1: Politician had to look at, which is that that g 70 00:04:03,880 --> 00:04:07,480 Speaker 1: that growth rate in the formula of how a country 71 00:04:07,520 --> 00:04:10,880 Speaker 1: moves forward? And as dr focus Landa Mensions, the little 72 00:04:10,960 --> 00:04:14,000 Speaker 1: G isn't there for Italy and so much more of Europe. Right, 73 00:04:14,040 --> 00:04:17,159 Speaker 1: But I guess the question is as appalling as it 74 00:04:17,200 --> 00:04:22,120 Speaker 1: may seem to more liberal factions of politics or what 75 00:04:22,160 --> 00:04:25,599 Speaker 1: we're accustomed to. Would someone from the five Star movement 76 00:04:25,839 --> 00:04:30,400 Speaker 1: jump start growth into the or is that just unthinkable? No, 77 00:04:30,920 --> 00:04:33,080 Speaker 1: I think that would be It's probably not going to happen. 78 00:04:33,120 --> 00:04:36,080 Speaker 1: But what needs to happen is that if Italy gets 79 00:04:36,080 --> 00:04:38,520 Speaker 1: into difficulty, it needs an I m F program, uh 80 00:04:39,160 --> 00:04:41,480 Speaker 1: and others have to be a general realignment on the 81 00:04:41,560 --> 00:04:46,320 Speaker 1: regular choice side, a market efficiency and labor market efficiency. 82 00:04:46,800 --> 00:04:50,640 Speaker 1: And it's got to be done. But outside outside agency, 83 00:04:50,720 --> 00:04:52,600 Speaker 1: I don't know actually will be accepted and withoud the 84 00:04:52,640 --> 00:04:57,160 Speaker 1: alternative be for Italy to um sometimes choose to leave 85 00:04:57,200 --> 00:04:59,240 Speaker 1: the European Union. At this is this is what I 86 00:04:59,240 --> 00:05:01,480 Speaker 1: mean by saying this could be a wake up qualities. 87 00:05:01,520 --> 00:05:04,239 Speaker 1: Changes could be made, but we have seen since OMT 88 00:05:04,560 --> 00:05:08,600 Speaker 1: that that changes haven't been made. Okay, this is haven't 89 00:05:08,600 --> 00:05:10,279 Speaker 1: been done. This is the I m F program. Bring 90 00:05:10,320 --> 00:05:12,760 Speaker 1: up this chart of francying. This is the Egyptian pound. 91 00:05:13,080 --> 00:05:17,440 Speaker 1: Are you Are you equating Italy with the depreciation managed 92 00:05:17,480 --> 00:05:19,920 Speaker 1: by the I m F of the Egyptian pound. I mean, 93 00:05:20,080 --> 00:05:22,560 Speaker 1: it's a little bit entertainment, your folks. I'm not equating 94 00:05:22,600 --> 00:05:25,200 Speaker 1: Cairo to Rome. But come on, and I am F 95 00:05:25,320 --> 00:05:29,000 Speaker 1: bailout of Italy or an I m F reorganization of Italy. 96 00:05:29,200 --> 00:05:32,719 Speaker 1: That's strong language, not of the organization, not a bailout. 97 00:05:33,000 --> 00:05:36,640 Speaker 1: Italy needs to reform its labor markets, its pension systems, 98 00:05:36,720 --> 00:05:41,479 Speaker 1: legal systems, government governance, system, each banking system. This has 99 00:05:41,560 --> 00:05:44,080 Speaker 1: not happened. It is not happened. It is posing at 100 00:05:44,160 --> 00:05:46,560 Speaker 1: risk for the rest of Europe, and it isn't happening 101 00:05:46,560 --> 00:05:48,640 Speaker 1: because of OMT. Once you take O m T D 102 00:05:48,720 --> 00:05:50,640 Speaker 1: used to be out of the picture, you will see 103 00:05:50,920 --> 00:05:54,000 Speaker 1: BTP rates going to four percent and then you will 104 00:05:54,040 --> 00:05:56,560 Speaker 1: have this particular problem. Fancy, and I want to begin 105 00:05:57,000 --> 00:06:01,200 Speaker 1: uh with this conversation with you on Italy and your 106 00:06:01,400 --> 00:06:04,360 Speaker 1: thoughts on what Dr Folgers Lando said about the I 107 00:06:04,560 --> 00:06:07,400 Speaker 1: m F coming in. To me, that's almost unimaginable that 108 00:06:07,480 --> 00:06:09,880 Speaker 1: they would do, right, I mean, the problem to you know, 109 00:06:10,000 --> 00:06:11,880 Speaker 1: David's point is that we've been trying to reform the 110 00:06:11,920 --> 00:06:14,880 Speaker 1: country for what ten fifteen years. We had a lot 111 00:06:15,000 --> 00:06:18,200 Speaker 1: more Well, you could argue that the former political class 112 00:06:18,240 --> 00:06:21,520 Speaker 1: wasn't that keen on reforming, but you know, since Terrans 113 00:06:21,560 --> 00:06:24,080 Speaker 1: he came into power, we're expecting many more things. Youth 114 00:06:24,160 --> 00:06:26,840 Speaker 1: unemployment is absolutely true, and so what I agree with 115 00:06:27,279 --> 00:06:29,520 Speaker 1: David on is that if you look at the Donald 116 00:06:29,560 --> 00:06:32,320 Speaker 1: Trump presidency and the fact that he got elected when 117 00:06:32,360 --> 00:06:35,920 Speaker 1: you have twenty percent even youth unemployment, that you are 118 00:06:36,000 --> 00:06:37,920 Speaker 1: going to see a lot of people in it to 119 00:06:38,040 --> 00:06:40,160 Speaker 1: the actually having for a protest vote, so it's very 120 00:06:40,200 --> 00:06:42,600 Speaker 1: likely that he will lose a referendum. What comes next 121 00:06:42,640 --> 00:06:45,560 Speaker 1: time wouldn't be palable, palatable to to the Italians to 122 00:06:45,640 --> 00:06:49,480 Speaker 1: actually get into an i m F program, no, very 123 00:06:49,560 --> 00:06:52,160 Speaker 1: very difficult, and I suspect that the European would put 124 00:06:52,200 --> 00:06:54,720 Speaker 1: Europeans would put something together by way of Troy or 125 00:06:54,800 --> 00:06:57,120 Speaker 1: something like that, to have it domestically, to have an 126 00:06:57,120 --> 00:07:00,920 Speaker 1: inside European financed and with European rules, attack through it um. 127 00:07:01,320 --> 00:07:03,760 Speaker 1: But that's not how the global financism is supposed to 128 00:07:03,800 --> 00:07:06,000 Speaker 1: work the I m F since at the center if 129 00:07:06,040 --> 00:07:09,720 Speaker 1: a country has debt difficulties, that's where the reforms are 130 00:07:09,720 --> 00:07:14,160 Speaker 1: supposed to come from, and not just regionally. So I'm 131 00:07:15,720 --> 00:07:17,960 Speaker 1: the actual outcome but probably not involved in I m F. 132 00:07:18,040 --> 00:07:19,720 Speaker 1: But that's where it should be going. But again, the 133 00:07:19,840 --> 00:07:22,560 Speaker 1: heart of the debate going back more than twenty years 134 00:07:22,800 --> 00:07:26,320 Speaker 1: is Germany has the same currency as Italy and they're 135 00:07:26,400 --> 00:07:28,800 Speaker 1: not the same economies. Are there? So look at the 136 00:07:28,840 --> 00:07:32,240 Speaker 1: statistic from nineteen seventy to the year two thousand, when 137 00:07:32,240 --> 00:07:38,520 Speaker 1: the Europe began, Germany revalued against the lira BO eight zero. 138 00:07:38,680 --> 00:07:41,160 Speaker 1: Now that's over. You can't do it anymore have the 139 00:07:41,200 --> 00:07:43,880 Speaker 1: same currency. Now that means Italy has to continue. You 140 00:07:43,920 --> 00:07:48,040 Speaker 1: have a domestic domestic devaluation in prices. You can only 141 00:07:49,000 --> 00:07:50,920 Speaker 1: and it's just very very hard to do. So this 142 00:07:51,040 --> 00:07:52,800 Speaker 1: problem with Italy is going to be with us for 143 00:07:52,840 --> 00:07:57,200 Speaker 1: a long time to come unless Italy implements very significant, 144 00:07:57,480 --> 00:08:01,640 Speaker 1: very deep structural reform, and it can't do that by itself. 145 00:08:01,880 --> 00:08:04,480 Speaker 1: David in twenty seconds, would it think be better off 146 00:08:04,520 --> 00:08:11,840 Speaker 1: outside the Arizone? It's tough without reforms. Yes, with reforms, 147 00:08:11,880 --> 00:08:14,000 Speaker 1: would be better inside the Eurozone obviously if it can 148 00:08:14,080 --> 00:08:17,240 Speaker 1: put it to the uniforms stay in. Without it, you 149 00:08:17,400 --> 00:08:19,760 Speaker 1: just have this. You're constantly on the village of crisis. 150 00:08:31,600 --> 00:08:33,800 Speaker 1: We continue to look forward here after the election of 151 00:08:33,840 --> 00:08:36,280 Speaker 1: Donald Trump, to see what he might do policy wise, 152 00:08:36,440 --> 00:08:38,800 Speaker 1: he might appointed his cabinet. Also useful here to look 153 00:08:38,880 --> 00:08:42,760 Speaker 1: back and see how so many polls got it so wrong. 154 00:08:42,840 --> 00:08:45,240 Speaker 1: Frank Newport is the editor in chief of Gallop, the 155 00:08:45,320 --> 00:08:48,160 Speaker 1: venerable polling agency, and it's great to speak with you, Frank, 156 00:08:48,200 --> 00:08:50,880 Speaker 1: Thanks for joining us. Thank you good to be with you. 157 00:08:51,320 --> 00:08:54,000 Speaker 1: Help us understand here how so many people got this 158 00:08:54,160 --> 00:08:56,199 Speaker 1: so wrong. Going into the election, it seemed like a 159 00:08:56,320 --> 00:08:58,320 Speaker 1: sure bat that that Hillary Clinton was going to win 160 00:08:58,360 --> 00:09:02,959 Speaker 1: the presidency. What happened, Well, we we've of course been 161 00:09:03,000 --> 00:09:05,360 Speaker 1: looking at that. Gallup was not involved in trying to 162 00:09:05,440 --> 00:09:07,199 Speaker 1: predict the election, So I'm kind of looking at this 163 00:09:07,280 --> 00:09:11,360 Speaker 1: as a dispassionate outside observer. This time a confluence of factors. 164 00:09:11,480 --> 00:09:13,839 Speaker 1: Let me mention several or quickly. One is, Hillary Clinton 165 00:09:13,920 --> 00:09:15,880 Speaker 1: did win the popular vote, and she's probably gonna win 166 00:09:15,960 --> 00:09:18,080 Speaker 1: by one to two percent. So it was a confusing 167 00:09:18,160 --> 00:09:21,640 Speaker 1: election in that sense. Note that the national polls had 168 00:09:21,679 --> 00:09:24,680 Speaker 1: said she would win the national vote were actually accurate 169 00:09:24,760 --> 00:09:26,559 Speaker 1: and actually not that far off, probably going to be 170 00:09:26,640 --> 00:09:30,040 Speaker 1: more accurate than they were in twelve. So these national 171 00:09:30,160 --> 00:09:33,400 Speaker 1: polls had said, here's the popular vote. I think, given 172 00:09:33,440 --> 00:09:37,160 Speaker 1: all the constraints that polling has underdid a pretty good job. Second, 173 00:09:37,280 --> 00:09:40,920 Speaker 1: the problem was state polling, which is notoriously difficult in 174 00:09:41,040 --> 00:09:45,400 Speaker 1: state flight Wisconsin, in Michigan, and North Carolina. To a degree, 175 00:09:45,840 --> 00:09:49,240 Speaker 1: the polling had suggested that she would win and she didn't. Uh, 176 00:09:49,320 --> 00:09:52,760 Speaker 1: And when those polls went arrived the so called forecasting models, 177 00:09:52,800 --> 00:09:56,520 Speaker 1: which became all the rage this time. All they do 178 00:09:56,679 --> 00:09:58,559 Speaker 1: is take those state polls and crank them into some 179 00:09:58,640 --> 00:10:01,600 Speaker 1: pseudoscience models. So when those state polls weren't so good, 180 00:10:02,000 --> 00:10:07,000 Speaker 1: these forecasting monum outles eight five percent ninety percent probability 181 00:10:07,080 --> 00:10:09,199 Speaker 1: that you'll win, and everybody just took that as gospel. 182 00:10:09,240 --> 00:10:11,760 Speaker 1: And that's why that compounded to make it really look 183 00:10:11,800 --> 00:10:15,040 Speaker 1: like people were wrong. A nicely said Frank Newport. Helped 184 00:10:15,040 --> 00:10:17,199 Speaker 1: me here with one over the square root of n 185 00:10:17,880 --> 00:10:22,120 Speaker 1: in that, I find no one bothers to have pay 186 00:10:22,240 --> 00:10:26,439 Speaker 1: reverence and honor to margin of error. With all the 187 00:10:26,640 --> 00:10:30,480 Speaker 1: killing of polars and strategists and pundits, are we just 188 00:10:30,679 --> 00:10:35,599 Speaker 1: juvenile in our disrespect for margin of error? Well? I 189 00:10:35,679 --> 00:10:37,800 Speaker 1: think so, margin of error we can you uh, I 190 00:10:37,880 --> 00:10:40,839 Speaker 1: think it just symbolizes the fact that polling is an 191 00:10:40,960 --> 00:10:43,959 Speaker 1: estimate of a population parameter, and they're gonna be it 192 00:10:44,040 --> 00:10:46,679 Speaker 1: can't be precise. It's very difficult, particularly in a state. 193 00:10:47,360 --> 00:10:51,160 Speaker 1: Most states have hugely different voting in the metropolitan areas 194 00:10:51,200 --> 00:10:54,559 Speaker 1: and outstate you know, truan Wisconsin, you know, Milwaukee is 195 00:10:54,600 --> 00:10:57,839 Speaker 1: totally in Madison totally different than outstates. Tru in Pennsylvania, 196 00:10:58,120 --> 00:11:02,040 Speaker 1: you know, Philadelphia is totally are strongly democratic, but the outstates, 197 00:11:02,200 --> 00:11:04,800 Speaker 1: by Alabama, in Pennsylvania, so if you get those, you're 198 00:11:04,800 --> 00:11:07,160 Speaker 1: trying to estimate turnout across these areas, and if you 199 00:11:07,240 --> 00:11:09,760 Speaker 1: missed the turnout estimates, of course you're going to miss 200 00:11:09,800 --> 00:11:12,520 Speaker 1: the overall estimate. And it's hard. In Wisconsin, the last 201 00:11:12,559 --> 00:11:15,320 Speaker 1: poll was done six days before the election, the lot 202 00:11:15,320 --> 00:11:18,280 Speaker 1: amount have changed. So, yes, polls are just estimates. And 203 00:11:18,360 --> 00:11:21,000 Speaker 1: in these closed swing states are close by definition, right, 204 00:11:21,080 --> 00:11:22,760 Speaker 1: so they're the hardest states of all to try to 205 00:11:22,920 --> 00:11:25,480 Speaker 1: estimate what's going to happen in. So it's very tricky business. 206 00:11:25,760 --> 00:11:28,199 Speaker 1: Right going into election day, the Donald Trump campaign was 207 00:11:28,320 --> 00:11:31,400 Speaker 1: very confident that it was very confident in its internal polling. 208 00:11:31,960 --> 00:11:34,719 Speaker 1: Help us understand the difference there between internal polling and 209 00:11:34,760 --> 00:11:37,400 Speaker 1: the kind of polling that Gallop does that other polling 210 00:11:37,440 --> 00:11:41,160 Speaker 1: houses do. Of course, success is a father, failure as 211 00:11:41,240 --> 00:11:44,599 Speaker 1: many is an orphan. You know, success has many fathers. So, 212 00:11:44,679 --> 00:11:47,000 Speaker 1: of course, to the people who want so, you know, 213 00:11:47,040 --> 00:11:49,959 Speaker 1: we knew it all along. Internal polling is nothing but 214 00:11:50,320 --> 00:11:52,400 Speaker 1: the polling that's paid for and done by the candidates. 215 00:11:52,440 --> 00:11:54,440 Speaker 1: They just don't release the publicly. Is that sometimes it's 216 00:11:54,480 --> 00:11:56,640 Speaker 1: pretty good. They have pretty good posters and they do 217 00:11:56,720 --> 00:11:58,720 Speaker 1: their own poll they do them in some unusual ways 218 00:11:58,840 --> 00:12:01,160 Speaker 1: to try to predict what's had and going. A candidate says, 219 00:12:01,800 --> 00:12:04,160 Speaker 1: my internal calling too was extra. Why he's talking about her, 220 00:12:04,240 --> 00:12:06,680 Speaker 1: She's talking about the calling that they paid for, which 221 00:12:06,720 --> 00:12:08,760 Speaker 1: can be good. These people are pretty skilled that work 222 00:12:08,800 --> 00:12:11,040 Speaker 1: for the candidates very quickly here and we're gonna we're 223 00:12:11,040 --> 00:12:13,319 Speaker 1: gonna have you stay with us. A lot of talk 224 00:12:13,400 --> 00:12:16,320 Speaker 1: about the the effect of the email investigation. How large 225 00:12:16,360 --> 00:12:18,000 Speaker 1: did that loom here on voters minds going to the 226 00:12:18,000 --> 00:12:21,559 Speaker 1: ballot box on Tuesday? It was huge. We asked with 227 00:12:21,640 --> 00:12:23,800 Speaker 1: the project we did with Michigan University of Michigan, and 228 00:12:23,840 --> 00:12:26,400 Speaker 1: George said, we were asking voters every day, what did 229 00:12:26,440 --> 00:12:28,599 Speaker 1: you reach here here about Hillary Clinton and Trump? In 230 00:12:28,640 --> 00:12:31,040 Speaker 1: the last day or two, an email just dominated, going 231 00:12:31,080 --> 00:12:34,640 Speaker 1: all the way back to July. Um emails, emails, emails. 232 00:12:34,720 --> 00:12:36,319 Speaker 1: I wrote this in a piece of emails with the 233 00:12:36,360 --> 00:12:39,120 Speaker 1: bane of Hillary Clinton's existence. She wishes she'd never seen 234 00:12:39,200 --> 00:12:42,280 Speaker 1: an email. I'm sure, but a lot of voters just 235 00:12:42,480 --> 00:12:45,640 Speaker 1: last on the emails in all their manifestations. You know 236 00:12:45,720 --> 00:12:49,480 Speaker 1: whom I Avideen's emails or servers emails, Podesta's emails, all 237 00:12:49,520 --> 00:12:52,080 Speaker 1: these different kind of emails came to symbolize it. Looked 238 00:12:52,120 --> 00:12:54,800 Speaker 1: like to us for voters a lot of her weaknesses 239 00:12:54,840 --> 00:12:57,720 Speaker 1: in terms of their perception she was dishonest and also 240 00:12:57,840 --> 00:13:00,240 Speaker 1: kind of colluding with the power. David Durry here with 241 00:13:00,400 --> 00:13:02,840 Speaker 1: Tom Keene, also joined by Frank Newport, editor in chief 242 00:13:02,960 --> 00:13:04,960 Speaker 1: of Gallup. We were talking about some of the issues 243 00:13:05,080 --> 00:13:08,680 Speaker 1: on voters minds going to the ballot box on Tuesday. Frank, 244 00:13:08,800 --> 00:13:10,800 Speaker 1: let me ask you what we know about turnout. Our 245 00:13:10,840 --> 00:13:14,320 Speaker 1: conversations ahead of election, they all centered on how readily, 246 00:13:14,360 --> 00:13:16,640 Speaker 1: how easily these candidates could get people to come to 247 00:13:16,720 --> 00:13:18,959 Speaker 1: the pulse. What do we know now six days out 248 00:13:18,960 --> 00:13:23,560 Speaker 1: about how well they did that? Well? The vult are 249 00:13:23,600 --> 00:13:25,439 Speaker 1: still being counted to some degree, but it looks like 250 00:13:25,520 --> 00:13:28,360 Speaker 1: overall turnout is not was not high. In fact, it 251 00:13:28,440 --> 00:13:30,920 Speaker 1: was lower than the last several elections. So overall this 252 00:13:31,120 --> 00:13:35,400 Speaker 1: was not a robust turnout election, and that's important. Enthusiasm 253 00:13:35,520 --> 00:13:38,480 Speaker 1: was at the lowest we've measured in Gallup before the election, 254 00:13:38,559 --> 00:13:41,000 Speaker 1: so people just weren't excited about it. Two very unfavorably 255 00:13:41,040 --> 00:13:44,959 Speaker 1: evaluated candidates. It certainly doesn't look like um from what 256 00:13:45,080 --> 00:13:47,079 Speaker 1: I've seen so far, that Hillary Clint was able to 257 00:13:47,160 --> 00:13:50,040 Speaker 1: duplicate the turnout among certain groups of rock Obama had 258 00:13:50,080 --> 00:13:54,040 Speaker 1: been able to generate. That would be young people and minorities, um. 259 00:13:54,120 --> 00:13:56,040 Speaker 1: And to some degree, she didn't get the same level 260 00:13:56,080 --> 00:13:58,679 Speaker 1: of vote Latino's actually did. It looked like when the 261 00:13:58,720 --> 00:14:01,560 Speaker 1: acted polls slightly less for her than they did vote 262 00:14:01,600 --> 00:14:04,280 Speaker 1: for Barack Obama against mid Remney back in two twelve. 263 00:14:04,320 --> 00:14:06,520 Speaker 1: So that was an issue as well. And if everybody 264 00:14:06,600 --> 00:14:10,160 Speaker 1: has talked about and noted, the data clearly suggests that 265 00:14:10,960 --> 00:14:13,559 Speaker 1: Trump was able to get higher than usual turn out 266 00:14:13,600 --> 00:14:16,920 Speaker 1: in rural areas, areas outside metropolitan areas, and some of 267 00:14:17,000 --> 00:14:19,280 Speaker 1: these key swing states, and that was very, very important 268 00:14:19,320 --> 00:14:23,920 Speaker 1: for him. Newport, How will your world change? I'm in 269 00:14:24,040 --> 00:14:27,920 Speaker 1: the camp of not wanting to bash on Polsters. I 270 00:14:27,960 --> 00:14:30,960 Speaker 1: think there's a lot more moving parts going on. But 271 00:14:31,120 --> 00:14:33,360 Speaker 1: is it the same old, same old four years from 272 00:14:33,400 --> 00:14:38,560 Speaker 1: now or will it forever change for Polsters? Well, I'm 273 00:14:38,600 --> 00:14:42,800 Speaker 1: not sure it will forever change at all. Again, Gallup 274 00:14:43,280 --> 00:14:45,320 Speaker 1: was not involved in the horse phrase estimate at all, 275 00:14:45,400 --> 00:14:47,280 Speaker 1: which is a change. You know, we decided to put 276 00:14:47,320 --> 00:14:50,240 Speaker 1: our effort elsewhere, we think, and I personally think there's 277 00:14:50,280 --> 00:14:52,600 Speaker 1: too much effort on just trying to forecast who's gonna 278 00:14:52,600 --> 00:14:55,360 Speaker 1: win which could spend more time on understanding why candidates 279 00:14:55,400 --> 00:14:57,960 Speaker 1: winning and what the voters want candidates to do. All 280 00:14:58,000 --> 00:14:59,880 Speaker 1: of this huge amount of effort in time, and the 281 00:15:00,040 --> 00:15:02,680 Speaker 1: forecasting goes away after the elections. Who carriage? You know 282 00:15:02,800 --> 00:15:06,400 Speaker 1: that doesn't have any lasting value broadly speaking, it's a 283 00:15:06,440 --> 00:15:09,480 Speaker 1: good question. The industry as a whole is always looking 284 00:15:09,600 --> 00:15:11,240 Speaker 1: to change. You know. We used to do all of 285 00:15:11,280 --> 00:15:13,720 Speaker 1: our interviewing in person. That shifted to the telephone. There's 286 00:15:13,720 --> 00:15:18,040 Speaker 1: a lot of institutions that are doing internet polling now, 287 00:15:18,640 --> 00:15:20,960 Speaker 1: you know, trying to use the internet or smartphones. So 288 00:15:21,040 --> 00:15:23,520 Speaker 1: I think the methods that posters us are going to 289 00:15:23,680 --> 00:15:26,360 Speaker 1: change and may be different four years from now, regardless 290 00:15:26,360 --> 00:15:28,760 Speaker 1: of the election, just in general. But our goal will 291 00:15:28,800 --> 00:15:31,400 Speaker 1: remain the same, and that is trying which I think 292 00:15:31,480 --> 00:15:33,880 Speaker 1: is critically important in the democracy. Trying to measure and 293 00:15:33,960 --> 00:15:36,680 Speaker 1: understand what Americans are thinking and feeling. That's an important 294 00:15:36,720 --> 00:15:38,600 Speaker 1: goal and we need to keep doing that. Frank, some 295 00:15:38,680 --> 00:15:41,280 Speaker 1: of our colleagues at another news outlet, I won't name 296 00:15:41,320 --> 00:15:45,760 Speaker 1: it already, looking ahead to go ahead please. It's a 297 00:15:45,840 --> 00:15:48,640 Speaker 1: piece in the hill looking at the top ten Democrats 298 00:15:48,680 --> 00:15:51,480 Speaker 1: who might run for for the nomination in two thousand twenties. 299 00:15:51,520 --> 00:15:53,080 Speaker 1: So here we are. You know, with five six days 300 00:15:53,080 --> 00:15:56,280 Speaker 1: since election, we're already starting to look ahead to what 301 00:15:56,480 --> 00:15:59,040 Speaker 1: what what? What do we learn from this campaign about 302 00:15:59,080 --> 00:16:03,640 Speaker 1: the persistence of campaigning in the year two thousand and sixteen. Well, 303 00:16:03,720 --> 00:16:06,120 Speaker 1: we know the public thought this campaign was horrible. The 304 00:16:06,200 --> 00:16:08,680 Speaker 1: tone was negative. They weren't satisfied was how it was wrung. 305 00:16:08,760 --> 00:16:10,560 Speaker 1: It went on too long. The public doesn't like the 306 00:16:10,600 --> 00:16:13,600 Speaker 1: electoral college, who would rather go to a direct popular vote. 307 00:16:13,640 --> 00:16:16,040 Speaker 1: That's been evident for decades now. Public would like a 308 00:16:16,080 --> 00:16:18,760 Speaker 1: lot of change in this UM. It's hard to get 309 00:16:18,760 --> 00:16:21,720 Speaker 1: a precise measure on how short the campaign should be, 310 00:16:21,840 --> 00:16:23,720 Speaker 1: but I think Americans would be quite happy if we 311 00:16:23,840 --> 00:16:26,040 Speaker 1: cut down this year and a half's worth of slug 312 00:16:26,120 --> 00:16:29,400 Speaker 1: food campaigning UM down to something that was much more 313 00:16:29,440 --> 00:16:31,960 Speaker 1: reasonable in terms of time, if that's what you're asking 314 00:16:32,480 --> 00:16:34,840 Speaker 1: rather than I mean, you're right, these candidates are already 315 00:16:34,880 --> 00:16:42,400 Speaker 1: assembling staffs now looking ahead to Frank. What will we see? Oh, 316 00:16:42,560 --> 00:16:45,080 Speaker 1: we think we just lost Frank Newport. Well we think 317 00:16:45,200 --> 00:16:47,960 Speaker 1: him for his effort today, David, you and I can 318 00:16:48,000 --> 00:16:52,280 Speaker 1: continue here. David, I thought, without question, the most important 319 00:16:52,360 --> 00:16:56,240 Speaker 1: essay the weekend was Robert Skidelski, Lord Skadelsky writing in 320 00:16:56,280 --> 00:17:00,600 Speaker 1: Project Syndicate, the great Keynesian biographer, who who gave us 321 00:17:01,160 --> 00:17:04,080 Speaker 1: David immense history, and that's in so much of the 322 00:17:04,119 --> 00:17:07,240 Speaker 1: analysis has been missing. We can barely get some people 323 00:17:07,280 --> 00:17:09,479 Speaker 1: to go back to the nineteen sixty and the regime 324 00:17:09,600 --> 00:17:13,320 Speaker 1: change of JFK. We certainly have trouble going back to 325 00:17:13,400 --> 00:17:17,000 Speaker 1: early Eisenhower, even back to the twenties and Calvin Coolidge 326 00:17:17,040 --> 00:17:20,040 Speaker 1: and Skidelski did that with a vengeance of how things 327 00:17:20,119 --> 00:17:23,760 Speaker 1: can unravel if it's not properly managed. Lord Skodolski, who 328 00:17:23,800 --> 00:17:25,600 Speaker 1: I think you're gonna be speaking with with tomorrow, he's 329 00:17:25,760 --> 00:17:28,920 Speaker 1: with us tomorrow. Incredible piece and and made me think 330 00:17:28,960 --> 00:17:31,280 Speaker 1: of the conversation that we had with Neil Ferguson on 331 00:17:31,440 --> 00:17:33,320 Speaker 1: on Friday. He was trying to view a bit of 332 00:17:33,400 --> 00:17:36,399 Speaker 1: it into the conversation. Now a couple of days out, 333 00:17:36,440 --> 00:17:38,320 Speaker 1: I got around to reading that Michael Barone piece that 334 00:17:38,480 --> 00:17:40,159 Speaker 1: that you wanted me to to check out in the 335 00:17:40,200 --> 00:17:42,560 Speaker 1: Washington's amer Michael Brown's column on the heels of that election. 336 00:17:42,640 --> 00:17:44,960 Speaker 1: He called, uh, it astounding. That was the lead to 337 00:17:44,960 --> 00:17:47,000 Speaker 1: the piece. Astounding, That's the best word to describe the 338 00:17:47,040 --> 00:17:50,159 Speaker 1: tumultuous election night into to most people's surprise victory of 339 00:17:50,200 --> 00:17:53,879 Speaker 1: Donald Trump. UH in that election really interesting as I 340 00:17:53,960 --> 00:17:56,960 Speaker 1: began to sort of sift through the demographics looking at 341 00:17:57,000 --> 00:18:00,000 Speaker 1: the at who voted something Frank Newport was talking about 342 00:18:00,119 --> 00:18:02,000 Speaker 1: just a few moments ago, and who didn't vote? And 343 00:18:02,080 --> 00:18:04,879 Speaker 1: I think that the headline there of the fact that 344 00:18:05,000 --> 00:18:07,200 Speaker 1: so many fewer people went to the polls. It's gonna 345 00:18:07,200 --> 00:18:08,680 Speaker 1: be something we're gonna be working with for a while. 346 00:18:08,760 --> 00:18:11,600 Speaker 1: Here I put the bar chart out. I can't remember, sorry, folks, 347 00:18:11,640 --> 00:18:14,840 Speaker 1: I can't remember the citation, but a very simple bar 348 00:18:15,040 --> 00:18:19,119 Speaker 1: chart that basically said, uh, the president of two thousand 349 00:18:19,240 --> 00:18:21,960 Speaker 1: eight and the president of two thousand twelve, they simply 350 00:18:22,000 --> 00:18:26,000 Speaker 1: didn't show up. For Secretary Clinton, David tell our global 351 00:18:26,119 --> 00:18:29,800 Speaker 1: audience the color of protests Saturday and Sunday, UH in 352 00:18:30,200 --> 00:18:32,560 Speaker 1: New York and around the country. Was it different than 353 00:18:32,600 --> 00:18:35,520 Speaker 1: the previous days? Was there something distinctive? I got the 354 00:18:35,560 --> 00:18:38,239 Speaker 1: sense I wasn't in Manhattan on on Saturday, but from 355 00:18:38,280 --> 00:18:40,400 Speaker 1: social media and talking to friends, I got a sense 356 00:18:40,440 --> 00:18:42,479 Speaker 1: that the protests were growing in size. I think there 357 00:18:42,560 --> 00:18:44,680 Speaker 1: was a march from from Union Square up Fifth Avenue. 358 00:18:45,000 --> 00:18:47,520 Speaker 1: So I think that that that anger continues, and that 359 00:18:47,600 --> 00:18:51,080 Speaker 1: anger seems to be getting channeled into these into these protests. 360 00:18:51,520 --> 00:18:53,480 Speaker 1: I continue to wonder Tom sort of what the the 361 00:18:53,680 --> 00:18:55,720 Speaker 1: the end result of that will be, In other words, 362 00:18:55,760 --> 00:18:57,520 Speaker 1: what are there Yes, there are grievances here. There are 363 00:18:57,520 --> 00:19:00,160 Speaker 1: people who were upset with how the election turned out 364 00:19:00,200 --> 00:19:04,200 Speaker 1: on Tuesday. Uh, they're they're making that dissatisfaction known. But 365 00:19:04,280 --> 00:19:06,040 Speaker 1: I don't know what the the end game for that is. 366 00:19:06,160 --> 00:19:07,920 Speaker 1: And of core, he said, this was something that Donald 367 00:19:07,960 --> 00:19:10,680 Speaker 1: Trump talked about in that interview last night, Leslie Stall 368 00:19:10,760 --> 00:19:12,280 Speaker 1: asking him, you know, if he had a message for 369 00:19:12,440 --> 00:19:15,800 Speaker 1: for those protesters, and he said two words, stop it. 370 00:19:15,920 --> 00:19:18,040 Speaker 1: And CBS since then has gotten a lot of criticism 371 00:19:18,119 --> 00:19:21,120 Speaker 1: for for holding that as we've seen a violence estimate, 372 00:19:21,440 --> 00:19:24,040 Speaker 1: you know, in cities across the country. Donald Trump with 373 00:19:24,320 --> 00:19:27,639 Speaker 1: a concise message to protesters there to lay off. It 374 00:19:27,800 --> 00:19:30,720 Speaker 1: was interesting coming out of hethrow folks. The vibrancy, of 375 00:19:30,800 --> 00:19:33,720 Speaker 1: course of the airport always visible. I got in on 376 00:19:33,840 --> 00:19:37,639 Speaker 1: early Sunday morning, but they're driving out around the acclaimed rotary. 377 00:19:38,359 --> 00:19:42,640 Speaker 1: David Gurrow was the big billboard sign obviously talking their 378 00:19:42,680 --> 00:19:45,640 Speaker 1: book of the runway coming up in eight or nine 379 00:19:45,840 --> 00:19:48,639 Speaker 1: years ago. It was, you know, interesting to see the 380 00:19:48,720 --> 00:19:52,000 Speaker 1: core infrastructure project of the Western world as we know 381 00:19:52,160 --> 00:19:55,720 Speaker 1: it bannered across UH the entryway to the four lane 382 00:19:55,760 --> 00:19:59,240 Speaker 1: highway into London. Speaking infrastructure here again that the conversation 383 00:19:59,320 --> 00:20:02,800 Speaker 1: here center on on on that infrastructure package. Donald Trump's 384 00:20:02,800 --> 00:20:04,960 Speaker 1: promised to double what Hillary Clinton would have done, so 385 00:20:05,240 --> 00:20:07,440 Speaker 1: so he will no doubt be hashing that out with 386 00:20:07,480 --> 00:20:10,240 Speaker 1: how Speaker Paul Ryan and the Senate Majority Leader. I 387 00:20:10,359 --> 00:20:13,680 Speaker 1: was struck over the weekend by how Donald Trump is 388 00:20:13,720 --> 00:20:16,760 Speaker 1: beginning to piece together his his administration, obviously hiring Steve 389 00:20:16,840 --> 00:20:19,480 Speaker 1: Bannon and runs previous for senior positions in his staff. 390 00:20:19,520 --> 00:20:22,080 Speaker 1: He called the President of China last night, rather received 391 00:20:22,080 --> 00:20:24,720 Speaker 1: a phone call from the President of China last night. UH. 392 00:20:25,240 --> 00:20:27,840 Speaker 1: He said that the president wished him well after the 393 00:20:27,920 --> 00:20:31,439 Speaker 1: historic election, and according to the Trump transition team here, 394 00:20:31,520 --> 00:20:33,840 Speaker 1: during the call, the leaders established a clear sense of 395 00:20:33,920 --> 00:20:37,119 Speaker 1: mutual respect for one another, and President Electrump stated that 396 00:20:37,160 --> 00:20:38,680 Speaker 1: he believes the two leaders will have one of the 397 00:20:38,760 --> 00:20:42,040 Speaker 1: strongest relationships for both countries moving forward. I'm just thinking 398 00:20:42,080 --> 00:20:44,520 Speaker 1: what James Foley was saying here about the degree to 399 00:20:44,560 --> 00:20:46,919 Speaker 1: which the rhetoric we heard on the campaign trail may erode. 400 00:20:55,840 --> 00:20:59,199 Speaker 1: Who you put your trust in matters. Investors have put 401 00:20:59,280 --> 00:21:03,160 Speaker 1: their trust in independent registered investment advisors to the two 402 00:21:03,160 --> 00:21:06,240 Speaker 1: and of four trillion dollars. Why they see their roles 403 00:21:06,320 --> 00:21:09,920 Speaker 1: to serve, not sell. That's why Charles Schwab is committed 404 00:21:10,200 --> 00:21:15,040 Speaker 1: to the success over seven thousand independent financial advisors who 405 00:21:15,200 --> 00:21:20,600 Speaker 1: passionately dedicate themselves to helping people achieve their financial goals. 406 00:21:21,040 --> 00:21:32,320 Speaker 1: Learn more at find your Independent Advisor dot com. David 407 00:21:32,359 --> 00:21:34,080 Speaker 1: Gurr in New York, I'm in London and joining me 408 00:21:34,160 --> 00:21:40,439 Speaker 1: now Charles Duma, who has been remarkably oppression about tepid 409 00:21:40,560 --> 00:21:45,679 Speaker 1: economic growth. He is with T. S. Lombard joins us. Now, 410 00:21:45,840 --> 00:21:49,680 Speaker 1: I first must congratulate you on the acquisition of Jonathan Fenby. 411 00:21:50,560 --> 00:21:55,640 Speaker 1: This is like cricketer baseball. This this involved massive negotiations. 412 00:21:55,840 --> 00:21:59,320 Speaker 1: What a what a joy to see the thoughtful stuff, 413 00:21:59,359 --> 00:22:01,560 Speaker 1: to has law where it doesn't, to bring Mr Fenby 414 00:22:01,680 --> 00:22:04,640 Speaker 1: into it. Why did you hire Mr Fenby? We didn't 415 00:22:04,680 --> 00:22:09,359 Speaker 1: know him. We merged with trusting sources and we're putting 416 00:22:09,400 --> 00:22:14,399 Speaker 1: the political into Lombard. That's it. This is fabulous. The 417 00:22:14,480 --> 00:22:17,040 Speaker 1: two of you together, tell me about the T s. 418 00:22:17,200 --> 00:22:20,960 Speaker 1: Lombard worldview. What will that be post Trump? Well, I 419 00:22:21,080 --> 00:22:24,040 Speaker 1: think as far as post trumpers, he seems to be. 420 00:22:25,359 --> 00:22:28,040 Speaker 1: It's interesting. You know, he's one thing as a candidate, 421 00:22:28,200 --> 00:22:32,320 Speaker 1: something slightly different as um as an elected, if not 422 00:22:32,520 --> 00:22:36,959 Speaker 1: yet inaugurated president. So um. You know, these contracts are 423 00:22:37,040 --> 00:22:39,520 Speaker 1: quite usually a matter of fact, I learned this weekend 424 00:22:39,600 --> 00:22:43,080 Speaker 1: Charles Duma that part of the known world doesn't know 425 00:22:43,200 --> 00:22:47,960 Speaker 1: who Nelson Rockefeller is, which surprised me. Is this Rockefeller 426 00:22:48,040 --> 00:22:53,600 Speaker 1: Republicanism and the new guys? Well, he's certainly economically you 427 00:22:53,640 --> 00:22:56,879 Speaker 1: could argue to the left of Mrs Clinton, which is 428 00:22:56,920 --> 00:23:00,800 Speaker 1: an interesting point, although obviously if we're going for a 429 00:23:00,920 --> 00:23:03,800 Speaker 1: much easier fiscal stance, it may well be more in 430 00:23:03,840 --> 00:23:06,960 Speaker 1: the form of tax cuts at the top end of 431 00:23:07,000 --> 00:23:09,480 Speaker 1: the range and corporation tax cuts. But of course the 432 00:23:09,840 --> 00:23:14,360 Speaker 1: the infrastructure side is also extremely interesting and and rather positive. 433 00:23:14,760 --> 00:23:17,159 Speaker 1: To dig into the fiscal side there. How does a 434 00:23:17,480 --> 00:23:23,600 Speaker 1: Donald Trump presidency complicate things for for the European Central Bank? Well, uh, 435 00:23:24,480 --> 00:23:27,520 Speaker 1: never mind the European Center what about the fat um? 436 00:23:28,119 --> 00:23:30,760 Speaker 1: You know, our view is that you're looking at inflation 437 00:23:30,880 --> 00:23:33,720 Speaker 1: that's around two percent now, just over two for the 438 00:23:33,800 --> 00:23:36,840 Speaker 1: CPI just under two for the consumity flater on a 439 00:23:36,920 --> 00:23:39,800 Speaker 1: core basis, and oil prices are up over the course 440 00:23:39,840 --> 00:23:42,639 Speaker 1: of the year. So by early next year, the the 441 00:23:42,840 --> 00:23:44,440 Speaker 1: CPI is going to be close to two and a 442 00:23:44,480 --> 00:23:46,800 Speaker 1: half percent and the deflate is going to be around 443 00:23:46,840 --> 00:23:50,000 Speaker 1: two percent. Now, if you look at when wages that 444 00:23:50,119 --> 00:23:52,040 Speaker 1: are currently coming through it about two and a half 445 00:23:52,119 --> 00:23:54,240 Speaker 1: three percent were formed, which is about a year back, 446 00:23:54,640 --> 00:23:58,479 Speaker 1: inflation was virtually nil, so people are expecting or at 447 00:23:58,520 --> 00:24:02,359 Speaker 1: five cent unemployment, they were were bargaining for two real 448 00:24:02,520 --> 00:24:05,240 Speaker 1: gains and add that to to percent inflation and you're 449 00:24:05,280 --> 00:24:08,439 Speaker 1: looking at a wait by spot. I mean, David, your 450 00:24:08,520 --> 00:24:11,879 Speaker 1: question brings up something important. This doesn't work on Bloomberg Radio, 451 00:24:12,040 --> 00:24:15,040 Speaker 1: but I'll probably do this David Girl tomorrow on television, 452 00:24:15,119 --> 00:24:18,600 Speaker 1: which is to compare and contrast the dot chart of 453 00:24:18,800 --> 00:24:22,080 Speaker 1: now versus where it was a click a go and 454 00:24:22,160 --> 00:24:26,040 Speaker 1: the answer is the markets moved yeah, yeah, yeah, that's right, 455 00:24:26,480 --> 00:24:28,760 Speaker 1: and and so to get back and so I guess 456 00:24:28,840 --> 00:24:31,200 Speaker 1: what I'm saying is that the Fed has got a 457 00:24:31,280 --> 00:24:34,720 Speaker 1: lot of catching up to do, and that inflation is 458 00:24:34,800 --> 00:24:37,240 Speaker 1: likely to be too sent by early next year and 459 00:24:37,359 --> 00:24:40,800 Speaker 1: pushing towards sleeper center a year later. So you know, 460 00:24:40,880 --> 00:24:44,800 Speaker 1: even if they tightened by a quarter percent every second meeting, 461 00:24:45,160 --> 00:24:48,040 Speaker 1: they'd still be behind inflation in two years time. I 462 00:24:48,119 --> 00:24:49,960 Speaker 1: had a conversation with it with a woman last week 463 00:24:49,960 --> 00:24:52,440 Speaker 1: who's charged with heading up the monetary policy side of 464 00:24:52,480 --> 00:24:54,520 Speaker 1: things for the Donald Trump transition team. It was it 465 00:24:54,600 --> 00:24:57,880 Speaker 1: was a frustrating conversation, in part because she wasn't allowing 466 00:24:58,040 --> 00:24:59,800 Speaker 1: very much. Here from where you sit, what does a 467 00:25:00,000 --> 00:25:02,120 Speaker 1: Donald Trump Fed looked like? Do we have any sense 468 00:25:02,200 --> 00:25:05,239 Speaker 1: of of whom he might appointed these two vacancies who 469 00:25:05,320 --> 00:25:07,880 Speaker 1: might replace Danny Yellen in two thousand eighteen, any sense 470 00:25:07,960 --> 00:25:11,360 Speaker 1: of his his vision for monetary policy. No, I don't 471 00:25:11,400 --> 00:25:13,639 Speaker 1: think he's got round to that in any kind of 472 00:25:13,760 --> 00:25:17,240 Speaker 1: serious way. But what I do think has become evident, 473 00:25:17,320 --> 00:25:20,040 Speaker 1: particularly here in Britain over the last few months, is 474 00:25:20,200 --> 00:25:23,800 Speaker 1: that there's no such thing as a non political monetary 475 00:25:23,880 --> 00:25:29,320 Speaker 1: policy um and so I think the business of independence, 476 00:25:29,480 --> 00:25:32,520 Speaker 1: whether the Fed Bank of England or anyone else, is 477 00:25:32,640 --> 00:25:35,600 Speaker 1: liable to start being eroded. And with good reason I 478 00:25:35,640 --> 00:25:39,480 Speaker 1: should have said, can you link all of the expectations, 479 00:25:39,640 --> 00:25:43,320 Speaker 1: the set of expectations that we have and what has 480 00:25:43,440 --> 00:25:46,159 Speaker 1: changed in our world. Can you link them in to 481 00:25:46,359 --> 00:25:51,080 Speaker 1: higher real GDP. I think in terms of longer term 482 00:25:51,160 --> 00:25:57,159 Speaker 1: growth UM. Maybe tax cuts help a little bit UM 483 00:25:57,520 --> 00:26:01,200 Speaker 1: and over time we're expecting some improved moment in labor mobility, 484 00:26:01,240 --> 00:26:03,800 Speaker 1: which has been held back badly by student debt and 485 00:26:03,960 --> 00:26:08,200 Speaker 1: the housing crisis. UM, and that should ease over time. UM. 486 00:26:08,720 --> 00:26:12,080 Speaker 1: So that those are those are potential plus is only 487 00:26:12,119 --> 00:26:14,879 Speaker 1: one of them is policy related of course, UM. The 488 00:26:15,040 --> 00:26:18,920 Speaker 1: infrastructure siety, I suppose also may help goth more With 489 00:26:19,000 --> 00:26:22,639 Speaker 1: the point it's um. It supports the existing level of 490 00:26:22,680 --> 00:26:26,399 Speaker 1: activity and a kind of decent life for people on 491 00:26:26,480 --> 00:26:29,359 Speaker 1: a day to day basis, never mind measure GDP. Charles 492 00:26:29,440 --> 00:26:32,600 Speaker 1: Duma with us in London or Ts Lombard David Gurr 493 00:26:32,640 --> 00:26:37,040 Speaker 1: of course in New York as well. Charles Duma David 494 00:26:37,080 --> 00:26:41,480 Speaker 1: focus Landau of Deutsche Bank today talked about the reality 495 00:26:42,280 --> 00:26:44,760 Speaker 1: of the euro experiment. You have been one of the 496 00:26:45,000 --> 00:26:51,000 Speaker 1: foremost critics of a combined Euro and dr focus Landau 497 00:26:51,119 --> 00:26:54,639 Speaker 1: focused on effect that Germany and Italy are pegged with 498 00:26:54,720 --> 00:26:59,440 Speaker 1: the same currency, so all of Italian adjustment must come 499 00:26:59,520 --> 00:27:04,160 Speaker 1: through themestic regime. Italian lira was nine lira per Deutsche 500 00:27:04,200 --> 00:27:06,760 Speaker 1: Bank and it ought to be now twenty two d 501 00:27:07,320 --> 00:27:11,040 Speaker 1: per Deutsche Bank, but it hasn't been allowed to appreciate. Yeah, 502 00:27:11,080 --> 00:27:13,920 Speaker 1: well that's the thing. I mean, it's Italian inflation has 503 00:27:13,960 --> 00:27:17,720 Speaker 1: been much higher than Germans, and so the result is 504 00:27:17,880 --> 00:27:21,240 Speaker 1: that the exchange rate reflects a blend of the two, 505 00:27:21,359 --> 00:27:23,680 Speaker 1: if you like, for the euro, and that means it's 506 00:27:23,960 --> 00:27:27,639 Speaker 1: too cheap for yours for for Germany and too expensive frily. 507 00:27:28,280 --> 00:27:30,000 Speaker 1: In fact, if you look at the if you look 508 00:27:30,040 --> 00:27:35,239 Speaker 1: at the long run average real level of German exchange rate, 509 00:27:35,560 --> 00:27:38,800 Speaker 1: it's about below that long run average, even including the 510 00:27:39,200 --> 00:27:41,040 Speaker 1: years of the ear in other words, the average going 511 00:27:41,119 --> 00:27:46,560 Speaker 1: back to Breton Woods. I mean, this is pretty simple geometry, 512 00:27:47,680 --> 00:27:50,119 Speaker 1: you know, the parameters. Paul de Guar will be with 513 00:27:50,240 --> 00:27:53,320 Speaker 1: us tomorrow with the School of Economics. He and Charles 514 00:27:53,400 --> 00:27:56,159 Speaker 1: White Plots and others look for a clearing of the 515 00:27:56,280 --> 00:28:01,800 Speaker 1: European market. Does President elect Trump help Europe towards tough 516 00:28:01,880 --> 00:28:06,920 Speaker 1: decisions that have been delayed? Well, um, not really. I 517 00:28:07,000 --> 00:28:09,320 Speaker 1: don't think so. No. I think I think that the 518 00:28:09,440 --> 00:28:11,639 Speaker 1: only way in which he does that is actually by 519 00:28:12,119 --> 00:28:17,080 Speaker 1: making people feel making the establishment feel scared and maybe 520 00:28:17,240 --> 00:28:21,679 Speaker 1: just a mite more self critical, because any normal establishment 521 00:28:21,760 --> 00:28:23,600 Speaker 1: by now would have done somethingly about the euro. And 522 00:28:23,760 --> 00:28:28,320 Speaker 1: we've had twenty three percent average unemployment in Spain for 523 00:28:28,320 --> 00:28:31,639 Speaker 1: about six years on the trot um, and yet no 524 00:28:31,800 --> 00:28:34,640 Speaker 1: one is proposing any major changes in the in the regime. 525 00:28:35,160 --> 00:28:38,640 Speaker 1: The growth rate has been pretty undistinguished, even in Germany. 526 00:28:38,760 --> 00:28:41,200 Speaker 1: I mean, people talk about Germany being successful, but you've 527 00:28:41,240 --> 00:28:45,080 Speaker 1: got to remember that if you measure it against the 528 00:28:45,200 --> 00:28:48,280 Speaker 1: last three year, a year German and British GDP are 529 00:28:48,360 --> 00:28:52,320 Speaker 1: up about the same. They're been per head about for 530 00:28:52,440 --> 00:28:56,000 Speaker 1: Germany for Britain, but that's roughly the same. Now when 531 00:28:56,080 --> 00:28:59,880 Speaker 1: you look at after tax income in real terms, are 532 00:29:00,120 --> 00:29:04,120 Speaker 1: allowing for inflation um, the British number her head is 533 00:29:04,200 --> 00:29:07,240 Speaker 1: up about the same twenty seven but the German number 534 00:29:07,480 --> 00:29:11,320 Speaker 1: is not only fifteen percents. So fundamentally they've sacrificed the 535 00:29:11,400 --> 00:29:14,920 Speaker 1: interests of their citizens in order to earn these great surfaces, 536 00:29:15,520 --> 00:29:18,000 Speaker 1: and the other guys are simply worse than that. I mean, 537 00:29:18,160 --> 00:29:23,320 Speaker 1: Italy GDP is minus one percent ahead over seventeen years, 538 00:29:23,400 --> 00:29:26,640 Speaker 1: it's minus one per center, and disposable income is down 539 00:29:26,720 --> 00:29:30,040 Speaker 1: by fifty about sorry, by seven percentage points. They're actually 540 00:29:30,120 --> 00:29:33,160 Speaker 1: poorer than they were in their nineties. David Drill jumped 541 00:29:33,160 --> 00:29:36,080 Speaker 1: into this conversation trust Tonight, President Obama board's air Force 542 00:29:36,160 --> 00:29:39,360 Speaker 1: one for what's looking like his final trip as president overseas. 543 00:29:39,400 --> 00:29:41,760 Speaker 1: He's traveling to Greece, to Athens tomorrow and then to 544 00:29:41,880 --> 00:29:44,600 Speaker 1: Germany on the heels of that. What do you expect 545 00:29:44,680 --> 00:29:46,760 Speaker 1: him to say? What do you expect him to say 546 00:29:46,760 --> 00:29:49,440 Speaker 1: about the about the European Union, about the Euro in 547 00:29:49,520 --> 00:29:53,280 Speaker 1: that major speech he scheduled to deliver tomorrow and Athens. Well, unfortunately, 548 00:29:53,320 --> 00:29:55,760 Speaker 1: I don't expect him to address the issues I'm talking about, 549 00:29:55,800 --> 00:29:57,880 Speaker 1: because what someone needs to do is to tell these 550 00:29:57,920 --> 00:30:00,800 Speaker 1: guys that actually, the Euro hasn't worked. And sometimes when 551 00:30:00,840 --> 00:30:03,080 Speaker 1: you take a wrong turning, you know you soldier on, 552 00:30:03,160 --> 00:30:04,719 Speaker 1: you find a new way to where you want to get. 553 00:30:04,800 --> 00:30:06,720 Speaker 1: But other times you go back to the turning and 554 00:30:06,840 --> 00:30:09,400 Speaker 1: you take the other turning. And that's really what they 555 00:30:09,440 --> 00:30:11,600 Speaker 1: need to do here, And I don't see Ovomer saying 556 00:30:11,640 --> 00:30:14,400 Speaker 1: anything like that. The ECB meets in a couple of 557 00:30:14,480 --> 00:30:17,560 Speaker 1: weeks time, they're going to reevaluate their their bond buying program. 558 00:30:17,840 --> 00:30:20,080 Speaker 1: How big an issue is scarcely for for the ECB 559 00:30:20,320 --> 00:30:22,600 Speaker 1: right now? And give us your sense of where things 560 00:30:22,680 --> 00:30:25,640 Speaker 1: are heading. Well, I think you know, they're gonna want 561 00:30:25,720 --> 00:30:28,520 Speaker 1: to keep policy easy through the French election, which lasts 562 00:30:28,560 --> 00:30:30,280 Speaker 1: until about May, and then they're going to want to 563 00:30:30,360 --> 00:30:33,880 Speaker 1: be visibly tighter before the German election, which comes up 564 00:30:33,960 --> 00:30:38,960 Speaker 1: in in September October. So we're expecting, therefore, a tapering 565 00:30:39,040 --> 00:30:42,240 Speaker 1: to start in the in the summer, which is early. 566 00:30:42,360 --> 00:30:44,760 Speaker 1: That's that you're you're expecting it to happen earlier than many. Yeah, 567 00:30:44,840 --> 00:30:48,120 Speaker 1: that's probably right. But you know, the the Eurozone economy 568 00:30:48,160 --> 00:30:50,360 Speaker 1: has actually been growing above its trend for the last 569 00:30:50,440 --> 00:30:52,760 Speaker 1: three years, believe it or not. That's because one and 570 00:30:52,760 --> 00:30:54,920 Speaker 1: a half percent is about twice the trend because the 571 00:30:54,960 --> 00:30:57,360 Speaker 1: trend so feeble. But I mean, it still means that 572 00:30:58,080 --> 00:31:01,080 Speaker 1: there's no longer any serious fear of inflation, and the 573 00:31:01,120 --> 00:31:03,280 Speaker 1: inflation rate is going to be about one percent, which is, 574 00:31:03,360 --> 00:31:06,960 Speaker 1: you know, not too far from the from the from 575 00:31:07,080 --> 00:31:10,000 Speaker 1: from the target. So you know, you've got a situation 576 00:31:10,080 --> 00:31:13,080 Speaker 1: where there's no particular reason to have negative interest rates, 577 00:31:13,360 --> 00:31:16,840 Speaker 1: massively negative villa industrates. Add a whopping great quantity division 578 00:31:16,880 --> 00:31:20,080 Speaker 1: on top. Just so you know, your colleague Jonathan Fenby 579 00:31:20,120 --> 00:31:22,320 Speaker 1: has just written a fabulous new book on France. I 580 00:31:22,400 --> 00:31:25,520 Speaker 1: don't know if his voice, yeah, yeah, yeah, I seen it. 581 00:31:25,960 --> 00:31:31,800 Speaker 1: It's obnoxiously thick. It's a fabulous book. And I said that, 582 00:31:32,560 --> 00:31:35,920 Speaker 1: Mr Fembi, what would Charles de gold do? What will 583 00:31:36,000 --> 00:31:40,160 Speaker 1: Marine Lapen do? Well? Depen, of course is a nicety 584 00:31:40,240 --> 00:31:43,760 Speaker 1: placed and the and the real, the real issue here 585 00:31:43,840 --> 00:31:47,160 Speaker 1: for the Eurozone is that there's a lot of momentum 586 00:31:47,200 --> 00:31:49,800 Speaker 1: behind this protest voting these days. I mean, you know, 587 00:31:49,920 --> 00:31:52,400 Speaker 1: Brexit may have seemed like a standout back in June, 588 00:31:52,440 --> 00:31:54,880 Speaker 1: but that was a big enough shock. Now you've got 589 00:31:55,760 --> 00:31:58,640 Speaker 1: what looks like a protest volt putting Donald Trump in 590 00:31:58,680 --> 00:32:03,000 Speaker 1: as president. And we've got a very powerful right wing 591 00:32:03,120 --> 00:32:07,920 Speaker 1: protest voting blocks in Holland which comes up in February March, 592 00:32:08,040 --> 00:32:10,720 Speaker 1: where frankly they're even better organized than Mrs le Pin. 593 00:32:11,240 --> 00:32:14,280 Speaker 1: And then Mrs Lpin, as you say, in in April May, 594 00:32:14,400 --> 00:32:18,280 Speaker 1: who will probably be head in the first round for president. 595 00:32:18,400 --> 00:32:21,840 Speaker 1: She may not win the the runoff, but she'll probably 596 00:32:21,840 --> 00:32:25,200 Speaker 1: be ahead in the starting starting blocks. And then of 597 00:32:25,280 --> 00:32:29,240 Speaker 1: course when we get to Germany, they hate these zero 598 00:32:29,360 --> 00:32:32,840 Speaker 1: interest rates because they think that's how they subsidize the 599 00:32:32,920 --> 00:32:37,160 Speaker 1: rest of Europe basically, and so so you can more 600 00:32:37,240 --> 00:32:40,840 Speaker 1: or less guarantee that if you believe in political monastery economics, 601 00:32:40,880 --> 00:32:45,720 Speaker 1: as I do, there's a high chance of taping having 602 00:32:45,800 --> 00:32:48,600 Speaker 1: started by then. But of course in the near term 603 00:32:49,200 --> 00:32:54,760 Speaker 1: the ECB may well extend the extend the quantity of 604 00:32:54,840 --> 00:32:57,000 Speaker 1: eating for a few months just to keep the French happy. 605 00:32:57,800 --> 00:33:00,960 Speaker 1: And there's probably just to answer your question, there's probably 606 00:33:01,040 --> 00:33:04,800 Speaker 1: just enough stuff out that they can buy under the 607 00:33:04,880 --> 00:33:07,960 Speaker 1: current rules to last for another three months, possibly even six, 608 00:33:08,720 --> 00:33:11,160 Speaker 1: and get them over the hump from March where it 609 00:33:11,280 --> 00:33:15,440 Speaker 1: runs out now to just after the French election. Charles Duma, 610 00:33:15,560 --> 00:33:18,840 Speaker 1: thank you so much with ts A Lombard. It's extraordinary. 611 00:33:18,920 --> 00:33:21,120 Speaker 1: It doesn't get it doesn't, it doesn't get boring, doesn't 612 00:33:21,400 --> 00:33:26,920 Speaker 1: it doesn't. Congratulations on trusted sources Lombard, tis A Lombard, 613 00:33:27,000 --> 00:33:43,640 Speaker 1: Jonathan Fenby and Charles Duma, among others as well. Then 614 00:33:43,680 --> 00:33:47,160 Speaker 1: I'll tell you, folks, it's never doll um. I was 615 00:33:47,240 --> 00:33:50,760 Speaker 1: making the joke this morning off of the acclaimed Keynes quote. This, 616 00:33:50,880 --> 00:33:55,000 Speaker 1: of course Robert Skodolski's wonderful essay in the Project Syndicate. Today. 617 00:33:55,040 --> 00:33:58,000 Speaker 1: When the facts change, I change. We're seeing all sorts 618 00:33:58,040 --> 00:34:01,080 Speaker 1: of people on Wall Street adapt and adjust to the 619 00:34:01,160 --> 00:34:06,280 Speaker 1: stunning election of Donald Trump. As we mentioned earlier, HSBC 620 00:34:07,240 --> 00:34:10,600 Speaker 1: and Steve Major change what has been a brilliant call 621 00:34:10,719 --> 00:34:13,680 Speaker 1: on lower interest rates and lower for longer. Just put 622 00:34:13,760 --> 00:34:16,720 Speaker 1: a chart out on Twitter showing this and will feature 623 00:34:16,760 --> 00:34:20,279 Speaker 1: that chart tomorrow and Bloomberg Television. Julian Jessop with us 624 00:34:20,320 --> 00:34:22,960 Speaker 1: with Capital Economics they do for those of you in America, 625 00:34:23,040 --> 00:34:28,880 Speaker 1: particularly Capital Economics says just wonderfully dense research on the 626 00:34:29,000 --> 00:34:33,200 Speaker 1: state of strategy and the state of oh everyone from Brexit. 627 00:34:33,280 --> 00:34:36,240 Speaker 1: They've been brilliant on Brexit not being the end of London. 628 00:34:36,320 --> 00:34:39,520 Speaker 1: And Julian Jessop joins us, now in our London studios, 629 00:34:40,120 --> 00:34:42,799 Speaker 1: you changed as well. Three percent the end of two 630 00:34:42,880 --> 00:34:47,359 Speaker 1: thousand seventeen. What is the three percent inflation I yield? Rather, 631 00:34:47,520 --> 00:34:50,799 Speaker 1: what is the three percent yield do to our listeners paychecks? 632 00:34:51,160 --> 00:34:56,759 Speaker 1: The inflation adjusted wage flat or will it be down? Well, 633 00:34:56,760 --> 00:35:00,560 Speaker 1: I think down the context in which bondie right seeing um, 634 00:35:00,800 --> 00:35:04,360 Speaker 1: if President Trump does indeed deliver stronger economic growth and 635 00:35:04,400 --> 00:35:07,200 Speaker 1: a stronger labor market, then what would be seeing in 636 00:35:07,239 --> 00:35:10,040 Speaker 1: the bond market is simply a normalization where yields and 637 00:35:10,120 --> 00:35:12,560 Speaker 1: borrowing costs more generally were turned towards the sorts of 638 00:35:12,680 --> 00:35:15,359 Speaker 1: levels that you'd hope for in economy growing at two 639 00:35:15,400 --> 00:35:17,879 Speaker 1: to three and one way, the labor market is fairly tight, 640 00:35:18,000 --> 00:35:21,600 Speaker 1: so um, it's not necessarily bad news for your listeners, 641 00:35:22,239 --> 00:35:24,800 Speaker 1: though it might be if a big sell off in 642 00:35:24,840 --> 00:35:28,360 Speaker 1: the bond market tree that goes weakness in other asset markets, 643 00:35:28,480 --> 00:35:31,719 Speaker 1: there's a big fall in in equity markets, or if 644 00:35:31,760 --> 00:35:34,640 Speaker 1: a rise in borrowing costs across the board makes companies 645 00:35:34,680 --> 00:35:37,880 Speaker 1: more cautious about investment. If it leads to higher mortgage 646 00:35:37,960 --> 00:35:41,239 Speaker 1: rates and therefore bigger cost of owning your own home, 647 00:35:41,480 --> 00:35:43,319 Speaker 1: then it could cause problems. But so far, at least 648 00:35:43,320 --> 00:35:45,239 Speaker 1: I see it actually is quite healthy. I agree that 649 00:35:45,360 --> 00:35:49,880 Speaker 1: econ and one O one is the ambiguity when things change. 650 00:35:50,400 --> 00:35:54,560 Speaker 1: What's the predominant effect that we will see that we 651 00:35:54,680 --> 00:35:57,839 Speaker 1: see witnessing the Bloomberg screen? To them, what depends what's 652 00:35:57,880 --> 00:36:00,920 Speaker 1: driving what if? The if bond deels are rising is 653 00:36:00,920 --> 00:36:04,880 Speaker 1: a symptom of increased optimism about the US economy and 654 00:36:04,960 --> 00:36:07,480 Speaker 1: in particular the prospect that interest rates work need to 655 00:36:07,520 --> 00:36:11,000 Speaker 1: remain near zero near emergency levels for much longer because 656 00:36:11,040 --> 00:36:13,680 Speaker 1: the economy is doing well, then I think the bond 657 00:36:13,760 --> 00:36:16,840 Speaker 1: market weakness is just something that we accepts as almost 658 00:36:16,920 --> 00:36:19,360 Speaker 1: something to be welcomed. If, on the other hand, the 659 00:36:19,400 --> 00:36:23,440 Speaker 1: bond market weakness reflects either inflation taking off, which I 660 00:36:23,480 --> 00:36:25,640 Speaker 1: think frankly as a possibility given how the U S 661 00:36:25,680 --> 00:36:28,879 Speaker 1: economy is already operating close to capacity and arguably doesn't 662 00:36:28,880 --> 00:36:32,239 Speaker 1: need a fiscal stimulus, or if the sell off in 663 00:36:32,280 --> 00:36:36,240 Speaker 1: the bond market prompts wider weakness in in other financial assets, 664 00:36:36,400 --> 00:36:38,840 Speaker 1: maybe even prompts an overreaction from the Fed, then I 665 00:36:38,880 --> 00:36:40,719 Speaker 1: think it could be a problem. But the key point 666 00:36:40,760 --> 00:36:42,480 Speaker 1: is it doesn't necessarily have to be. This could be 667 00:36:42,840 --> 00:36:46,120 Speaker 1: simply the long awaited normalization of interest rates and bond 668 00:36:46,200 --> 00:36:48,200 Speaker 1: deals that we've frankly been hoping for for some time, 669 00:36:48,800 --> 00:36:51,040 Speaker 1: that long awaited normalization. Did your view of when and 670 00:36:51,120 --> 00:36:53,920 Speaker 1: how that will happen change at all after the election 671 00:36:53,960 --> 00:36:58,080 Speaker 1: results of Tuesday? Oh? Absolutely. I mean our central scenario, 672 00:36:58,239 --> 00:37:00,440 Speaker 1: like I think most people's, have been that real Clinton 673 00:37:00,480 --> 00:37:03,080 Speaker 1: would win and the Fed would returned to raising rates 674 00:37:03,120 --> 00:37:07,839 Speaker 1: gradually in December, and therefore that bond deals would would rise. Um. 675 00:37:08,440 --> 00:37:10,279 Speaker 1: The one thing that's changed, of course, is that maybe 676 00:37:10,320 --> 00:37:12,239 Speaker 1: yields will rise even quicker, as indeed they have over 677 00:37:12,280 --> 00:37:14,600 Speaker 1: the last few days, and get to a high level 678 00:37:14,920 --> 00:37:18,200 Speaker 1: rather rather sooner. I think that many things that you 679 00:37:18,320 --> 00:37:21,759 Speaker 1: might think of President Alex Trump's new program, but one 680 00:37:21,800 --> 00:37:23,759 Speaker 1: thing he's made very clear is that there's going to 681 00:37:23,800 --> 00:37:27,200 Speaker 1: be increased emphasis on looser fiscal policy, and actually a 682 00:37:27,280 --> 00:37:30,399 Speaker 1: positive welcome for tighter monetary policy is removing some sort 683 00:37:30,440 --> 00:37:34,160 Speaker 1: of the artificial economy we're seeing in the financial markets. Um. 684 00:37:34,560 --> 00:37:36,759 Speaker 1: So we're already expecting bond deals for rise, but now 685 00:37:36,800 --> 00:37:38,880 Speaker 1: they've risen quicker, and we think they'll rise further than 686 00:37:38,920 --> 00:37:42,560 Speaker 1: we previously anticipated. Julie, When you think about that fiscal package, 687 00:37:42,760 --> 00:37:45,160 Speaker 1: that that infrastructure plan, what does it have to look 688 00:37:45,239 --> 00:37:48,680 Speaker 1: like to to make a difference. Well, definitely, lots of 689 00:37:48,680 --> 00:37:51,239 Speaker 1: different aspects of it. Um I think the thing the 690 00:37:51,320 --> 00:37:54,440 Speaker 1: markets would like to see most is infrastructure spending. That's 691 00:37:54,480 --> 00:37:56,719 Speaker 1: the thing that has the biggest impact both on the 692 00:37:56,800 --> 00:37:59,520 Speaker 1: demand side of the economy but also potentially boosting the 693 00:37:59,560 --> 00:38:02,520 Speaker 1: supply side. If all you do is cut taxes the 694 00:38:02,600 --> 00:38:05,000 Speaker 1: relatively well off, they may well spend that money, they 695 00:38:05,080 --> 00:38:07,879 Speaker 1: may will save it, but that doesn't necessarily boost growth 696 00:38:07,920 --> 00:38:10,680 Speaker 1: in the longer term. The distinction Lawrence Somers put on it, 697 00:38:10,840 --> 00:38:13,480 Speaker 1: I would suggest even his critics call him an economist. 698 00:38:13,560 --> 00:38:16,160 Speaker 1: Of note is what I call the how much idness 699 00:38:16,239 --> 00:38:21,680 Speaker 1: which in so many mathematical relationships, particularly in finance, people 700 00:38:21,840 --> 00:38:24,680 Speaker 1: overlook they get the vector right, but they overlook the 701 00:38:24,800 --> 00:38:31,640 Speaker 1: how much idness the amplitude Professor Somers was advocating much 702 00:38:31,920 --> 00:38:37,560 Speaker 1: bigger infrastructure then President Trump or his Republicans can stomach, 703 00:38:38,120 --> 00:38:40,440 Speaker 1: do you is capital economics have a sense of the 704 00:38:40,520 --> 00:38:45,399 Speaker 1: how much idness it's necessary to make infrastructure move the needle. Well. 705 00:38:45,480 --> 00:38:47,320 Speaker 1: First of all, I think a couple of reasons for 706 00:38:47,360 --> 00:38:49,520 Speaker 1: thinking that the infrastructure boost won't be quite as big 707 00:38:49,560 --> 00:38:51,719 Speaker 1: as the markets now seem to be anticipating. One is 708 00:38:51,760 --> 00:38:55,560 Speaker 1: the constraints in the political system in the US. After all, 709 00:38:56,080 --> 00:38:59,880 Speaker 1: Republicans by large are fiscally conservative. If he's planning to 710 00:39:00,000 --> 00:39:02,239 Speaker 1: ben awful lot more infrastructure, he wouldn't have as much 711 00:39:02,280 --> 00:39:04,799 Speaker 1: to do on on tax cuts, And of course there 712 00:39:04,840 --> 00:39:06,680 Speaker 1: are constraints of the debt ceiling as well. So the 713 00:39:06,719 --> 00:39:09,440 Speaker 1: first point is that it may be less than he's 714 00:39:09,440 --> 00:39:11,920 Speaker 1: planning anyway. The second point is it needs to be 715 00:39:12,000 --> 00:39:14,960 Speaker 1: seen in context. If we're thinking about the global economy, 716 00:39:15,640 --> 00:39:18,600 Speaker 1: then China this year alone has added an additional two 717 00:39:18,719 --> 00:39:21,879 Speaker 1: hundred billion dollars worth of infrastructure spending in the first 718 00:39:21,960 --> 00:39:24,920 Speaker 1: nine months of the year alone. So if that spending 719 00:39:25,000 --> 00:39:26,800 Speaker 1: drops off next year, as I think it will in 720 00:39:26,840 --> 00:39:29,480 Speaker 1: the China economy slows, that could still have a much 721 00:39:29,520 --> 00:39:33,800 Speaker 1: bigger negative impact on global industrial commodity prices than anything 722 00:39:33,920 --> 00:39:36,560 Speaker 1: that Trump is likely to do over the next few years. 723 00:39:36,800 --> 00:39:40,160 Speaker 1: Remembering that infrastructure spending tends to be slow, it takes 724 00:39:40,200 --> 00:39:42,000 Speaker 1: a while to build up, and it won't be much 725 00:39:42,040 --> 00:39:46,480 Speaker 1: happening next year. Go ahead, David, I'm sorry, no, I'll 726 00:39:46,480 --> 00:39:48,000 Speaker 1: introduce this. We can come back and talk about it 727 00:39:48,040 --> 00:39:49,400 Speaker 1: here in a couple of minutes. But I just I 728 00:39:49,520 --> 00:39:52,560 Speaker 1: wonder what's changed notionally. There was so much pushback when 729 00:39:52,600 --> 00:39:56,360 Speaker 1: President of I'm proposed more more stimulus, more fiscal spending. 730 00:39:56,400 --> 00:40:01,160 Speaker 1: And now we have the selections. Everything has changed. Let 731 00:40:01,239 --> 00:40:05,120 Speaker 1: us explain this, Julian the young gera. Now it's our bridge. 732 00:40:05,320 --> 00:40:11,360 Speaker 1: And we say that with thanks to Gina Romando, governor 733 00:40:11,440 --> 00:40:14,320 Speaker 1: of Rhode Island, who showed up last week. It was 734 00:40:14,480 --> 00:40:17,200 Speaker 1: great to have her in with the bridge challenges that 735 00:40:17,280 --> 00:40:19,480 Speaker 1: they haven't Rhode Island. David Gura in New York. I'm 736 00:40:19,520 --> 00:40:22,880 Speaker 1: Tom keenan London. Shout out right now to the Victorian 737 00:40:22,920 --> 00:40:26,879 Speaker 1: Albert Museum. They are just absolutely killing it with two 738 00:40:27,000 --> 00:40:30,799 Speaker 1: shows right now. One of them is Revolution David Gura. 739 00:40:31,040 --> 00:40:33,120 Speaker 1: I can't convey what it's like to go into a 740 00:40:33,239 --> 00:40:40,719 Speaker 1: museum and see your childhood as an exhibition. Yeah, it was. 741 00:40:41,000 --> 00:40:44,719 Speaker 1: It was odd to see Sergeant Pepper's Lonely Hearts Club 742 00:40:44,800 --> 00:40:49,000 Speaker 1: band venerated if you will, it was I remember sitting 743 00:40:49,040 --> 00:40:51,720 Speaker 1: on Mike hasan Ier is bad looking at this record album. 744 00:40:52,080 --> 00:40:54,279 Speaker 1: A record album, David, is a big thing you hold 745 00:40:54,360 --> 00:40:56,680 Speaker 1: in your hands and spins around it. What else do 746 00:40:56,760 --> 00:40:59,080 Speaker 1: they have a lot of Warhol Yeah, they got the 747 00:40:59,120 --> 00:41:01,400 Speaker 1: whole sixties twig, this thing going, you know, the usual. 748 00:41:01,560 --> 00:41:06,000 Speaker 1: But also they've got their Opus Anglican medieval embroidery show. 749 00:41:06,080 --> 00:41:08,840 Speaker 1: Just you can't say enough about what the Vienna is 750 00:41:08,920 --> 00:41:12,799 Speaker 1: doing as well. M Julian Jess appear with Capital Economics. 751 00:41:13,160 --> 00:41:16,960 Speaker 1: Who is telling us about modern Britain as we look 752 00:41:17,040 --> 00:41:22,200 Speaker 1: at Opus Anglican and from Plantagenet times in places, But 753 00:41:22,320 --> 00:41:27,280 Speaker 1: it speaks to the resiliency of our economic and political systems. 754 00:41:27,760 --> 00:41:34,120 Speaker 1: We forget in our modern upward Julian. These are resilient societies, 755 00:41:34,200 --> 00:41:36,560 Speaker 1: aren't they. Um Well, I think that's right. A lot 756 00:41:36,600 --> 00:41:39,759 Speaker 1: depends on the quality of the of the institutions. Has 757 00:41:39,800 --> 00:41:42,520 Speaker 1: been a bit big argument, for example in the UK 758 00:41:42,719 --> 00:41:46,160 Speaker 1: recently about the whether or not our judges should be 759 00:41:46,200 --> 00:41:48,920 Speaker 1: allowed to decide whether or not Parliament or the government 760 00:41:49,719 --> 00:41:54,040 Speaker 1: decides when we actually implement the legal framework necessary to 761 00:41:54,120 --> 00:41:56,800 Speaker 1: lead the European Union. But but what's reassuring is that 762 00:41:56,920 --> 00:41:59,719 Speaker 1: that debate is being carried out in with a free 763 00:41:59,760 --> 00:42:02,479 Speaker 1: prayer US, It's been carried out in public. Some people 764 00:42:02,560 --> 00:42:07,000 Speaker 1: disagree about whether the judges should have this right or not. Um, 765 00:42:07,200 --> 00:42:09,560 Speaker 1: but it's an open, honest debate, and the institutions by 766 00:42:09,640 --> 00:42:12,160 Speaker 1: and large are are working pretty well. I think part 767 00:42:12,200 --> 00:42:13,799 Speaker 1: of the benefit there is that we have had these 768 00:42:13,840 --> 00:42:16,880 Speaker 1: institutions for an awful long period of time, you know, 769 00:42:17,000 --> 00:42:20,399 Speaker 1: centuries in many cases, whereas some of the new things 770 00:42:20,520 --> 00:42:22,360 Speaker 1: that are coming along people are less comfortable with. I 771 00:42:22,440 --> 00:42:26,280 Speaker 1: still think the European Union, certainly, the euro is relatively 772 00:42:26,360 --> 00:42:28,839 Speaker 1: short lived if you set it against that long span 773 00:42:28,920 --> 00:42:32,080 Speaker 1: of history, and hasn't got that sort of tradition behind it. 774 00:42:32,440 --> 00:42:34,279 Speaker 1: I think people are far more willing to be, you know, 775 00:42:34,440 --> 00:42:37,279 Speaker 1: dumping things like the EU or the Euro than there 776 00:42:37,320 --> 00:42:39,279 Speaker 1: would be some of the underlying institutions that I think 777 00:42:39,280 --> 00:42:41,759 Speaker 1: are a lot stronger, have a lot better history. I 778 00:42:41,840 --> 00:42:44,000 Speaker 1: know that you keep a close watch on the commodities space. 779 00:42:44,040 --> 00:42:47,000 Speaker 1: We were talking earlier about what we've seen in industrial medals, 780 00:42:47,239 --> 00:42:49,839 Speaker 1: Copper stronger than it's been in a long time. Here, 781 00:42:49,960 --> 00:42:52,640 Speaker 1: it seems like folks are very willing, very eager to 782 00:42:52,760 --> 00:42:54,799 Speaker 1: place a bit here. And the probability of of what's 783 00:42:54,840 --> 00:42:58,160 Speaker 1: going to happen in a Donald Trump administration, how how 784 00:42:58,239 --> 00:43:01,319 Speaker 1: fool hardy is that at this point to do that, well, 785 00:43:01,320 --> 00:43:03,600 Speaker 1: I think it's it's risky. I don't think anybody really 786 00:43:03,640 --> 00:43:05,680 Speaker 1: knows what Donald Trump is going to do as president, 787 00:43:05,760 --> 00:43:09,440 Speaker 1: including frankly, Donald Trump himself, So you're very brave to 788 00:43:09,520 --> 00:43:11,680 Speaker 1: take a big directional bet on the on the back 789 00:43:11,760 --> 00:43:14,520 Speaker 1: of this, my own feeling is that what markets have 790 00:43:14,680 --> 00:43:16,520 Speaker 1: done in the in the last few days is that 791 00:43:16,640 --> 00:43:20,600 Speaker 1: they've been willing to accept that or hope that Trump 792 00:43:20,760 --> 00:43:22,120 Speaker 1: is going to do some of the good things that 793 00:43:22,239 --> 00:43:25,360 Speaker 1: he promised during the election campaign, but frankly none of 794 00:43:25,400 --> 00:43:27,719 Speaker 1: the bad things. So all the concerns that many of 795 00:43:27,800 --> 00:43:29,759 Speaker 1: us still have about the prospect of a trade war 796 00:43:30,719 --> 00:43:33,759 Speaker 1: have been put to one side. A trade war would 797 00:43:33,760 --> 00:43:36,200 Speaker 1: have major implications for the global economy and for demand 798 00:43:36,280 --> 00:43:40,080 Speaker 1: for commodities worldwide, but also some of the domestic policies. 799 00:43:40,080 --> 00:43:41,680 Speaker 1: I mean, we're you know, we're hearing fresh talk about 800 00:43:41,680 --> 00:43:45,880 Speaker 1: possibly three million migrant workers being pushed out of the country. 801 00:43:45,960 --> 00:43:48,439 Speaker 1: That would have a substantial impact. We can talk about 802 00:43:48,440 --> 00:43:50,279 Speaker 1: the politics if you like, but the economic impact of 803 00:43:50,360 --> 00:43:52,920 Speaker 1: that in the short term at least would be quite damaging. 804 00:43:53,120 --> 00:43:55,840 Speaker 1: So there's still some potentially quite difficult and nasty challenges 805 00:43:55,880 --> 00:43:58,239 Speaker 1: for the markets to deal with. David, I'm over here 806 00:43:58,239 --> 00:44:01,040 Speaker 1: in Merry Old London's some in the last twenty four 807 00:44:01,080 --> 00:44:08,359 Speaker 1: hours explain how we migraat x amount of immigrants out 808 00:44:08,520 --> 00:44:10,880 Speaker 1: of the country. No, and you've seen a good article 809 00:44:10,920 --> 00:44:12,600 Speaker 1: on this, not a good article on it yet. And 810 00:44:12,680 --> 00:44:14,959 Speaker 1: it was something that Leslie Style asked Donald Trump about 811 00:44:15,000 --> 00:44:17,279 Speaker 1: last night. Again, that's where that three million figure came from. 812 00:44:17,360 --> 00:44:19,360 Speaker 1: He said he intends to do it, and to do 813 00:44:19,480 --> 00:44:22,600 Speaker 1: it quickly. But I think that I think that Julian 814 00:44:22,640 --> 00:44:24,200 Speaker 1: brings up a very good point there, which is there 815 00:44:24,200 --> 00:44:26,000 Speaker 1: there there are all are all of these things that 816 00:44:26,040 --> 00:44:29,000 Speaker 1: are eventualities variables that we don't know about yet. And 817 00:44:30,040 --> 00:44:34,520 Speaker 1: how worried are you about the trade war variable? Julian, Well, 818 00:44:34,880 --> 00:44:37,040 Speaker 1: I'm a little bit less worried, to be fair, than 819 00:44:37,080 --> 00:44:39,000 Speaker 1: I was when I initially heard the news that Trump 820 00:44:39,080 --> 00:44:41,400 Speaker 1: had been elected. Um, I mean he has said some 821 00:44:41,800 --> 00:44:44,160 Speaker 1: more moderate things in other areas. I mean he's not 822 00:44:44,440 --> 00:44:47,239 Speaker 1: He's not, for example, going to dump all of Obamacare, 823 00:44:47,800 --> 00:44:50,360 Speaker 1: and it has made some concidatory noises towards some of 824 00:44:50,400 --> 00:44:53,800 Speaker 1: the the overseas partners, including even China. So Um, I 825 00:44:53,840 --> 00:44:57,239 Speaker 1: would hope that wiser voices prevailed and would be recognition 826 00:44:57,320 --> 00:45:00,480 Speaker 1: that a trade war triggered by punitive tar on on 827 00:45:00,680 --> 00:45:03,840 Speaker 1: China would at least in the short term, cause significant 828 00:45:03,880 --> 00:45:05,960 Speaker 1: damage to the U. S economy as well, including many 829 00:45:06,000 --> 00:45:08,480 Speaker 1: of the people who would have voted for Trump. Um. 830 00:45:09,000 --> 00:45:12,240 Speaker 1: That said, there is of course a global trend against 831 00:45:12,320 --> 00:45:17,080 Speaker 1: free trade, against globalization, which Trump has faced successfully tapped into, 832 00:45:17,560 --> 00:45:19,600 Speaker 1: which is nothing new. We're seeing the same things in 833 00:45:20,440 --> 00:45:23,839 Speaker 1: Europe and across much of Asia actually as well. Um, 834 00:45:24,160 --> 00:45:26,640 Speaker 1: So I would be concerned that some of the benefits 835 00:45:26,680 --> 00:45:29,200 Speaker 1: of globalization will be will be rolled back. I'm not 836 00:45:29,239 --> 00:45:31,760 Speaker 1: saying globalization is all good. It clearly has some important 837 00:45:31,800 --> 00:45:36,800 Speaker 1: distributional impacts that some politicians haven't yet properly tackled. But overall, 838 00:45:36,800 --> 00:45:39,200 Speaker 1: the world economy, including many of the world's poorest people, 839 00:45:39,239 --> 00:45:42,520 Speaker 1: have benefited. Sitting on the surveillance golf stream coming over, 840 00:45:42,600 --> 00:45:47,000 Speaker 1: it's been a lot of time Julian thinking about NAFTA 841 00:45:47,440 --> 00:45:51,040 Speaker 1: with the United Kingdom. Is there any feasibility that the 842 00:45:51,200 --> 00:45:57,759 Speaker 1: United Kingdom would establish a bilateral or I got to 843 00:45:57,760 --> 00:46:01,160 Speaker 1: figure out how to get Iceland in this regional agreement 844 00:46:01,280 --> 00:46:05,000 Speaker 1: with Canada, Mexico, the United States, the United Kingdom. Well, 845 00:46:05,040 --> 00:46:08,880 Speaker 1: it's not a completely crazy idea. The big problem not 846 00:46:09,560 --> 00:46:13,960 Speaker 1: well that from my executive unser Rachel's worst span, you 847 00:46:14,040 --> 00:46:18,120 Speaker 1: have no idea how she can unload Fortunman Mason be 848 00:46:18,280 --> 00:46:21,160 Speaker 1: free and I mean they need that, they need the 849 00:46:21,360 --> 00:46:23,799 Speaker 1: carriage to get it out of the what if. I mean, 850 00:46:23,840 --> 00:46:27,760 Speaker 1: geography is still important. We could relocate the UK somewhere 851 00:46:27,800 --> 00:46:29,319 Speaker 1: in the middle of the Atlantic then, and I think 852 00:46:29,320 --> 00:46:32,400 Speaker 1: it would be a serious runner. But the reality is 853 00:46:32,480 --> 00:46:34,759 Speaker 1: that we do about half of our trade with the 854 00:46:34,840 --> 00:46:38,600 Speaker 1: rest of Europe for obvious geographical reasons. We do about 855 00:46:38,600 --> 00:46:40,680 Speaker 1: twenty percent of our trade with the US. The US 856 00:46:40,760 --> 00:46:44,040 Speaker 1: is our biggest single trading partner as a single country, 857 00:46:44,880 --> 00:46:46,840 Speaker 1: but Europe is still going to be where most of 858 00:46:46,920 --> 00:46:49,000 Speaker 1: our exports go. And also, of course in terms of 859 00:46:49,000 --> 00:46:52,319 Speaker 1: the fastest growing markets, those will be in the emerging world. 860 00:46:52,360 --> 00:46:54,880 Speaker 1: They'll be India, they'll be China very quickly. Her as 861 00:46:54,920 --> 00:46:58,800 Speaker 1: Prime Minister, May and government precluded from beginning discussions with 862 00:46:58,960 --> 00:47:03,320 Speaker 1: Mr Trump because of the permanent agreements that they have prerexit. 863 00:47:03,719 --> 00:47:06,919 Speaker 1: It's the government in the UK can't sign or imp 864 00:47:07,280 --> 00:47:09,600 Speaker 1: any new trade but they can talk. They can certainly talk, 865 00:47:09,760 --> 00:47:13,239 Speaker 1: and I'm absolutely certain that they will be. Were in 866 00:47:13,320 --> 00:47:15,760 Speaker 1: India last week talking about these sorts of trade deals. 867 00:47:15,960 --> 00:47:19,319 Speaker 1: So yes, talking can happen, just not yet signing. Julian Jessa, 868 00:47:19,400 --> 00:47:21,920 Speaker 1: thank you so much. With capital David, I think we're 869 00:47:21,960 --> 00:47:25,040 Speaker 1: going to be employed for the next few years, and 870 00:47:25,120 --> 00:47:27,480 Speaker 1: are gonna employed bringing back all those biscuits for Rachel's 871 00:47:27,800 --> 00:47:30,640 Speaker 1: like the New York magazine. Thanks to Sylvia for putting 872 00:47:30,719 --> 00:47:33,080 Speaker 1: this out on Twitter. They're out, of course with a 873 00:47:33,200 --> 00:47:38,000 Speaker 1: acclaimed New York cartoon. It shows the President elect in 874 00:47:38,120 --> 00:47:42,919 Speaker 1: front of the Chief Justice. Mrs Trump is wearing mink 875 00:47:44,200 --> 00:47:46,400 Speaker 1: and will do the best of my ability, which is 876 00:47:46,560 --> 00:47:50,960 Speaker 1: terrific ability. By the way, everyone agrees I have fantastic ability, 877 00:47:51,320 --> 00:47:54,960 Speaker 1: so there's no problem with my ability. Believe me. For 878 00:47:55,120 --> 00:47:59,800 Speaker 1: the oath of office the New Yorker editorializing, perhaps with 879 00:47:59,880 --> 00:48:10,800 Speaker 1: a cartoon to keep things light. Thanks for listening to 880 00:48:10,880 --> 00:48:16,920 Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on iTunes, SoundCloud, 881 00:48:17,400 --> 00:48:21,600 Speaker 1: or whichever podcast platform you prefer. I'm out on Twitter 882 00:48:21,719 --> 00:48:25,480 Speaker 1: at Tom Keene. David Gura is at David Gura. Before 883 00:48:25,560 --> 00:48:29,879 Speaker 1: the podcast, you can always catch us worldwide on Bloomberg Radio. 884 00:48:42,360 --> 00:48:44,960 Speaker 1: Who you put your trust in matters. Investors have put 885 00:48:45,000 --> 00:48:49,440 Speaker 1: their trust and independent registered investment advisors to the tune 886 00:48:49,600 --> 00:48:53,640 Speaker 1: four trillion dollars. Why learn more and find your independent 887 00:48:53,719 --> 00:48:55,359 Speaker 1: advisor dot com