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Speaker 1: Advisor dot com. Welcome to the Bloomberg Surveillance Podcast. I'm
Speaker 1: Tom Keene with David Gura. Daily we bring you insight
Speaker 1: from the best in economics, finance, investment and international relations.
Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and
Speaker 1: of course on the Bloomberg We're back with David Folgers Landau.
Speaker 1: He's Deutsche Bank chief economist. David, when I look, first
Speaker 1: of all, your Mario draggy right, and you've done everything
Speaker 1: you could with your mandate to try and reflect the
Speaker 1: economy or at least show us to your recovery. You've
Speaker 1: taken risk out of yields because that's exactly what you wanted,
Speaker 1: so that there are no bond vigilantes. But actually, how
Speaker 1: do you deal with the Donald Trump presidency? Is it
Speaker 1: much more uncertainty? Again he's dealing with the exit of
Speaker 1: the UK from the European Union and we don't know
Speaker 1: what comes next. But continental Europe has been a challenged
Speaker 1: continent in economic terms for some time now. In that
Speaker 1: we have a central bank that's basically run out of
Speaker 1: ammunition and and overshot it's it's not it's mandate, but
Speaker 1: overshot its policy tools quite a bit, ending up with
Speaker 1: a couple of chilion balance sheet pretty soon. We have
Speaker 1: a government securities markets that don't properly signal risk anymore
Speaker 1: because of m and others. Uh. And we've got plus unemployment,
Speaker 1: youth unemployment, frances regular unemployment. Uh and we've just marked
Speaker 1: down growth to almost half we had it's just six
Speaker 1: months ago. This election has a tremendous impact on Europe,
Speaker 1: tremendously negative. Um think of defense. Think of defense in
Speaker 1: the sense that Europe basically doesn't have a proper defense
Speaker 1: posture except for NATO. If the President elect chooses to
Speaker 1: reduce his contributions to NATO, that will impose the tremendous
Speaker 1: burning Europeans. But can it be a wake up call?
Speaker 1: And in certain you know this US election result will
Speaker 1: shift European values or will it just spur the politicians
Speaker 1: attack that That is the big worry that people like
Speaker 1: me have, in the sense that yes, it should be
Speaker 1: a wake up call. It could be a wake up
Speaker 1: called Europe has the correct lead potential to catch up.
Speaker 1: The question is the political arrangements are so entrenched and
Speaker 1: it's so difficult to get changed done in Europe and
Speaker 1: to get policy reactions done quickly that I'm very pessimistic
Speaker 1: about that. Well, well then that let's care that for
Speaker 1: bring up the charter, Anthony, if you would in London.
Speaker 1: This is the Italian tenure and I requested back to
Speaker 1: two thousand eleven. And it's amazing off that red line,
Speaker 1: the leg the move up. If I talk about Italy
Speaker 1: as an emerging market to the rescue, it is supposed
Speaker 1: to come European fed realism. I don't observe it. Is
Speaker 1: it there? So what? It definitely is there? So here
Speaker 1: we have a country um that there has a hundred
Speaker 1: plus death the GDP ratio zero growth runs a deficit
Speaker 1: of three percent, so it keeps accumulating that um and
Speaker 1: it was trading a hundred PEPs above bond. Completely distorted. Now,
Speaker 1: given that the referendum is outcome is in doubt. You
Speaker 1: see it all sund going up behund. The basis points
Speaker 1: My worry is that as we come closer to the
Speaker 1: referendum date and as Trump's changes make themselves felt that
Speaker 1: you're going to see external investors pulling back completely and
Speaker 1: instead of getting a hundred paces point, but we're gonna
Speaker 1: go to four percent and then you're going to have
Speaker 1: an impact on the banking system in Italy and the
Speaker 1: rest of Europe. So for me, Italy is the country
Speaker 1: that I would I would worry about as a flash
Speaker 1: point for additional European princing jump in here? But what's
Speaker 1: so critical here? And you had Joe Stiglets is your
Speaker 1: morning mustard? This morning? There was a Stiglet's equation that
Speaker 1: even the most arch conservative ac car and a Mr
Speaker 1: Politician had to look at, which is that that g
Speaker 1: that growth rate in the formula of how a country
Speaker 1: moves forward? And as dr focus Landa Mensions, the little
Speaker 1: G isn't there for Italy and so much more of Europe. Right,
Speaker 1: But I guess the question is as appalling as it
Speaker 1: may seem to more liberal factions of politics or what
Speaker 1: we're accustomed to. Would someone from the five Star movement
Speaker 1: jump start growth into the or is that just unthinkable? No,
Speaker 1: I think that would be It's probably not going to happen.
Speaker 1: But what needs to happen is that if Italy gets
Speaker 1: into difficulty, it needs an I m F program, uh
Speaker 1: and others have to be a general realignment on the
Speaker 1: regular choice side, a market efficiency and labor market efficiency.
Speaker 1: And it's got to be done. But outside outside agency,
Speaker 1: I don't know actually will be accepted and withoud the
Speaker 1: alternative be for Italy to um sometimes choose to leave
Speaker 1: the European Union. At this is this is what I
Speaker 1: mean by saying this could be a wake up qualities.
Speaker 1: Changes could be made, but we have seen since OMT
Speaker 1: that that changes haven't been made. Okay, this is haven't
Speaker 1: been done. This is the I m F program. Bring
Speaker 1: up this chart of francying. This is the Egyptian pound.
Speaker 1: Are you Are you equating Italy with the depreciation managed
Speaker 1: by the I m F of the Egyptian pound. I mean,
Speaker 1: it's a little bit entertainment, your folks. I'm not equating
Speaker 1: Cairo to Rome. But come on, and I am F
Speaker 1: bailout of Italy or an I m F reorganization of Italy.
Speaker 1: That's strong language, not of the organization, not a bailout.
Speaker 1: Italy needs to reform its labor markets, its pension systems,
Speaker 1: legal systems, government governance, system, each banking system. This has
Speaker 1: not happened. It is not happened. It is posing at
Speaker 1: risk for the rest of Europe, and it isn't happening
Speaker 1: because of OMT. Once you take O m T D
Speaker 1: used to be out of the picture, you will see
Speaker 1: BTP rates going to four percent and then you will
Speaker 1: have this particular problem. Fancy, and I want to begin
Speaker 1: uh with this conversation with you on Italy and your
Speaker 1: thoughts on what Dr Folgers Lando said about the I
Speaker 1: m F coming in. To me, that's almost unimaginable that
Speaker 1: they would do, right, I mean, the problem to you know,
Speaker 1: David's point is that we've been trying to reform the
Speaker 1: country for what ten fifteen years. We had a lot
Speaker 1: more Well, you could argue that the former political class
Speaker 1: wasn't that keen on reforming, but you know, since Terrans
Speaker 1: he came into power, we're expecting many more things. Youth
Speaker 1: unemployment is absolutely true, and so what I agree with
Speaker 1: David on is that if you look at the Donald
Speaker 1: Trump presidency and the fact that he got elected when
Speaker 1: you have twenty percent even youth unemployment, that you are
Speaker 1: going to see a lot of people in it to
Speaker 1: the actually having for a protest vote, so it's very
Speaker 1: likely that he will lose a referendum. What comes next
Speaker 1: time wouldn't be palable, palatable to to the Italians to
Speaker 1: actually get into an i m F program, no, very
Speaker 1: very difficult, and I suspect that the European would put
Speaker 1: Europeans would put something together by way of Troy or
Speaker 1: something like that, to have it domestically, to have an
Speaker 1: inside European financed and with European rules, attack through it um.
Speaker 1: But that's not how the global financism is supposed to
Speaker 1: work the I m F since at the center if
Speaker 1: a country has debt difficulties, that's where the reforms are
Speaker 1: supposed to come from, and not just regionally. So I'm
Speaker 1: the actual outcome but probably not involved in I m F.
Speaker 1: But that's where it should be going. But again, the
Speaker 1: heart of the debate going back more than twenty years
Speaker 1: is Germany has the same currency as Italy and they're
Speaker 1: not the same economies. Are there? So look at the
Speaker 1: statistic from nineteen seventy to the year two thousand, when
Speaker 1: the Europe began, Germany revalued against the lira BO eight zero.
Speaker 1: Now that's over. You can't do it anymore have the
Speaker 1: same currency. Now that means Italy has to continue. You
Speaker 1: have a domestic domestic devaluation in prices. You can only
Speaker 1: and it's just very very hard to do. So this
Speaker 1: problem with Italy is going to be with us for
Speaker 1: a long time to come unless Italy implements very significant,
Speaker 1: very deep structural reform, and it can't do that by itself.
Speaker 1: David in twenty seconds, would it think be better off
Speaker 1: outside the Arizone? It's tough without reforms. Yes, with reforms,
Speaker 1: would be better inside the Eurozone obviously if it can
Speaker 1: put it to the uniforms stay in. Without it, you
Speaker 1: just have this. You're constantly on the village of crisis.
Speaker 1: We continue to look forward here after the election of
Speaker 1: Donald Trump, to see what he might do policy wise,
Speaker 1: he might appointed his cabinet. Also useful here to look
Speaker 1: back and see how so many polls got it so wrong.
Speaker 1: Frank Newport is the editor in chief of Gallop, the
Speaker 1: venerable polling agency, and it's great to speak with you, Frank,
Speaker 1: Thanks for joining us. Thank you good to be with you.
Speaker 1: Help us understand here how so many people got this
Speaker 1: so wrong. Going into the election, it seemed like a
Speaker 1: sure bat that that Hillary Clinton was going to win
Speaker 1: the presidency. What happened, Well, we we've of course been
Speaker 1: looking at that. Gallup was not involved in trying to
Speaker 1: predict the election, So I'm kind of looking at this
Speaker 1: as a dispassionate outside observer. This time a confluence of factors.
Speaker 1: Let me mention several or quickly. One is, Hillary Clinton
Speaker 1: did win the popular vote, and she's probably gonna win
Speaker 1: by one to two percent. So it was a confusing
Speaker 1: election in that sense. Note that the national polls had
Speaker 1: said she would win the national vote were actually accurate
Speaker 1: and actually not that far off, probably going to be
Speaker 1: more accurate than they were in twelve. So these national
Speaker 1: polls had said, here's the popular vote. I think, given
Speaker 1: all the constraints that polling has underdid a pretty good job. Second,
Speaker 1: the problem was state polling, which is notoriously difficult in
Speaker 1: state flight Wisconsin, in Michigan, and North Carolina. To a degree,
Speaker 1: the polling had suggested that she would win and she didn't. Uh,
Speaker 1: And when those polls went arrived the so called forecasting models,
Speaker 1: which became all the rage this time. All they do
Speaker 1: is take those state polls and crank them into some
Speaker 1: pseudoscience models. So when those state polls weren't so good,
Speaker 1: these forecasting monum outles eight five percent ninety percent probability
Speaker 1: that you'll win, and everybody just took that as gospel.
Speaker 1: And that's why that compounded to make it really look
Speaker 1: like people were wrong. A nicely said Frank Newport. Helped
Speaker 1: me here with one over the square root of n
Speaker 1: in that, I find no one bothers to have pay
Speaker 1: reverence and honor to margin of error. With all the
Speaker 1: killing of polars and strategists and pundits, are we just
Speaker 1: juvenile in our disrespect for margin of error? Well? I
Speaker 1: think so, margin of error we can you uh, I
Speaker 1: think it just symbolizes the fact that polling is an
Speaker 1: estimate of a population parameter, and they're gonna be it
Speaker 1: can't be precise. It's very difficult, particularly in a state.
Speaker 1: Most states have hugely different voting in the metropolitan areas
Speaker 1: and outstate you know, truan Wisconsin, you know, Milwaukee is
Speaker 1: totally in Madison totally different than outstates. Tru in Pennsylvania,
Speaker 1: you know, Philadelphia is totally are strongly democratic, but the outstates,
Speaker 1: by Alabama, in Pennsylvania, so if you get those, you're
Speaker 1: trying to estimate turnout across these areas, and if you
Speaker 1: missed the turnout estimates, of course you're going to miss
Speaker 1: the overall estimate. And it's hard. In Wisconsin, the last
Speaker 1: poll was done six days before the election, the lot
Speaker 1: amount have changed. So, yes, polls are just estimates. And
Speaker 1: in these closed swing states are close by definition, right,
Speaker 1: so they're the hardest states of all to try to
Speaker 1: estimate what's going to happen in. So it's very tricky business.
Speaker 1: Right going into election day, the Donald Trump campaign was
Speaker 1: very confident that it was very confident in its internal polling.
Speaker 1: Help us understand the difference there between internal polling and
Speaker 1: the kind of polling that Gallop does that other polling
Speaker 1: houses do. Of course, success is a father, failure as
Speaker 1: many is an orphan. You know, success has many fathers. So,
Speaker 1: of course, to the people who want so, you know,
Speaker 1: we knew it all along. Internal polling is nothing but
Speaker 1: the polling that's paid for and done by the candidates.
Speaker 1: They just don't release the publicly. Is that sometimes it's
Speaker 1: pretty good. They have pretty good posters and they do
Speaker 1: their own poll they do them in some unusual ways
Speaker 1: to try to predict what's had and going. A candidate says,
Speaker 1: my internal calling too was extra. Why he's talking about her,
Speaker 1: She's talking about the calling that they paid for, which
Speaker 1: can be good. These people are pretty skilled that work
Speaker 1: for the candidates very quickly here and we're gonna we're
Speaker 1: gonna have you stay with us. A lot of talk
Speaker 1: about the the effect of the email investigation. How large
Speaker 1: did that loom here on voters minds going to the
Speaker 1: ballot box on Tuesday? It was huge. We asked with
Speaker 1: the project we did with Michigan University of Michigan, and
Speaker 1: George said, we were asking voters every day, what did
Speaker 1: you reach here here about Hillary Clinton and Trump? In
Speaker 1: the last day or two, an email just dominated, going
Speaker 1: all the way back to July. Um emails, emails, emails.
Speaker 1: I wrote this in a piece of emails with the
Speaker 1: bane of Hillary Clinton's existence. She wishes she'd never seen
Speaker 1: an email. I'm sure, but a lot of voters just
Speaker 1: last on the emails in all their manifestations. You know
Speaker 1: whom I Avideen's emails or servers emails, Podesta's emails, all
Speaker 1: these different kind of emails came to symbolize it. Looked
Speaker 1: like to us for voters a lot of her weaknesses
Speaker 1: in terms of their perception she was dishonest and also
Speaker 1: kind of colluding with the power. David Durry here with
Speaker 1: Tom Keene, also joined by Frank Newport, editor in chief
Speaker 1: of Gallup. We were talking about some of the issues
Speaker 1: on voters minds going to the ballot box on Tuesday. Frank,
Speaker 1: let me ask you what we know about turnout. Our
Speaker 1: conversations ahead of election, they all centered on how readily,
Speaker 1: how easily these candidates could get people to come to
Speaker 1: the pulse. What do we know now six days out
Speaker 1: about how well they did that? Well? The vult are
Speaker 1: still being counted to some degree, but it looks like
Speaker 1: overall turnout is not was not high. In fact, it
Speaker 1: was lower than the last several elections. So overall this
Speaker 1: was not a robust turnout election, and that's important. Enthusiasm
Speaker 1: was at the lowest we've measured in Gallup before the election,
Speaker 1: so people just weren't excited about it. Two very unfavorably
Speaker 1: evaluated candidates. It certainly doesn't look like um from what
Speaker 1: I've seen so far, that Hillary Clint was able to
Speaker 1: duplicate the turnout among certain groups of rock Obama had
Speaker 1: been able to generate. That would be young people and minorities, um.
Speaker 1: And to some degree, she didn't get the same level
Speaker 1: of vote Latino's actually did. It looked like when the
Speaker 1: acted polls slightly less for her than they did vote
Speaker 1: for Barack Obama against mid Remney back in two twelve.
Speaker 1: So that was an issue as well. And if everybody
Speaker 1: has talked about and noted, the data clearly suggests that
Speaker 1: Trump was able to get higher than usual turn out
Speaker 1: in rural areas, areas outside metropolitan areas, and some of
Speaker 1: these key swing states, and that was very, very important
Speaker 1: for him. Newport, How will your world change? I'm in
Speaker 1: the camp of not wanting to bash on Polsters. I
Speaker 1: think there's a lot more moving parts going on. But
Speaker 1: is it the same old, same old four years from
Speaker 1: now or will it forever change for Polsters? Well, I'm
Speaker 1: not sure it will forever change at all. Again, Gallup
Speaker 1: was not involved in the horse phrase estimate at all,
Speaker 1: which is a change. You know, we decided to put
Speaker 1: our effort elsewhere, we think, and I personally think there's
Speaker 1: too much effort on just trying to forecast who's gonna
Speaker 1: win which could spend more time on understanding why candidates
Speaker 1: winning and what the voters want candidates to do. All
Speaker 1: of this huge amount of effort in time, and the
Speaker 1: forecasting goes away after the elections. Who carriage? You know
Speaker 1: that doesn't have any lasting value broadly speaking, it's a
Speaker 1: good question. The industry as a whole is always looking
Speaker 1: to change. You know. We used to do all of
Speaker 1: our interviewing in person. That shifted to the telephone. There's
Speaker 1: a lot of institutions that are doing internet polling now,
Speaker 1: you know, trying to use the internet or smartphones. So
Speaker 1: I think the methods that posters us are going to
Speaker 1: change and may be different four years from now, regardless
Speaker 1: of the election, just in general. But our goal will
Speaker 1: remain the same, and that is trying which I think
Speaker 1: is critically important in the democracy. Trying to measure and
Speaker 1: understand what Americans are thinking and feeling. That's an important
Speaker 1: goal and we need to keep doing that. Frank, some
Speaker 1: of our colleagues at another news outlet, I won't name
Speaker 1: it already, looking ahead to go ahead please. It's a
Speaker 1: piece in the hill looking at the top ten Democrats
Speaker 1: who might run for for the nomination in two thousand twenties.
Speaker 1: So here we are. You know, with five six days
Speaker 1: since election, we're already starting to look ahead to what
Speaker 1: what what? What do we learn from this campaign about
Speaker 1: the persistence of campaigning in the year two thousand and sixteen. Well,
Speaker 1: we know the public thought this campaign was horrible. The
Speaker 1: tone was negative. They weren't satisfied was how it was wrung.
Speaker 1: It went on too long. The public doesn't like the
Speaker 1: electoral college, who would rather go to a direct popular vote.
Speaker 1: That's been evident for decades now. Public would like a
Speaker 1: lot of change in this UM. It's hard to get
Speaker 1: a precise measure on how short the campaign should be,
Speaker 1: but I think Americans would be quite happy if we
Speaker 1: cut down this year and a half's worth of slug
Speaker 1: food campaigning UM down to something that was much more
Speaker 1: reasonable in terms of time, if that's what you're asking
Speaker 1: rather than I mean, you're right, these candidates are already
Speaker 1: assembling staffs now looking ahead to Frank. What will we see? Oh,
Speaker 1: we think we just lost Frank Newport. Well we think
Speaker 1: him for his effort today, David, you and I can
Speaker 1: continue here. David, I thought, without question, the most important
Speaker 1: essay the weekend was Robert Skidelski, Lord Skadelsky writing in
Speaker 1: Project Syndicate, the great Keynesian biographer, who who gave us
Speaker 1: David immense history, and that's in so much of the
Speaker 1: analysis has been missing. We can barely get some people
Speaker 1: to go back to the nineteen sixty and the regime
Speaker 1: change of JFK. We certainly have trouble going back to
Speaker 1: early Eisenhower, even back to the twenties and Calvin Coolidge
Speaker 1: and Skidelski did that with a vengeance of how things
Speaker 1: can unravel if it's not properly managed. Lord Skodolski, who
Speaker 1: I think you're gonna be speaking with with tomorrow, he's
Speaker 1: with us tomorrow. Incredible piece and and made me think
Speaker 1: of the conversation that we had with Neil Ferguson on
Speaker 1: on Friday. He was trying to view a bit of
Speaker 1: it into the conversation. Now a couple of days out,
Speaker 1: I got around to reading that Michael Barone piece that
Speaker 1: that you wanted me to to check out in the
Speaker 1: Washington's amer Michael Brown's column on the heels of that election.
Speaker 1: He called, uh, it astounding. That was the lead to
Speaker 1: the piece. Astounding, That's the best word to describe the
Speaker 1: tumultuous election night into to most people's surprise victory of
Speaker 1: Donald Trump. UH in that election really interesting as I
Speaker 1: began to sort of sift through the demographics looking at
Speaker 1: the at who voted something Frank Newport was talking about
Speaker 1: just a few moments ago, and who didn't vote? And
Speaker 1: I think that the headline there of the fact that
Speaker 1: so many fewer people went to the polls. It's gonna
Speaker 1: be something we're gonna be working with for a while.
Speaker 1: Here I put the bar chart out. I can't remember, sorry, folks,
Speaker 1: I can't remember the citation, but a very simple bar
Speaker 1: chart that basically said, uh, the president of two thousand
Speaker 1: eight and the president of two thousand twelve, they simply
Speaker 1: didn't show up. For Secretary Clinton, David tell our global
Speaker 1: audience the color of protests Saturday and Sunday, UH in
Speaker 1: New York and around the country. Was it different than
Speaker 1: the previous days? Was there something distinctive? I got the
Speaker 1: sense I wasn't in Manhattan on on Saturday, but from
Speaker 1: social media and talking to friends, I got a sense
Speaker 1: that the protests were growing in size. I think there
Speaker 1: was a march from from Union Square up Fifth Avenue.
Speaker 1: So I think that that that anger continues, and that
Speaker 1: anger seems to be getting channeled into these into these protests.
Speaker 1: I continue to wonder Tom sort of what the the
Speaker 1: the end result of that will be, In other words,
Speaker 1: what are there Yes, there are grievances here. There are
Speaker 1: people who were upset with how the election turned out
Speaker 1: on Tuesday. Uh, they're they're making that dissatisfaction known. But
Speaker 1: I don't know what the the end game for that is.
Speaker 1: And of core, he said, this was something that Donald
Speaker 1: Trump talked about in that interview last night, Leslie Stall
Speaker 1: asking him, you know, if he had a message for
Speaker 1: for those protesters, and he said two words, stop it.
Speaker 1: And CBS since then has gotten a lot of criticism
Speaker 1: for for holding that as we've seen a violence estimate,
Speaker 1: you know, in cities across the country. Donald Trump with
Speaker 1: a concise message to protesters there to lay off. It
Speaker 1: was interesting coming out of hethrow folks. The vibrancy, of
Speaker 1: course of the airport always visible. I got in on
Speaker 1: early Sunday morning, but they're driving out around the acclaimed rotary.
Speaker 1: David Gurrow was the big billboard sign obviously talking their
Speaker 1: book of the runway coming up in eight or nine
Speaker 1: years ago. It was, you know, interesting to see the
Speaker 1: core infrastructure project of the Western world as we know
Speaker 1: it bannered across UH the entryway to the four lane
Speaker 1: highway into London. Speaking infrastructure here again that the conversation
Speaker 1: here center on on on that infrastructure package. Donald Trump's
Speaker 1: promised to double what Hillary Clinton would have done, so
Speaker 1: so he will no doubt be hashing that out with
Speaker 1: how Speaker Paul Ryan and the Senate Majority Leader. I
Speaker 1: was struck over the weekend by how Donald Trump is
Speaker 1: beginning to piece together his his administration, obviously hiring Steve
Speaker 1: Bannon and runs previous for senior positions in his staff.
Speaker 1: He called the President of China last night, rather received
Speaker 1: a phone call from the President of China last night. UH.
Speaker 1: He said that the president wished him well after the
Speaker 1: historic election, and according to the Trump transition team here,
Speaker 1: during the call, the leaders established a clear sense of
Speaker 1: mutual respect for one another, and President Electrump stated that
Speaker 1: he believes the two leaders will have one of the
Speaker 1: strongest relationships for both countries moving forward. I'm just thinking
Speaker 1: what James Foley was saying here about the degree to
Speaker 1: which the rhetoric we heard on the campaign trail may erode.
Speaker 1: Who you put your trust in matters. Investors have put
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Speaker 1: and of four trillion dollars. Why they see their roles
Speaker 1: to serve, not sell. That's why Charles Schwab is committed
Speaker 1: to the success over seven thousand independent financial advisors who
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Speaker 1: Learn more at find your Independent Advisor dot com. David
Speaker 1: Gurr in New York, I'm in London and joining me
Speaker 1: now Charles Duma, who has been remarkably oppression about tepid
Speaker 1: economic growth. He is with T. S. Lombard joins us. Now,
Speaker 1: I first must congratulate you on the acquisition of Jonathan Fenby.
Speaker 1: This is like cricketer baseball. This this involved massive negotiations.
Speaker 1: What a what a joy to see the thoughtful stuff,
Speaker 1: to has law where it doesn't, to bring Mr Fenby
Speaker 1: into it. Why did you hire Mr Fenby? We didn't
Speaker 1: know him. We merged with trusting sources and we're putting
Speaker 1: the political into Lombard. That's it. This is fabulous. The
Speaker 1: two of you together, tell me about the T s.
Speaker 1: Lombard worldview. What will that be post Trump? Well, I
Speaker 1: think as far as post trumpers, he seems to be.
Speaker 1: It's interesting. You know, he's one thing as a candidate,
Speaker 1: something slightly different as um as an elected, if not
Speaker 1: yet inaugurated president. So um. You know, these contracts are
Speaker 1: quite usually a matter of fact, I learned this weekend
Speaker 1: Charles Duma that part of the known world doesn't know
Speaker 1: who Nelson Rockefeller is, which surprised me. Is this Rockefeller
Speaker 1: Republicanism and the new guys? Well, he's certainly economically you
Speaker 1: could argue to the left of Mrs Clinton, which is
Speaker 1: an interesting point, although obviously if we're going for a
Speaker 1: much easier fiscal stance, it may well be more in
Speaker 1: the form of tax cuts at the top end of
Speaker 1: the range and corporation tax cuts. But of course the
Speaker 1: the infrastructure side is also extremely interesting and and rather positive.
Speaker 1: To dig into the fiscal side there. How does a
Speaker 1: Donald Trump presidency complicate things for for the European Central Bank? Well, uh,
Speaker 1: never mind the European Center what about the fat um?
Speaker 1: You know, our view is that you're looking at inflation
Speaker 1: that's around two percent now, just over two for the
Speaker 1: CPI just under two for the consumity flater on a
Speaker 1: core basis, and oil prices are up over the course
Speaker 1: of the year. So by early next year, the the
Speaker 1: CPI is going to be close to two and a
Speaker 1: half percent and the deflate is going to be around
Speaker 1: two percent. Now, if you look at when wages that
Speaker 1: are currently coming through it about two and a half
Speaker 1: three percent were formed, which is about a year back,
Speaker 1: inflation was virtually nil, so people are expecting or at
Speaker 1: five cent unemployment, they were were bargaining for two real
Speaker 1: gains and add that to to percent inflation and you're
Speaker 1: looking at a wait by spot. I mean, David, your
Speaker 1: question brings up something important. This doesn't work on Bloomberg Radio,
Speaker 1: but I'll probably do this David Girl tomorrow on television,
Speaker 1: which is to compare and contrast the dot chart of
Speaker 1: now versus where it was a click a go and
Speaker 1: the answer is the markets moved yeah, yeah, yeah, that's right,
Speaker 1: and and so to get back and so I guess
Speaker 1: what I'm saying is that the Fed has got a
Speaker 1: lot of catching up to do, and that inflation is
Speaker 1: likely to be too sent by early next year and
Speaker 1: pushing towards sleeper center a year later. So you know,
Speaker 1: even if they tightened by a quarter percent every second meeting,
Speaker 1: they'd still be behind inflation in two years time. I
Speaker 1: had a conversation with it with a woman last week
Speaker 1: who's charged with heading up the monetary policy side of
Speaker 1: things for the Donald Trump transition team. It was it
Speaker 1: was a frustrating conversation, in part because she wasn't allowing
Speaker 1: very much. Here from where you sit, what does a
Speaker 1: Donald Trump Fed looked like? Do we have any sense
Speaker 1: of of whom he might appointed these two vacancies who
Speaker 1: might replace Danny Yellen in two thousand eighteen, any sense
Speaker 1: of his his vision for monetary policy. No, I don't
Speaker 1: think he's got round to that in any kind of
Speaker 1: serious way. But what I do think has become evident,
Speaker 1: particularly here in Britain over the last few months, is
Speaker 1: that there's no such thing as a non political monetary
Speaker 1: policy um and so I think the business of independence,
Speaker 1: whether the Fed Bank of England or anyone else, is
Speaker 1: liable to start being eroded. And with good reason I
Speaker 1: should have said, can you link all of the expectations,
Speaker 1: the set of expectations that we have and what has
Speaker 1: changed in our world. Can you link them in to
Speaker 1: higher real GDP. I think in terms of longer term
Speaker 1: growth UM. Maybe tax cuts help a little bit UM
Speaker 1: and over time we're expecting some improved moment in labor mobility,
Speaker 1: which has been held back badly by student debt and
Speaker 1: the housing crisis. UM, and that should ease over time. UM.
Speaker 1: So that those are those are potential plus is only
Speaker 1: one of them is policy related of course, UM. The
Speaker 1: infrastructure siety, I suppose also may help goth more With
Speaker 1: the point it's um. It supports the existing level of
Speaker 1: activity and a kind of decent life for people on
Speaker 1: a day to day basis, never mind measure GDP. Charles
Speaker 1: Duma with us in London or Ts Lombard David Gurr
Speaker 1: of course in New York as well. Charles Duma David
Speaker 1: focus Landau of Deutsche Bank today talked about the reality
Speaker 1: of the euro experiment. You have been one of the
Speaker 1: foremost critics of a combined Euro and dr focus Landau
Speaker 1: focused on effect that Germany and Italy are pegged with
Speaker 1: the same currency, so all of Italian adjustment must come
Speaker 1: through themestic regime. Italian lira was nine lira per Deutsche
Speaker 1: Bank and it ought to be now twenty two d
Speaker 1: per Deutsche Bank, but it hasn't been allowed to appreciate. Yeah,
Speaker 1: well that's the thing. I mean, it's Italian inflation has
Speaker 1: been much higher than Germans, and so the result is
Speaker 1: that the exchange rate reflects a blend of the two,
Speaker 1: if you like, for the euro, and that means it's
Speaker 1: too cheap for yours for for Germany and too expensive frily.
Speaker 1: In fact, if you look at the if you look
Speaker 1: at the long run average real level of German exchange rate,
Speaker 1: it's about below that long run average, even including the
Speaker 1: years of the ear in other words, the average going
Speaker 1: back to Breton Woods. I mean, this is pretty simple geometry,
Speaker 1: you know, the parameters. Paul de Guar will be with
Speaker 1: us tomorrow with the School of Economics. He and Charles
Speaker 1: White Plots and others look for a clearing of the
Speaker 1: European market. Does President elect Trump help Europe towards tough
Speaker 1: decisions that have been delayed? Well, um, not really. I
Speaker 1: don't think so. No. I think I think that the
Speaker 1: only way in which he does that is actually by
Speaker 1: making people feel making the establishment feel scared and maybe
Speaker 1: just a mite more self critical, because any normal establishment
Speaker 1: by now would have done somethingly about the euro. And
Speaker 1: we've had twenty three percent average unemployment in Spain for
Speaker 1: about six years on the trot um, and yet no
Speaker 1: one is proposing any major changes in the in the regime.
Speaker 1: The growth rate has been pretty undistinguished, even in Germany.
Speaker 1: I mean, people talk about Germany being successful, but you've
Speaker 1: got to remember that if you measure it against the
Speaker 1: last three year, a year German and British GDP are
Speaker 1: up about the same. They're been per head about for
Speaker 1: Germany for Britain, but that's roughly the same. Now when
Speaker 1: you look at after tax income in real terms, are
Speaker 1: allowing for inflation um, the British number her head is
Speaker 1: up about the same twenty seven but the German number
Speaker 1: is not only fifteen percents. So fundamentally they've sacrificed the
Speaker 1: interests of their citizens in order to earn these great surfaces,
Speaker 1: and the other guys are simply worse than that. I mean,
Speaker 1: Italy GDP is minus one percent ahead over seventeen years,
Speaker 1: it's minus one per center, and disposable income is down
Speaker 1: by fifty about sorry, by seven percentage points. They're actually
Speaker 1: poorer than they were in their nineties. David Drill jumped
Speaker 1: into this conversation trust Tonight, President Obama board's air Force
Speaker 1: one for what's looking like his final trip as president overseas.
Speaker 1: He's traveling to Greece, to Athens tomorrow and then to
Speaker 1: Germany on the heels of that. What do you expect
Speaker 1: him to say? What do you expect him to say
Speaker 1: about the about the European Union, about the Euro in
Speaker 1: that major speech he scheduled to deliver tomorrow and Athens. Well, unfortunately,
Speaker 1: I don't expect him to address the issues I'm talking about,
Speaker 1: because what someone needs to do is to tell these
Speaker 1: guys that actually, the Euro hasn't worked. And sometimes when
Speaker 1: you take a wrong turning, you know you soldier on,
Speaker 1: you find a new way to where you want to get.
Speaker 1: But other times you go back to the turning and
Speaker 1: you take the other turning. And that's really what they
Speaker 1: need to do here, And I don't see Ovomer saying
Speaker 1: anything like that. The ECB meets in a couple of
Speaker 1: weeks time, they're going to reevaluate their their bond buying program.
Speaker 1: How big an issue is scarcely for for the ECB
Speaker 1: right now? And give us your sense of where things
Speaker 1: are heading. Well, I think you know, they're gonna want
Speaker 1: to keep policy easy through the French election, which lasts
Speaker 1: until about May, and then they're going to want to
Speaker 1: be visibly tighter before the German election, which comes up
Speaker 1: in in September October. So we're expecting, therefore, a tapering
Speaker 1: to start in the in the summer, which is early.
Speaker 1: That's that you're you're expecting it to happen earlier than many. Yeah,
Speaker 1: that's probably right. But you know, the the Eurozone economy
Speaker 1: has actually been growing above its trend for the last
Speaker 1: three years, believe it or not. That's because one and
Speaker 1: a half percent is about twice the trend because the
Speaker 1: trend so feeble. But I mean, it still means that
Speaker 1: there's no longer any serious fear of inflation, and the
Speaker 1: inflation rate is going to be about one percent, which is,
Speaker 1: you know, not too far from the from the from
Speaker 1: from the target. So you know, you've got a situation
Speaker 1: where there's no particular reason to have negative interest rates,
Speaker 1: massively negative villa industrates. Add a whopping great quantity division
Speaker 1: on top. Just so you know, your colleague Jonathan Fenby
Speaker 1: has just written a fabulous new book on France. I
Speaker 1: don't know if his voice, yeah, yeah, yeah, I seen it.
Speaker 1: It's obnoxiously thick. It's a fabulous book. And I said that,
Speaker 1: Mr Fembi, what would Charles de gold do? What will
Speaker 1: Marine Lapen do? Well? Depen, of course is a nicety
Speaker 1: placed and the and the real, the real issue here
Speaker 1: for the Eurozone is that there's a lot of momentum
Speaker 1: behind this protest voting these days. I mean, you know,
Speaker 1: Brexit may have seemed like a standout back in June,
Speaker 1: but that was a big enough shock. Now you've got
Speaker 1: what looks like a protest volt putting Donald Trump in
Speaker 1: as president. And we've got a very powerful right wing
Speaker 1: protest voting blocks in Holland which comes up in February March,
Speaker 1: where frankly they're even better organized than Mrs le Pin.
Speaker 1: And then Mrs Lpin, as you say, in in April May,
Speaker 1: who will probably be head in the first round for president.
Speaker 1: She may not win the the runoff, but she'll probably
Speaker 1: be ahead in the starting starting blocks. And then of
Speaker 1: course when we get to Germany, they hate these zero
Speaker 1: interest rates because they think that's how they subsidize the
Speaker 1: rest of Europe basically, and so so you can more
Speaker 1: or less guarantee that if you believe in political monastery economics,
Speaker 1: as I do, there's a high chance of taping having
Speaker 1: started by then. But of course in the near term
Speaker 1: the ECB may well extend the extend the quantity of
Speaker 1: eating for a few months just to keep the French happy.
Speaker 1: And there's probably just to answer your question, there's probably
Speaker 1: just enough stuff out that they can buy under the
Speaker 1: current rules to last for another three months, possibly even six,
Speaker 1: and get them over the hump from March where it
Speaker 1: runs out now to just after the French election. Charles Duma,
Speaker 1: thank you so much with ts A Lombard. It's extraordinary.
Speaker 1: It doesn't get it doesn't, it doesn't get boring, doesn't
Speaker 1: it doesn't. Congratulations on trusted sources Lombard, tis A Lombard,
Speaker 1: Jonathan Fenby and Charles Duma, among others as well. Then
Speaker 1: I'll tell you, folks, it's never doll um. I was
Speaker 1: making the joke this morning off of the acclaimed Keynes quote. This,
Speaker 1: of course Robert Skodolski's wonderful essay in the Project Syndicate. Today.
Speaker 1: When the facts change, I change. We're seeing all sorts
Speaker 1: of people on Wall Street adapt and adjust to the
Speaker 1: stunning election of Donald Trump. As we mentioned earlier, HSBC
Speaker 1: and Steve Major change what has been a brilliant call
Speaker 1: on lower interest rates and lower for longer. Just put
Speaker 1: a chart out on Twitter showing this and will feature
Speaker 1: that chart tomorrow and Bloomberg Television. Julian Jessop with us
Speaker 1: with Capital Economics they do for those of you in America,
Speaker 1: particularly Capital Economics says just wonderfully dense research on the
Speaker 1: state of strategy and the state of oh everyone from Brexit.
Speaker 1: They've been brilliant on Brexit not being the end of London.
Speaker 1: And Julian Jessop joins us, now in our London studios,
Speaker 1: you changed as well. Three percent the end of two
Speaker 1: thousand seventeen. What is the three percent inflation I yield? Rather,
Speaker 1: what is the three percent yield do to our listeners paychecks?
Speaker 1: The inflation adjusted wage flat or will it be down? Well,
Speaker 1: I think down the context in which bondie right seeing um,
Speaker 1: if President Trump does indeed deliver stronger economic growth and
Speaker 1: a stronger labor market, then what would be seeing in
Speaker 1: the bond market is simply a normalization where yields and
Speaker 1: borrowing costs more generally were turned towards the sorts of
Speaker 1: levels that you'd hope for in economy growing at two
Speaker 1: to three and one way, the labor market is fairly tight,
Speaker 1: so um, it's not necessarily bad news for your listeners,
Speaker 1: though it might be if a big sell off in
Speaker 1: the bond market tree that goes weakness in other asset markets,
Speaker 1: there's a big fall in in equity markets, or if
Speaker 1: a rise in borrowing costs across the board makes companies
Speaker 1: more cautious about investment. If it leads to higher mortgage
Speaker 1: rates and therefore bigger cost of owning your own home,
Speaker 1: then it could cause problems. But so far, at least
Speaker 1: I see it actually is quite healthy. I agree that
Speaker 1: econ and one O one is the ambiguity when things change.
Speaker 1: What's the predominant effect that we will see that we
Speaker 1: see witnessing the Bloomberg screen? To them, what depends what's
Speaker 1: driving what if? The if bond deels are rising is
Speaker 1: a symptom of increased optimism about the US economy and
Speaker 1: in particular the prospect that interest rates work need to
Speaker 1: remain near zero near emergency levels for much longer because
Speaker 1: the economy is doing well, then I think the bond
Speaker 1: market weakness is just something that we accepts as almost
Speaker 1: something to be welcomed. If, on the other hand, the
Speaker 1: bond market weakness reflects either inflation taking off, which I
Speaker 1: think frankly as a possibility given how the U S
Speaker 1: economy is already operating close to capacity and arguably doesn't
Speaker 1: need a fiscal stimulus, or if the sell off in
Speaker 1: the bond market prompts wider weakness in in other financial assets,
Speaker 1: maybe even prompts an overreaction from the Fed, then I
Speaker 1: think it could be a problem. But the key point
Speaker 1: is it doesn't necessarily have to be. This could be
Speaker 1: simply the long awaited normalization of interest rates and bond
Speaker 1: deals that we've frankly been hoping for for some time,
Speaker 1: that long awaited normalization. Did your view of when and
Speaker 1: how that will happen change at all after the election
Speaker 1: results of Tuesday? Oh? Absolutely. I mean our central scenario,
Speaker 1: like I think most people's, have been that real Clinton
Speaker 1: would win and the Fed would returned to raising rates
Speaker 1: gradually in December, and therefore that bond deals would would rise. Um.
Speaker 1: The one thing that's changed, of course, is that maybe
Speaker 1: yields will rise even quicker, as indeed they have over
Speaker 1: the last few days, and get to a high level
Speaker 1: rather rather sooner. I think that many things that you
Speaker 1: might think of President Alex Trump's new program, but one
Speaker 1: thing he's made very clear is that there's going to
Speaker 1: be increased emphasis on looser fiscal policy, and actually a
Speaker 1: positive welcome for tighter monetary policy is removing some sort
Speaker 1: of the artificial economy we're seeing in the financial markets. Um.
Speaker 1: So we're already expecting bond deals for rise, but now
Speaker 1: they've risen quicker, and we think they'll rise further than
Speaker 1: we previously anticipated. Julie, When you think about that fiscal package,
Speaker 1: that that infrastructure plan, what does it have to look
Speaker 1: like to to make a difference. Well, definitely, lots of
Speaker 1: different aspects of it. Um I think the thing the
Speaker 1: markets would like to see most is infrastructure spending. That's
Speaker 1: the thing that has the biggest impact both on the
Speaker 1: demand side of the economy but also potentially boosting the
Speaker 1: supply side. If all you do is cut taxes the
Speaker 1: relatively well off, they may well spend that money, they
Speaker 1: may will save it, but that doesn't necessarily boost growth
Speaker 1: in the longer term. The distinction Lawrence Somers put on it,
Speaker 1: I would suggest even his critics call him an economist.
Speaker 1: Of note is what I call the how much idness
Speaker 1: which in so many mathematical relationships, particularly in finance, people
Speaker 1: overlook they get the vector right, but they overlook the
Speaker 1: how much idness the amplitude Professor Somers was advocating much
Speaker 1: bigger infrastructure then President Trump or his Republicans can stomach,
Speaker 1: do you is capital economics have a sense of the
Speaker 1: how much idness it's necessary to make infrastructure move the needle. Well.
Speaker 1: First of all, I think a couple of reasons for
Speaker 1: thinking that the infrastructure boost won't be quite as big
Speaker 1: as the markets now seem to be anticipating. One is
Speaker 1: the constraints in the political system in the US. After all,
Speaker 1: Republicans by large are fiscally conservative. If he's planning to
Speaker 1: ben awful lot more infrastructure, he wouldn't have as much
Speaker 1: to do on on tax cuts, And of course there
Speaker 1: are constraints of the debt ceiling as well. So the
Speaker 1: first point is that it may be less than he's
Speaker 1: planning anyway. The second point is it needs to be
Speaker 1: seen in context. If we're thinking about the global economy,
Speaker 1: then China this year alone has added an additional two
Speaker 1: hundred billion dollars worth of infrastructure spending in the first
Speaker 1: nine months of the year alone. So if that spending
Speaker 1: drops off next year, as I think it will in
Speaker 1: the China economy slows, that could still have a much
Speaker 1: bigger negative impact on global industrial commodity prices than anything
Speaker 1: that Trump is likely to do over the next few years.
Speaker 1: Remembering that infrastructure spending tends to be slow, it takes
Speaker 1: a while to build up, and it won't be much
Speaker 1: happening next year. Go ahead, David, I'm sorry, no, I'll
Speaker 1: introduce this. We can come back and talk about it
Speaker 1: here in a couple of minutes. But I just I
Speaker 1: wonder what's changed notionally. There was so much pushback when
Speaker 1: President of I'm proposed more more stimulus, more fiscal spending.
Speaker 1: And now we have the selections. Everything has changed. Let
Speaker 1: us explain this, Julian the young gera. Now it's our bridge.
Speaker 1: And we say that with thanks to Gina Romando, governor
Speaker 1: of Rhode Island, who showed up last week. It was
Speaker 1: great to have her in with the bridge challenges that
Speaker 1: they haven't Rhode Island. David Gura in New York. I'm
Speaker 1: Tom keenan London. Shout out right now to the Victorian
Speaker 1: Albert Museum. They are just absolutely killing it with two
Speaker 1: shows right now. One of them is Revolution David Gura.
Speaker 1: I can't convey what it's like to go into a
Speaker 1: museum and see your childhood as an exhibition. Yeah, it was.
Speaker 1: It was odd to see Sergeant Pepper's Lonely Hearts Club
Speaker 1: band venerated if you will, it was I remember sitting
Speaker 1: on Mike hasan Ier is bad looking at this record album.
Speaker 1: A record album, David, is a big thing you hold
Speaker 1: in your hands and spins around it. What else do
Speaker 1: they have a lot of Warhol Yeah, they got the
Speaker 1: whole sixties twig, this thing going, you know, the usual.
Speaker 1: But also they've got their Opus Anglican medieval embroidery show.
Speaker 1: Just you can't say enough about what the Vienna is
Speaker 1: doing as well. M Julian Jess appear with Capital Economics.
Speaker 1: Who is telling us about modern Britain as we look
Speaker 1: at Opus Anglican and from Plantagenet times in places, But
Speaker 1: it speaks to the resiliency of our economic and political systems.
Speaker 1: We forget in our modern upward Julian. These are resilient societies,
Speaker 1: aren't they. Um Well, I think that's right. A lot
Speaker 1: depends on the quality of the of the institutions. Has
Speaker 1: been a bit big argument, for example in the UK
Speaker 1: recently about the whether or not our judges should be
Speaker 1: allowed to decide whether or not Parliament or the government
Speaker 1: decides when we actually implement the legal framework necessary to
Speaker 1: lead the European Union. But but what's reassuring is that
Speaker 1: that debate is being carried out in with a free
Speaker 1: prayer US, It's been carried out in public. Some people
Speaker 1: disagree about whether the judges should have this right or not. Um,
Speaker 1: but it's an open, honest debate, and the institutions by
Speaker 1: and large are are working pretty well. I think part
Speaker 1: of the benefit there is that we have had these
Speaker 1: institutions for an awful long period of time, you know,
Speaker 1: centuries in many cases, whereas some of the new things
Speaker 1: that are coming along people are less comfortable with. I
Speaker 1: still think the European Union, certainly, the euro is relatively
Speaker 1: short lived if you set it against that long span
Speaker 1: of history, and hasn't got that sort of tradition behind it.
Speaker 1: I think people are far more willing to be, you know,
Speaker 1: dumping things like the EU or the Euro than there
Speaker 1: would be some of the underlying institutions that I think
Speaker 1: are a lot stronger, have a lot better history. I
Speaker 1: know that you keep a close watch on the commodities space.
Speaker 1: We were talking earlier about what we've seen in industrial medals,
Speaker 1: Copper stronger than it's been in a long time. Here,
Speaker 1: it seems like folks are very willing, very eager to
Speaker 1: place a bit here. And the probability of of what's
Speaker 1: going to happen in a Donald Trump administration, how how
Speaker 1: fool hardy is that at this point to do that, well,
Speaker 1: I think it's it's risky. I don't think anybody really
Speaker 1: knows what Donald Trump is going to do as president,
Speaker 1: including frankly, Donald Trump himself, So you're very brave to
Speaker 1: take a big directional bet on the on the back
Speaker 1: of this, my own feeling is that what markets have
Speaker 1: done in the in the last few days is that
Speaker 1: they've been willing to accept that or hope that Trump
Speaker 1: is going to do some of the good things that
Speaker 1: he promised during the election campaign, but frankly none of
Speaker 1: the bad things. So all the concerns that many of
Speaker 1: us still have about the prospect of a trade war
Speaker 1: have been put to one side. A trade war would
Speaker 1: have major implications for the global economy and for demand
Speaker 1: for commodities worldwide, but also some of the domestic policies.
Speaker 1: I mean, we're you know, we're hearing fresh talk about
Speaker 1: possibly three million migrant workers being pushed out of the country.
Speaker 1: That would have a substantial impact. We can talk about
Speaker 1: the politics if you like, but the economic impact of
Speaker 1: that in the short term at least would be quite damaging.
Speaker 1: So there's still some potentially quite difficult and nasty challenges
Speaker 1: for the markets to deal with. David, I'm over here
Speaker 1: in Merry Old London's some in the last twenty four
Speaker 1: hours explain how we migraat x amount of immigrants out
Speaker 1: of the country. No, and you've seen a good article
Speaker 1: on this, not a good article on it yet. And
Speaker 1: it was something that Leslie Style asked Donald Trump about
Speaker 1: last night. Again, that's where that three million figure came from.
Speaker 1: He said he intends to do it, and to do
Speaker 1: it quickly. But I think that I think that Julian
Speaker 1: brings up a very good point there, which is there
Speaker 1: there there are all are all of these things that
Speaker 1: are eventualities variables that we don't know about yet. And
Speaker 1: how worried are you about the trade war variable? Julian, Well,
Speaker 1: I'm a little bit less worried, to be fair, than
Speaker 1: I was when I initially heard the news that Trump
Speaker 1: had been elected. Um, I mean he has said some
Speaker 1: more moderate things in other areas. I mean he's not
Speaker 1: He's not, for example, going to dump all of Obamacare,
Speaker 1: and it has made some concidatory noises towards some of
Speaker 1: the the overseas partners, including even China. So Um, I
Speaker 1: would hope that wiser voices prevailed and would be recognition
Speaker 1: that a trade war triggered by punitive tar on on
Speaker 1: China would at least in the short term, cause significant
Speaker 1: damage to the U. S economy as well, including many
Speaker 1: of the people who would have voted for Trump. Um.
Speaker 1: That said, there is of course a global trend against
Speaker 1: free trade, against globalization, which Trump has faced successfully tapped into,
Speaker 1: which is nothing new. We're seeing the same things in
Speaker 1: Europe and across much of Asia actually as well. Um,
Speaker 1: So I would be concerned that some of the benefits
Speaker 1: of globalization will be will be rolled back. I'm not
Speaker 1: saying globalization is all good. It clearly has some important
Speaker 1: distributional impacts that some politicians haven't yet properly tackled. But overall,
Speaker 1: the world economy, including many of the world's poorest people,
Speaker 1: have benefited. Sitting on the surveillance golf stream coming over,
Speaker 1: it's been a lot of time Julian thinking about NAFTA
Speaker 1: with the United Kingdom. Is there any feasibility that the
Speaker 1: United Kingdom would establish a bilateral or I got to
Speaker 1: figure out how to get Iceland in this regional agreement
Speaker 1: with Canada, Mexico, the United States, the United Kingdom. Well,
Speaker 1: it's not a completely crazy idea. The big problem not
Speaker 1: well that from my executive unser Rachel's worst span, you
Speaker 1: have no idea how she can unload Fortunman Mason be
Speaker 1: free and I mean they need that, they need the
Speaker 1: carriage to get it out of the what if. I mean,
Speaker 1: geography is still important. We could relocate the UK somewhere
Speaker 1: in the middle of the Atlantic then, and I think
Speaker 1: it would be a serious runner. But the reality is
Speaker 1: that we do about half of our trade with the
Speaker 1: rest of Europe for obvious geographical reasons. We do about
Speaker 1: twenty percent of our trade with the US. The US
Speaker 1: is our biggest single trading partner as a single country,
Speaker 1: but Europe is still going to be where most of
Speaker 1: our exports go. And also, of course in terms of
Speaker 1: the fastest growing markets, those will be in the emerging world.
Speaker 1: They'll be India, they'll be China very quickly. Her as
Speaker 1: Prime Minister, May and government precluded from beginning discussions with
Speaker 1: Mr Trump because of the permanent agreements that they have prerexit.
Speaker 1: It's the government in the UK can't sign or imp
Speaker 1: any new trade but they can talk. They can certainly talk,
Speaker 1: and I'm absolutely certain that they will be. Were in
Speaker 1: India last week talking about these sorts of trade deals.
Speaker 1: So yes, talking can happen, just not yet signing. Julian Jessa,
Speaker 1: thank you so much. With capital David, I think we're
Speaker 1: going to be employed for the next few years, and
Speaker 1: are gonna employed bringing back all those biscuits for Rachel's
Speaker 1: like the New York magazine. Thanks to Sylvia for putting
Speaker 1: this out on Twitter. They're out, of course with a
Speaker 1: acclaimed New York cartoon. It shows the President elect in
Speaker 1: front of the Chief Justice. Mrs Trump is wearing mink
Speaker 1: and will do the best of my ability, which is
Speaker 1: terrific ability. By the way, everyone agrees I have fantastic ability,
Speaker 1: so there's no problem with my ability. Believe me. For
Speaker 1: the oath of office the New Yorker editorializing, perhaps with
Speaker 1: a cartoon to keep things light. Thanks for listening to
Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on iTunes, SoundCloud,
Speaker 1: or whichever podcast platform you prefer. I'm out on Twitter
Speaker 1: at Tom Keene. David Gura is at David Gura. Before
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