1 00:00:11,240 --> 00:00:15,040 Speaker 1: Blow and Welcome to another episode of the Odd Lots Podcast. 2 00:00:15,080 --> 00:00:20,040 Speaker 1: I'm Joe Wisenthal and I'm Tracy Away. So Tracy obviously 3 00:00:20,600 --> 00:00:24,920 Speaker 1: still in the middle of this ongoing crisis. And I 4 00:00:24,960 --> 00:00:28,320 Speaker 1: think like one of the big questions that I've wondered about, 5 00:00:28,440 --> 00:00:30,880 Speaker 1: or something I've we've been talking about for a while 6 00:00:31,040 --> 00:00:35,879 Speaker 1: and thinking about, is whether it would lead to any substantive, 7 00:00:36,520 --> 00:00:42,600 Speaker 1: meaningful economic policy changes going forward that causes the economy 8 00:00:42,640 --> 00:00:45,600 Speaker 1: to look at different than it did pre crisis. Yeah, 9 00:00:45,640 --> 00:00:48,280 Speaker 1: I think that's right. I think there's a sense or 10 00:00:48,360 --> 00:00:52,639 Speaker 1: a desire that after the worst economic crisis in decades 11 00:00:52,760 --> 00:00:55,840 Speaker 1: or possibly in modern history, you would want to see 12 00:00:55,920 --> 00:00:59,400 Speaker 1: some sort of change something to happen to the global 13 00:00:59,440 --> 00:01:02,960 Speaker 1: economies of that the next time something like this occurred, 14 00:01:03,520 --> 00:01:07,279 Speaker 1: you wouldn't see as big of a knock on effect 15 00:01:07,360 --> 00:01:10,080 Speaker 1: on the economy. But do you ever do you ever 16 00:01:10,120 --> 00:01:13,160 Speaker 1: get the sense that things sort of become more entrenched 17 00:01:14,000 --> 00:01:17,840 Speaker 1: rather than change. Yes, it does feel like that. And 18 00:01:17,880 --> 00:01:19,800 Speaker 1: I have to say, like, like I don't know like 19 00:01:19,840 --> 00:01:23,520 Speaker 1: what the future holds, but you know, today we're recording 20 00:01:23,560 --> 00:01:27,959 Speaker 1: this June four, I'm less I think it's you know, 21 00:01:28,000 --> 00:01:31,360 Speaker 1: I feel less confident today than I would have say 22 00:01:31,400 --> 00:01:35,679 Speaker 1: in early April that this crisis will lead to some 23 00:01:35,840 --> 00:01:39,840 Speaker 1: sort of major change in policy, you know, some sort 24 00:01:39,880 --> 00:01:43,600 Speaker 1: of major demand side change or major change in how 25 00:01:43,840 --> 00:01:46,399 Speaker 1: the world trades. Like it's not over and we still 26 00:01:46,400 --> 00:01:50,920 Speaker 1: don't know the lingering effects at all, and unemployment remains 27 00:01:51,480 --> 00:01:54,920 Speaker 1: sky high still. So they're like incredibly serious issues. But 28 00:01:55,000 --> 00:01:58,440 Speaker 1: at the moment, the sort of policy momentum that maybe 29 00:01:58,600 --> 00:02:01,440 Speaker 1: we it looked like we might see in late March 30 00:02:01,560 --> 00:02:04,760 Speaker 1: or early April, it feels less strong today. And it 31 00:02:04,840 --> 00:02:07,600 Speaker 1: feels like, just as you say, the sort of inertia, 32 00:02:08,320 --> 00:02:14,440 Speaker 1: the entrencheness of the existing system may yet survive. Yeah, 33 00:02:14,600 --> 00:02:18,079 Speaker 1: I feel like that's always a risk after a big crisis, uh, 34 00:02:18,120 --> 00:02:21,079 Speaker 1: and tends to happen quite often. I should just mention that, 35 00:02:21,120 --> 00:02:22,640 Speaker 1: you know, this is the week we're seeing a lot 36 00:02:22,720 --> 00:02:26,160 Speaker 1: of social unrest and mass protests in the US, so 37 00:02:26,960 --> 00:02:34,000 Speaker 1: the policy conversation is sort of drifting further away from economics. True, 38 00:02:34,280 --> 00:02:37,440 Speaker 1: and and also it just you know, the within the 39 00:02:37,480 --> 00:02:40,720 Speaker 1: context of the social unrest, and think I'm important to 40 00:02:40,800 --> 00:02:43,840 Speaker 1: point out just like how incredibly difficult it is to 41 00:02:44,000 --> 00:02:47,320 Speaker 1: predict anything in the future lit alone. You know, two 42 00:02:47,360 --> 00:02:52,320 Speaker 1: weeks ago. Not many people were anticipating this, so things, 43 00:02:52,360 --> 00:02:54,440 Speaker 1: as they say is kind of a cliche, are very 44 00:02:54,480 --> 00:02:59,760 Speaker 1: fluid and anything that happened. Yeah, um okay, yeah, I agree, 45 00:03:00,280 --> 00:03:02,960 Speaker 1: So all right, I'm glad we agree. So they big said, 46 00:03:02,960 --> 00:03:06,360 Speaker 1: like we're going to talk about plausible changes or what 47 00:03:06,480 --> 00:03:11,200 Speaker 1: could change, it's worth discussing what the regime, what the 48 00:03:11,280 --> 00:03:13,080 Speaker 1: system was like before, And of course we've done a 49 00:03:13,080 --> 00:03:16,320 Speaker 1: lot of that with like our recent interview with Matt 50 00:03:16,400 --> 00:03:21,360 Speaker 1: Klein Adam Two's sort of brand censor. A lot of 51 00:03:21,400 --> 00:03:25,720 Speaker 1: these discussions have centered around this question what could change, 52 00:03:25,720 --> 00:03:30,000 Speaker 1: but also understanding the set of conditions that we saw 53 00:03:30,120 --> 00:03:33,640 Speaker 1: before we got into this crisis that created the economic 54 00:03:33,680 --> 00:03:37,640 Speaker 1: and market backdrop that we saw. Yeah. I think that's right, 55 00:03:37,760 --> 00:03:41,000 Speaker 1: And certainly one of the big focuses for us in 56 00:03:41,360 --> 00:03:45,320 Speaker 1: recent episodes has been, in particular the dynamic between the U. 57 00:03:45,400 --> 00:03:48,320 Speaker 1: S economy and the Chinese economy as well. And you 58 00:03:48,360 --> 00:03:51,080 Speaker 1: mentioned Matt Klein there. That was a great episode where 59 00:03:51,120 --> 00:03:54,360 Speaker 1: he really dug into it. But we've also discussed that 60 00:03:54,440 --> 00:03:59,320 Speaker 1: relationship in the context of the financial system, UH savings 61 00:03:59,320 --> 00:04:02,320 Speaker 1: and balances and that sort of thing, and it is 62 00:04:02,680 --> 00:04:06,480 Speaker 1: it is basically a bedrock of the way the global economy, 63 00:04:06,720 --> 00:04:09,800 Speaker 1: the global financial system works, but I don't know, I 64 00:04:09,800 --> 00:04:13,400 Speaker 1: feel like people forget it sometimes totally. So I think 65 00:04:13,680 --> 00:04:17,200 Speaker 1: it's worth again continuing to dive deep into this into 66 00:04:17,360 --> 00:04:21,080 Speaker 1: what this system currently looks like, and in particularly this 67 00:04:21,200 --> 00:04:25,200 Speaker 1: combination that we've seen for a while of very mediocre 68 00:04:25,720 --> 00:04:28,440 Speaker 1: growth rates UH in terms of just in terms of GDP, 69 00:04:29,240 --> 00:04:33,039 Speaker 1: very mild inflation everywhere, despite this sort of effort among 70 00:04:33,160 --> 00:04:36,520 Speaker 1: central bankers to get it going almost no effect, extremely 71 00:04:36,600 --> 00:04:40,800 Speaker 1: low nominal policy rates the FED hiked a few times 72 00:04:40,920 --> 00:04:44,240 Speaker 1: and then head to backtrack on them uh. And then 73 00:04:44,279 --> 00:04:47,520 Speaker 1: also the boom and asset prices and the fact that stocks, 74 00:04:47,640 --> 00:04:51,040 Speaker 1: despite a lot of stuff prior to the crisis being 75 00:04:51,120 --> 00:04:55,560 Speaker 1: just sort of mediocre, just this incredible tenurable market with 76 00:04:55,680 --> 00:05:00,599 Speaker 1: a huge concentration of acid uh asset inflations so to speak, 77 00:05:00,839 --> 00:05:03,760 Speaker 1: among growth stocks and tech stocks. So I think today 78 00:05:03,760 --> 00:05:06,599 Speaker 1: we're going to try to pick apart what that set 79 00:05:06,720 --> 00:05:08,919 Speaker 1: up was like, because I think it's important for people 80 00:05:08,920 --> 00:05:12,120 Speaker 1: to understand the connection between all these things as they 81 00:05:12,120 --> 00:05:14,640 Speaker 1: think about what could change or what could go back 82 00:05:14,640 --> 00:05:17,720 Speaker 1: to normal, and what that would mean for markets. Yeah, 83 00:05:17,800 --> 00:05:19,320 Speaker 1: although I have a feeling this is going to be 84 00:05:19,360 --> 00:05:21,480 Speaker 1: one of those things where we come out the other 85 00:05:21,520 --> 00:05:25,240 Speaker 1: side thinking just about how difficult it is to actually 86 00:05:25,440 --> 00:05:28,520 Speaker 1: unpick that entire system that you just described. Okay, let's 87 00:05:28,520 --> 00:05:32,479 Speaker 1: do it. Okay, So today our guest, um, he wrote 88 00:05:32,480 --> 00:05:34,880 Speaker 1: a great blog post in the middle of May called 89 00:05:34,880 --> 00:05:38,800 Speaker 1: the Global Savings Glut a modern policy failure that really 90 00:05:38,839 --> 00:05:41,280 Speaker 1: connected a lot of these dots. I want to bring 91 00:05:41,279 --> 00:05:44,680 Speaker 1: in John Turk. He's a student and a macro trader 92 00:05:44,720 --> 00:05:48,839 Speaker 1: and the author of the Cheap Convexity blog. Definitely a 93 00:05:49,000 --> 00:05:51,320 Speaker 1: must read, and he's going to help us sort of 94 00:05:51,320 --> 00:05:53,720 Speaker 1: put all these pieces together. So John, thank you very 95 00:05:53,760 --> 00:05:56,400 Speaker 1: much for joining us. Hey, guys, thanks for having me on. 96 00:05:56,480 --> 00:06:00,200 Speaker 1: Let's appreciate a big fan. Thank you. So let's are 97 00:06:00,600 --> 00:06:03,039 Speaker 1: you know we're the title of your post is a 98 00:06:03,080 --> 00:06:06,440 Speaker 1: modern policy failure, But we're not even This wasn't even 99 00:06:06,560 --> 00:06:10,960 Speaker 1: in reference to the massive crash that we've seen or 100 00:06:11,000 --> 00:06:14,560 Speaker 1: the massive unemployment that we see right now. You're just 101 00:06:14,600 --> 00:06:18,600 Speaker 1: talking essentially about the conditions that we saw in terms 102 00:06:18,640 --> 00:06:22,760 Speaker 1: of global growth and global demand pre crisis. What is 103 00:06:22,800 --> 00:06:27,119 Speaker 1: the policy failure in your view? Yeah, So I think 104 00:06:27,200 --> 00:06:31,520 Speaker 1: that the policy failure is definitely more of a macro 105 00:06:31,640 --> 00:06:34,560 Speaker 1: backdrop that kind of stems from the fact that we 106 00:06:34,640 --> 00:06:38,000 Speaker 1: had this era before the Great the Financial Crisis, where 107 00:06:38,040 --> 00:06:40,240 Speaker 1: you know, there was a lot of global integration. China 108 00:06:40,320 --> 00:06:43,680 Speaker 1: sends the w t O and kind of globe there's 109 00:06:43,680 --> 00:06:48,880 Speaker 1: a global trade boom and that worked um until really 110 00:06:48,920 --> 00:06:52,640 Speaker 1: two thousand nine, and it had a brief re emergence 111 00:06:52,880 --> 00:06:57,000 Speaker 1: after the London G twenty meeting and China promise to stimulate, 112 00:06:57,480 --> 00:07:00,200 Speaker 1: but it's really a trick. It's really a trip that 113 00:07:00,360 --> 00:07:03,120 Speaker 1: kind of fizzled out as as the global demand impulse 114 00:07:03,160 --> 00:07:07,280 Speaker 1: from China structurally weakened. UM. I think someone you've had 115 00:07:07,279 --> 00:07:10,480 Speaker 1: on the podcast before, Human Function for the b I 116 00:07:10,640 --> 00:07:13,840 Speaker 1: S has done an amazing chart of goods exports relative 117 00:07:13,880 --> 00:07:16,440 Speaker 1: to world GDP and basically showed that that kind of 118 00:07:16,760 --> 00:07:19,640 Speaker 1: it's topped out in two thousand and nine and since 119 00:07:19,720 --> 00:07:22,440 Speaker 1: two thousand and eleven has been into steady decline. And 120 00:07:22,560 --> 00:07:25,280 Speaker 1: kind of the interesting thing in that backdrop is is 121 00:07:25,320 --> 00:07:30,080 Speaker 1: that major economies like East Asian economies in Europe have 122 00:07:30,880 --> 00:07:35,160 Speaker 1: still had exports as percentage of GDP um at their highs. 123 00:07:35,160 --> 00:07:39,080 Speaker 1: So in Europe it's still in East Asia's and that 124 00:07:39,240 --> 00:07:42,720 Speaker 1: structurally disinflationary when so much of your growth composition is 125 00:07:42,840 --> 00:07:46,800 Speaker 1: you know, tied to something that's really in decline, and 126 00:07:46,840 --> 00:07:49,880 Speaker 1: then I think this is kind of factored into the 127 00:07:49,960 --> 00:07:52,720 Speaker 1: policy response has not been how do we change the 128 00:07:52,760 --> 00:07:56,320 Speaker 1: growth composition? The policy responses how do we reinvigorate the 129 00:07:56,360 --> 00:07:58,640 Speaker 1: thing that we're kind of betting on, which has been exports, 130 00:07:58,880 --> 00:08:02,320 Speaker 1: Which is why you've kind of in this weird bifurcation 131 00:08:02,360 --> 00:08:05,760 Speaker 1: between monetary and fiscal policy in places like Europe, UM 132 00:08:05,880 --> 00:08:09,560 Speaker 1: and Asia where they're running fiscal surpluses and uh and 133 00:08:09,760 --> 00:08:13,080 Speaker 1: pretty expansionary monetary policies, because monetary policy is much more 134 00:08:13,520 --> 00:08:16,560 Speaker 1: exchange rate driven. And if you're really if your emphasis 135 00:08:16,800 --> 00:08:20,440 Speaker 1: is to kind of stimulate um external demand, then the 136 00:08:20,480 --> 00:08:22,360 Speaker 1: way is that is like to improve your terms of 137 00:08:22,360 --> 00:08:25,840 Speaker 1: trade by waiting your exchange rate. And it's been like 138 00:08:25,920 --> 00:08:29,080 Speaker 1: kind of an ever chase lower as this you know, this, 139 00:08:29,080 --> 00:08:32,600 Speaker 1: this the structural impulse of demand that kind of weakens 140 00:08:32,880 --> 00:08:36,319 Speaker 1: has been met by just steadily declining you know, exchange 141 00:08:36,400 --> 00:08:40,079 Speaker 1: rates and even negatives and from negative interest rates in 142 00:08:40,120 --> 00:08:43,240 Speaker 1: a lot of jurisdictions, um, and it's kind of been 143 00:08:43,840 --> 00:08:47,800 Speaker 1: the wrong response. I'm not saying that monetary policy shouldn't 144 00:08:47,800 --> 00:08:50,400 Speaker 1: have acted, because that would have the assumption that fiscal 145 00:08:50,440 --> 00:08:55,120 Speaker 1: policy is always a irrational actor. But I think that 146 00:08:55,200 --> 00:08:57,920 Speaker 1: there's kind of been this overlay of that countries are 147 00:08:58,040 --> 00:09:01,280 Speaker 1: very focused on being able to port aggregant demand instead 148 00:09:01,280 --> 00:09:03,600 Speaker 1: of creating it themselves, and that's kind of been on 149 00:09:03,640 --> 00:09:06,600 Speaker 1: this bias that they had um from the turn of 150 00:09:06,640 --> 00:09:10,880 Speaker 1: the two thousands and China's assensions to other they could 151 00:09:10,880 --> 00:09:13,720 Speaker 1: always import aggregate demand, and that really hasn't been true 152 00:09:13,800 --> 00:09:17,760 Speaker 1: for a while. So I want to dig into this, 153 00:09:17,920 --> 00:09:22,959 Speaker 1: and especially the way that currencies actually um factor into this, 154 00:09:23,200 --> 00:09:26,200 Speaker 1: and especially the US dollar. But before we do, I 155 00:09:26,240 --> 00:09:28,959 Speaker 1: have a sort of backup question, which is, why did 156 00:09:29,000 --> 00:09:32,600 Speaker 1: you decide to take up this particular topic? Like it's 157 00:09:32,640 --> 00:09:35,480 Speaker 1: sort of as big picture as you can possibly get 158 00:09:36,320 --> 00:09:39,760 Speaker 1: when it comes to markets are the financial system um, 159 00:09:40,000 --> 00:09:42,720 Speaker 1: And it's unusual to see someone go like I'm gonna 160 00:09:42,760 --> 00:09:48,760 Speaker 1: wake up today and write about the global savings glut. Yeah. Well, 161 00:09:48,800 --> 00:09:50,320 Speaker 1: I think there are a couple of things that were 162 00:09:50,360 --> 00:09:55,480 Speaker 1: really like kind of jarred my interest. One was Brad 163 00:09:55,520 --> 00:09:59,040 Speaker 1: Setser's work at Counsel for Relations has been like very 164 00:09:59,120 --> 00:10:02,400 Speaker 1: eye opening and terms of like kind of these imbalances. 165 00:10:02,440 --> 00:10:05,320 Speaker 1: And then I think my original point, which I really 166 00:10:05,320 --> 00:10:08,760 Speaker 1: struggled with, was kind of from the monetary policy side, 167 00:10:09,280 --> 00:10:12,840 Speaker 1: especially in two thousand nineteen, when the FED was seemingly 168 00:10:12,920 --> 00:10:17,520 Speaker 1: cutting rates preemptively like they were. They were very low unemployment, 169 00:10:17,559 --> 00:10:21,000 Speaker 1: inflation wasn't exactly a target, but and they were cutting 170 00:10:21,080 --> 00:10:23,319 Speaker 1: rates and the curve was flattening even though the economy 171 00:10:23,480 --> 00:10:26,840 Speaker 1: is doing reasonably well. So this kind of all jarred 172 00:10:26,880 --> 00:10:29,040 Speaker 1: my interest is kind of like trying to understand what 173 00:10:29,120 --> 00:10:33,000 Speaker 1: was going on. I guess that it more more meta level. 174 00:10:33,960 --> 00:10:37,800 Speaker 1: So um you mentioned one of our previous guests, Professor 175 00:10:37,960 --> 00:10:41,800 Speaker 1: shin Um. He's been on talking about why, um, the 176 00:10:41,920 --> 00:10:44,880 Speaker 1: dollar obviously matters for the global economy and in particular 177 00:10:44,920 --> 00:10:48,080 Speaker 1: why a strong dollar is so painful for the global economy, 178 00:10:48,360 --> 00:10:51,400 Speaker 1: and there are shades of that in your blog post 179 00:10:51,720 --> 00:10:54,920 Speaker 1: as well. Can you walk us through what role currencies 180 00:10:55,120 --> 00:10:58,440 Speaker 1: play in your argument. One of the interesting things is 181 00:10:58,440 --> 00:11:01,480 Speaker 1: that there's this kind of in this duality in the 182 00:11:01,480 --> 00:11:05,600 Speaker 1: global economy between the financial markets and the real economy, 183 00:11:05,640 --> 00:11:08,520 Speaker 1: and I think actually the dollar is exactly what encapsulates 184 00:11:08,559 --> 00:11:12,719 Speaker 1: that because the dollars kind have been okay, So now 185 00:11:12,760 --> 00:11:15,560 Speaker 1: we have this world where policymakers around the world are 186 00:11:15,600 --> 00:11:18,920 Speaker 1: trying to reinvigorate this external demand, but everyone's doing and 187 00:11:19,160 --> 00:11:23,840 Speaker 1: there's no They're seemingly a structural laps in in aggregate 188 00:11:23,880 --> 00:11:28,359 Speaker 1: demand and they can't see an export um their deflationary conditions, 189 00:11:28,400 --> 00:11:31,280 Speaker 1: so there's a lot of their Naturally there's a higher 190 00:11:31,280 --> 00:11:34,440 Speaker 1: propensity to save when nominal GDP is not really going anywhere. 191 00:11:34,840 --> 00:11:37,240 Speaker 1: And as we've seen kind of as these like kind 192 00:11:37,240 --> 00:11:42,199 Speaker 1: of two positions UM coexist where you have lower nominal GDP, 193 00:11:42,400 --> 00:11:45,640 Speaker 1: weaker exchange rate and kind of UH and no real 194 00:11:45,800 --> 00:11:49,280 Speaker 1: fiscal impulse, you get very high savings rates from public 195 00:11:49,280 --> 00:11:52,199 Speaker 1: and private sector. And what happens, specially in a lot 196 00:11:52,240 --> 00:11:56,200 Speaker 1: of these economies UM is that these get exported UM 197 00:11:56,200 --> 00:11:58,360 Speaker 1: and they get exported basically to the place that's able 198 00:11:58,360 --> 00:12:01,360 Speaker 1: to absorb them. I think Matt Klein and in his 199 00:12:01,400 --> 00:12:03,360 Speaker 1: new book, which has been excellent, called it the sink, 200 00:12:03,800 --> 00:12:06,960 Speaker 1: and that's really been and that's really been what happens. 201 00:12:07,000 --> 00:12:10,199 Speaker 1: So what happens is you get places like Japan where 202 00:12:10,240 --> 00:12:13,480 Speaker 1: they're trying to basically weaken the end to grow exports, 203 00:12:13,520 --> 00:12:16,959 Speaker 1: even though you know that hasn't been winning strategy. But 204 00:12:17,080 --> 00:12:18,680 Speaker 1: what happens is is that the b o J buys 205 00:12:18,760 --> 00:12:21,760 Speaker 1: up to the g GB market, they don't around it, 206 00:12:22,080 --> 00:12:25,959 Speaker 1: and then there's not that much corporate impulse and saving 207 00:12:26,040 --> 00:12:28,320 Speaker 1: rates are high there, so you end up having for 208 00:12:28,800 --> 00:12:31,920 Speaker 1: a big saving sector, you end up having um domestic 209 00:12:31,920 --> 00:12:33,920 Speaker 1: assets on life and sure balance each there are twenty 210 00:12:34,000 --> 00:12:36,600 Speaker 1: five times the size of the investment grade bomb market. 211 00:12:36,679 --> 00:12:40,040 Speaker 1: So you kind of get these factors that basically say 212 00:12:40,120 --> 00:12:43,240 Speaker 1: that are that are short kind of global trade because 213 00:12:43,240 --> 00:12:46,319 Speaker 1: there's a high savings um and that kind of gets 214 00:12:46,320 --> 00:12:49,320 Speaker 1: exported when it's too big for the local market. And 215 00:12:49,320 --> 00:12:51,640 Speaker 1: then that kind of This is when I really found 216 00:12:51,679 --> 00:12:55,160 Speaker 1: it got interesting, is is that this kind of had 217 00:12:55,520 --> 00:12:58,880 Speaker 1: this explorting of financial assets to the US, who is 218 00:12:58,920 --> 00:13:01,800 Speaker 1: the most able to absorb bit um either for growth 219 00:13:01,840 --> 00:13:05,200 Speaker 1: reasons or they were expanding corporate and public sector balance sheets. 220 00:13:05,400 --> 00:13:07,880 Speaker 1: Is is that it had an economic cost. Because the 221 00:13:07,920 --> 00:13:11,480 Speaker 1: economic cost was that the US brought back onto the 222 00:13:11,520 --> 00:13:14,640 Speaker 1: world a stronger dollar, which kind of reinforced these dynamics 223 00:13:14,640 --> 00:13:18,280 Speaker 1: of lower global trade, lower nominal GDP growth, lower you know, 224 00:13:18,320 --> 00:13:21,520 Speaker 1: neutral interest rates and things like that. And then there's 225 00:13:21,559 --> 00:13:23,720 Speaker 1: the other side of the dollar is also a reflection 226 00:13:24,440 --> 00:13:27,600 Speaker 1: of global lack of global trade because the dollar has 227 00:13:27,720 --> 00:13:30,360 Speaker 1: much less bade in North American UH exports as a 228 00:13:30,400 --> 00:13:34,000 Speaker 1: percentage of GDP are like four pent where it's in 229 00:13:34,040 --> 00:13:37,520 Speaker 1: Asia in ar so the dollars kind of become a 230 00:13:37,559 --> 00:13:41,040 Speaker 1: reflection of a lower nominal GDP, lower global trade world. 231 00:13:41,120 --> 00:13:43,160 Speaker 1: But it's also a culprit in it in that like 232 00:13:43,240 --> 00:13:46,719 Speaker 1: in the work of professor Shin and and and get 233 00:13:46,840 --> 00:13:49,200 Speaker 1: open after the I m F for that, it's um 234 00:13:49,240 --> 00:13:52,440 Speaker 1: the dollar inflicts pain on the globe, on the global economy. 235 00:13:52,440 --> 00:14:03,640 Speaker 1: They're via tightened credit channels or as a global invoice. 236 00:14:10,400 --> 00:14:14,280 Speaker 1: So I want to get to the connection between all 237 00:14:14,320 --> 00:14:17,120 Speaker 1: of this and asset prices, particularly the boom in the 238 00:14:17,160 --> 00:14:20,120 Speaker 1: stock market. Before we do that, I want to talk 239 00:14:20,160 --> 00:14:24,280 Speaker 1: about dessert and the ultra sort of low nominal policy 240 00:14:24,520 --> 00:14:27,080 Speaker 1: rates that we've seen, most notably out of the FED. 241 00:14:28,040 --> 00:14:32,320 Speaker 1: And everyone hates it, right like gold people, they complain 242 00:14:32,400 --> 00:14:35,560 Speaker 1: about it. Bond investors are always complaining about it. Bankers 243 00:14:35,600 --> 00:14:39,160 Speaker 1: are always complaining about it. It's like that nobody seems 244 00:14:39,200 --> 00:14:43,800 Speaker 1: to really be a fan of super low interest rates 245 00:14:43,840 --> 00:14:46,280 Speaker 1: for whatever, for whatever reason. We don't necessarily need to 246 00:14:46,320 --> 00:14:48,240 Speaker 1: get into that, but it's like people hate the FED 247 00:14:48,280 --> 00:14:50,600 Speaker 1: and we all know that kind of like one of 248 00:14:50,640 --> 00:14:53,160 Speaker 1: your points in that in this piece, and I think 249 00:14:53,160 --> 00:14:55,600 Speaker 1: it's one of the most subtle things, is that the 250 00:14:55,640 --> 00:15:00,120 Speaker 1: FED is a passive player that essentially these policies of 251 00:15:01,680 --> 00:15:06,800 Speaker 1: export led growth, over production, weak demand really just don't 252 00:15:06,840 --> 00:15:10,240 Speaker 1: give the FED many options, and so the feds zerpness 253 00:15:10,600 --> 00:15:17,080 Speaker 1: is really a consequence of policies that perceived it. Yeah. Absolutely, um. 254 00:15:17,240 --> 00:15:20,480 Speaker 1: I think one of the things was when Berneke like 255 00:15:21,400 --> 00:15:23,760 Speaker 1: kind of introduced the idea of the global savings called 256 00:15:23,760 --> 00:15:26,560 Speaker 1: in two thousand three, and there was the and he 257 00:15:26,640 --> 00:15:28,720 Speaker 1: was kind of explaining the flow of funds and why 258 00:15:28,760 --> 00:15:32,360 Speaker 1: money comes into the US, and and it was the 259 00:15:32,360 --> 00:15:34,840 Speaker 1: same time that Greenspan was kind of struggling why with 260 00:15:35,040 --> 00:15:37,480 Speaker 1: like why we we have escape velocity why his term 261 00:15:37,520 --> 00:15:40,760 Speaker 1: premium compressing, and he called it what Greenspan called at 262 00:15:40,760 --> 00:15:43,920 Speaker 1: the time as the conundrum is pretty easily explained by 263 00:15:44,000 --> 00:15:47,120 Speaker 1: these by these slows. I mean, one of the one 264 00:15:47,120 --> 00:15:49,600 Speaker 1: of the things that's been pretty remarkable in this in 265 00:15:49,600 --> 00:15:53,480 Speaker 1: the decade is that if you kind of just aggregate, 266 00:15:53,840 --> 00:15:56,880 Speaker 1: you know, surplus net international investment positions, they kind of 267 00:15:56,920 --> 00:15:59,560 Speaker 1: just even out with the US deficit. They're both about 268 00:15:59,600 --> 00:16:03,440 Speaker 1: you know, each Germany, Japan, Switzerland, Korea, Singapore, and it 269 00:16:03,520 --> 00:16:05,960 Speaker 1: basically I wanted it equals out to the US deficits 270 00:16:06,640 --> 00:16:09,480 Speaker 1: um so, and the way that kind of factors in 271 00:16:09,560 --> 00:16:13,720 Speaker 1: is that it's monetary policy. Is that there's two ways 272 00:16:13,840 --> 00:16:17,320 Speaker 1: for the global art star community in the law back 273 00:16:17,360 --> 00:16:21,280 Speaker 1: Williams estimate, there's two big components. There's the demands for 274 00:16:21,360 --> 00:16:24,360 Speaker 1: safe assets, which factors into our star, and as we 275 00:16:24,400 --> 00:16:26,080 Speaker 1: know based on this back shop there's been a lot 276 00:16:26,120 --> 00:16:28,560 Speaker 1: of that, so that is a compressor of our star. 277 00:16:28,640 --> 00:16:30,160 Speaker 1: And then the other part is is like we live 278 00:16:30,200 --> 00:16:33,880 Speaker 1: into like a very interconnective global economy. Um if Europe 279 00:16:33,880 --> 00:16:36,200 Speaker 1: and Japan are experiencing very low growth, there's only a 280 00:16:36,200 --> 00:16:40,160 Speaker 1: certain level that the US can can kind of feel. 281 00:16:40,200 --> 00:16:44,040 Speaker 1: So this is kind of this is basically repressed neutral 282 00:16:44,080 --> 00:16:47,400 Speaker 1: interest rates, which is basically how the FED kind of 283 00:16:47,440 --> 00:16:49,480 Speaker 1: gauges where it is. I mean, we don't know it 284 00:16:49,560 --> 00:16:51,680 Speaker 1: in real time, what the level, what the you know, 285 00:16:51,720 --> 00:16:55,240 Speaker 1: what our star is, but the FEDS level of accommodation 286 00:16:55,960 --> 00:16:58,680 Speaker 1: is only relative to where it is relative to neutral 287 00:16:58,720 --> 00:17:01,120 Speaker 1: interest rates. So we I always here and you've highlighted 288 00:17:01,160 --> 00:17:03,040 Speaker 1: on Twitter A lot is that all the Feds, like 289 00:17:03,400 --> 00:17:06,000 Speaker 1: you know, going like especially in twenty nineteen when the 290 00:17:06,000 --> 00:17:09,360 Speaker 1: FED was cutting for quote unquote seemingly no reason. Is 291 00:17:09,359 --> 00:17:11,399 Speaker 1: is that they were cut that you could almost make 292 00:17:11,400 --> 00:17:13,240 Speaker 1: the argument that if our star was falling as it 293 00:17:13,359 --> 00:17:15,320 Speaker 1: was last year, which we do know in retrospect, that 294 00:17:15,359 --> 00:17:18,800 Speaker 1: the FED was cutting to stay to avoid hike. And 295 00:17:18,840 --> 00:17:21,000 Speaker 1: this is kind of something that I've been thinking about 296 00:17:21,000 --> 00:17:24,639 Speaker 1: a lot, especially in um Christian Forbes from the x 297 00:17:24,680 --> 00:17:27,800 Speaker 1: Bank in England, um MPC member has done a lot 298 00:17:27,800 --> 00:17:29,600 Speaker 1: of work that's like a lot of these factors have 299 00:17:29,680 --> 00:17:31,520 Speaker 1: become global. I she does it in terms of the 300 00:17:31,560 --> 00:17:34,920 Speaker 1: global Phillips curve. But basically and then this this was 301 00:17:34,960 --> 00:17:37,640 Speaker 1: a very prevalent topic of Jackson Jackson Hole this year 302 00:17:37,680 --> 00:17:40,720 Speaker 1: where they basically did a paper and they decomposed the 303 00:17:40,800 --> 00:17:43,560 Speaker 1: variants in uh A neutral interest rates, and a large 304 00:17:43,560 --> 00:17:47,320 Speaker 1: component now as opposed to the seventies and eighties is 305 00:17:47,440 --> 00:17:50,399 Speaker 1: that global our stars is just as prevalent as you know, 306 00:17:50,480 --> 00:17:52,919 Speaker 1: your domestic factors. So yeah, the US had three and 307 00:17:52,920 --> 00:17:55,760 Speaker 1: afters and unemployment rate and inflation not far from target, 308 00:17:56,119 --> 00:17:58,800 Speaker 1: but so many countries didn't. And their demand for safe 309 00:17:58,840 --> 00:18:01,760 Speaker 1: assets were pulling our our started down that you could 310 00:18:01,760 --> 00:18:04,240 Speaker 1: almost make the argument. I think the BED was correctly 311 00:18:04,320 --> 00:18:08,040 Speaker 1: making the argument that they were cutting to avoid tightening, 312 00:18:08,280 --> 00:18:10,040 Speaker 1: and this is why they couldn't get the yel curves 313 00:18:10,080 --> 00:18:13,040 Speaker 1: deeper even though they were cutting into a relatively benign economy. 314 00:18:14,240 --> 00:18:18,359 Speaker 1: M I have, um, what's possibly a dumb question, but 315 00:18:18,440 --> 00:18:21,639 Speaker 1: you mentioned demand for safe assets. So obviously, if you 316 00:18:21,680 --> 00:18:24,080 Speaker 1: have a glut in global savings, people are going to 317 00:18:24,200 --> 00:18:27,800 Speaker 1: want to put those savings into assets which aren't going 318 00:18:27,880 --> 00:18:31,320 Speaker 1: to default or suddenly disappear. So that's where the demand 319 00:18:31,359 --> 00:18:35,320 Speaker 1: comes from. I've written previously about a shortage of safe 320 00:18:35,320 --> 00:18:39,560 Speaker 1: assets in the financial system. I'm just wondering if you 321 00:18:39,720 --> 00:18:44,199 Speaker 1: suddenly had more safe assets, you know, and we're probably 322 00:18:44,200 --> 00:18:47,000 Speaker 1: heading that way because lots of countries are are issuing 323 00:18:47,280 --> 00:18:50,080 Speaker 1: government debt at the moment. But could you solve this 324 00:18:50,160 --> 00:18:54,760 Speaker 1: problem by impacting the supply rather than trying to impact 325 00:18:54,840 --> 00:18:58,320 Speaker 1: the demand side? Yeah, I think I think it is. 326 00:18:58,400 --> 00:19:01,359 Speaker 1: I think it is possible, But I think the demand 327 00:19:01,440 --> 00:19:04,200 Speaker 1: side also has a lot of you know, feedback loop 328 00:19:04,240 --> 00:19:06,720 Speaker 1: elements to it that if you know, if the corporate 329 00:19:06,760 --> 00:19:09,680 Speaker 1: sector was more comfortable that they would issue more investment 330 00:19:09,680 --> 00:19:12,560 Speaker 1: grade product at home, and that would kind of incentivize 331 00:19:12,880 --> 00:19:15,680 Speaker 1: The thing is that I'm not I'm unsure about how 332 00:19:15,800 --> 00:19:20,560 Speaker 1: you know, this round of abolition, its effects um you know, 333 00:19:20,640 --> 00:19:24,120 Speaker 1: demand for safe assets and maybe kind of localizing um 334 00:19:24,200 --> 00:19:27,840 Speaker 1: excess savings is is that a lot of the you know, 335 00:19:27,960 --> 00:19:30,800 Speaker 1: government stimulus so far has been kind of we want 336 00:19:30,840 --> 00:19:32,760 Speaker 1: to do this, but we're also not letting term premium 337 00:19:32,760 --> 00:19:35,680 Speaker 1: go anywhere. So there's been a lot of you know, 338 00:19:35,760 --> 00:19:39,760 Speaker 1: countries doing y C C or um you know, massive 339 00:19:39,880 --> 00:19:42,200 Speaker 1: keewee programs kind of implicitly to keep the shape of 340 00:19:42,200 --> 00:19:46,400 Speaker 1: the eel curve the same or explicitly. So it's possible. 341 00:19:46,440 --> 00:19:48,800 Speaker 1: I think it is possible, and but I think a 342 00:19:48,840 --> 00:19:50,840 Speaker 1: lot more of it will come from the demand side 343 00:19:50,840 --> 00:19:54,760 Speaker 1: than you know, the supply of safe assets. So one 344 00:19:54,760 --> 00:19:56,280 Speaker 1: of the let's get I want to talk about the 345 00:19:56,280 --> 00:19:59,000 Speaker 1: mark like markets and Tracy opened it up to that 346 00:19:59,080 --> 00:20:01,800 Speaker 1: in terms of this demand for various assets. And one 347 00:20:01,840 --> 00:20:05,960 Speaker 1: of the striking things about the last decade is this 348 00:20:06,040 --> 00:20:09,159 Speaker 1: sort of like some people call it a barbell, in 349 00:20:09,200 --> 00:20:13,240 Speaker 1: which we saw incredible demand for extreme safe assets. So 350 00:20:13,400 --> 00:20:16,800 Speaker 1: Treasury is obviously with youlds just going lower and lower 351 00:20:16,840 --> 00:20:21,119 Speaker 1: and other sort of equivalent, but also a tremendous demand 352 00:20:21,119 --> 00:20:23,960 Speaker 1: for risky assets at the same time, and in particular 353 00:20:24,400 --> 00:20:28,919 Speaker 1: sort of tech companies and company incredible valuations on companies 354 00:20:28,960 --> 00:20:33,560 Speaker 1: with like uh sort of secular growth opportunities. Talk to 355 00:20:33,680 --> 00:20:37,240 Speaker 1: us about that split, because it's not intuitive that people 356 00:20:37,359 --> 00:20:41,320 Speaker 1: are buying the riskiest stuff and also buying the safest 357 00:20:41,320 --> 00:20:44,760 Speaker 1: stuff at the same time. How is it all connected? 358 00:20:46,080 --> 00:20:49,239 Speaker 1: So I think that it is because a lot of 359 00:20:49,280 --> 00:20:53,879 Speaker 1: this safe supply has kind of had two impacts on 360 00:20:54,080 --> 00:20:56,840 Speaker 1: financial markets in the way that the safe supply is 361 00:20:56,920 --> 00:21:00,439 Speaker 1: reduced because there's either this there's this excess savings that 362 00:21:00,480 --> 00:21:03,119 Speaker 1: wants to soak it up that's pretty much price and sensitive. 363 00:21:03,440 --> 00:21:06,040 Speaker 1: And then there's also governments, you know in central banks 364 00:21:06,080 --> 00:21:08,600 Speaker 1: who are basically you know, doing policies like quantity of 365 00:21:08,640 --> 00:21:11,360 Speaker 1: easy that are also kind of taking the supply out 366 00:21:11,359 --> 00:21:13,919 Speaker 1: of the market. And this was very prevalent um when 367 00:21:14,119 --> 00:21:17,560 Speaker 1: countries like you know, Germany and East Asia and even 368 00:21:17,600 --> 00:21:22,399 Speaker 1: the US really until eighteen, we're running pretty tight fiscal policies, 369 00:21:23,400 --> 00:21:27,199 Speaker 1: and I think that that kind of naturally moved these 370 00:21:27,320 --> 00:21:32,640 Speaker 1: um these players Taiwanese life insurance companies, Japanese life insurance companies, 371 00:21:32,840 --> 00:21:36,879 Speaker 1: big pools of excess savings out the risk curve. Um. Now, 372 00:21:36,920 --> 00:21:39,080 Speaker 1: most of them were still you know, like even if 373 00:21:39,080 --> 00:21:41,679 Speaker 1: they were moving into investment grade bad markets or clos 374 00:21:41,880 --> 00:21:45,480 Speaker 1: or even yield to some extent um, they still were 375 00:21:45,600 --> 00:21:49,080 Speaker 1: kind of in you know, relatively safe assets. And but 376 00:21:49,160 --> 00:21:52,160 Speaker 1: the way I think it ties into this surge invaluation, 377 00:21:52,240 --> 00:21:55,720 Speaker 1: especially for like U S tech companies, is is that 378 00:21:56,280 --> 00:22:01,399 Speaker 1: this kind of force, these disinflationary pressures of excess savings 379 00:22:01,600 --> 00:22:04,399 Speaker 1: as that results from you know, lower nominal GDP and 380 00:22:04,440 --> 00:22:08,880 Speaker 1: demand for safe assets, is that it basically allows all 381 00:22:08,960 --> 00:22:11,920 Speaker 1: these natural growers who are kind of you know, I 382 00:22:11,960 --> 00:22:15,639 Speaker 1: wouldn't say insensitive to you know, real economic activity, but 383 00:22:15,960 --> 00:22:18,439 Speaker 1: are definitely have much less beta to it than you know, 384 00:22:18,720 --> 00:22:22,240 Speaker 1: traditional cyclical companies. Is that they're based they find themselves 385 00:22:22,720 --> 00:22:25,639 Speaker 1: kind of cannibalizing the world with you know, three percent 386 00:22:25,920 --> 00:22:29,160 Speaker 1: borrowing rates, and when the discount rate for them gets 387 00:22:29,200 --> 00:22:32,480 Speaker 1: that low relative to how they can naturally grow, it 388 00:22:32,560 --> 00:22:35,960 Speaker 1: can you can get these massive expansions of multiples and 389 00:22:36,000 --> 00:22:39,760 Speaker 1: they're probably end up somehow getting justified just by kind 390 00:22:39,800 --> 00:22:41,480 Speaker 1: of how love the discount rate gets. And then that 391 00:22:41,640 --> 00:22:43,720 Speaker 1: it's I think these factors have kind of fed on 392 00:22:43,760 --> 00:22:46,359 Speaker 1: each other, and it's the same thing like these you 393 00:22:46,359 --> 00:22:49,800 Speaker 1: know these you know, tech versus um Russell or tech 394 00:22:49,960 --> 00:22:52,560 Speaker 1: versus E M or whatever. All these things they kind 395 00:22:52,560 --> 00:22:55,040 Speaker 1: of chart against the level of the dollars, and the 396 00:22:55,160 --> 00:22:57,800 Speaker 1: level of the dollar is almost charted with the level 397 00:22:57,840 --> 00:23:02,080 Speaker 1: of you know, the average neutral average global neutral interest rate. 398 00:23:02,640 --> 00:23:05,280 Speaker 1: So I think a lot of these factors are interconnected, 399 00:23:05,280 --> 00:23:08,040 Speaker 1: and it kind of comes from this this world of 400 00:23:08,080 --> 00:23:11,680 Speaker 1: low nominal GDP excess savings, and then how tech kind 401 00:23:11,720 --> 00:23:15,080 Speaker 1: of benefits from that either in terms of flows or activity. 402 00:23:15,880 --> 00:23:19,440 Speaker 1: So we have this phenomenon in a low nominal GDP world. 403 00:23:19,640 --> 00:23:23,120 Speaker 1: People like companies that are sort of growth and sensitive, 404 00:23:23,160 --> 00:23:25,680 Speaker 1: and so a company like Netflix, which probably doesn't need 405 00:23:25,680 --> 00:23:28,560 Speaker 1: a booming economy to get people to subscribe to get 406 00:23:28,560 --> 00:23:32,639 Speaker 1: onto it, they can borrow really cheaply. They there's a 407 00:23:32,720 --> 00:23:36,720 Speaker 1: huge demand for their earning stream. One of the conversations, 408 00:23:36,760 --> 00:23:39,240 Speaker 1: and it's less of macro than some of these conversations. 409 00:23:39,280 --> 00:23:41,399 Speaker 1: But one thing that we talked about from time to 410 00:23:41,440 --> 00:23:44,359 Speaker 1: time is the so called like the death of value 411 00:23:44,400 --> 00:23:47,720 Speaker 1: stocks and people who are looking for cheap opportunities in 412 00:23:47,720 --> 00:23:51,880 Speaker 1: the market. Why they're always disappointed. In your view, does 413 00:23:51,920 --> 00:23:57,359 Speaker 1: it come down to, essentially, value isn't going to work 414 00:23:58,040 --> 00:24:02,520 Speaker 1: as a strategy until we have policies that actually boost 415 00:24:02,600 --> 00:24:05,600 Speaker 1: nominal GDP that as long as there's this growth shortage 416 00:24:05,680 --> 00:24:08,600 Speaker 1: out there, then you have this advance, you have this 417 00:24:08,760 --> 00:24:12,400 Speaker 1: love for an asset like Netflix, and until we get 418 00:24:12,600 --> 00:24:15,199 Speaker 1: meaningful macro change than some of these just sort of 419 00:24:15,200 --> 00:24:19,720 Speaker 1: more cyclical companies that may trade at sort of seemingly 420 00:24:19,800 --> 00:24:22,399 Speaker 1: cheap price to earnings ratios just aren't going to be 421 00:24:22,720 --> 00:24:25,760 Speaker 1: in favor. Like, is that basically a macro question in 422 00:24:25,800 --> 00:24:30,359 Speaker 1: your view? Yeah? Absolutely, Um, I really, I really do 423 00:24:30,440 --> 00:24:34,320 Speaker 1: think it is this kind of growth value. All these things, uh, 424 00:24:35,119 --> 00:24:39,040 Speaker 1: interest rates have kind of all the dollar about kind 425 00:24:39,080 --> 00:24:42,560 Speaker 1: of all become lump sumed a little. And I think 426 00:24:42,600 --> 00:24:44,800 Speaker 1: it does make sense because a lot of these value 427 00:24:44,800 --> 00:24:47,160 Speaker 1: companies are much more you know, depending on the level 428 00:24:47,320 --> 00:24:50,320 Speaker 1: of economic activity. But I do think that like there 429 00:24:50,359 --> 00:24:55,360 Speaker 1: are kind of first signs of promise that a lot 430 00:24:55,400 --> 00:24:59,080 Speaker 1: of these dynamics will begin to change not by choice, 431 00:24:59,080 --> 00:25:01,800 Speaker 1: but more by four um. And we can get into that, 432 00:25:01,880 --> 00:25:05,879 Speaker 1: I guess. But yeah, I definitely think that the growth 433 00:25:05,960 --> 00:25:09,119 Speaker 1: value that those kind of dynamics are very rooted in 434 00:25:09,119 --> 00:25:16,040 Speaker 1: this kind of UM high asset prices, low nominal GDP world. Well, 435 00:25:16,160 --> 00:25:19,160 Speaker 1: let's talk about that, like, because what you're basically describing 436 00:25:19,280 --> 00:25:21,360 Speaker 1: is the sort of feedback loop where you have low 437 00:25:21,400 --> 00:25:24,440 Speaker 1: economic growth that generates a bunch of savings, and all 438 00:25:24,440 --> 00:25:27,120 Speaker 1: those savings go into US financial assets and that sort 439 00:25:27,160 --> 00:25:30,560 Speaker 1: of keeps the dollar high, which then generates lower growth 440 00:25:30,560 --> 00:25:33,480 Speaker 1: and the cycle begins again. When you have that kind 441 00:25:33,520 --> 00:25:37,080 Speaker 1: of doom loop, I guess it's it's hard to get 442 00:25:37,160 --> 00:25:40,560 Speaker 1: out of it. So do you see the prospect of 443 00:25:40,640 --> 00:25:45,160 Speaker 1: change on the horizon. Yeah, the doom loop is really 444 00:25:45,320 --> 00:25:47,159 Speaker 1: the best way to describe it. UM, And I do 445 00:25:47,280 --> 00:25:50,679 Speaker 1: think it is possible. They're definitely early signs. I'm not 446 00:25:50,760 --> 00:25:55,439 Speaker 1: gonna I wouldn't say it's all systems go UM. But 447 00:25:55,640 --> 00:25:57,960 Speaker 1: it's one of the things that is interesting about this 448 00:25:58,400 --> 00:26:02,040 Speaker 1: crisis is that it's made actors who have been very 449 00:26:02,119 --> 00:26:05,600 Speaker 1: hesitant and reticent to kind of, you know, use bazooka 450 00:26:05,560 --> 00:26:09,320 Speaker 1: as it's made them kind of forced to UM and 451 00:26:09,400 --> 00:26:11,480 Speaker 1: I think it's kind of I think one of the 452 00:26:11,520 --> 00:26:14,760 Speaker 1: main factors of the you know, the past five years 453 00:26:15,520 --> 00:26:19,000 Speaker 1: has been that the response to weakness and demand has 454 00:26:19,040 --> 00:26:24,680 Speaker 1: been so bifurcated between you know, Europe, Asia versus the US. 455 00:26:24,840 --> 00:26:27,439 Speaker 1: Is in the US has been able either on the 456 00:26:27,440 --> 00:26:30,000 Speaker 1: monetary side and more importantly, like to do a massive 457 00:26:30,000 --> 00:26:33,040 Speaker 1: physical expansion at you know what at times we thought 458 00:26:33,119 --> 00:26:36,560 Speaker 1: was levels of close to full employment, whatever that means. 459 00:26:36,600 --> 00:26:38,760 Speaker 1: So there was kind of this this kind of added 460 00:26:38,800 --> 00:26:40,680 Speaker 1: to the divide if not only was the US able 461 00:26:40,720 --> 00:26:43,320 Speaker 1: to absorb this excess savings, but it was also kind 462 00:26:43,320 --> 00:26:47,359 Speaker 1: of justified on relative growth rates. And this also really 463 00:26:47,400 --> 00:26:51,119 Speaker 1: impacted the dollar feedback loop because it was also it 464 00:26:51,160 --> 00:26:54,520 Speaker 1: was just a reflection of you know, the relative growth dynamics. 465 00:26:54,560 --> 00:26:57,680 Speaker 1: But what's happening now, which is kind of interesting, is 466 00:26:57,760 --> 00:27:01,560 Speaker 1: is that countries who would have been very hesitant to 467 00:27:01,720 --> 00:27:05,000 Speaker 1: kind of change their you know, economic structuring in terms 468 00:27:05,000 --> 00:27:07,960 Speaker 1: of their composition of growth are kind of being forced 469 00:27:08,000 --> 00:27:09,840 Speaker 1: to now. So we kind of start hearing things like 470 00:27:10,119 --> 00:27:13,320 Speaker 1: you know, Moon and Prime Minister moved in Korea is 471 00:27:13,400 --> 00:27:15,959 Speaker 1: kind of talking about this new deal. Where Korea has 472 00:27:15,960 --> 00:27:19,639 Speaker 1: previously been running you know, budget surpluses and exports are 473 00:27:19,680 --> 00:27:22,920 Speaker 1: still you know GDP, and now they're talking about ways 474 00:27:22,960 --> 00:27:26,360 Speaker 1: how do they generate aggregate to men post covid um, 475 00:27:26,440 --> 00:27:28,720 Speaker 1: and we we seem to have some you know, green 476 00:27:28,760 --> 00:27:32,119 Speaker 1: shoots in terms of European politics and Germany passing you know, 477 00:27:32,160 --> 00:27:35,159 Speaker 1: another round of stimulus, and these are all things that 478 00:27:35,240 --> 00:27:37,480 Speaker 1: kind of two years ago you would say it would 479 00:27:37,480 --> 00:27:40,000 Speaker 1: be the US doing them only and you know, Korea 480 00:27:40,080 --> 00:27:42,720 Speaker 1: and Europe and Japan figuring out out a way to 481 00:27:42,760 --> 00:27:44,960 Speaker 1: get how to get their currency mower. And that really 482 00:27:45,000 --> 00:27:47,359 Speaker 1: hasn't been the case this time around, kind of because 483 00:27:47,720 --> 00:27:50,560 Speaker 1: there's no terms of trade advantage when no countries can 484 00:27:50,560 --> 00:27:53,680 Speaker 1: trade with each other. So that's been uh in terms 485 00:27:53,760 --> 00:27:57,360 Speaker 1: of a structural development, unfortunate as it is, has kind 486 00:27:57,400 --> 00:28:01,240 Speaker 1: of been welcomed in terms that like trees now really 487 00:28:01,320 --> 00:28:05,320 Speaker 1: because there's global trade broke down, not only for structural reasons, 488 00:28:05,359 --> 00:28:08,320 Speaker 1: just you know, practically when there's a pandemic. So the 489 00:28:08,359 --> 00:28:11,520 Speaker 1: only way to kind of generate demand is internally. And 490 00:28:11,560 --> 00:28:15,120 Speaker 1: that's kind of focused people, um, you know, policymakers. I mean, 491 00:28:15,119 --> 00:28:17,480 Speaker 1: it was not that long ago when you know, Olaf Schultz, 492 00:28:17,520 --> 00:28:19,520 Speaker 1: the finance minister in Germany, was saying that, you know, 493 00:28:19,640 --> 00:28:22,480 Speaker 1: there's no needs for fiscal there's you know, the economy 494 00:28:22,560 --> 00:28:25,240 Speaker 1: is fine. And now you know Germany is tripping over 495 00:28:25,280 --> 00:28:29,159 Speaker 1: themselves to past additional fiscal measures. They're looking, you know, 496 00:28:29,240 --> 00:28:33,440 Speaker 1: they're looking to prevent European fragmentation in terms of bond yields. 497 00:28:33,440 --> 00:28:37,000 Speaker 1: It's like, so I think there are positive developments and 498 00:28:37,040 --> 00:28:40,400 Speaker 1: this is kind of where this you know, what I've 499 00:28:40,440 --> 00:28:44,240 Speaker 1: called the the Imperial Circle Part two kind of breaks down. 500 00:28:44,360 --> 00:28:49,400 Speaker 1: Is where countries are investing in domestic demand and then 501 00:28:49,440 --> 00:28:52,560 Speaker 1: the world kind of can as it exits you know, 502 00:28:52,680 --> 00:28:56,320 Speaker 1: this horrible period, is it kind of exits on on 503 00:28:56,320 --> 00:28:59,600 Speaker 1: on even footing because you know, South Korea is investing 504 00:28:59,640 --> 00:29:02,960 Speaker 1: into stick demand, Japan's investing in domestic demand, Europe is, 505 00:29:03,680 --> 00:29:06,840 Speaker 1: Australia is. So it's kind of that we all kind 506 00:29:06,840 --> 00:29:10,480 Speaker 1: of had a popular up. Sorry, we all kind of 507 00:29:10,520 --> 00:29:13,600 Speaker 1: had a proper demand impulse that kind of allowed us, 508 00:29:13,680 --> 00:29:16,320 Speaker 1: the the global economy to exit on even footing. And 509 00:29:16,320 --> 00:29:18,960 Speaker 1: it hasn't been on an even footing pretty much since 510 00:29:19,000 --> 00:29:35,120 Speaker 1: the financial crisis. So the disappearance and you used mad 511 00:29:35,240 --> 00:29:38,160 Speaker 1: Klient's term earlier of the sink, the demand sinc and 512 00:29:38,200 --> 00:29:41,920 Speaker 1: the US was kind of the consumer of last resort 513 00:29:42,280 --> 00:29:45,520 Speaker 1: for all of these export oriented nations. That's going away. 514 00:29:45,520 --> 00:29:49,160 Speaker 1: I mean, we'll see if and when uh if and 515 00:29:49,200 --> 00:29:52,400 Speaker 1: when the US returns as a consumer of last resort, 516 00:29:52,560 --> 00:29:56,480 Speaker 1: depending on the robustness of the recovery. But it's essentially 517 00:29:56,520 --> 00:30:01,120 Speaker 1: that condition, the disappearance of robust external demand, that forced 518 00:30:01,120 --> 00:30:04,840 Speaker 1: all these countries to address their own internal demand, and 519 00:30:05,680 --> 00:30:08,240 Speaker 1: they could. It allowed them to do it simultaneously because 520 00:30:08,280 --> 00:30:10,560 Speaker 1: they didn't have to worry about undermining each other on 521 00:30:10,640 --> 00:30:14,800 Speaker 1: a currency front. Um. They actually they can all sort 522 00:30:14,800 --> 00:30:17,520 Speaker 1: of jump at the same time, right. And one of 523 00:30:17,520 --> 00:30:22,400 Speaker 1: the things that's really interesting now is and it's still early, 524 00:30:22,520 --> 00:30:26,600 Speaker 1: of course, is that because so much of the policy 525 00:30:26,640 --> 00:30:29,280 Speaker 1: response now is more focused on the fiscal side, and 526 00:30:29,360 --> 00:30:32,760 Speaker 1: monetary policy is much more so become more just an 527 00:30:32,880 --> 00:30:38,760 Speaker 1: enabler of fiscal expansion, is that that's positive for the currency. 528 00:30:39,080 --> 00:30:42,320 Speaker 1: So these guys are not saying, you know, they're not saying, oh, well, 529 00:30:42,360 --> 00:30:44,560 Speaker 1: you know, you're really worries me at one twelve and 530 00:30:44,560 --> 00:30:47,600 Speaker 1: a half or wherever it is it is today. Is 531 00:30:47,600 --> 00:30:51,680 Speaker 1: is that like, because this response, the monetary response, we 532 00:30:51,760 --> 00:30:53,320 Speaker 1: know where that what that does for the currency, But 533 00:30:53,440 --> 00:30:57,480 Speaker 1: usually fiscal response actually strengthens the currency because you're you know, 534 00:30:57,520 --> 00:31:00,960 Speaker 1: improving your medium terms prospects for growth or potential growth. 535 00:31:01,400 --> 00:31:04,320 Speaker 1: So that's kind of been an interesting element that's very 536 00:31:04,400 --> 00:31:08,000 Speaker 1: new because really what we were seeing and especially after 537 00:31:08,960 --> 00:31:14,880 Speaker 1: after Chinese evaluation in trade war, is that the only 538 00:31:15,000 --> 00:31:18,840 Speaker 1: response was kind of currency based. I mean, you're basically 539 00:31:19,000 --> 00:31:21,640 Speaker 1: was saying, you know, we'll cut further negative and you 540 00:31:21,720 --> 00:31:25,440 Speaker 1: have that Ali Ren speech in August of where he's 541 00:31:25,440 --> 00:31:28,280 Speaker 1: basically saying there's no you know, there's no reversal rate, 542 00:31:28,320 --> 00:31:30,240 Speaker 1: don't worry about it. And the only point of that 543 00:31:30,320 --> 00:31:33,320 Speaker 1: to say is you're just trying to get your currency 544 00:31:33,320 --> 00:31:36,600 Speaker 1: weaker to adjust to, you know, the external demand environment, 545 00:31:37,400 --> 00:31:40,160 Speaker 1: and that's kind of been where policy was for the 546 00:31:40,240 --> 00:31:42,680 Speaker 1: last few years. We've had this negative rates to me, 547 00:31:42,880 --> 00:31:45,600 Speaker 1: is just a trade off between internal and external demand. 548 00:31:45,680 --> 00:31:49,760 Speaker 1: You're basically sacrificing your credit channel, your domestic credit channel, 549 00:31:49,800 --> 00:31:52,400 Speaker 1: so that you can have more in terms of trade competitiveness. 550 00:31:53,080 --> 00:31:55,959 Speaker 1: And now we're kind of seeing basically by force, I'm 551 00:31:56,000 --> 00:31:58,680 Speaker 1: not going to give these guys that much credit. Um 552 00:31:58,840 --> 00:32:02,360 Speaker 1: is that they've had to focus on their domestic demand 553 00:32:02,400 --> 00:32:04,280 Speaker 1: impulse and they know that they're not going to get 554 00:32:04,280 --> 00:32:07,920 Speaker 1: out of this even post the the health care part 555 00:32:07,960 --> 00:32:09,440 Speaker 1: of the crisis. Is they're not going to get out 556 00:32:09,440 --> 00:32:11,320 Speaker 1: of this by you know, China just importing a bunch 557 00:32:11,360 --> 00:32:15,360 Speaker 1: of goods. So the focus now is becoming much more strategic, 558 00:32:15,400 --> 00:32:17,920 Speaker 1: and whether it lasts, I guess we'll see. But there are, 559 00:32:18,160 --> 00:32:21,360 Speaker 1: you know, promising signs that there's kind of this global 560 00:32:21,360 --> 00:32:25,160 Speaker 1: fiscal impulse that seems to be here to stay. So 561 00:32:25,280 --> 00:32:27,360 Speaker 1: just that last point, I mean, I said in the 562 00:32:27,360 --> 00:32:30,760 Speaker 1: beginning that I was kind of losing a little bit 563 00:32:30,840 --> 00:32:33,840 Speaker 1: of I felt less confident that there was going to 564 00:32:33,880 --> 00:32:36,920 Speaker 1: be some big structural change post crisis. But you're saying, 565 00:32:37,040 --> 00:32:39,560 Speaker 1: but maybe it was maybe that was too pessimistic and 566 00:32:39,640 --> 00:32:41,880 Speaker 1: that you think it. Uh, maybe we really are saying 567 00:32:41,920 --> 00:32:44,920 Speaker 1: it and I'm being sort of blind or taking for 568 00:32:45,000 --> 00:32:47,600 Speaker 1: granted or maybe have a two US centric focus where 569 00:32:47,600 --> 00:32:50,320 Speaker 1: there it's not clear that anything is going to change, 570 00:32:50,520 --> 00:32:53,440 Speaker 1: but hey, you say it's there. In terms of the shifting, 571 00:32:54,080 --> 00:32:57,600 Speaker 1: you think it could be this is start, Like what 572 00:32:57,680 --> 00:33:00,240 Speaker 1: are the what would you look for to see if 573 00:33:00,280 --> 00:33:04,760 Speaker 1: this is the start of a sustainable change in how 574 00:33:05,200 --> 00:33:08,080 Speaker 1: global economic policy operates? Like how would you when would 575 00:33:08,120 --> 00:33:10,760 Speaker 1: you feel like, wow, this is really different? Yeah, I mean, 576 00:33:10,800 --> 00:33:13,640 Speaker 1: I think one of the things that's definitely starting to 577 00:33:13,720 --> 00:33:17,600 Speaker 1: see is that the relative weakness in the dollar because, 578 00:33:17,640 --> 00:33:19,280 Speaker 1: as we said, kind of the dollar has been the 579 00:33:19,800 --> 00:33:23,000 Speaker 1: folk from instrument for pricing all of these kind of 580 00:33:23,040 --> 00:33:25,960 Speaker 1: you know, external backdrops and dynamics. So I think the 581 00:33:26,000 --> 00:33:29,800 Speaker 1: dollar is definitely is definitely one of them. And I listen, 582 00:33:29,840 --> 00:33:32,600 Speaker 1: I don't I'm not. I'm not convinced either. I'm but 583 00:33:32,640 --> 00:33:36,520 Speaker 1: I am starting to be a bit more optimistic that 584 00:33:36,840 --> 00:33:39,920 Speaker 1: a lot of these kind of more who were relatively 585 00:33:39,960 --> 00:33:44,920 Speaker 1: prudent actors are kind of starting to embrace um more 586 00:33:44,960 --> 00:33:48,400 Speaker 1: physical expansion, which is really needed in the world where 587 00:33:48,480 --> 00:33:51,360 Speaker 1: you know, global trade isn't gonna bail anyone out. Whether 588 00:33:51,400 --> 00:33:54,360 Speaker 1: it lasts or not, I don't know, but you know, 589 00:33:54,480 --> 00:33:58,280 Speaker 1: it's it's because of how you know, because of how 590 00:33:58,320 --> 00:34:00,720 Speaker 1: big it could be. As long as the expected value 591 00:34:00,800 --> 00:34:04,240 Speaker 1: keeps moving, right, then it'll have a significant price effect. 592 00:34:04,600 --> 00:34:07,800 Speaker 1: So yeah, it's it does seem that the seeds are there. 593 00:34:07,880 --> 00:34:10,719 Speaker 1: Whether it lasts or not, I don't know. Well, this 594 00:34:10,800 --> 00:34:13,880 Speaker 1: will be the thing to watch, John Turk. Really great 595 00:34:13,920 --> 00:34:17,400 Speaker 1: to get your perspective. Ali. My only complaint is I 596 00:34:17,440 --> 00:34:20,040 Speaker 1: wish you'd write more, because I really do think your 597 00:34:20,080 --> 00:34:21,680 Speaker 1: blog and your Twitter feed is some of the best 598 00:34:21,719 --> 00:34:24,040 Speaker 1: stuff out there right now. More people should read it. 599 00:34:24,080 --> 00:34:26,080 Speaker 1: So thanks for joining us. Thank you so much for 600 00:34:26,120 --> 00:34:39,040 Speaker 1: having me. Thanks. That's great, Tracy, I really liked Obviously 601 00:34:39,080 --> 00:34:40,880 Speaker 1: I like that conversation, but I like the sort of 602 00:34:41,000 --> 00:34:44,120 Speaker 1: clear marker that John laid down, which is that we 603 00:34:44,239 --> 00:34:49,360 Speaker 1: are seeing any sort of early signs of governments around 604 00:34:49,400 --> 00:34:57,080 Speaker 1: the world Europe overall, Germany in particular, Japan, Korea do 605 00:34:57,239 --> 00:35:00,080 Speaker 1: more aggressive actions on the demand side, which they have 606 00:35:00,160 --> 00:35:02,000 Speaker 1: been reluctant to do for a long time. And I 607 00:35:02,040 --> 00:35:04,719 Speaker 1: feel like that is going to be something very like 608 00:35:04,960 --> 00:35:08,240 Speaker 1: meaty that we can continue to watch, Like maybe they'll 609 00:35:08,719 --> 00:35:11,360 Speaker 1: by December they'll be like, Okay, we did enough fiscal 610 00:35:11,480 --> 00:35:14,640 Speaker 1: fiscal expansion and we need to go into retrenchment mode, 611 00:35:14,920 --> 00:35:17,600 Speaker 1: because that's often how these governments operate, they get nervous 612 00:35:17,640 --> 00:35:20,719 Speaker 1: or whatever. Um. But it definitely feels like that is 613 00:35:20,760 --> 00:35:25,120 Speaker 1: just a huge storyline to watch, whether this starts to 614 00:35:25,160 --> 00:35:28,440 Speaker 1: shape their focus on the sort of pure export led 615 00:35:28,480 --> 00:35:32,080 Speaker 1: growth model. Yeah. I was gonna say, like what we 616 00:35:32,160 --> 00:35:35,840 Speaker 1: tend to see is as economic recovery actually starts, uh, 617 00:35:36,239 --> 00:35:41,240 Speaker 1: the impetus for that sort of fiscal expansion starts to away. 618 00:35:41,600 --> 00:35:44,279 Speaker 1: So it'll be interesting to see whether or not that 619 00:35:44,360 --> 00:35:47,480 Speaker 1: happens this time, or whether or not an unemployment crisis 620 00:35:47,600 --> 00:35:51,160 Speaker 1: of the scale has maybe changed the conversation around that. 621 00:35:51,800 --> 00:35:53,800 Speaker 1: I don't know. I tend to think that people get 622 00:35:53,840 --> 00:35:58,400 Speaker 1: easily distracted, and you know, new problems will come up, 623 00:35:58,440 --> 00:36:03,400 Speaker 1: and has basically been a lesson in our inability to 624 00:36:03,600 --> 00:36:06,719 Speaker 1: predict what's next on the horizon and what's next on 625 00:36:06,800 --> 00:36:10,359 Speaker 1: the sort of global news agenda. So who knows what 626 00:36:10,400 --> 00:36:13,640 Speaker 1: people will be talking about? Then, yeah, no, who knows. 627 00:36:13,719 --> 00:36:17,200 Speaker 1: I think probably a lot does depend on the degree 628 00:36:17,239 --> 00:36:20,000 Speaker 1: to which the U S bounces back, And because if 629 00:36:20,040 --> 00:36:23,640 Speaker 1: the US were to have a sort of V shaped recovery, 630 00:36:23,800 --> 00:36:26,640 Speaker 1: and you know, as a recording this the market, the 631 00:36:26,640 --> 00:36:29,359 Speaker 1: soup market increasingly appears to be pricing in something close 632 00:36:29,400 --> 00:36:33,160 Speaker 1: to resembling If the U S has this great recovery 633 00:36:33,400 --> 00:36:36,319 Speaker 1: and we have this demand for goods for the rest 634 00:36:36,320 --> 00:36:40,040 Speaker 1: of the world, it's extremely easy for me to imagine 635 00:36:40,120 --> 00:36:43,319 Speaker 1: the export led countries sort of just going back to 636 00:36:43,440 --> 00:36:46,359 Speaker 1: the model that was I guess working for them up 637 00:36:46,440 --> 00:36:50,040 Speaker 1: until this crisis. But if not, then, you know, then 638 00:36:50,080 --> 00:36:53,200 Speaker 1: it seems very plausible that they will continue to focus 639 00:36:53,200 --> 00:36:57,319 Speaker 1: on cultivating domestic demand. But this is in terms of 640 00:36:57,360 --> 00:36:59,920 Speaker 1: like the big macro questions we're going to be watching. 641 00:37:00,239 --> 00:37:04,359 Speaker 1: To me, this feels like one of the huge ones. Yeah. Absolutely, 642 00:37:04,400 --> 00:37:07,480 Speaker 1: And already you can see a lot of export oriented 643 00:37:07,560 --> 00:37:11,759 Speaker 1: economies sort of betting on the first outcome, the V 644 00:37:11,840 --> 00:37:14,719 Speaker 1: shaped recovery in the US and a bounce back in demand. So, 645 00:37:14,800 --> 00:37:16,839 Speaker 1: for instance, you know, in China, we have a lot 646 00:37:16,840 --> 00:37:19,719 Speaker 1: of factories that are getting back to work and producing 647 00:37:19,840 --> 00:37:23,800 Speaker 1: at the same scale that they were before the coronavirus crisis, 648 00:37:23,840 --> 00:37:28,360 Speaker 1: but of course demand hasn't quite recovered in other parts 649 00:37:28,360 --> 00:37:30,640 Speaker 1: of the world, so it'll be interesting to see whether 650 00:37:30,800 --> 00:37:33,520 Speaker 1: that that pays off, or whether or not they're just 651 00:37:33,560 --> 00:37:36,720 Speaker 1: sort of, you know, it's a knee jerk, habitual reaction 652 00:37:36,800 --> 00:37:39,279 Speaker 1: to the way things have always been. I guess the 653 00:37:39,360 --> 00:37:43,560 Speaker 1: other thing that's kind of nice about this is that 654 00:37:44,200 --> 00:37:46,239 Speaker 1: this is a weird thing to say, But if there 655 00:37:46,400 --> 00:37:49,319 Speaker 1: is not a V shaped recovery in the US, then 656 00:37:49,360 --> 00:37:53,719 Speaker 1: I guess the upside is that potentially we we see 657 00:37:53,760 --> 00:37:58,120 Speaker 1: the first steps um of rethinking attitudes towards fiscal expansion 658 00:37:58,200 --> 00:38:01,759 Speaker 1: and sort of rethinking that the dolop that John was describing, 659 00:38:01,880 --> 00:38:06,200 Speaker 1: maybe that's the very very small silver lining and that 660 00:38:06,320 --> 00:38:10,759 Speaker 1: kind of pressing outcome. Yeah. Absolutely. I mean, look, I 661 00:38:10,800 --> 00:38:12,959 Speaker 1: wanted to see a v shape recovery in the US 662 00:38:13,040 --> 00:38:16,560 Speaker 1: from the perspective of getting people back to work. But 663 00:38:16,680 --> 00:38:19,600 Speaker 1: I do agree that, look, if there's gonna be a 664 00:38:19,640 --> 00:38:23,239 Speaker 1: moment where things change, um, this could be it to 665 00:38:23,239 --> 00:38:24,960 Speaker 1: have some sort to go on a new sort of 666 00:38:24,960 --> 00:38:27,360 Speaker 1: more sustainable growth path. The other thing, you know, we 667 00:38:27,400 --> 00:38:29,399 Speaker 1: didn't the one thing we didn't really talk about much 668 00:38:29,440 --> 00:38:33,920 Speaker 1: with John actually is China's own uh sort of skipped 669 00:38:33,920 --> 00:38:36,160 Speaker 1: around China itself, which is of course at the center 670 00:38:36,280 --> 00:38:38,840 Speaker 1: of a lot of this tension analysis. And I've seen, like, 671 00:38:39,560 --> 00:38:43,400 Speaker 1: you know, folks like Michael Pettis pointing out that, um, 672 00:38:43,440 --> 00:38:45,360 Speaker 1: so far it's not clear and maybe you have a 673 00:38:45,360 --> 00:38:49,320 Speaker 1: better perspective than I do, Like they're not really reven 674 00:38:49,480 --> 00:38:52,640 Speaker 1: yet on the domestic demand side, like they're obviously the 675 00:38:52,680 --> 00:38:56,200 Speaker 1: industrial production that's come back, but in terms of demand 676 00:38:56,400 --> 00:39:00,080 Speaker 1: still feels like very much like credit oriented relo just 677 00:39:00,400 --> 00:39:04,279 Speaker 1: to go too heavy on fiscal etcetera. Like that's got 678 00:39:04,280 --> 00:39:06,720 Speaker 1: to be a big part of this question of whether 679 00:39:06,800 --> 00:39:10,680 Speaker 1: they will they themselves will sort of retailt their economy 680 00:39:10,680 --> 00:39:14,040 Speaker 1: towards more domestic demand or not. Yeah, Well, I mean, 681 00:39:14,080 --> 00:39:16,879 Speaker 1: I think Matt Klein made the argument quite convincingly that 682 00:39:17,200 --> 00:39:21,040 Speaker 1: China has always had a demand problem and if anything, 683 00:39:21,160 --> 00:39:25,480 Speaker 1: the coronavirus crisis just sort of accentuates it. It is 684 00:39:25,680 --> 00:39:28,360 Speaker 1: pretty interesting too to watch what's going on with the 685 00:39:28,360 --> 00:39:31,440 Speaker 1: economy right now, and all signs at the moment are 686 00:39:31,560 --> 00:39:36,000 Speaker 1: pointing towards a supply driven recovery. Um, if there is 687 00:39:36,080 --> 00:39:38,480 Speaker 1: much of a recovery at all, but again, interesting, wanted 688 00:39:38,520 --> 00:39:42,839 Speaker 1: to be watching at the moment. Okay, well, this has 689 00:39:42,880 --> 00:39:46,600 Speaker 1: been another episode of the Odd Thoughts podcast. I'm Tracy Alloway. 690 00:39:46,719 --> 00:39:50,120 Speaker 1: You can follow me on Twitter at Tracy Alloway and 691 00:39:50,120 --> 00:39:53,360 Speaker 1: I'm Joe Wisnthal. You can follow me at The Stalwart 692 00:39:53,760 --> 00:39:57,520 Speaker 1: and definitely follow our guest John Turret. He's at j 693 00:39:57,960 --> 00:40:03,120 Speaker 1: Turk eighteen. Follow our producer Laura Carlson at Laura M. Carlson. 694 00:40:03,280 --> 00:40:07,080 Speaker 1: Follow the Bloomberg head of podcast, Francesca Leavi at Francesca Today, 695 00:40:07,600 --> 00:40:10,960 Speaker 1: and check out all of our podcasts under the handle 696 00:40:11,320 --> 00:40:13,160 Speaker 1: at podcast. Thanks for listening.