1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you. 2 00:00:05,360 --> 00:00:07,680 Speaker 1: Along with my co host Lisa Brahma Waits. Each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money. Whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple 6 00:00:15,520 --> 00:00:17,960 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:24,000 Speaker 1: at Bloomberg dot com. It's being taken by the market 8 00:00:24,160 --> 00:00:27,639 Speaker 1: as an escalation of the trade war, and frankly a 9 00:00:27,720 --> 00:00:30,960 Speaker 1: material escalation at that between the US and China. The 10 00:00:31,080 --> 00:00:34,400 Speaker 1: question is how far will this go, what will be 11 00:00:34,440 --> 00:00:38,240 Speaker 1: the retaliation by the United States, and what is China's goal? Here? 12 00:00:38,320 --> 00:00:40,239 Speaker 1: Is the goal just not to even try to have 13 00:00:40,320 --> 00:00:42,960 Speaker 1: a trade deal with the US? Joining US now? Matt Gerkin, 14 00:00:43,040 --> 00:00:47,280 Speaker 1: geopolitical strategist for b c A Research in Montreal, joining 15 00:00:47,360 --> 00:00:50,960 Speaker 1: US by phone. Matt, let's start there. Do you think 16 00:00:51,200 --> 00:00:56,440 Speaker 1: that China's allowance permitting the U n to go above 17 00:00:56,640 --> 00:01:00,600 Speaker 1: seven per dollar was a clear retaliatory sure to the 18 00:01:00,680 --> 00:01:05,440 Speaker 1: United States saying we don't care anymore about preserving this 19 00:01:05,560 --> 00:01:07,720 Speaker 1: level because you guys clearly don't want to make a 20 00:01:07,760 --> 00:01:12,240 Speaker 1: deal with US. Hi. Yes, thanks to glad to be on. 21 00:01:12,480 --> 00:01:15,959 Speaker 1: It's absolutely a retaliation. The six point nine level was 22 00:01:16,040 --> 00:01:18,600 Speaker 1: the level at which Trump was inaugurated, and seven, of 23 00:01:18,640 --> 00:01:21,760 Speaker 1: course is a psychological level as well for the markets, 24 00:01:21,800 --> 00:01:25,000 Speaker 1: and it's been known within politics political circles as well. 25 00:01:25,480 --> 00:01:29,520 Speaker 1: So they're clearly saying, look, you've gone to all Chinese 26 00:01:29,520 --> 00:01:32,679 Speaker 1: exports to the US. Now we're going to retaliate in 27 00:01:32,680 --> 00:01:34,959 Speaker 1: the easiest, clearest way for US. And of course it's 28 00:01:35,000 --> 00:01:37,880 Speaker 1: also a way of stimulating their economy, which is hitting 29 00:01:38,120 --> 00:01:41,480 Speaker 1: getting hit from this move. So, Matt, let's step back 30 00:01:41,480 --> 00:01:43,960 Speaker 1: a little bit. What do you think the long game 31 00:01:44,319 --> 00:01:47,520 Speaker 1: is for China? Because I'm sure that I think for 32 00:01:47,560 --> 00:01:49,400 Speaker 1: a lot of investors that they just don't have a 33 00:01:49,400 --> 00:01:52,600 Speaker 1: good handle on that. The long game for China is 34 00:01:52,640 --> 00:01:55,559 Speaker 1: to first of all, try to divide the United States 35 00:01:55,640 --> 00:01:59,240 Speaker 1: from the rest of the West UH, particularly Europe, which 36 00:01:59,280 --> 00:02:02,880 Speaker 1: is the swing play are in this entire geopolitical conflict. UH. 37 00:02:02,920 --> 00:02:06,400 Speaker 1: It is to continue to weaken the US by continuing 38 00:02:06,400 --> 00:02:10,200 Speaker 1: the global status quo, which is one in which China 39 00:02:10,680 --> 00:02:14,720 Speaker 1: is able to continue state oriented, mercantilist policies of its 40 00:02:14,760 --> 00:02:19,600 Speaker 1: own while the US suffers from political division Internally and 41 00:02:20,000 --> 00:02:23,680 Speaker 1: is in populism, etcetera, and is not able to focus 42 00:02:24,080 --> 00:02:30,000 Speaker 1: a constant trated Western coalition against China and the US. 43 00:02:30,000 --> 00:02:32,680 Speaker 1: How could the US potentially retaliate here? And what's the 44 00:02:32,680 --> 00:02:35,520 Speaker 1: goal there? I think from the US point of view, 45 00:02:35,520 --> 00:02:38,080 Speaker 1: there's there's two goals. Trump is very short term. Trump 46 00:02:38,160 --> 00:02:40,760 Speaker 1: is of course thinking about the election. But what he's 47 00:02:40,840 --> 00:02:44,480 Speaker 1: learned is that the market has climbed the wall of 48 00:02:44,480 --> 00:02:47,040 Speaker 1: worry repeatedly on the tariffs, and the U s economy 49 00:02:47,120 --> 00:02:50,440 Speaker 1: is held up pretty well, and that gives him room 50 00:02:50,520 --> 00:02:52,880 Speaker 1: to pursue the trade war with China, where Americans are 51 00:02:52,919 --> 00:02:56,280 Speaker 1: fairly skeptical. I mean, Americans do think China treats on 52 00:02:56,639 --> 00:02:59,840 Speaker 1: cheats on trade, and Americans don't have a very favorable 53 00:03:00,080 --> 00:03:02,679 Speaker 1: of China. But meanwhile, he's got to try to tamp 54 00:03:02,760 --> 00:03:06,280 Speaker 1: down other crises, whether they be domestic or you know, 55 00:03:06,320 --> 00:03:08,600 Speaker 1: trade conflicts with other countries. He'll try to wrap those 56 00:03:08,680 --> 00:03:11,600 Speaker 1: up in order to keep the impact on markets somewhat 57 00:03:11,639 --> 00:03:14,720 Speaker 1: controlled on his short term timeframe. Long term, of course, 58 00:03:14,720 --> 00:03:18,360 Speaker 1: the US is worried about technological supremacy. So Matt the 59 00:03:18,639 --> 00:03:23,440 Speaker 1: unilateral style of negotiating trade negotiation of President Trump. Here 60 00:03:23,760 --> 00:03:25,359 Speaker 1: are you suggesting that as it relates to the US 61 00:03:25,400 --> 00:03:27,960 Speaker 1: and China, that that's not the way to go, that 62 00:03:28,000 --> 00:03:30,000 Speaker 1: it needs to be more of a bilateral kind of 63 00:03:30,000 --> 00:03:33,920 Speaker 1: a more of a global type of negotiation. Well, I 64 00:03:33,919 --> 00:03:35,800 Speaker 1: don't have an opinion on it, but as an analyst, 65 00:03:35,920 --> 00:03:38,120 Speaker 1: I think it's it's pretty clear that the US would 66 00:03:38,160 --> 00:03:41,119 Speaker 1: have greater influence over China if we had a unified 67 00:03:41,160 --> 00:03:46,560 Speaker 1: coalition of the willing, where basically about nine percent of 68 00:03:46,640 --> 00:03:51,760 Speaker 1: China's GDP would be exposed to potential trade impacts as 69 00:03:51,760 --> 00:03:54,000 Speaker 1: opposed to today, which is, you know, about five percent 70 00:03:54,120 --> 00:03:58,360 Speaker 1: or less. Because essentially the U s would be able 71 00:03:58,400 --> 00:04:01,840 Speaker 1: to get Europe in Japan on the same page UH 72 00:04:01,880 --> 00:04:05,600 Speaker 1: and then prosecute the trade practices and and the cyber 73 00:04:05,640 --> 00:04:08,560 Speaker 1: practices that it's most concerned about, and China at that 74 00:04:08,600 --> 00:04:11,440 Speaker 1: point would be forced to capitulate because the entirety of 75 00:04:11,480 --> 00:04:15,280 Speaker 1: its export profile would be threatened. UM. That's not the 76 00:04:15,640 --> 00:04:17,960 Speaker 1: course Trump has taken, and one of the reasons is 77 00:04:17,960 --> 00:04:20,000 Speaker 1: because it takes a long time for the diplomacy with 78 00:04:20,040 --> 00:04:23,080 Speaker 1: Europe and Japan. UH. Instead, he's chosen to lead from 79 00:04:23,080 --> 00:04:28,040 Speaker 1: the front and to aggressively UH prosecute the trade issues 80 00:04:28,080 --> 00:04:31,040 Speaker 1: with China, and this has been a paradigm shift, but 81 00:04:31,080 --> 00:04:32,640 Speaker 1: I think it was one that was long and coming. 82 00:04:33,240 --> 00:04:35,359 Speaker 1: So just give you a sense of the market reaction 83 00:04:35,440 --> 00:04:38,560 Speaker 1: as backed down nearly three two point nine percent decline, 84 00:04:38,960 --> 00:04:41,960 Speaker 1: SMP down two point three percent. Clearly markets are taking 85 00:04:42,000 --> 00:04:45,320 Speaker 1: this as a negative sign when it comes to global growth. 86 00:04:45,680 --> 00:04:48,960 Speaker 1: But just to take a bigger historical perspective, as you're 87 00:04:49,000 --> 00:04:51,960 Speaker 1: so good at doing matt, you know, what is the 88 00:04:52,080 --> 00:04:56,000 Speaker 1: chance that this tip for tat becomes something more and 89 00:04:56,200 --> 00:05:01,679 Speaker 1: escalates into something that's potentially even uh military high chance. 90 00:05:01,720 --> 00:05:03,920 Speaker 1: I mean, I think actually we'll see saber rattling in 91 00:05:03,960 --> 00:05:05,920 Speaker 1: the immediate term. And the reason for that is that 92 00:05:06,360 --> 00:05:09,279 Speaker 1: the breakdown in US China relations has been taking place 93 00:05:09,360 --> 00:05:13,120 Speaker 1: since the financial crisis. We have clearly moved beyond the 94 00:05:13,160 --> 00:05:16,120 Speaker 1: period from nine to two thousand and eight where we 95 00:05:16,240 --> 00:05:18,600 Speaker 1: had this huge day tent between US and China, which 96 00:05:18,640 --> 00:05:22,400 Speaker 1: was driven by the Cold War and China's industrialization. Now 97 00:05:22,640 --> 00:05:25,600 Speaker 1: China is a near peer competitor to the United States, 98 00:05:26,000 --> 00:05:29,159 Speaker 1: and as I mentioned, technologically, China is gaining on the 99 00:05:29,200 --> 00:05:31,880 Speaker 1: US and threatening the US over the long run, which 100 00:05:32,160 --> 00:05:35,000 Speaker 1: is the ultimate determiner of the power of nations. So 101 00:05:35,080 --> 00:05:39,599 Speaker 1: the U S is strategically rotating to Asia Pacific, regardless 102 00:05:39,600 --> 00:05:43,120 Speaker 1: of the administration or political party. And and China, of 103 00:05:43,160 --> 00:05:46,479 Speaker 1: course is feeling the heat. They're feeling contained, and they've 104 00:05:46,520 --> 00:05:48,839 Speaker 1: got a slowing economy now on a again on a 105 00:05:48,880 --> 00:05:53,160 Speaker 1: secular level. Uh, and that's going to cause them to 106 00:05:53,240 --> 00:05:57,160 Speaker 1: indulge in nationalism and uh. And these two things combined 107 00:05:57,720 --> 00:06:01,480 Speaker 1: mean that these two countries will continue to see sanctions, caraffs. 108 00:06:01,960 --> 00:06:05,360 Speaker 1: It's a persistent threat and saber rattling in the near 109 00:06:05,480 --> 00:06:08,920 Speaker 1: seas of China. So, Matt, I think one of the 110 00:06:09,400 --> 00:06:12,919 Speaker 1: issues that President Trump has introduced recently as the talks 111 00:06:12,960 --> 00:06:16,200 Speaker 1: seem to have kind of broken down between US and China, 112 00:06:16,320 --> 00:06:19,640 Speaker 1: is that maybe any type of meaningful negotiation will be 113 00:06:19,680 --> 00:06:24,280 Speaker 1: pushed beyond the presidential election. Is that a reasonable view? 114 00:06:24,279 --> 00:06:28,320 Speaker 1: And your in your thought, we have actually consistently argued 115 00:06:28,400 --> 00:06:31,040 Speaker 1: that China's best play is to wait until after the election. 116 00:06:31,080 --> 00:06:32,919 Speaker 1: It it just doesn't do them good to commit to 117 00:06:33,680 --> 00:06:38,680 Speaker 1: publicly to irreversible structural reforms that could heighten domestic economic 118 00:06:38,760 --> 00:06:41,919 Speaker 1: risks for China before even knowing the outcome of the 119 00:06:42,000 --> 00:06:45,520 Speaker 1: US presidential election. So I think they're playing the long game, 120 00:06:45,839 --> 00:06:49,120 Speaker 1: as is well known about China, but even specifically, Trump 121 00:06:49,160 --> 00:06:51,400 Speaker 1: is playing a very short game and they're taking advantage 122 00:06:51,400 --> 00:06:53,760 Speaker 1: of that. And it's one reason why the Trump administration 123 00:06:54,400 --> 00:06:58,320 Speaker 1: has has become angry. But also, of course Trump has 124 00:06:58,360 --> 00:07:01,320 Speaker 1: ammunition because, as I mentioned, the market, you know, it 125 00:07:01,360 --> 00:07:04,000 Speaker 1: climbs the wall of worry with the tariffs thus far, 126 00:07:04,080 --> 00:07:06,080 Speaker 1: and that gave him the ammunition to decide to go 127 00:07:06,160 --> 00:07:08,280 Speaker 1: all the way. Now he has to try to do 128 00:07:08,360 --> 00:07:10,320 Speaker 1: damage control and make sure he doesn't create a bear 129 00:07:10,440 --> 00:07:12,880 Speaker 1: market which could lead to a recession and get him 130 00:07:12,920 --> 00:07:15,400 Speaker 1: kicked out of office. Matt Gerkin, thank you so much 131 00:07:15,400 --> 00:07:18,640 Speaker 1: for joining us. Matt's a geopolitical strategists at bc A 132 00:07:18,680 --> 00:07:22,760 Speaker 1: research based on Montreal, Quebec, giving us some very valuable 133 00:07:22,800 --> 00:07:25,800 Speaker 1: perspective on kind of the U. S. China negotiations, not 134 00:07:25,840 --> 00:07:27,320 Speaker 1: just hear what we're seeing right now, but kind a 135 00:07:27,360 --> 00:07:30,720 Speaker 1: little bit of a historical perspective and uh, just highlighting 136 00:07:30,920 --> 00:07:34,200 Speaker 1: the risk to the market today and maybe even bigger 137 00:07:34,280 --> 00:07:51,160 Speaker 1: risk going forward. Well. Trade negotiations are without question facing 138 00:07:51,280 --> 00:07:55,440 Speaker 1: new obstacles as President Trump increases tariffs once again and 139 00:07:55,560 --> 00:07:59,119 Speaker 1: the Chinese just allowing that you want to weaken below 140 00:07:59,160 --> 00:08:01,640 Speaker 1: the seven to one level to get a sense of 141 00:08:01,640 --> 00:08:04,600 Speaker 1: what that means for currencies going forward. We welcome Dr 142 00:08:04,640 --> 00:08:07,160 Speaker 1: Win Thin. He's a global head of currency strategy at 143 00:08:07,160 --> 00:08:09,760 Speaker 1: Brown Brothers Harriman in New York City joining us on 144 00:08:09,760 --> 00:08:12,760 Speaker 1: the phone. So Dr Thin, thanks so much for joining us. 145 00:08:13,120 --> 00:08:16,640 Speaker 1: Does it appear to you that the Chinese are weaponizing 146 00:08:17,000 --> 00:08:21,080 Speaker 1: the one? Uh? You know, the break of the seven 147 00:08:21,160 --> 00:08:24,520 Speaker 1: levels has always uh capture one attention. But I would 148 00:08:24,560 --> 00:08:28,080 Speaker 1: just say that there's nothing magical about this level. Uh. 149 00:08:28,080 --> 00:08:30,240 Speaker 1: The Chinese stories have come out in the past, and 150 00:08:30,240 --> 00:08:31,680 Speaker 1: they have come out today and saying they will not 151 00:08:31,760 --> 00:08:34,000 Speaker 1: weaponize the yawn, and I take them at the word 152 00:08:34,040 --> 00:08:37,120 Speaker 1: they We saw the disaster that the two thousand and 153 00:08:37,160 --> 00:08:40,440 Speaker 1: fifteen evaluation brought onto Chinese markets, so I think they 154 00:08:40,440 --> 00:08:42,840 Speaker 1: will shy away from that. The one thing I would 155 00:08:42,840 --> 00:08:45,400 Speaker 1: point out, and I read a nice correlation study using 156 00:08:45,760 --> 00:08:49,120 Speaker 1: your function on your Bloomberg the correlation between c N 157 00:08:49,320 --> 00:08:52,080 Speaker 1: y on shore you on and m S c I 158 00:08:52,360 --> 00:08:55,960 Speaker 1: E m f X has a basket of e MC currencies. 159 00:08:56,240 --> 00:08:59,240 Speaker 1: It's running my point eight two very very high correlation. 160 00:08:59,320 --> 00:09:02,200 Speaker 1: So what that's it's basically the Chine of the ways 161 00:09:02,200 --> 00:09:05,520 Speaker 1: are allowing you want to sort of reflect greater market 162 00:09:05,559 --> 00:09:07,720 Speaker 1: forces trading with the rest of EM rather than being 163 00:09:08,080 --> 00:09:11,080 Speaker 1: somewhat pegged. So okay, if you have the mixing paste 164 00:09:11,080 --> 00:09:13,600 Speaker 1: it down half one and half percent, two percent, you know, 165 00:09:13,640 --> 00:09:16,199 Speaker 1: the rest of em getting clovered. It's not it shouldn't 166 00:09:16,200 --> 00:09:18,640 Speaker 1: be surprised that the U want is trading along with it. 167 00:09:19,120 --> 00:09:22,080 Speaker 1: Certainly that's the case. However, I do have to push 168 00:09:22,120 --> 00:09:24,839 Speaker 1: back a little bit because this the value or the 169 00:09:25,840 --> 00:09:28,240 Speaker 1: weakening of the U N it is was not a 170 00:09:28,280 --> 00:09:32,760 Speaker 1: gradual issue. This was the decline was the most since 171 00:09:32,800 --> 00:09:36,160 Speaker 1: two thousand and fifteen for any single day. It was 172 00:09:36,200 --> 00:09:39,400 Speaker 1: a huge plunge, and it was a shift in the 173 00:09:39,440 --> 00:09:44,240 Speaker 1: pboc's rhetorics. So how do you sort of interpret that. Well, 174 00:09:44,280 --> 00:09:45,800 Speaker 1: I have to say, look at the rest of EM. 175 00:09:45,800 --> 00:09:49,360 Speaker 1: It's not like it's not happening. The vacuum, the emson 176 00:09:49,440 --> 00:09:53,280 Speaker 1: selling off since Wednesday when the Fed delivered a lesstubblished 177 00:09:53,320 --> 00:09:57,520 Speaker 1: than than expected cut. So you know, again, e M 178 00:09:57,559 --> 00:10:00,160 Speaker 1: has been under incredible pressures, not just you want look 179 00:10:00,160 --> 00:10:03,160 Speaker 1: at EM equities. It's pretty much the MSc i UH 180 00:10:03,360 --> 00:10:06,200 Speaker 1: e M has pretty much given up over three quarters 181 00:10:06,240 --> 00:10:09,680 Speaker 1: of this year's rally and getting back towards the January lows. 182 00:10:09,720 --> 00:10:12,280 Speaker 1: So you know, again there's a lot of moving parts. 183 00:10:12,280 --> 00:10:15,160 Speaker 1: I have sympathy what you're saying, but I really I 184 00:10:15,160 --> 00:10:16,880 Speaker 1: guess I'm trying to be a sort of note of 185 00:10:16,920 --> 00:10:21,120 Speaker 1: caution saying, Look, the Chinese responding in other ways. They've 186 00:10:21,280 --> 00:10:24,679 Speaker 1: for instance, there's reports that they've told the state importers 187 00:10:24,679 --> 00:10:27,960 Speaker 1: to stop buying US agricultural goods. Uh. And we know 188 00:10:28,080 --> 00:10:31,360 Speaker 1: that this trade truce was really not laughing very long, 189 00:10:31,480 --> 00:10:34,800 Speaker 1: So uh, what's happening? I think what the authorities are 190 00:10:34,800 --> 00:10:37,080 Speaker 1: trying to do in China is they're separating the effects 191 00:10:37,679 --> 00:10:40,880 Speaker 1: from the trade. I really do believe that that. Um, 192 00:10:41,040 --> 00:10:42,880 Speaker 1: they don't want to let the genie out of bottle. 193 00:10:42,960 --> 00:10:45,559 Speaker 1: We we saw what happened back into downs between massive 194 00:10:45,559 --> 00:10:50,240 Speaker 1: capital outflows out of China, very destabilizing, UM when they devalued. 195 00:10:50,320 --> 00:10:51,959 Speaker 1: I don't think they want to go down that road again. 196 00:10:52,280 --> 00:10:55,319 Speaker 1: So dr then, is there any sense of where the 197 00:10:55,480 --> 00:10:59,000 Speaker 1: Uuan could go? Here? I mean, we're in very uncharted territory. 198 00:10:59,000 --> 00:11:01,320 Speaker 1: It's been a you know a long time since we've 199 00:11:01,360 --> 00:11:03,640 Speaker 1: seen this thing get off the seven peg. Any sense 200 00:11:03,640 --> 00:11:07,760 Speaker 1: of where this could go? Sure? Uh? And I again, 201 00:11:07,760 --> 00:11:09,560 Speaker 1: I'm gonna go take it from my lens of sort 202 00:11:09,559 --> 00:11:13,280 Speaker 1: of the wider um e M. I'm very negative on 203 00:11:13,360 --> 00:11:17,599 Speaker 1: him as long as he's trade pensions continue. Um. You know, 204 00:11:17,679 --> 00:11:21,079 Speaker 1: EM is very very vulnerable, not not only the commodities 205 00:11:21,080 --> 00:11:23,559 Speaker 1: but also the Asian exporters in the China supply chain. 206 00:11:23,600 --> 00:11:25,960 Speaker 1: So I'm very very negative EM. And because I'm negative 207 00:11:25,960 --> 00:11:29,200 Speaker 1: on EM effects given that point eight to correlation, I'm 208 00:11:29,240 --> 00:11:32,360 Speaker 1: also very negative on on nuance. So I think it'll 209 00:11:32,400 --> 00:11:35,720 Speaker 1: have a seven handle and we'll go up towards seven 210 00:11:35,720 --> 00:11:38,240 Speaker 1: and a half. Um. Again, there's nothing magical about the 211 00:11:38,240 --> 00:11:41,560 Speaker 1: seven level. It's it's it's psychologically it may be important, 212 00:11:41,600 --> 00:11:45,920 Speaker 1: but um, you know, basically the stories of have pledged 213 00:11:45,960 --> 00:11:50,160 Speaker 1: to allow greater market forces for the exchange way, and 214 00:11:50,240 --> 00:11:52,880 Speaker 1: ironically that's what they're doing, and ironically that's what the 215 00:11:52,960 --> 00:11:55,320 Speaker 1: US is probably going to complain about. Now. You know, 216 00:11:55,320 --> 00:11:59,480 Speaker 1: we've always had Mr Trump, I think, tweet about currency manipulation, etcetera. 217 00:11:59,520 --> 00:12:03,760 Speaker 1: But and yes, exactly again, I say, look, this is 218 00:12:03,880 --> 00:12:06,520 Speaker 1: it's not manipulating. This is this is this the market work. 219 00:12:06,600 --> 00:12:09,679 Speaker 1: This is the markets being very negulenting him. This is 220 00:12:09,720 --> 00:12:12,040 Speaker 1: actually a really good point in. Jonathan Farrow was going 221 00:12:12,080 --> 00:12:14,800 Speaker 1: on about it this morning about how this is not 222 00:12:14,920 --> 00:12:18,959 Speaker 1: as assarily China devaluing the UN and is allowing the 223 00:12:19,080 --> 00:12:23,120 Speaker 1: UN to just sort of fluctuate and exist within its 224 00:12:23,160 --> 00:12:26,400 Speaker 1: market forces. So, uh, the fact that you're reiterating that 225 00:12:26,559 --> 00:12:30,160 Speaker 1: is an important and powerful point I am wondering going forward. 226 00:12:30,200 --> 00:12:32,559 Speaker 1: I remember once upon a time people used to talk 227 00:12:32,559 --> 00:12:35,280 Speaker 1: about central banks and sort of the reaction function there, 228 00:12:35,280 --> 00:12:38,719 Speaker 1: and certainly even President Trump saying, uh, you know, as 229 00:12:38,760 --> 00:12:41,760 Speaker 1: anyone look at currency manipulation, Hey is the Fed watching? 230 00:12:42,240 --> 00:12:44,960 Speaker 1: Do you think that this will induce the Fed two 231 00:12:45,040 --> 00:12:48,360 Speaker 1: cut rates further in order to weaken the dollar or 232 00:12:48,440 --> 00:12:52,920 Speaker 1: for example, the e c B as well. Well, that's 233 00:12:52,960 --> 00:12:55,319 Speaker 1: a very good question, and let me take this two 234 00:12:55,360 --> 00:13:01,480 Speaker 1: things separately. Um said, Uh, it runs monetary policy for 235 00:13:01,520 --> 00:13:04,360 Speaker 1: the for the U. S. Economy, but it's it's been 236 00:13:04,400 --> 00:13:07,480 Speaker 1: taking on a greater focus on quote unquote international and 237 00:13:07,559 --> 00:13:10,439 Speaker 1: global factors. We know that, you know, twenty years ago 238 00:13:11,400 --> 00:13:13,920 Speaker 1: global factor would barely get mentioned, but it's obviously clear 239 00:13:13,920 --> 00:13:17,160 Speaker 1: and they started under yelling that that international and global 240 00:13:17,200 --> 00:13:20,520 Speaker 1: conditions are very big important part of the fans reaction function. 241 00:13:20,559 --> 00:13:23,560 Speaker 1: Now Mr Power setted himself yet last week he said, look, 242 00:13:23,559 --> 00:13:26,280 Speaker 1: we're the biggest thing that we are uncertain about is 243 00:13:26,280 --> 00:13:27,880 Speaker 1: is the trade war. We don't know how to deal 244 00:13:27,880 --> 00:13:29,560 Speaker 1: with this. This is a very uncharted territory. And he 245 00:13:29,559 --> 00:13:31,840 Speaker 1: admitted that. And I think that's that's said. I would 246 00:13:31,840 --> 00:13:33,800 Speaker 1: admit the same thing for US analysts. That's it's it's 247 00:13:33,800 --> 00:13:36,559 Speaker 1: hard to analyze what the dollar it should be doing 248 00:13:36,600 --> 00:13:41,160 Speaker 1: within this context. That said, the Mr Power gave him 249 00:13:41,160 --> 00:13:44,280 Speaker 1: once uh by cutting race and he was I thought 250 00:13:44,679 --> 00:13:46,599 Speaker 1: on target when he said, look, let's see how the 251 00:13:46,679 --> 00:13:50,880 Speaker 1: data come in. UM. Think the markets, your your w 252 00:13:51,000 --> 00:13:54,640 Speaker 1: I r P page is showing chance of a cut 253 00:13:54,720 --> 00:13:58,120 Speaker 1: in September. UM, and I think that overstates the case. 254 00:13:58,120 --> 00:13:59,640 Speaker 1: I also think I would also point out that the 255 00:13:59,679 --> 00:14:01,839 Speaker 1: fret in the futures market is pricing in three more 256 00:14:01,880 --> 00:14:04,719 Speaker 1: cuts now by the end of the year. Uh. That 257 00:14:04,840 --> 00:14:07,440 Speaker 1: to me is like a recession those settings. I don't 258 00:14:07,440 --> 00:14:10,640 Speaker 1: think we're there yet. Obviously, recession risk has risen, but 259 00:14:10,800 --> 00:14:14,079 Speaker 1: I don't think the Fed is is panicking yet. Um. 260 00:14:14,200 --> 00:14:16,040 Speaker 1: Then you know you over the whole candle worms is 261 00:14:16,280 --> 00:14:18,720 Speaker 1: are they giving into the try Mr Trump and Trump 262 00:14:18,760 --> 00:14:21,720 Speaker 1: doing this on purpose? It's it's really crazy. Um. Yeah, 263 00:14:21,720 --> 00:14:23,360 Speaker 1: there's a lot of a lot of angles here that 264 00:14:23,680 --> 00:14:25,960 Speaker 1: everybody needs to try to get a hand along. Uh. 265 00:14:26,080 --> 00:14:28,120 Speaker 1: Dr Winton, thanks so much. We're gonna have to leave 266 00:14:28,120 --> 00:14:31,040 Speaker 1: it there. Dr Winton, Global head of Currency Strategy of 267 00:14:31,080 --> 00:14:34,360 Speaker 1: Brown Brothers Harriman in New York City, joining us on 268 00:14:34,400 --> 00:14:54,640 Speaker 1: the phone. Well, according to our next guest, the connection 269 00:14:54,680 --> 00:14:58,080 Speaker 1: between Trump and uncertainty and financial market angst has become 270 00:14:58,360 --> 00:15:03,200 Speaker 1: very clear, oddly, making trunks digital communications a leading economic indicator. 271 00:15:03,600 --> 00:15:06,040 Speaker 1: To get the latest, Let's welcome our next guest, Ben Brightholds. 272 00:15:06,160 --> 00:15:09,360 Speaker 1: Ben is chief data scientists for Arbor Research and Trading 273 00:15:09,440 --> 00:15:13,360 Speaker 1: based in Chicago, Illinois. Ben, thanks so much for joining us. So, 274 00:15:13,400 --> 00:15:17,040 Speaker 1: as you point out, Trump's tweets clearly impact the markets. 275 00:15:17,080 --> 00:15:19,040 Speaker 1: Can just give us a sense of kind of what 276 00:15:19,120 --> 00:15:22,280 Speaker 1: you think the relationship is and maybe how investors are 277 00:15:22,360 --> 00:15:26,880 Speaker 1: are using this data. Yes, so what we're doing here 278 00:15:26,960 --> 00:15:29,760 Speaker 1: is some you know, some fancy natural language processing of 279 00:15:29,760 --> 00:15:32,960 Speaker 1: Trump's tweets that initially started out as really me having 280 00:15:33,080 --> 00:15:35,840 Speaker 1: fun with the data about a year ago or so. 281 00:15:36,000 --> 00:15:40,080 Speaker 1: But ever since his uncertainty level measured via his tweets 282 00:15:40,080 --> 00:15:43,040 Speaker 1: and the natural language processing and sentiment became so negative, 283 00:15:43,080 --> 00:15:46,480 Speaker 1: we saw it start to actually impact not only what 284 00:15:46,680 --> 00:15:50,320 Speaker 1: consumers and businesses are concerned about, but also Marcus now 285 00:15:50,360 --> 00:15:52,880 Speaker 1: for the first time starting around May of this year, 286 00:15:53,280 --> 00:15:58,000 Speaker 1: and we saw a heightened connection really between the rise 287 00:15:58,080 --> 00:16:01,720 Speaker 1: and uncertainty across numerous topic be a trade, financial markets, 288 00:16:01,720 --> 00:16:05,160 Speaker 1: and now currencies. And what happened a week to two 289 00:16:05,200 --> 00:16:10,520 Speaker 1: weeks later and be it the SMP five or one 290 00:16:10,520 --> 00:16:12,920 Speaker 1: of the tightest connections really is to the short end 291 00:16:13,000 --> 00:16:16,440 Speaker 1: of the treasury curve and really rate hype timing. Uh. 292 00:16:16,440 --> 00:16:20,520 Speaker 1: And with that heightened correlation, it's it's really made Trump's 293 00:16:20,600 --> 00:16:24,720 Speaker 1: digital communications an important leading indicator. And if I were 294 00:16:24,720 --> 00:16:28,120 Speaker 1: to rate it, it would be from impacting most really 295 00:16:28,200 --> 00:16:31,680 Speaker 1: treasuries at the moment, and um, now it's finally starting 296 00:16:31,720 --> 00:16:35,080 Speaker 1: to bleed into risk as then I love the image 297 00:16:35,240 --> 00:16:38,200 Speaker 1: of you at your computer, like ha ha ha. Wouldn't 298 00:16:38,240 --> 00:16:40,480 Speaker 1: this be fun to enter these words into a little 299 00:16:40,520 --> 00:16:43,040 Speaker 1: system and see what it. You know, it shoots out 300 00:16:43,120 --> 00:16:46,480 Speaker 1: bad or it shoots out you know, negative sentiment, and 301 00:16:46,520 --> 00:16:49,800 Speaker 1: then you know, you realize that it actually was Wow, 302 00:16:49,920 --> 00:16:53,400 Speaker 1: actually a real indicator. So I'm wondering with respect to 303 00:16:53,480 --> 00:16:57,640 Speaker 1: its indications, how forward looking is it? So what we 304 00:16:57,840 --> 00:17:00,800 Speaker 1: found looking at cross correlations, which is just fancy for 305 00:17:00,920 --> 00:17:04,119 Speaker 1: moving around the window. And the lag or lead is 306 00:17:04,240 --> 00:17:08,320 Speaker 1: about a one to two week lead time with measuring 307 00:17:08,320 --> 00:17:11,879 Speaker 1: the uncertainty, and we do that by numerous different different topics. 308 00:17:11,920 --> 00:17:14,560 Speaker 1: So we look at things like the so called witch 309 00:17:14,600 --> 00:17:17,119 Speaker 1: hunt that's used a lot, and things like you know, 310 00:17:17,160 --> 00:17:19,439 Speaker 1: talks about democrats, and we remove a lot of that 311 00:17:19,480 --> 00:17:22,560 Speaker 1: try to getting down to the really what is important 312 00:17:22,560 --> 00:17:25,399 Speaker 1: from an economic standpoint, so the overall economy, the federal 313 00:17:25,440 --> 00:17:30,280 Speaker 1: reserve currencies, financial markets, and so on, and that grouping 314 00:17:30,840 --> 00:17:33,119 Speaker 1: has about a one a two week lead time on 315 00:17:33,520 --> 00:17:36,760 Speaker 1: most importantly rate hug timing short under the Treasury curve. 316 00:17:36,840 --> 00:17:39,639 Speaker 1: And now we're starting to see the same thing within 317 00:17:39,960 --> 00:17:42,760 Speaker 1: SMP five hundred and and the VIX. So I think 318 00:17:42,760 --> 00:17:46,239 Speaker 1: it's been a slow move, whereas in May of this 319 00:17:46,320 --> 00:17:49,160 Speaker 1: year where we got this big burst in negative sentiment 320 00:17:49,240 --> 00:17:54,160 Speaker 1: from Trump's tweets that started to impact mostly the Treasury curve. 321 00:17:54,400 --> 00:17:58,520 Speaker 1: And but that is now finally as businesses are indicating 322 00:17:58,560 --> 00:18:02,879 Speaker 1: that they are getting um hurt un evidence by s 323 00:18:03,040 --> 00:18:05,880 Speaker 1: M I s M non Manufacturing this this morning, as 324 00:18:05,920 --> 00:18:10,080 Speaker 1: well as numerous other surveys UM via the different regional 325 00:18:10,080 --> 00:18:13,960 Speaker 1: Fed surveys that is finally starting to really deteriorate and 326 00:18:14,000 --> 00:18:16,600 Speaker 1: show that it could end up hitting the real economy. 327 00:18:16,680 --> 00:18:19,440 Speaker 1: And the problem is economic data in the US has 328 00:18:19,480 --> 00:18:22,919 Speaker 1: been coming in below average, and everyone's been hopeful for 329 00:18:23,000 --> 00:18:26,960 Speaker 1: this rebound, but I think this added uncertainty is is 330 00:18:27,000 --> 00:18:31,840 Speaker 1: really starting to wear on investors minds. It's interesting here Bloomberg. 331 00:18:31,840 --> 00:18:33,840 Speaker 1: I mean, even on the Bloomberg terminal, you can type 332 00:18:33,840 --> 00:18:35,399 Speaker 1: in tweets by Trump and now I'll give you a 333 00:18:35,400 --> 00:18:37,640 Speaker 1: listing of all the tweets, and or you can set 334 00:18:37,720 --> 00:18:39,920 Speaker 1: up an alert to have any time the president tweets, 335 00:18:39,920 --> 00:18:42,600 Speaker 1: you can get a message or an ib So investors 336 00:18:42,680 --> 00:18:45,800 Speaker 1: clearly looking for this information. Ben, have you gotten a 337 00:18:45,920 --> 00:18:49,919 Speaker 1: sense of maybe how investors are in fact using some 338 00:18:50,080 --> 00:18:55,520 Speaker 1: of the Trump tweets into their investment process. Yeah, so 339 00:18:55,560 --> 00:18:57,600 Speaker 1: that's I mean, that's what we do UM here at 340 00:18:57,640 --> 00:18:59,840 Speaker 1: Arbor Research and Trading has helped provide a lot of 341 00:18:59,840 --> 00:19:02,760 Speaker 1: this content and data. And what we found is that 342 00:19:02,800 --> 00:19:04,840 Speaker 1: there are those that are in putting this into their 343 00:19:04,880 --> 00:19:09,200 Speaker 1: own be at modeling capabilities or models that that kick 344 00:19:09,240 --> 00:19:12,840 Speaker 1: out their actual trading signals or ideas and then also 345 00:19:12,880 --> 00:19:15,720 Speaker 1: subject to you know, from a subjective standpoint in terms 346 00:19:15,720 --> 00:19:19,640 Speaker 1: of gauging risk that is now arising in this market. 347 00:19:19,800 --> 00:19:22,760 Speaker 1: They're pulling this information and just like we aren't connecting 348 00:19:22,800 --> 00:19:26,440 Speaker 1: it to be at volatility like the VIX or volatility 349 00:19:26,440 --> 00:19:29,000 Speaker 1: of treasuries and so on in order to get to 350 00:19:29,040 --> 00:19:32,199 Speaker 1: gauge for how much that is actually impacting the market. So, 351 00:19:32,400 --> 00:19:36,040 Speaker 1: case in point, the US tenure note yield is down 352 00:19:36,160 --> 00:19:39,560 Speaker 1: to one seventy six, about twenty six basis points on 353 00:19:39,600 --> 00:19:42,960 Speaker 1: a month of a month basis, looking back about a month, 354 00:19:43,040 --> 00:19:45,679 Speaker 1: and we can attribute about sixteen basis points of that 355 00:19:45,720 --> 00:19:48,960 Speaker 1: twenty six basis point drop to this Trump and uncertainty 356 00:19:49,280 --> 00:19:52,080 Speaker 1: via just some simple modeling of taking all this uncertainty 357 00:19:52,080 --> 00:19:55,959 Speaker 1: measures and connecting it with major economic data releases. And 358 00:19:56,040 --> 00:19:58,200 Speaker 1: so it is having an impact and I think being 359 00:19:58,240 --> 00:20:01,000 Speaker 1: able to gauge how much it is impacting markets and 360 00:20:01,040 --> 00:20:03,400 Speaker 1: then what that lead time is um You know, it's 361 00:20:03,400 --> 00:20:06,120 Speaker 1: important for investors, and we're seeing that because the equity 362 00:20:06,160 --> 00:20:08,400 Speaker 1: markets for the first time in a long time are 363 00:20:08,400 --> 00:20:12,000 Speaker 1: finally being impacted by by this so called Trumpian uncertainty. 364 00:20:12,160 --> 00:20:16,879 Speaker 1: So what exactly does a data word processing function look like? 365 00:20:17,000 --> 00:20:20,720 Speaker 1: What's it looking for? Has it? Has it? Great things? Sure. 366 00:20:20,760 --> 00:20:23,760 Speaker 1: So what it does is within natural language processing, the 367 00:20:23,840 --> 00:20:27,240 Speaker 1: key is a dictionary or you know, so called a lexicon, 368 00:20:27,840 --> 00:20:31,119 Speaker 1: and what you know is a practitioner here. What we 369 00:20:31,160 --> 00:20:33,359 Speaker 1: need to do is go out and find those words 370 00:20:33,400 --> 00:20:36,480 Speaker 1: that have the meaning that you think they do um 371 00:20:36,720 --> 00:20:39,440 Speaker 1: and contextually. So what we do is work with a 372 00:20:39,520 --> 00:20:43,120 Speaker 1: variation of something called the law Law Frun McDonald lexicon, 373 00:20:43,200 --> 00:20:45,920 Speaker 1: which is very financial based, meaning that will have low 374 00:20:46,000 --> 00:20:49,679 Speaker 1: misclassification rates in picking up words, for example, that are 375 00:20:50,240 --> 00:20:53,760 Speaker 1: mean uncertainty um, and they really do mean uncertainty in 376 00:20:53,800 --> 00:20:56,199 Speaker 1: the financial standpoint. So that can be simple things like 377 00:20:56,240 --> 00:21:01,400 Speaker 1: picking up on words of uncertain confusion, unproductable, and words 378 00:21:01,520 --> 00:21:06,640 Speaker 1: like this, and then basically scoring them um on their 379 00:21:06,680 --> 00:21:10,240 Speaker 1: frequency that as they exist, and then contextually how they 380 00:21:10,280 --> 00:21:13,840 Speaker 1: exist within a given statement, be it a um, you know, 381 00:21:13,840 --> 00:21:17,840 Speaker 1: a paragraph, or even just an individual you know, set comment. 382 00:21:18,200 --> 00:21:21,199 Speaker 1: So those get summed up um with each day or 383 00:21:21,240 --> 00:21:24,399 Speaker 1: each tweet, and then we're looking essentially at that aggregate 384 00:21:24,600 --> 00:21:26,840 Speaker 1: to get a flavor for how much uncertainty or if 385 00:21:26,880 --> 00:21:29,680 Speaker 1: it's a sentiment, we're looking for how negative or positive 386 00:21:29,720 --> 00:21:34,520 Speaker 1: it is is Trump or whoever. We're measuring using words 387 00:21:34,560 --> 00:21:38,199 Speaker 1: that are favorable or unfavorable towards their target of what 388 00:21:38,240 --> 00:21:40,919 Speaker 1: they're talking about. And again that's all summed up with 389 00:21:41,320 --> 00:21:44,119 Speaker 1: a kind of a simple scoring mechanism to get to 390 00:21:44,160 --> 00:21:47,280 Speaker 1: an aggregate number to then measure quantitatively so we can 391 00:21:47,359 --> 00:21:49,440 Speaker 1: use this information. Ben bright Holds, thank you so much 392 00:21:49,440 --> 00:21:51,680 Speaker 1: for being with us. Really appreciate it. Ben bright Holds 393 00:21:51,800 --> 00:21:55,200 Speaker 1: is a data scientist, chief data scientist at Harbor Research 394 00:21:55,280 --> 00:21:58,879 Speaker 1: and treading talking about how not only does President Trump tweet, 395 00:21:58,920 --> 00:22:00,960 Speaker 1: but now you can measure it and put it into 396 00:22:01,000 --> 00:22:04,119 Speaker 1: your algorithm and trade off it, which is sort of, uh, 397 00:22:04,480 --> 00:22:07,399 Speaker 1: you know, this is something that people have increasingly been doing, 398 00:22:07,720 --> 00:22:09,760 Speaker 1: and the question is just what does it actually indicate. 399 00:22:09,760 --> 00:22:11,959 Speaker 1: The idea that it's got a pretty close correlation with 400 00:22:12,080 --> 00:22:17,240 Speaker 1: rates shouldn't necessarily be entirely surprising given how trained his 401 00:22:17,280 --> 00:22:35,320 Speaker 1: focus has been on the Federal Reserve. President Trump giving 402 00:22:35,359 --> 00:22:38,920 Speaker 1: comments at the White House following the deadly shootings over 403 00:22:38,960 --> 00:22:43,639 Speaker 1: the weekend UH that took the lives of twenty nine people. 404 00:22:44,000 --> 00:22:48,560 Speaker 1: President Trump proposing a number of measures in response, saying 405 00:22:49,000 --> 00:22:52,199 Speaker 1: that there is a need for a bipartisan solution to 406 00:22:52,320 --> 00:22:57,480 Speaker 1: identify an act early on warning signs. He really indicated 407 00:22:57,520 --> 00:23:00,440 Speaker 1: an intention to work with social media companies and put 408 00:23:00,680 --> 00:23:03,959 Speaker 1: part of the onus on them. He also talked about 409 00:23:04,160 --> 00:23:06,919 Speaker 1: video games, which is sort of interesting to see what 410 00:23:06,960 --> 00:23:09,160 Speaker 1: he might do there. And then of course mental health, 411 00:23:09,280 --> 00:23:16,280 Speaker 1: calling the perpetrators of the senseless crimes as mentally ill monsters. 412 00:23:16,359 --> 00:23:18,479 Speaker 1: Joining us down to talk about what the potential policy 413 00:23:18,520 --> 00:23:22,280 Speaker 1: implications are of his comments, Frank Wilkinson, Bloeberg Opinion editor 414 00:23:22,280 --> 00:23:25,240 Speaker 1: and Anna Edverton, Bloomberg Coggressional reporter. Frank, I want to 415 00:23:25,280 --> 00:23:28,439 Speaker 1: start with you what stood out the most. What stood 416 00:23:28,440 --> 00:23:30,880 Speaker 1: out the most to me was that he actually did 417 00:23:30,920 --> 00:23:34,320 Speaker 1: what he needed to do, which for him, he needed 418 00:23:34,400 --> 00:23:39,240 Speaker 1: to denounce racism, and he did that very clearly up 419 00:23:39,280 --> 00:23:42,919 Speaker 1: in the beginning. He said the words white supremacy. Uh. 420 00:23:43,040 --> 00:23:45,960 Speaker 1: So you know that was a step for him. That 421 00:23:46,040 --> 00:23:48,960 Speaker 1: was the most important thing he did. I don't, frankly 422 00:23:49,119 --> 00:23:55,400 Speaker 1: take the policy uh solutions offered as anything even remotely serious, 423 00:23:56,080 --> 00:23:59,520 Speaker 1: but the cultural concession that he made at the beginning 424 00:23:59,640 --> 00:24:03,480 Speaker 1: about racism was important and I think it will help 425 00:24:03,560 --> 00:24:06,000 Speaker 1: him and I agretain. We want to bring you in 426 00:24:06,040 --> 00:24:09,240 Speaker 1: and get your thoughts on the per perhaps some policy 427 00:24:09,280 --> 00:24:12,399 Speaker 1: implications here. UH, give us just give us a sense 428 00:24:12,440 --> 00:24:17,600 Speaker 1: of where you think, uh, any type of gun legislation 429 00:24:17,960 --> 00:24:20,439 Speaker 1: um might be right now, what the future could be. 430 00:24:21,119 --> 00:24:23,159 Speaker 1: There are two bills that the Democratic led House of 431 00:24:23,200 --> 00:24:26,359 Speaker 1: Representatives has passed this year. They passed h R eight, 432 00:24:26,359 --> 00:24:29,280 Speaker 1: which would close the so called gun show loophole, which 433 00:24:29,440 --> 00:24:33,280 Speaker 1: would require background checks for all gun purchases, including a 434 00:24:33,359 --> 00:24:36,000 Speaker 1: gun shows and online. The other bill that they passed 435 00:24:36,119 --> 00:24:38,960 Speaker 1: was called HR one twelve. They closes the so called 436 00:24:39,000 --> 00:24:44,080 Speaker 1: Charleston loophole, which makes it mandatory for any background check 437 00:24:44,400 --> 00:24:47,600 Speaker 1: to have at least twenty days to be completed before 438 00:24:48,119 --> 00:24:51,920 Speaker 1: the gun purchase is completed. Now that's currently three days, 439 00:24:51,960 --> 00:24:54,480 Speaker 1: which was how the shooter at the Charleston church years 440 00:24:54,480 --> 00:24:57,800 Speaker 1: ago was able to purchase a gun. Those bills have 441 00:24:57,880 --> 00:24:59,880 Speaker 1: been passed by the House of Representatives and have not 442 00:25:00,040 --> 00:25:03,280 Speaker 1: been taken up by the Republican led Senate. So if 443 00:25:03,320 --> 00:25:07,760 Speaker 1: there were to be very bipartisan, common sense gun control 444 00:25:07,800 --> 00:25:11,399 Speaker 1: legislation that's ready to go today, it would be those 445 00:25:11,440 --> 00:25:15,520 Speaker 1: two bills. The President notably didn't mention those bills or 446 00:25:15,560 --> 00:25:18,919 Speaker 1: any proposals that even resemble those bills. He did step 447 00:25:19,000 --> 00:25:21,199 Speaker 1: forward to say that red flag laws could be on 448 00:25:21,240 --> 00:25:23,280 Speaker 1: the table, which was something that came up in response 449 00:25:23,320 --> 00:25:26,640 Speaker 1: to Parkland and certainly would be welcomed by gun control advocates, 450 00:25:26,680 --> 00:25:30,480 Speaker 1: but is certainly seen as not um, not adequate to 451 00:25:30,560 --> 00:25:34,000 Speaker 1: respond to this, to this violence in our country. Frank, 452 00:25:34,320 --> 00:25:36,320 Speaker 1: I want to go back to your point, because it 453 00:25:36,359 --> 00:25:38,880 Speaker 1: really stands out to me that the most important thing, 454 00:25:38,960 --> 00:25:41,879 Speaker 1: from your perspective is less the policy proposals that may 455 00:25:41,960 --> 00:25:45,840 Speaker 1: or may not really be developed upon, but rather President 456 00:25:45,880 --> 00:25:50,440 Speaker 1: Trump's decision to denounce white supremacy and talk about white 457 00:25:50,440 --> 00:25:53,480 Speaker 1: supremacy and racism in one breath in his words. And 458 00:25:53,520 --> 00:25:57,159 Speaker 1: I'm wondering, why do you think he changed, because he 459 00:25:57,240 --> 00:26:01,080 Speaker 1: has sort of avoided could deemning this in the past. 460 00:26:01,640 --> 00:26:07,200 Speaker 1: He has very clearly and um, it's beginning to cost him. 461 00:26:07,240 --> 00:26:10,320 Speaker 1: That's one reason. Uh. So we have political costs in 462 00:26:10,359 --> 00:26:14,280 Speaker 1: a lot of American suburbs where white women in particular 463 00:26:14,800 --> 00:26:19,040 Speaker 1: are expressing some very strong discomfort with him on the 464 00:26:19,040 --> 00:26:22,560 Speaker 1: issue of race. And uh we have had, of course 465 00:26:22,600 --> 00:26:26,639 Speaker 1: the last couple of weeks where he used quite inflammatory 466 00:26:26,760 --> 00:26:31,040 Speaker 1: language to denounce four members of Congress and then subsequently 467 00:26:31,080 --> 00:26:35,560 Speaker 1: denounced another member of Congress, all of whom we're non white. Um, 468 00:26:35,600 --> 00:26:41,360 Speaker 1: there's not really a debate anymore among most people about 469 00:26:41,560 --> 00:26:44,560 Speaker 1: what his strategy is, and in fact, some of his 470 00:26:44,640 --> 00:26:48,679 Speaker 1: White House staff have been fairly explicit about it. So, 471 00:26:49,200 --> 00:26:52,680 Speaker 1: you know, for him to to come out and say, Okay, 472 00:26:52,720 --> 00:26:55,879 Speaker 1: I am drawing a line. I am not going to 473 00:26:56,000 --> 00:26:59,280 Speaker 1: wink at white supremacy in this case. I'm not going 474 00:26:59,359 --> 00:27:01,960 Speaker 1: to you know, just kind of nudge nudge as I 475 00:27:02,000 --> 00:27:04,959 Speaker 1: have in the past. I'm actually going to denounce it 476 00:27:06,000 --> 00:27:10,080 Speaker 1: because something has gone seriously too far. I think that's 477 00:27:10,119 --> 00:27:14,520 Speaker 1: an important development for him. So, Anna, what is the 478 00:27:14,680 --> 00:27:18,280 Speaker 1: sense in Washington right now about these bills that are 479 00:27:18,280 --> 00:27:21,960 Speaker 1: sitting on the Senate's uh floor or on the desk 480 00:27:22,000 --> 00:27:24,840 Speaker 1: of the senators. Will it in fact move forward or 481 00:27:25,280 --> 00:27:27,920 Speaker 1: will the events of this weekend perhaps you know, when 482 00:27:27,920 --> 00:27:31,640 Speaker 1: this Congress gets back maybe open up new negotiations. Well, 483 00:27:31,640 --> 00:27:33,360 Speaker 1: that's one thing I was looking for from the President's 484 00:27:33,400 --> 00:27:35,400 Speaker 1: speech today, whether or not he would show any openness 485 00:27:35,400 --> 00:27:38,800 Speaker 1: to these bills, and he didn't. And so that to 486 00:27:38,920 --> 00:27:41,439 Speaker 1: me says that Mitch McConnell has very little incentive to 487 00:27:41,480 --> 00:27:43,439 Speaker 1: actually take up these bills, and it's going to be 488 00:27:43,480 --> 00:27:46,480 Speaker 1: a very awkward position for the Senate majority leader. He 489 00:27:46,680 --> 00:27:50,040 Speaker 1: has taken great pride in declaring himself to be the 490 00:27:50,080 --> 00:27:53,480 Speaker 1: grim reaper of democratic legislation and that he has been 491 00:27:53,520 --> 00:27:55,840 Speaker 1: able to kill all bills that have been passed by 492 00:27:55,840 --> 00:27:58,639 Speaker 1: the House of Representatives. That's not playing well for him 493 00:27:58,720 --> 00:28:01,679 Speaker 1: right now, and the Republican led Senate is going to 494 00:28:01,760 --> 00:28:04,440 Speaker 1: come under a lot of pressure to do something besides 495 00:28:04,600 --> 00:28:11,480 Speaker 1: just approve the president's nominees for judicial positions. There could 496 00:28:11,520 --> 00:28:14,000 Speaker 1: be some negotiation and red flag laws. As the President 497 00:28:14,080 --> 00:28:17,879 Speaker 1: suggested this morning, he would like to pair gun legislation 498 00:28:18,040 --> 00:28:20,919 Speaker 1: with immigration reform, which is absolutely not going to happen. 499 00:28:21,280 --> 00:28:25,520 Speaker 1: They couldn't even get immigration reform that was supported by 500 00:28:25,880 --> 00:28:29,959 Speaker 1: Republicans through the Republican lead House, like Republicans couldn't get 501 00:28:30,000 --> 00:28:32,080 Speaker 1: on the same page about this, So to think that 502 00:28:32,080 --> 00:28:34,720 Speaker 1: that could be those two very controversial issues could be 503 00:28:34,720 --> 00:28:37,760 Speaker 1: paired together and become law is just absolutely not going 504 00:28:37,800 --> 00:28:42,560 Speaker 1: to happen in this Congress. Frank President Trump did mention guns, 505 00:28:42,600 --> 00:28:46,040 Speaker 1: saying that there should be rules to prevent people who 506 00:28:46,080 --> 00:28:49,640 Speaker 1: are at grave risk to public safety from getting access 507 00:28:49,680 --> 00:28:53,680 Speaker 1: to firearms and to allow law enforcement to seize them quickly, 508 00:28:53,800 --> 00:28:56,120 Speaker 1: just real quick. Do you think that there's anything in 509 00:28:56,160 --> 00:28:58,040 Speaker 1: that that has teeth or is that just sort of 510 00:28:58,040 --> 00:29:02,200 Speaker 1: flip service. I doubt it, And here's why, because of 511 00:29:02,240 --> 00:29:04,600 Speaker 1: the context it was in. I mean, when when you 512 00:29:04,640 --> 00:29:09,160 Speaker 1: start mentioning mental illness, which the United States has no 513 00:29:09,240 --> 00:29:12,720 Speaker 1: greater propensity than any other nation, when you start mentioning 514 00:29:12,880 --> 00:29:15,760 Speaker 1: video games, which Europe and Japan have just as much 515 00:29:15,800 --> 00:29:18,959 Speaker 1: as we do. Clearly, video games and mental illness are 516 00:29:19,040 --> 00:29:21,880 Speaker 1: not the issue that separates the United States from the 517 00:29:21,920 --> 00:29:24,880 Speaker 1: rest of the O E c D countries in terms 518 00:29:24,880 --> 00:29:28,440 Speaker 1: of guns. What separates us are our gun laws. And 519 00:29:28,480 --> 00:29:30,920 Speaker 1: if you're not going to address the gun laws and 520 00:29:30,960 --> 00:29:34,320 Speaker 1: you're bringing out these red herrings of mental illness and 521 00:29:34,480 --> 00:29:38,760 Speaker 1: UH and video games, that that's a different story. Frank Wilkinson, 522 00:29:38,920 --> 00:29:41,480 Speaker 1: UM Bloomberg Opinion Columns, thank you so much for joining 523 00:29:41,560 --> 00:29:43,440 Speaker 1: us here in our Bloomberg and Ractor Broker studio. And and 524 00:29:43,360 --> 00:29:46,479 Speaker 1: and Edgerton, congressional reporter from Bloomberg News, joining us from 525 00:29:47,280 --> 00:29:50,040 Speaker 1: studios in Washington in d C. Thanks for listening to 526 00:29:50,040 --> 00:29:52,480 Speaker 1: the Bloomberg P and L podcast. You can subscribe and 527 00:29:52,480 --> 00:29:55,640 Speaker 1: listen to interviews at Apple Podcasts or whatever podcast platform 528 00:29:55,680 --> 00:29:58,800 Speaker 1: you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney 529 00:29:58,840 --> 00:30:01,440 Speaker 1: and Lisa Brahm Woyd's I'm on Twitter at Lisa Abramo. 530 00:30:01,520 --> 00:30:03,920 Speaker 1: It's one before the podcast. You can always catch us 531 00:30:04,000 --> 00:30:05,600 Speaker 1: worldwide on Bloomberg Radio