Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you.
Speaker 1: Along with my co host Lisa Brahma wits. Each day
Speaker 1: we bring you the most noteworthy and useful interviews for
Speaker 1: you and your money. Whether at the grocery store or
Speaker 1: the trading floor. Find a Bloomberg penl podcast on Apple
Speaker 1: podcast or wherever you listen to podcasts, as well as
Speaker 1: at Bloomberg dot com. One share a price that's not
Speaker 1: entirely flatt ast Nike. Nike shares up about a quarter
Speaker 1: of a percentage point after Tiger Woods one yet again,
Speaker 1: although after more than ten years of a hiatus of
Speaker 1: winning a major golf tournament. Joining us now to talk
Speaker 1: about how this is wonderful news for his sponsors is
Speaker 1: Evan Novihi Williams joining us here in our Bloomberg Interactive
Speaker 1: Broker's Studios. So Evan, first, let's just talk about the
Speaker 1: number of sponsors who stuck with Tiger Woods through an
Speaker 1: incredibly tumultuous period. Who stuck with him? Who dropped away? Yeah,
Speaker 1: it's not a long list of companies, right, Nike is
Speaker 1: one of them, um and Upper Deck the st is
Speaker 1: the other one. So those are the only two that
Speaker 1: stuck with him. You have a long list of companies
Speaker 1: like A Center, A, T and T, Gillette, Gatorade, companies,
Speaker 1: Tag Hoyer that either dropped him or you know, refused
Speaker 1: to renew him when their sponsorship came up, right, So,
Speaker 1: so it's been ten long years for Tiger Woods and
Speaker 1: the company's backing him are a bit different, you know.
Speaker 1: So so Nike upper Deck are still there, Bridge Stone
Speaker 1: makes the balls he uses, Tailor Made makes the clubs
Speaker 1: he uses. Monster Energy is the logo on the bag
Speaker 1: for people who watched over the weekend. So it's a
Speaker 1: it's a kind of a whole different stable of of
Speaker 1: endorsers outside of Nike, you know, which has been the
Speaker 1: mainstay and the company that I think people you know
Speaker 1: most closely associate with Tiger. So have we been able
Speaker 1: to quantify what the impact was, Like what do those
Speaker 1: tigers you know, sponsorship income back in the day when
Speaker 1: he had those A listers too? Maybe today where maybe
Speaker 1: it's not so many, Yeah, it's not. He's certainly he's
Speaker 1: he's still making money off the course, obviously, you know, Um,
Speaker 1: his relationship with Nike was once a thirty million dollar
Speaker 1: a year relationship. That's changed a bit because Nike has
Speaker 1: you know, they no longer make golf equipment, so Nike
Speaker 1: doesn't make the ball and the clubs and the bag anymore. Um.
Speaker 1: And and yeah, he's probably not being paid, you know,
Speaker 1: in total what he was when he was making when
Speaker 1: it's sixty million dollars a year off the course. Um.
Speaker 1: But you know, he has a very successful course design business.
Speaker 1: He still has a number of sponsors that pay him well.
Speaker 1: I imagine the fact that he just won the Masters
Speaker 1: is not going to hurt him, uh in any regard
Speaker 1: in that way either. So you know, it's his portfolio
Speaker 1: is not what it used to be, but he's not
Speaker 1: struggling for cash right now. I'm curious, though, you know,
Speaker 1: beyond just Tiger Woods and Nike, I'm wondering what kind
Speaker 1: of audience, uh, these golf tournaments get because my understanding
Speaker 1: is that the population of people watching these has been
Speaker 1: going down and getting older. Yeah. It's funny. Ten years ago,
Speaker 1: you know, we we always talked about, you know, the
Speaker 1: Tiger bump. What happened, you know, the the amount of
Speaker 1: people that turned in just to watch golf only when
Speaker 1: Tiger Woods was playing well. And eleven years it we're
Speaker 1: having the same conversations. Golf is still reliant on this
Speaker 1: one athlete, and it's great for golf that he's back. Right,
Speaker 1: if you're the Golf Channel, if you're CBS, anyone who's
Speaker 1: going to televise a golf a professional golf tournament in
Speaker 1: the next couple of months, you are thrilled by what
Speaker 1: just happened because people are going to tune in to
Speaker 1: watch uh Tiger Woods to see if he can do
Speaker 1: this again. The bigger underlying issue is the sport still,
Speaker 1: you know, is reliant on a forty three year old
Speaker 1: with a bad back, who is who is not going
Speaker 1: to be this good in another eleven years. Right, there
Speaker 1: is a there is a finite end to Tiger woods dominance.
Speaker 1: It's amazing that he got back to this stage, but
Speaker 1: you know, you can make an argument that it's not
Speaker 1: great for golf that that he is still the number
Speaker 1: one biggest draw. Well, a lot of winners came out
Speaker 1: of yesterday's performance by Tiger Woods, but one of the losers,
Speaker 1: which is the sports betting business. You know what happened
Speaker 1: the book He's had the wrong side of this trade,
Speaker 1: and yeah, it's funny they you know, Tiger Woods, just
Speaker 1: because of his popularity is almost always the most bet
Speaker 1: golfer in the field. And when Tiger Woods was bad,
Speaker 1: that was a great, a great business opportunity for for
Speaker 1: sports books. And you know, now that he won, you
Speaker 1: know it was a bad business opportunity. The William Hill
Speaker 1: had a single bet that they paid out one point
Speaker 1: two million dollars on. It's the biggest single golf bet
Speaker 1: liability they've ever had taking bets in the US. FanDuel
Speaker 1: lost two million dollars. Draft Kings was out a million
Speaker 1: and a half. A lot of sports books took a
Speaker 1: big bath on this. Again, it doesn't come close to
Speaker 1: off setting the money they've made off of Tiger in
Speaker 1: the past ten years. Um. But yeah, in general, being
Speaker 1: a sports book is a pretty darn good business model.
Speaker 1: Occasionally you get burned by individual events, and this was
Speaker 1: certainly one that that burned them. Interesting, but thus, certainly
Speaker 1: a lot of winners yesterday, and uh, you know from
Speaker 1: the broadcast networks just just you know, to the sponsors,
Speaker 1: and you know, I won't be surprised at all to
Speaker 1: see some of those A list sponsors who left Tiger
Speaker 1: Woods when he had those troubles uh, come flocking back, um,
Speaker 1: because you know, you could just tell if you think
Speaker 1: about the uh, if you follow the game up off
Speaker 1: and you just kind of look at your Twitter feed
Speaker 1: or your Facebook. It was just exploding yesterday with Tiger
Speaker 1: Woods in contention at the Master. So it's a it's
Speaker 1: a whole another dynamic. As Evan was mentioning, so uh, Evan,
Speaker 1: we appreciated Evan Wi Williams and Bloomberg News bringing us
Speaker 1: the latest on everything that is Tiger Woods and golf.
Speaker 1: He is back. Well. We are right smack in the
Speaker 1: middle of earning season for the big banks. We had
Speaker 1: JP Morgan on Friday Today, Goldman, Sachs and City Group
Speaker 1: mixed bag across the board to dig in to some
Speaker 1: of these results of what it means for the big
Speaker 1: money center banks. We welcome Ken Leon Kenna's Global director
Speaker 1: of Industry and Equity Research at cfr A Research. He
Speaker 1: joins us on the phone from New York. So, Ken,
Speaker 1: thanks so much for joining us. What are some of
Speaker 1: the takeaways that you are seeing from some of these
Speaker 1: first wave of big bank earnings. JP Morgan headed out
Speaker 1: of the park. You know, the expectations for all these
Speaker 1: banks was dismal performance for the first quarter UM March
Speaker 1: really helped JP Morgan and it provides some glimmer of hope,
Speaker 1: you know for certainly City and Golden Sacks today. You know,
Speaker 1: the capital markets were from the government phrase really hurt
Speaker 1: the underwriting pipeline, both equity and debt, and the I
Speaker 1: p O market really just started to click in March.
Speaker 1: So we think what's unusual here is first quarter tends
Speaker 1: to be the strongest quarter for the banks UM and
Speaker 1: it looks to be a base quarter with improvement every quarter.
Speaker 1: In two thousand nineteen, Ken it seems like big US
Speaker 1: banks are being put to the test. How much can
Speaker 1: they diversify away from trading revenue because that has not
Speaker 1: been the driver that it once was. So can you
Speaker 1: give them a grade? How are they doing in terms
Speaker 1: of turning to advisor to the revenue or consumer consumer profitability?
Speaker 1: So the banks are pretty much agents and not principal
Speaker 1: businesses where they invest for the house and from a
Speaker 1: regulatory standpoint in the capacity of how much capital is
Speaker 1: needed for trading, they have been de risking the last
Speaker 1: few years and even on the Goldmen call today, look,
Speaker 1: we have we have a new management, a new management
Speaker 1: now lad from former executives and investment banking, not trading
Speaker 1: as before, and they're going to size down further thick,
Speaker 1: which is the fixed income, currency and commodity business, so
Speaker 1: they get efficiencies and higher returns. When you look at
Speaker 1: the other banks, UM, the one area that's the bread
Speaker 1: and butter for the large commercial banks is treasury because
Speaker 1: he's tied directly into their corporate relationships and corporate lending.
Speaker 1: So I think um directionally, Um, none of these banks
Speaker 1: want to put that much capital. Um. We also had
Speaker 1: low investor activity, we had low volatility as measured by
Speaker 1: the VIS We'll put that together. You had uh high
Speaker 1: uppertee negative declines in trading. So you want to be
Speaker 1: Another business is that you have confidence can grow. So ken,
Speaker 1: as a former wall streeter, I always take a look
Speaker 1: at the cost line for Cindy's big investment banks because
Speaker 1: that usually goes to head count, into compensation to things
Speaker 1: near and dear to my heart as a former wall streeter,
Speaker 1: but I see for Coleman sacks down twent firm wide expenses. Um.
Speaker 1: Is that just the people's side of the business. So um.
Speaker 1: Part of it is the early stages of efficiencies from
Speaker 1: heavy technology investing. UM, it's not. It is absolutely not
Speaker 1: major head count cuts yet. What's interesting for Goldman of
Speaker 1: their workforces technology and that's what's driving their platforms in
Speaker 1: the business. UM. For the other banks UM, the efficiency
Speaker 1: ratios seem to be more of a UM fading indicator
Speaker 1: that no one has. None of the banks have conviction
Speaker 1: to say that we're going to go from low SI
Speaker 1: to low fifty in the next two years, as they
Speaker 1: did for several quarters, not this one UH, and even
Speaker 1: asked that question City Group today. They kind of backed
Speaker 1: off because they're just there is that uncertainty just about
Speaker 1: global economy and the capital markets. But that's generally part
Speaker 1: parcel for these banks. Can One notable factor also with
Speaker 1: City Groups win on bond trading revenues. They actually UH
Speaker 1: posted an increase you over year after it expected decrease,
Speaker 1: and the other banks that have reported have all seen
Speaker 1: declines in their year of year comps for bond trading.
Speaker 1: I'm just wondering where is City getting the volumes? What
Speaker 1: how do they eat this out? They have a very
Speaker 1: UM strong global network in terms of working with corporate
Speaker 1: US treasuries, and they're they're not doing it on the
Speaker 1: high risk side of the curve, which would be derivatives
Speaker 1: or any futures. It's it's mostly UM playing vanilla treasury
Speaker 1: services UM and that continues to be a strength for
Speaker 1: a City also for JP Morgan. What's interesting is Goldman
Speaker 1: Sachs really wasn't in those parts of fixed income trading UH,
Speaker 1: and they have increased their headcount to go there and
Speaker 1: take market share. So can When I think about City Group,
Speaker 1: I'm good at the stock here. It's up almost thirty
Speaker 1: percent year to date. How is this company position globally
Speaker 1: from a franchise perspective, it seems like they have you know,
Speaker 1: they had really had a tough time coming out from
Speaker 1: the financial crisis, but they've seen pretty solid So they
Speaker 1: had a terrific two thousand and eighteen and the first
Speaker 1: quarter as a continuum UM and that's reflected in the stock.
Speaker 1: We raised our target price to seventy from sixty five
Speaker 1: this morning. We do feel um that City Um is
Speaker 1: getting the most out of its global footprint. We have
Speaker 1: a whole recommendation on City buying Goldman simply because we
Speaker 1: think with City it's more now dependent on the global
Speaker 1: economic environment. They had flat first quarter in Europe as
Speaker 1: well as in Asia, Mexico and Latin America is another
Speaker 1: very important franchise for City, and it's likely to be
Speaker 1: flat or low single digit. Look at Goldman Sachs. You've
Speaker 1: got a new management team on board. There's a delta
Speaker 1: for improvement on earnings coming from strategic moves across the
Speaker 1: board in terms of realigning fixed income trading um. They're
Speaker 1: also aligning to get more business and investment banking by
Speaker 1: hiring hundreds of investment bankers for small companies. Never heard
Speaker 1: of that for decades. Well, it seems like that's where
Speaker 1: the profitability is. Ken Leon, thank you so much for
Speaker 1: being with us, Global Director of Industry and Equity Research
Speaker 1: at cf are A Research in New York. Well, there's
Speaker 1: a great story out on the Bloomberg terminal today about taxes. Yes,
Speaker 1: taxes can be interesting. Basically just here is basically President
Speaker 1: Trump gave most Americans a big tax cut last year.
Speaker 1: But the problem is they did not notice it. In fact,
Speaker 1: just one fifth of taxpayers believe that their taxes have
Speaker 1: been cut. So to get a sense of what happened
Speaker 1: here with the messaging, we welcome Lara Davidson one of
Speaker 1: the reporters on this story, larsa congressional tax reporter for
Speaker 1: Bloomberg Tax. She's on Capitol Hill in Washington, d C. Today. Laura,
Speaker 1: thank you so much for joining us. So again, there
Speaker 1: was a tax cut. Not a lot of people believe
Speaker 1: there was a tax cut. So what happened with the mess?
Speaker 1: So really there were there were two big missteps that
Speaker 1: that Republicans made here in One is that the Democrats
Speaker 1: argument that this was going towards the wealthy and towards
Speaker 1: large corporations was just more salient with voters. Um they
Speaker 1: saw the big, big tax breaks go to corporations, and
Speaker 1: when they saw the changes that we're going to to
Speaker 1: them as individuals, it didn't seem as big. The second
Speaker 1: thing is that the way people got their tax cuts,
Speaker 1: so instead of getting a big refund at the end
Speaker 1: of the year, which is what many people expected, they
Speaker 1: got basically they paid less throughout the year, so there
Speaker 1: was less taken out of their paycheck. But in most cases,
Speaker 1: once you spread that out over over paychecks over the year,
Speaker 1: it wasn't that much. So by the time that people
Speaker 1: got to you know today to April fifte uh, they
Speaker 1: either had a much smaller refund or in some cases
Speaker 1: they owed money because they had too much taken out
Speaker 1: over the year. And uh, you know, even though they
Speaker 1: ended up getting more money that they still felt like
Speaker 1: they owed more. So what is the truth here as
Speaker 1: far as who got the biggest tax cuts? Right? Because
Speaker 1: if you're saying that the Democrats kind of one on
Speaker 1: their messaging, they went on the facts, Well, it really depends.
Speaker 1: So you look, our our tax system is progressive, so
Speaker 1: that means that there are higher rates for people at
Speaker 1: the higher end of the income spectrum. So people who
Speaker 1: make more uh also pay more, but they also got
Speaker 1: a bigger tax cut in comparison overall. So it's a
Speaker 1: little bit tricky to say, you know who definitively want
Speaker 1: and lost. But particularly in a lot of U states
Speaker 1: where where Democrats are who already uh disinclined to like
Speaker 1: this tax cut, New York, New Jersey, they were also
Speaker 1: limited by these state and local tax deductions. Used to
Speaker 1: be able to write off all of your state and
Speaker 1: local taxes that's now capped at ten thousand dollars to
Speaker 1: lots of voters in the in the northeastern California are
Speaker 1: finding that they actually saw a tax increase. Overall, it's
Speaker 1: a relatively small portion. You know, about five ten percent
Speaker 1: of people actually had their taxes increase, but they're mostly
Speaker 1: in Democratic leaning places and they feel that they were
Speaker 1: targeted by this law. Boy, you can count me as
Speaker 1: one of those people who paid lost on the sought deduction.
Speaker 1: So here being the metro New York area. UM Laura
Speaker 1: Trump's top economic advisor, Larry Cudlow last week, I believe,
Speaker 1: said that the tax cut package had largely already paid
Speaker 1: for itself. Is that accurate? That is not. We have
Speaker 1: seen that there's been some economic feedback from the law,
Speaker 1: but it's really only paid for a fraction of the
Speaker 1: one point five trillion dollars that this cost over a decade.
Speaker 1: And once you throw on you know, what it costs
Speaker 1: to service this debt um, it's even more than that
Speaker 1: one point five trillion, approaching almost two trillion. So the
Speaker 1: that's simply simply not the case. And and when you
Speaker 1: look at the Republicans have been a little bit um
Speaker 1: inconsistent on their messaging about this. You know, at times
Speaker 1: they've said, oh, look, we never said this was going
Speaker 1: to pay for it for itself. Cudlow said, it would
Speaker 1: pay for itself, but the facts and the numbers that
Speaker 1: have so far been coming in have shown that it
Speaker 1: has not paid for itself, and it probably will not
Speaker 1: over the course of the next decade. Laura, I want
Speaker 1: to go back to the salt the state and local
Speaker 1: tax deductions that were eliminated basically or kept at ten
Speaker 1: thousand dollars. Is there any evidence that residents of some
Speaker 1: of the high tax states New York, New Jersey, California
Speaker 1: have been moving to lower tax states in response to
Speaker 1: this tax lot change. There has not been great evidence yet,
Speaker 1: and we're only you know, a year in um and
Speaker 1: it would be a pretty drastic move to to move
Speaker 1: somewhere across the country just for a lower tax rate.
Speaker 1: On the margins, you're seeing a little bit of that.
Speaker 1: In particular on the higher end, you're seeing um condo
Speaker 1: developers and and real estate agents who are trying to
Speaker 1: target some of these high earners and convince them to
Speaker 1: move to Miami or you know, in California, to move
Speaker 1: across the state line to Nevada. So far that that's
Speaker 1: not necessarily going to be economist or looking at this
Speaker 1: not a huge driving factor, just because there's so many
Speaker 1: reasons to be in New York and your business is there,
Speaker 1: your kids are there, your your network is there. Uh.
Speaker 1: That that uh in New York State also makes it
Speaker 1: very hard to leave. They will look very closely if
Speaker 1: you can have a home in Florida. They look at
Speaker 1: how many nights you're spending in Florida versus New York
Speaker 1: and really sort of this teddy bear test of where
Speaker 1: does your teddy bear at night? Do as you do
Speaker 1: you have your dentists? Do you have your that is
Speaker 1: that's a very technical term. You can look that up
Speaker 1: in the tax coak just real quickly. What is What
Speaker 1: do you think the Democrats are going to do here
Speaker 1: with this tax issue? Are they're gonna try to use
Speaker 1: this as something to really be a positive for them
Speaker 1: and go against the Republicans. So far they were successful
Speaker 1: in that and really ran hard on the tax issue.
Speaker 1: And you've seen so far a lot of Democrats campaigning
Speaker 1: on on raising taxes, particularly for the wealthy. So you know,
Speaker 1: Elizabeth Warren and Bernie Sanders have talked about you know,
Speaker 1: expanding the estate tax or or paying um uh, you know,
Speaker 1: having the wealth the wealthy pay an annual tax on
Speaker 1: their on their total wealth, and and they're saying, look,
Speaker 1: this will pay for you know, um costs for childcare,
Speaker 1: or for free college tuition or medicare for all. And
Speaker 1: that's where they're really seeing that these ideas are polling
Speaker 1: really well, you know in some cases. Laura Davison, thank
Speaker 1: you so much for being with us. Laura Davison is
Speaker 1: Congressional tax reporter for Bloomberg Tax, joining us from Washington,
Speaker 1: d C. Well, it looks like the on again, off
Speaker 1: again trade talks between the US and China are most
Speaker 1: certainly back on again. To get the latest, we welcome
Speaker 1: Mike McDonough. Mike is a chief economist for financial Products
Speaker 1: at Bloomberg. He joined us live here in Bloomberg eleven
Speaker 1: three oh studios in New York. So, Mike, is China
Speaker 1: just gonna buy more soybeans from US? Or is there
Speaker 1: something more substantive coming down the pike? You know, I
Speaker 1: think I think we're going to see something far more
Speaker 1: substantive than China buying more soybeans. I think the reason
Speaker 1: we haven't seen a deal yet, well, there's many reasons,
Speaker 1: but one of them is they are trying to do
Speaker 1: something that is a little bit more holistic that answers
Speaker 1: for some of the UH investor access into China, some
Speaker 1: of the intellectual property UH issues. UH. And of course,
Speaker 1: you know China buying more stuff, trying to buying more
Speaker 1: stuff is actually the easiest thing to tackle it. If
Speaker 1: that was it, this would have been done months ago.
Speaker 1: It's trying to figure out how do you open up
Speaker 1: more of China's economy to foreign investors, how do you
Speaker 1: deal with intellectual property? And what is the enforcement mechanism
Speaker 1: put in place to make sure that that happens well.
Speaker 1: Talking about the enforcement mechanism, Steve mcnuch in, the Treasury
Speaker 1: Secretary in the United States, said over the weekend at
Speaker 1: the I m F meetings that the US is open
Speaker 1: to facing repercussions if it doesn't live up to its
Speaker 1: commitments and a potential trade deal with China. So this
Speaker 1: actually speaks to the mechanism of enforcement. And my question
Speaker 1: is how significant is that statement by Treasure Secretary monution.
Speaker 1: You know, I know there had been some debate over
Speaker 1: what if it was decided China wasn't following through with
Speaker 1: part of the deal, what would happen. The US wanted
Speaker 1: to put sanctions back on China. China wanted to be
Speaker 1: able to reciprocate. I think that that was a line
Speaker 1: in the sand that had been drawn that the US
Speaker 1: was saying no. So it would indicate that there has
Speaker 1: been some progress made on that front. But I'd be
Speaker 1: really really interested to hear President Trump's comments on that
Speaker 1: suggestion to see if they're a line there. So, Mike,
Speaker 1: when you take a look at the both sides, I'm
Speaker 1: thinking about China here, who is more incentive to get
Speaker 1: a real deal done as a one as opposed to
Speaker 1: one is more of a kind of a headline like deal. Uh. Well,
Speaker 1: I think you know, China would like to see a
Speaker 1: deal that kind of makes this go away this problem.
Speaker 1: But I think you know what what China is worried
Speaker 1: about right now is not just getting this deal done.
Speaker 1: They're looking further ahead, and I think they're worried about
Speaker 1: you know what if the economy starts to slow in
Speaker 1: what is the situation going to be? Right if they
Speaker 1: pass a holistic deal, you have these enforcement mechanisms in place. Uh,
Speaker 1: will the bluster continue from the administration, as you know?
Speaker 1: If growth is slowing ahead of the election and China
Speaker 1: becomes another target despite this deal, so I think that
Speaker 1: is a bit of a concern. I think that on
Speaker 1: the U S side, the trade negotiators, the lighthousers of
Speaker 1: the administration, um, they have a certain bar they'd like
Speaker 1: to see. They view this as an opportunity to do
Speaker 1: something meaningful with China. I think though, as growth has
Speaker 1: slowed in the U S a little bit or become yeah,
Speaker 1: that's growth is slowed, markets have become a little bit
Speaker 1: more sang wine, I think that you have, um, the
Speaker 1: President Trump's bar may have actually gone down below that
Speaker 1: of his own trade negotiators. That's why I was saying
Speaker 1: it would be interesting to get his comments on Stephen
Speaker 1: Minusian statement of the China being able to put tariffs
Speaker 1: on the U S if they don't follow through with
Speaker 1: the deal. I I it's all very interesting to me that, well, here,
Speaker 1: here's my here's my question. I'm trying to understand the
Speaker 1: China U S trade negotiations in the context of the
Speaker 1: latest salvos with the European Union in the United States,
Speaker 1: and evidently talks are ongoing between those two regions to
Speaker 1: try to come to some sort of agreement on everything
Speaker 1: from whiskey to motorcycles to wine. And cheese. I'm just
Speaker 1: trying to figure out why is that happening at the
Speaker 1: same time that we're also hearing about the China talks. Well,
Speaker 1: it's interesting, right, I think that the Europeans are concerned
Speaker 1: at the moment that if there is closure on the
Speaker 1: US trying a trade talks, that they are going to
Speaker 1: become the next target of the administration. And I guess
Speaker 1: you're starting to see some some signs of that. So, um,
Speaker 1: you know, maybe it's a precursor for something more uh
Speaker 1: more direct targeting Europe. But we're all gonna have to
Speaker 1: kind of wait and see. I think, Mike wonder if
Speaker 1: you could give your comments or your thoughts on this.
Speaker 1: But it seems like, you know that the tariffs as
Speaker 1: it relates to China actually worked. It brought them to
Speaker 1: the table, and it has them maybe negotiating in a
Speaker 1: way that's maybe a little bit more than we even
Speaker 1: anticipated initially. Yeah, So, I mean I was talking about
Speaker 1: the bar in the US. I think the bar for
Speaker 1: China also went down, right, So when when the trade
Speaker 1: war really started you were starting to see a deceleration
Speaker 1: of China's economy, it wasn't due to the trade war.
Speaker 1: It was due to the leveraging cycle they were having
Speaker 1: at home. They misjudged the impact that would have. But
Speaker 1: then coming into this year, you had that slowdown. Then
Speaker 1: you had the kind of the bad sentiment of okay,
Speaker 1: we are going into a trade war. So it's kind
Speaker 1: of a double whammy. Uh. So they were eager to
Speaker 1: come to the table and maybe make a little bit
Speaker 1: more concessions than they had before. So I mean, really,
Speaker 1: both sides bars are lower. I think that it is
Speaker 1: imminent in my view, that we do get a deal.
Speaker 1: I think that the reason we don't have a deal yet. Uh,
Speaker 1: it's unrelated. But it's interesting when you look at when
Speaker 1: President Trump had the summit with Kim jongun for North Korea,
Speaker 1: when he went to Hanoi, I think everyone was surprised
Speaker 1: that he just kind of walked away from that. Everybody
Speaker 1: had assumed work had been done, the would at least
Speaker 1: be some sort of friendly handshake and would end on
Speaker 1: positive terms for the Chinese. Um they're fearful that if
Speaker 1: they send President she to Marrow Lago and that repeats
Speaker 1: that would not that would be a very unacceptable outcome
Speaker 1: for the Chinese. So I think that they're making sure,
Speaker 1: before that data is said, every eye is dotted and
Speaker 1: every t is crossed. So for me, the moment that
Speaker 1: date is set in my mind, I think that means
Speaker 1: that deal has been done and they're just going to
Speaker 1: kind of go through the motions. Mike mcdonnald, thank you
Speaker 1: so much for being with us. Always love having you.
Speaker 1: Mike mcdona, chief economist covering financial products for us here
Speaker 1: at Bloomberg, joining us in our interactive broker's studio. Thanks
Speaker 1: for listening to the Bloomberg P and L podcast. You
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