WEBVTT - Surveillance: The Equity Market Can Rally, Calvasina Says 0:00:00.840 --> 0:00:12.960 Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm term Keene 0:00:13.480 --> 0:00:17.560 Jay Lee. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:34.040 Bloomberg dot Com, and of course, on the Bloomberg. We 0:00:34.159 --> 0:00:37.040 begin with the top story. According to a person briefed 0:00:37.080 --> 0:00:40.479 on trade talks, US and Chinese negotiators are working on 0:00:40.600 --> 0:00:45.000 multiple memorandums of understanding that would form the basis of 0:00:45.000 --> 0:00:48.360 a final trade deal, covering areas including agriculture and non 0:00:48.400 --> 0:00:53.400 tariff barriers, services, technology transfer, and intellectual property as well. 0:00:53.720 --> 0:00:55.720 Jo winting us on the phone to discuss is Carl Weinberg, 0:00:55.800 --> 0:00:59.520 High Frequency Economics Chief Economists. So, Karl, walk me through 0:00:59.560 --> 0:01:02.600 where you think we can make a breakthrough and what 0:01:02.720 --> 0:01:06.600 the sticking points might be as well. Yeah, Hi, good morning, Jonathan. Well, 0:01:06.760 --> 0:01:09.120 you know these trade talks right now, the idea is 0:01:09.160 --> 0:01:12.680 to postpone or to avert an increase in teriff rates. 0:01:12.720 --> 0:01:14.759 And I think that we will get that, but not 0:01:14.840 --> 0:01:17.920 necessarily because we get a deal, but simply because we're 0:01:17.920 --> 0:01:20.800 moving closer to a deal. On the Chinese side, we 0:01:20.880 --> 0:01:25.039 have the national People's Congress on March five, and beginning 0:01:25.120 --> 0:01:27.680 in the next few days, all of China's leaders are 0:01:27.720 --> 0:01:31.240 going to be focused on preparing for that congress. So 0:01:31.760 --> 0:01:34.800 probably get something in the form of a memorandum or 0:01:34.800 --> 0:01:37.880 an outline of an agreement, or something that's sufficient to 0:01:37.959 --> 0:01:41.480 postpone the increase of tariffs that might happen on March 0:01:41.560 --> 0:01:43.959 one in the absence of progress. But I don't think 0:01:43.959 --> 0:01:46.800 we're going to get final deals anytime in the foreseeable future. 0:01:47.200 --> 0:01:50.200 The question I here asked again and again increasingly over 0:01:50.200 --> 0:01:52.840 the last week or so, is who is next? Europe? 0:01:53.000 --> 0:01:55.600 Is Europe next? Is that the next target for negotiations 0:01:55.600 --> 0:01:59.640 between the United States and trade partners. Well, we're watching 0:01:59.640 --> 0:02:03.120 what the what the administration has to say about cars, 0:02:03.200 --> 0:02:05.680 and cars seem to be the next bone of contention. 0:02:05.680 --> 0:02:09.280 It's a particularly delicate topic with respect to Europe. We 0:02:09.320 --> 0:02:12.440 have all of the main European Let me say that 0:02:12.720 --> 0:02:17.240 probably German automakers are very heavily invested in the United States, 0:02:17.280 --> 0:02:20.040 moving parts and bits and kids into it and out 0:02:20.040 --> 0:02:23.440 of it. We'll see what the declaration is about whether 0:02:23.960 --> 0:02:27.799 these enterprises are a threat to national security. If they are, 0:02:27.840 --> 0:02:31.600 the Europeans that promised to respond quite vigorously to any 0:02:31.720 --> 0:02:34.440 US trade action, So that could very well be the 0:02:34.480 --> 0:02:38.520 next front. Karl Weinberg with US, so high Frequency Economics, 0:02:38.520 --> 0:02:41.480 and we're thrilled these with US because he, before pretty 0:02:41.560 --> 0:02:46.600 much anyone else, actually wrote a China note. I remember that, Carl, 0:02:46.639 --> 0:02:49.840 when High Frequency Economics came out with a China focus note. 0:02:50.280 --> 0:02:53.480 You looked at their behavior for years, What is there 0:02:53.600 --> 0:02:57.480 incentive to do anything? But weighed out two thousand and 0:02:57.520 --> 0:03:01.280 twenty in the election. Well, I think Tom, you hit 0:03:01.520 --> 0:03:03.760 the nail on the head. I think that the Chinese 0:03:04.160 --> 0:03:08.079 view of trade relations, or the Chinese view of relations 0:03:08.120 --> 0:03:11.760 with the United States, is extremely long term. President g 0:03:12.240 --> 0:03:16.120 will be president of China long after President Trumps president 0:03:16.160 --> 0:03:18.680 of the United States. And I think they view the 0:03:18.800 --> 0:03:22.680 current administration as overtly hostile. I don't think we have 0:03:22.800 --> 0:03:25.280 to think very hard to understand why that's the case. 0:03:25.720 --> 0:03:27.720 And I think that they are hoping that the next 0:03:27.760 --> 0:03:31.160 administration will be a little bit less hostile towards them, 0:03:31.440 --> 0:03:34.400 so they'll drag their heels. But they also under no 0:03:34.560 --> 0:03:38.640 circumstances will give up their long term industrial development plan. 0:03:38.800 --> 0:03:43.560 The contentious made in China and their business practices are 0:03:43.600 --> 0:03:46.800 their business practices, and even though they may be modified 0:03:46.880 --> 0:03:50.160 slightly to deal with intellectual property or to deal with 0:03:50.400 --> 0:03:54.000 um transfer of technology. Uh, they're not going to make 0:03:54.040 --> 0:03:56.800 big changes in those simply at the request of a 0:03:56.880 --> 0:03:59.160 foreign government. Would it be a mistate to believe that 0:03:59.280 --> 0:04:02.600 whoever the next president is, whenever the next president comes along, 0:04:02.880 --> 0:04:04.840 that there will be a change of approach towards China, 0:04:04.880 --> 0:04:06.960 Cow Because what I see in Washington, d C. Right 0:04:06.960 --> 0:04:09.720 now is it bipartisan approach to the problems in the 0:04:09.760 --> 0:04:14.440 world Second Larncht economy. Well, you see it bipartisan within 0:04:14.480 --> 0:04:16.919 the United States, But what you don't see is a 0:04:17.040 --> 0:04:21.799 multinational approach. I think that there are um I won't 0:04:21.839 --> 0:04:24.400 choose right or wrong in this conversation, but I'll say 0:04:24.400 --> 0:04:29.080 there are disagreements about how economic policy and business conditions 0:04:29.120 --> 0:04:32.560 should be conducted between the United States and China, and 0:04:32.640 --> 0:04:35.400 some of them may be legitimate, But to the extent 0:04:35.480 --> 0:04:39.080 that the United States wants to improve those conditions, history 0:04:39.120 --> 0:04:41.560 shows that a better course of action is to move 0:04:41.600 --> 0:04:44.880 in unison with our economic allies rather than to go 0:04:44.920 --> 0:04:47.960 it alone. And right now, this administration is very much 0:04:47.960 --> 0:04:52.440 an isolationist administration. I'm hoping that this was a diversion 0:04:52.560 --> 0:04:56.200 from the recent historical trend of the United States to 0:04:56.200 --> 0:04:59.120 be more global. What does it do to your calculations 0:04:59.120 --> 0:05:01.520 of g DPM the basic idea of Carlos. You do 0:05:01.560 --> 0:05:04.880 a lot of international relations, international economics, but you and 0:05:04.960 --> 0:05:08.760 Jim O'Sullivan will it down to what is the economy 0:05:08.800 --> 0:05:11.440 going to do? How does all this talk fold into 0:05:11.839 --> 0:05:15.120 your call on the American economy? Yeah, Well, for the 0:05:15.120 --> 0:05:18.799 American economy right now, the impact on trade is marginal. 0:05:19.080 --> 0:05:22.800 There are clearly some sectors that are affected, uh profoundly 0:05:22.839 --> 0:05:25.440 by this. If you're a Soybee informer, you're very unhappy 0:05:25.600 --> 0:05:29.400 right now. If you're in a technology industry that's dependent 0:05:29.520 --> 0:05:32.520 upon equipment coming from China that's now tariff, you care 0:05:32.560 --> 0:05:34.520 about this. If you're in the steel sector, you care 0:05:34.520 --> 0:05:37.359 about this. But overall, we've got a very very large 0:05:37.440 --> 0:05:40.160 US economy and the amount of goods and services that 0:05:40.200 --> 0:05:44.480 are affected by this trade war so far are not significant. 0:05:44.680 --> 0:05:48.719 Having said that, China's imports from the United States plummeted 0:05:48.760 --> 0:05:51.200 in the fourth quarter of last year, so we're looking 0:05:51.240 --> 0:05:54.880 at a thirty something per cent average drop in imports 0:05:54.880 --> 0:05:57.400 of China from the United States according to their data 0:05:57.800 --> 0:06:01.000 um in the fourth quarter, and that is you know, 0:06:01.160 --> 0:06:04.000 it's a it's visible, but it's not significant to the 0:06:04.040 --> 0:06:06.799 overall growth trajectory of the economy. Kel just one final 0:06:06.880 --> 0:06:09.560 question from myself. The Chinese are looking to stabilize their 0:06:09.800 --> 0:06:11.680 their economy. They have been doing this for much of 0:06:11.720 --> 0:06:14.800 the last twelve months. The easy measures don't seem to 0:06:14.800 --> 0:06:17.840 be stabilizing the economy though. I'm wondering whether the transmission 0:06:17.839 --> 0:06:21.200 mechanism is blocked up somehow. Why is it blocked up, 0:06:21.600 --> 0:06:24.719 and is it going to hamper their effects, their ability 0:06:25.120 --> 0:06:28.760 to really stabilize the situation. You know, John, you and 0:06:28.800 --> 0:06:30.479 I have to sit down and look at the data. 0:06:30.560 --> 0:06:32.720 But it looks to me as if GDP has been 0:06:32.720 --> 0:06:35.159 growing around six and three quarter percent for the last 0:06:35.240 --> 0:06:39.520 four years, and industrial production has been around eight percent 0:06:39.600 --> 0:06:42.200 seven eight percent, And while the trend has been very, 0:06:42.279 --> 0:06:46.239 very gradually downward, right, the economy is running very stable. 0:06:46.279 --> 0:06:48.600 On their numbers are a lot more stable than ours. Now. 0:06:48.680 --> 0:06:51.839 Some people will say that that's artificial, but the numbers 0:06:51.880 --> 0:06:54.120 that we look at tell us that while there may 0:06:54.160 --> 0:06:56.720 be a slow, gradual decline in the growth rate of 0:06:56.800 --> 0:07:00.719 China's economy a quartered a quarter. There's not much of 0:07:00.800 --> 0:07:03.920 the world decline in trade or an economic growth that 0:07:03.960 --> 0:07:07.440 you can blame on an incremental slowdown in China growth 0:07:07.520 --> 0:07:10.160 there is slower than they want to see, but absolutely 0:07:10.560 --> 0:07:13.240 still doing three times faster growth than we are. So, Carl, 0:07:13.280 --> 0:07:16.920 what is the manufacturing pm I doing sub fifty? Well, 0:07:17.000 --> 0:07:19.120 you know, John, you and I also have disagreed about 0:07:19.120 --> 0:07:20.440 the p m I. I think the p m I 0:07:20.560 --> 0:07:24.320 is an interesting statistic, but it's the industrial production number 0:07:24.360 --> 0:07:26.520 that tells you the story. The p m I wants 0:07:26.560 --> 0:07:29.400 you to believe when it's below fifty that industrial production 0:07:29.480 --> 0:07:32.240 has declined year over year, And quite frankly, if you 0:07:32.240 --> 0:07:34.600 look at the data, you're hard pressed to find any 0:07:34.680 --> 0:07:39.360 declines in China's GDP. Ever, so, in my view, using 0:07:39.360 --> 0:07:43.240 a p m I in an emerging market economy analytical mistake. 0:07:43.920 --> 0:07:46.600 Carol Weinber, thank you so much. I freaking see economics 0:08:00.640 --> 0:08:02.680 right now, John Farrow and I trying to figure out 0:08:02.720 --> 0:08:05.120 with the editor in chief how to fix the microphone stand. 0:08:05.920 --> 0:08:11.200 It's for him. This is when you're when you're high saluting. 0:08:12.000 --> 0:08:14.040 Let it go. We can what can let it go? 0:08:14.200 --> 0:08:17.440 It's broken. Can you get the duct tape, the one 0:08:17.520 --> 0:08:21.600 the Rangers and broke the studios again, the New York 0:08:21.680 --> 0:08:24.000 Rangers duct tape. We've had this studio for a couple 0:08:24.040 --> 0:08:29.480 of months and you've broken it already. Company. This is 0:08:29.480 --> 0:08:32.959 because print gets a budget and we don't. The rescue 0:08:33.679 --> 0:08:36.320 as well, joining us down, John Michel Tweede, what an 0:08:36.320 --> 0:08:40.120 introduction to thank you? I like to do that with 0:08:40.280 --> 0:08:45.240 a really important essay on the broader state of the 0:08:45.320 --> 0:08:48.760 Anglo Saxon experiment. You hear me talk about this Anglo 0:08:48.840 --> 0:08:53.240 Saxon economics and corporate theology in that But John Michael Tweede, 0:08:53.280 --> 0:08:55.200 of course, and so he can only do takes much 0:08:55.280 --> 0:08:59.080 much further. The feeling at the end of your essay 0:08:59.320 --> 0:09:02.960 is we're a critical point that clearly centers around Brexit, 0:09:03.200 --> 0:09:06.360 clearly centers around in the US election. What are the 0:09:06.440 --> 0:09:10.880 things you're watching which give you confidence that the Anglo 0:09:11.000 --> 0:09:14.480 sphere as you call it, can be maintained into the future. 0:09:14.679 --> 0:09:17.320 Just to give a little background, first, the article makes 0:09:17.360 --> 0:09:20.319 the argument that, and it's a very big picture article 0:09:20.320 --> 0:09:22.240 when it makes it makes it makes the argument that 0:09:22.280 --> 0:09:26.040 for the past thirty forty years, certainly since Thees. The 0:09:26.080 --> 0:09:29.320 mood music of the world was set by a combination 0:09:29.320 --> 0:09:33.080 of America and Britain, and obviously with America much bigger. 0:09:33.679 --> 0:09:38.160 Britain's economy is currently smaller than California's. But since the nineties, 0:09:38.520 --> 0:09:42.080 especially since Reagan and Thatcher, and then with Bush and Blair, 0:09:42.240 --> 0:09:45.640 Blair and Clinton, Cameron and Obama, all these different people, 0:09:45.880 --> 0:09:51.160 they basically spread a tune of globalization, liberalization, freedom, and 0:09:51.200 --> 0:09:53.040 around the rest of the world. Most people, even if 0:09:53.080 --> 0:09:55.839 they didn't like pontificating anglos and you've never met one, 0:09:56.800 --> 0:09:59.760 they even people didn't like it, they generally accepted that 0:09:59.800 --> 0:10:01.360 that was the way the world was going to go. 0:10:01.920 --> 0:10:04.040 And obviously had problems. You have the problems of Iraq, 0:10:04.120 --> 0:10:06.160 you had the problems with the credit crunch, But it 0:10:06.280 --> 0:10:09.240 really in two thousands and sixteen, with Brexit and then 0:10:09.280 --> 0:10:11.559 with the Trump election that that alliance has come into 0:10:11.559 --> 0:10:15.240 trouble and it's it's going basically in the wrong direction. 0:10:15.360 --> 0:10:18.439 Brexit is chaos, and Trump is singing something which is 0:10:18.480 --> 0:10:21.000 exactly the opposite. He doesn't wander around the world talking 0:10:21.040 --> 0:10:23.360 about freedom. He doesn't do the things that you would 0:10:23.360 --> 0:10:26.440 expect an American president to do, and so the dominant 0:10:26.440 --> 0:10:29.080 message has stopped, and to some extent it's been taken 0:10:29.120 --> 0:10:31.600 over by China. I think the Europeans hope that people 0:10:31.600 --> 0:10:33.960 like Macron would fill that void, but he doesn't seem to. 0:10:34.440 --> 0:10:36.439 And I think this does make a difference to the 0:10:36.440 --> 0:10:38.080 future of the world. So even if you don't like 0:10:38.840 --> 0:10:41.320 pontificating Englishman, and there maybe many people even in the 0:10:41.360 --> 0:10:45.880 studio who reached that conclusion where actually it's better to 0:10:45.920 --> 0:10:50.360 have us than what you think. Right now, you can't 0:10:50.400 --> 0:10:53.400 get into the glass dome with the interactive broker studio 0:10:54.679 --> 0:10:57.400 a palace before I asked you what it's replaced with. 0:10:57.600 --> 0:10:59.240 I think we have to decide whether this is just 0:10:59.280 --> 0:11:01.800 a moment in time or whether it is an inflection point. 0:11:02.120 --> 0:11:04.360 What do you think it is that that is the debate. 0:11:04.440 --> 0:11:06.760 I mean, I fear that it's an inflection point because 0:11:06.800 --> 0:11:10.280 these things um, you have a momentum. Victor Hugo has 0:11:10.280 --> 0:11:12.360 a very good line about nothing can stop an idea 0:11:12.400 --> 0:11:15.040 whose time has come, and that's how it felt in 0:11:15.080 --> 0:11:17.840 the eighties, nineties, and the first century, the first first 0:11:17.880 --> 0:11:21.280 decade of the century. Now it's at a certain point 0:11:21.320 --> 0:11:24.719 when momentum loses, other ideas begin to come in. You've 0:11:24.720 --> 0:11:28.240 already got the Chinese pushing the idea of the Beijing Consensus. 0:11:28.960 --> 0:11:32.160 You don't really see Europe pushing anything particularly new. That 0:11:32.640 --> 0:11:34.920 the main, the main argument for it being able to 0:11:34.920 --> 0:11:38.000 come back is a mixture between two things. One, politics 0:11:38.040 --> 0:11:41.160 can change. You know, Britain could just about mudel its 0:11:41.200 --> 0:11:43.959 way through to a slightly orderly breaks it will perhaps 0:11:44.000 --> 0:11:46.560 even remain. And on the other hand, you could have 0:11:47.559 --> 0:11:50.080 Trump himself could get into trouble, and you know there 0:11:50.120 --> 0:11:52.760 are other options. Europe can't get his act together. Seemingly, 0:11:53.640 --> 0:11:57.080 does China have the willingness, never mind the ability, to 0:11:57.200 --> 0:11:59.959 take a leadership role on the global stage. I think 0:12:00.040 --> 0:12:01.400 you can see you see the sort of things which 0:12:01.400 --> 0:12:04.680 she did at Davos um when she Shan did again 0:12:04.760 --> 0:12:08.320 this year. You know, they are becoming slightly more overt 0:12:08.400 --> 0:12:10.240 in that way, or at least saying this is an 0:12:10.240 --> 0:12:12.680 alternative way of thinking about the world. And the point 0:12:12.720 --> 0:12:15.520 about when you deal in these big ideas is that 0:12:15.679 --> 0:12:18.320 it placed where these things often really matter is the 0:12:18.320 --> 0:12:22.199 emerging world, and there it's definitely true, you know, emerging 0:12:22.240 --> 0:12:25.480 world governments quite like what China says. You know, what's 0:12:25.480 --> 0:12:28.600 better than saying that in order to have a successful 0:12:28.600 --> 0:12:31.440 economy you just need to be slightly more authoritarian. Government 0:12:31.520 --> 0:12:35.640 strangely tend to quite like that. What I think, though, 0:12:35.760 --> 0:12:37.839 is that on the whole, that there are still some 0:12:38.160 --> 0:12:40.360 the amosphere still got some big strengths. Most of the 0:12:40.360 --> 0:12:44.120 world's big companies, eight of the biggest term American, you've got, 0:12:44.160 --> 0:12:45.880 and you've also got the basic fact that the people 0:12:45.960 --> 0:12:49.040 of the world, I think, do not necessarily think that 0:12:49.120 --> 0:12:53.000 more authoritarian. And the discipline of all this, taking a 0:12:53.000 --> 0:12:55.600 back to Kissinger's diplomacy and a lot of the experience 0:12:55.640 --> 0:12:58.280 of the United Kingdom, is the cliche what the world 0:12:58.320 --> 0:13:01.079 needs as a good war. We've had a huge time 0:13:01.640 --> 0:13:04.680 of peace within the Western world where we can get 0:13:04.679 --> 0:13:10.280 distracted into other ideas besides the discipline of institutions, and 0:13:10.320 --> 0:13:12.840 we've lost that. You could argue that the biggest another 0:13:12.880 --> 0:13:16.400 big thing that has happened over the past six or 0:13:16.480 --> 0:13:20.319 nine months, is that the general fraction between especially between 0:13:20.320 --> 0:13:22.880 America and China, and that that could also be an 0:13:22.880 --> 0:13:25.199 inflection point, but I do think it doesn't. It does 0:13:25.280 --> 0:13:27.800 tied back a bit to the idea that the dominant 0:13:27.800 --> 0:13:30.960 mood music, the presumption of the world, I think for 0:13:31.000 --> 0:13:34.760 the past forty years was in general most countries, even 0:13:34.800 --> 0:13:36.920 if they didn't like it. I thought the world was 0:13:36.960 --> 0:13:40.400 going to move slightly more towards the direction that America 0:13:40.440 --> 0:13:42.640 and Britain were singing. And I think it's very this 0:13:42.960 --> 0:13:46.240 obviously being English, like the useless Mr Farrow, we we 0:13:46.240 --> 0:13:49.120 we we tend to exaggerate our our our own importance, 0:13:49.160 --> 0:13:51.560 as you often point out. But in this particular case, 0:13:51.600 --> 0:13:54.600 I think it mattered that there wasn't just one country 0:13:54.600 --> 0:13:57.840 saying this, because it made the made the message broader. 0:13:58.000 --> 0:14:02.080 Britain brought many things about global media right board room, 0:14:02.080 --> 0:14:03.880 in the room, in the European Union, other things that 0:14:04.000 --> 0:14:08.439 made a difference. Do you'll make with white that I 0:14:08.600 --> 0:14:23.680 must read today? And we need a desperate guest to 0:14:23.720 --> 0:14:26.720 talk about desperate markets, and we do that now with 0:14:26.800 --> 0:14:30.600 Dennis Gartman, local Pinada. Of course Mr Gartman has our respect, 0:14:30.880 --> 0:14:34.320 and then he publishes his trades in detail in the 0:14:34.320 --> 0:14:37.800 back of his acclaimed newsletter Red Worldwide. Dennis, the only 0:14:37.800 --> 0:14:40.760 reason I wanted you on today is because you lead 0:14:41.000 --> 0:14:43.680 with the fact there are more sixty five year olds 0:14:43.960 --> 0:14:46.960 than the rest of the world combined. I mean, it's 0:14:47.080 --> 0:14:49.600 the United Nations, and it's a serious thing that we're 0:14:49.640 --> 0:14:54.080 an aging global population. And to bring this over to investment, Dennis, 0:14:54.120 --> 0:14:58.160 the percentage of us nowhere near able to retire. It's 0:14:58.200 --> 0:15:01.480 off the proverbial chart, isn't. Oh, it's really quite sad 0:15:01.560 --> 0:15:03.040 when you look at the amount of money that the 0:15:03.040 --> 0:15:05.920 average American has, I think it's somewhere in the neighborhood 0:15:05.920 --> 0:15:09.120 of less than fifteen hundred dollars in his retirement account. 0:15:09.120 --> 0:15:13.280 It's it's something, uh, really shockingly low. The ability for 0:15:13.280 --> 0:15:17.160 the average American consumer to meet even the slightest emergency 0:15:17.240 --> 0:15:20.960 need in cash is is shockingly low. So we've really 0:15:21.000 --> 0:15:24.200 done a very very bad job individually trying to say 0:15:24.280 --> 0:15:27.080 for retirement. And it's only I'm afraid going to get worse. 0:15:27.280 --> 0:15:31.360 With the whip saw are round trip move early December, 0:15:31.400 --> 0:15:34.800 we've now piqued that here in the middle of February. 0:15:34.960 --> 0:15:39.200 For long term investors, what do you do now with 0:15:39.440 --> 0:15:43.640 cash for quote long term unquote? Do you go into 0:15:43.680 --> 0:15:47.520 the equity markets? It's still nobody's gonna like to hear 0:15:47.520 --> 0:15:49.240 what I have to say. But it's still a bowl market, 0:15:49.280 --> 0:15:51.640 isn't it. It's still moving from the lower left to 0:15:51.680 --> 0:15:56.200 the upper right. The violence of the downward swinging in September, October, 0:15:56.280 --> 0:15:59.880 November until December twenty six last year was awe inspiring. 0:16:00.320 --> 0:16:03.320 The rally that we've had since December has also been 0:16:03.360 --> 0:16:06.200 on sparing. The answer your question is what do you 0:16:06.240 --> 0:16:09.240 do now. If you have not done anything, you have 0:16:09.280 --> 0:16:11.880 to put something into the equities market. If you've done something, 0:16:11.920 --> 0:16:14.680 you probably want to sit and wait. After after the 0:16:14.760 --> 0:16:17.080 rally that we've had since December twenties, you probably don't 0:16:17.080 --> 0:16:19.440 want to buy today's rally. You probably want to wait 0:16:19.440 --> 0:16:20.640 for a couple of weeks or so. But if you're 0:16:20.640 --> 0:16:22.840 outlooked this for the next ten years, you have to 0:16:22.840 --> 0:16:25.240 be a buyer. There's no question if you're If you're 0:16:25.240 --> 0:16:27.200 outlooking for the next six weeks, you probably want to 0:16:27.200 --> 0:16:29.480 stand on the sideline. We protect the copyright of our 0:16:29.520 --> 0:16:33.040 research guests, and of course we do that with Dennis Garban, 0:16:33.080 --> 0:16:35.720 who writes us every morning at two am with ink 0:16:35.800 --> 0:16:38.960 and quill in the back. Dennis, there's no mention of 0:16:39.040 --> 0:16:42.880 equities on the short term. Gartman trades all the criticism 0:16:42.880 --> 0:16:46.040 and a claim that you get you don't have anything 0:16:46.040 --> 0:16:51.120 on equities, Why uh for? For actually I like to 0:16:51.160 --> 0:16:54.040 stay clear of the sec They get upset with me 0:16:54.120 --> 0:16:56.320 sometimes when I write about specific equities, so I don't 0:16:56.360 --> 0:16:59.840 put them into Yeah, there's nothing to hear about Dennis 0:16:59.840 --> 0:17:03.280 car in the stock market. Why is that? Well? Actually, 0:17:03.320 --> 0:17:05.080 if you read the newsletter, and if you read a 0:17:05.119 --> 0:17:07.040 section on the equities market, I explained that I am 0:17:07.119 --> 0:17:09.720 long of a local bank here, I am long of 0:17:10.160 --> 0:17:12.600 f c X, I am long of of gold and 0:17:12.640 --> 0:17:15.639 silver equities. So I am actually long, and but I 0:17:15.680 --> 0:17:17.719 haven't put it out as as an original, as an 0:17:17.760 --> 0:17:21.239 official recommendation, as I like to call it. Nonetheless, if 0:17:21.240 --> 0:17:23.600 you read the newsletter, you'll find out that I have 0:17:23.720 --> 0:17:26.560 been and continue to be rather long of the of 0:17:26.640 --> 0:17:29.399 the stock market in various in various manners. Jeff Curry 0:17:29.400 --> 0:17:33.320 at Goldman Sachs boldly three months ago climbed on the 0:17:33.320 --> 0:17:36.560 Gartman gold band wagon Goldman Sacks. I believe working in 0:17:36.640 --> 0:17:40.320 dollars review with this the idea you you do this 0:17:40.920 --> 0:17:44.160 in euros and yen, and am I right? Denisit within 0:17:44.280 --> 0:17:48.160 all the tribulations this has actually worked out. Oh, it's 0:17:48.160 --> 0:17:50.119 worked out dramatically. So if you take a look at 0:17:50.440 --> 0:17:52.920 if you go back to November, just abjectly. Pick a 0:17:53.000 --> 0:17:56.520 day in November golds up dramatically from that period of time, 0:17:56.800 --> 0:17:58.360 and if you look at that same period of time, 0:17:58.400 --> 0:18:01.120 the euro has gone essentially side ways or even slightly down. 0:18:01.280 --> 0:18:04.920 So if you have funded a position in gold using euros, 0:18:05.440 --> 0:18:08.200 you're you've actually increased the amount of return that you've 0:18:08.240 --> 0:18:12.359 gotten from gold marginally, but you have increased should I 0:18:12.359 --> 0:18:14.840 saw you, You've actually decreased the volatility on a daily 0:18:14.840 --> 0:18:17.360 basis materially. And it isn't that the essence of great 0:18:17.359 --> 0:18:20.399 trading to get the same return with a decrease in volatility. 0:18:20.400 --> 0:18:22.359 And that's exactly what's happened there. This is why we 0:18:22.400 --> 0:18:24.040 love to have Dennis garbmen. Now we get in a 0:18:24.119 --> 0:18:27.120 research report in from someone acclaimed and Gartment can give 0:18:27.160 --> 0:18:30.879 us some mediate analysis. The wonderful George Seravellos at Deutsche 0:18:30.920 --> 0:18:34.359 Bank is always interesting reading, and he comes out moments 0:18:34.359 --> 0:18:38.240 ago Dennis Gartment and reaffirms euro and says, this is 0:18:38.280 --> 0:18:41.639 a fed that will blink in. The interest rate difference 0:18:41.840 --> 0:18:45.880 between the United States and Europe will narrow. Do you agree? 0:18:46.480 --> 0:18:49.040 I think the spread between the United States and Europe 0:18:49.040 --> 0:18:52.080 will continue to widen. Our economy is stronger than is 0:18:52.160 --> 0:18:55.159 their's ten year yields in Europe, are are in Germany, 0:18:55.200 --> 0:18:57.200 for example, are still negative takor yields here in the 0:18:57.280 --> 0:19:00.000 United States or two point six three, that's probably gonna 0:19:00.000 --> 0:19:03.280 continue to widen. It's been widening for years. Many people 0:19:03.280 --> 0:19:05.040 have called for it to narrow for years, and they 0:19:05.040 --> 0:19:08.560 have been They have been decidedly wrong for years. The 0:19:08.600 --> 0:19:11.560 trend is clearly for that interest rate spread to move 0:19:11.600 --> 0:19:13.440 in the United States favor and for the United States 0:19:13.520 --> 0:19:16.960 dollar to the beneficiary that move. So so can you 0:19:17.040 --> 0:19:20.679 go stable dollar or strong dollar? I think on balance, 0:19:20.720 --> 0:19:22.320 if you're if you're only looking at the U. S. 0:19:22.359 --> 0:19:24.920 Dollar versus the Euro, probably going to see the dollar 0:19:24.960 --> 0:19:27.119 get stronger. You're probably going to see the euro get weaker. 0:19:27.600 --> 0:19:30.399 If you're talking about the dollar versus Canada, Australia or 0:19:30.400 --> 0:19:33.600 New Zealand, maybe that's a different story entirely. But most 0:19:33.600 --> 0:19:35.879 people when they speak about the dollar speak about the 0:19:35.880 --> 0:19:38.080 dollar versus euro, and the dollar is likely to get stronger. 0:19:38.160 --> 0:19:40.880 Now we Dennis one final idea here. I just look 0:19:40.920 --> 0:19:43.200 at the soy being chart and we're off the bottom. 0:19:43.240 --> 0:19:45.600 I know that, And we kid Dennis about red wheat 0:19:45.600 --> 0:19:48.000 and winter wheating all the rest. Dennis, You are, more 0:19:48.040 --> 0:19:52.040 than anyone we speak to, are hardwired to the fields 0:19:52.200 --> 0:19:55.760 of the American Midwest. How tough is it out there 0:19:55.880 --> 0:19:58.840 right now? For the people you know in the Midwest. 0:19:59.080 --> 0:20:03.280 It's very tough. It's been four years of steadily declining 0:20:03.400 --> 0:20:08.600 or or stable low prices. Bankers are very reticent this 0:20:08.680 --> 0:20:10.840 year to extend credit to to farmers to put the 0:20:10.880 --> 0:20:13.199 crop in the ground. If there's one thing to be 0:20:13.240 --> 0:20:16.119 concerned about in the United States, it's that it's precisely 0:20:16.200 --> 0:20:18.800 that we are going to plant the smallest amount of 0:20:18.800 --> 0:20:21.920 wheat in a hundred and ten years, and it probably 0:20:22.000 --> 0:20:23.920 is even going to be smaller than the original usd 0:20:24.000 --> 0:20:26.840 A projections something because the banks will not extend credit. 0:20:26.880 --> 0:20:29.879 It really is tough out there, no question about it, Dennis. 0:20:29.880 --> 0:20:32.800 One final question March nine. There's these two schools in 0:20:32.840 --> 0:20:36.200 North Carolina that you know they bounce off North North 0:20:36.240 --> 0:20:40.359 Carolina State. Does Duke have any chance March nine against 0:20:40.359 --> 0:20:44.160 the dynamic crew from Chapel Hill after what happened last night, 0:20:44.280 --> 0:20:47.240 and and and the injury to to the best player 0:20:47.240 --> 0:20:50.040 in the country this year is Zion Williamson. No, Duke 0:20:50.080 --> 0:20:52.240 does not have a chance. I hate to say that 0:20:52.320 --> 0:20:55.760 I dislike both teams. I'm an MP States fan through 0:20:55.800 --> 0:20:57.520 and through. I was hoping that the game, As I 0:20:57.560 --> 0:20:59.840 told my wife last night, I hope this game goes 0:20:59.880 --> 0:21:01.840 to seven overtimes and then ends in the tie, because 0:21:01.840 --> 0:21:06.000 I didn't want either team to win. But Williamson Ducas 0:21:06.200 --> 0:21:09.200 is really a demonstrably lesser team than they were. No questions. 0:21:09.240 --> 0:21:11.720 Dennis Gartman, thank you so much for a wide ranging 0:21:11.720 --> 0:21:30.800 discussion this morning. We've had this big move in the market. 0:21:30.800 --> 0:21:33.360 The question is is on many investors mind is how 0:21:33.440 --> 0:21:37.200 much is left? So to get a professional opinion, let's 0:21:37.200 --> 0:21:40.600 bring in Lori Calvacina. Lori is the head of US 0:21:40.640 --> 0:21:45.040 Equity strategy at RBC. Lorie, thanks so much for joining us. So, 0:21:45.480 --> 0:21:48.560 given this huge reversal that we've seen in the equity 0:21:48.600 --> 0:21:52.639 markets from December through to year to day nineteen, what 0:21:52.760 --> 0:21:54.280 is your view of the equity markets? Is there any 0:21:54.359 --> 0:21:56.679 room left here? So? I think there's a little bit 0:21:56.680 --> 0:21:58.720 of room. I don't think there's a ton of room. Um. 0:21:58.720 --> 0:22:00.920 You know, we've came into the our price target on 0:22:00.960 --> 0:22:04.320 the SMP is. We think the PE on a trailing 0:22:04.359 --> 0:22:07.520 basis can expand to about seventeen times. That's not heroic. 0:22:07.800 --> 0:22:10.040