WEBVTT - Surveillance: Top Risks 2019 With Eurasia Group 0:00:00.080 --> 0:00:13.040 Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jay Ley. 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 --> 0:00:34.200 Bloomberg dot Com, and of course on the Bloomberg John 0:00:34.280 --> 0:00:36.960 Fifth AVENU are really down towards New York University in 0:00:37.000 --> 0:00:40.240 the offices John of your Raisia group, And of course 0:00:40.280 --> 0:00:43.080 that always means our annual first of the year visit 0:00:43.479 --> 0:00:46.720 with Ian Bremer and their top risk for two thousand 0:00:46.720 --> 0:00:49.880 and nineteen, we've had a spirited discussion through the morning, John, 0:00:49.920 --> 0:00:52.400 Why don't you kick it off with Dr Bremer and 0:00:52.560 --> 0:00:55.280 I Speagan shadowy with the tough risk that you guys 0:00:55.320 --> 0:00:57.800 are looking at. You put out this list every single year, 0:00:57.840 --> 0:00:59.920 and we have the privilege of opening some of our 0:01:00.000 --> 0:01:01.840 overage up with you when you do do that. And 0:01:01.880 --> 0:01:04.440 I think it's interesting that you mentioned what could transpire 0:01:04.480 --> 0:01:07.119 over the coming years because of what is happening now, 0:01:07.200 --> 0:01:09.440 the bad seats that we're planting. Just walk us through 0:01:09.440 --> 0:01:13.720 that thinking again, sure, I mean you know there are 0:01:13.800 --> 0:01:16.840 so if you look at the major things that are 0:01:16.880 --> 0:01:20.400 happening in the world today, the geopolitical trends, both domestically, 0:01:20.440 --> 0:01:25.679 within countries and internationally, all of them are trending in 0:01:25.680 --> 0:01:27.760 the negative directions. The first time since we started the 0:01:27.760 --> 0:01:30.520 company twenty one years ago when we could say that 0:01:30.800 --> 0:01:33.200 none of them are urgent. Whether we look at the 0:01:33.240 --> 0:01:37.640 erosion of US political institutions, whether we look at challenges 0:01:37.760 --> 0:01:40.800 inside Europe as a whole and inside those individual countries, 0:01:40.959 --> 0:01:44.400 whether we look at the system of global alliances US Russia, 0:01:44.520 --> 0:01:49.040 US China, Transatlantic and within the Middle East, or the 0:01:49.160 --> 0:01:52.680 rise of populism and nationalism, none of these things are urgent. 0:01:53.160 --> 0:01:55.120 All of them trend in negative direction. All of the 0:01:55.200 --> 0:01:57.760 mean that we won't respond effectively to the next crisis 0:01:57.760 --> 0:02:01.040 when it comes. Your team is so good a calculus 0:02:01.080 --> 0:02:05.760 the first and second derivative rates of change of international relations. 0:02:05.800 --> 0:02:09.960 I love your word. I gotta pronounce it right here. Escalatory. 0:02:10.040 --> 0:02:13.679 We are escalatory right now. What is our movement towards 0:02:13.960 --> 0:02:17.920 escalatory crisis? Well, I guess I would say, with the 0:02:17.919 --> 0:02:22.560 global economy doing well, it doesn't feel like twenty nineteen 0:02:22.880 --> 0:02:25.440 is your challenge. But if you think about when the 0:02:25.480 --> 0:02:30.000 big recession hit in two thousand eight, everyone responded constructively 0:02:30.080 --> 0:02:34.079 so that we avoided depression the United States, there was 0:02:34.120 --> 0:02:37.200 a lot of strength nine eleven. The response came from 0:02:37.200 --> 0:02:39.840 the United States. The whole country came together behind the 0:02:40.160 --> 0:02:44.200 coalition of Russians. No, no, whatever the next shock is, 0:02:44.240 --> 0:02:47.120 whether it's cyber or terror or more likely the next 0:02:47.160 --> 0:02:52.160 economic downturn, the reaction inside our country and internationally is 0:02:52.160 --> 0:02:54.639 gonna be toxic. And I think that that's what's under 0:02:54.680 --> 0:02:58.560 appreciated issue. What measure for is the confidence of the 0:02:58.600 --> 0:03:01.079 system right now in the markets, in all of global 0:03:01.120 --> 0:03:03.720 Wall Street that listens to us every day, they're hard 0:03:03.800 --> 0:03:07.280 wired to the confidence for investment, the confidence to find 0:03:07.320 --> 0:03:10.079 the bid in various markets as well. What is our 0:03:10.280 --> 0:03:13.600 I our confidence right now? Yeah, I mean the confidence 0:03:13.720 --> 0:03:17.800 in the economy is I would say reasonably strong. The 0:03:18.000 --> 0:03:22.519 i R. The international relations confidence is low and trending 0:03:22.600 --> 0:03:25.639 worse on a daily basis. Now A lot of that, 0:03:26.000 --> 0:03:28.280 A lot of the reason that I our confidence isn't 0:03:28.360 --> 0:03:31.920 high in the markets is because of Trump. But it 0:03:31.919 --> 0:03:35.200 shouldn't be that. It should be much more structural. It 0:03:35.240 --> 0:03:38.120 should be that the forces that got Trump elected in 0:03:38.160 --> 0:03:40.360 the United States, it should be the forces that led 0:03:40.400 --> 0:03:42.520 to Brexit in the UK. It should be the forces 0:03:42.880 --> 0:03:44.960 that have led to the Italian government as well as 0:03:44.960 --> 0:03:47.600 the rise of China. Is here one off? I mean, 0:03:47.640 --> 0:03:49.600 that's the question. I see you out doing all the 0:03:49.680 --> 0:03:51.840 media for your raising group and all that, they never 0:03:51.960 --> 0:03:55.120 ask you that, just the pregnant question. Is President Trump 0:03:55.200 --> 0:03:58.480 a one off phenomenon? I think of William James Bryant 0:03:58.520 --> 0:04:03.000 when I see Alexander your Ocasio Cortez on sixty minutes 0:04:03.120 --> 0:04:07.640 yesterday saying, uh, I may get the facts wrong, but 0:04:07.760 --> 0:04:10.480 you need to focus on the underlying morality of what 0:04:10.560 --> 0:04:14.560 I'm saying. Right, That's exactly what Trump was saying. Take 0:04:14.680 --> 0:04:19.080 him seriously but not literally. That's exactly why the Brexit 0:04:20.480 --> 0:04:24.400 is the Is the liberal progressive new confidence that we 0:04:24.440 --> 0:04:26.640 see in the House, will that be a one off? 0:04:27.000 --> 0:04:29.479 Or is there a real sustained move back to a 0:04:29.520 --> 0:04:32.720 more liberal theology in America? I get what I'm saying 0:04:32.920 --> 0:04:35.800 is I think the center not holding is not a 0:04:35.880 --> 0:04:38.680 one off. And while Trump himself, in terms of his 0:04:38.800 --> 0:04:42.880 volatility is character or lack thereof that that is indeed 0:04:42.920 --> 0:04:46.920 an extreme outcome in the US, the likelihood that the 0:04:46.960 --> 0:04:50.560 next president or series of leaders would come from the 0:04:50.680 --> 0:04:54.320 farther right and farther left I think is growing. Do 0:04:54.320 --> 0:04:56.880 you have an optimism that we can do in practice 0:04:56.960 --> 0:05:00.719 democracy given this polarity, I mean, George Herb Walker Bush 0:05:00.800 --> 0:05:03.520 was one of our great losses for two thousand and eighteen, 0:05:03.880 --> 0:05:06.920 That middle ground seems to be gone. I have an 0:05:06.920 --> 0:05:12.600 optimism that American political institutions are surprisingly strong and resilient 0:05:12.640 --> 0:05:17.080 and they can withstand whatever Trump and his administration has 0:05:17.120 --> 0:05:20.039 to offer against it. But that's different from saying that 0:05:20.120 --> 0:05:23.320 democracy fundamentally is working for a majority of Americans. I 0:05:23.320 --> 0:05:26.080 think that when Trump says the system is rigged against you, 0:05:26.240 --> 0:05:30.080 and people respond to that, it's because he's right. Now. 0:05:30.240 --> 0:05:33.200 Trump hasn't made the system less rigged against them, but 0:05:33.279 --> 0:05:35.760 he did identify the problem. And a lot of people 0:05:35.800 --> 0:05:39.760 out there are telling their constituents liberal democracy has been 0:05:39.800 --> 0:05:43.520 gained to create much greater inequality and to give access 0:05:43.560 --> 0:05:46.520 to power and speak power to truth. And that's not 0:05:46.600 --> 0:05:48.920 a useful thing for most of those. When I look 0:05:48.920 --> 0:05:53.760 at bad seas, US, China, cybergloves off europopulism, Mexico, Ukraine 0:05:54.080 --> 0:05:55.640 and the rest. I want to go back to the 0:05:55.800 --> 0:05:58.560 arching theme of surveillance for last year, and I don't 0:05:58.600 --> 0:06:02.560 think I nailed this of months ago, which is technology. 0:06:02.880 --> 0:06:06.040 What all of our listeners global Wall Street people just 0:06:06.160 --> 0:06:10.039 wired into Wall Street, in the great professional group of 0:06:10.080 --> 0:06:14.200 all ages that listen to us, they're all affected by technology. 0:06:14.320 --> 0:06:16.840 And you're calling for an innovation winter. What is that? 0:06:17.040 --> 0:06:21.440 Innovation winter means that a combination of a fragmentation of 0:06:21.520 --> 0:06:24.960 the most important technology trend. So five G, which is 0:06:25.000 --> 0:06:27.400 going to be the backbone not just of smartphones, but 0:06:27.440 --> 0:06:29.840 the Internet of things smart cities, is not going to 0:06:29.960 --> 0:06:32.120 be one system like four G was. It's gonna be 0:06:32.160 --> 0:06:34.640 a China lead system and a Western lead system and 0:06:34.680 --> 0:06:38.440 they won't interact. That's one part, and the second part 0:06:38.560 --> 0:06:43.400 is the growing tech lash, the political trends against the 0:06:43.480 --> 0:06:47.880 big tech firms in the West. To ask you this question, 0:06:48.040 --> 0:06:53.440 and does technology enhance or accentuate the guilded age so 0:06:53.480 --> 0:06:56.640 many of our listeners feel we're living in. It makes 0:06:57.200 --> 0:07:00.200 uh those that don't participate in the guilded age age 0:07:00.240 --> 0:07:02.640 more aware of the fact that they're left behind. It 0:07:02.680 --> 0:07:05.440 makes it easier for them to connect with others that 0:07:05.520 --> 0:07:10.440 feel the same way. UM. It also speeds up the 0:07:10.480 --> 0:07:14.200 ability of those in the Gilded Age UM to build 0:07:14.320 --> 0:07:19.320 walls that effectively differentiate these people. What will the Democratic Party, 0:07:19.400 --> 0:07:22.520 or you're a great student of domestic politics, what will 0:07:22.600 --> 0:07:27.560 the new Democratic Party look like? Um? Because they are 0:07:27.960 --> 0:07:32.320 all um focused on twenty twenty after these midterm elections, 0:07:32.400 --> 0:07:35.240 and focused on April of this year and Trump, Well, 0:07:35.280 --> 0:07:37.960 I mean they're they're gonna be focused on impeachment proceedings 0:07:37.960 --> 0:07:40.200 as well. And I have a hard time seeing Pelosi 0:07:40.640 --> 0:07:44.560 uh keeping that off of the agenda. But I do 0:07:44.600 --> 0:07:48.440 think that it helps to coalesce the Democrats when they 0:07:48.480 --> 0:07:52.160 are all kind of on message against the American president. 0:07:52.200 --> 0:07:56.560 But let's be clear, seventeen Republican candidates, most of them 0:07:56.760 --> 0:07:59.720 were pretty establishment in the middle. You're gonna have freny 0:07:59.800 --> 0:08:04.120 to thirty Democratic candidates and they're going to be some 0:08:04.240 --> 0:08:07.360 in the middle, some on the left, and some complete outsiders. 0:08:07.360 --> 0:08:10.920 And that does make from the Democratic perspective, much more 0:08:10.960 --> 0:08:14.000 of a crapshoot. What you get, Brower, Thank you so much. 0:08:14.040 --> 0:08:16.760 Top Risks of two thousand nineteen at euris your group 0:08:16.840 --> 0:08:21.120 as we visit his office is here, unfit there having 0:08:36.480 --> 0:08:38.160 I want to bring it in Pria Misra, now TV 0:08:38.280 --> 0:08:41.199 Securities head of Global Race Strategy, to talk about the 0:08:41.280 --> 0:08:45.240 bond market, Priya, A big change in tone from the chairman. 0:08:45.320 --> 0:08:47.560 Just to go through some of his recent comments, listening 0:08:47.640 --> 0:08:51.720 carefully to market risks, prepared to be patient, flexible, even 0:08:51.800 --> 0:08:55.680 open to balance sheet policy change, Priya, the Chairman seems 0:08:55.679 --> 0:09:01.040 to be all over the place the last couple of months. Hi, John, Um, Yes, 0:09:01.280 --> 0:09:05.360 So I think the market interpretation of the chairman's comments 0:09:05.440 --> 0:09:07.959 has changed now. I do think in in the December 0:09:08.000 --> 0:09:10.880 press conference, he was trying to signal this flexibility, but 0:09:11.000 --> 0:09:13.680 we were we sort of went into that meeting expecting 0:09:13.720 --> 0:09:17.720 a lot. Uh. There were certainly people expecting no hikes there, uh, 0:09:18.120 --> 0:09:20.000 and the Chairman did hike. I think it's very hard 0:09:20.080 --> 0:09:23.199 to hike and then sound extremely nervous or panicky. So 0:09:23.320 --> 0:09:25.720 I think, you know, the hikes sort of set him 0:09:25.800 --> 0:09:27.920 up to sound somewhat hawkish. But what we heard from 0:09:28.000 --> 0:09:30.960 him on Friday was this idea that they're flexible, nothing 0:09:31.080 --> 0:09:34.040 is on autopilot. Um. You know, I think the fact 0:09:34.080 --> 0:09:36.800 that he's listening to financial conditions actually tells me that, 0:09:37.440 --> 0:09:41.199 you know, he's setting up somewhat for a pause here. 0:09:41.280 --> 0:09:44.000 So um, you know, whether it's a pause, whether um 0:09:44.320 --> 0:09:46.360 it's it's the end of the hiking cycle. I think 0:09:46.440 --> 0:09:48.599 that only data will tell us. But at least we 0:09:48.720 --> 0:09:51.960 have the FED now suggesting that they are watching uh, 0:09:52.679 --> 0:09:55.520 the tightening and financial conditions much more closely than they 0:09:55.559 --> 0:09:58.520 were earlier, uh, you know, the last few months. So 0:09:58.880 --> 0:10:01.079 let's begin by talking about potential for a pause, and 0:10:01.120 --> 0:10:03.760 then we can explore this tension between the market and 0:10:03.840 --> 0:10:07.160 the economic data. I think for many people, for now, 0:10:07.880 --> 0:10:09.800 many investors are going to run with the idea that 0:10:09.880 --> 0:10:13.800 Poal is going with the twenty sixteen FED playbook. Can 0:10:13.840 --> 0:10:17.599 we take a page out of the playbook in I 0:10:17.679 --> 0:10:22.559 think we can. I mean, the similarity of is is 0:10:22.600 --> 0:10:25.959 pretty high right now. Now. It is ultimately going to 0:10:26.040 --> 0:10:28.719 depend on whether we get the global growth rebound that 0:10:28.800 --> 0:10:31.880 we did see in twenty six we saw significant China easing. 0:10:32.480 --> 0:10:34.400 I'm not sure that the triple our cut is enough, 0:10:34.480 --> 0:10:37.520 but but if we do get you know, significant fiscal 0:10:37.559 --> 0:10:41.040 easing in China, if global growth rebounds, I think then 0:10:41.120 --> 0:10:45.080 twenty six uh is the reasonable uh you know thing 0:10:45.160 --> 0:10:49.119 to um sort of watch for. If growth starts to decelerate, 0:10:49.200 --> 0:10:51.520 so we actually don't get that rebound, then I think 0:10:51.559 --> 0:10:54.160 we're you know, I'll be looking more at two thousand seven. 0:10:54.480 --> 0:10:56.520 So I think right now, just given that we don't 0:10:56.559 --> 0:10:59.439 know enough, the US economy still seems to be you know, 0:10:59.559 --> 0:11:01.440 powering true. I think we really have to look at 0:11:01.520 --> 0:11:04.720 what happens to global growth, what happens on the trade front, 0:11:04.760 --> 0:11:07.480 to say whether this is or this is two thousand 0:11:07.559 --> 0:11:10.640 seven had some really extreme price action on the Thursday, 0:11:10.760 --> 0:11:13.040 never mind the Friday. In fact, maybe Friday told us 0:11:13.080 --> 0:11:16.040 more about the extreme positioning after Thursday than it did 0:11:16.080 --> 0:11:19.079 anything else. Prayer, I just wander your thoughts on the 0:11:19.320 --> 0:11:22.640 on the tension right now between financial markets where things 0:11:22.679 --> 0:11:25.000 are a little bit darker relative to twelve months ago, 0:11:25.120 --> 0:11:28.040 maybe a whole lot darker in your view, compared to 0:11:28.080 --> 0:11:31.600 the data. Whether data seems to be okay, especially here 0:11:31.600 --> 0:11:33.880 in the United States. Softer, yes, in some parts, but 0:11:33.960 --> 0:11:37.920 the labor market still looking very strong, right. I think 0:11:37.960 --> 0:11:40.880 the tension that you're talking about is also you know, 0:11:41.000 --> 0:11:43.640 in the data front, a lot of the forward looking 0:11:44.080 --> 0:11:48.160 measures are looking uh, you know, more worrisome. I think 0:11:48.600 --> 0:11:51.640 the Bureau report is still somewhat of a backward looking 0:11:52.040 --> 0:11:54.199 data point we still have for still using in the 0:11:54.320 --> 0:11:56.400 system in the US. So I think what we're seeing 0:11:56.520 --> 0:11:59.720 is that the US economy, at least backward looking, seems 0:11:59.720 --> 0:12:02.079 to be pretty strong. We sort of knew that. I 0:12:02.160 --> 0:12:05.480 think the fear is that the China I s M, 0:12:06.160 --> 0:12:08.280 the U s I s M, all of these forward 0:12:08.320 --> 0:12:11.480 looking measures are suggesting some slowdown. Now, if we slow 0:12:11.520 --> 0:12:13.320 down from a three and a half the cent GDP 0:12:13.559 --> 0:12:15.720 to let's say two and a half the cent GDP, 0:12:16.160 --> 0:12:18.160 that is the slowdown, But then two and a half 0:12:18.400 --> 0:12:20.480 is still well above potential. So I think that can 0:12:20.520 --> 0:12:23.960 allow the market to sort of stabilize. I think if 0:12:24.000 --> 0:12:26.240 we're slowing down much more than that, and that's what 0:12:26.400 --> 0:12:28.199 we really don't know, that's where the tension is. I 0:12:28.240 --> 0:12:30.960 think all forward looking measures are going to be extremely 0:12:31.559 --> 0:12:33.720 strutinized by the market because I think now the Fed 0:12:33.800 --> 0:12:37.880 policy mistake issue that should go in the background. I 0:12:37.920 --> 0:12:40.200 think now it's all going to be does the US 0:12:40.240 --> 0:12:44.280 economy slow down above potential or do we go below potential? 0:12:44.600 --> 0:12:47.319 And how is the global growth backdrop here? I think 0:12:47.360 --> 0:12:50.319 that's where you know, what's what's going to become extremely 0:12:50.360 --> 0:12:53.199 important as we analyze data. It's really going to be 0:12:53.280 --> 0:12:55.960 the forward looking versus backward looking different. So we need 0:12:56.040 --> 0:12:58.600 to analyze the soft data versus the hard dates are 0:12:58.920 --> 0:13:01.040 once again, and the tension between that and not just 0:13:01.160 --> 0:13:03.280 the tension between the data of the market. Preyer, I 0:13:03.320 --> 0:13:05.679 want some final thoughts on what your base cases right 0:13:05.720 --> 0:13:07.960 now for the US economy and for US rates. How 0:13:08.000 --> 0:13:11.160 difficult is it to construct a base case? It is 0:13:11.320 --> 0:13:14.360 very difficult, Um, I say, you know, what we're suggesting 0:13:14.640 --> 0:13:17.120 is for investors to stay somewhat in the front end. 0:13:17.160 --> 0:13:19.000 You know, when the two year old or three month 0:13:19.000 --> 0:13:23.160 treasury builds are giving you two forty or um. You know, 0:13:23.240 --> 0:13:26.559 basis points versus the tenure that's giving you to sixty, 0:13:26.880 --> 0:13:28.679 you're not getting a whole lot more to take on 0:13:28.760 --> 0:13:31.599 the additional duration risk. So I'm actually still suggesting that 0:13:31.720 --> 0:13:34.559 investors stay in the front end and then start looking 0:13:34.760 --> 0:13:37.960 at parts of the fixed in markets where risk premium 0:13:38.040 --> 0:13:41.120 has been adequately repriced. So some of the markets have 0:13:41.320 --> 0:13:45.480 seen significant widening in spreads, I think it might make 0:13:45.600 --> 0:13:48.880 sense to start dipping in your tours. They're keeping an 0:13:48.920 --> 0:13:51.079 eye on the data because if if the data does 0:13:51.120 --> 0:13:54.080 start to deteriorate significantly, then you want to move out 0:13:54.120 --> 0:13:57.280 of risk asses. But something we have that signal just yet. 0:13:57.440 --> 0:13:59.520 Pre always great to catch you out with your TV 0:13:59.640 --> 0:14:14.520 Security's head of Global Rights Strategy and bringing in Meredith 0:14:14.600 --> 0:14:18.520 Sumter of ERAISA Group head of Research, Strategy and Operations. 0:14:18.640 --> 0:14:20.480 I was a bit surprised for him. It's the first 0:14:20.520 --> 0:14:23.480 time I've brought it up. President of Trump, the huge 0:14:23.720 --> 0:14:26.760 distraction in Davos last year, and he goes for re 0:14:26.960 --> 0:14:28.960 DUX this year if he can get through the t 0:14:29.200 --> 0:14:31.600 s A at the airport to fly there. I mean 0:14:31.880 --> 0:14:36.240 President Trump against speaking to the international community. Yes, Davos 0:14:36.400 --> 0:14:39.520 is certainly a critical stage for him and for his 0:14:39.640 --> 0:14:43.440 brand globally. Like that his brand, his brand for sure, 0:14:43.560 --> 0:14:46.480 and I think he also his speech at last year's 0:14:46.560 --> 0:14:51.040 Davos played fairly well according to the White House, so 0:14:51.400 --> 0:14:54.240 look for a repeat performance there. But also watched for 0:14:54.480 --> 0:14:59.160 President Trump to have a sideline meeting with Chinese Vice 0:14:59.240 --> 0:15:02.960 President Wong she Sean at Davos. That is something that 0:15:03.200 --> 0:15:05.160 all of us will be watching for signs as to 0:15:05.280 --> 0:15:08.200 how the ongoing round of negotiations between the US and 0:15:08.320 --> 0:15:10.360 China are faring. We've spent a lot of times to 0:15:10.480 --> 0:15:13.360 the morning was really up top your Chinese risk as well. 0:15:13.400 --> 0:15:16.440 I want to dress right now your lengthy essay on 0:15:16.640 --> 0:15:20.840 Europe populism, which is decidedly different than it was twelve 0:15:20.880 --> 0:15:24.000 months ago. What is the threat to democracy in Europe 0:15:24.120 --> 0:15:27.480 right now? Well, twenty nineteen is really the year when 0:15:27.560 --> 0:15:30.520 the populace will take center stage in Europe and begin 0:15:30.640 --> 0:15:34.200 to erode the EU from within. We've written for several 0:15:34.280 --> 0:15:37.160 months now about the lives of populism and populist leaders 0:15:37.240 --> 0:15:41.080 and uh, you know Europe's third and fourth largest market 0:15:41.160 --> 0:15:45.080 economies in other countries such as Hungary and Poland. But 0:15:45.200 --> 0:15:49.680 what's critical now is that we expect that populists their 0:15:49.800 --> 0:15:52.800 numbers are going to fare even better in twenty nine 0:15:53.480 --> 0:15:56.080 and keep an eye on the May parliamentary elections. We 0:15:56.240 --> 0:16:00.560 expect that their numbers are going to grow following those elections, 0:16:00.600 --> 0:16:04.160 which will put them at center stage in Europe's most 0:16:04.200 --> 0:16:08.280 important democratic institution. In the dominant countries as well. Your 0:16:08.320 --> 0:16:10.400 age group was so out front on the fractures of 0:16:10.440 --> 0:16:13.120 Germany one and two and even three years ago, and 0:16:13.200 --> 0:16:15.720 of course Mr mccrawl with the challenges Now, how does 0:16:15.760 --> 0:16:19.520 that readdound back to Brussels, where I was just two 0:16:19.560 --> 0:16:22.600 weeks ago. I guess when when I look at Brussels, 0:16:22.720 --> 0:16:26.560 what is the strength of this European Union within the 0:16:26.680 --> 0:16:31.800 media frenzy of Brexit. Well, look the Brussels it's it's 0:16:31.880 --> 0:16:34.920 dealing both with Brexit, but it's going to have to 0:16:35.120 --> 0:16:38.320 deal with the growing voice and the growing influence of 0:16:38.400 --> 0:16:42.280 the Populace not only in the European Parliament following May's elections, 0:16:42.360 --> 0:16:44.960 but tom if if the Populace get enough of a 0:16:45.000 --> 0:16:48.200 strong showing in the May parliamentary elections, you combine that 0:16:48.840 --> 0:16:53.160 with their fairly solid basis of support and several Keys states, 0:16:53.600 --> 0:16:57.480 and you have a risk of uh, you know, euroskeptic 0:16:57.720 --> 0:17:00.240 populist having a voice not only in the parlor meant, 0:17:00.560 --> 0:17:03.680 but also in the European Commission, which oversees the day 0:17:03.680 --> 0:17:06.440 to day operations of Europe, as as well as the 0:17:06.520 --> 0:17:09.840 European Council. This affords them real decision making power. Is 0:17:09.920 --> 0:17:12.800 this within all of your top risks your Asia group? 0:17:13.040 --> 0:17:16.439 Is the system fractured? To steal a word from Franci 0:17:16.560 --> 0:17:20.879 Laquois earlier this morning, is the system fractured? Are you 0:17:21.080 --> 0:17:23.919 optimistic with Dr Bremer that we can see a healing 0:17:24.400 --> 0:17:27.040 If not in two thousand nineteen, then on through twenty 0:17:27.359 --> 0:17:31.080 after the presidential cycle. In the ensuing years so is 0:17:31.080 --> 0:17:34.280 the question more so with Europe or broadly spec Broadly speaking, 0:17:34.320 --> 0:17:36.800 I think our listeners are you know, they're they're interested 0:17:36.840 --> 0:17:38.879 in Europe, and they're interested in Wall Street and that. 0:17:39.440 --> 0:17:42.440 But it's sort of a broad feeling of Okay, when 0:17:42.560 --> 0:17:45.600 does this heal? Right, Look, it's going to take several 0:17:45.640 --> 0:17:48.240 more years of healing. But but the length of time 0:17:48.320 --> 0:17:51.440 that it takes for us to actually heal depends upon 0:17:51.600 --> 0:17:56.720 the ability of leaders from largely industrialized economies tackling head 0:17:56.800 --> 0:17:59.280 on the reforms that are necessary to bring more of 0:17:59.320 --> 0:18:03.119 their popular ations into the economy of the future. A 0:18:03.200 --> 0:18:06.000 lot of the geopolitical flux that we're seeing now part 0:18:06.040 --> 0:18:09.040 of it. It's a long term process of evolving from 0:18:09.080 --> 0:18:11.440 the post World war to order to what that new 0:18:11.520 --> 0:18:14.440 world war, what that new world order? Will know that 0:18:14.640 --> 0:18:17.440 this is critical. Do we know that new order that's 0:18:17.480 --> 0:18:22.280 out there? Cicaria, post American order, bremer g zero world, 0:18:22.640 --> 0:18:25.520 your own writings, Merit of the Sumter as well, and others. 0:18:25.680 --> 0:18:29.440 What's the new consensus after the Washington Consensus? I don't 0:18:29.480 --> 0:18:32.159 see it. Well. Part of that will depend upon what 0:18:32.520 --> 0:18:36.280 role Washington decides to play in this post world war 0:18:36.400 --> 0:18:40.560 to order and to what extent Washington can get along 0:18:40.640 --> 0:18:43.960 with other key power brokers, even if they don't agree 0:18:44.080 --> 0:18:45.879 with them, even if they don't agree with him. This 0:18:46.200 --> 0:18:51.560 this fundamentally includes China Beijing. So regardless of whatever tariff 0:18:51.600 --> 0:18:55.960 deal is agreed to, our call is that that relationships 0:18:56.080 --> 0:18:59.040 between the two that these two world powers, is going 0:18:59.119 --> 0:19:01.720 to get even huffer and he will. Let's bring the 0:19:01.800 --> 0:19:05.640 immediacy of a shutdown where the president's made clear it's 0:19:05.720 --> 0:19:09.520 his way or the highway. Is that his relationship with China. 0:19:09.680 --> 0:19:12.040 Is that what we're going to see in the talks 0:19:12.800 --> 0:19:15.679 this week, the talks maybe at Davos, and the talks 0:19:15.720 --> 0:19:17.879 and the talks and the talks after that. Is it 0:19:17.960 --> 0:19:21.760 a Trump lateral world. It would be a Trump lateral 0:19:21.880 --> 0:19:26.120 world if we had an unending US economic growth and strength, 0:19:26.240 --> 0:19:29.639 but that's not necessarily what we're seeing right now. Trump 0:19:29.840 --> 0:19:32.320 is fairly confident in the U s economy, but we're 0:19:32.320 --> 0:19:35.639 all watching the increased market volatility. We're all watching signs 0:19:35.720 --> 0:19:38.399 of a potential slowdown in the US economy, and that 0:19:38.440 --> 0:19:41.639 could force his hand earlier than than he would like. 0:19:42.040 --> 0:19:44.160 But the key question is whether it's Trump or post 0:19:44.200 --> 0:19:47.520 Trump to what extent is America going to lead and 0:19:47.680 --> 0:19:51.200 what does that mean for the post world order? You, 0:19:51.320 --> 0:19:54.640 more than any other guest we speak to, is hardwired 0:19:54.920 --> 0:19:58.159 for distance from capital. You did your academics at the 0:19:58.280 --> 0:20:01.440 University of Washington. You where were you? You and the 0:20:01.480 --> 0:20:04.520 grizzly bears up an anchorage? Right, something like that. I'm 0:20:04.560 --> 0:20:06.680 from Alaska, but it did my my graduate work at LSE. 0:20:06.960 --> 0:20:09.120 I know you went to London for your graduate work. 0:20:09.160 --> 0:20:12.000 I get that. But nobody I know spent more time 0:20:12.200 --> 0:20:16.159 distance from a capital than you. What does Wanhington not 0:20:16.440 --> 0:20:19.520 get about what's out there? The rest of the world 0:20:19.640 --> 0:20:24.479 is moving on regardless of what that's right, that's right, 0:20:24.600 --> 0:20:26.840 And if you if you're in Washington circles and you 0:20:26.920 --> 0:20:29.399 listen to the kind of discussions happening there, to me, 0:20:29.520 --> 0:20:32.560 it's not apparent. That reality is not yet apparent to 0:20:32.600 --> 0:20:35.040 the key thought leaders and decision makers in Washington, and 0:20:35.119 --> 0:20:37.920 the faster they realized that, the faster that they're able 0:20:37.960 --> 0:20:41.119 to turn away from this high levels of partisanship and 0:20:41.200 --> 0:20:44.320 internal naval gazing and really focus on, no kidding, what 0:20:44.400 --> 0:20:46.880 does it really take for America and the American workforce 0:20:47.000 --> 0:20:50.760 to be competitive and global economy? Then take it over 0:20:50.840 --> 0:20:54.359 to your wheelhouse of international relations. We're not getting along 0:20:54.400 --> 0:20:58.400 with their allies. Is that one off of this distrust 0:20:58.560 --> 0:21:02.160 with our this limited US, as you say, with our allies, 0:21:02.440 --> 0:21:05.159 or is there can there be a recovery towards some 0:21:05.359 --> 0:21:08.200 trust with our core ellis it's going to be a 0:21:08.240 --> 0:21:11.240 bit of an apphole battle to get a recovery of 0:21:11.600 --> 0:21:14.000 the kind of trust that we saw pre Trump. In 0:21:14.040 --> 0:21:15.560 other words, I think we're going to have to see 0:21:15.560 --> 0:21:20.240 a refashioning of the US related commitment to its alliance relationships, 0:21:20.280 --> 0:21:23.080 not only with traditional allies but also with new emerging 0:21:23.160 --> 0:21:26.440 partners with with whom Washington will need to partner to 0:21:26.520 --> 0:21:30.320 be an effective and strategic power in person, Meredith Sumter, 0:21:30.440 --> 0:21:32.520 thank you so much with your raising group, Head of Research, 0:21:32.560 --> 0:21:51.200 Strategy and Operations. Folding in the state of our capitalism 0:21:51.280 --> 0:21:54.119 and particularly the state of our technology, which means it's 0:21:54.119 --> 0:21:56.960 a wonderful time to speak to Sally craw Check. You 0:21:57.080 --> 0:21:59.919 know her from Wall Street, you know her from Elevant, uh, 0:22:00.080 --> 0:22:03.520 Elevate and Elavesta should say and all that she's done 0:22:03.560 --> 0:22:07.760 within digital, particularly with a thrust towards how women should 0:22:07.800 --> 0:22:11.199 adapt to the markets and to capitalism and she joins us. 0:22:11.800 --> 0:22:16.800 This morning, Sally, what have you and Albus learned about 0:22:16.840 --> 0:22:22.960 how the digital platforms, the digital technologies will deal with volatility. 0:22:23.160 --> 0:22:27.800 You enjoyed February, then you enjoyed October and on to 0:22:27.920 --> 0:22:31.200 the end of the year. It's different than Smith Barney, 0:22:31.359 --> 0:22:34.800 isn't it. Well, it is different than Smith Barney and 0:22:34.960 --> 0:22:39.399 different from Merrill Lynch and everybody told me. And the 0:22:39.480 --> 0:22:43.160 conventional wisdom is if you have a digital first investing 0:22:43.280 --> 0:22:47.440 platform and we get into some tough markets, your clients 0:22:47.480 --> 0:22:49.920 will leave you. There won't be a person there to 0:22:50.800 --> 0:22:54.200 either sue them or grab them around the ankles and 0:22:54.359 --> 0:22:56.800 keep them from leaving. And Tom, that's it, not at 0:22:56.880 --> 0:23:00.399 all what we saw that you know, we have built 0:23:00.400 --> 0:23:04.960 a product platform here at Labs that shows our clients 0:23:05.280 --> 0:23:08.399 are they on or off track for achieving their goals. 0:23:08.800 --> 0:23:11.600