1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,239 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,680 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,280 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:37,560 Speaker 2: Terminal and the Bloomberg Business App. Joining us now, Danny 10 00:00:37,600 --> 00:00:40,240 Speaker 2: of Yourdenny Research. He writes Trump and Bess and discards 11 00:00:40,240 --> 00:00:42,640 Speaker 2: some of their best cards while preparing to play tariff 12 00:00:42,640 --> 00:00:46,000 Speaker 2: poker with China. Financial markets are happy that Team Trump 13 00:00:46,280 --> 00:00:48,800 Speaker 2: is blinkingg Edgiandenny joined us now for more. Ed Welcome 14 00:00:48,800 --> 00:00:51,160 Speaker 2: to the program. Let's talk about the extent of that blink. 15 00:00:51,240 --> 00:00:53,280 Speaker 2: How much of a U turne are you expecting in 16 00:00:53,320 --> 00:00:54,240 Speaker 2: the next several weeks. 17 00:00:55,400 --> 00:00:56,240 Speaker 3: Well, it's a very. 18 00:00:56,080 --> 00:00:59,320 Speaker 4: Odd situation where the United States seems to be negotiating 19 00:00:59,360 --> 00:01:02,640 Speaker 4: with itself, so very peculiar art of the deal where 20 00:01:02,680 --> 00:01:05,319 Speaker 4: you walk in the room and you're you're the only 21 00:01:05,360 --> 00:01:10,480 Speaker 4: one in there, and you keep issuing really press release 22 00:01:10,520 --> 00:01:12,880 Speaker 4: to saying that great progress is being made. 23 00:01:12,959 --> 00:01:14,800 Speaker 3: So I don't really know what to make of it. 24 00:01:14,880 --> 00:01:15,959 Speaker 3: What I do make of. 25 00:01:15,920 --> 00:01:19,319 Speaker 4: It is that curly the financial markets have had a 26 00:01:19,319 --> 00:01:24,120 Speaker 4: big impact on the administration. This is the bond vigilantes 27 00:01:24,160 --> 00:01:28,200 Speaker 4: and the stock vigilantes ganging up on the administration and saying, 28 00:01:28,720 --> 00:01:31,039 Speaker 4: you know, we need some moderation here, we need some 29 00:01:31,560 --> 00:01:34,240 Speaker 4: cooling off. And that's exactly what the administration is doing. 30 00:01:35,440 --> 00:01:38,040 Speaker 2: And that is the target Home Depot and Walmart vigilantes 31 00:01:38,040 --> 00:01:41,080 Speaker 2: as well. Clearly the most important meeting that took place 32 00:01:41,080 --> 00:01:43,880 Speaker 2: in Washington this week where the retailer is sitting down 33 00:01:43,880 --> 00:01:45,840 Speaker 2: with the President of the United States and warning Kim 34 00:01:46,080 --> 00:01:49,080 Speaker 2: they're within weeks we could have empty shelves. And I 35 00:01:49,120 --> 00:01:51,040 Speaker 2: think it makes it difficult at this moment to read 36 00:01:51,080 --> 00:01:55,280 Speaker 2: the economic data. What is a genuine rebuilding infantries, what 37 00:01:55,400 --> 00:01:59,320 Speaker 2: is a genuine sustainable underlying trend in demand, and what 38 00:01:59,360 --> 00:02:01,920 Speaker 2: do you see in the data and the earnings. 39 00:02:03,320 --> 00:02:07,200 Speaker 4: Well, the earnings are actually starting to be cut back. 40 00:02:07,280 --> 00:02:11,800 Speaker 4: Of course, analysts have finally gotten their recession tariff memo, 41 00:02:12,880 --> 00:02:16,320 Speaker 4: so they've started to incorporate the fact that this isn't 42 00:02:16,320 --> 00:02:18,160 Speaker 4: going to be good for the economy. It's going to 43 00:02:18,160 --> 00:02:21,520 Speaker 4: weigh on the economy. I think to the extent that 44 00:02:22,360 --> 00:02:25,520 Speaker 4: analysts usually talk just to companies, they don't talk to economists, 45 00:02:25,520 --> 00:02:28,520 Speaker 4: But they're reading the headlines and they see that economists 46 00:02:28,560 --> 00:02:32,120 Speaker 4: are lowering their outlook for economic growth, and they're probably 47 00:02:32,160 --> 00:02:34,760 Speaker 4: getting that kind of guidance from some of their companies 48 00:02:34,760 --> 00:02:37,800 Speaker 4: that if the tariffs stay on, the longer they stay on, 49 00:02:37,840 --> 00:02:41,400 Speaker 4: the weaker the economy is going to be. But I 50 00:02:41,400 --> 00:02:43,519 Speaker 4: think at the rate at which the administration is back 51 00:02:43,560 --> 00:02:47,120 Speaker 4: and off here, the economic impact of the tariffs could 52 00:02:47,160 --> 00:02:49,520 Speaker 4: start to really ease off by the second half of 53 00:02:49,520 --> 00:02:52,360 Speaker 4: the year, which is at this point when most economists 54 00:02:52,440 --> 00:02:56,600 Speaker 4: expecting a much weaker economy are actually a recession. So 55 00:02:57,160 --> 00:02:59,480 Speaker 4: there could be a reversal at least in the soft 56 00:02:59,560 --> 00:03:02,880 Speaker 4: data that then it would suddenly lift the pressure off 57 00:03:02,880 --> 00:03:03,480 Speaker 4: the hard data. 58 00:03:04,600 --> 00:03:06,560 Speaker 5: And it feels like the genius sort of out of 59 00:03:06,560 --> 00:03:07,959 Speaker 5: the bottle, But we can't see and we don't know 60 00:03:07,960 --> 00:03:09,280 Speaker 5: how big he is. We don't know whether he can 61 00:03:09,320 --> 00:03:11,519 Speaker 5: climb back into the bottle at any given time. 62 00:03:11,600 --> 00:03:14,119 Speaker 6: I just wonder as you look forward why you reject. 63 00:03:13,840 --> 00:03:16,200 Speaker 5: The idea that what we're seeing right now is a 64 00:03:16,360 --> 00:03:20,320 Speaker 5: long term structural loss of US exceptionalism that will result 65 00:03:20,360 --> 00:03:23,840 Speaker 5: in a weaker dollar and potentially less dynamism in US 66 00:03:23,880 --> 00:03:24,840 Speaker 5: equities over time. 67 00:03:25,600 --> 00:03:26,760 Speaker 3: Yeah, that's a great question. 68 00:03:26,880 --> 00:03:30,080 Speaker 4: I mean, it's only a few months ago that the 69 00:03:30,320 --> 00:03:33,799 Speaker 4: American exceptionalism made the front cover of The Economist. I 70 00:03:33,840 --> 00:03:36,480 Speaker 4: think it was October of last year. There was a 71 00:03:36,560 --> 00:03:38,760 Speaker 4: lot of dollars that looked like a rocket ship, and 72 00:03:39,160 --> 00:03:42,560 Speaker 4: you know, we couldn't be staffed. Look, I think now 73 00:03:42,600 --> 00:03:45,560 Speaker 4: that everybody is having second thoughts about that, or even 74 00:03:45,880 --> 00:03:50,560 Speaker 4: concluding in a dire way that the dollars is in 75 00:03:50,640 --> 00:03:53,720 Speaker 4: decline here as a reserve currency. Keep in mind that 76 00:03:54,280 --> 00:03:57,040 Speaker 4: there's nothing like the US capital markets. Well, you know, 77 00:03:57,040 --> 00:04:00,560 Speaker 4: when you make a list of exceptionalism, American capital markets 78 00:04:00,640 --> 00:04:04,280 Speaker 4: are exceptional. They are huge, they are liquid. There's nothing 79 00:04:04,440 --> 00:04:07,760 Speaker 4: like them. So I don't know how the dollar losers. 80 00:04:07,840 --> 00:04:12,480 Speaker 4: That's preserve status, and I think it remains strong even 81 00:04:12,520 --> 00:04:17,599 Speaker 4: this recent hysteria about the weaker dollar. It's fell about 82 00:04:17,600 --> 00:04:22,200 Speaker 4: ten percent. Using the Dollar index, the DXY that everybody watches, 83 00:04:22,240 --> 00:04:25,680 Speaker 4: but a much better index that the FED calculates is 84 00:04:25,720 --> 00:04:27,920 Speaker 4: down about half as much, which is no big deal 85 00:04:27,960 --> 00:04:28,680 Speaker 4: in my opinion. 86 00:04:30,120 --> 00:04:32,200 Speaker 5: This is the reason why people are looking at announcements 87 00:04:32,200 --> 00:04:34,280 Speaker 5: from a number of different ACID allocators and seeing if 88 00:04:34,279 --> 00:04:37,279 Speaker 5: they are trying to diversify even a little bit away 89 00:04:37,279 --> 00:04:40,320 Speaker 5: from the United States into other countries. I just wonder 90 00:04:40,640 --> 00:04:42,600 Speaker 5: how concerned you are about the idea that forty four 91 00:04:42,600 --> 00:04:44,479 Speaker 5: percent of S and P five hundred companies that have 92 00:04:44,520 --> 00:04:47,400 Speaker 5: reported so far have mentioned the word recession, except from 93 00:04:47,440 --> 00:04:50,160 Speaker 5: three percent in the fourth quarter, at a time where 94 00:04:50,200 --> 00:04:54,720 Speaker 5: potentially the US's ability to borrow to bolster the economy 95 00:04:54,720 --> 00:04:57,760 Speaker 5: and any kind of downturn could really be a lot 96 00:04:57,800 --> 00:05:01,640 Speaker 5: more difficult, a lot more pricey, a lot more paniff. 97 00:05:02,920 --> 00:05:03,120 Speaker 3: Yeah. 98 00:05:03,160 --> 00:05:06,480 Speaker 4: Well, I think the stock markets discounted certainly a weakening 99 00:05:06,560 --> 00:05:08,440 Speaker 4: in the economy in the second half of the year. 100 00:05:09,240 --> 00:05:12,520 Speaker 4: We certainly lowered our numbers from something like two and 101 00:05:12,600 --> 00:05:15,800 Speaker 4: a half to three percent growth this year to something 102 00:05:16,080 --> 00:05:16,640 Speaker 4: more like. 103 00:05:18,200 --> 00:05:20,200 Speaker 3: Zero point five to one and a half percent. 104 00:05:21,080 --> 00:05:23,680 Speaker 4: The only question is what there should be negative signs 105 00:05:24,120 --> 00:05:26,680 Speaker 4: on those numbers, and some people, I guess are in 106 00:05:26,720 --> 00:05:29,800 Speaker 4: that camp. We're still looking at the forty five percent 107 00:05:30,080 --> 00:05:32,440 Speaker 4: odds of an outright recession. 108 00:05:32,680 --> 00:05:33,120 Speaker 3: We think the. 109 00:05:33,040 --> 00:05:35,880 Speaker 4: President's really the administration is going to back off as 110 00:05:35,920 --> 00:05:38,800 Speaker 4: they have been on these tariffs, and to the extent 111 00:05:38,839 --> 00:05:41,440 Speaker 4: that they don't, I think they're going to declare victory. 112 00:05:41,480 --> 00:05:43,440 Speaker 4: I think they're going to get maybe ninety pieces of 113 00:05:43,440 --> 00:05:49,440 Speaker 4: paper from ninety countries, signed by key diplomats, laying out a. 114 00:05:49,040 --> 00:05:50,359 Speaker 3: Groundwork of framework. 115 00:05:51,000 --> 00:05:53,640 Speaker 4: You can't negotiate a treaty in ninety days, you can't 116 00:05:53,880 --> 00:05:56,160 Speaker 4: implement the treaty in ninety days. But I think they're 117 00:05:56,200 --> 00:05:59,240 Speaker 4: going to declare victory, move on to the extension of 118 00:05:59,279 --> 00:06:01,839 Speaker 4: the tax cuts, and life will go on. 119 00:06:03,440 --> 00:06:05,040 Speaker 1: And when it comes to the tariffs, though, the Wall 120 00:06:05,040 --> 00:06:07,240 Speaker 1: Street General appoint of the administration might back down on 121 00:06:07,320 --> 00:06:09,839 Speaker 1: China to say sixty percent, but that is what Trump 122 00:06:09,880 --> 00:06:12,560 Speaker 1: has been saying for months. On the campaign trail, he 123 00:06:12,640 --> 00:06:15,800 Speaker 1: promised ten percent across the board, of sixty percent on China. 124 00:06:15,920 --> 00:06:18,960 Speaker 1: So if that's the base case, how does this economy look? 125 00:06:20,160 --> 00:06:22,080 Speaker 4: Well, as you know, it's hard to define what the 126 00:06:22,120 --> 00:06:27,719 Speaker 4: base case is. It changes almost daily from the press 127 00:06:27,720 --> 00:06:32,920 Speaker 4: conferences that the President has in the Oval Office. Is 128 00:06:35,440 --> 00:06:40,280 Speaker 4: associates keep talking about how much progress they're making. So 129 00:06:41,440 --> 00:06:44,720 Speaker 4: I think, you know, sixty percent is just as prohibitive 130 00:06:44,720 --> 00:06:47,560 Speaker 4: as one hundred and forty five percent. I think they're 131 00:06:47,560 --> 00:06:51,760 Speaker 4: going to have to again negotiate against themselves and maybe 132 00:06:51,760 --> 00:06:55,040 Speaker 4: postpone that increase so to leave it at sixty percent, 133 00:06:55,040 --> 00:06:59,039 Speaker 4: but they're going to postpone it for ninety days, turn 134 00:06:59,120 --> 00:07:03,360 Speaker 4: down the rhetoric, and find somebody to negotiate with the 135 00:07:03,480 --> 00:07:04,960 Speaker 4: Chinese on a better deal. 136 00:07:06,480 --> 00:07:08,880 Speaker 2: Just a final question from us. You've been super constructive 137 00:07:08,880 --> 00:07:10,960 Speaker 2: on this cycle for quite a while. Coming into the 138 00:07:11,000 --> 00:07:13,720 Speaker 2: twenty twenties, you talked about the Roaring twenties. Yep, we're 139 00:07:13,720 --> 00:07:16,440 Speaker 2: at the halfway point working through that now. If he's 140 00:07:16,440 --> 00:07:18,480 Speaker 2: fronting the town on that view or you're sticking with. 141 00:07:18,480 --> 00:07:21,320 Speaker 4: It, well, John, it was a great first half of 142 00:07:21,320 --> 00:07:24,840 Speaker 4: the decade. I hope it's the Roaring twenty twenties as over. 143 00:07:24,960 --> 00:07:29,280 Speaker 4: Yet there's sort of deja avous with the nineteen the 144 00:07:29,360 --> 00:07:32,120 Speaker 4: nineteen twenties we got a whole decade out of that 145 00:07:32,200 --> 00:07:38,680 Speaker 4: before the Congress that hoerendously imposed tariffs, So there's a 146 00:07:38,720 --> 00:07:41,400 Speaker 4: certain similarity here. But I think this too shall pass, 147 00:07:41,800 --> 00:07:44,000 Speaker 4: and I'm still looking for the Roaring twenty twenties to 148 00:07:44,000 --> 00:07:47,280 Speaker 4: be a description of the entire decade called me an optimist, 149 00:07:47,320 --> 00:07:51,280 Speaker 4: but I think I guess my mantra has been Look 150 00:07:51,280 --> 00:07:53,760 Speaker 4: how well the US economy has done over the years 151 00:07:53,760 --> 00:07:54,840 Speaker 4: despite Washington. 152 00:07:55,440 --> 00:07:56,760 Speaker 3: That's still my bet. 153 00:07:58,080 --> 00:07:59,680 Speaker 2: And we hope you're right. It's going to catch up 154 00:07:59,680 --> 00:08:02,840 Speaker 2: with you. As always, Danny, there have your Danny research 155 00:08:12,440 --> 00:08:14,920 Speaker 2: to discuss and place to say. The North Bank Investment 156 00:08:14,920 --> 00:08:17,880 Speaker 2: Management CEO Nikolay Tangan joins US now for more. Nicolay, 157 00:08:17,920 --> 00:08:20,080 Speaker 2: welcome back to the program. So a lot has changed 158 00:08:20,480 --> 00:08:23,360 Speaker 2: since we last spoke. Attitudes towards US as sets are 159 00:08:23,400 --> 00:08:25,160 Speaker 2: starting to shift. I just wonder how you and the 160 00:08:25,200 --> 00:08:27,679 Speaker 2: team have started to think about that, how you're debating 161 00:08:27,720 --> 00:08:29,800 Speaker 2: that issue internally over in Norway. 162 00:08:31,280 --> 00:08:33,600 Speaker 7: Well, we have a very long term view on what 163 00:08:33,640 --> 00:08:36,880 Speaker 7: we do, so you know, we are invested with roughue 164 00:08:36,960 --> 00:08:39,679 Speaker 7: half for the fund in the US and we are 165 00:08:39,679 --> 00:08:41,680 Speaker 7: here for the very long term. So we have not 166 00:08:41,880 --> 00:08:44,400 Speaker 7: made any major adjustments lately. 167 00:08:45,480 --> 00:08:47,480 Speaker 2: So Nikolai, can I rid into that that you view 168 00:08:47,520 --> 00:08:49,280 Speaker 2: this as just a shock to the cycle and maybe 169 00:08:49,280 --> 00:08:51,840 Speaker 2: not a long term shock to the system. 170 00:08:52,240 --> 00:08:53,839 Speaker 7: Well, I think it's very very difficult to say it, 171 00:08:53,840 --> 00:08:56,600 Speaker 7: because when we make scenario analysis here, one of the 172 00:08:56,640 --> 00:08:59,600 Speaker 7: negative things that that we see is that if you 173 00:08:59,640 --> 00:09:04,240 Speaker 7: get a decentanglement between the two major trading blocks, that's 174 00:09:04,440 --> 00:09:07,760 Speaker 7: really really negative because it slow down it slows down growth, 175 00:09:08,080 --> 00:09:10,760 Speaker 7: increases inflation and zone. So it is potentially one of 176 00:09:10,800 --> 00:09:13,760 Speaker 7: the really negative things that can happen here. So I 177 00:09:13,800 --> 00:09:18,160 Speaker 7: think the out look for markets are very, very uncertain, given. 178 00:09:17,920 --> 00:09:21,240 Speaker 5: That there has been a shift, Nikolai, to move at 179 00:09:21,320 --> 00:09:24,960 Speaker 5: least a little bit of assets about large acid allocators 180 00:09:25,000 --> 00:09:27,760 Speaker 5: out of the United States, diversified to places like China, 181 00:09:27,840 --> 00:09:31,160 Speaker 5: to India, to Europe. Why aren't you doing the same 182 00:09:31,320 --> 00:09:34,360 Speaker 5: and shifting to benchmarks that have a little bit more 183 00:09:34,360 --> 00:09:35,360 Speaker 5: exposure elsewhere. 184 00:09:36,679 --> 00:09:42,120 Speaker 7: Well, we actually are extremely well diversified already. You know, 185 00:09:42,160 --> 00:09:44,400 Speaker 7: we own one and a half percent of all the 186 00:09:44,440 --> 00:09:47,160 Speaker 7: listed equities in the world. In Europe we have more, 187 00:09:47,200 --> 00:09:50,319 Speaker 7: we have closed to three percent, and so in the 188 00:09:50,440 --> 00:09:53,120 Speaker 7: US we have one than a half percent, and we 189 00:09:53,160 --> 00:09:55,320 Speaker 7: also have the same in the rest of the world. 190 00:09:55,360 --> 00:09:57,439 Speaker 7: So I would say we are we are well diversified, 191 00:09:57,440 --> 00:10:00,560 Speaker 7: seventy percent equities, thirty percent bonds. We also have a 192 00:10:00,640 --> 00:10:03,080 Speaker 7: very very good way to say, portfolio, which is coming 193 00:10:03,080 --> 00:10:03,959 Speaker 7: in really handy here. 194 00:10:05,120 --> 00:10:08,120 Speaker 5: Well, nikola you said previously this morning when you were 195 00:10:08,160 --> 00:10:11,680 Speaker 5: speaking to media and OSLO that you will correct the 196 00:10:11,840 --> 00:10:15,120 Speaker 5: underweight to US stocks. So you are planning to reinvest 197 00:10:15,120 --> 00:10:18,320 Speaker 5: in US stocks even though you are surprised that we haven't. 198 00:10:18,080 --> 00:10:19,240 Speaker 6: Seen even more weakness. 199 00:10:19,720 --> 00:10:23,679 Speaker 5: Why are you redeploying all of the money that maybe 200 00:10:24,000 --> 00:10:27,320 Speaker 5: has lost in terms of benchmark allocation to US equity 201 00:10:27,360 --> 00:10:29,480 Speaker 5: has given some of these larger uncertainties. 202 00:10:30,600 --> 00:10:34,400 Speaker 7: Well, the kind of the increased medication to the US 203 00:10:34,480 --> 00:10:36,800 Speaker 7: is part of a program that we've been doing for 204 00:10:36,920 --> 00:10:39,960 Speaker 7: quite some time. We still have some work to do 205 00:10:40,040 --> 00:10:43,880 Speaker 7: here and that we will continue to do. And you know, 206 00:10:43,960 --> 00:10:47,040 Speaker 7: we think the large American companies are just great long 207 00:10:47,120 --> 00:10:49,240 Speaker 7: term investments, and so we are very happy to be 208 00:10:49,280 --> 00:10:49,880 Speaker 7: invested in there. 209 00:10:51,080 --> 00:10:52,800 Speaker 1: What sectors can you give us a little bit of 210 00:10:52,800 --> 00:10:55,719 Speaker 1: a hint of specifically the sectors or the companies are 211 00:10:55,720 --> 00:10:57,240 Speaker 1: interested in the United States? 212 00:10:58,559 --> 00:11:01,640 Speaker 7: Well, are quite in near in how we are invested 213 00:11:01,840 --> 00:11:04,360 Speaker 7: in the US. So we typically have large holdings in 214 00:11:04,440 --> 00:11:07,520 Speaker 7: the you know, in the big tech companies, in all 215 00:11:07,559 --> 00:11:08,800 Speaker 7: your large companies. 216 00:11:08,400 --> 00:11:12,280 Speaker 6: Really and we made you know a lot of money. 217 00:11:12,040 --> 00:11:13,200 Speaker 8: There over the last few years. 218 00:11:13,559 --> 00:11:16,360 Speaker 7: Of course, so far this year it's been it's been negative. 219 00:11:16,360 --> 00:11:18,280 Speaker 7: But when you look in comparison to the games we've 220 00:11:18,280 --> 00:11:21,880 Speaker 7: had the last year and the year before, we're given 221 00:11:21,960 --> 00:11:24,840 Speaker 7: back in a way surprisingly little. 222 00:11:24,880 --> 00:11:29,000 Speaker 1: I would say, what about defensive companies like Lockheed Martin, 223 00:11:29,200 --> 00:11:31,160 Speaker 1: is that going to be open for business? When it 224 00:11:31,160 --> 00:11:32,240 Speaker 1: comes to the cumber. 225 00:11:31,960 --> 00:11:38,199 Speaker 7: Well fund, Well, we invest in a lot of different industries. 226 00:11:38,240 --> 00:11:42,920 Speaker 7: We have less exposure to the defense industry, but we 227 00:11:42,960 --> 00:11:46,240 Speaker 7: are in a lot of the defensing names as well. 228 00:11:46,440 --> 00:11:48,520 Speaker 2: Nikolai, one word you often use with us is we 229 00:11:48,559 --> 00:11:50,920 Speaker 2: are diversified. I just wonder if the meaning of that 230 00:11:50,960 --> 00:11:54,439 Speaker 2: word has shifted over time, particularly this year, the treasury 231 00:11:54,480 --> 00:11:57,319 Speaker 2: market is behaving in unpredictable ways. When the equity market 232 00:11:57,360 --> 00:11:59,600 Speaker 2: is falling, treasury markets have fell as well. In fact, 233 00:11:59,640 --> 00:12:02,319 Speaker 2: those two asset classes are training and lockstep. At the moment, 234 00:12:02,559 --> 00:12:06,040 Speaker 2: it's as if investors are treating all dollarg and ONMITD 235 00:12:06,080 --> 00:12:08,920 Speaker 2: as assets as one bucket. And I just wondered, Nicolay, 236 00:12:08,960 --> 00:12:11,440 Speaker 2: what that means for how you think about diversification this 237 00:12:11,559 --> 00:12:12,240 Speaker 2: year and beyond. 238 00:12:13,679 --> 00:12:16,839 Speaker 7: Yeah, there was sometimes when when this type of diversification 239 00:12:16,920 --> 00:12:17,840 Speaker 7: worked less well. 240 00:12:18,640 --> 00:12:20,480 Speaker 8: We had the same type of situation. 241 00:12:20,960 --> 00:12:24,760 Speaker 7: You know, two three years ago, and so some years 242 00:12:24,760 --> 00:12:25,959 Speaker 7: it works, some years it doesn't. 243 00:12:26,000 --> 00:12:27,120 Speaker 8: I think over time, if you have. 244 00:12:27,120 --> 00:12:29,800 Speaker 7: A really long term time horizon, I think it's the 245 00:12:30,720 --> 00:12:31,720 Speaker 7: right positioning to have. 246 00:12:33,080 --> 00:12:35,320 Speaker 2: We've seen over the last month or so that some 247 00:12:35,400 --> 00:12:38,000 Speaker 2: investors were trying to understand whether what was happening in 248 00:12:38,040 --> 00:12:42,000 Speaker 2: the treasury market was just trades unwinding, some hedgephones, hedge 249 00:12:42,040 --> 00:12:45,120 Speaker 2: funds blowing up, or nicolay, whether it was a reassessment 250 00:12:45,160 --> 00:12:48,040 Speaker 2: of the safe haven status of the United States. Nicola 251 00:12:48,040 --> 00:12:50,560 Speaker 2: I was on your dashboard to have distinguished between one 252 00:12:50,880 --> 00:12:51,400 Speaker 2: and the other. 253 00:12:51,559 --> 00:12:52,880 Speaker 8: What do you think it was? What do you think 254 00:12:52,880 --> 00:12:53,200 Speaker 8: it is? 255 00:12:54,440 --> 00:12:56,439 Speaker 7: Well, I think it's a very very complicated question. I 256 00:12:56,440 --> 00:12:58,679 Speaker 7: don't think it's only one thing. I think it's a 257 00:12:58,720 --> 00:13:04,440 Speaker 7: cocktail of all kind of things you mentioned. Now, so 258 00:13:04,520 --> 00:13:08,520 Speaker 7: far this year, we've we have been neutral to the 259 00:13:08,600 --> 00:13:11,720 Speaker 7: US treasure market. We have not reduced or increased positions, 260 00:13:11,760 --> 00:13:14,760 Speaker 7: so we have we have certainly not to cause that move. 261 00:13:16,000 --> 00:13:18,439 Speaker 5: Do you have a sense, Nikolai, going forward of whether 262 00:13:18,520 --> 00:13:22,600 Speaker 5: we are entering a more inflationary period given some of 263 00:13:22,640 --> 00:13:26,000 Speaker 5: the deglobalization that we're seeing, some of the fissures and 264 00:13:26,120 --> 00:13:28,200 Speaker 5: some of the kinks that are emerging in the supply 265 00:13:28,320 --> 00:13:29,479 Speaker 5: chain system. 266 00:13:30,400 --> 00:13:33,360 Speaker 7: Yeah, I think we are potentially going into a more 267 00:13:33,360 --> 00:13:39,520 Speaker 7: inflationary situation. It is kind of a pretty obvious consequence 268 00:13:39,679 --> 00:13:45,880 Speaker 7: of higher tariffs, and of course inflation is really negative 269 00:13:45,880 --> 00:13:48,120 Speaker 7: of market so I think that's potentially one of the 270 00:13:48,160 --> 00:13:49,240 Speaker 7: big risks that we are. 271 00:13:49,200 --> 00:13:49,920 Speaker 8: Seeing just now. 272 00:13:50,160 --> 00:13:53,680 Speaker 7: Interestingly, we just yesterday released a podcast with Ken Rogoff, 273 00:13:54,120 --> 00:13:56,800 Speaker 7: kind of the world leading specialist, I guess on inflation, 274 00:13:57,480 --> 00:14:01,960 Speaker 7: and he's also very word about this particular fact. 275 00:14:02,960 --> 00:14:04,880 Speaker 5: Well, I guess, just to build in what John was 276 00:14:04,920 --> 00:14:08,000 Speaker 5: asking about the idea of diversification, and you have been 277 00:14:08,040 --> 00:14:10,960 Speaker 5: about neutral on US bonds, there has been a feeling 278 00:14:11,000 --> 00:14:15,560 Speaker 5: that maybe diversification, especially in an inflationary environment, requires some gold, 279 00:14:15,840 --> 00:14:19,920 Speaker 5: requires some alternative assets that might be act based funding 280 00:14:20,320 --> 00:14:24,120 Speaker 5: that have different streams of diversified revenues. Is that your 281 00:14:24,280 --> 00:14:26,320 Speaker 5: take on it that you just on the margins want 282 00:14:26,320 --> 00:14:28,920 Speaker 5: to pick up a little bit more gold or diversify 283 00:14:28,960 --> 00:14:31,120 Speaker 5: a little bit more in some of these other asset classes. 284 00:14:32,400 --> 00:14:32,680 Speaker 3: Yeah. 285 00:14:32,720 --> 00:14:35,360 Speaker 7: So we have a very strict mannight here from the ministry, 286 00:14:35,400 --> 00:14:39,200 Speaker 7: so we cannot buy gold, and I do think gold 287 00:14:39,240 --> 00:14:42,160 Speaker 7: sometimes has a bit difficult to understand what the intrinsic 288 00:14:42,240 --> 00:14:43,760 Speaker 7: value is of gold. 289 00:14:44,040 --> 00:14:47,040 Speaker 8: We also don't do cryptocurrencies, for instance. 290 00:14:47,440 --> 00:14:49,400 Speaker 7: But when we look at alternative assets, I would say 291 00:14:49,440 --> 00:14:52,120 Speaker 7: in a market like this to have real estates, that's 292 00:14:52,200 --> 00:14:55,440 Speaker 7: very good. We have just under a thousand properties around 293 00:14:55,480 --> 00:14:59,560 Speaker 7: the world, you know, large holdings in Manhattan, Boston, Washington 294 00:15:00,160 --> 00:15:01,760 Speaker 7: one and so I think that's going to be a 295 00:15:01,800 --> 00:15:03,360 Speaker 7: pretty good place to be going forward. 296 00:15:04,560 --> 00:15:07,120 Speaker 2: Nikolay, I appreciate your take at a difficult time. Thanks 297 00:15:07,120 --> 00:15:09,560 Speaker 2: for your time this morning. Nicolai Tangan there the Norway 298 00:15:09,800 --> 00:15:22,360 Speaker 2: Well fun CEO. On a difficult moment, the UCB warning 299 00:15:22,440 --> 00:15:26,360 Speaker 2: tarras may be more disinflationary than inflationary for Europe. This 300 00:15:26,440 --> 00:15:29,320 Speaker 2: after President Trump said he's confident of reaching a trade 301 00:15:29,360 --> 00:15:31,960 Speaker 2: deal with the EU. Joining us around the table here 302 00:15:32,000 --> 00:15:34,320 Speaker 2: in our studio in Washington, d C. The chief economist 303 00:15:34,360 --> 00:15:36,080 Speaker 2: of the European Central Bank, Philip Blank. 304 00:15:36,120 --> 00:15:38,320 Speaker 8: Philip's good to see you, sir, Good morning. Thanks for 305 00:15:38,360 --> 00:15:39,400 Speaker 8: being able to hear in Washington. 306 00:15:39,520 --> 00:15:41,760 Speaker 2: So the Governing Council meeting, I imagine was very different 307 00:15:41,760 --> 00:15:43,920 Speaker 2: this time around than a number of months ago when 308 00:15:43,920 --> 00:15:46,920 Speaker 2: you walked into that room and presented changes to the economy. 309 00:15:47,200 --> 00:15:48,360 Speaker 8: What did you tell a team? 310 00:15:48,400 --> 00:15:50,400 Speaker 9: Sure, I mean, I think it was a gear change 311 00:15:50,640 --> 00:15:55,080 Speaker 9: for several reasons, So of course our core business has 312 00:15:55,080 --> 00:15:57,000 Speaker 9: been to try and get inflation back down from a 313 00:15:57,120 --> 00:16:01,360 Speaker 9: high number to our targets. I think there was a 314 00:16:01,400 --> 00:16:04,960 Speaker 9: milestone in this meeting in the sense of the most 315 00:16:04,960 --> 00:16:08,200 Speaker 9: recent data had come in quite low. What we've been 316 00:16:08,240 --> 00:16:11,080 Speaker 9: waiting for services inflation to kind of drop, and it 317 00:16:11,320 --> 00:16:15,000 Speaker 9: has been dropping. And then we had surveys showing that 318 00:16:15,040 --> 00:16:18,600 Speaker 9: basically the weight dynamic this year and in twenty six 319 00:16:18,800 --> 00:16:22,480 Speaker 9: is lower than we expected. So basically, if you like, 320 00:16:22,560 --> 00:16:26,040 Speaker 9: if you clear the table about the historic issue, are 321 00:16:26,040 --> 00:16:29,360 Speaker 9: we safely bringing inflation back to target? I think a 322 00:16:29,360 --> 00:16:31,320 Speaker 9: lot it's not entirely settled, but a lot of it 323 00:16:31,360 --> 00:16:34,360 Speaker 9: is settled. So the gear change was of course, now 324 00:16:34,520 --> 00:16:37,880 Speaker 9: we have new things to talk about, and really since 325 00:16:38,880 --> 00:16:42,440 Speaker 9: all the way back to last summer, trade policy uncertainty 326 00:16:42,880 --> 00:16:45,720 Speaker 9: has been part of what we've had to talk about. 327 00:16:46,360 --> 00:16:49,520 Speaker 9: But we still have trade policy uncertainty, but we also 328 00:16:49,560 --> 00:16:53,840 Speaker 9: have trade policy news. You know, lots has happened that 329 00:16:54,040 --> 00:16:57,800 Speaker 9: the and then the other element of what we've seen 330 00:16:58,200 --> 00:17:00,280 Speaker 9: is of course, and that happened, by the way, like 331 00:17:00,360 --> 00:17:03,240 Speaker 9: a day or two before our March meeting, was a 332 00:17:03,280 --> 00:17:07,359 Speaker 9: German break through and fiscal policy. So we already had that, 333 00:17:07,560 --> 00:17:11,800 Speaker 9: if you like, in the early incarnation at the March meeting. 334 00:17:12,440 --> 00:17:14,919 Speaker 9: We know more now, but it's still, you know, in 335 00:17:15,000 --> 00:17:17,160 Speaker 9: terms of what the other European countries are going to do, 336 00:17:17,800 --> 00:17:21,880 Speaker 9: it's something that's still in discussion. So what I would 337 00:17:21,880 --> 00:17:23,960 Speaker 9: say if you put all of that together, and I 338 00:17:23,960 --> 00:17:27,000 Speaker 9: think you're probably hearing this from various colleagues and other 339 00:17:27,040 --> 00:17:30,840 Speaker 9: people this week, is if I take a longer term perspective, 340 00:17:31,640 --> 00:17:34,400 Speaker 9: and the IMF in their publications this week, a lot 341 00:17:34,400 --> 00:17:37,199 Speaker 9: of the data go out of twenty thirty. If I 342 00:17:37,240 --> 00:17:41,160 Speaker 9: take a twenty thirty perspective, you know, I think there's 343 00:17:41,200 --> 00:17:44,840 Speaker 9: a lot of grants to have a renewed optimism that essentially, 344 00:17:44,840 --> 00:17:49,640 Speaker 9: with more fiscal support, the credibility of delivering our two 345 00:17:49,640 --> 00:17:52,840 Speaker 9: percent target on a kind of long term basis is stronger. 346 00:17:53,680 --> 00:17:57,080 Speaker 9: The case for the European economy to be more resilient, 347 00:17:57,760 --> 00:18:01,639 Speaker 9: to grow from a domestic source, not just from running 348 00:18:01,680 --> 00:18:06,639 Speaker 9: a big export machine is more credible. But of course 349 00:18:06,680 --> 00:18:09,240 Speaker 9: we have to navigate from where we are now. Where 350 00:18:09,359 --> 00:18:13,840 Speaker 9: As you said in your intro, immediately in the short term, 351 00:18:14,440 --> 00:18:18,200 Speaker 9: the way it's playing out with euro appreciation with. 352 00:18:18,200 --> 00:18:19,840 Speaker 8: A big job and energy prices. 353 00:18:20,920 --> 00:18:25,640 Speaker 9: The disinflatory forces are there, but I would say maybe 354 00:18:26,280 --> 00:18:28,000 Speaker 9: the question you know, I wouldn't load it all on 355 00:18:28,160 --> 00:18:30,719 Speaker 9: the trade policy is what we also see now as 356 00:18:30,720 --> 00:18:34,719 Speaker 9: a portfolio shift. So there's a clear portfolio shift going on, 357 00:18:35,240 --> 00:18:37,800 Speaker 9: which is I think the way you can reconcile euro 358 00:18:38,040 --> 00:18:41,640 Speaker 9: appreciation in the middle of this trade discussion. 359 00:18:41,680 --> 00:18:43,120 Speaker 2: As you know, Philip, that sort of begs the question 360 00:18:43,200 --> 00:18:45,320 Speaker 2: why you don't act more aggressively. Does that give you 361 00:18:45,359 --> 00:18:47,000 Speaker 2: the space to act more preemptively? 362 00:18:47,400 --> 00:18:51,719 Speaker 9: Well, I think a very important narrative we had last week, 363 00:18:51,920 --> 00:18:55,920 Speaker 9: and it was repeated threat to Manto policy statement was resilience. 364 00:18:56,600 --> 00:18:59,880 Speaker 9: What we're seeing is the europan economy growing. Two years 365 00:18:59,880 --> 00:19:03,360 Speaker 9: of it was kind of more stagnating. So we said 366 00:19:03,400 --> 00:19:07,400 Speaker 9: the European economy is going to recover. We saw modest 367 00:19:07,480 --> 00:19:10,879 Speaker 9: but still market recovery last year is around zero nine. 368 00:19:11,400 --> 00:19:14,280 Speaker 9: We have zero nine written down in March for this year. 369 00:19:15,000 --> 00:19:20,360 Speaker 9: And that's basically because with incomes going up, consumption through 370 00:19:20,400 --> 00:19:24,280 Speaker 9: recover with our Munti policy, and the general improvement of 371 00:19:24,280 --> 00:19:28,760 Speaker 9: the economy, investments should recover with more government support. So 372 00:19:28,840 --> 00:19:32,919 Speaker 9: all the domestic engines are there. So what you have 373 00:19:32,960 --> 00:19:36,359 Speaker 9: to think about. Is all of that, if you like, 374 00:19:36,720 --> 00:19:40,919 Speaker 9: is saying that the economies should be growing, even marking 375 00:19:40,960 --> 00:19:44,679 Speaker 9: down some trait negative And this is why we're not 376 00:19:44,800 --> 00:19:48,840 Speaker 9: in a situation where we see some dramatic change in 377 00:19:48,880 --> 00:19:51,720 Speaker 9: the external environment or in friest pressures and so on. 378 00:19:52,000 --> 00:19:52,880 Speaker 8: So steady is okay? 379 00:19:53,040 --> 00:19:55,120 Speaker 5: Hold on a second, Are you saying that what we've 380 00:19:55,119 --> 00:19:58,800 Speaker 5: seen with respect to US policy and the uncertainty isn't 381 00:19:58,920 --> 00:20:02,240 Speaker 5: increasing the chance of session materially for the euroregion? 382 00:20:02,680 --> 00:20:06,480 Speaker 9: Well, I mean, I think our overriding seam, of course 383 00:20:06,560 --> 00:20:09,280 Speaker 9: is uncertainty, and let's not get ahead of ourselves in 384 00:20:09,320 --> 00:20:11,560 Speaker 9: terms of being too sure about any any path for 385 00:20:11,600 --> 00:20:14,879 Speaker 9: the economy. But I think the message is but it's 386 00:20:15,480 --> 00:20:17,360 Speaker 9: not me dreaming it up. If you look at the 387 00:20:17,480 --> 00:20:21,399 Speaker 9: external watchers, if you look at the IMF, it's fairly 388 00:20:21,520 --> 00:20:25,240 Speaker 9: modest mark dance on the growth trade for the European economy. 389 00:20:25,560 --> 00:20:29,520 Speaker 9: The US, of course has a major trade policy issue 390 00:20:29,760 --> 00:20:32,920 Speaker 9: all with the world. We have a trade policy issue 391 00:20:32,960 --> 00:20:36,360 Speaker 9: with the US. The US is an important trading partner, 392 00:20:36,960 --> 00:20:40,320 Speaker 9: but it's not our only trading partner, so directionally it 393 00:20:40,400 --> 00:20:43,760 Speaker 9: is a markdown. There is a markdown, but it's important 394 00:20:43,760 --> 00:20:46,800 Speaker 9: to say. It's a markdown from a growth trade around 395 00:20:47,000 --> 00:20:50,480 Speaker 9: zero nine to a little bit less. Let's see in 396 00:20:50,520 --> 00:20:52,679 Speaker 9: the coming weeks how much less. And I think if 397 00:20:52,720 --> 00:20:55,159 Speaker 9: you look at the surveys this week, the surveys have 398 00:20:55,280 --> 00:20:59,240 Speaker 9: elements of people being concerned, but they also have elements. 399 00:20:59,560 --> 00:21:03,240 Speaker 9: Right now, we're busy. Manufacturing is a bit busier than 400 00:21:03,240 --> 00:21:05,440 Speaker 9: it was. That could be a little bit of front 401 00:21:05,520 --> 00:21:09,560 Speaker 9: running of taris, for sure, but it's also remember the 402 00:21:09,680 --> 00:21:13,959 Speaker 9: recovery narrative Europe what has been stagnating. The American economy 403 00:21:13,960 --> 00:21:16,040 Speaker 9: has grown quickly, So if you like, in terms of 404 00:21:16,960 --> 00:21:19,960 Speaker 9: if there was room for the American economy to decelerate, 405 00:21:20,119 --> 00:21:23,200 Speaker 9: and then trade policy is adding to that. What I'm 406 00:21:23,240 --> 00:21:27,000 Speaker 9: saying to you is essentially the baseline for Europe was 407 00:21:27,000 --> 00:21:29,719 Speaker 9: to grow a bit more quickly, and so the resilience 408 00:21:29,800 --> 00:21:33,760 Speaker 9: is there. You can take a trade hit without going 409 00:21:33,880 --> 00:21:38,600 Speaker 9: to using that word which I of that you mentioned. 410 00:21:38,800 --> 00:21:41,720 Speaker 1: You mentioned, of course, that Europe has more trading partners. 411 00:21:41,440 --> 00:21:42,320 Speaker 6: Than the United States. 412 00:21:42,359 --> 00:21:44,360 Speaker 1: How concerned are you that if the walls keep going 413 00:21:44,480 --> 00:21:46,879 Speaker 1: up in the United States, China will have to just 414 00:21:46,960 --> 00:21:47,560 Speaker 1: jump somewhere. 415 00:21:47,640 --> 00:21:49,000 Speaker 6: It's going to be on the continent. 416 00:21:49,640 --> 00:21:53,920 Speaker 9: So I think directly an element with that must be 417 00:21:54,320 --> 00:21:57,679 Speaker 9: you know, must be expected. But I think you know, 418 00:21:58,080 --> 00:22:03,200 Speaker 9: China fully understands that if you listen to their policy 419 00:22:03,240 --> 00:22:07,280 Speaker 9: announcements they're going to do. Their focus is on improving 420 00:22:07,359 --> 00:22:10,960 Speaker 9: domestic demand. So in terms of the reorientation from the US, 421 00:22:11,640 --> 00:22:16,400 Speaker 9: I would allocator at fairmount to domestic demand, some amount 422 00:22:16,600 --> 00:22:20,040 Speaker 9: to around the world. But I think also China understands 423 00:22:20,080 --> 00:22:23,679 Speaker 9: it's a large economy and a bit of restraint in 424 00:22:23,760 --> 00:22:26,160 Speaker 9: exporting may make sense. 425 00:22:26,200 --> 00:22:28,399 Speaker 2: For the twenty seconds left, I just wanted to jump in. 426 00:22:28,480 --> 00:22:32,000 Speaker 2: Olie Rain was busy this morning, your governing council partner, 427 00:22:32,359 --> 00:22:34,080 Speaker 2: and he made the point that we should be open 428 00:22:34,160 --> 00:22:36,159 Speaker 2: to larger interest rate cuts. Is that a position that 429 00:22:36,359 --> 00:22:37,240 Speaker 2: you and the team agree with? 430 00:22:37,400 --> 00:22:40,800 Speaker 9: Philosophically, we don't pre commit to any rate path, of course, 431 00:22:40,840 --> 00:22:43,960 Speaker 9: and so this is why again it's important, and I 432 00:22:44,000 --> 00:22:47,760 Speaker 9: think the Government Council, I think tries hard to maintain 433 00:22:47,800 --> 00:22:51,000 Speaker 9: this is. You can express that in different ways, and 434 00:22:51,080 --> 00:22:54,760 Speaker 9: in particular, there's no reason to say we're always going 435 00:22:54,800 --> 00:23:00,359 Speaker 9: to do the default twenty five. Philosophically I agree with that. Okay, 436 00:23:00,359 --> 00:23:01,360 Speaker 9: what I said to you earlier on. 437 00:23:01,520 --> 00:23:02,120 Speaker 8: Is right now. 438 00:23:02,320 --> 00:23:06,280 Speaker 9: The growth performance. I'm sure to be marked down. It's 439 00:23:06,280 --> 00:23:09,800 Speaker 9: still a growing economy. We've replaced from I think to 440 00:23:09,880 --> 00:23:12,520 Speaker 9: the downside. But we don't need to be too from. 441 00:23:12,400 --> 00:23:23,240 Speaker 8: Out about equity futures. 442 00:23:23,280 --> 00:23:24,840 Speaker 2: Right now in the SMP, just the touch soft that 443 00:23:24,880 --> 00:23:27,280 Speaker 2: we're down by two tenths of one percent. Coming up 444 00:23:27,320 --> 00:23:30,679 Speaker 2: this hour Franklin Templeton CEO Jenny Johnson. Following back to 445 00:23:30,720 --> 00:23:33,440 Speaker 2: back games for equities, we'll catch up with Carlos Querpo, 446 00:23:33,640 --> 00:23:36,160 Speaker 2: the Trade and Economy Minister of Spain, on a US 447 00:23:36,280 --> 00:23:39,040 Speaker 2: EU trade deal and the standard chart of Chair Jose 448 00:23:39,160 --> 00:23:43,439 Speaker 2: Vines on the potential for lower levees on China. We 449 00:23:43,520 --> 00:23:46,320 Speaker 2: begin this now with stocks lower as investors away clarity 450 00:23:46,440 --> 00:23:49,200 Speaker 2: on trade talks. Jenny Johnson, the CEO of Franklin Templeton, 451 00:23:49,400 --> 00:23:52,000 Speaker 2: one of the world's largest investment managers, joined us now 452 00:23:52,119 --> 00:23:52,399 Speaker 2: for more. 453 00:23:52,480 --> 00:23:53,320 Speaker 8: Jenny, it's good to see you. 454 00:23:53,440 --> 00:23:54,959 Speaker 6: It's great to be here. Thanks for having me. 455 00:23:55,040 --> 00:23:56,800 Speaker 2: Things have changed a lot since we caught up with 456 00:23:56,840 --> 00:23:59,119 Speaker 2: you in Davos, Switzerland. So a lot of optimism, you 457 00:23:59,160 --> 00:24:02,960 Speaker 2: remember it everyone with us, exceptionalism well strength, lots of 458 00:24:03,040 --> 00:24:04,480 Speaker 2: hiring markets are great. 459 00:24:04,720 --> 00:24:06,440 Speaker 8: There's a change the law. Have they change for you. 460 00:24:07,200 --> 00:24:09,840 Speaker 10: Well, you know, I actually we talked about it at 461 00:24:09,880 --> 00:24:13,960 Speaker 10: the time. You know, I think that you have to 462 00:24:14,080 --> 00:24:15,960 Speaker 10: think through kind of where the president is. 463 00:24:16,040 --> 00:24:18,280 Speaker 6: Right, He's come in with a plan. He's been very clear. 464 00:24:18,359 --> 00:24:22,880 Speaker 10: Right, it's taxes, immigration, tariffs, government efficiency and deregulation, right 465 00:24:22,920 --> 00:24:25,680 Speaker 10: and so, and he has about a year and a 466 00:24:25,720 --> 00:24:29,160 Speaker 10: half to get those things done before the midterms come in. 467 00:24:29,560 --> 00:24:33,520 Speaker 10: And so you know, from the tariff standpoint, again, he's 468 00:24:33,560 --> 00:24:36,080 Speaker 10: a deal maker. So when you are trying to make 469 00:24:36,080 --> 00:24:38,280 Speaker 10: a deal, you need to show that you are in 470 00:24:38,280 --> 00:24:40,240 Speaker 10: the position of strength, right, So a lot of this 471 00:24:40,680 --> 00:24:43,119 Speaker 10: blistering is around I'm in a position of strength and 472 00:24:43,160 --> 00:24:45,199 Speaker 10: you're going to have to bow to my will. I 473 00:24:45,200 --> 00:24:48,400 Speaker 10: think the challenge has been there are some unintended consequences 474 00:24:48,400 --> 00:24:51,320 Speaker 10: of that. I was talking to somebody yesterday about Canadians. 475 00:24:51,359 --> 00:24:52,280 Speaker 6: They're so they're not. 476 00:24:52,400 --> 00:24:54,600 Speaker 10: Upset about the terroiff, they're upset about the fifty first 477 00:24:54,600 --> 00:24:58,280 Speaker 10: state comment and that Airbnbs in Rhode Island are down 478 00:24:58,400 --> 00:25:00,320 Speaker 10: because the Canadians say, I'm not going to come visit 479 00:25:00,320 --> 00:25:03,000 Speaker 10: the US. So those are the under tenant consequences. The 480 00:25:03,040 --> 00:25:07,360 Speaker 10: other piece of this is he needs the tax revenues 481 00:25:07,920 --> 00:25:11,920 Speaker 10: identified in tariffs to help fund his tax cuts, which, 482 00:25:11,960 --> 00:25:15,440 Speaker 10: by the way, are not tax cuts really, they're extensions. 483 00:25:15,480 --> 00:25:17,760 Speaker 10: And if we don't get that extension, there is a 484 00:25:17,920 --> 00:25:21,280 Speaker 10: massive tax increase that happens, which really becomes an issue 485 00:25:21,280 --> 00:25:22,080 Speaker 10: around the economy. 486 00:25:22,119 --> 00:25:23,639 Speaker 2: Can you describe how you and the same thing the 487 00:25:23,760 --> 00:25:25,439 Speaker 2: endgame looks like? What do you think it looks like? 488 00:25:25,480 --> 00:25:28,080 Speaker 2: Because some people have described the last few weeks as madness. 489 00:25:28,480 --> 00:25:29,359 Speaker 8: Is there a method to it? 490 00:25:29,600 --> 00:25:29,840 Speaker 6: Yeah? 491 00:25:29,880 --> 00:25:32,439 Speaker 10: So I think what we hope to see, you'd like 492 00:25:32,480 --> 00:25:34,560 Speaker 10: to see a couple of deals done right, to show 493 00:25:34,600 --> 00:25:36,560 Speaker 10: that he's willing to come to the table and make 494 00:25:36,600 --> 00:25:36,920 Speaker 10: a deal. 495 00:25:37,000 --> 00:25:37,160 Speaker 4: Right. 496 00:25:37,200 --> 00:25:38,080 Speaker 6: So if we can see a deal with. 497 00:25:38,119 --> 00:25:41,080 Speaker 10: Japan or Vietnam or you know, somewhere, to show no, no, no, 498 00:25:41,320 --> 00:25:42,440 Speaker 10: he's playing his deals. 499 00:25:42,680 --> 00:25:45,159 Speaker 6: You'd like to know who is responsible. 500 00:25:45,480 --> 00:25:48,120 Speaker 10: Remember it was Paul Ryan who ushered the first tax 501 00:25:48,160 --> 00:25:51,600 Speaker 10: cuts through, Like who's responsible for ushering that legislation through 502 00:25:51,640 --> 00:25:52,400 Speaker 10: and champion that? 503 00:25:52,400 --> 00:25:53,200 Speaker 6: That will be very. 504 00:25:53,040 --> 00:25:54,960 Speaker 10: Important because he's got to get those done and the 505 00:25:55,040 --> 00:25:57,439 Speaker 10: question is how quickly can he get it done to 506 00:25:57,480 --> 00:26:00,199 Speaker 10: calm the markets because what we've seen is, you know, 507 00:26:00,520 --> 00:26:02,960 Speaker 10: look at you when you suddenly have CEOs who say 508 00:26:03,000 --> 00:26:05,879 Speaker 10: I can't give guidance because there's so much uncertainty. That 509 00:26:06,000 --> 00:26:10,240 Speaker 10: uncertainty makes them fear, and then they stop making investments. 510 00:26:10,240 --> 00:26:12,880 Speaker 10: If you stop making investments, it slows down the economy. Right, 511 00:26:12,920 --> 00:26:15,760 Speaker 10: So I think what we need to see in the 512 00:26:15,800 --> 00:26:19,080 Speaker 10: next ninety days is some clarity in the meantime uncertainty. 513 00:26:19,119 --> 00:26:21,040 Speaker 5: It leads to a lot of conspiracy theories and lots 514 00:26:21,080 --> 00:26:25,080 Speaker 5: of other types of speculation. As someone who oversees one 515 00:26:25,119 --> 00:26:28,000 Speaker 5: and a half trillion dollars of assets, how much of 516 00:26:28,040 --> 00:26:33,040 Speaker 5: a material shift have you seen with customers, consumers shifting 517 00:26:33,160 --> 00:26:36,000 Speaker 5: just slightly away from US assets to insulate from some 518 00:26:36,080 --> 00:26:37,840 Speaker 5: of the whip siwing and the uncertainty. 519 00:26:38,119 --> 00:26:43,639 Speaker 10: You definitely see, you know, non Americans reducing on the 520 00:26:43,680 --> 00:26:45,880 Speaker 10: institutional side some of their exposure to US equities. 521 00:26:45,920 --> 00:26:47,280 Speaker 6: Okay, so we've seen that a bit. 522 00:26:48,200 --> 00:26:50,560 Speaker 10: But on your hand, you know, you sort of you 523 00:26:50,760 --> 00:26:53,080 Speaker 10: if you are in the market now, this is not 524 00:26:53,160 --> 00:26:54,600 Speaker 10: the time we get out of the market, right, you 525 00:26:54,640 --> 00:26:57,320 Speaker 10: need to play this out. And if you hadn't made 526 00:26:57,359 --> 00:27:01,040 Speaker 10: the trade to being in more defensive stock, then there's 527 00:27:01,080 --> 00:27:03,840 Speaker 10: no point in doing that now, right, because you've already 528 00:27:03,880 --> 00:27:07,440 Speaker 10: sort of missed it. So you know, the reality is AI. 529 00:27:07,720 --> 00:27:10,400 Speaker 10: I actually played around this weekend with an app called 530 00:27:10,440 --> 00:27:13,359 Speaker 10: replet where you can just use natural language processing to 531 00:27:13,400 --> 00:27:15,840 Speaker 10: have it code and generate an app for you. Like 532 00:27:15,880 --> 00:27:18,480 Speaker 10: the efficiencies are come from AI, we haven't seen those 533 00:27:18,520 --> 00:27:21,280 Speaker 10: kind of productivity gains yet. The productivity gains that we're 534 00:27:21,320 --> 00:27:24,960 Speaker 10: seeing are coming from technologies that came out twenty years ago, 535 00:27:25,320 --> 00:27:28,240 Speaker 10: and so as those things play into companies, I think 536 00:27:28,280 --> 00:27:29,760 Speaker 10: you'll see real opportunity. 537 00:27:30,000 --> 00:27:31,480 Speaker 5: You know, one thing that I hear from you, and 538 00:27:31,520 --> 00:27:34,119 Speaker 5: I heard from Mike Wilson of Morgan Stanley earlier this morning, 539 00:27:34,280 --> 00:27:36,800 Speaker 5: was that corporate America has a lot of good about 540 00:27:36,800 --> 00:27:38,600 Speaker 5: it in terms of strength, in terms of resilience, in 541 00:27:38,680 --> 00:27:42,200 Speaker 5: terms of technological progress. It's the question about other dollar 542 00:27:42,240 --> 00:27:44,880 Speaker 5: denominated assets, and I'm talking about treasuries. I'm talking about 543 00:27:44,920 --> 00:27:47,399 Speaker 5: government debt, especially given some of what you were talking 544 00:27:47,400 --> 00:27:49,600 Speaker 5: about with respect to who is driving some of these 545 00:27:50,000 --> 00:27:52,119 Speaker 5: budget proposals through Congress. 546 00:27:52,840 --> 00:27:54,160 Speaker 6: That really is the issue. 547 00:27:54,280 --> 00:27:56,720 Speaker 5: How much have you seen that bid get called into 548 00:27:56,840 --> 00:27:59,920 Speaker 5: question as institutions, particularly foreign ones, move away. 549 00:28:00,080 --> 00:28:01,720 Speaker 10: I think there's a question of you know, how much 550 00:28:01,800 --> 00:28:06,040 Speaker 10: are you know, foreign governments pulling away from treasuries and 551 00:28:06,240 --> 00:28:07,840 Speaker 10: you know, is that is that what we're seeing the 552 00:28:07,840 --> 00:28:09,840 Speaker 10: treasury market or are we seeing the unwinding of the 553 00:28:09,840 --> 00:28:10,440 Speaker 10: basis point? 554 00:28:10,480 --> 00:28:11,560 Speaker 6: They are the basis. 555 00:28:11,200 --> 00:28:15,960 Speaker 10: Trade and so you know, look, then the question falls 556 00:28:16,000 --> 00:28:19,080 Speaker 10: into well is the reserve US as the reserve currency? 557 00:28:19,080 --> 00:28:21,280 Speaker 6: At question? Look, is not where else you going to go? 558 00:28:21,400 --> 00:28:21,520 Speaker 3: Right? 559 00:28:21,560 --> 00:28:23,840 Speaker 10: The US is going to be the reserve currency. People 560 00:28:23,840 --> 00:28:26,360 Speaker 10: will say, well, China trade has gone up to two percent. Yeah, 561 00:28:26,359 --> 00:28:28,600 Speaker 10: it's gone from four to six percent of trade, right, 562 00:28:28,920 --> 00:28:31,080 Speaker 10: you know, it'll chip away at it, but we are 563 00:28:31,119 --> 00:28:32,960 Speaker 10: still going to continue to be the reserve currency. 564 00:28:33,200 --> 00:28:36,080 Speaker 1: You mentioned a lot of non US investors pulling back 565 00:28:36,080 --> 00:28:38,200 Speaker 1: from the United States. Morning Star had research out this 566 00:28:38,240 --> 00:28:41,280 Speaker 1: week that said some of that is actually patriotic rebalancing 567 00:28:41,560 --> 00:28:44,600 Speaker 1: from capital from America to Europe. Do you think it's 568 00:28:44,640 --> 00:28:45,760 Speaker 1: that emotional for some. 569 00:28:45,720 --> 00:28:49,760 Speaker 10: Of these people, Well, you know, just again talking to 570 00:28:49,760 --> 00:28:54,040 Speaker 10: folks from Canada who are so fundamentally offended by the 571 00:28:54,080 --> 00:28:58,160 Speaker 10: comment of you know, the fifty first state. Yeah, it's emotional, right, 572 00:28:58,920 --> 00:29:01,440 Speaker 10: they kind of get it on the trade and tariffs 573 00:29:01,440 --> 00:29:03,360 Speaker 10: and we can deal and you want help on immigration. 574 00:29:04,160 --> 00:29:06,200 Speaker 10: But a comment like that has obviously had that kind 575 00:29:06,240 --> 00:29:07,160 Speaker 10: of nationalists response. 576 00:29:07,200 --> 00:29:10,320 Speaker 1: One are the long term impacts of feelings like that. 577 00:29:11,360 --> 00:29:14,360 Speaker 10: You know, who's at a dinner last night, we're you know, debating. 578 00:29:14,360 --> 00:29:17,040 Speaker 10: Does that push Europe to China? 579 00:29:17,600 --> 00:29:19,160 Speaker 6: I don't think it, you know, obviously. 580 00:29:19,240 --> 00:29:21,320 Speaker 10: I think what it does is there's the joke of 581 00:29:21,400 --> 00:29:24,240 Speaker 10: you know, it's not Mega, it's Mega make Europe great again, right. 582 00:29:24,280 --> 00:29:26,280 Speaker 6: It forces Europe. 583 00:29:25,920 --> 00:29:31,120 Speaker 10: To do things like more defense independence, more energy independence. Look, 584 00:29:31,160 --> 00:29:34,440 Speaker 10: there's been a lot of brilliant talent in Europe. Why 585 00:29:34,440 --> 00:29:38,040 Speaker 10: are we not seeing these unicorn companies from a technological 586 00:29:38,040 --> 00:29:39,800 Speaker 10: and a lot of people say it's the regulation and 587 00:29:40,160 --> 00:29:42,240 Speaker 10: it's some of the policies that they have in Europe. 588 00:29:42,360 --> 00:29:46,720 Speaker 10: And so if this forces Europe to be more resilient 589 00:29:46,760 --> 00:29:48,720 Speaker 10: on its own, that's actually a good thing for Europe. 590 00:29:48,720 --> 00:29:51,520 Speaker 10: I don't think it necessarily. They don't suddenly trust China 591 00:29:51,600 --> 00:29:55,600 Speaker 10: much more. They're already trading with China. But it forces 592 00:29:55,640 --> 00:29:57,400 Speaker 10: them to say, you know what, we have to we 593 00:29:57,440 --> 00:29:58,920 Speaker 10: have to stand on our own a little bit more. 594 00:29:58,960 --> 00:30:01,400 Speaker 2: It's why we're seeing some invest this rebalance towards Europe 595 00:30:01,440 --> 00:30:03,200 Speaker 2: since the start of the year. I wanted to build 596 00:30:03,200 --> 00:30:05,000 Speaker 2: on some of Lisa's questions, and I think this is 597 00:30:05,040 --> 00:30:07,760 Speaker 2: an important line of questioning at the moment, some investors 598 00:30:07,800 --> 00:30:11,040 Speaker 2: aren't drawing a distinction between risk assets in America and 599 00:30:11,080 --> 00:30:13,160 Speaker 2: the safe have an asset in America, it's training as 600 00:30:13,200 --> 00:30:14,200 Speaker 2: one bucket. 601 00:30:14,000 --> 00:30:15,400 Speaker 8: Dollar denominated assets. 602 00:30:15,680 --> 00:30:18,200 Speaker 2: And I wonder from your perspective, when that Ian dynamic 603 00:30:18,240 --> 00:30:20,520 Speaker 2: starts to take hold of the country, whether that's a 604 00:30:20,600 --> 00:30:23,240 Speaker 2: risk you need to actively manage or a dislocation you 605 00:30:23,360 --> 00:30:24,280 Speaker 2: take advantage of. 606 00:30:24,600 --> 00:30:25,720 Speaker 8: Which one is it at the moment? 607 00:30:25,760 --> 00:30:29,080 Speaker 10: Well, I think anytime that it becomes a risk on 608 00:30:29,240 --> 00:30:31,600 Speaker 10: risk off in a big block, and yet you know, 609 00:30:31,680 --> 00:30:35,200 Speaker 10: the underlying fundamentals are different in kind of an investment, 610 00:30:35,240 --> 00:30:37,440 Speaker 10: that actually becomes a great investment opportunity. 611 00:30:37,560 --> 00:30:38,680 Speaker 6: So I think you have to look at it and 612 00:30:38,800 --> 00:30:39,920 Speaker 6: unpack those Do. 613 00:30:39,840 --> 00:30:42,080 Speaker 2: You think that's what this is right now and it's 614 00:30:42,080 --> 00:30:43,560 Speaker 2: the opportunity in stocks or bonds? 615 00:30:43,560 --> 00:30:43,960 Speaker 8: With that in. 616 00:30:43,920 --> 00:30:48,160 Speaker 10: Mind, I think you know, right now it's almost a 617 00:30:48,240 --> 00:30:51,160 Speaker 10: market reacting to just a headline statement, right, and so 618 00:30:51,240 --> 00:30:53,520 Speaker 10: it's really sort of on and off. It's a risk 619 00:30:53,560 --> 00:30:56,960 Speaker 10: on risk off. I think that from a you know, 620 00:30:57,040 --> 00:31:00,959 Speaker 10: the dollar was someon would say over valued, who knows, right, 621 00:31:01,360 --> 00:31:03,120 Speaker 10: and it's come down a fair bit. I think there 622 00:31:03,160 --> 00:31:05,680 Speaker 10: are a lot of people that were the US the 623 00:31:05,760 --> 00:31:08,400 Speaker 10: debt and the deficit. You know, thought that it was overvalued, 624 00:31:08,440 --> 00:31:10,920 Speaker 10: and so probably in this there's a little bit of 625 00:31:10,960 --> 00:31:13,560 Speaker 10: that coming, you know, some of that frightingness coming off. 626 00:31:13,720 --> 00:31:15,520 Speaker 2: What's your advice to people right now who were part 627 00:31:15,560 --> 00:31:17,440 Speaker 2: of that dollar bit. They've built up that massive dollar 628 00:31:17,480 --> 00:31:20,080 Speaker 2: long over the period of a decade across asset classes, 629 00:31:20,080 --> 00:31:22,920 Speaker 2: in both equities and fixed income, and they're nervous about 630 00:31:22,920 --> 00:31:25,120 Speaker 2: the policy in Washington and looking to reallocate. 631 00:31:25,400 --> 00:31:26,560 Speaker 8: What do you suggesting they do? 632 00:31:26,680 --> 00:31:29,240 Speaker 10: I think it depends on where If you're a dollar 633 00:31:29,280 --> 00:31:31,640 Speaker 10: based economy, I think that's okay, you don't have to 634 00:31:31,720 --> 00:31:33,600 Speaker 10: worry about that. If you're not a dollar based economy, 635 00:31:33,600 --> 00:31:37,080 Speaker 10: you have to understand how that's going to impact your investments. 636 00:31:37,080 --> 00:31:38,880 Speaker 2: Certainly been something that the Europeans about to think about 637 00:31:38,880 --> 00:31:40,640 Speaker 2: over the last few months, that's for sure. Jenny, it's 638 00:31:40,640 --> 00:31:42,320 Speaker 2: good to see you lost to talk about. I can't 639 00:31:42,360 --> 00:31:44,480 Speaker 2: imagine how much has changed the next time we spoke. 640 00:31:44,680 --> 00:31:47,760 Speaker 2: I speak Jenny Johnson. There the Franklin Templeton CEO on 641 00:31:47,800 --> 00:31:51,720 Speaker 2: the latest in this market. This is the Bloomberg Sevenants podcast, 642 00:31:51,840 --> 00:31:55,760 Speaker 2: bringing you the best in markets, economics, angiot, politics, You 643 00:31:55,800 --> 00:31:58,560 Speaker 2: can watch the show live on Bloomberg TV weekday mornings 644 00:31:58,560 --> 00:32:01,520 Speaker 2: from six am to nine am Eastern. Subscribe to the 645 00:32:01,520 --> 00:32:05,040 Speaker 2: podcast on Apple, Spotify, or anywhere else you listen, and 646 00:32:05,080 --> 00:32:07,959 Speaker 2: as always, on the Bloomberg Terminal and the Bloomberg Business 647 00:32:07,960 --> 00:32:08,160 Speaker 2: app 648 00:32:12,120 --> 00:32:12,520 Speaker 5: MHM