WEBVTT - Bloomberg Surveillance TV: April 24, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.239 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.680 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.280 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.560 Terminal and the Bloomberg Business App. Joining us now, Danny 0:00:37.600 --> 0:00:40.240 of Yourdenny Research. He writes Trump and Bess and discards 0:00:40.240 --> 0:00:42.640 some of their best cards while preparing to play tariff 0:00:42.640 --> 0:00:46.000 poker with China. Financial markets are happy that Team Trump 0:00:46.280 --> 0:00:48.800 is blinkingg Edgiandenny joined us now for more. Ed Welcome 0:00:48.800 --> 0:00:51.160 to the program. Let's talk about the extent of that blink. 0:00:51.240 --> 0:00:53.280 How much of a U turne are you expecting in 0:00:53.320 --> 0:00:54.240 the next several weeks. 0:00:55.400 --> 0:00:56.240 Well, it's a very. 0:00:56.080 --> 0:00:59.320 Odd situation where the United States seems to be negotiating 0:00:59.360 --> 0:01:02.640 with itself, so very peculiar art of the deal where 0:01:02.680 --> 0:01:05.319 you walk in the room and you're you're the only 0:01:05.360 --> 0:01:10.480 one in there, and you keep issuing really press release 0:01:10.520 --> 0:01:12.880 to saying that great progress is being made. 0:01:12.959 --> 0:01:14.800 So I don't really know what to make of it. 0:01:14.880 --> 0:01:15.959 What I do make of. 0:01:15.920 --> 0:01:19.319 It is that curly the financial markets have had a 0:01:19.319 --> 0:01:24.120 big impact on the administration. This is the bond vigilantes 0:01:24.160 --> 0:01:28.200 and the stock vigilantes ganging up on the administration and saying, 0:01:28.720 --> 0:01:31.039 you know, we need some moderation here, we need some 0:01:31.560 --> 0:01:34.240 cooling off. And that's exactly what the administration is doing. 0:01:35.440 --> 0:01:38.040 And that is the target Home Depot and Walmart vigilantes 0:01:38.040 --> 0:01:41.080 as well. Clearly the most important meeting that took place 0:01:41.080 --> 0:01:43.880 in Washington this week where the retailer is sitting down 0:01:43.880 --> 0:01:45.840 with the President of the United States and warning Kim 0:01:46.080 --> 0:01:49.080 they're within weeks we could have empty shelves. And I 0:01:49.120 --> 0:01:51.040 think it makes it difficult at this moment to read 0:01:51.080 --> 0:01:55.280 the economic data. What is a genuine rebuilding infantries, what 0:01:55.400 --> 0:01:59.320 is a genuine sustainable underlying trend in demand, and what 0:01:59.360 --> 0:02:01.920 do you see in the data and the earnings. 0:02:03.320 --> 0:02:07.200 Well, the earnings are actually starting to be cut back. 0:02:07.280 --> 0:02:11.800 Of course, analysts have finally gotten their recession tariff memo, 0:02:12.880 --> 0:02:16.320 so they've started to incorporate the fact that this isn't 0:02:16.320 --> 0:02:18.160 going to be good for the economy. It's going to 0:02:18.160 --> 0:02:21.520 weigh on the economy. I think to the extent that 0:02:22.360 --> 0:02:25.520 analysts usually talk just to companies, they don't talk to economists, 0:02:25.520 --> 0:02:28.520 But they're reading the headlines and they see that economists 0:02:28.560 --> 0:02:32.120 are lowering their outlook for economic growth, and they're probably 0:02:32.160 --> 0:02:34.760 getting that kind of guidance from some of their companies 0:02:34.760 --> 0:02:37.800 that if the tariffs stay on, the longer they stay on, 0:02:37.840 --> 0:02:41.400 the weaker the economy is going to be. But I 0:02:41.400 --> 0:02:43.519 think at the rate at which the administration is back 0:02:43.560 --> 0:02:47.120 and off here, the economic impact of the tariffs could 0:02:47.160 --> 0:02:49.520 start to really ease off by the second half of 0:02:49.520 --> 0:02:52.360 the year, which is at this point when most economists 0:02:52.440 --> 0:02:56.600 expecting a much weaker economy are actually a recession. So 0:02:57.160 --> 0:02:59.480 there could be a reversal at least in the soft 0:02:59.560 --> 0:03:02.880 data that then it would suddenly lift the pressure off 0:03:02.880 --> 0:03:03.480 the hard data. 0:03:04.600 --> 0:03:06.560 And it feels like the genius sort of out of 0:03:06.560 --> 0:03:07.959 the bottle, But we can't see and we don't know 0:03:07.960 --> 0:03:09.280 how big he is. We don't know whether he can 0:03:09.320 --> 0:03:11.519 climb back into the bottle at any given time. 0:03:11.600 --> 0:03:14.119 I just wonder as you look forward why you reject. 0:03:13.840 --> 0:03:16.200 The idea that what we're seeing right now is a 0:03:16.360 --> 0:03:20.320 long term structural loss of US exceptionalism that will result 0:03:20.360 --> 0:03:23.840 in a weaker dollar and potentially less dynamism in US 0:03:23.880 --> 0:03:24.840 equities over time. 0:03:25.600 --> 0:03:26.760 Yeah, that's a great question. 0:03:26.880 --> 0:03:30.080 I mean, it's only a few months ago that the 0:03:30.320 --> 0:03:33.799 American exceptionalism made the front cover of The Economist. I 0:03:33.840 --> 0:03:36.480 think it was October of last year. There was a 0:03:36.560 --> 0:03:38.760 lot of dollars that looked like a rocket ship, and 0:03:39.160 --> 0:03:42.560 you know, we couldn't be staffed. Look, I think now 0:03:42.600 --> 0:03:45.560 that everybody is having second thoughts about that, or even 0:03:45.880 --> 0:03:50.560 concluding in a dire way that the dollars is in 0:03:50.640 --> 0:03:53.720 decline here as a reserve currency. Keep in mind that 0:03:54.280 --> 0:03:57.040 there's nothing like the US capital markets. Well, you know, 0:03:57.040 --> 0:04:00.560 when you make a list of exceptionalism, American capital markets 0:04:00.640 --> 0:04:04.280 are exceptional. They are huge, they are liquid. There's nothing 0:04:04.440 --> 0:04:07.760 like them. So I don't know how the dollar losers. 0:04:07.840 --> 0:04:12.480 That's preserve status, and I think it remains strong even 0:04:12.520 --> 0:04:17.599 this recent hysteria about the weaker dollar. It's fell about 0:04:17.600 --> 0:04:22.200 ten percent. Using the Dollar index, the DXY that everybody watches, 0:04:22.240 --> 0:04:25.680 but a much better index that the FED calculates is 0:04:25.720 --> 0:04:27.920 down about half as much, which is no big deal 0:04:27.960 --> 0:04:28.680 in my opinion. 0:04:30.120 --> 0:04:32.200 This is the reason why people are looking at announcements 0:04:32.200 --> 0:04:34.280 from a number of different ACID allocators and seeing if 0:04:34.279 --> 0:04:37.279 they are trying to diversify even a little bit away 0:04:37.279 --> 0:04:40.320 from the United States into other countries. I just wonder 0:04:40.640 --> 0:04:42.600 how concerned you are about the idea that forty four 0:04:42.600 --> 0:04:44.479 percent of S and P five hundred companies that have 0:04:44.520 --> 0:04:47.400 reported so far have mentioned the word recession, except from 0:04:47.440 --> 0:04:50.160 three percent in the fourth quarter, at a time where 0:04:50.200 --> 0:04:54.720 potentially the US's ability to borrow to bolster the economy 0:04:54.720 --> 0:04:57.760 and any kind of downturn could really be a lot 0:04:57.800 --> 0:05:01.640 more difficult, a lot more pricey, a lot more paniff. 0:05:02.920 --> 0:05:03.120 Yeah. 0:05:03.160 --> 0:05:06.480 Well, I think the stock markets discounted certainly a weakening 0:05:06.560 --> 0:05:08.440 in the economy in the second half of the year. 0:05:09.240 --> 0:05:12.520 We certainly lowered our numbers from something like two and 0:05:12.600 --> 0:05:15.800 a half to three percent growth this year to something 0:05:16.080 --> 0:05:16.640 more like. 0:05:18.200 --> 0:05:20.200 Zero point five to one and a half percent. 0:05:21.080 --> 0:05:23.680 The only question is what there should be negative signs 0:05:24.120 --> 0:05:26.680 on those numbers, and some people, I guess are in 0:05:26.720 --> 0:05:29.800 that camp. We're still looking at the forty five percent 0:05:30.080 --> 0:05:32.440 odds of an outright recession. 0:05:32.680 --> 0:05:33.120 We think the. 0:05:33.040 --> 0:05:35.880 President's really the administration is going to back off as 0:05:35.920 --> 0:05:38.800 they have been on these tariffs, and to the extent 0:05:38.839 --> 0:05:41.440 that they don't, I think they're going to declare victory. 0:05:41.480 --> 0:05:43.440 I think they're going to get maybe ninety pieces of 0:05:43.440 --> 0:05:49.440 paper from ninety countries, signed by key diplomats, laying out a. 0:05:49.040 --> 0:05:50.359 Groundwork of framework. 0:05:51.000 --> 0:05:53.640 You can't negotiate a treaty in ninety days, you can't 0:05:53.880 --> 0:05:56.160 implement the treaty in ninety days. But I think they're 0:05:56.200 --> 0:05:59.240 going to declare victory, move on to the extension of 0:05:59.279 --> 0:06:01.839 the tax cuts, and life will go on. 0:06:03.440 --> 0:06:05.040 And when it comes to the tariffs, though, the Wall 0:06:05.040 --> 0:06:07.240 Street General appoint of the administration might back down on 0:06:07.320 --> 0:06:09.839 China to say sixty percent, but that is what Trump 0:06:09.880 --> 0:06:12.560 has been saying for months. On the campaign trail, he 0:06:12.640 --> 0:06:15.800 promised ten percent across the board, of sixty percent on China. 0:06:15.920 --> 0:06:18.960 So if that's the base case, how does this economy look? 0:06:20.160 --> 0:06:22.080 Well, as you know, it's hard to define what the 0:06:22.120 --> 0:06:27.719 base case is. It changes almost daily from the press 0:06:27.720 --> 0:06:32.920 conferences that the President has in the Oval Office. Is 0:06:35.440 --> 0:06:40.280 associates keep talking about how much progress they're making. So 0:06:41.440 --> 0:06:44.720 I think, you know, sixty percent is just as prohibitive 0:06:44.720 --> 0:06:47.560 as one hundred and forty five percent. I think they're 0:06:47.560 --> 0:06:51.760 going to have to again negotiate against themselves and maybe 0:06:51.760 --> 0:06:55.040 postpone that increase so to leave it at sixty percent, 0:06:55.040 --> 0:06:59.039 but they're going to postpone it for ninety days, turn 0:06:59.120 --> 0:07:03.360 down the rhetoric, and find somebody to negotiate with the 0:07:03.480 --> 0:07:04.960 Chinese on a better deal. 0:07:06.480 --> 0:07:08.880 Just a final question from us. You've been super constructive 0:07:08.880 --> 0:07:10.960 on this cycle for quite a while. Coming into the 0:07:11.000 --> 0:07:13.720 twenty twenties, you talked about the Roaring twenties. Yep, we're 0:07:13.720 --> 0:07:16.440 at the halfway point working through that now. If he's 0:07:16.440 --> 0:07:18.480 fronting the town on that view or you're sticking with. 0:07:18.480 --> 0:07:21.320 It, well, John, it was a great first half of 0:07:21.320 --> 0:07:24.840 the decade. I hope it's the Roaring twenty twenties as over. 0:07:24.960 --> 0:07:29.280 Yet there's sort of deja avous with the nineteen the 0:07:29.360 --> 0:07:32.120 nineteen twenties we got a whole decade out of that 0:07:32.200 --> 0:07:38.680 before the Congress that hoerendously imposed tariffs, So there's a 0:07:38.720 --> 0:07:41.400 certain similarity here. But I think this too shall pass, 0:07:41.800 --> 0:07:44.000 and I'm still looking for the Roaring twenty twenties to 0:07:44.000 --> 0:07:47.280 be a description of the entire decade called me an optimist, 0:07:47.320 --> 0:07:51.280 but I think I guess my mantra has been Look 0:07:51.280 --> 0:07:53.760 how well the US economy has done over the years 0:07:53.760 --> 0:07:54.840 despite Washington. 0:07:55.440 --> 0:07:56.760 That's still my bet. 0:07:58.080 --> 0:07:59.680 And we hope you're right. It's going to catch up 0:07:59.680 --> 0:08:02.840 with you. As always, Danny, there have your Danny research 0:08:12.440 --> 0:08:14.920 to discuss and place to say. The North Bank Investment 0:08:14.920 --> 0:08:17.880 Management CEO Nikolay Tangan joins US now for more. Nicolay, 0:08:17.920 --> 0:08:20.080 welcome back to the program. So a lot has changed 0:08:20.480 --> 0:08:23.360 since we last spoke. Attitudes towards US as sets are 0:08:23.400 --> 0:08:25.160 starting to shift. I just wonder how you and the 0:08:25.200 --> 0:08:27.679 team have started to think about that, how you're debating 0:08:27.720 --> 0:08:29.800 that issue internally over in Norway. 0:08:31.280 --> 0:08:33.600 Well, we have a very long term view on what 0:08:33.640 --> 0:08:36.880 we do, so you know, we are invested with roughue 0:08:36.960 --> 0:08:39.679 half for the fund in the US and we are 0:08:39.679 --> 0:08:41.680 here for the very long term. So we have not 0:08:41.880 --> 0:08:44.400 made any major adjustments lately. 0:08:45.480 --> 0:08:47.480 So Nikolai, can I rid into that that you view 0:08:47.520 --> 0:08:49.280 this as just a shock to the cycle and maybe 0:08:49.280 --> 0:08:51.840 not a long term shock to the system. 0:08:52.240 --> 0:08:53.839 Well, I think it's very very difficult to say it, 0:08:53.840 --> 0:08:56.600 because when we make scenario analysis here, one of the 0:08:56.640 --> 0:08:59.600 negative things that that we see is that if you 0:08:59.640 --> 0:09:04.240 get a decentanglement between the two major trading blocks, that's 0:09:04.440 --> 0:09:07.760 really really negative because it slow down it slows down growth, 0:09:08.080 --> 0:09:10.760 increases inflation and zone. So it is potentially one of 0:09:10.800 --> 0:09:13.760 the really negative things that can happen here. So I 0:09:13.800 --> 0:09:18.160 think the out look for markets are very, very uncertain, given. 0:09:17.920 --> 0:09:21.240 That there has been a shift, Nikolai, to move at 0:09:21.320 --> 0:09:24.960 least a little bit of assets about large acid allocators 0:09:25.000 --> 0:09:27.760 out of the United States, diversified to places like China, 0:09:27.840 --> 0:09:31.160 to India, to Europe. Why aren't you doing the same 0:09:31.320 --> 0:09:34.360 and shifting to benchmarks that have a little bit more 0:09:34.360 --> 0:09:35.360 exposure elsewhere. 0:09:36.679 --> 0:09:42.120 Well, we actually are extremely well diversified already. You know, 0:09:42.160 --> 0:09:44.400 we own one and a half percent of all the 0:09:44.440 --> 0:09:47.160 listed equities in the world. In Europe we have more, 0:09:47.200 --> 0:09:50.319 we have closed to three percent, and so in the 0:09:50.440 --> 0:09:53.120 US we have one than a half percent, and we 0:09:53.160 --> 0:09:55.320 also have the same in the rest of the world. 0:09:55.360 --> 0:09:57.439 So I would say we are we are well diversified, 0:09:57.440 --> 0:10:00.560 seventy percent equities, thirty percent bonds. We also have a 0:10:00.640 --> 0:10:03.080 very very good way to say, portfolio, which is coming 0:10:03.080 --> 0:10:03.959 in really handy here. 0:10:05.120 --> 0:10:08.120 Well, nikola you said previously this morning when you were 0:10:08.160 --> 0:10:11.680 speaking to media and OSLO that you will correct the 0:10:11.840 --> 0:10:15.120 underweight to US stocks. So you are planning to reinvest 0:10:15.120 --> 0:10:18.320 in US stocks even though you are surprised that we haven't. 0:10:18.080 --> 0:10:19.240 Seen even more weakness. 0:10:19.720 --> 0:10:23.679 Why are you redeploying all of the money that maybe 0:10:24.000 --> 0:10:27.320 has lost in terms of benchmark allocation to US equity 0:10:27.360 --> 0:10:29.480 has given some of these larger uncertainties. 0:10:30.600 --> 0:10:34.400 Well, the kind of the increased medication to the US 0:10:34.480 --> 0:10:36.800 is part of a program that we've been doing for 0:10:36.920 --> 0:10:39.960 quite some time. We still have some work to do 0:10:40.040 --> 0:10:43.880 here and that we will continue to do. And you know, 0:10:43.960 --> 0:10:47.040 we think the large American companies are just great long 0:10:47.120 --> 0:10:49.240 term investments, and so we are very happy to be 0:10:49.280 --> 0:10:49.880 invested in there. 0:10:51.080 --> 0:10:52.800 What sectors can you give us a little bit of 0:10:52.800 --> 0:10:55.719 a hint of specifically the sectors or the companies are 0:10:55.720 --> 0:10:57.240 interested in the United States? 0:10:58.559 --> 0:11:01.640 Well, are quite in near in how we are invested 0:11:01.840 --> 0:11:04.360 in the US. So we typically have large holdings in 0:11:04.440 --> 0:11:07.520 the you know, in the big tech companies, in all 0:11:07.559 --> 0:11:08.800 your large companies. 0:11:08.400 --> 0:11:12.280 Really and we made you know a lot of money. 0:11:12.040 --> 0:11:13.200 There over the last few years. 0:11:13.559 --> 0:11:16.360 Of course, so far this year it's been it's been negative. 0:11:16.360 --> 0:11:18.280 But when you look in comparison to the games we've 0:11:18.280 --> 0:11:21.880 had the last year and the year before, we're given 0:11:21.960 --> 0:11:24.840 back in a way surprisingly little. 0:11:24.880 --> 0:11:29.000 I would say, what about defensive companies like Lockheed Martin, 0:11:29.200 --> 0:11:31.160 is that going to be open for business? When it 0:11:31.160 --> 0:11:32.240 comes to the cumber. 0:11:31.960 --> 0:11:38.199 Well fund, Well, we invest in a lot of different industries. 0:11:38.240 --> 0:11:42.920 We have less exposure to the defense industry, but we 0:11:42.960 --> 0:11:46.240 are in a lot of the defensing names as well. 0:11:46.440 --> 0:11:48.520 Nikolai, one word you often use with us is we 0:11:48.559 --> 0:11:50.920 are diversified. I just wonder if the meaning of that 0:11:50.960 --> 0:11:54.439 word has shifted over time, particularly this year, the treasury 0:11:54.480 --> 0:11:57.319 market is behaving in unpredictable ways. When the equity market 0:11:57.360 --> 0:11:59.600 is falling, treasury markets have fell as well. In fact, 0:11:59.640 --> 0:12:02.319 those two asset classes are training and lockstep. At the moment, 0:12:02.559 --> 0:12:06.040 it's as if investors are treating all dollarg and ONMITD 0:12:06.080 --> 0:12:08.920 as assets as one bucket. And I just wondered, Nicolay, 0:12:08.960 --> 0:12:11.440 what that means for how you think about diversification this 0:12:11.559 --> 0:12:12.240 year and beyond. 0:12:13.679 --> 0:12:16.839 Yeah, there was sometimes when when this type of diversification 0:12:16.920 --> 0:12:17.840 worked less well. 0:12:18.640 --> 0:12:20.480 We had the same type of situation. 0:12:20.960 --> 0:12:24.760 You know, two three years ago, and so some years 0:12:24.760 --> 0:12:25.959 it works, some years it doesn't. 0:12:26.000 --> 0:12:27.120 I think over time, if you have. 0:12:27.120 --> 0:12:29.800 A really long term time horizon, I think it's the 0:12:30.720 --> 0:12:31.720 right positioning to have. 0:12:33.080 --> 0:12:35.320 We've seen over the last month or so that some 0:12:35.400 --> 0:12:38.000 investors were trying to understand whether what was happening in 0:12:38.040 --> 0:12:42.000 the treasury market was just trades unwinding, some hedgephones, hedge 0:12:42.040 --> 0:12:45.120 funds blowing up, or nicolay, whether it was a reassessment 0:12:45.160 --> 0:12:48.040 of the safe haven status of the United States. Nicola 0:12:48.040 --> 0:12:50.560 I was on your dashboard to have distinguished between one 0:12:50.880 --> 0:12:51.400 and the other. 0:12:51.559 --> 0:12:52.880 What do you think it was? What do you think 0:12:52.880 --> 0:12:53.200 it is? 0:12:54.440 --> 0:12:56.439 Well, I think it's a very very complicated question. I 0:12:56.440 --> 0:12:58.679 don't think it's only one thing. I think it's a 0:12:58.720 --> 0:13:04.440 cocktail of all kind of things you mentioned. Now, so 0:13:04.520 --> 0:13:08.520 far this year, we've we have been neutral to the 0:13:08.600 --> 0:13:11.720 US treasure market. We have not reduced or increased positions, 0:13:11.760 --> 0:13:14.760 so we have we have certainly not to cause that move. 0:13:16.000 --> 0:13:18.439 Do you have a sense, Nikolai, going forward of whether 0:13:18.520 --> 0:13:22.600 we are entering a more inflationary period given some of 0:13:22.640 --> 0:13:26.000 the deglobalization that we're seeing, some of the fissures and 0:13:26.120 --> 0:13:28.200 some of the kinks that are emerging in the supply 0:13:28.320 --> 0:13:29.479 chain system. 0:13:30.400 --> 0:13:33.360 Yeah, I think we are potentially going into a more 0:13:33.360 --> 0:13:39.520 inflationary situation. It is kind of a pretty obvious consequence 0:13:39.679 --> 0:13:45.880 of higher tariffs, and of course inflation is really negative 0:13:45.880 --> 0:13:48.120 of market so I think that's potentially one of the 0:13:48.160 --> 0:13:49.240 big risks that we are. 0:13:49.200 --> 0:13:49.920 Seeing just now. 0:13:50.160 --> 0:13:53.680 Interestingly, we just yesterday released a podcast with Ken Rogoff, 0:13:54.120 --> 0:13:56.800 kind of the world leading specialist, I guess on inflation, 0:13:57.480 --> 0:14:01.960 and he's also very word about this particular fact. 0:14:02.960 --> 0:14:04.880 Well, I guess, just to build in what John was 0:14:04.920 --> 0:14:08.000 asking about the idea of diversification, and you have been 0:14:08.040 --> 0:14:10.960 about neutral on US bonds, there has been a feeling 0:14:11.000 --> 0:14:15.560 that maybe diversification, especially in an inflationary environment, requires some gold, 0:14:15.840 --> 0:14:19.920 requires some alternative assets that might be act based funding 0:14:20.320 --> 0:14:24.120 that have different streams of diversified revenues. Is that your 0:14:24.280 --> 0:14:26.320 take on it that you just on the margins want 0:14:26.320 --> 0:14:28.920 to pick up a little bit more gold or diversify 0:14:28.960 --> 0:14:31.120 a little bit more in some of these other asset classes. 0:14:32.400 --> 0:14:32.680 Yeah. 0:14:32.720 --> 0:14:35.360 So we have a very strict mannight here from the ministry, 0:14:35.400 --> 0:14:39.200 so we cannot buy gold, and I do think gold 0:14:39.240 --> 0:14:42.160 sometimes has a bit difficult to understand what the intrinsic 0:14:42.240 --> 0:14:43.760 value is of gold. 0:14:44.040 --> 0:14:47.040 We also don't do cryptocurrencies, for instance. 0:14:47.440 --> 0:14:49.400 But when we look at alternative assets, I would say 0:14:49.440 --> 0:14:52.120 in a market like this to have real estates, that's 0:14:52.200 --> 0:14:55.440 very good. We have just under a thousand properties around 0:14:55.480 --> 0:14:59.560 the world, you know, large holdings in Manhattan, Boston, Washington 0:15:00.160 --> 0:15:01.760 one and so I think that's going to be a 0:15:01.800 --> 0:15:03.360 pretty good place to be going forward. 0:15:04.560 --> 0:15:07.120 Nikolay, I appreciate your take at a difficult time. Thanks 0:15:07.120 --> 0:15:09.560 for your time this morning. Nicolai Tangan there the Norway 0:15:09.800 --> 0:15:22.360 Well fun CEO. On a difficult moment, the UCB warning 0:15:22.440 --> 0:15:26.360 tarras may be more disinflationary than inflationary for Europe. This 0:15:26.440 --> 0:15:29.320 after President Trump said he's confident of reaching a trade 0:15:29.360 --> 0:15:31.960 deal with the EU. Joining us around the table here 0:15:32.000 --> 0:15:34.320 in our studio in Washington, d C. The chief economist 0:15:34.360 --> 0:15:36.080 of the European Central Bank, Philip Blank. 0:15:36.120 --> 0:15:38.320 Philip's good to see you, sir, Good morning. Thanks for 0:15:38.360 --> 0:15:39.400 being able to hear in Washington. 0:15:39.520 --> 0:15:41.760 So the Governing Council meeting, I imagine was very different 0:15:41.760 --> 0:15:43.920 this time around than a number of months ago when 0:15:43.920 --> 0:15:46.920 you walked into that room and presented changes to the economy. 0:15:47.200 --> 0:15:48.360 What did you tell a team? 0:15:48.400 --> 0:15:50.400 Sure, I mean, I think it was a gear change 0:15:50.640 --> 0:15:55.080 for several reasons, So of course our core business has 0:15:55.080 --> 0:15:57.000 been to try and get inflation back down from a 0:15:57.120 --> 0:16:01.360 high number to our targets. I think there was a 0:16:01.400 --> 0:16:04.960 milestone in this meeting in the sense of the most 0:16:04.960 --> 0:16:08.200 recent data had come in quite low. What we've been 0:16:08.240 --> 0:16:11.080 waiting for services inflation to kind of drop, and it 0:16:11.320 --> 0:16:15.000 has been dropping. And then we had surveys showing that 0:16:15.040 --> 0:16:18.600 basically the weight dynamic this year and in twenty six 0:16:18.800 --> 0:16:22.480 is lower than we expected. So basically, if you like, 0:16:22.560 --> 0:16:26.040 if you clear the table about the historic issue, are 0:16:26.040 --> 0:16:29.360 we safely bringing inflation back to target? I think a 0:16:29.360 --> 0:16:31.320 lot it's not entirely settled, but a lot of it 0:16:31.360 --> 0:16:34.360 is settled. So the gear change was of course, now 0:16:34.520 --> 0:16:37.880 we have new things to talk about, and really since 0:16:38.880 --> 0:16:42.440 all the way back to last summer, trade policy uncertainty 0:16:42.880 --> 0:16:45.720 has been part of what we've had to talk about. 0:16:46.360 --> 0:16:49.520 But we still have trade policy uncertainty, but we also 0:16:49.560 --> 0:16:53.840 have trade policy news. You know, lots has happened that 0:16:54.040 --> 0:16:57.800 the and then the other element of what we've seen 0:16:58.200 --> 0:17:00.280 is of course, and that happened, by the way, like 0:17:00.360 --> 0:17:03.240 a day or two before our March meeting, was a 0:17:03.280 --> 0:17:07.359 German break through and fiscal policy. So we already had that, 0:17:07.560 --> 0:17:11.800 if you like, in the early incarnation at the March meeting. 0:17:12.440 --> 0:17:14.919 We know more now, but it's still, you know, in 0:17:15.000 --> 0:17:17.160 terms of what the other European countries are going to do, 0:17:17.800 --> 0:17:21.880 it's something that's still in discussion. So what I would 0:17:21.880 --> 0:17:23.960 say if you put all of that together, and I 0:17:23.960 --> 0:17:27.000 think you're probably hearing this from various colleagues and other 0:17:27.040 --> 0:17:30.840 people this week, is if I take a longer term perspective, 0:17:31.640 --> 0:17:34.400 and the IMF in their publications this week, a lot 0:17:34.400 --> 0:17:37.199 of the data go out of twenty thirty. If I 0:17:37.240 --> 0:17:41.160 take a twenty thirty perspective, you know, I think there's 0:17:41.200 --> 0:17:44.840 a lot of grants to have a renewed optimism that essentially, 0:17:44.840 --> 0:17:49.640 with more fiscal support, the credibility of delivering our two 0:17:49.640 --> 0:17:52.840 percent target on a kind of long term basis is stronger. 0:17:53.680 --> 0:17:57.080 The case for the European economy to be more resilient, 0:17:57.760 --> 0:18:01.639 to grow from a domestic source, not just from running 0:18:01.680 --> 0:18:06.639 a big export machine is more credible. But of course 0:18:06.680 --> 0:18:09.240 we have to navigate from where we are now. Where 0:18:09.359 --> 0:18:13.840 As you said in your intro, immediately in the short term, 0:18:14.440 --> 0:18:18.200 the way it's playing out with euro appreciation with. 0:18:18.200 --> 0:18:19.840 A big job and energy prices. 0:18:20.920 --> 0:18:25.640 The disinflatory forces are there, but I would say maybe 0:18:26.280 --> 0:18:28.000 the question you know, I wouldn't load it all on 0:18:28.160 --> 0:18:30.719 the trade policy is what we also see now as 0:18:30.720 --> 0:18:34.719 a portfolio shift. So there's a clear portfolio shift going on, 0:18:35.240 --> 0:18:37.800 which is I think the way you can reconcile euro 0:18:38.040 --> 0:18:41.640 appreciation in the middle of this trade discussion. 0:18:41.680 --> 0:18:43.120 As you know, Philip, that sort of begs the question 0:18:43.200 --> 0:18:45.320 why you don't act more aggressively. Does that give you 0:18:45.359 --> 0:18:47.000 the space to act more preemptively? 0:18:47.400 --> 0:18:51.719 Well, I think a very important narrative we had last week, 0:18:51.920 --> 0:18:55.920 and it was repeated threat to Manto policy statement was resilience. 0:18:56.600 --> 0:18:59.880 What we're seeing is the europan economy growing. Two years 0:18:59.880 --> 0:19:03.360 of it was kind of more stagnating. So we said 0:19:03.400 --> 0:19:07.400 the European economy is going to recover. We saw modest 0:19:07.480 --> 0:19:10.879 but still market recovery last year is around zero nine. 0:19:11.400 --> 0:19:14.280 We have zero nine written down in March for this year. 0:19:15.000 --> 0:19:20.360 And that's basically because with incomes going up, consumption through 0:19:20.400 --> 0:19:24.280 recover with our Munti policy, and the general improvement of 0:19:24.280 --> 0:19:28.760 the economy, investments should recover with more government support. So 0:19:28.840 --> 0:19:32.919 all the domestic engines are there. So what you have 0:19:32.960 --> 0:19:36.359 to think about. Is all of that, if you like, 0:19:36.720 --> 0:19:40.919 is saying that the economies should be growing, even marking 0:19:40.960 --> 0:19:44.679 down some trait negative And this is why we're not 0:19:44.800 --> 0:19:48.840 in a situation where we see some dramatic change in 0:19:48.880 --> 0:19:51.720 the external environment or in friest pressures and so on. 0:19:52.000 --> 0:19:52.880 So steady is okay? 0:19:53.040 --> 0:19:55.120 Hold on a second, Are you saying that what we've 0:19:55.119 --> 0:19:58.800 seen with respect to US policy and the uncertainty isn't 0:19:58.920 --> 0:20:02.240 increasing the chance of session materially for the euroregion? 0:20:02.680 --> 0:20:06.480 Well, I mean, I think our overriding seam, of course 0:20:06.560 --> 0:20:09.280 is uncertainty, and let's not get ahead of ourselves in 0:20:09.320 --> 0:20:11.560 terms of being too sure about any any path for 0:20:11.600 --> 0:20:14.879 the economy. But I think the message is but it's 0:20:15.480 --> 0:20:17.360 not me dreaming it up. If you look at the 0:20:17.480 --> 0:20:21.399 external watchers, if you look at the IMF, it's fairly 0:20:21.520 --> 0:20:25.240 modest mark dance on the growth trade for the European economy. 0:20:25.560 --> 0:20:29.520 The US, of course has a major trade policy issue 0:20:29.760 --> 0:20:32.920 all with the world. We have a trade policy issue 0:20:32.960 --> 0:20:36.360 with the US. The US is an important trading partner, 0:20:36.960 --> 0:20:40.320 but it's not our only trading partner, so directionally it 0:20:40.400 --> 0:20:43.760 is a markdown. There is a markdown, but it's important 0:20:43.760 --> 0:20:46.800 to say. It's a markdown from a growth trade around 0:20:47.000 --> 0:20:50.480 zero nine to a little bit less. Let's see in 0:20:50.520 --> 0:20:52.679 the coming weeks how much less. And I think if 0:20:52.720 --> 0:20:55.159 you look at the surveys this week, the surveys have 0:20:55.280 --> 0:20:59.240 elements of people being concerned, but they also have elements. 0:20:59.560 --> 0:21:03.240 Right now, we're busy. Manufacturing is a bit busier than 0:21:03.240 --> 0:21:05.440 it was. That could be a little bit of front 0:21:05.520 --> 0:21:09.560