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Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene

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Speaker 1: Jay Leye. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Yeah.

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Speaker 1: I'm gonna bring a Neil sharing Capital Economics Chief, Emerging

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Speaker 1: Markets Economists, and Nail. I want to ask you if

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Speaker 1: things are really as good as they say they are.

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Speaker 1: The numbers out of Europe today, the economic confidence numbers

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Speaker 1: the best in like two decades that data are out

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Speaker 1: of Europe has been good the US as well. What

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Speaker 1: about em SO the e s I said, SI record highs,

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Speaker 1: p M, IT record highs. All. The news out of

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Speaker 1: em has been pretty solid too. I think the global

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Speaker 1: economies are entering two thousand and eight on a reasonably

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Speaker 1: strong footing Q and I think it will be quite

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Speaker 1: strong um. The one area of concern I have at

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Speaker 1: this stage is China. Some sense that China's economy is

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Speaker 1: already starting to turn this big recovery clup swing that

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Speaker 1: we saw in already starting to perhaps lose a bit

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Speaker 1: of steam, and I think that could be the big

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Speaker 1: story that starts to emerge over the course of theition.

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Speaker 1: How do you get a lead on what's happening in China?

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Speaker 1: What are the data points that give you that picture?

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Speaker 1: Neil Well, the first thing is you ignore the official

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Speaker 1: data because the official data are going to tell you

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Speaker 1: that the economy is remarkably stable, strong and stable. Where

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Speaker 1: if you've heard that before six and a half percents

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Speaker 1: of that um We have our own activity proxy. Other

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Speaker 1: companies have their own activity proxies to we use it.

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Speaker 1: We built it from the bottom up. Gives us a

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Speaker 1: real time measure of growth. Has been pretty good at

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Speaker 1: tracking the cycle too. That currently puts growth at about

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Speaker 1: five year on year, but that's already dying from over

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Speaker 1: six percent about six months ago. Our senses, it gets

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Speaker 1: below five pretty quickly by perhaps the middle of this year,

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Speaker 1: and perhaps as low as four by the end of

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Speaker 1: the year. So now the story was we got towards

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Speaker 1: year end last year and the leaders kind of pumped

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Speaker 1: up the economy for the annual get together to make

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Speaker 1: things look good, and then they took the foot off

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Speaker 1: the accelerators we came towards new year. Is that the

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Speaker 1: reality that's part of the story. There are other things

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Speaker 1: going on to Obviously, there was a bit of before

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Speaker 1: the Party Congress, there's a bit of policy stimulus um.

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Speaker 1: There's been a pollution cracked down in the northeast of

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Speaker 1: the country. That's weighing on the industrial sector. We've had

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Speaker 1: new property controls that's weighing on the construction and real

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Speaker 1: estate sectors. The big story, though, the really big thing,

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Speaker 1: is that potential growth trend growth in China has slowed,

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Speaker 1: and we've got to get get away from the idea

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Speaker 1: that China is an economy that grows at six or

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Speaker 1: seven percent annually. That's just you know, it's much richer now.

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Speaker 1: It's got these big structural problems over capacity, over investment.

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Speaker 1: The norm for growth is going to be about three

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Speaker 1: or four percent over the over the next ten years.

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Speaker 1: So before we all get barish about China, tell me,

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Speaker 1: do they still have the capacity just to put the

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Speaker 1: foot down on the accelerator again, push up the numbers,

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Speaker 1: make everything seem pretty and we all have to back

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Speaker 1: off once more. They do. But the point is that

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Speaker 1: you get less banged for your back each time you

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Speaker 1: do that. And what's more, each time you do that,

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Speaker 1: all you're gonna do is add to this ever increase

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Speaker 1: in debt pile too. I think they're becoming increasingly aware

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Speaker 1: of this. Don't think you'll stop them doing it this

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Speaker 1: time around either. I think it probably will lose some

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Speaker 1: policy later this year, but that comes with a bigger

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Speaker 1: debt part, It comes with financial risks, and ultimately I

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Speaker 1: think perhaps a much harder adjustment at some point. Further

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Speaker 1: down the line is e m study in economics, in finance,

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Speaker 1: in investment? Is it the same methods, models and reaction functions?

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Speaker 1: Is ten years ago of globalization? I say this with

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Speaker 1: the loss of Peter Sutherland, who had so much to

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Speaker 1: do with the Uruguay round to Louisium was it was

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Speaker 1: a great loss for international economics. But are we using

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Speaker 1: the same models that the late Peter Sutherland uh new

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Speaker 1: at the Uruguay round or is it? Is it a

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Speaker 1: whole calculus now? I think it's a it's a different calculus.

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Speaker 1: I mean, if you if you wind back twenty years,

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Speaker 1: it was all about trade. It's all about the Washington contents.

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Speaker 1: Is liberalization trade liberalization? Get your fiscal house? Is there

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Speaker 1: a consensus now? But I think there's a consensus insofar

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Speaker 1: as that's been good and developed growth obviously, and so

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Speaker 1: deniverate growth and development. That's that's good, But much more

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Speaker 1: emphasis now I think goes on the financial side and

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Speaker 1: should go on the financial side. This financial liberalization opening

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Speaker 1: up to capital flows, huge capital inflows can create big

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Speaker 1: destate like okay, but as China, just to go to

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Speaker 1: China and Mr mccross there right now, are they playing

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Speaker 1: you know with the proverbial fair deal. I mean Secretary

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Speaker 1: Clinton I've always given credit for for really emphasizing the

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Speaker 1: word fair deal within her political economics are the is

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Speaker 1: the financial flows into China and a fair is it

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Speaker 1: a fair set? So in terms of financial flows, the

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Speaker 1: capsitual account is pretty much closed, so you can't really

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Speaker 1: get money in and out of China in the same

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Speaker 1: way that you can in any other em More, indeed,

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Speaker 1: the US on the trade side, obviously there are big

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Speaker 1: issues the currencies managed. The government picks winners, it backs

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Speaker 1: them with subsidies. UM So no, I don't think I

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Speaker 1: think you know this. This is where the administration, Um,

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Speaker 1: I think it has something to fall back on. There

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Speaker 1: is there is a sense in which I don't think

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Speaker 1: that the playing off field is level. It's almost in

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Speaker 1: that medieval that's the wrong word. But how can China

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Speaker 1: be a global player? How can e M have stability

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Speaker 1: word of the weekend, How can they have stability if

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Speaker 1: they don't allow one of the legs of the tripod

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Speaker 1: to work, which is capital flows. I mean at this

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Speaker 1: stage that that leg of the tripod is absolutely critical.

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Speaker 1: Keeping that capital capital account closes absolutely critical because what

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Speaker 1: happens if you open it up Suddenly Chinese residents can

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Speaker 1: put their money elsewhere. Sudden you get this big downward

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Speaker 1: pressure I think on the remmbee big caps and outflows,

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Speaker 1: and that's what could ultimately I think precipitate financial problems

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Speaker 1: of financial stress in China. So so the caps that

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Speaker 1: account being closed at the moment is absolutely critical to Beijing.

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Speaker 1: And that's why we're not going to get any liberalization

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Speaker 1: on meaningful liberalization anytime soon. Well, Neil Tom's question is

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Speaker 1: based on the idea that they're ready even to acquire

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Speaker 1: any kind of global leadership role. It doesn't appear to

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Speaker 1: me that they are. Do they want want at this

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Speaker 1: point they'll see any signs that they actually want one.

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Speaker 1: I think they do in certain areas, So one belt

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Speaker 1: one road. They're interested in kind of creating markets for

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Speaker 1: particularly Chinese industries that have had this legacy of over capacity,

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Speaker 1: is a big steel construction finding markets for that stuff

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Speaker 1: to go off into. They're interested in the classic trade

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Speaker 1: deals um, and that's what we see with the our

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Speaker 1: CEP to recept the Chinese version of TPP. Essentially it's

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Speaker 1: all about trade liberalization opening up markets for China. I

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Speaker 1: think they're less interested in kind of broader global leadership

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Speaker 1: of the salt sort that we would think say the

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Speaker 1: US or Europe taking on in terms of these classic

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Speaker 1: trade deals. Classic trade deal to me is given get

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Speaker 1: are they ready to give? Well, this is the question

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Speaker 1: that they're they're they're ready to get. The The market

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Speaker 1: access is about market access in China, particularly on the

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Speaker 1: services side, that I think that Europe in particular is

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Speaker 1: very interesting in and that's where we've seen a bit

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Speaker 1: more reticence on on behalf of the Chinese at this stage.

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Speaker 1: No Shameron always quite a can't choun with you. I'm

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Speaker 1: capital he can Almos Chief American Emerging Markets Economists, No

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Speaker 1: sharing alongside Tom Kine, Jonathan Farrell with this, Dan Tannebon

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Speaker 1: p WC. Daniel Tannebaum is truly one of the nation's

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Speaker 1: experts on the minutia of sanctions. Dan, I want you

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Speaker 1: to go bigger to where we are on multilateral versus

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Speaker 1: unilateral trade and sanctions and just international discussions. Peter Sutherland,

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Speaker 1: the late Great Peter Sutherland dying this weekend, UH was

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Speaker 1: so much part of GAT and gap a gat rather

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Speaker 1: in the Uruguay round as a multilateral days a day

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Speaker 1: over for the moment, it seems that the multilateral days

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Speaker 1: are hanging on by a thread. Um. You know, there's

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Speaker 1: still multilateral efforts at Bay. It's kind of the next

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Speaker 1: steps of sanctions seem to be less multilateral, and I

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Speaker 1: think you know, you saw it towards the end of

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Speaker 1: the summer into the fall, a number of good multilateral

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Speaker 1: actions with respect to North Korea, but some of the

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Speaker 1: next steps that have been recommended by Ambassador Hailey in

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Speaker 1: the u n UM have generally fallen flat. This has

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Speaker 1: included efforts to designate Chinese flag vessels that were sending

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Speaker 1: petroleum shipments to North Korea. The U n has generally

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Speaker 1: shot that down. We haven't talked about that. So let's

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Speaker 1: look there their boats out there in the stormy winter

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Speaker 1: Pacific and the Chinese are ascending. Is it illegal oil?

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Speaker 1: So it's not there are it's not illegal entirely. There

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Speaker 1: have been certain restrictions that were in place around North

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Speaker 1: Korea UM oil shipments, but they're not a hundred percent embargoes,

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Speaker 1: So you know. On Friday, actually China tightened energy supply

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Speaker 1: limits to North Korea. Beijing said it with limit exports

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Speaker 1: of crude oil and refined petroleum to the North. Previous

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Speaker 1: restrictions didn't apply to crude oil, which makes up the

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Speaker 1: bulk of China's energy options that are sent to North Korea.

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Speaker 1: So this is very very new. It only went into

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Speaker 1: effect on Friday. UM. What you'll likely hear out of

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Speaker 1: the Trump administration though, is to the Chinese government, especially

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Speaker 1: with some of the tensions and the Ciffiest deals that

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Speaker 1: have fallen short or Ciffius approvals that have fallen short,

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Speaker 1: is prove it proved that the sanctions are actually being

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Speaker 1: enforced effectively. So this is a critical question. When you

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Speaker 1: hear the media and the politicians talk about your world,

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Speaker 1: is it informed depends on who is talking about it.

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Speaker 1: I think again, it's very easy to look at sanctions

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Speaker 1: and say we're not doing business with X country. But

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Speaker 1: as you know, it's a lot more nuanced than that.

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Speaker 1: It's a lot more complicated in terms of what you

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Speaker 1: can and cannot do. I mean, the short answer, and

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Speaker 1: this is the easiest talking points, is there's no hundred

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Speaker 1: percent embargo on anyone. There's always something that's carved out.

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Speaker 1: Now whether everyone needs to know about this, MANU leave

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Speaker 1: it to people like me who dwell over all this

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Speaker 1: stuff is a different issue. But it's complicated. It's gotten

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Speaker 1: more complicated. It used to be if you look at Cuba,

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Speaker 1: we're not doing business with Cuba. That was largely true.

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Speaker 1: Today there's no program that's quite akin to that. Just

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Speaker 1: under a week ago we were at the Razia Group.

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Speaker 1: We did the whole radio program from there with em Brema,

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Speaker 1: the founder in chief of the Arasia Group, and in

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Speaker 1: their report for risk this year, they talked about global

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Speaker 1: institutions and the erosion of global institutions, and you mentioned

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Speaker 1: the u N. What is the United States is placed

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Speaker 1: in the u N right now? And how do they

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Speaker 1: get the other permanent VITA holding members, the likes of China, Russia,

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Speaker 1: France and the UK to come along with them. I

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Speaker 1: think at the moment, we're perceived as just another voice

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Speaker 1: at the table rather than a leading voice. I think

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Speaker 1: there's been enough discussions where we've been potentially perceived to

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Speaker 1: be on the wrong side of the issue. Um it's

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Speaker 1: degrading our position in the u N. The challenge especially

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Speaker 1: and if you look at North Korea, where the UN

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Speaker 1: has been somewhat helpful in trying to create arbitrage and

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Speaker 1: restricting North Korean business is the next step that we

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Speaker 1: have is more larger institutions, especially those in China, being

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Speaker 1: directly targeted under sanctions for supporting North Korea should that

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Speaker 1: be found to be true, and that next step is

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Speaker 1: something that would it would be difficult to be multi

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Speaker 1: lateral on because this is evident that one nation might

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Speaker 1: be bringing to the Security Council that kind of shows

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Speaker 1: up another Security Council member. Some people would say that

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Speaker 1: the likes of China and Russia have been a problem

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Speaker 1: in terms of getting them on side of the United States.

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Speaker 1: That predates the this administration, It predates the Obama administration

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Speaker 1: as well. Was it a new approach needed? Was the

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Speaker 1: Nicki Haley approach to the u N needed. I've always

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Speaker 1: been a fan of status quo if everything was generally fine,

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Speaker 1: I think we seem to be drawing further and further

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Speaker 1: away from our allies on the Security councilor at least

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Speaker 1: on some sort of multi e lateral views. The stage

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Speaker 1: that we're at now where there was talking the u

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Speaker 1: N of designating Chinese flag vessels that fell short. There's

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Speaker 1: been talked for months of designating larger Chinese banks that

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Speaker 1: are found to be supporting North Korean a material way.

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Speaker 1: That hasn't happened yet. So there is to the many

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Speaker 1: Trump supporters that we have listening, there are a lot

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Speaker 1: of people listening to support parts are all of the

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Speaker 1: presidents let's call it general agenda. Can can you state

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Speaker 1: that we will see action on trade or is that

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Speaker 1: just a fiction of of a part of America that

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Speaker 1: wants certitude and action and solution to what they see

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Speaker 1: is decades of grievance. I think you have begun to

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Speaker 1: see action. So the Ciffiest Approval process, the quasi secretive

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Speaker 1: government body that is designed to vet certain deals that

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Speaker 1: have an impact on national security. In the technology space,

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Speaker 1: there has been a number of trans actions that have

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Speaker 1: been turned down in Ciphius of Chinese acquisition of US

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Speaker 1: companies being in technology or financial services. So I think

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Speaker 1: as a mechanism Siphius is being used more and more

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Speaker 1: to deny trade where historically you wouldn't see some of

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Speaker 1: these deals turned down. And I got this John this

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Speaker 1: weekend and a question or was it the vet's third

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Speaker 1: visit to the vet this weekend? Is when you when

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Speaker 1: you look at what the president can do? Can he

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Speaker 1: do in the Dantan Obama world? More executive orders? The

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Speaker 1: important thing to note is executive orders in the sanctions

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Speaker 1: space aren't new through the Obama and the Bush administration.

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Speaker 1: Executive orders have been used historically to drive sanctions agendas forward.

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Speaker 1: Um sanctions have generally not been legislated like they had

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Speaker 1: with cats A last summer, which was actually the first

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Speaker 1: time that Congress is an accurate sanction. So that's where

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Speaker 1: you get rid of cats in your house. Well, so

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Speaker 1: now CATS is I don't have the I can't even

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Speaker 1: remember the acronym because but CATS is essentially congres sational

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Speaker 1: driven economic sanctions on on North Korea, on Iran, on Russia,

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Speaker 1: versus sanctions that were generated by the Treasury and State

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Speaker 1: departments signed off by the executive through executive order. There

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Speaker 1: is more that can be done through executive order, but

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Speaker 1: that's more of the same. It Actually Obama and Trump

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Speaker 1: and Bush have always used executive order to drive these

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Speaker 1: types of issues. Dan Tanneba PwC Principles anxious lead fantastic

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Speaker 1: And to Dan's point, Tom using Cyphius, the Committee on

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Speaker 1: Foreign Investment just to hold up deals, just to hold

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Speaker 1: them up. Never mind say you can't have this deal,

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Speaker 1: just hold them up, keep holding them up. It makes

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Speaker 1: it so difficult to do business with the United States

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Speaker 1: that foreign companies might think twice. And I think that

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Speaker 1: might be the message that Cyfius is trying to change.

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Speaker 1: In particular, I mean one that I can think of

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Speaker 1: where I think the three times they applied for approval

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Speaker 1: and just kept letting the deadline lapse. Okay, d Dan Tu,

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Speaker 1: thank you so much. With p WC, she has been

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Speaker 1: a shining voice of market economics. She's had the huge

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Speaker 1: advantage of being out of the Midwest, based in Chicago,

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Speaker 1: working over the years for Bank One, mazer Rod Dance

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Speaker 1: Wank Economics, and we are honored that this is her

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Speaker 1: first interview with Grant Thornton with someone with a bow

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Speaker 1: tie It's just very good that your first interview was

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Speaker 1: someone with a bow tie. It is dance congratulations. What

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Speaker 1: I what I find fascinating knowing of Grant Thornton back

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Speaker 1: to I believe it was, and the merger with Thornton Baker,

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Speaker 1: and you know what Grant Thornton does, which is tactical

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Speaker 1: audit and tax work. So the first question McGuire has

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Speaker 1: got to ask you, Grant Thornton, is this tax bill

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Speaker 1: are we going to make it to April fift What

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Speaker 1: did you tell the good people of Grant Thornton about

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Speaker 1: the reality of their tax legislation. Well, actually, Grant Thornton

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Speaker 1: is also a consulting firm and doing a lot of

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Speaker 1: work with middle market. But yes, the tax bill is

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Speaker 1: clearly important to them, and they've got an incredible group

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Speaker 1: that does policy work and they know Washington like the

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Speaker 1: back of their hand. So I mean, the tax bill

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Speaker 1: is complicated. Unfortunately, there's a lot of glitches that need

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Speaker 1: to be ironed out because it was done so quickly. Um,

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Speaker 1: it is good news, as we've seen already for Wall Street.

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Speaker 1: The question is how will the loopholes be dealt with?

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Speaker 1: And that is something that Congress still has to deal

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Speaker 1: with going forward as well, and it's one of the

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Speaker 1: uncertainties going forward is what are the unintended consequences of

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Speaker 1: some of the loopholes and how will they close them?

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Speaker 1: Will they be able to close them before we get

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Speaker 1: to actually enacting the tax package and people taking advantage

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Speaker 1: of Let me bring in John Pharaoh l l C

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Speaker 1: here to help out the CEO of Hindsight Capital. Um,

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Speaker 1: Diane's always going to catch up with you. We're gonna

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Speaker 1: have a really murky earning season begin with the banks

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Speaker 1: on Friday. They're gonna have some one off charges and

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Speaker 1: they're gonna try and give us some guidance as well.

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Speaker 1: When you fold that into the kind of things you

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Speaker 1: just said, how much longer is it going to take

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Speaker 1: to really get a clear review of how this is

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Speaker 1: going to play out? Well, actually think it's going to

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Speaker 1: be a lot longer. We are seeing your already baked

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Speaker 1: into the cake, of course, is that companies are going

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Speaker 1: to do while off this. We've seen the one off

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Speaker 1: bonuses that some companies have announced as they're going to

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Speaker 1: get an advantage from this tax bill. But you made

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Speaker 1: a very good point, and that is many people weren't

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Speaker 1: expecting that they also had to take the charges for repatriation.

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Speaker 1: Even though they don't have to repatriate their profits overnight,

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Speaker 1: those charges are going to be coming right away, and

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Speaker 1: I think that's a very important thing that you know,

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Speaker 1: many people hadn't really counted on, and so now we're

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Speaker 1: seeing that going. That's going to come through, as you said,

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Speaker 1: as a murky season as people try to tease out

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Speaker 1: what the tax bill is, what's real, and where the

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Speaker 1: profits really are. The good news is we are in

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Speaker 1: a synchronous growth global economy, and in fact we know

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Speaker 1: these are essentially corporate tax cuts. This is going to

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Speaker 1: be an advantage for the corporate sector. The interesting thing

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Speaker 1: as well is the unintended consequences. China is already offered

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Speaker 1: to way taxes if you locate there, although you have

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Speaker 1: to use all your profits and reinvest them the way

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Speaker 1: they say, which I wonder how many firms will actually

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Speaker 1: do that, big big point. Another question I've got for

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Speaker 1: you are caught up with Gary con the President's chief

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Speaker 1: economic advisor, formerly of Government Sanks. Of course, Gary thinks

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Speaker 1: that the market and economists are underestimated and the capex

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Speaker 1: boost this tax bill could bring. This year. Um, do

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Speaker 1: you share that view? Well, Capex has already come back,

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Speaker 1: and so the good news is it's hard to tease

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Speaker 1: out what effects the bill actually has itself. It will

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Speaker 1: move some Capex boward, and we've added a little bit

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Speaker 1: to growth because of the tax cuts, but the real

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Speaker 1: impact has already begun because we've had synchronous growth and

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Speaker 1: we're running on our cylinders. We've seen durable goods already

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Speaker 1: pick up in the second half of the year. We've

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Speaker 1: seen the manufacturing sector already pick up. So that all

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Speaker 1: happen before the tax bill, and we'll be building on

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Speaker 1: that momentum as we move forward. And I think that's

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Speaker 1: the really important part is fundamentally, it's not just a

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Speaker 1: tax cut that people are making decisions on. They're making

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Speaker 1: decisions on underlying economic fundamentals are better now? Well are they?

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Speaker 1: Can you can you tell that the clients of Grant

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Speaker 1: Thornton that the President's right, we can have a sustain

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Speaker 1: three percent GDP is that the outcome and the victory

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Speaker 1: lap ultimately for the fire and fury of this president.

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Speaker 1: Three percent sustained is very difficult to get um And

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Speaker 1: in fact, in the fourth quarter we think we're going

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Speaker 1: to get about two point four percent, which is the

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Speaker 1: year at two and a quarter percent or so for

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Speaker 1: the year or so I sustained three percent is very

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Speaker 1: hard to do until unless you actually change the equation

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Speaker 1: on productivity growth, and any productivity growth we get off

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Speaker 1: of corporate tax reform will take years to actually um

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Speaker 1: sort of materialize. We're coming off of very low levels,

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Speaker 1: and we've got against us the demographics. We've got very

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Speaker 1: little labor force growth, and curbs on immigration has further

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Speaker 1: limited that. So we're going to have a good year.

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Speaker 1: What we worry about is having a good year at

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Speaker 1: the expense of future years, because these tax cuts will

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Speaker 1: not pay for themselves and in fact will be higher

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Speaker 1: interest rates down the road because of the rising debt

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Speaker 1: and deficit. Don Swank, now the chief economist at Grant Thornton.

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Speaker 1: Eric Freeman writes these terse terse notes always rich with

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Speaker 1: content for US Bank and Eric, Uh, You've got a

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Speaker 1: single sentence, which I think is really important in capturing

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Speaker 1: the fear that so many have as we go up, up, up,

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Speaker 1: melt up. Where are we nine four? I'm still not

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Speaker 1: used to that number. Quote. We are paying close attention

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Speaker 1: to whether risk assets can withstand to sell off in

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Speaker 1: some of the leaders and strongest performers. That to me

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Speaker 1: really captures it is we all understand they're these high flyers.

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Speaker 1: What does the rest of the market do if the

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Speaker 1: high flyers correct? Yeah, that imagery I think is important. Tom.

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Speaker 1: It's almost like a relay race. Where can technology, for example,

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Speaker 1: hand the baton off to um industrials or you know,

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Speaker 1: telecom services are real estate obviously very small sectors. But

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Speaker 1: I think the key thing, and then a lot of

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Speaker 1: people are talking about it is will there be a

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Speaker 1: rotation out of growth and into value? And while we

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Speaker 1: still think that information technology has some solid fundamental underpinnings,

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Speaker 1: particularly in the back of the tax changes, that there

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Speaker 1: needs to be some leadership stability, if you want, other words,

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Speaker 1: there needs to be the ability for that baton to

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Speaker 1: be handed off from some of these stronger parts of

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Speaker 1: the domestic and international likely markets to some of the

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Speaker 1: areas that have lagged. So should that occur, which we

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Speaker 1: think it will, that just adds to the again a

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Speaker 1: strengthening base, if you will, of the global equity picture. Well,

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Speaker 1: you know, I was wondering about some specific companies and

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Speaker 1: I know you don't cover specific companies. But the reason

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Speaker 1: I bring them up is because you talk about the

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Speaker 1: ones that are in the headlines. We know about those.

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Speaker 1: But I just give you an example. Musics now, musics

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Speaker 1: vu z I. Yeah, musics now. If you go to

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Speaker 1: wait a minute, that's a Lisa Brandow with on on

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Speaker 1: six letters and the symbols. The symbol is vu z I.

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Speaker 1: It's got fifty employees. It's based in Rochester, New York.

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Speaker 1: And guess what they help make. In fact, they do

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Speaker 1: make the glasses that Amazon is UH offering and revealing

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Speaker 1: at the Consumer Electronics Show that allow you to wear

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Speaker 1: these glasses not just for fun than artificial intelligence, but

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Speaker 1: for industrial uses, imagined glasses that would be able to

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Speaker 1: instantly give you the inventory level in a particular factory,

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Speaker 1: for example, or a warehouse. And so my question to

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Speaker 1: you is how do you go about finding these eric

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Speaker 1: in a world that's dominated, as Tom would say, by

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Speaker 1: these bigger stocks like you know, uh, Facebook or Alphabet

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Speaker 1: or song but views the music. I mean, you're talking

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Speaker 1: about a stock now that is already up, you know

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Speaker 1: another nine percent today was up eighteen percent on Friday.

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Speaker 1: I think number one it being the product of Tom

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Speaker 1: and my home region of Upstate New York, and it's

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Speaker 1: it's certainly an interesting area. Um So Tom and I

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Speaker 1: haven't have a fun affinity for anything that comes out

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Speaker 1: of that that region, but see I had to look

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Speaker 1: for that one. The uh, you know, it's an important

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Speaker 1: point them. I think, you know, one of the areas

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Speaker 1: that you touched on in your comments is companies like

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Speaker 1: that that are focused on increasing and improved productivity. Those

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Speaker 1: sort of second and third derivative plays that we we

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Speaker 1: call them at US Bank that are not as mainstream,

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Speaker 1: but certainly you know, speak to a part of the

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Speaker 1: economy that needs help and that is offsetting what I know.

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Speaker 1: You know, Dian's wanted a really nice job of covering

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Speaker 1: it in the segment before me. Just that absence of

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Speaker 1: productivity growth. Some argument cyclical, some arguments it's structural. But

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Speaker 1: companies like this helps still avoid that basically make us

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Speaker 1: produce stuff more quickly, and so that you know, that

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Speaker 1: speaks to some of the factors that are really driven

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Speaker 1: the global equity market have been growth factors. So companies

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Speaker 1: that are again helping to make up some of that gap.

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Speaker 1: The fact that we're aging as as a society. As

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Speaker 1: you know, some of the ingenuity starts to slow down.

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Speaker 1: You have a wave of companies like this that can

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Speaker 1: certainly add to add earning. So those second and third

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Speaker 1: derivative plays we think are the next leg higher in

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Speaker 1: the sequity market. Whether this is the US banking course,

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Speaker 1: we're looking western an upstate New York. Here we say

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Speaker 1: good morning to all of you. I mentioned earlier, Clinton

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Speaker 1: New York and Colgate cold, but that's nothing compared to

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Speaker 1: Clarkson University. Paul Travers of Musics is out of Canon

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Speaker 1: ATC and Clarkson, which is somewhere south of the North Pole,

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Speaker 1: and he gets cold up there. To say the least,

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Speaker 1: let me talk about another bit of creative destruction or

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Speaker 1: innovation in Western New York, and that is the death

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Speaker 1: of Kodak. I mean, Eric, you and I grew up

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Speaker 1: with all of that. Do you worry about obsolescence among

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Speaker 1: the top one under toor topies? We do? We think, Tom,

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Speaker 1: it's uh, it's certainly a as information travels quickly, and

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Speaker 1: you think about just how quickly things like retail trends

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Speaker 1: can shift, and even things you had a nice segment

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Speaker 1: before about mobile payments and what that means for the future. Obviously,

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Speaker 1: firms like ours US Bank, we think a lot about

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Speaker 1: the banking industry, what what the industry looks like out five, ten,

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Speaker 1: fifteen years. So that idea of obsolescences is certainly an

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Speaker 1: important one, and clearly you have some leadership in certain

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Speaker 1: sectors that seemed to be driving the obsolescence of of

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Speaker 1: other of other companies. But again paying attention to that

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Speaker 1: rate of change, if you will, that first and second

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Speaker 1: derivatives are really really important. One of our themes here, folks,

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Speaker 1: is going to be the technology overlay. Literally interviewed the

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Speaker 1: interview and everything that we do. Eric Freeman, thank you

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Speaker 1: so much with u BS Wealth Management. Love what he

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Speaker 1: said there about the reaction at the high flyers come in.

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Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and

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Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast

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00:26:48,480 --> 00:26:52,679
Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before

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Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg

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Speaker 1: Radio S