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

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Speaker 1: 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. Joining

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Speaker 1: us now a Dina Freedman. She's a NAZDAK president and

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Speaker 1: chief executive officer Adena. I just saw you on CNBC

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Speaker 1: do the Earnings Act. I want to move on from that.

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Speaker 1: This primal scream I here right now across global Wall

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Speaker 1: Street is that everything is free. As you well know,

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Speaker 1: in retail things of running muck. We've got free trades,

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Speaker 1: free trades and all of this trading. There's becoming a

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Speaker 1: new distrust. Almost of our business is done for retail

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Speaker 1: in America. Are you concerned that retails getting a fair

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Speaker 1: deal in this new high speed online economy. Well, I

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Speaker 1: definitely think that the environment for retail investing has really

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Speaker 1: been been pretty pretty great over the last ten years. Frankly,

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Speaker 1: I think that you know, the fees that retail has

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Speaker 1: had to pay to be able to enter the markets,

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Speaker 1: the democratization of the markets by allowing them to have

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Speaker 1: direct access to the markets over the last ten to

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Speaker 1: twenty years has really been, you know, a key trend

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Speaker 1: that has driven I was in the US markets, but

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Speaker 1: so I I do think that's a longer term trend.

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Speaker 1: The fact that that the commissions have gone to free

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Speaker 1: certainly has driven more demand within the retail environment UM

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Speaker 1: and retail investors coming into the moment. Is it a

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Speaker 1: free lunch? I mean, this is the key thing. And

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Speaker 1: I go back, of course to our relationship at DINA

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Speaker 1: with Arthur Levitt and his respect for the individual investor

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Speaker 1: thirty years ago. Is it a free lunch? I mean

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Speaker 1: a Schwab says it's free. T d A Merit Trade

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Speaker 1: says it free. You can trade NASTAC shares and it's free.

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Speaker 1: Is it a free lunch? Well, I, first of all,

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Speaker 1: it really is free for retail UM and I was.

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Speaker 1: I was at NASZAC with Arthur Lovitts during his tenure,

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Speaker 1: and I do think that he really was on a

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Speaker 1: mission to make it so we democratize access at the

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Speaker 1: capital markets, and I think he went a long way

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Speaker 1: in that regard. The online brokers have done an enormous

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Speaker 1: amount to create services that really do benefit retail, and

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Speaker 1: I do think that at the end of the day,

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Speaker 1: they are getting a good experience. The spreads in our

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Speaker 1: markets are extremely narrow, which means they are getting good

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Speaker 1: executions and they are now not having to pay commissions

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Speaker 1: against and to those retail brokers to gain access to

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Speaker 1: the markets. So for them it really is free active Adina,

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Speaker 1: the spreads might be narrow. Are there sufficient protections against

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Speaker 1: losses in companies, say in China that are filing for

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Speaker 1: I p O S here and trading without necessarily the

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Speaker 1: same types of oversight the U S companies face. Yeah,

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Speaker 1: and that's actually something that we have been in active

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Speaker 1: dialogue with the SEC about we UM. We encourage them

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Speaker 1: to have a round table recently with the experts, whether

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Speaker 1: the underwriter's accounting firms, the lawyers, the SEC itself and NASAC,

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Speaker 1: WE and all the ex changes we play a big

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Speaker 1: role together and trying to make sure that we've create

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Speaker 1: the right disclosure regime for companies coming to the US

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Speaker 1: and including companies from China. There are some differences in

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Speaker 1: terms of the disclosure obligations that UM that companies have

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Speaker 1: coming from China as well as UM some reduced oversight

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Speaker 1: that's on the accounting firms that that UM support these companies.

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Speaker 1: So that's an area that we are focused on and

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Speaker 1: trying to create positive change. I think the SEC is

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Speaker 1: also focused on it UM, but those that requires some

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Speaker 1: diplomacy between the United States and China, and it's something

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Speaker 1: we've really been encouraging them to really to to focus on. aDNA.

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Speaker 1: You've been incredibly proactive about all of this. Can you

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Speaker 1: just walk us through what you have actually done specifically? Yeah,

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Speaker 1: so we we have we have definitely had some concern

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Speaker 1: that we want to make sure that we can play

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Speaker 1: our role in addressing. So we've increased the our our

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Speaker 1: oversight of the accounting firms that are being used by

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Speaker 1: the by the Chinese companies. We we normally really have

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Speaker 1: rely on the SEC for the but at the same time,

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Speaker 1: we do want to make sure that we have some

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Speaker 1: oversight over the quality the accounting firms that are being used.

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Speaker 1: The second thing is we are requiring at least one

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Speaker 1: member of the management team or consultant to the management

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Speaker 1: team to have US public company experience. And the third

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Speaker 1: thing is we have actually increased the public float requirement

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Speaker 1: for companies that are listening from China. And all of

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Speaker 1: those three things are things that we can achieve, but

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Speaker 1: it's really a broader ecosystem issue that we're trying to

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Speaker 1: make sure that that the government is working with the

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Speaker 1: Chinese government to address. I mean, I mean this the

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Speaker 1: backdrop for this, folks, is really important. Here. It's the

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Speaker 1: Ali Bob and the up war over Grand Cayman Islands

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Speaker 1: island positioning, you know, up to years ago, etcetera. But

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Speaker 1: then Adina, you've got the recent wire card train wreck

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Speaker 1: in Germany as well. This is really important. Do you

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Speaker 1: and your other markets do you feel the sec is

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Speaker 1: ambrogating its duty? Well, I think that the SEC IS

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Speaker 1: has an enormous amount of responsibility and they take it

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Speaker 1: extremely seriously in terms of the disclosure obligations that they

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Speaker 1: place in companies that choose to listen to the United States. UM.

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Speaker 1: I do think that they do an excellent job, frankly

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Speaker 1: of managing those disclosure obligations and reviewing the companies, being

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Speaker 1: very proactive and um writing back questions and comments to

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Speaker 1: companies with their filings and it is it is a

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Speaker 1: huge part of their role. But but Dina aunt is

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Speaker 1: doing Shanghai and Hong Kong. I think I can't remember

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Speaker 1: which markets. They're not doing you, They're not doing ny S, e. Etcetera. Okay, great,

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Speaker 1: is that a loss for you? Do you care that

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Speaker 1: you didn't get the aunt? I p O. I think

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Speaker 1: that we should look at the U S Markets as

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Speaker 1: really the place where any company from around the world

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Speaker 1: will want would want to come and go public. So

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Speaker 1: I think that we would like to see you every

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Speaker 1: company from around the world choose to listening. Okay, but

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Speaker 1: then what are you gonna do about it? Besides, you know,

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Speaker 1: the president's out there with the politics of the moment,

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Speaker 1: and maybe President Biden President Trump next term will be

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Speaker 1: the same way. I don't mean to disparage them, but

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Speaker 1: what can you do proactively to maintain America is a

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Speaker 1: place to do capitalism? Yeah? Well, first of all, are

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Speaker 1: we are the engine of capitalism here in the United States,

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Speaker 1: and we're really proud of that role. We want to

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Speaker 1: make sure we create a frictionalist trading environment, but we

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Speaker 1: also want to make sure we have a really high

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Speaker 1: quality disclosure regime that we operate under here in the

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Speaker 1: United States. And that's really a combination of the role

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Speaker 1: of the SEC, the role of the exchanges, and the

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Speaker 1: role of the underwriters and accounting firms as they play

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Speaker 1: play their part escape keepers as well. And I think

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Speaker 1: that that's something that we have to make sure we

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Speaker 1: create that balance, making sure that we have the right

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Speaker 1: kind of quality that coming into the United States, but

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Speaker 1: also making the capital markets and maintaining them as open

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Speaker 1: capital markets for the world. UM, it is a fine

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Speaker 1: balance to strike right now, Adina, Have you rejected certain

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Speaker 1: I p o s based on the disclosures even if

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Speaker 1: the SEC maybe hasn't weighed in. Um, we definitely have

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Speaker 1: we go through a second level of review, and we

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Speaker 1: do absolutely reject companies that we don't think meet our standards,

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Speaker 1: even if they've gone through the disclosure process with the

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Speaker 1: SEC as the defense as to catch you out of

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Speaker 1: you today, Thank you very much. What you want to

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Speaker 1: get to data, Freedman. That that's that, President, And see

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Speaker 1: eight right now on the gyrations of the commodity space,

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Speaker 1: and it is a deceptive space. The Bloomberg Commodity Index

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Speaker 1: is actually really good math and it's about eighteen percent gold,

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Speaker 1: and with gold of the moon, clearly that index has

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Speaker 1: done better. But what about the rest of the space.

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Speaker 1: Francisco Blanche is head of Global commodities and derivatives and

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Speaker 1: owns gold up to his eyeballs. He's like gold singer

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Speaker 1: in the early Bond movie and he joins us this

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Speaker 1: morning as well, Franstanco Blanche. Let's get gold out of

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Speaker 1: the way here. Is it dominating all of commodity and

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Speaker 1: analysis right now? Are the index is no good just

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Speaker 1: because of gold? Uh? It makes me last. Uh Look

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Speaker 1: it's uh, we're having old precious metals ripping here. But

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Speaker 1: also frankly we've had a pretty good run on industrial medals.

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Speaker 1: And then then the one commodity hasn't moved all that

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Speaker 1: much has been oil, which has been pretty stable around

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Speaker 1: the forty forty fiveular level for for a few for

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Speaker 1: a few weeks now. But but yes, there's a lot

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Speaker 1: of focus on precess medals, also a lot of focus

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Speaker 1: on what China is gonna do next in terms of

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Speaker 1: infrastructure and the big pool from from China from a

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Speaker 1: resources perspective. So so I think I think you can

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Speaker 1: you know, there's a reflation story going on, um and

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Speaker 1: uh and obviously called this is the biggest beneficiary because

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Speaker 1: of of of a lot of micro factors that have

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Speaker 1: that have been piling up to support it right, So,

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Speaker 1: so I don't think it's the only story and commodities.

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Speaker 1: I also think that industrial medals are are tacking up

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Speaker 1: and an oil is kind of waiting on the sidelines

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Speaker 1: until until we get a bigger uptake and economic activity.

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Speaker 1: That that's I think the reality for oil UM Francisco crisis.

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Speaker 1: Hold on a second therapy because there's a sweet spot

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Speaker 1: between industrial medals and press just metals, and that is silver,

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Speaker 1: which is on a tear. How much do you see

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Speaker 1: that escalating at this point? Can you give us some

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Speaker 1: calls both on silver and gold in the upcoming months? Um? So,

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Speaker 1: we we've we've maintained a twenty plug to our target

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Speaker 1: on silver. UM. I mean obviously the uh one of

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Speaker 1: the things that that silver is good for is solar panels.

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Speaker 1: And what we are saying is that a large portion

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Speaker 1: of all this money going into infrastructure is going into

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Speaker 1: what some people label the energy transition, and of energy

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Speaker 1: transition means we're going to be using a lot more

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Speaker 1: silver for a lot of this. This uses the same

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Speaker 1: thing applies to copper, by the way, so think about

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Speaker 1: think about the energy transistent medals, what we call the

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Speaker 1: myths the metals in future energy technologies, copper, um uh, lysthium, cobalt,

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Speaker 1: uh silver itself. So silver is getting is getting very hot,

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Speaker 1: partly because of that, it's a combination, and it's also

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Speaker 1: also some people put as a supportman's gold. It's just

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Speaker 1: some being a little easier to buy. But I mean,

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Speaker 1: I don't quite buy that argument. But I think I

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Speaker 1: think there's certainly that that accelerating trend on silver. I

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Speaker 1: also think both platinum colladium pretty great. Platinum has has

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Speaker 1: a long way to go here as well. So Francisco,

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Speaker 1: we should say that Tom has been outfitting his entire

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Speaker 1: apartment in solar panels, so he's been attributing to the

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Speaker 1: arise in silver. There's a question of whether the industrial

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Speaker 1: medals can continue to rally in tandem with weakening oil.

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Speaker 1: The idea that you could have demand for building but

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Speaker 1: not necessarily a commensurate demand for crude. Could you see

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Speaker 1: that happening. It's it's happening to some extent, right because,

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Speaker 1: as we said, a lot of the infrastructure packages that

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Speaker 1: are coming through, and like I said, pretty great China,

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Speaker 1: I think are are are going to to boost that

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Speaker 1: kind of spending. But COVID is primarily a mobility crisis. Um.

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Speaker 1: The more we move, the more COVID spreads, and and

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Speaker 1: that's I think a fact that hopefully has been has

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Speaker 1: been shown in different ways now. So so my senses

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Speaker 1: that until we have a vaccine or a cure or

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Speaker 1: connection of both, we're gonna have to keep limiting our mobility.

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Speaker 1: And that's not great for oil. Um. We still think

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Speaker 1: that demand will be ninety eight million bells a day

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Speaker 1: for next year on average, but again it should have

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Speaker 1: been a hundreds and three. So we're gonna be maybe

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Speaker 1: five or six million bells a day away from the

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Speaker 1: level of demand that we should have seen next year,

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Speaker 1: all the things being equal. For instance, so what is

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Speaker 1: the instability to e M here to commodity e M

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Speaker 1: How close are we to where your world folds over

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Speaker 1: into the fiscal world of these e M nations? Um.

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Speaker 1: So I mean I think if you look at if

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Speaker 1: you look at Russia, Russia's reasonable economic shape um, their

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Speaker 1: budget break even is in the mid forties for oil.

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Speaker 1: So with cool oil having rallied back into forty three

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Speaker 1: fortifilar range, they are their reasonable shape um. All the

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Speaker 1: emerging mark it's not so much. Remember countries like Saudi

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Speaker 1: Arabia have a much higher break even so so they're

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Speaker 1: gonna struggle more. And then other countries which are heavily

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Speaker 1: reliable on things like iron ore or agricultural commornities like

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Speaker 1: Brazil are in better shape because you know, um iron

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Speaker 1: or has been one of the one of the stellar

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Speaker 1: commodities in the past in the past year, so iron

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Speaker 1: eors really is really wrapped here, so that's kind of

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Speaker 1: benefiting Brazil as well. So so I think for the

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Speaker 1: most part it's oiled nations, and it's those oil nations

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Speaker 1: that have not adjusted their their budgets. Uh And and

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Speaker 1: Saudi Arabia comes from probably at the Fund, but also

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Speaker 1: many others in in Africa and Venezuela obviously and what

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Speaker 1: have you to sort of visits, visit Francisco blind thank

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Speaker 1: you so much with Bank of America of course on commodities.

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Speaker 1: Michael jesus Is does public policy from Morgan Stanley, but

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Speaker 1: he does it through a wonderful prism of municipal credit.

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Speaker 1: It really helps to be a credit analyst before you

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Speaker 1: spout about public policy. Michael's thrilled to have you on.

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Speaker 1: Let's start with a desperation. How desperate are states and

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Speaker 1: locals to this aid? How bad do they need it? Uh?

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Speaker 1: They need it pretty badly, but not nearly as badly

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Speaker 1: as they would have if the FED hadn't come through

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Speaker 1: with the Municipal Liquidity Facility the mL left. So by

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Speaker 1: our estimate, state and local government um or our state

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Speaker 1: deficits through the end of fiscal one range anywhere from

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Speaker 1: a d eighty billion to three seventy five billion UH,

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Speaker 1: and the FED MLFT back stop is making roughly two

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Speaker 1: fifty billion dollars available for states. So in theory, before

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Speaker 1: you undertake any austerity measures, you can basically punt most

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Speaker 1: of that budget deficit. You could turn it out about

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Speaker 1: three years just with the mL LEFT. But the austerity

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Speaker 1: in itself is important, right because if you do have

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Speaker 1: to undertake the austerity or that borrowing, you probably see

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Speaker 1: credit downgrades, you see a drag on the broader macro

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Speaker 1: economy through staton local government layoffs. So it's it's obviously

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Speaker 1: much better for investors if the care IF cares to

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Speaker 1: what Congress is negotiating right now, put something like two

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Speaker 1: dred and fifty to five hundred billion dollars in state

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Speaker 1: and local aid into the bill, and actually that's where

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Speaker 1: we think they're gonna end up. So I think at

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Speaker 1: the end of the day, a few weeks from now,

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Speaker 1: you're going to see this problem, I don't want to

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Speaker 1: say solved, but largely mitigated, kind of taking the state

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Speaker 1: of state credit back to where it was in January

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Speaker 1: February of this year. So, in other words, a two

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Speaker 1: hundred and fifty to five hundred billion dollar allocation to

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Speaker 1: state's municipalities in the next round of the Cares Act

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Speaker 1: will be sufficient to totally offset the damage from the

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Speaker 1: pandemic to state finances. Is that what you're saying. Yeah,

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Speaker 1: I think that's more or less correct, right, And totally

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Speaker 1: totally offset is probably too strong award, but uh, you

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Speaker 1: largely fill in that gap. Um. Now, of course, if

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Speaker 1: we're wrong in our own estimate about how the rest

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Speaker 1: of the pandemic plays out, If um, you know, if

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Speaker 1: the vaccines don't get us to HERD immunity by the

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Speaker 1: first half of next year, then you'd expect a continuation

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Speaker 1: of revenue shortfalls, further impressuring budgets. But if we are

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Speaker 1: comfortable with the assumption, and we are Morgan family, that

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Speaker 1: you're going to be able to achieve that by the

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Speaker 1: first half of next year, then yes, this is a

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Speaker 1: substantial mitigan to the stress that's opened up for state

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Speaker 1: local finances. Michael, let's get to the substance of the

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Speaker 1: current debate down in Washington. Day say, there seems to

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Speaker 1: be a general broad agreement on sending more stimulus checks

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Speaker 1: to Americans, on extending the enhanced unemployment benefits to some

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Speaker 1: degree at least. Where's the big sticking point that you

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Speaker 1: expect to emerge in the coming week of negotiations. Yeah,

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Speaker 1: I'd say they're there's kind of there's a few different

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Speaker 1: sticking points. One is on the absolute size, ever, but

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Speaker 1: Republicans seem keen to want to keep that headline number

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Speaker 1: relatively low to appease some of the depths of hawks

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Speaker 1: Uh and their caucus. The marker they've laid down is

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Speaker 1: we don't want to see more than a trillion dollars.

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Speaker 1: I think practically speaking, there's a good chance that that

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Speaker 1: number is going to have to come up a little

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Speaker 1: bit to accommodate what everyone wants. Right, if we filter

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Speaker 1: this down to what's bipartisan, what addresses the pandemic impact directly,

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Speaker 1: and what are things that can be done without impacting

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Speaker 1: the budget baseline over the long term. You know, it's

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Speaker 1: still a filter that allows for things like you mentioned,

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Speaker 1: stimulus checks, state and local government aid, an extension of

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Speaker 1: supplemental unemployment benefits. Uh And therefore a trillion dollars probably

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Speaker 1: looks more like the floor of what's going to happen here. Uh.

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Speaker 1: So they think that's that seems like a red line,

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Speaker 1: but it's going to have to move a little bit.

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Speaker 1: The size of the extra unemployment checks is is it

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Speaker 1: seems like a red line, but it's probably going to

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Speaker 1: have to move a little bit. Um. Ultimately, there's enough

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Speaker 1: agreement around those issues in principle that we're pretty confident

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Speaker 1: you're going to see an agreement here over the next

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Speaker 1: two to three weeks. Tom, I think this is the

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Speaker 1: really important aspect of this, that the concepts themselves aren't

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Speaker 1: really being debated. It's about size. If they were negotiating

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Speaker 1: the concepts themselves and had broad disagreements over them, I

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Speaker 1: think it would be difficult to get a deal and

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Speaker 1: get a deal quickly. We actually saw this in Europe

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Speaker 1: a very similar story. The Netherlands weren't debating the concept

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Speaker 1: that we're debating the size, and when you see that

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Speaker 1: plan get in negotiations, I think you can be confident

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Speaker 1: that we can come to a deal. Someone needs to

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Speaker 1: come down a bit, someone needs to come up a bit.

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Speaker 1: We meet somewhere in the middle. If it was about concepts,

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Speaker 1: I'd be much more nervous. I would. I would agree

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Speaker 1: with that, John, But I think it's a huge difference

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Speaker 1: between europe and American. Michael. This goes to the labor

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Speaker 1: component of our municipal finance. Do you just presume layoffs

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Speaker 1: at the federal, at the state, and at the many

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Speaker 1: cities level. Well, I think there's probably going to be

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Speaker 1: some degree of that, and it tends to sort of,

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Speaker 1: at least at the state and local level, it tends

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Speaker 1: to kind of lag the real economy. Um. Now, I

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Speaker 1: think if we get the appropriation that we think you're

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Speaker 1: going to get, those layoffs become a much lighter touch.

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Speaker 1: But yeah, I mean, I think you can't dismiss the

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Speaker 1: idea that there wouldn't be any layoffs whatsoever. But this

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Speaker 1: is really about mitigating that effect in the drag on

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Speaker 1: the state, local sector, on the on the broader economic

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Speaker 1: recovery over time. I think that's heavily influencing the debate

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Speaker 1: in Washington, d C. You have plenty of Republicans who

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Speaker 1: are very reticent initially to extend any aid to state

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Speaker 1: and local governments, right You that Mitch McConnell talking about

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Speaker 1: bankruptcy as a solution, but it seems to have crept

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Speaker 1: in is that there are plenty of Republican states that

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Speaker 1: had big budget gaps, not just because COVID, but because

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Speaker 1: the oil price is going down, and there's an understanding

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Speaker 1: that the sort of negative feedback loop on the economy

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Speaker 1: um keeps going if you don't fill in some of

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Speaker 1: these budget gaps. Some of the more toxic language isn't

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Speaker 1: a part of the conversation right now. Michael Zess great

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Speaker 1: to cash Oo Morgan Stanley's head of US Public Policy Research,

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Speaker 1: and were delighted to be joined now by Sir Howard

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Speaker 1: Davies is not West Group chairman and actually not West

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Speaker 1: Group because you rebranded today. Sir Howard's actually also congratulations

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Speaker 1: on that. I mean, first, just on on this consulate

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Speaker 1: Um you know story in Houston. Are we assuming that

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Speaker 1: things between the US and China, that China and the

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Speaker 1: rest of the world will actually escalate on intellectual property issues. Well,

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Speaker 1: it's a it's a difficult one for me to answer,

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Speaker 1: because some citys, of course say there's not much intellectual

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Speaker 1: property in banking, and I think that the financial sector

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Speaker 1: has not been particularly affected by this issue. But I

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Speaker 1: do know that many companies are concerned that their intellectual

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Speaker 1: property has been well whether stolen is the right word,

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Speaker 1: but has been used by by Chinese competitors. What I

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Speaker 1: find is slightly surprising is that this is something that's

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Speaker 1: taken place in a consulate. I mean, most Western countries

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Speaker 1: consulates are involved in issuing visas, they're not involved in

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Speaker 1: industrial espionage, but it looks as if the Americans do

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Speaker 1: have some reason to think that's the case. I would say, however,

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Speaker 1: that these kind of tipped for tat closures of offices

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Speaker 1: are things which are quite easy to do, and sometimes

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Speaker 1: they are almost like a safety valve if you like,

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Speaker 1: you know, so you close something, they close one of yours,

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Speaker 1: and you know everybody's made that point. But it will

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Speaker 1: be interestly to see if there's something more to it

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Speaker 1: than that. If it's just a reciprocal closures of consulates,

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Speaker 1: then it's probably a relatively minor question. How does COVID

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Speaker 1: nineteen actually change the trade war between the U S

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Speaker 1: and China? Does it make it less likely that we'll

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Speaker 1: see a real, you know, second trade war or continuation

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Speaker 1: of because of the already depressed state of the world economy. Well,

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Speaker 1: it raises the stakes, of course, because when everything's going well,

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Speaker 1: you know, governments feel that they can perhaps make make

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Speaker 1: gestures or make political points in the trade area without

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Speaker 1: too much damage. I think what the COVID situation means

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Speaker 1: is that you're playing with fire here because you're operating

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Speaker 1: against a rather fragile economic background anyway, and therefore taking

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Speaker 1: tough trade measures, imposing tariffs is going to be potentially

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Speaker 1: more damaging than it would be if trade is otherwise buoyant.

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Speaker 1: So I think that's the way in which it affected.

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Speaker 1: Sir Howard, I must turn to this historic moment for

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Speaker 1: Europe that we saw over the weekend. You are qualified

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Speaker 1: to speak on this with your tenure of duty, your

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Speaker 1: tour of duty rather at siance PO, and of course

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Speaker 1: with your work at the London School of Economic Is

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Speaker 1: Europe a better place this morning because of what occurred

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Speaker 1: this weekend to consolidate the United States of Europe? Yes,

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Speaker 1: it is whether the United States of Europe overstates the case.

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Speaker 1: I think perhaps it does, but it's clearly a kind

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Speaker 1: of ruby con has been crossed here in that they

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Speaker 1: have agreed to collectively guaranteed borrowing, and that's been something

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Speaker 1: which the Germans and others have held out against for

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Speaker 1: quite a long time. That I think is a very

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Speaker 1: important moment and suggests that the arguments for solidarity a

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Speaker 1: word that doesn't translate terribly well into English, that the

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Speaker 1: arguments for solidarity in Europe have one the day, at

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Speaker 1: least temporarily. So I do think it's an important moment. Indeed,

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Speaker 1: you could see by the fact that it took them

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Speaker 1: four days to get there that they were overcoming some

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Speaker 1: very serious issues. So I'm modestly optimistic about the way

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Speaker 1: this has turned out, and I think we could see

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Speaker 1: a stronger European recovery as a result. From where you

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Speaker 1: sit right now, and with all your radar at the

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Speaker 1: net West Group and all of your discussions within academics

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Speaker 1: and the experts that are out there, how in recession

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Speaker 1: is the economy right now? I'm having trouble getting a

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Speaker 1: gauge of the depth or persistency of a slowdown and

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Speaker 1: aggregate demand. The markets are telling me it's worse than

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Speaker 1: the chit chat. What is it, sir Howard. Yeah, what

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Speaker 1: we've seen so far is that some parts of spending

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Speaker 1: have recovered really quite well. Spending on staples if you like,

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Speaker 1: as being pretty flat through the period and that's okay,

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Speaker 1: and spending on consumer durables has picked up really quite sharply.

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Speaker 1: What we have not yet seen is a sharp pick

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Speaker 1: up in what you might call social expenditure, eating out

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Speaker 1: obviously all the arts related cinemas at tea. That has

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Speaker 1: not yet picked up. And so the question is will

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Speaker 1: people be confident enough to go back to their previous

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Speaker 1: practices of social expenditure, and that I think is going

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Speaker 1: to take quite a bit of time. So my favorite

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Speaker 1: view of the shape of the recovery is that we

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Speaker 1: have had the beginnings of a V shaped recovery and

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Speaker 1: that that's been quite good as far as it goes.

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Speaker 1: If had slightly better in the UK and the bag

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Speaker 1: of England thought, but that the next part of the

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Speaker 1: V may flatten out a bit because then you reach

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Speaker 1: some social and psychological issues about people's confidence, and that

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Speaker 1: I think will take some time to recover, so Howard thinks.

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Speaker 1: So much for Howard Davis of Network Group. Thanks for

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

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Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.

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Speaker 1: I'm on Twitter at Tom Keane before the podcast. You

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Speaker 1: can always catch us worldwide. I'm Bloomberg Radio