WEBVTT - Surveillance: NATO Summit With Adm. Stavridis & Vinjamuri 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Ley. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:28.000 Bloomberg dot Com, and of course on the Bloomberg with 0:00:28.160 --> 0:00:31.040 us here in New York and Police to say Savena Subramanium. 0:00:31.280 --> 0:00:33.919 Bank of America, Merrill Lynch, head of US Equity Strategy, 0:00:33.920 --> 0:00:36.760 Good morning to Savita, Good morning. What are you talent 0:00:36.880 --> 0:00:41.639 clients at the moment about December? That line in the 0:00:41.680 --> 0:00:44.239 sand when terrorists could go on? What is it? A 0:00:44.280 --> 0:00:46.720 hundred and sixty billion dollars a Chinese impulse? What's the 0:00:46.720 --> 0:00:49.360 message at the moment? And it's mostly consumer goods, which 0:00:49.440 --> 0:00:52.320 is which is different from what we've seen in the past. 0:00:52.800 --> 0:00:56.000 You know, I think the messages that if we get 0:00:56.080 --> 0:00:58.800 some sort of a skinny deal, I think we could 0:00:58.800 --> 0:01:02.640 see a really strong wrong rally in the more cyclical 0:01:02.680 --> 0:01:04.679 areas of the market, because my sense is that the 0:01:04.680 --> 0:01:08.400 market is actually pricing in a fairly dire scenario on trade. 0:01:08.600 --> 0:01:10.640 I mean, if you look at what's expensive within the 0:01:10.800 --> 0:01:15.000 SMP five hundred, it's utilities, it's consumer staples. These are 0:01:15.280 --> 0:01:18.600 you know, the recession stocks of the SMP five hundred. 0:01:18.680 --> 0:01:22.560 It's not machinery and and you know retailers. Those are 0:01:22.600 --> 0:01:25.240 the stocks that are really cheap. So my sense is 0:01:25.440 --> 0:01:28.280 that the market is actually pricing in not a great 0:01:28.319 --> 0:01:33.280 outcome from from the tariff scenario. Now now here, I 0:01:33.319 --> 0:01:35.280 think is where it gets interesting. I don't see the 0:01:35.280 --> 0:01:37.440 trade war ending, even if we get some kind of 0:01:37.480 --> 0:01:40.200 skinny deal. I think what it turns into is more 0:01:40.280 --> 0:01:43.080 of a tech war. UM. So I think we're shifting 0:01:43.120 --> 0:01:46.480 from this trade war tariffs on you know, soybeans, to 0:01:46.680 --> 0:01:49.160 and to an environment where I think the real war 0:01:49.320 --> 0:01:54.440 is around technology, UM, intellectual property, national security, and I 0:01:54.480 --> 0:01:57.640 think that could could continue for a lot longer. You 0:01:57.720 --> 0:02:00.440 actively talent claunch the need to position that fundio I 0:02:00.560 --> 0:02:03.440 was the equity allocation with regards to those kind of 0:02:03.440 --> 0:02:05.520 consents that you have. Absolutely, I mean, I think the 0:02:05.560 --> 0:02:07.919 way to think about this is the tech which hasn't 0:02:07.960 --> 0:02:10.680 been a market leader for you know, ten years running 0:02:10.720 --> 0:02:13.640 now UM is one of the areas that could actually 0:02:13.680 --> 0:02:15.520 take it on the chin in the near term. I mean, 0:02:15.560 --> 0:02:18.040 not only do you have tariffs, not only do you 0:02:18.080 --> 0:02:20.800 have the idea of you know, tech companies having to 0:02:21.120 --> 0:02:25.440 dislocate their supply chain, but you also have bipartisan support 0:02:25.520 --> 0:02:28.280 to regulate tech companies. So you know, what I worry 0:02:28.280 --> 0:02:30.679 about within tech is the same thing that we saw 0:02:30.800 --> 0:02:35.680 in financials back in two thousand five. So there's should 0:02:35.720 --> 0:02:37.520 I sell my Amazon and Apple? That's all I want 0:02:37.520 --> 0:02:39.360 to know. So I think if you're worried about the 0:02:39.400 --> 0:02:42.760 next year or two, I don't see Amazon and Apple 0:02:43.200 --> 0:02:45.680 or you know, just fang stocks in general. Are big 0:02:45.760 --> 0:02:49.560 cap tech companies as retaining their leadership. I think there's 0:02:49.639 --> 0:02:51.360 even when their regular growth if you look at the 0:02:51.400 --> 0:02:54.360 nominal g D be called Ethan Harris has and and 0:02:54.480 --> 0:02:57.519 your team, you're telling me to get out of revenue 0:02:57.560 --> 0:03:00.919 growth stocks with that are double digit inn sure, and 0:03:00.960 --> 0:03:04.080 go over to something with a much less revenue growth 0:03:04.160 --> 0:03:06.359 stream scheme. Now here's the thing I think that the 0:03:07.160 --> 0:03:09.240 I mean you you, we all kind of know this. 0:03:09.360 --> 0:03:13.760 But the second derivative story for tech is less positive 0:03:14.080 --> 0:03:17.640 than it has been fast. That's calculus talk on our 0:03:17.680 --> 0:03:21.360 Wednesday folks. Just but but I think the second derivative 0:03:21.400 --> 0:03:23.160 story for you know, potent to some of the more 0:03:23.160 --> 0:03:26.760 cyclical areas of the market could actually recover nicely if 0:03:26.800 --> 0:03:30.560 we see any sort of a you know, resolution on 0:03:30.639 --> 0:03:33.200 trade in the near term. So so, I guess when 0:03:33.240 --> 0:03:35.320 I look at it, I think, Okay, here's your tech 0:03:35.360 --> 0:03:38.800 companies that have crushed it for ten years, but now 0:03:39.080 --> 0:03:43.080 they're super crowded, they're arguably a little bit more expensive 0:03:43.400 --> 0:03:47.720 than than they happened in the past, and we're seeing 0:03:47.760 --> 0:03:50.960 a lot of different catalysts that could unseat that. I 0:03:51.000 --> 0:03:53.160 love what you're saying, and I love your smart, smart 0:03:53.240 --> 0:03:55.520 research deck about how we're gonna have this big shift 0:03:55.520 --> 0:03:58.880 to international big shift a small and big cap. What 0:03:59.080 --> 0:04:02.080 will be the pri some catalyst to make that occur? 0:04:02.360 --> 0:04:04.800 Is it as simple as FED policy or do we 0:04:04.840 --> 0:04:07.440 have to get more equity in nature or yield nature? 0:04:07.800 --> 0:04:10.760 In our analysis, I don't know if it's has to 0:04:10.800 --> 0:04:12.680 do with the FED. I mean, so, I think the 0:04:12.680 --> 0:04:16.919 biggest driver for rotations in style are the contours of 0:04:16.960 --> 0:04:19.320 the profit cycle. That's what we found in our quant work. 0:04:19.800 --> 0:04:22.200 And you know, I think what's important here is we've 0:04:22.240 --> 0:04:26.960 gone from an environment of very very slow decelerating growth 0:04:27.360 --> 0:04:30.919 to what looks like a reasonable acceleration in growth in 0:04:31.000 --> 0:04:33.440 two thousand twenty. And here's why I say that. So 0:04:33.440 --> 0:04:35.760 if you look at two thousand nineteen, this year, it's 0:04:35.760 --> 0:04:39.839 been flat earnings growth. We've had a flat year on 0:04:39.839 --> 0:04:43.400 on SMP earnings. Next year, without a lot of great 0:04:43.440 --> 0:04:47.520 economic delivery, we're likely to see a better year and 0:04:47.560 --> 0:04:51.040 amidst that pickup. This has historically been the biggest driver 0:04:51.200 --> 0:04:55.000 for value cycles, over growth cycles, for small, over large, 0:04:55.120 --> 0:04:57.800 for rest of world over us is just the idea 0:04:57.839 --> 0:05:00.839 that we get some kind of a pickup in profit cycle. 0:05:01.040 --> 0:05:04.680 Let's get your rival White survey to financials, consumer discretionary industrials, 0:05:04.800 --> 0:05:08.680 utilities that you rove a weights into. Those are overweighting 0:05:09.279 --> 0:05:11.400 sight into the conversations you're having at the moment. Where's 0:05:11.400 --> 0:05:13.560 the pushback coming from you? So the pushback is, why 0:05:13.600 --> 0:05:17.080 the heck are you overweight utilities because it's really expensive 0:05:17.120 --> 0:05:20.160 and it looks like a bond um. I guess utilities 0:05:20.279 --> 0:05:22.760 is our hedge against you know, things not going well 0:05:22.839 --> 0:05:25.480 over the next twelve months and utilities. What I like 0:05:25.600 --> 0:05:28.000 about it is that it's got a dividend yield that's 0:05:28.080 --> 0:05:30.720 a you know, a couple of percentage points higher than 0:05:30.800 --> 0:05:34.480 bond yields and um and it's basically, you know, it 0:05:34.600 --> 0:05:37.640 gives you what you think you're getting, regulated earnings growth 0:05:37.720 --> 0:05:40.880 relatively smooth. The real pushback that we get is on financials, 0:05:40.920 --> 0:05:43.200 because financials, everybody thinks we need the yield curve to 0:05:43.240 --> 0:05:45.839 steep in in order for financials to work, And here 0:05:46.000 --> 0:05:48.520 I totally disagree. I don't think you need the yield 0:05:48.520 --> 0:05:50.680 curve to steep in. I think financials is going to 0:05:50.800 --> 0:05:54.920 start to be acknowledged as a high quality dividend yield sector, 0:05:55.360 --> 0:05:57.520 which is something that we haven't really seen it as 0:05:58.000 --> 0:06:00.160 in a very long time. It was the less ever 0:06:00.520 --> 0:06:03.400 toxic sector back in two thousand seven, and I think 0:06:03.480 --> 0:06:06.320 that's how investors are painting it today. But the truth 0:06:06.480 --> 0:06:08.640 is the leverage ray show has been. You know, it's 0:06:08.680 --> 0:06:12.000 a shadow of its former self. These companies are arguably 0:06:12.160 --> 0:06:15.560 over capitalized, and their shareholder yield, if you add up 0:06:15.960 --> 0:06:19.520 share buy backs and dividend yield, shareholder yield for financials 0:06:19.839 --> 0:06:23.240 is the highest of all eleven sectors. You and I've 0:06:23.240 --> 0:06:25.200 talked about this many times. For this to work, you 0:06:25.279 --> 0:06:27.440 need a perception shift. You need investors to sit there 0:06:27.480 --> 0:06:29.880 and agree with you, not think that everything is just 0:06:30.040 --> 0:06:32.159 about a ten year yield of a shape and yield curve. 0:06:32.400 --> 0:06:34.440 You've seen evidence of that this year because actually some 0:06:34.520 --> 0:06:36.680 of these big names are more straighted, performed really rather 0:06:36.720 --> 0:06:39.720 well through. Is that already starting to happen. I think 0:06:39.760 --> 0:06:42.640 you're starting to get that acknowledgement that these are different 0:06:42.720 --> 0:06:45.400 companies than what what we saw in two thousand and eight. 0:06:45.480 --> 0:06:48.160 And then you know also just the idea that they've 0:06:48.200 --> 0:06:51.240 been so shunned for so many years that their underweight 0:06:51.360 --> 0:06:54.800 positions are now arguably risky. If the stocks start to 0:06:54.880 --> 0:06:56.640 move at all, I think that investors are going to 0:06:56.680 --> 0:06:59.560 be forced to start adding exposure. I mean, financials is 0:06:59.600 --> 0:07:04.080 a sect where the average institutional manager is two standard 0:07:04.120 --> 0:07:08.440 deviations below his or her relative exposure to the sector. 0:07:08.760 --> 0:07:11.640 So that means that they basically hate financials right now. 0:07:12.560 --> 0:07:15.720 You're gonna have to leave it there, Thank you, Superman. 0:07:17.680 --> 0:07:22.360 Really optimistic view in really stating that the shift will occur. 0:07:22.440 --> 0:07:26.840 That's been a huge debate. John on the show. Let's 0:07:26.880 --> 0:07:30.200 get to Lensley Vinja Murray, who joins US now Sheffield 0:07:30.320 --> 0:07:32.720 United as two points had Leslie vin Ja Murray knew 0:07:32.760 --> 0:07:35.920 that Chatham House head of US and America's program. Don't worry, Leslie, 0:07:35.960 --> 0:07:38.760 We're not going to continue that conversation. We are awaiting. 0:07:39.400 --> 0:07:43.520 We are awaiting a bilateral between Chancellor Angela Merkel and 0:07:43.600 --> 0:07:46.200 a President of the United States, Donald Trump, taking place 0:07:46.280 --> 0:07:48.600 just outside of London, England. We're going to bring that 0:07:48.680 --> 0:07:50.560 to our listeners in just a moment when it begins. 0:07:50.880 --> 0:07:53.320 But let's see, what are you looking for outside of 0:07:53.360 --> 0:07:55.920 the body language in the spectacle, what are you listening 0:07:56.000 --> 0:07:59.520 for when these two start talking. Well, I mean, I 0:07:59.560 --> 0:08:01.960 think you know the big thing right now is are 0:08:02.040 --> 0:08:05.840 we going to see a unity and cohesion? And of course, 0:08:05.960 --> 0:08:09.680 you know, the relationship between angel and Donald Trump has 0:08:10.400 --> 0:08:12.760 not been the easiest one. Of course, it's now being 0:08:12.840 --> 0:08:16.200 sort of overtaken, at least optically by the relationship between 0:08:16.200 --> 0:08:18.360 Trump and Macron. I think there's more to say about that, 0:08:18.800 --> 0:08:20.440 but I think we will still be looking to say, 0:08:20.440 --> 0:08:23.160 you know, are they on the same page? Will they 0:08:23.800 --> 0:08:27.720 speak to internal issues in the alliance, the question of Turkey. 0:08:27.760 --> 0:08:30.000 I think that's probably less likely, But I really do 0:08:30.080 --> 0:08:31.400 think that this is this going to be, you know, 0:08:31.520 --> 0:08:34.240 can they waive the flag as it were of NATO 0:08:34.400 --> 0:08:37.719 and forward that come in front lessa you're such a 0:08:37.840 --> 0:08:40.240 student of this, the US and then folding in the 0:08:40.360 --> 0:08:44.280 European Prison. I look at it as a fossil of SPD. 0:08:44.640 --> 0:08:48.280 The liberals being Billy, Bryant and Conrad added an hour's 0:08:48.280 --> 0:08:50.400 in the mix. And of course Helmet Cole had changed 0:08:50.440 --> 0:08:54.880 German politics. Does the President perceive Ms Miracle as a 0:08:55.000 --> 0:08:58.440 conservative or is he have a greater affinity to those 0:08:58.480 --> 0:09:03.160 in Germany even more servative? You know, I don't, to 0:09:03.240 --> 0:09:05.679 be very honest, I don't think Donald Trump is is 0:09:05.800 --> 0:09:07.920 thinking in quite this way. I think he hasn't a 0:09:08.080 --> 0:09:13.640 view of Germany in general that's driven by his antagonismic 0:09:13.760 --> 0:09:17.440 front right absolutely, and you know, in terms of sort 0:09:17.480 --> 0:09:22.280 of drilling down and thinking where does she stand? Because 0:09:24.200 --> 0:09:27.199 just not motivating this president because Johnny does it with 0:09:27.640 --> 0:09:30.120 the Prime Minister Johnson, but he just can't translate that 0:09:30.320 --> 0:09:32.720 over to some of these other nations were looking at Jeermany. 0:09:32.760 --> 0:09:34.720 I thought it was fascinating yesterday here in the President 0:09:34.800 --> 0:09:38.480 called out Germany by name Leslie, referring to the lack 0:09:38.640 --> 0:09:40.839 or the failure of getting the military spending up to 0:09:40.880 --> 0:09:44.480 two percent of GDP in the country and basically threatening 0:09:44.559 --> 0:09:48.040 to use trade as a tool to push the Germans 0:09:48.080 --> 0:09:50.959 to spend more on military. Leslie this is something new 0:09:51.080 --> 0:09:53.199 that I don't think many people have been thinking about 0:09:53.280 --> 0:09:55.199 at all in the last couple of years, as the 0:09:55.240 --> 0:09:57.839 President has made this book push. How are you thinking 0:09:57.880 --> 0:10:01.440 about that in the last twenty four hours. Yeah, I mean, 0:10:01.600 --> 0:10:04.160 and remember it's not just the last twenty four hours. 0:10:04.240 --> 0:10:09.559 Donald Trump has has linked sanctions to national security concerns 0:10:10.160 --> 0:10:11.760 for a little while right now, and I think for 0:10:11.840 --> 0:10:15.080 many of us this is very distressing because, of course, 0:10:15.240 --> 0:10:19.160 especially when it comes to America's relationship with its most 0:10:19.240 --> 0:10:22.360 important allies, the idea that you would link questions of 0:10:22.520 --> 0:10:28.520 trade um to national security concerns is is contrary to 0:10:28.880 --> 0:10:31.280 you know, what we've what we've witnessed over the last 0:10:31.440 --> 0:10:34.160 seven decades. So it's it is a very significant shift. 0:10:34.240 --> 0:10:36.319 It's one that's getting traction. He's taking it to the 0:10:36.360 --> 0:10:40.240 next level. UM. But I don't think that it really plays. 0:10:40.720 --> 0:10:42.679 It doesn't play. You know, this is not the U. S. 0:10:42.760 --> 0:10:45.319 China relationship. I don't think it plays actually back home 0:10:45.400 --> 0:10:48.400 in the same way. But and it and it alienates, 0:10:49.360 --> 0:10:52.480 but it is um it's another thing driving a wedge 0:10:52.480 --> 0:10:54.959 through America, and it's European partners. We welcome all of 0:10:55.000 --> 0:10:58.120 you coast to coast and worldwide. A good conversation with Leslie, 0:10:58.360 --> 0:11:01.680 Vinja Murray of Chatham House and expertise across the Atlantic 0:11:02.120 --> 0:11:05.000 from London on the United States, Chan Fero and Tom 0:11:05.120 --> 0:11:11.680 Keene futures of fifteen down futures. We await the symbolism, 0:11:11.960 --> 0:11:14.439 a huge symbolism of the leader of Germany in the 0:11:14.520 --> 0:11:18.120 United States of America at the Seventh Needle Meetings channel. 0:11:18.200 --> 0:11:20.840 Let's least to continue this conversation, shall we. I think 0:11:20.880 --> 0:11:25.000 the President quite rightly identifies a problem. He's identified a 0:11:25.040 --> 0:11:27.439 problem with China that many people agree with him on. 0:11:27.600 --> 0:11:30.000 They need to open up. They have been stealing i P. 0:11:30.440 --> 0:11:33.760 There has been forced technology transfer. The disagreement has been 0:11:33.760 --> 0:11:37.080 about the approach and as you say, is alienated allies. 0:11:37.400 --> 0:11:40.120 We see the same thing with NATO. They've all pledged 0:11:40.160 --> 0:11:42.439 to get military spending up to two percentage GDP, and 0:11:42.520 --> 0:11:45.640 let's be quite honest, some people, even the Germans, haven't 0:11:45.679 --> 0:11:47.959 done enough to get themselves there. But once again, the 0:11:48.000 --> 0:11:51.079 President identifies a problem. Then he's criticized for his approach. 0:11:51.400 --> 0:11:54.680 But letslie, I think many people are asking the following question. Okay, 0:11:54.800 --> 0:11:58.760 criticize his approach, but what did previous administrations do, and 0:11:58.840 --> 0:12:01.360 why should we continue at that very same approach if 0:12:01.400 --> 0:12:03.800 we are just going to end up with the same results. 0:12:04.440 --> 0:12:07.480 What do you say back to that, Leslie, Well, first 0:12:07.520 --> 0:12:09.760 of all, you know, let's let's break that down. M 0:12:09.920 --> 0:12:14.440 on the on the question of European contributions to defense 0:12:14.520 --> 0:12:16.719 spending hitting that two percent target. This is something that 0:12:16.840 --> 0:12:22.760 preceded Donald Trump. Um the increase in European spending. What proceeded, 0:12:23.000 --> 0:12:26.679 you know, began really in fourteen. It's it's continued and 0:12:26.800 --> 0:12:28.880 taken on more steam, and it's certainly gotten a lot 0:12:28.960 --> 0:12:32.920 more visibility because of the rhetorical line taken by the president, 0:12:33.080 --> 0:12:36.480 very aggressive rhetorical line. But that you know that push 0:12:37.440 --> 0:12:41.520 dates pre dates the president on China absolutely. You know, 0:12:41.559 --> 0:12:43.920 people have been wanting to level the playing field with 0:12:44.040 --> 0:12:47.480 China for some time and Donald Trump has certainly been 0:12:47.679 --> 0:12:50.480 the person that has taken us He's driven it forward, 0:12:50.559 --> 0:12:52.920 and I think it's game changing regardless of what we 0:12:53.000 --> 0:12:56.959 see who we see in the White House post does 0:12:57.040 --> 0:13:03.599 the president change international American rather foreign relations? Is it 0:13:04.200 --> 0:13:08.839 so seismic, this different approach by the gentleman from Manhattan 0:13:09.800 --> 0:13:13.600 that it's a permanent change to how America addresses its 0:13:13.679 --> 0:13:19.040 foreign policy. You know, this is the question that everybody 0:13:19.120 --> 0:13:21.880 wants to an answer to. We've been certainly discussing it, 0:13:22.040 --> 0:13:26.360 frankly all morning at Chatham House. Um uh, and it's 0:13:26.880 --> 0:13:31.240 it's it's clearly the case that he's taken some things 0:13:31.320 --> 0:13:33.600 that I think we're a long term, long time coming 0:13:33.679 --> 0:13:38.200 America's relationship with China, reorienting it, taking a harder line 0:13:38.240 --> 0:13:41.839 on trade, um and and driven them forward. And I 0:13:42.000 --> 0:13:46.679 do think that the style and the attention that he's 0:13:46.720 --> 0:13:49.400 given to those changes, you know, they predate the president, 0:13:49.480 --> 0:13:53.240 but he's made them front and center. Will we see 0:13:53.600 --> 0:13:56.480 the continued style of diplomacy that we've seen it under 0:13:56.520 --> 0:13:58.440 this president? I don't think so. I think it's very 0:13:58.520 --> 0:14:02.480 hard to imagine any anybody other than this President m 0:14:03.080 --> 0:14:06.600 pursuing kind of diplomacy that he's pursued with America's allies. 0:14:07.400 --> 0:14:09.920 But will America ask for more on the global stage, Yes, 0:14:09.960 --> 0:14:12.160 I think it will. Of its allies as well as 0:14:12.320 --> 0:14:15.480 of its adversaries going to continue to be put in 0:14:15.559 --> 0:14:19.320 that second, that second bracket. Dr Vinjabinry absolutely nails us 0:14:19.520 --> 0:14:22.360 about this idea of substance versus style, and so much 0:14:22.440 --> 0:14:26.240 of the reporting, John ignores the substance that could be 0:14:26.400 --> 0:14:30.160 permanent of this absolutely unique president and whether things are 0:14:30.160 --> 0:14:32.400 going to change, Leslie, I think is an important point. 0:14:32.560 --> 0:14:34.760 I just look at the situation and wonder what the 0:14:34.800 --> 0:14:38.240 electorate actually wants, what the demands of the electorate will be. 0:14:38.720 --> 0:14:40.920 Do they want to go back to the old way 0:14:40.960 --> 0:14:43.520 of doing things, which is getting countries together in Europe, 0:14:43.520 --> 0:14:46.200 playing nicely and saying to China please open up? Or 0:14:46.280 --> 0:14:49.920 do they want this more confrontational approach from their leader 0:14:50.080 --> 0:14:52.320 here in America. Is that what they want on the 0:14:52.400 --> 0:14:55.200 international stage. What's your perception of what the electorate wants 0:14:55.240 --> 0:14:59.360 to see, Leslie, I don't think that people are behind 0:14:59.680 --> 0:15:02.000 I think, you know, there's there's a peeling off of 0:15:02.080 --> 0:15:05.080 support for this style of trade wars because it's so 0:15:05.160 --> 0:15:08.560 far not delivered any results. Um. It's you know, it's 0:15:08.560 --> 0:15:13.480 a destabilized it's it's raised protectionism has gotten worse, the 0:15:14.640 --> 0:15:18.360 numbers aren't getting better. Um. And so I think that 0:15:18.760 --> 0:15:21.200 people are aware that now this is an issue, but 0:15:21.360 --> 0:15:24.760 is it really changing the playing fields, really leveling the 0:15:24.840 --> 0:15:27.280 playing field as Donald Trump taking on the bigger issues. 0:15:27.320 --> 0:15:29.720 I think Americans are pretty aware that, you know, it's 0:15:29.760 --> 0:15:32.280 the right issue, but it's the wrong approach. We thank you. 0:15:32.480 --> 0:15:34.840 They're looking for a more strategic approach. We thank you 0:15:34.960 --> 0:15:37.880 for listening. Dr Vinja Murray with us here from Chadow Mouse. 0:15:38.240 --> 0:15:41.800 Jay John is a supporter of the President United States. 0:15:41.920 --> 0:15:44.560 We're thrilled. I think he's I think he's taking advantage 0:15:44.600 --> 0:15:48.080 of municipal bonds. Jay emails in and says the President 0:15:48.520 --> 0:15:51.920 is more like Churchill and the US Founders. He considers 0:15:52.520 --> 0:15:57.680 the European leaders smug and self righteous. I mean, leslie. 0:15:57.800 --> 0:16:03.119 That is a perception of Republicans and Democrats in America. 0:16:03.720 --> 0:16:07.520 Do did you buy the idea European leaders have a 0:16:07.760 --> 0:16:13.760 smugness about America? Yeah? First of all, is it a 0:16:13.840 --> 0:16:17.440 perception of Republicans? And I think that's a broad you know, 0:16:17.680 --> 0:16:20.680 too far, too broad. ABRESHI data that's coming out of 0:16:20.800 --> 0:16:25.040 serious places like the Chicago Council, like Pe. The vast 0:16:25.120 --> 0:16:27.840 majority of Americans want to be a native, They want 0:16:27.880 --> 0:16:30.640 to cooperate with Europe, they want to be internationally engaged. 0:16:30.640 --> 0:16:32.400 There are certain things that they don't want to do 0:16:32.520 --> 0:16:37.040 any more troop deployments. They'd like to see scaled back. Um. 0:16:37.360 --> 0:16:39.680 But I you know, to sort of the Republican Party. 0:16:39.720 --> 0:16:42.920 I don't think is in any way anti European um, 0:16:43.320 --> 0:16:46.400 and the question of smugness is really again it's I'm 0:16:46.440 --> 0:16:48.400 not so sure how helpful it is. I think there's 0:16:48.400 --> 0:16:54.600 always been a admiration of European leaders. But in regardless 0:16:54.640 --> 0:16:57.040 what Americans thing of the president, nobody likes to see, 0:16:57.040 --> 0:17:02.440 you know, the president being talked about out um negatively 0:17:03.000 --> 0:17:05.760 because it sort of reflects badly on the entire country. 0:17:05.840 --> 0:17:08.560 So it's incredibly complicated. I want to explore this relationship 0:17:08.640 --> 0:17:10.800 with China in the United States just a little bit further. 0:17:11.200 --> 0:17:13.000 There are some people that might argue time is up. 0:17:13.119 --> 0:17:15.560 The labor arbor trage has taken place, the plants have 0:17:15.680 --> 0:17:18.639 been built on the mainland. Western multinationals will do anything 0:17:19.000 --> 0:17:21.080 to keep a foothold in the country now, despite the 0:17:21.119 --> 0:17:24.040 fact that seems to be serious allegations of human rights 0:17:24.160 --> 0:17:27.040 violations in the mainland at the moment, with the exception 0:17:27.080 --> 0:17:29.439 of big tech and perhaps finance as well, I think 0:17:29.480 --> 0:17:32.240 at the moment, gaining entry to this market is perhaps 0:17:32.320 --> 0:17:34.680 not the issue it once was. It's keeping access, and 0:17:34.760 --> 0:17:37.399 I think keeping access may well be the issue in 0:17:37.480 --> 0:17:40.160 the next few decades. China is not going to become 0:17:40.560 --> 0:17:42.479 more like the United States. And a question I've been 0:17:42.520 --> 0:17:45.399 thinking about, Leslie, is how does a multinational company succeed 0:17:45.560 --> 0:17:49.320 navigating what the Economist and the last weekend called two 0:17:49.440 --> 0:17:52.639 spheres of influence, the American sphere of influence and the 0:17:52.800 --> 0:17:54.720 Chinese sphere of influence. And I think about it in 0:17:54.760 --> 0:17:58.560 the following terms, how does a multinational company please a 0:17:58.640 --> 0:18:01.240 progressive consumer in the way than a country like America 0:18:01.640 --> 0:18:05.280 and a repressive state abroad in a country like China. 0:18:05.480 --> 0:18:07.600 How does that kind of company succeed on the global 0:18:07.680 --> 0:18:10.240 state in a coming ten years? How do they do that? Leslie? 0:18:11.440 --> 0:18:13.920 I think it is difficult, because, of course, consumers in 0:18:14.000 --> 0:18:17.000 the West are becoming much more tuned to issues of 0:18:17.160 --> 0:18:21.119 labor standards, of environmental regulations, of you know, a number 0:18:21.240 --> 0:18:25.080 of what we might consider progressive policies are really becoming 0:18:25.840 --> 0:18:28.520 things that people individual certainly in the States in Europe, 0:18:28.520 --> 0:18:30.560 are taking very very seriously, and they want to know 0:18:30.800 --> 0:18:34.680 when they're buying from a multinational when they're engaging that 0:18:34.920 --> 0:18:37.840 that China is hitting the same standard that they would 0:18:37.840 --> 0:18:42.280 expect of an American company back home. So it's it's complicated, 0:18:42.320 --> 0:18:44.280 but I think that the harder choices, you know, for 0:18:44.480 --> 0:18:47.800 for multinationals are are balancing governments and not really not 0:18:47.960 --> 0:18:52.359 necessarily balancing consumers. On the human rights question, very tricky. Right, 0:18:52.480 --> 0:18:57.040 Clearly there's now more pressure coming out of Congress on 0:18:57.200 --> 0:19:01.160 the human rights question. Uh know, human rights is something 0:19:01.200 --> 0:19:04.760 that America had takes very seriously, American to take seriously, 0:19:05.000 --> 0:19:09.560 but but selectively. It's always been selective. Um. And if 0:19:09.600 --> 0:19:12.479 you look even at the most recent legislation, there are 0:19:12.600 --> 0:19:16.680 exceptions written in saying that you know that the president 0:19:16.920 --> 0:19:21.360 can and the weaker bill could could waive sanctions, um, 0:19:21.600 --> 0:19:23.720 if he determined that this would be in the national 0:19:23.760 --> 0:19:26.399 interest to do so. So. Even the legislation, which is 0:19:26.480 --> 0:19:29.800 potentially very powerful if it if it becomes a part 0:19:29.840 --> 0:19:33.480 of law, has exceptions written and that and that's pretty 0:19:33.560 --> 0:19:35.960 much the story of America's human rights to point. Well, Leslie, 0:19:35.960 --> 0:19:37.000 I don't mean to put you on the spot, but 0:19:37.040 --> 0:19:40.120 I think this is an important question. If China wasn't 0:19:40.160 --> 0:19:43.000 the world's second largest economy, if it didn't have the 0:19:43.080 --> 0:19:46.080 consumer base that so many of these companies want access to, 0:19:46.760 --> 0:19:49.400 if we had these kind of allegations of human rights 0:19:49.480 --> 0:19:52.479 abuses in any other country would we be looking at 0:19:52.520 --> 0:19:58.480 doing a trade deal with them. Um, it's it's clearly 0:19:58.680 --> 0:20:02.760 a very difficult issue. And again China is not the 0:20:02.880 --> 0:20:05.480 only country in which human rights are a very serious issue, 0:20:05.520 --> 0:20:08.800 which is in no um way, shape or form to 0:20:08.880 --> 0:20:11.320 diminish them. Think about North Korea right, Think about the 0:20:11.480 --> 0:20:17.120 Commission of Inquiry that was released UH investigating the human 0:20:17.240 --> 0:20:21.480 rights abuses in North Korea, and that at the moment 0:20:21.560 --> 0:20:24.120 it's pretty much been set aside in order to try 0:20:24.240 --> 0:20:27.600 and engage, you know, selectively again with talks on the 0:20:27.680 --> 0:20:32.280 non proliferation issues. So America when engages abroad, has a 0:20:32.359 --> 0:20:34.960 set of priorities and it tries to balance them, and 0:20:35.200 --> 0:20:37.159 of course human rights is a through line, but it 0:20:37.240 --> 0:20:39.840 has been selectively applied in China is not the only 0:20:39.920 --> 0:20:43.000 country in which, you know, there's a sort of oscillation 0:20:43.200 --> 0:20:48.440 based on a range of a range of interests. Lessie Benjaminy, 0:20:48.480 --> 0:20:50.399 thank you so much. With Chad A mouse would greatly 0:20:50.440 --> 0:20:55.960 appreciate it. This morning. Jane Farley jointing US now founding 0:20:56.000 --> 0:20:59.480 in from London, the capital of global foreign exchange. Rabbit 0:20:59.520 --> 0:21:03.760 bankhead of ex Strategy, Jane why sterling up here ahead 0:21:03.760 --> 0:21:06.840 of some serious event risk next week. Well, I think 0:21:06.880 --> 0:21:09.440 the market thinks that perhaps the event risk is is 0:21:09.520 --> 0:21:12.240 relatively muted. Now. We've got to remember, of course, that 0:21:13.119 --> 0:21:14.960 although there is still over a week, just over a 0:21:15.000 --> 0:21:16.920 week to go until the election, there's been lots of 0:21:17.000 --> 0:21:21.600 reports and in the UK suggesting that Boris Johnson's advisors 0:21:22.119 --> 0:21:24.480 have really been tried to keep a lid on what 0:21:24.680 --> 0:21:26.080 he can say. Now, if you go back to the 0:21:26.119 --> 0:21:30.000 twenty seventeen election, at that point, certainly at the beginning 0:21:30.040 --> 0:21:34.439 of that election campaign, PM May, the previous Tory Prime minister, 0:21:34.840 --> 0:21:37.159 had at least a ten point lead, and then that 0:21:37.440 --> 0:21:40.240 lead narrowed and of course, if you remember, we ended 0:21:40.320 --> 0:21:43.040 up and she didn't manage to have a majority at 0:21:43.080 --> 0:21:46.879 that election. So it seems that or list these are 0:21:46.880 --> 0:21:49.880 the reports which have been circulated, it seems that Johnson's 0:21:49.880 --> 0:21:53.120 advisors are taking note from that and are telling him 0:21:53.240 --> 0:21:57.640 only to give one word short sort of popular responses, 0:21:57.680 --> 0:22:01.320 and also to say very little. Now. The market seems 0:22:01.359 --> 0:22:04.520 to be inferring that if that policy remains, then he 0:22:04.640 --> 0:22:07.160 can hold on to this lead in the polls, meaning 0:22:07.240 --> 0:22:10.280