1 00:00:00,080 --> 00:00:12,960 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:32,839 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. I 5 00:00:32,840 --> 00:00:34,920 Speaker 1: want to bring in Michael Shell now market Field Asset 6 00:00:34,920 --> 00:00:38,360 Speaker 1: Management Shairman portfolio manager and CEO, which joins us here 7 00:00:38,360 --> 00:00:40,479 Speaker 1: in New York. Good morning to Michael. Good morning. Let's 8 00:00:40,520 --> 00:00:43,480 Speaker 1: get to the IBM deal. Ten times sales for red 9 00:00:43,520 --> 00:00:46,960 Speaker 1: half thirty three billion dollars. What does red Hat do 10 00:00:47,080 --> 00:00:49,200 Speaker 1: and why does IBM need them? Is this all about 11 00:00:49,240 --> 00:00:53,199 Speaker 1: the cloud? I think it's all about IBM trying to 12 00:00:53,240 --> 00:00:56,040 Speaker 1: catch up with a technology cycle that's you know, left 13 00:00:56,040 --> 00:00:59,400 Speaker 1: it trailing in the dust. Sounds a little late to me, Michael, 14 00:01:00,160 --> 00:01:03,080 Speaker 1: I think it's it's extremely late, and and you know, 15 00:01:03,320 --> 00:01:05,640 Speaker 1: somewhat despert. I'm not enough of an expert to tell 16 00:01:05,640 --> 00:01:07,880 Speaker 1: you whether it's a quote unquote good deal or not, 17 00:01:08,319 --> 00:01:11,120 Speaker 1: or what exactly that happenings to the table. But you know, 18 00:01:11,160 --> 00:01:12,959 Speaker 1: when I look at IBM, I look at a company 19 00:01:13,040 --> 00:01:15,400 Speaker 1: that used to be Triple A and is now single 20 00:01:15,440 --> 00:01:18,800 Speaker 1: a um and And nineteen years ago was one of 21 00:01:18,840 --> 00:01:22,280 Speaker 1: the absolute dominant corporate American companies. In fact, for what 22 00:01:22,319 --> 00:01:25,040 Speaker 1: I remember, it even managed the first eighteen months of 23 00:01:25,080 --> 00:01:27,720 Speaker 1: the bear market, and we're still near it's high um 24 00:01:27,800 --> 00:01:31,160 Speaker 1: and And since Venners has you know, in absolute terms, 25 00:01:31,520 --> 00:01:35,640 Speaker 1: maybe not absolutely disastrous, but but in relative terms kind 26 00:01:35,640 --> 00:01:38,039 Speaker 1: of looks like Wegg did a year ago. What happens 27 00:01:38,120 --> 00:01:40,680 Speaker 1: if they slipped to some form of triple B or 28 00:01:40,840 --> 00:01:43,920 Speaker 1: flavor of triple B. I mean, this is an iconic 29 00:01:43,959 --> 00:01:46,959 Speaker 1: company of the phrase bet. The company has been seen 30 00:01:47,080 --> 00:01:50,320 Speaker 1: three and four times at PC tobaccle the death of 31 00:01:50,440 --> 00:01:53,800 Speaker 1: the near death, I should say, of But as you 32 00:01:53,880 --> 00:01:56,240 Speaker 1: correctly state, Michael, they've got an a rating of a 33 00:01:56,240 --> 00:01:59,040 Speaker 1: triple A perception and one day they're going to be 34 00:01:59,120 --> 00:02:02,760 Speaker 1: B or whatever. What happens when a company does that 35 00:02:02,960 --> 00:02:07,160 Speaker 1: shifts from ash to be ish. You know, I think 36 00:02:07,280 --> 00:02:10,600 Speaker 1: it's okay to debase your balance sheet if you are 37 00:02:10,720 --> 00:02:13,040 Speaker 1: enriching your shareholders. It may not be the way I 38 00:02:13,040 --> 00:02:14,440 Speaker 1: would want to run a company, but I think you 39 00:02:14,440 --> 00:02:16,200 Speaker 1: can make an argument, but that's in your in your 40 00:02:16,240 --> 00:02:19,200 Speaker 1: shareholders interest in your bond holders, you know, provided you 41 00:02:19,360 --> 00:02:21,359 Speaker 1: keep up at that sort of triple B plus level 42 00:02:21,360 --> 00:02:24,400 Speaker 1: haven't really been damaged, haven't really been damaged too greatly. 43 00:02:24,440 --> 00:02:27,240 Speaker 1: But you know, if we went into a technology downtread 44 00:02:28,160 --> 00:02:31,040 Speaker 1: um and IBM is teaching between as you say, that 45 00:02:31,160 --> 00:02:33,679 Speaker 1: A level and that triple B level and spreads a widening. 46 00:02:34,400 --> 00:02:36,760 Speaker 1: You know, those sorts of bombs don't get treated well 47 00:02:36,880 --> 00:02:39,760 Speaker 1: by markets. What did Mr mL get wrong? If you 48 00:02:39,800 --> 00:02:42,079 Speaker 1: were having a cup of coffee with Mrs Romedy and 49 00:02:42,120 --> 00:02:45,160 Speaker 1: Bloomberg will speak to Mrs Romedy here in a bid 50 00:02:45,800 --> 00:02:48,960 Speaker 1: uh if if what would you say to Ms Romedi 51 00:02:49,080 --> 00:02:53,840 Speaker 1: about lessons learned from Mr Immelt? You know, it's it's 52 00:02:53,960 --> 00:02:57,400 Speaker 1: I think both of them took over companies that exactly 53 00:02:57,400 --> 00:02:59,880 Speaker 1: there a long time. I mean, I mean they were 54 00:03:00,000 --> 00:03:04,280 Speaker 1: and did very very difficult situations by the time management look. 55 00:03:04,320 --> 00:03:08,520 Speaker 1: I think m L in retrospect panicked after the OA 56 00:03:08,639 --> 00:03:11,120 Speaker 1: financial crisis and got part of a crucial party, got 57 00:03:11,160 --> 00:03:12,840 Speaker 1: bit of a crucial part of g which was the 58 00:03:13,200 --> 00:03:16,040 Speaker 1: financial business, and the company has never really been able 59 00:03:16,080 --> 00:03:21,320 Speaker 1: to rebuild itself since. You know, in the case of IBM, yes, 60 00:03:21,400 --> 00:03:24,440 Speaker 1: as I say, it's it's been a wonderful technology cycle, 61 00:03:24,639 --> 00:03:26,680 Speaker 1: and you have to ask questions of somebody that came 62 00:03:26,720 --> 00:03:29,960 Speaker 1: into the cycle and in an okay position like IBM 63 00:03:30,000 --> 00:03:32,960 Speaker 1: and hasn't managed to innovate, hasn't managed to take advantage 64 00:03:32,960 --> 00:03:35,760 Speaker 1: of any of the major trends that you've seen take place. John, 65 00:03:35,840 --> 00:03:38,040 Speaker 1: I get a chart out. I put a Michael shul 66 00:03:38,120 --> 00:03:41,360 Speaker 1: chart on the Chinese stock market. That was just the 67 00:03:41,440 --> 00:03:44,400 Speaker 1: usual show brilliance. But I went back and looked at 68 00:03:44,440 --> 00:03:48,880 Speaker 1: IBM history, which I lived. But I'd forgotten the boom 69 00:03:49,000 --> 00:03:52,280 Speaker 1: of the early eighties with the IBM PC and then 70 00:03:52,360 --> 00:03:59,760 Speaker 1: John the absolute crater. I'd forgotten the trouble IBM was 71 00:03:59,800 --> 00:04:02,680 Speaker 1: in twenty five years ago, even the last ten years. 72 00:04:02,720 --> 00:04:05,760 Speaker 1: They think about Microsoft, think about the transition that Microsoft 73 00:04:05,840 --> 00:04:08,760 Speaker 1: has managed to make of Santa and Adela. Now that's 74 00:04:08,760 --> 00:04:10,800 Speaker 1: the way it should have been done at IBM, you 75 00:04:10,800 --> 00:04:14,160 Speaker 1: would assume, Michael, Yes, But I you know, Microsoft had 76 00:04:14,160 --> 00:04:17,280 Speaker 1: one key advantage, which was they were earning tremendous amounts 77 00:04:17,320 --> 00:04:19,520 Speaker 1: of cash for whole way through it and never really 78 00:04:19,520 --> 00:04:22,560 Speaker 1: had to touch their balance sheet. That the trouble with Microsoft, 79 00:04:22,560 --> 00:04:25,320 Speaker 1: as they had a fantastic legacy business and they didn't 80 00:04:25,320 --> 00:04:28,280 Speaker 1: really noticed, they really didn't understand what to do with it. 81 00:04:28,560 --> 00:04:31,680 Speaker 1: You know, IBM unfortunately seems to have a deteriorating legacy 82 00:04:31,720 --> 00:04:33,720 Speaker 1: business and doesn't quite know what to do about it. Well, 83 00:04:33,760 --> 00:04:36,840 Speaker 1: IBM stocks down about five. I love the way many 84 00:04:36,839 --> 00:04:40,679 Speaker 1: people will refer to this, Michael as a cash deal, 85 00:04:40,960 --> 00:04:42,960 Speaker 1: and it's a cash deal for Red Hat. For IBM, 86 00:04:42,960 --> 00:04:45,240 Speaker 1: it's something else. It's a debt deal, right correct, It 87 00:04:45,279 --> 00:04:48,120 Speaker 1: will be financed by debt. That's the situation for the 88 00:04:48,120 --> 00:04:50,760 Speaker 1: big tech companies. Looking at the situation right now for 89 00:04:50,760 --> 00:04:52,640 Speaker 1: the broader market is interesting that we're about together the 90 00:04:52,640 --> 00:04:55,440 Speaker 1: world's second largest tech deal. Michael seemingly at a time 91 00:04:55,440 --> 00:04:57,960 Speaker 1: where the markets falling gat a bed and increasingly the 92 00:04:58,000 --> 00:04:59,800 Speaker 1: doom and Gloom crew were coming on a program like 93 00:04:59,839 --> 00:05:02,040 Speaker 1: this talking about the prospect of a downturn. What's the 94 00:05:02,120 --> 00:05:04,440 Speaker 1: signal that comes from a deal like this this morning? 95 00:05:05,720 --> 00:05:08,920 Speaker 1: You know, you don't want to like take every deal 96 00:05:08,960 --> 00:05:11,000 Speaker 1: and say this definitely means something. I think it means 97 00:05:11,000 --> 00:05:13,640 Speaker 1: a lot for IBM for the overall technology market. It's 98 00:05:13,640 --> 00:05:16,359 Speaker 1: perhaps interesting, but Red Hat was willing to sell. You know, 99 00:05:16,400 --> 00:05:19,359 Speaker 1: maybe they felt that their own business was coming under pressure. 100 00:05:19,520 --> 00:05:21,279 Speaker 1: But I think technology has got to the point that 101 00:05:21,320 --> 00:05:26,520 Speaker 1: it's becoming increasingly competitive, increasingly oligopalistic um, and for the 102 00:05:26,560 --> 00:05:29,000 Speaker 1: first time, I think we have questions whether over the 103 00:05:29,080 --> 00:05:32,000 Speaker 1: medium to longer term, the large technology companies can keep 104 00:05:32,080 --> 00:05:35,280 Speaker 1: up with expectations. Are all ego bullies? How does IBM 105 00:05:35,320 --> 00:05:37,320 Speaker 1: adjust to that? And we get to the cow and 106 00:05:37,400 --> 00:05:40,240 Speaker 1: Jeffrey's headlines today in the Bloombird, where one of them, 107 00:05:40,279 --> 00:05:42,880 Speaker 1: I believe Cowen says we could see other bids even 108 00:05:42,920 --> 00:05:46,440 Speaker 1: at thirty one time, Zibadar or whatever, and Jeffreys saying, 109 00:05:46,560 --> 00:05:49,919 Speaker 1: no way. I mean there's a desperation out there in 110 00:05:50,040 --> 00:05:53,480 Speaker 1: cloud technology, isn't there. Well, I think it's viewed as 111 00:05:53,640 --> 00:05:56,880 Speaker 1: as the best way to make money from the corporate sector, 112 00:05:57,200 --> 00:05:59,360 Speaker 1: you know, going forward. And I think if the IBM 113 00:05:59,440 --> 00:06:03,440 Speaker 1: three six, do you have two thousand twenty two right? Yes? 114 00:06:03,560 --> 00:06:08,359 Speaker 1: You know whatever? That was his face I wish we 115 00:06:08,480 --> 00:06:14,400 Speaker 1: had wish Did you see that on radio? We need 116 00:06:15,320 --> 00:06:19,400 Speaker 1: you like brilliant Michael's face, Michael bar Did you see that? 117 00:06:19,839 --> 00:06:24,600 Speaker 1: She'll just killed me that? Yes? To last, you have 118 00:06:24,640 --> 00:06:29,080 Speaker 1: no idea John, how the pecking order at any firm 119 00:06:29,520 --> 00:06:32,120 Speaker 1: was whether you had an IBM typewriter. They were just 120 00:06:32,160 --> 00:06:34,640 Speaker 1: the coolest thing. Going back in the day. They were 121 00:06:34,680 --> 00:06:38,400 Speaker 1: the coolest thing. What going I couldn't type was this. 122 00:06:38,400 --> 00:06:40,719 Speaker 1: This is so far back I don't remember what decade, 123 00:06:40,880 --> 00:06:42,760 Speaker 1: But the point is it didn't even matter if you 124 00:06:42,800 --> 00:06:45,120 Speaker 1: could type. It was just cool. You still don't do 125 00:06:45,200 --> 00:06:47,719 Speaker 1: on your own typing even now. No, I don't do 126 00:06:47,800 --> 00:06:52,240 Speaker 1: my own type. Tom Kane, Happy, Tom Kine, Michael Shell, 127 00:06:52,400 --> 00:06:56,400 Speaker 1: Thank you, Michael, give me so much time to place 128 00:06:56,480 --> 00:06:59,640 Speaker 1: on TV and radio. Market Field Asset Management's chairman, portfolio 129 00:06:59,680 --> 00:07:16,840 Speaker 1: manager and CEO. We are honored to bring in Shannon 130 00:07:16,880 --> 00:07:20,360 Speaker 1: O'Neill of the Counsul and foreign relations or expertise in 131 00:07:20,520 --> 00:07:23,720 Speaker 1: Mexico and Argentine of course on all of Latin America 132 00:07:24,280 --> 00:07:26,960 Speaker 1: and Brazil. Dr Nil, wonderful to have you whe us 133 00:07:26,960 --> 00:07:31,160 Speaker 1: you speak of Mexico and America indivisible in your book? 134 00:07:31,680 --> 00:07:35,840 Speaker 1: Are Brazil and the United States? Is this new president 135 00:07:36,000 --> 00:07:40,120 Speaker 1: and President Trump? Are they indivisible? Well? I do think 136 00:07:40,160 --> 00:07:43,360 Speaker 1: that the new president elect would like to make them indivisible. 137 00:07:44,000 --> 00:07:47,200 Speaker 1: He's a big fan of President Trump and has talked 138 00:07:47,240 --> 00:07:50,440 Speaker 1: a lot about him and how he would follow him, 139 00:07:50,480 --> 00:07:53,120 Speaker 1: and also really touted the phone call he got from 140 00:07:53,120 --> 00:07:58,240 Speaker 1: President Trump last night in the congratulations within this, Shannon O'Neill, 141 00:07:58,680 --> 00:08:05,560 Speaker 1: is the comparison is to Mr deterity of the Philippines. Obviously, law, criminality, 142 00:08:05,800 --> 00:08:09,120 Speaker 1: corruption or front and center. In Brazil. Will there be 143 00:08:09,280 --> 00:08:14,480 Speaker 1: a crackdown to threaten civil liberties? This is what everyone 144 00:08:14,600 --> 00:08:18,000 Speaker 1: is expecting and what he has said over and over 145 00:08:18,520 --> 00:08:22,800 Speaker 1: during each campaign. Stop. Brazil is already a place where 146 00:08:22,840 --> 00:08:27,480 Speaker 1: the police kill somewhere around five thousand individuals every year, 147 00:08:27,760 --> 00:08:30,160 Speaker 1: and so expect those numbers to go up, just as 148 00:08:30,200 --> 00:08:33,800 Speaker 1: they did in the Philippines. The commitment to liberalize and 149 00:08:33,880 --> 00:08:37,800 Speaker 1: privatize is something the markets have really focused on over 150 00:08:37,800 --> 00:08:39,880 Speaker 1: the last few months or so. Shannon, just how strong 151 00:08:40,000 --> 00:08:43,800 Speaker 1: is that commitment? How fluid is that commitment? Well, this 152 00:08:43,880 --> 00:08:47,920 Speaker 1: is a big question because the president elect Bosnao has 153 00:08:47,960 --> 00:08:51,439 Speaker 1: never been a big privatizer, he's voted against it during 154 00:08:51,480 --> 00:08:55,239 Speaker 1: his almost thirty years within the Congress. But his economic 155 00:08:55,320 --> 00:09:00,440 Speaker 1: advisor is a very strong privatizer, very orthodox Econ missed, 156 00:09:00,720 --> 00:09:03,000 Speaker 1: and he's hinted that he will give him free reign. 157 00:09:03,160 --> 00:09:06,480 Speaker 1: So which Billsonaro, which government shows up will be a 158 00:09:06,520 --> 00:09:09,040 Speaker 1: big question. And Shannon, this is the issue. The narrative 159 00:09:09,080 --> 00:09:13,040 Speaker 1: around Bolsonaro, This economic narrative is recent, it's vague and 160 00:09:13,080 --> 00:09:14,959 Speaker 1: it hinges on this one individual. Talk to me a 161 00:09:15,000 --> 00:09:17,120 Speaker 1: little bit more about this one individual that is going 162 00:09:17,160 --> 00:09:20,079 Speaker 1: to be shaping economic policy in Brazil, that ultimately is 163 00:09:20,080 --> 00:09:23,160 Speaker 1: the economic policy that the market has gone behind. Well, 164 00:09:23,160 --> 00:09:26,640 Speaker 1: he's a very strong personality, very set in these beliefs, 165 00:09:26,760 --> 00:09:30,800 Speaker 1: very orthodox economists along the University of Chicago lines. So 166 00:09:30,840 --> 00:09:33,800 Speaker 1: in that sense, he's very pro market. The question is, 167 00:09:33,840 --> 00:09:36,640 Speaker 1: as you say, he's new to the Billsonaro team, and 168 00:09:36,720 --> 00:09:39,880 Speaker 1: so will he really have his trust, will he have 169 00:09:39,960 --> 00:09:43,040 Speaker 1: the power to go forward? And one thing that was 170 00:09:43,080 --> 00:09:45,160 Speaker 1: said in the last couple of days is that he 171 00:09:45,200 --> 00:09:49,040 Speaker 1: will report to Bilsonaro's chief of staff, so suggesting he 172 00:09:49,120 --> 00:09:53,720 Speaker 1: might not have that direct line to the new president. Shannon, 173 00:09:53,920 --> 00:09:58,080 Speaker 1: within your expertise of Latin America, how discreet is Brazil 174 00:09:58,880 --> 00:10:01,719 Speaker 1: or are there more linkage? Is than we understand with 175 00:10:01,800 --> 00:10:05,880 Speaker 1: the adjacent nations and even with Mexico. Brazil is the 176 00:10:05,880 --> 00:10:09,959 Speaker 1: biggest economy in in the hemisphere outside of the United States. 177 00:10:10,640 --> 00:10:16,400 Speaker 1: It has a lot of trade with the microsar partners, Argentina, Uruguay, Paraguay. 178 00:10:16,440 --> 00:10:18,800 Speaker 1: It has the possibility of being a regional and a 179 00:10:18,840 --> 00:10:21,960 Speaker 1: bigger global leader We've seen that at various moments along 180 00:10:21,960 --> 00:10:24,880 Speaker 1: the way, um, and it is important for what's going 181 00:10:24,920 --> 00:10:28,720 Speaker 1: on in Venezuela also its neighbor, and we'll see whether 182 00:10:28,840 --> 00:10:31,520 Speaker 1: the new president takes a leadership role on the crisis 183 00:10:31,559 --> 00:10:34,560 Speaker 1: that's happening there. What's the linkage of the military or well, 184 00:10:34,679 --> 00:10:37,839 Speaker 1: let me rephrase this in my ignorance, what is the 185 00:10:37,920 --> 00:10:43,960 Speaker 1: linkage of the military slash police with this new president. Well, 186 00:10:44,040 --> 00:10:47,600 Speaker 1: he was an army captain many many years ago, but 187 00:10:47,640 --> 00:10:50,880 Speaker 1: he's a huge official and not a huge fan of 188 00:10:50,920 --> 00:10:54,240 Speaker 1: the military. He likes to talk in that language. He 189 00:10:54,320 --> 00:10:57,120 Speaker 1: likes to talk about giving the police a free reign. 190 00:10:57,480 --> 00:11:01,960 Speaker 1: So expect a much more milit terries state in many ways. 191 00:11:02,400 --> 00:11:06,480 Speaker 1: We also saw several ex military office brought in as 192 00:11:06,520 --> 00:11:09,480 Speaker 1: governors or as members of Congress, So you're gonna see 193 00:11:09,520 --> 00:11:12,760 Speaker 1: more of this rhetoric within the new political class. Shannon, 194 00:11:12,840 --> 00:11:14,520 Speaker 1: Thank you so much. Shannon on the old console on 195 00:11:14,559 --> 00:11:18,640 Speaker 1: foreign relations, can't say enough about two nations indivisible. It 196 00:11:18,640 --> 00:11:21,320 Speaker 1: has aged well out four or five years ago. Two 197 00:11:21,400 --> 00:11:25,360 Speaker 1: nations indivisible Mexico, the United States, and the road ahead 198 00:11:25,600 --> 00:11:41,080 Speaker 1: is wrong. Let us pause with Neil sharing of Catholic anomics, 199 00:11:41,160 --> 00:11:43,120 Speaker 1: you can do that. He's he's really really quite good, 200 00:11:43,200 --> 00:11:46,880 Speaker 1: spanning from e M to developed countries as well. Neil, 201 00:11:46,960 --> 00:11:50,920 Speaker 1: if you were to write a report today, what would 202 00:11:50,920 --> 00:11:55,959 Speaker 1: you focus on in the capital economics mix? Well, that's 203 00:11:55,960 --> 00:12:00,040 Speaker 1: the question. There's just so many things going on. I 204 00:12:00,080 --> 00:12:04,120 Speaker 1: don't want to predetermine it. What which right There's There's 205 00:12:04,240 --> 00:12:06,680 Speaker 1: obviously lots of strands that we that we we do 206 00:12:06,760 --> 00:12:09,920 Speaker 1: tend to focus on. There's the trade war. To what 207 00:12:09,960 --> 00:12:11,960 Speaker 1: extent is that going to escalate? To what extent that's 208 00:12:12,040 --> 00:12:15,400 Speaker 1: is that going to kill the global economy. There's the 209 00:12:15,520 --> 00:12:21,160 Speaker 1: risk of the political fragmentation, rise of populism, economic nationalism 210 00:12:21,160 --> 00:12:24,080 Speaker 1: and parts of the world, including with the news of 211 00:12:24,160 --> 00:12:27,840 Speaker 1: Bosonara's victory in Brazil over the weekend. And the big 212 00:12:27,920 --> 00:12:30,640 Speaker 1: question to my mind though, is to what extent how 213 00:12:30,679 --> 00:12:32,959 Speaker 1: much longevity is there in the US recovery. To what 214 00:12:33,080 --> 00:12:37,679 Speaker 1: extent does the cumulative effects of previous FED rate rate hikes, 215 00:12:37,679 --> 00:12:41,120 Speaker 1: FED tightening, Well, when does that start to bite? When 216 00:12:41,160 --> 00:12:43,720 Speaker 1: does the fiscal sugar high from the tax cuts earlier 217 00:12:43,760 --> 00:12:46,680 Speaker 1: this year start to fade? And that's the big puzzle, 218 00:12:46,679 --> 00:12:48,560 Speaker 1: because that's the it's the US that stands out at 219 00:12:48,559 --> 00:12:51,400 Speaker 1: the moment every most other parts of the globe economy 220 00:12:51,400 --> 00:12:58,040 Speaker 1: is slowing US. The dollar dynamics is the guess of dollardics. Yeah, 221 00:12:58,040 --> 00:13:00,360 Speaker 1: which people have got wrong for two years wrong, two 222 00:13:00,440 --> 00:13:03,839 Speaker 1: years running. Now Tom looking for a stronger and they 223 00:13:03,880 --> 00:13:05,480 Speaker 1: get a weaker. They look for a weaker and they 224 00:13:05,520 --> 00:13:09,080 Speaker 1: get a stronger. That's been the story of Neil. Really 225 00:13:09,160 --> 00:13:13,719 Speaker 1: fascinating interview with Jeff Gunlag very recently on on Citywire. 226 00:13:13,920 --> 00:13:15,720 Speaker 1: It was really really interesting and he talked about what 227 00:13:15,720 --> 00:13:18,520 Speaker 1: he looks for in the economic data and either the 228 00:13:18,600 --> 00:13:22,680 Speaker 1: data changes or people's interpretation of that data changes. Has 229 00:13:22,720 --> 00:13:25,560 Speaker 1: the data changed or if people just started to interpret 230 00:13:25,600 --> 00:13:29,800 Speaker 1: the data differently another good question. I think that there 231 00:13:29,880 --> 00:13:32,600 Speaker 1: is genuinely a sense I think in the last six 232 00:13:32,640 --> 00:13:34,959 Speaker 1: months that the economic data outside of the US have 233 00:13:35,040 --> 00:13:38,920 Speaker 1: started to soften. We see that not just in the 234 00:13:38,960 --> 00:13:41,400 Speaker 1: soft data, the survey data, the p m s and 235 00:13:41,400 --> 00:13:42,839 Speaker 1: so on and so forth. We see in the hard 236 00:13:42,920 --> 00:13:46,320 Speaker 1: days of some trade data slowing, industrial productions weaker. Pretty 237 00:13:46,360 --> 00:13:49,280 Speaker 1: much across the board. Japan's economy looks like it looks 238 00:13:49,320 --> 00:13:52,800 Speaker 1: like it contracted in Q three, and China's economy is 239 00:13:52,840 --> 00:13:55,880 Speaker 1: losing momentum. Too, So I think there is something tangible 240 00:13:55,920 --> 00:13:58,679 Speaker 1: in the in the data. The puzzle that you as 241 00:13:58,679 --> 00:14:00,680 Speaker 1: you alluded to earlier is that we've not yet seen 242 00:14:00,760 --> 00:14:03,120 Speaker 1: signs of wage pressure picking up in the countries where 243 00:14:03,120 --> 00:14:05,120 Speaker 1: the labor market is a titan. Growth is still strong, 244 00:14:05,240 --> 00:14:09,720 Speaker 1: particularly the US and in the U k UM And 245 00:14:09,800 --> 00:14:11,800 Speaker 1: that's that. I think that's the that's the that's the 246 00:14:11,800 --> 00:14:14,480 Speaker 1: missing piece of the jig saw so far. No, very quickly, 247 00:14:14,559 --> 00:14:17,360 Speaker 1: you're you were with us earlier we talked about China 248 00:14:17,480 --> 00:14:20,880 Speaker 1: slowing down. What is China growth right now? In capital 249 00:14:20,960 --> 00:14:23,960 Speaker 1: economics and conder, I say, we get a print below 250 00:14:24,080 --> 00:14:27,280 Speaker 1: six point zero percent, we you can. We have our 251 00:14:27,320 --> 00:14:30,320 Speaker 1: own in highse measure China activity proxy that's kind of 252 00:14:30,360 --> 00:14:32,960 Speaker 1: running at the moment about five and a half five's 253 00:14:33,000 --> 00:14:35,120 Speaker 1: something like that. It got to as low as just 254 00:14:35,200 --> 00:14:40,040 Speaker 1: below four at the end of twenty fifteen, started sixteen, 255 00:14:40,080 --> 00:14:41,640 Speaker 1: which if you remember, that's when he had the botched 256 00:14:41,680 --> 00:14:45,520 Speaker 1: evaluation and big slow down in China's economy, subsequent recovery 257 00:14:45,520 --> 00:14:48,840 Speaker 1: field by policy stimulus that's now fading ah and growth 258 00:14:48,880 --> 00:14:51,480 Speaker 1: of stowing. Accordingly, just quickly, what are you looking for 259 00:14:51,520 --> 00:14:55,840 Speaker 1: on Friday? We've got five think the consensus is one 260 00:14:56,120 --> 00:14:59,160 Speaker 1: three something around that. The key will be what happens 261 00:14:59,200 --> 00:15:01,880 Speaker 1: with the way number? Is there a further sleervation in 262 00:15:01,960 --> 00:15:04,120 Speaker 1: wage growth? How does the fetch reacts? How does it 263 00:15:04,200 --> 00:15:06,920 Speaker 1: went bound? Stop against the tamil that we see actually 264 00:15:06,920 --> 00:15:10,880 Speaker 1: office stops the pause bubbles now sharing, thank you so 265 00:15:10,960 --> 00:15:22,880 Speaker 1: much as well with a new slow this morning. We 266 00:15:23,080 --> 00:15:26,480 Speaker 1: uh we did early early this morning the shocking headlines 267 00:15:26,680 --> 00:15:30,200 Speaker 1: coming out of Germany of Chancellor Miracle stepping down from 268 00:15:30,240 --> 00:15:33,680 Speaker 1: party leadership of her dominant c DU. This after a 269 00:15:33,800 --> 00:15:37,320 Speaker 1: troubled election in Bavaria a few weeks ago in Hessan 270 00:15:37,400 --> 00:15:41,080 Speaker 1: which is vis Boden and Frankfurt over the weekend, and 271 00:15:41,120 --> 00:15:44,600 Speaker 1: then really the major headline coming out of a end 272 00:15:44,640 --> 00:15:47,600 Speaker 1: or political career looking out two and three years. Nina 273 00:15:47,640 --> 00:15:51,040 Speaker 1: Schick is with Rasmussen. This is the Rasmusen of Denmark 274 00:15:51,080 --> 00:15:55,600 Speaker 1: in London. Uh, and we greatly appreciate her attendance uh 275 00:15:55,800 --> 00:16:00,280 Speaker 1: this morning. Nina. Is it an analysis out two and 276 00:16:00,440 --> 00:16:04,720 Speaker 1: three years of after the party's c DU, after the 277 00:16:04,800 --> 00:16:09,320 Speaker 1: party's CPD, or can these two dominant parties find a 278 00:16:09,440 --> 00:16:14,960 Speaker 1: new path in domestic Germany. I think they don't have 279 00:16:15,040 --> 00:16:17,680 Speaker 1: a choice. They have to find a new pass. And 280 00:16:17,680 --> 00:16:20,480 Speaker 1: the thing is that Angela Merkel has been such a 281 00:16:20,640 --> 00:16:25,200 Speaker 1: monolith not only in terms of domestic politics in Germany, 282 00:16:25,200 --> 00:16:30,160 Speaker 1: but also in terms of EU politics and also global politics, 283 00:16:30,200 --> 00:16:33,160 Speaker 1: that filling that space, that void that she's going to 284 00:16:33,200 --> 00:16:36,360 Speaker 1: live behind, is going to inevitably going to cause a 285 00:16:36,360 --> 00:16:40,400 Speaker 1: little soul searching and blood letting in her parties. And 286 00:16:40,720 --> 00:16:44,480 Speaker 1: although I think she's setting setting the stage for her departure, 287 00:16:44,520 --> 00:16:47,360 Speaker 1: which by the way, I would argue was always going 288 00:16:47,400 --> 00:16:50,320 Speaker 1: to be the case, given her performance in the national 289 00:16:50,320 --> 00:16:54,800 Speaker 1: election in seventeen and the subsequent regional elections where we've 290 00:16:54,800 --> 00:16:57,600 Speaker 1: seen her parties her both her party and the other 291 00:16:57,680 --> 00:17:01,160 Speaker 1: traditional kind of center left Mains Treen Party being hammered. 292 00:17:01,360 --> 00:17:04,560 Speaker 1: I would argue that this is inevitable. And the bigger 293 00:17:04,600 --> 00:17:07,719 Speaker 1: trend of what we're seeing in Germany is something that 294 00:17:07,760 --> 00:17:11,560 Speaker 1: we see across the liberal western democratic world, where the 295 00:17:11,680 --> 00:17:15,000 Speaker 1: center cannot hold anymore and politics is becoming more and 296 00:17:15,080 --> 00:17:19,760 Speaker 1: more polarized, noisy, and increasingly fractured. That's something we see 297 00:17:19,800 --> 00:17:22,080 Speaker 1: in Germany with the rise of the far right a 298 00:17:22,200 --> 00:17:25,840 Speaker 1: f T but also with the Greens, both of whom 299 00:17:26,400 --> 00:17:30,960 Speaker 1: present you know, a diametrically opposing vision of Germany and 300 00:17:31,040 --> 00:17:34,919 Speaker 1: what Germany's place in the world should be. Wondering, you know, 301 00:17:34,960 --> 00:17:38,440 Speaker 1: if there are any sort of likely candidates to fulfill 302 00:17:39,080 --> 00:17:41,800 Speaker 1: Uncle and Merkel's role as head of the party, for example, 303 00:17:41,800 --> 00:17:47,480 Speaker 1: the health minister Yen's spawn. Well, so the first thing 304 00:17:47,520 --> 00:17:50,880 Speaker 1: I should mention is that Michael has said that she's 305 00:17:50,920 --> 00:17:53,560 Speaker 1: going to step down from the party's leadership, but she's 306 00:17:53,560 --> 00:17:56,560 Speaker 1: still technically saying that she's going to serve out the 307 00:17:56,600 --> 00:18:00,480 Speaker 1: full tenure as chancellor leading into one. But again I 308 00:18:00,520 --> 00:18:03,840 Speaker 1: think what she's doing stayed, you know, setting the scene 309 00:18:03,880 --> 00:18:06,920 Speaker 1: for an early exit, so big question mark about whether 310 00:18:07,040 --> 00:18:10,040 Speaker 1: or not you will actually stay until twenty one. But 311 00:18:10,200 --> 00:18:13,960 Speaker 1: she's not leaning leaving imminently. As to her successor, well 312 00:18:14,000 --> 00:18:17,000 Speaker 1: that's where it gets a bit complicated because Angela Mackel 313 00:18:17,040 --> 00:18:20,200 Speaker 1: herself was you know, a proponent or even a student 314 00:18:20,280 --> 00:18:23,680 Speaker 1: of helmwou Cool, you know, the former chancellor, and under 315 00:18:23,720 --> 00:18:26,960 Speaker 1: that school of thought, she looked very good at eradicating 316 00:18:27,119 --> 00:18:30,680 Speaker 1: any potential successor when they started getting a bit too powerful, 317 00:18:30,720 --> 00:18:33,240 Speaker 1: a bit too close for her. So there aren't very 318 00:18:33,280 --> 00:18:36,600 Speaker 1: many obvious candidates. Well, of the few people that are 319 00:18:36,640 --> 00:18:40,639 Speaker 1: being touted, like Jen Spahn or Anne mcgrad kavan Bower, 320 00:18:40,720 --> 00:18:44,240 Speaker 1: who is known as almost a mini Mercle. I think 321 00:18:44,280 --> 00:18:46,760 Speaker 1: that it is a poison chalice because she has been 322 00:18:47,240 --> 00:18:51,399 Speaker 1: such a bemus in German and global politics that being 323 00:18:51,480 --> 00:18:54,040 Speaker 1: her successor, and make no mistake, she's still going to 324 00:18:54,160 --> 00:18:57,719 Speaker 1: have a say on who her successor is. Being her 325 00:18:57,760 --> 00:19:01,640 Speaker 1: successor might be too toxic long term politically, because they'll 326 00:19:01,680 --> 00:19:04,320 Speaker 1: be so tight to Angela Mackael. And you know, the 327 00:19:04,359 --> 00:19:07,399 Speaker 1: older generation of the city who be it Machael or 328 00:19:07,440 --> 00:19:11,400 Speaker 1: Wolcom Scheibler, that their own political career might not last 329 00:19:11,440 --> 00:19:14,080 Speaker 1: too long. So you have a younger generation of politicians 330 00:19:14,119 --> 00:19:18,920 Speaker 1: who are coming up, including for example, who don't necessarily 331 00:19:19,000 --> 00:19:22,000 Speaker 1: immediately want to step into her shoes right now because 332 00:19:22,040 --> 00:19:23,760 Speaker 1: they want to make sure that they are able to 333 00:19:23,800 --> 00:19:27,159 Speaker 1: define themselves with something quite different from Machaels. So it 334 00:19:27,200 --> 00:19:29,919 Speaker 1: will take a few years. I think. As part of 335 00:19:29,920 --> 00:19:34,359 Speaker 1: your work at Rasmussen Global, you've looked at a variety 336 00:19:34,640 --> 00:19:39,480 Speaker 1: of campaigns. You also did some work on the UK's 337 00:19:40,000 --> 00:19:42,919 Speaker 1: EU referendum. Do you believe that there will be a 338 00:19:42,920 --> 00:19:50,000 Speaker 1: new government in the UK. Well, British politics is very 339 00:19:50,080 --> 00:19:52,719 Speaker 1: precarious right now, and I think that you know. On 340 00:19:52,720 --> 00:19:55,320 Speaker 1: a separate note, I think that we are seeing a 341 00:19:55,320 --> 00:19:59,960 Speaker 1: lot of kind of disciplines or should we say company 342 00:20:00,000 --> 00:20:02,560 Speaker 1: located politics around the world, which I think has is 343 00:20:02,680 --> 00:20:05,320 Speaker 1: something much larger to do with the state of democracy 344 00:20:05,359 --> 00:20:07,399 Speaker 1: in the world order, which was built in the ashes 345 00:20:07,440 --> 00:20:09,920 Speaker 1: of the Second World War, and how that's all being offended, 346 00:20:10,200 --> 00:20:12,639 Speaker 1: not least because of what's happening in the United States. 347 00:20:13,160 --> 00:20:17,280 Speaker 1: With regards to the UK in particular, the biggest challenge 348 00:20:17,680 --> 00:20:19,919 Speaker 1: that the government and the Prime Minister Trees that may 349 00:20:19,960 --> 00:20:22,719 Speaker 1: have on their hands right now is to get the 350 00:20:22,760 --> 00:20:26,320 Speaker 1: Brexit deal through Parliament. They've already kind of agreed the 351 00:20:26,359 --> 00:20:28,520 Speaker 1: deal on the EU level, and what we've been in 352 00:20:28,560 --> 00:20:31,000 Speaker 1: the past two years is that the UK has come 353 00:20:31,040 --> 00:20:34,000 Speaker 1: around this easy position of thinking. But if they don't 354 00:20:34,000 --> 00:20:37,280 Speaker 1: get that through the government may okay. But in Germany 355 00:20:37,359 --> 00:20:40,440 Speaker 1: and in England it pends. Good question, and you're wonderful 356 00:20:40,480 --> 00:20:44,800 Speaker 1: answer and informed answer is the reality at the ballot 357 00:20:44,840 --> 00:20:50,480 Speaker 1: box people are voting. When does this populism trend end, 358 00:20:50,600 --> 00:20:54,920 Speaker 1: whether it's Poland or Germany, or England or frankly Kentucky 359 00:20:54,960 --> 00:20:58,879 Speaker 1: in eight days, when does populism end? I don't I 360 00:20:58,920 --> 00:21:02,280 Speaker 1: don't see a rash all outcome for the elites other 361 00:21:02,320 --> 00:21:07,359 Speaker 1: than it keeps going. I tend to agree with your analysis. 362 00:21:07,359 --> 00:21:10,760 Speaker 1: Third home, I think that this is very much the 363 00:21:10,760 --> 00:21:14,199 Speaker 1: trajectory of politics that we're going to be seeing in 364 00:21:14,240 --> 00:21:19,600 Speaker 1: the years to come, a highly emotive, partisan and destructive 365 00:21:19,600 --> 00:21:24,440 Speaker 1: and angry politics, in part because I think that democracy 366 00:21:24,520 --> 00:21:27,360 Speaker 1: quote unquote has failed for a lot of people. And 367 00:21:27,440 --> 00:21:30,000 Speaker 1: this kind of anger that you see not only in 368 00:21:30,080 --> 00:21:33,439 Speaker 1: the United States but also across Europe means that the 369 00:21:33,560 --> 00:21:37,840 Speaker 1: narrative that we've told ourselves in particular with the United 370 00:21:37,880 --> 00:21:41,520 Speaker 1: States as well, that open markets, liberal democracy, and capitalism 371 00:21:41,560 --> 00:21:43,840 Speaker 1: go hand in pans, and that this is some kind 372 00:21:43,840 --> 00:21:46,359 Speaker 1: of linear progress to which all of the rest of 373 00:21:46,359 --> 00:21:47,960 Speaker 1: the countries in the world are going to aspire to. 374 00:21:48,520 --> 00:21:52,240 Speaker 1: That very narrative is being challenged. And what we find 375 00:21:52,359 --> 00:21:56,480 Speaker 1: is that liberal democracy is no longer the UH is 376 00:21:56,520 --> 00:21:59,320 Speaker 1: no longer the aspirational model for everyone in the world, 377 00:21:59,480 --> 00:22:03,480 Speaker 1: but it's actual She's becoming an exception, and there is 378 00:22:03,600 --> 00:22:06,719 Speaker 1: valid criticism to be made, you know, there's valid criticism 379 00:22:06,800 --> 00:22:11,520 Speaker 1: of the liberal elites um and I tend to agree 380 00:22:11,520 --> 00:22:13,560 Speaker 1: with you that this is something we're going to speak 381 00:22:13,880 --> 00:22:16,240 Speaker 1: playing out heavily in the next few years. Nina and 382 00:22:16,320 --> 00:22:18,280 Speaker 1: Short Notice, thank you as so much. Share with rast 383 00:22:18,320 --> 00:22:21,480 Speaker 1: Miss of Denmark in England helping out this morning on 384 00:22:21,800 --> 00:22:29,680 Speaker 1: European News. Thanks for listening to the Bloomberg Surveillance podcast. 385 00:22:30,040 --> 00:22:35,000 Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or 386 00:22:35,160 --> 00:22:39,400 Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom 387 00:22:39,560 --> 00:22:43,440 Speaker 1: Keane before the podcast. You can always catch us worldwide. 388 00:22:43,880 --> 00:22:44,960 Speaker 1: I'm Bloomberg Radio.