1
00:00:09,880 --> 00:00:13,800
Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Ley.

2
00:00:13,960 --> 00:00:17,560
Speaker 1: 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 --> 00:00:30,640
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Let's

5
00:00:30,640 --> 00:00:32,960
Speaker 1: bring It. Michael Purvis shout we Weed in chief, Global

6
00:00:33,000 --> 00:00:36,599
Speaker 1: Strategistic Joints us on the phone. Good morning to Mr Purvis. Mike,

7
00:00:36,600 --> 00:00:39,400
Speaker 1: what do your tann in clients this week? Well, I

8
00:00:39,440 --> 00:00:41,279
Speaker 1: think you have to stand back for a second and

9
00:00:41,320 --> 00:00:43,400
Speaker 1: take stock to the fact that Trump has never had

10
00:00:43,400 --> 00:00:45,880
Speaker 1: a stronger hand in which to go at China. Was

11
00:00:45,960 --> 00:00:49,960
Speaker 1: all right, he's got very stable approval ratings. He's got

12
00:00:49,960 --> 00:00:52,120
Speaker 1: a market that just a week and a half ago

13
00:00:52,200 --> 00:00:56,240
Speaker 1: was that fresh highs um. He has also very importantly,

14
00:00:56,800 --> 00:00:59,200
Speaker 1: you know, six months ago we didn't have the Powell

15
00:00:59,280 --> 00:01:02,120
Speaker 1: put and now he does, and he can leverage that. Right,

16
00:01:02,160 --> 00:01:04,160
Speaker 1: So it's an asset that he that that Trump can

17
00:01:04,240 --> 00:01:08,760
Speaker 1: leverage for his policy goals um and and arguably his

18
00:01:08,840 --> 00:01:11,880
Speaker 1: political goals of of really trying to come away with

19
00:01:11,920 --> 00:01:14,679
Speaker 1: a with a real deal in China. So so I

20
00:01:14,720 --> 00:01:16,840
Speaker 1: think that the narrative going into this a week ago

21
00:01:16,880 --> 00:01:18,840
Speaker 1: and said, oh, this is just a couple more tweets

22
00:01:18,880 --> 00:01:21,080
Speaker 1: here and some of the usual back and forth, and

23
00:01:21,080 --> 00:01:24,160
Speaker 1: we're on the sort of slow but steady resolution to trade.

24
00:01:24,319 --> 00:01:26,600
Speaker 1: I think you have to take, uh, you know, just

25
00:01:26,640 --> 00:01:28,920
Speaker 1: step back and realize that a Trump is going to

26
00:01:29,040 --> 00:01:33,919
Speaker 1: push this part. Now's the time and is still far away.

27
00:01:33,920 --> 00:01:36,119
Speaker 1: So can you have to ask yourself the question, can

28
00:01:36,160 --> 00:01:38,480
Speaker 1: Trump a board a six percent drop in the market

29
00:01:38,520 --> 00:01:41,360
Speaker 1: and a fix it stays in the twenties for a

30
00:01:41,360 --> 00:01:44,440
Speaker 1: few weeks or maybe even higher. I would suggest to

31
00:01:44,440 --> 00:01:46,640
Speaker 1: you that he can. Well, let's talk about that. The

32
00:01:46,680 --> 00:01:49,320
Speaker 1: three areas of potential policy support that I hear so

33
00:01:49,400 --> 00:01:52,760
Speaker 1: much from so many people on programs like this. Three puts.

34
00:01:52,760 --> 00:01:54,840
Speaker 1: The pound put the Trump put, the Sheep put the

35
00:01:54,840 --> 00:01:57,480
Speaker 1: pound put effectively being that the Fed will be reactive

36
00:01:57,520 --> 00:01:59,960
Speaker 1: to time of financial conditions. The Trump put a fact

37
00:02:00,000 --> 00:02:02,880
Speaker 1: of the bank that he has market sensitive policy preferences,

38
00:02:03,160 --> 00:02:05,720
Speaker 1: and that she put essentially being that she and China

39
00:02:05,800 --> 00:02:09,200
Speaker 1: is willing to offset risks with more stimulus. The reasons

40
00:02:09,240 --> 00:02:12,600
Speaker 1: to doubt the deployment and all the effectiveness of all

41
00:02:12,680 --> 00:02:17,120
Speaker 1: three of them, Well, you know, I think to a

42
00:02:17,120 --> 00:02:19,359
Speaker 1: certain degree you can you can almost think that Trump

43
00:02:19,440 --> 00:02:21,639
Speaker 1: might be for the moment sort of coloring the market,

44
00:02:21,680 --> 00:02:25,079
Speaker 1: you know, um where there is some sort of Trump

45
00:02:25,280 --> 00:02:30,560
Speaker 1: Trump trump put here. Um. The question is is we

46
00:02:30,600 --> 00:02:33,120
Speaker 1: don't really know the Chinese reaction function. I think the

47
00:02:33,120 --> 00:02:36,280
Speaker 1: working narrative or assumption is is that, hey, you know,

48
00:02:36,400 --> 00:02:39,080
Speaker 1: we've got the stronger hands. So it's just you know,

49
00:02:39,400 --> 00:02:43,080
Speaker 1: you know, if everything is within our control. We don't

50
00:02:43,080 --> 00:02:46,200
Speaker 1: really necessarily know that. We don't know what what what

51
00:02:46,200 --> 00:02:50,440
Speaker 1: what China inks own internal um situation, at least how

52
00:02:50,440 --> 00:02:52,200
Speaker 1: it BET is going to unravel there. So I think

53
00:02:52,200 --> 00:02:55,320
Speaker 1: it's a little bit of a you can't necessarily assume

54
00:02:55,360 --> 00:02:58,600
Speaker 1: that Trump put is is absolutely there because we don't

55
00:02:58,600 --> 00:03:02,240
Speaker 1: know the Chinese reaction Punk, what are you doing on

56
00:03:02,280 --> 00:03:08,040
Speaker 1: this Monday morning? Are you deploying capital to speculation or investment?

57
00:03:08,440 --> 00:03:13,720
Speaker 1: Are you under the purvous desk? You know, you were

58
00:03:13,760 --> 00:03:16,919
Speaker 1: just making a point about you're not seeing the correlations

59
00:03:16,960 --> 00:03:20,800
Speaker 1: across asset classes really come together. And that's absolutely true.

60
00:03:20,840 --> 00:03:23,120
Speaker 1: You started to see some things pick up. You saw

61
00:03:23,520 --> 00:03:27,200
Speaker 1: certainly the Chinese currency volves pick up. That must spill

62
00:03:27,240 --> 00:03:30,160
Speaker 1: over to the d M currency balls. You're not seeing it.

63
00:03:30,240 --> 00:03:32,480
Speaker 1: But again we're just you know, we're just we just

64
00:03:32,520 --> 00:03:35,560
Speaker 1: started with the equity move here. But the theme I

65
00:03:35,640 --> 00:03:39,520
Speaker 1: really think is I've been advocating is that credit spreads

66
00:03:39,560 --> 00:03:42,480
Speaker 1: have yet to back up, but that that's the replay

67
00:03:42,520 --> 00:03:45,000
Speaker 1: of what happened in October equity lead. It's a little

68
00:03:45,000 --> 00:03:48,200
Speaker 1: bit unusual usually creditly, so I think if you're looking,

69
00:03:48,280 --> 00:03:51,240
Speaker 1: I think there's gonna be more risk of coming here. John,

70
00:03:51,400 --> 00:03:54,080
Speaker 1: jump in here. This is Michael. This is really important.

71
00:03:54,160 --> 00:03:56,520
Speaker 1: Credit spreads it not backed up, and I know we're

72
00:03:56,560 --> 00:03:59,880
Speaker 1: weeks away from the next episode of the Real Yield John.

73
00:04:00,120 --> 00:04:04,720
Speaker 1: The bond market is pricing economic slowdown this morning. Forget

74
00:04:04,760 --> 00:04:07,840
Speaker 1: about spread. Let's distinction. Let's draw a distinction between the

75
00:04:07,840 --> 00:04:10,680
Speaker 1: bond market you're talking about in the high yield market,

76
00:04:11,280 --> 00:04:14,640
Speaker 1: the sovereign debt market treasuries Yes, yields a lot at

77
00:04:14,680 --> 00:04:16,839
Speaker 1: the front end, and the way that they are suggesting

78
00:04:16,880 --> 00:04:19,240
Speaker 1: that we have a market that is still believing that

79
00:04:19,279 --> 00:04:21,279
Speaker 1: the next move could be a right cut the credit

80
00:04:21,320 --> 00:04:23,320
Speaker 1: markets home. We had a great week of of issuance

81
00:04:23,400 --> 00:04:26,000
Speaker 1: last week for investment cred and high and it was

82
00:04:26,040 --> 00:04:28,160
Speaker 1: all sucked up and taken away pretty well. Spreads to

83
00:04:28,200 --> 00:04:30,360
Speaker 1: widey yes, but I don't think the credit mark is

84
00:04:30,400 --> 00:04:32,840
Speaker 1: this price for a material slowdown just yet. I don't

85
00:04:32,839 --> 00:04:35,880
Speaker 1: see that, Michael, do you no? And that you know?

86
00:04:36,080 --> 00:04:38,120
Speaker 1: I think if you go back to the narrative in

87
00:04:38,200 --> 00:04:41,760
Speaker 1: October November, the framework back then was the credit wasn't

88
00:04:41,800 --> 00:04:44,920
Speaker 1: really seeing a big economic slowdown. It was really sort

89
00:04:44,920 --> 00:04:47,479
Speaker 1: of what happened was that there was a rerating of

90
00:04:47,480 --> 00:04:51,560
Speaker 1: the equity risk premium and then that persisted UM and

91
00:04:51,560 --> 00:04:53,440
Speaker 1: and all of a sudden there was pan risked off

92
00:04:53,480 --> 00:04:55,880
Speaker 1: into November December, and then you know, that's when the

93
00:04:55,880 --> 00:04:58,600
Speaker 1: credit spread, the high yield spread started backing up. That's

94
00:04:58,600 --> 00:05:00,600
Speaker 1: what I'm saying right now. If you're looking, we're hedging,

95
00:05:01,000 --> 00:05:04,080
Speaker 1: you know where the vics we're where it's at. Right.

96
00:05:04,320 --> 00:05:06,760
Speaker 1: You can find cheaper hedging by simply taking a view

97
00:05:06,800 --> 00:05:08,800
Speaker 1: that you know you can buy puts, for example on

98
00:05:08,839 --> 00:05:11,440
Speaker 1: the h y G E t F that that tracks

99
00:05:11,440 --> 00:05:14,600
Speaker 1: the high yield universe UM, which is where that ball

100
00:05:14,720 --> 00:05:17,040
Speaker 1: is cheap. And that has looked a little bit, but

101
00:05:17,120 --> 00:05:19,039
Speaker 1: not that much. I just think if there's more risk

102
00:05:19,080 --> 00:05:21,080
Speaker 1: off coming, it will spread and you will see that

103
00:05:21,120 --> 00:05:24,159
Speaker 1: cross ass a correlation spike. Final question, Let's talk about

104
00:05:24,240 --> 00:05:27,520
Speaker 1: regions globally, there is a belief quite widely how that

105
00:05:27,560 --> 00:05:31,479
Speaker 1: the hierarchy of vulnerability globally speaking is China first, then

106
00:05:31,560 --> 00:05:34,520
Speaker 1: Europe M, and then the United States, the United States

107
00:05:34,520 --> 00:05:37,599
Speaker 1: being the most relatively it's so insulated to the trade

108
00:05:37,680 --> 00:05:45,280
Speaker 1: story that was playbook any different, um, it's a very

109
00:05:45,320 --> 00:05:49,280
Speaker 1: fair question. Look, and you're we're talking economics not markets here, right,

110
00:05:50,080 --> 00:05:54,640
Speaker 1: both consequentially? Okay, well, you know, just you know, economically,

111
00:05:56,240 --> 00:05:58,520
Speaker 1: that would seem to be the right narrative there. I

112
00:05:58,560 --> 00:06:00,560
Speaker 1: do think that there's a there's a real case though

113
00:06:00,600 --> 00:06:03,800
Speaker 1: that the you know, Europe as the sort of this

114
00:06:03,800 --> 00:06:07,840
Speaker 1: this UH spillover effect onto these China US focused trade

115
00:06:08,360 --> 00:06:11,080
Speaker 1: that's that is very very significant here. So I'm not

116
00:06:11,160 --> 00:06:13,440
Speaker 1: sure how much of a distinction throw on between China

117
00:06:13,520 --> 00:06:16,520
Speaker 1: and Europe right now in terms of economic sensitivity there.

118
00:06:16,800 --> 00:06:18,600
Speaker 1: I would certainly on the market side, I do think

119
00:06:18,680 --> 00:06:21,039
Speaker 1: that the US equity market is certainly going to be

120
00:06:21,080 --> 00:06:23,400
Speaker 1: among the most vulnerable, only because we've you know, we've

121
00:06:23,520 --> 00:06:27,479
Speaker 1: added on two pe points since UH since December, and

122
00:06:27,520 --> 00:06:31,520
Speaker 1: we've had record valuations relative valuations for example, the text

123
00:06:31,560 --> 00:06:35,520
Speaker 1: sector relative to the SPX and so forth. That you

124
00:06:35,600 --> 00:06:37,880
Speaker 1: have to leave it there with the market valuation and

125
00:06:37,960 --> 00:06:56,719
Speaker 1: negative thirty seven and down Michael Purvis with weed this morning, John,

126
00:06:56,839 --> 00:06:59,719
Speaker 1: you've got a plan, You've got a script with Stephen Roach,

127
00:06:59,760 --> 00:07:04,120
Speaker 1: and then you've got tweets. What happened tweets? You just

128
00:07:04,240 --> 00:07:08,359
Speaker 1: rip up the screw the tweet storm? Can you tweet? Professor?

129
00:07:09,000 --> 00:07:11,760
Speaker 1: I can, but I don't. Well, you should come on.

130
00:07:11,760 --> 00:07:13,480
Speaker 1: We'd love to hear from you. We would love to

131
00:07:13,520 --> 00:07:16,480
Speaker 1: hear from from Professor Stephen Roach on Twitter. Come on,

132
00:07:16,960 --> 00:07:18,920
Speaker 1: of Yeah, he's joined us in the studio. Great to

133
00:07:18,960 --> 00:07:21,960
Speaker 1: see you, professor, the President saying the following there was

134
00:07:22,000 --> 00:07:24,080
Speaker 1: no reason for the West consumer to pay the tariffs

135
00:07:24,400 --> 00:07:26,680
Speaker 1: which take effect on China today. This has been proven

136
00:07:26,800 --> 00:07:28,960
Speaker 1: recently when only four points were paid by the US

137
00:07:29,000 --> 00:07:31,760
Speaker 1: twenty one points by China, because China subsidize his product

138
00:07:32,160 --> 00:07:34,400
Speaker 1: to such a large degree. We've of course got to

139
00:07:34,440 --> 00:07:37,000
Speaker 1: draw a distinction between who pays the tariff and who

140
00:07:37,080 --> 00:07:40,120
Speaker 1: absorbs the higher cost. Mean, by definition, the importers pays

141
00:07:40,200 --> 00:07:42,880
Speaker 1: the tariff, but who absorbs the higher cost? Far more nuance,

142
00:07:42,920 --> 00:07:47,320
Speaker 1: wouldn't you say, professor, Not not nearly as nuanced as

143
00:07:47,360 --> 00:07:50,360
Speaker 1: the President is trying to oviskate and have you believe

144
00:07:50,520 --> 00:07:55,360
Speaker 1: you said it, Jonathan. Tariffs are attacks on importers. We

145
00:07:55,440 --> 00:07:59,400
Speaker 1: are the importers. China is the exporter uh and um

146
00:07:59,440 --> 00:08:02,360
Speaker 1: you know al to only if um uh, if there's

147
00:08:02,360 --> 00:08:05,679
Speaker 1: diversion of trade away from China for a saving short

148
00:08:05,800 --> 00:08:09,400
Speaker 1: US economy. Uh, those costs will go up because we'll

149
00:08:09,440 --> 00:08:13,560
Speaker 1: be importing from higher cost nations other than China. Uh.

150
00:08:13,600 --> 00:08:17,280
Speaker 1: And and so the President's got it completely wrong in

151
00:08:17,400 --> 00:08:22,880
Speaker 1: terms of the impact of tariffs on US businesses and consumers.

152
00:08:22,920 --> 00:08:25,520
Speaker 1: But at the beginning, you can't talk it products with

153
00:08:25,840 --> 00:08:29,160
Speaker 1: high valuability of substitutes. You can talk at products that

154
00:08:29,240 --> 00:08:32,520
Speaker 1: have high elasticity of demand. It puts the onus then

155
00:08:32,840 --> 00:08:35,560
Speaker 1: on the exports to absorb the cost. There has been

156
00:08:35,760 --> 00:08:38,559
Speaker 1: several research reports that suggests that has been the case.

157
00:08:38,920 --> 00:08:40,600
Speaker 1: And the only pot that tried dispute. And I don't

158
00:08:40,600 --> 00:08:42,480
Speaker 1: know what kind of research you're reading. I've seen two

159
00:08:42,520 --> 00:08:46,120
Speaker 1: studies on the impact of Trump's tariffs put out by

160
00:08:46,840 --> 00:08:49,120
Speaker 1: All Star casts of economists, and they have concluded that

161
00:08:49,440 --> 00:08:53,880
Speaker 1: literally one of the President's tariffs have been borne by

162
00:08:54,120 --> 00:08:56,479
Speaker 1: the costs of which have been born by US businesses,

163
00:08:56,800 --> 00:08:59,800
Speaker 1: in US consumers by and I can give you one

164
00:09:00,040 --> 00:09:03,559
Speaker 1: such report right now. ACoM polled Europe Network of Research

165
00:09:03,720 --> 00:09:06,719
Speaker 1: is in the European Union. They essentially say that four

166
00:09:06,760 --> 00:09:09,760
Speaker 1: point five percent have been paid by US consumers of

167
00:09:09,800 --> 00:09:15,440
Speaker 1: the tariff, twenty five percent Chinese producers. And with all

168
00:09:15,520 --> 00:09:17,800
Speaker 1: due respect, it's wrong. I don't I don't know where

169
00:09:17,840 --> 00:09:20,440
Speaker 1: you get your research from. You read the paper to you, Okay,

170
00:09:20,480 --> 00:09:22,160
Speaker 1: well I've got one out there too. I'll bring it

171
00:09:22,200 --> 00:09:24,760
Speaker 1: in and one we'd love to look at it. Yeah.

172
00:09:27,200 --> 00:09:30,599
Speaker 1: I look at the partial differentials of all this and

173
00:09:30,840 --> 00:09:33,280
Speaker 1: to me, Steve Roach, it's like moving from the X

174
00:09:33,480 --> 00:09:37,040
Speaker 1: y space. You're at Yale University, you're teaching, and the

175
00:09:37,240 --> 00:09:39,760
Speaker 1: adults are in the x y Z space. They're in

176
00:09:39,840 --> 00:09:44,600
Speaker 1: a three dimensional space. What is all the punditry missing here?

177
00:09:44,720 --> 00:09:48,719
Speaker 1: What are we missing about the complexity and richness of this?

178
00:09:48,880 --> 00:09:54,760
Speaker 1: William Klein oh I Adore Peterson Institute would say, the leakages,

179
00:09:54,880 --> 00:09:58,240
Speaker 1: the adjacence eas here are off the chart, and nobody's

180
00:09:58,280 --> 00:10:02,800
Speaker 1: talking about him Tom And that's a deep and important question.

181
00:10:03,040 --> 00:10:06,800
Speaker 1: But but the you know, the the issue here is

182
00:10:07,120 --> 00:10:12,280
Speaker 1: um I think, um, you know what. The there's a

183
00:10:12,320 --> 00:10:18,400
Speaker 1: perception that America is strong, and we've been um egregiously

184
00:10:18,559 --> 00:10:22,240
Speaker 1: damaged by China for generations, and so at this moment

185
00:10:22,280 --> 00:10:25,360
Speaker 1: of great strength, we need to put them in in

186
00:10:25,440 --> 00:10:30,079
Speaker 1: their place. And its absolutely allows for no possibility that

187
00:10:30,160 --> 00:10:33,520
Speaker 1: this is a two way relationship. That yes, China relies

188
00:10:33,600 --> 00:10:35,920
Speaker 1: on us, but we also rely on China, and so

189
00:10:36,080 --> 00:10:38,760
Speaker 1: when we take actions against somebody that we rely on,

190
00:10:39,240 --> 00:10:43,520
Speaker 1: there are consequences. That China has yet to respond to

191
00:10:43,800 --> 00:10:46,520
Speaker 1: the increase in US tariffs, I can assure you they're

192
00:10:46,559 --> 00:10:51,319
Speaker 1: going to UH and those responses will bear critically on

193
00:10:51,440 --> 00:10:55,120
Speaker 1: our companies. Who is our biggest exporter, Tom the company

194
00:10:55,679 --> 00:10:58,400
Speaker 1: it's it's Boeing Bowing is under a lot of pressure

195
00:10:58,440 --> 00:11:00,760
Speaker 1: for other reasons. Do you think Wing is gonna get

196
00:11:00,800 --> 00:11:04,200
Speaker 1: a uh, you know, a free pass in this next

197
00:11:04,360 --> 00:11:08,839
Speaker 1: round of UH? Very quickly here, if Apple is a

198
00:11:08,880 --> 00:11:12,840
Speaker 1: big exporter, or at least a prestigious exporter, and Apple

199
00:11:12,880 --> 00:11:14,839
Speaker 1: doesn't get a free pass either, no one gets a

200
00:11:14,920 --> 00:11:17,880
Speaker 1: free pass. I mean, whiskey from McConnell's Kentucky doesn't get

201
00:11:17,920 --> 00:11:20,840
Speaker 1: a free pass. We all get that, But what about Apple?

202
00:11:21,120 --> 00:11:24,200
Speaker 1: They won't get a free pass. Um. It's it's ludicrous

203
00:11:24,280 --> 00:11:27,000
Speaker 1: to think that big companies who are account for a

204
00:11:27,120 --> 00:11:30,920
Speaker 1: large portion of the bilateral trade flows between these two countries.

205
00:11:30,960 --> 00:11:36,400
Speaker 1: All of a sudden, I get exact dispensation. I know

206
00:11:36,520 --> 00:11:38,600
Speaker 1: you've got to go to run out of timer? How's

207
00:11:38,640 --> 00:11:41,280
Speaker 1: a great inflation at yell? Are you giving out enough season?

208
00:11:42,480 --> 00:11:45,280
Speaker 1: You know? You know we have we have, we have

209
00:11:45,480 --> 00:11:48,880
Speaker 1: a good balance in our good bodies. And you know,

210
00:11:49,000 --> 00:11:51,599
Speaker 1: not all students get, you know, the top grade that

211
00:11:51,640 --> 00:11:54,160
Speaker 1: they aspired to. I just turned in my grades on Friday,

212
00:11:54,200 --> 00:11:57,280
Speaker 1: and you know most of them have a small seminar,

213
00:11:57,400 --> 00:12:01,800
Speaker 1: did extremely well, some of them did less well. Very good,

214
00:12:01,880 --> 00:12:04,200
Speaker 1: Stephen Roach, thank you so much your university on an

215
00:12:04,240 --> 00:12:21,120
Speaker 1: important day. Were thrilled. Thank you. This is an immense

216
00:12:21,280 --> 00:12:24,080
Speaker 1: joy to have Kidgin with us, who's with a London

217
00:12:24,160 --> 00:12:27,959
Speaker 1: School of Economics and has just an exceptional perspective on

218
00:12:28,160 --> 00:12:30,600
Speaker 1: China the US. We do this with futures at negative

219
00:12:30,640 --> 00:12:35,319
Speaker 1: forty down futures a negative three and Professor, what I

220
00:12:35,400 --> 00:12:38,400
Speaker 1: want to do is go to u A seven names,

221
00:12:39,040 --> 00:12:48,040
Speaker 1: g Lee, another Lee, Awang, Awangao and a Han that

222
00:12:48,280 --> 00:12:53,240
Speaker 1: is the Chinese Communist Party committee that the trade delegation

223
00:12:53,400 --> 00:12:56,600
Speaker 1: has to go home to in Beijing. How do they

224
00:12:56,760 --> 00:13:04,040
Speaker 1: distill or respond to what they served in Washington. UM.

225
00:13:04,520 --> 00:13:08,839
Speaker 1: For first of all, they have the Chinese people to

226
00:13:09,280 --> 00:13:13,800
Speaker 1: to face, not just the top leadership. UM. The Chinese

227
00:13:13,880 --> 00:13:17,480
Speaker 1: people UH still wants the Chinese government to stay strong

228
00:13:17,640 --> 00:13:23,480
Speaker 1: against the US UM kind of demands. UH. The US tension.

229
00:13:23,600 --> 00:13:26,640
Speaker 1: Trade tensions have caused a rise in the surgein nationalism

230
00:13:26,720 --> 00:13:29,959
Speaker 1: in China. And the argument is also that if we

231
00:13:30,200 --> 00:13:32,560
Speaker 1: if the Chinese cave in this time around, what's going

232
00:13:32,640 --> 00:13:34,520
Speaker 1: to happen next? There will be in a worse position

233
00:13:34,840 --> 00:13:39,240
Speaker 1: in the future. Well, the markets down in priced down

234
00:13:39,480 --> 00:13:42,400
Speaker 1: and with the correlations that we're beginning to see the

235
00:13:42,480 --> 00:13:45,320
Speaker 1: two year yield in five basis points, how does an

236
00:13:45,480 --> 00:13:51,120
Speaker 1: international relations expert like you correlate all this politics into

237
00:13:51,320 --> 00:13:58,240
Speaker 1: market moves? Uh. There are various forces at least inside

238
00:13:58,280 --> 00:14:02,520
Speaker 1: the Chinese economy that is contributing to the to the

239
00:14:02,679 --> 00:14:06,880
Speaker 1: market reactions. UM. Not only the uncertainty that has been

240
00:14:06,920 --> 00:14:09,760
Speaker 1: brought about by trade war. Of course, the direct direct

241
00:14:09,840 --> 00:14:12,120
Speaker 1: effects of the trade war has yet to be seen,

242
00:14:12,200 --> 00:14:15,599
Speaker 1: but certainly uncertainty has caused much panic. But there is

243
00:14:15,600 --> 00:14:18,160
Speaker 1: also a slowdown of the Chinese economy that has nothing

244
00:14:18,240 --> 00:14:20,600
Speaker 1: to do with the trade war. And in particular more

245
00:14:21,080 --> 00:14:25,800
Speaker 1: to do with the deleveraging process and in general policy uncertainty,

246
00:14:25,920 --> 00:14:29,920
Speaker 1: how the Chinese businesses, the private entrepreneurs will be treated.

247
00:14:30,320 --> 00:14:33,240
Speaker 1: These are all confounding elements. Just looking at the moves

248
00:14:33,240 --> 00:14:34,640
Speaker 1: in the pre market. So I'm got to bring up

249
00:14:34,640 --> 00:14:37,560
Speaker 1: pop but down five percent, red headline just across the

250
00:14:37,600 --> 00:14:41,800
Speaker 1: blame bog terminal down five We're going to try and

251
00:14:41,880 --> 00:14:46,120
Speaker 1: talk about this a little bit later. Not great futures,

252
00:14:46,680 --> 00:14:52,040
Speaker 1: futures connecative fort sm down by one point four Excuse me,

253
00:14:52,440 --> 00:14:54,920
Speaker 1: Professor I will come back in with a trade related

254
00:14:55,000 --> 00:14:58,320
Speaker 1: question for you. We will avoid the uber conversation. A

255
00:14:58,360 --> 00:15:00,080
Speaker 1: lot of people are looking for China's next move is

256
00:15:00,120 --> 00:15:02,200
Speaker 1: both in terms of retaliation and in terms of the

257
00:15:02,280 --> 00:15:04,720
Speaker 1: next move on stimulus. You've touched on that just a

258
00:15:04,760 --> 00:15:07,360
Speaker 1: little bit. Talk to me about how limited the appetite

259
00:15:07,480 --> 00:15:10,160
Speaker 1: is of the current government to actually reach for a

260
00:15:10,320 --> 00:15:13,840
Speaker 1: full scale, large scale stimulus in a way that they

261
00:15:13,920 --> 00:15:16,200
Speaker 1: had done in years previously. Why that's not happening this

262
00:15:16,280 --> 00:15:21,680
Speaker 1: time around. The large stimulus in the past have created

263
00:15:21,720 --> 00:15:24,800
Speaker 1: these huge credit expansions and credit cycles. That's causing a

264
00:15:24,880 --> 00:15:28,520
Speaker 1: lot of the macroeconomic woes that we're observing today, So

265
00:15:28,680 --> 00:15:33,280
Speaker 1: they want to avoid over using this kind of policies. Um.

266
00:15:33,400 --> 00:15:36,000
Speaker 1: And of course we still have bubbles looming in the

267
00:15:36,120 --> 00:15:40,760
Speaker 1: Chinese background, in the economic background. Um. But in terms

268
00:15:40,840 --> 00:15:44,600
Speaker 1: of trade tensions, they of course want to seek a solution.

269
00:15:44,800 --> 00:15:47,760
Speaker 1: But on the other hand, they probably don't want to

270
00:15:47,800 --> 00:15:49,880
Speaker 1: have a reach of full solutions so that they can

271
00:15:49,920 --> 00:15:53,880
Speaker 1: still continue the arguments with the US, because if the

272
00:15:54,040 --> 00:15:58,560
Speaker 1: trade gets resolved, what's next? Those are more intractable problems

273
00:15:58,640 --> 00:16:01,320
Speaker 1: for China to deal with. Wrestler. I brought this up

274
00:16:01,360 --> 00:16:03,280
Speaker 1: with Steve Roach. It's one of the great books of

275
00:16:03,360 --> 00:16:07,160
Speaker 1: the giant Jonathan Spence of Yale University that CON's great

276
00:16:07,240 --> 00:16:11,600
Speaker 1: continent China in the Western mind is the thought process

277
00:16:11,840 --> 00:16:17,560
Speaker 1: of modern Chinese leaders anywhere remotely near to China nine

278
00:16:18,360 --> 00:16:22,560
Speaker 1: China eighty, you know, obviously not China nine fifty. But

279
00:16:23,280 --> 00:16:26,480
Speaker 1: is this a modern set of leaders that were possibly

280
00:16:26,520 --> 00:16:31,360
Speaker 1: going to miscalculate on? The modern set of leaders that

281
00:16:31,480 --> 00:16:35,280
Speaker 1: we're thinking about will be the next generation of leaders,

282
00:16:35,320 --> 00:16:38,560
Speaker 1: possibly the one that will succeed President She Okay, he

283
00:16:38,720 --> 00:16:42,080
Speaker 1: will leave his term, don't don't you worry, um. But

284
00:16:42,680 --> 00:16:45,080
Speaker 1: there is a lot of similarity still in terms of

285
00:16:45,200 --> 00:16:48,920
Speaker 1: the paternalism in the system, the the stability, the kind

286
00:16:48,920 --> 00:16:51,800
Speaker 1: of organization, the discipline, the outward view. And I would

287
00:16:51,840 --> 00:16:55,840
Speaker 1: say that with President she Uh, there's definitely a stronger

288
00:16:56,240 --> 00:17:00,920
Speaker 1: Chinese kind of a stance that China somehow not really

289
00:17:01,000 --> 00:17:04,000
Speaker 1: going to sit in some global existing order, but possibly

290
00:17:04,119 --> 00:17:06,600
Speaker 1: shaping it. And that's one big difference we've seen with

291
00:17:07,280 --> 00:17:09,600
Speaker 1: compared to the past two leaders. Well, then let's get

292
00:17:09,640 --> 00:17:13,000
Speaker 1: you out of the ivory tower in in into market tactics.

293
00:17:13,160 --> 00:17:16,440
Speaker 1: What would you expect given what you just said, Is

294
00:17:16,520 --> 00:17:22,920
Speaker 1: they quote unquote retaliate or not? They will? I suspect

295
00:17:22,920 --> 00:17:25,600
Speaker 1: they will do some form of retaliation, if not fully

296
00:17:25,640 --> 00:17:29,399
Speaker 1: symmetric or full scale, because that's not realistic that they

297
00:17:29,440 --> 00:17:34,040
Speaker 1: will have to respond. Yes, professor, just the final question

298
00:17:34,119 --> 00:17:36,919
Speaker 1: for you, your base case for retaliation from the Chinese?

299
00:17:37,000 --> 00:17:39,000
Speaker 1: We still wait. The market is still nervously looking to

300
00:17:39,040 --> 00:17:42,360
Speaker 1: see what it will be. You can't have accurate tip

301
00:17:42,480 --> 00:17:45,040
Speaker 1: fitat of course, because China running imports so much from

302
00:17:45,040 --> 00:17:47,600
Speaker 1: the United States versus what the United States imports from China.

303
00:17:47,960 --> 00:17:49,680
Speaker 1: So what kind of scale are you looking for in

304
00:17:49,840 --> 00:17:53,800
Speaker 1: terms of retaliation. I think they will still go for

305
00:17:54,080 --> 00:17:58,240
Speaker 1: narrow UM industries, UM and agriculture, and those that will

306
00:17:58,320 --> 00:18:01,600
Speaker 1: hurt the States that are political support based for President Trump.

307
00:18:01,680 --> 00:18:03,920
Speaker 1: But it's really hard to say. Professor, thank you so much.

308
00:18:03,960 --> 00:18:05,680
Speaker 1: Kay gin with us with a lot of moving news

309
00:18:05,760 --> 00:18:08,880
Speaker 1: this morning. She is at the London School of Economics. Professor,

310
00:18:08,960 --> 00:18:11,320
Speaker 1: we really look forward to seeing you at Queen Victoria

311
00:18:11,400 --> 00:18:29,120
Speaker 1: Street here soon. This is the interview of the Day

312
00:18:29,720 --> 00:18:33,200
Speaker 1: on Trade. A book came out a number of years ago,

313
00:18:33,320 --> 00:18:38,480
Speaker 1: two eight pages. It's a Council on Foreign Relations book,

314
00:18:39,080 --> 00:18:41,320
Speaker 1: and it's one of those books you hate because it's

315
00:18:41,400 --> 00:18:47,000
Speaker 1: so intelligent, so densely intelligent, intelligently written that the two

316
00:18:47,840 --> 00:18:52,119
Speaker 1: pages feels like four. But it's worth plowing through because

317
00:18:52,240 --> 00:18:57,000
Speaker 1: it makes us so smart about the President's America and

318
00:18:57,200 --> 00:19:01,000
Speaker 1: all of our America. Edward Alden. The book is Failure

319
00:19:01,080 --> 00:19:05,360
Speaker 1: to Adjust, How Americans got left behind in the global economy.

320
00:19:05,440 --> 00:19:06,879
Speaker 1: It was one of my books of the summer a

321
00:19:06,960 --> 00:19:10,320
Speaker 1: few years ago. Ted Aldon. If you sat down with

322
00:19:10,440 --> 00:19:13,520
Speaker 1: the President of the United States and you handed him

323
00:19:14,240 --> 00:19:17,560
Speaker 1: a brief summary of Failure to Adjust, what would you

324
00:19:17,640 --> 00:19:22,520
Speaker 1: tell President Trump? Well, I'd tell him that the United

325
00:19:22,520 --> 00:19:25,480
Speaker 1: States made a lot of mistakes in the first era

326
00:19:25,720 --> 00:19:29,119
Speaker 1: of globalization, and his job is to make sure we

327
00:19:29,200 --> 00:19:31,399
Speaker 1: don't make a whole new series of mistakes in the

328
00:19:31,480 --> 00:19:33,920
Speaker 1: era that we're in right now. And I'm afraid that's

329
00:19:34,119 --> 00:19:37,439
Speaker 1: exactly what he's doing. Hopefully, hopefully he'd he'd pay attention

330
00:19:37,520 --> 00:19:40,080
Speaker 1: long enough for me to say that, let us go

331
00:19:40,440 --> 00:19:43,000
Speaker 1: to the theory and get it out of the way first.

332
00:19:43,680 --> 00:19:48,560
Speaker 1: GLIB TV radio people like me can say it's mercantil

333
00:19:48,680 --> 00:19:52,399
Speaker 1: is m The President's defenders would say, China has been

334
00:19:52,520 --> 00:19:56,520
Speaker 1: cheating for years. Is it one the other? Is it both?

335
00:19:57,720 --> 00:19:59,400
Speaker 1: I think it's both. I mean, I think the President's

336
00:19:59,400 --> 00:20:03,119
Speaker 1: approaches clearly mercantilists, but the Chinese have been a mercantilist

337
00:20:03,200 --> 00:20:07,600
Speaker 1: power for decades now, and the constraints of the w

338
00:20:07,760 --> 00:20:09,880
Speaker 1: t O in a variety ways proved inadequate. I really

339
00:20:09,920 --> 00:20:11,920
Speaker 1: think we didn't use the system as fully as we

340
00:20:11,960 --> 00:20:15,000
Speaker 1: should have. But the President's complaints about China are legitimate.

341
00:20:15,040 --> 00:20:17,399
Speaker 1: The concern is over the tactics, and that's obviously what

342
00:20:17,560 --> 00:20:20,160
Speaker 1: the markets in the world are concerned over. I don't

343
00:20:20,160 --> 00:20:24,040
Speaker 1: think anybody's arguing over the diagnosis. It's the prescription that's

344
00:20:24,080 --> 00:20:26,840
Speaker 1: the problem. So it ted just specifically about the most

345
00:20:27,040 --> 00:20:29,239
Speaker 1: the most recent round of negotiations. What do you think

346
00:20:29,320 --> 00:20:32,200
Speaker 1: went wrong that derailed the momentum that seemed to be

347
00:20:32,280 --> 00:20:35,160
Speaker 1: building up until maybe a week or two ago. Well,

348
00:20:35,200 --> 00:20:37,280
Speaker 1: I mean, I I'm relying on the reporting here like

349
00:20:37,400 --> 00:20:40,520
Speaker 1: everyone else, but I think it's clear that the Chinese

350
00:20:40,560 --> 00:20:44,159
Speaker 1: backslided on some issues. I mean, the Chinese are tough negotiators, right,

351
00:20:44,240 --> 00:20:46,479
Speaker 1: They're they're going to give as little as they can

352
00:20:46,520 --> 00:20:48,200
Speaker 1: get away with. I think they thought they were in

353
00:20:48,280 --> 00:20:52,040
Speaker 1: a stronger position than they were. What surprised me a

354
00:20:52,119 --> 00:20:55,680
Speaker 1: little bit was the ferocity of the President's reaction to

355
00:20:55,880 --> 00:20:59,320
Speaker 1: move so quickly to impose additional tariffs. And then we've

356
00:20:59,320 --> 00:21:02,320
Speaker 1: got another round them that's going to be announced, possibly today,

357
00:21:02,400 --> 00:21:06,159
Speaker 1: certainly sometime this week. The issues are huge, and I

358
00:21:06,200 --> 00:21:07,879
Speaker 1: think anyone who believed there was going to be an

359
00:21:07,920 --> 00:21:12,120
Speaker 1: easy deal was not paying attention. But I certainly expected

360
00:21:12,160 --> 00:21:14,479
Speaker 1: we would get, you know, some kind of preliminary accord

361
00:21:14,560 --> 00:21:16,359
Speaker 1: and then we'd see where it went next. But but

362
00:21:16,520 --> 00:21:18,960
Speaker 1: things obviously work look a lot worse right at the moment.

363
00:21:19,160 --> 00:21:23,000
Speaker 1: All Right, So China has reacted with its set of

364
00:21:23,200 --> 00:21:26,320
Speaker 1: tariffs on some remaining goods. What do you think China

365
00:21:26,359 --> 00:21:30,240
Speaker 1: will do next, Well, I mean China, as it actually

366
00:21:30,320 --> 00:21:33,520
Speaker 1: has throughout this conflict, is behaving pretty cautiously. I mean,

367
00:21:33,600 --> 00:21:36,760
Speaker 1: this is a retaliation that certainly doesn't come close to

368
00:21:36,880 --> 00:21:39,520
Speaker 1: matching the dollar value of the of the U s tariffs.

369
00:21:39,920 --> 00:21:42,760
Speaker 1: They're delaying in position until June one, and even then

370
00:21:43,119 --> 00:21:45,600
Speaker 1: they're following the US lead and saying it's goods and transit.

371
00:21:45,720 --> 00:21:48,040
Speaker 1: So that's another couple of weeks for ocean going goods.

372
00:21:48,359 --> 00:21:50,960
Speaker 1: So I think the hope is that maybe when the

373
00:21:51,119 --> 00:21:54,240
Speaker 1: President and Shijing paying meet for the G twenty SMIT

374
00:21:54,320 --> 00:21:57,200
Speaker 1: in Japan, that that they can call the halts in this.

375
00:21:57,359 --> 00:22:00,040
Speaker 1: So I think there's there's still h some room of

376
00:22:00,160 --> 00:22:03,760
Speaker 1: playout the negotiations. The Chinese have been remarkably constrained in

377
00:22:03,920 --> 00:22:06,000
Speaker 1: terms of their reaction, but as you know, these things

378
00:22:06,040 --> 00:22:09,000
Speaker 1: can change quickly. Right if they reach a conclusion that

379
00:22:09,119 --> 00:22:11,840
Speaker 1: there's no deal to be had, we could see ramp

380
00:22:11,920 --> 00:22:14,080
Speaker 1: up pretty rapidly. Ted Alden, where this the book is

381
00:22:14,119 --> 00:22:16,199
Speaker 1: failure to adjust, we are going to continue. I need

382
00:22:16,240 --> 00:22:17,879
Speaker 1: to do a data check down. We go on the

383
00:22:18,000 --> 00:22:21,240
Speaker 1: opening with a very nice bid to the market, and

384
00:22:21,280 --> 00:22:24,160
Speaker 1: we're retesting that right now. We're a negative for eighty

385
00:22:24,200 --> 00:22:27,720
Speaker 1: Now we're negative five twenty on the Dow, fifty nine

386
00:22:27,880 --> 00:22:31,000
Speaker 1: SMP points down and the vix was under twenty now

387
00:22:31,119 --> 00:22:34,639
Speaker 1: back above twenty, showing that new angst in the market.

388
00:22:34,920 --> 00:22:37,320
Speaker 1: What am I watching most closely? We are now at

389
00:22:37,480 --> 00:22:41,040
Speaker 1: lows in yield for the two year today two point

390
00:22:41,160 --> 00:22:45,480
Speaker 1: one eight eight four, well under two point one nine percent.

391
00:22:45,560 --> 00:22:48,720
Speaker 1: I'm looking for a retest of yen. We're almost there,

392
00:22:48,800 --> 00:22:51,520
Speaker 1: Paul Sweeney on a one o nine o nine yen.

393
00:22:51,600 --> 00:22:54,760
Speaker 1: So a new retest to this market at nine fifty

394
00:22:54,840 --> 00:22:57,600
Speaker 1: three Wall Street Time. Thanks so, Ted. Just I mean,

395
00:22:57,720 --> 00:22:59,720
Speaker 1: one of the things I think the market was looking for,

396
00:23:00,000 --> 00:23:02,000
Speaker 1: are you know, really over the last several months, is

397
00:23:02,000 --> 00:23:05,120
Speaker 1: maybe just some type of headline deal. Is that still

398
00:23:05,240 --> 00:23:07,880
Speaker 1: on the table. It seems like it's certainly in both

399
00:23:07,960 --> 00:23:10,720
Speaker 1: sides best interest, But even a minimalist type deal, do

400
00:23:10,720 --> 00:23:13,840
Speaker 1: you think that is still a near term opportunity. I mean,

401
00:23:13,880 --> 00:23:16,320
Speaker 1: I think there's still a possibility that the reality of

402
00:23:16,359 --> 00:23:18,840
Speaker 1: Traine negotiations like this is they always go right to

403
00:23:18,920 --> 00:23:20,880
Speaker 1: the edge of the cliff and there's always these heart

404
00:23:20,960 --> 00:23:23,639
Speaker 1: stopping moments, and so I think we were never going

405
00:23:23,680 --> 00:23:26,680
Speaker 1: to get a deal unless something like this happened. Just

406
00:23:26,920 --> 00:23:29,720
Speaker 1: very hard to predict with this administration because Trump likes

407
00:23:29,800 --> 00:23:32,600
Speaker 1: tariffs and he's made it very clear that he's happy

408
00:23:32,680 --> 00:23:37,280
Speaker 1: with the tariffs, and so I I don't want interrupt,

409
00:23:37,320 --> 00:23:39,000
Speaker 1: but we just got a headline out, which is why

410
00:23:39,119 --> 00:23:44,119
Speaker 1: we've come down China to raise tariffs on imports of

411
00:23:44,480 --> 00:23:50,560
Speaker 1: US rare earths to We're with Ted Alden of of CFR,

412
00:23:50,680 --> 00:23:57,000
Speaker 1: which is wonderful. What is the US rare earth are

413
00:23:57,560 --> 00:23:59,280
Speaker 1: as as far as as far as I know, and

414
00:23:59,320 --> 00:24:01,080
Speaker 1: you guys can check quickly on your terminals. U S

415
00:24:01,080 --> 00:24:03,439
Speaker 1: production rarers is very small. I mean, China is by

416
00:24:03,480 --> 00:24:06,960
Speaker 1: far the world's largest rare producer. There are minds I

417
00:24:07,000 --> 00:24:10,120
Speaker 1: think in Vietnam, a couple exactly Southeast Asia. The US

418
00:24:10,200 --> 00:24:13,159
Speaker 1: is trying to get its capacity back in response to

419
00:24:13,240 --> 00:24:15,840
Speaker 1: a Chinese export ban on rarers some years ago that

420
00:24:15,920 --> 00:24:18,840
Speaker 1: we actually challenge successfully in the w t O. That

421
00:24:18,920 --> 00:24:20,760
Speaker 1: was one of the places where the w t O worked.

422
00:24:21,320 --> 00:24:24,399
Speaker 1: The United States, Japan and other countries took China to

423
00:24:24,480 --> 00:24:27,480
Speaker 1: the w t O said WO forbid export bands, and

424
00:24:27,600 --> 00:24:30,040
Speaker 1: China relented. We am puzzled by that way. We had

425
00:24:30,080 --> 00:24:32,959
Speaker 1: two thousand I'm puzzled. We're puzzled by everything right now,

426
00:24:33,040 --> 00:24:38,520
Speaker 1: Ted Alden, there's twenty products. What's the banner headline across

427
00:24:38,560 --> 00:24:42,879
Speaker 1: the Bloomberg that you're gonna wait for? Which product obviously soybeans,

428
00:24:42,920 --> 00:24:46,720
Speaker 1: but which product matters to you within the obscure stuff

429
00:24:46,760 --> 00:24:49,880
Speaker 1: of trade? Well, I mean, you know, if you're looking

430
00:24:49,920 --> 00:24:51,760
Speaker 1: at the U. S. Action, obviously the next round is

431
00:24:51,800 --> 00:24:54,280
Speaker 1: gonna Co're gonna cover smartphones. Right if we go to

432
00:24:54,400 --> 00:24:56,600
Speaker 1: the whole of Chinese trade, it's gonna hit Apple, and

433
00:24:56,720 --> 00:24:59,440
Speaker 1: that's gonna have a major impact, even if it takes

434
00:24:59,440 --> 00:25:01,520
Speaker 1: a while to be put in place. And from the

435
00:25:01,680 --> 00:25:04,399
Speaker 1: Chinese and the big shoe that hasn't dropped his U S.

436
00:25:04,440 --> 00:25:07,159
Speaker 1: Aerospace exports. I'm out here in Washington State. Boeing is

437
00:25:07,200 --> 00:25:09,680
Speaker 1: a very important to the economy out here. That's a

438
00:25:09,760 --> 00:25:12,440
Speaker 1: big shoe that that hasn't dropped yet. So so those

439
00:25:12,440 --> 00:25:15,080
Speaker 1: are the ones I'm gonna be watching. You mentioned Apple,

440
00:25:15,160 --> 00:25:18,600
Speaker 1: that stock is is down five today, so entering in

441
00:25:18,720 --> 00:25:22,200
Speaker 1: correction territory for that one. So, Ted, it seems like

442
00:25:22,320 --> 00:25:24,720
Speaker 1: you know both sides again are incented to get a

443
00:25:24,920 --> 00:25:27,320
Speaker 1: deal done. Is you have a sense of who will

444
00:25:27,359 --> 00:25:32,480
Speaker 1: blink first, Well, I mean, I think that the Chinese are,

445
00:25:32,680 --> 00:25:35,160
Speaker 1: in the short run, at least in the weaker position.

446
00:25:35,280 --> 00:25:38,800
Speaker 1: I think they would not have been so conciliatory sending

447
00:25:38,880 --> 00:25:42,800
Speaker 1: lou Hey to Washington last week responding on a delayed

448
00:25:42,880 --> 00:25:45,680
Speaker 1: timetable with its own tariffs. And the Chinese very much

449
00:25:45,720 --> 00:25:48,560
Speaker 1: want to deal. But there's certainly a limit as to

450
00:25:48,720 --> 00:25:52,760
Speaker 1: how far the United States can can push. Uh. There

451
00:25:52,800 --> 00:25:55,120
Speaker 1: are big dangers, and Wall Street Journal is very good

452
00:25:55,119 --> 00:25:58,720
Speaker 1: on that. I think over the weekend, big dangers of miscalculation,

453
00:25:58,880 --> 00:26:01,919
Speaker 1: that each side thinks it's in a stronger position than

454
00:26:02,000 --> 00:26:04,359
Speaker 1: it actually is. And and so even though I do

455
00:26:04,480 --> 00:26:06,959
Speaker 1: believe China is in the weaker position, it doesn't mean

456
00:26:07,040 --> 00:26:09,920
Speaker 1: that the Trump administration can continue to push and push

457
00:26:09,960 --> 00:26:13,240
Speaker 1: and push with the faith that China will always respond favorably.

458
00:26:13,280 --> 00:26:15,359
Speaker 1: At some point it will say no and then and

459
00:26:15,400 --> 00:26:17,719
Speaker 1: then things will really take a tumble. Ted, I've got

460
00:26:17,760 --> 00:26:20,600
Speaker 1: another our questions. We'll have to do that later. Ted

461
00:26:20,680 --> 00:26:23,760
Speaker 1: alden Uh coming to us from the West Coast this morning.

462
00:26:23,800 --> 00:26:26,879
Speaker 1: We greatly thank his attention with the Counsel on Foreign Relations.

463
00:26:28,160 --> 00:26:32,240
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and

464
00:26:32,440 --> 00:26:37,720
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast

465
00:26:37,800 --> 00:26:42,000
Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before

466
00:26:42,080 --> 00:26:45,880
Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg

467
00:26:46,000 --> 00:26:46,240
Speaker 1: Radio