1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jai 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 --> 00:00:27,360 Speaker 1: Bloomberg dot com, and of course on the Bloomberg Jointing 5 00:00:27,400 --> 00:00:29,640 Speaker 1: US Now places a side Steve Wanting City Private Bank 6 00:00:29,680 --> 00:00:34,200 Speaker 1: Global Chief investment Strategist Stave Tefness and pay five hundred. 7 00:00:34,400 --> 00:00:38,760 Speaker 1: Come on, what is going to brighten this thing? Well? Um, 8 00:00:38,800 --> 00:00:42,400 Speaker 1: while the US is getting safe haven influence from the 9 00:00:42,400 --> 00:00:44,120 Speaker 1: rest of the world, you can take a look at 10 00:00:44,440 --> 00:00:46,800 Speaker 1: both bombs and stocks in the United States. You can 11 00:00:46,840 --> 00:00:49,280 Speaker 1: take a look at the U S dollar as evidence 12 00:00:49,320 --> 00:00:52,479 Speaker 1: of that. Um, you know, this is an unlikely time 13 00:00:52,640 --> 00:00:56,720 Speaker 1: for US out performance really to wane while these concerns 14 00:00:56,720 --> 00:00:59,560 Speaker 1: are more centered in the rest of the world. Um, 15 00:00:59,680 --> 00:01:02,160 Speaker 1: does a it too far? Well, twelve basis points of 16 00:01:02,240 --> 00:01:05,720 Speaker 1: our performance of US stocks versus the rest of the world, Um, 17 00:01:05,800 --> 00:01:08,759 Speaker 1: you know, seems pretty far. It seems as if not 18 00:01:08,840 --> 00:01:13,399 Speaker 1: only do we discount a rebound in EPs, but maybe 19 00:01:13,440 --> 00:01:16,800 Speaker 1: an uninterrupted one. You know. The question then, is, um, 20 00:01:16,880 --> 00:01:19,440 Speaker 1: sort of what is the opportunity for long term investors 21 00:01:19,800 --> 00:01:23,560 Speaker 1: who might want to again look beyond um interruptions to 22 00:01:23,600 --> 00:01:26,600 Speaker 1: the Chinese economy and it's impact on the world. UM. 23 00:01:26,640 --> 00:01:28,600 Speaker 1: And then you start to say, We'll wait a second. 24 00:01:28,600 --> 00:01:31,360 Speaker 1: You know, all rates be this low, Um, should all 25 00:01:31,400 --> 00:01:33,680 Speaker 1: the infras go to a few stocks in the world 26 00:01:33,720 --> 00:01:37,440 Speaker 1: in one country, Well, then then the game changes. Long 27 00:01:37,560 --> 00:01:40,920 Speaker 1: central banks, short growth. That's the quote coming from our 28 00:01:40,959 --> 00:01:43,440 Speaker 1: better gallow of Algebras. And here's the quote as follows. 29 00:01:43,720 --> 00:01:46,039 Speaker 1: After a decade of QA and decline in nominal and 30 00:01:46,080 --> 00:01:48,720 Speaker 1: real interest rates, the substitution effect is not working, as 31 00:01:48,720 --> 00:01:51,400 Speaker 1: planned assets with a direct link to interest rates continue 32 00:01:51,440 --> 00:01:56,640 Speaker 1: to outperform versus assets whose performance depends on economic growth. 33 00:01:56,920 --> 00:01:58,680 Speaker 1: What do you make of that state that we're long 34 00:01:58,760 --> 00:02:01,559 Speaker 1: central banks, were short owth and pretty much every asset 35 00:02:01,640 --> 00:02:05,560 Speaker 1: class reflects that at the moment. Look, you know, I 36 00:02:05,680 --> 00:02:10,400 Speaker 1: have basically disagreed that fundamentals and asset prices. You know, 37 00:02:10,440 --> 00:02:13,760 Speaker 1: I've just completely gone in different directions. Um. You know, 38 00:02:13,960 --> 00:02:16,000 Speaker 1: US rates are higher than the rest of the world. 39 00:02:16,040 --> 00:02:19,720 Speaker 1: We've had somewhat higher trend economic griff. Um. You know 40 00:02:19,880 --> 00:02:24,040 Speaker 1: you see movements UM and credit defaults and credit spreads. 41 00:02:24,440 --> 00:02:29,200 Speaker 1: You know, generally, look like each other. UM. And you know, 42 00:02:29,280 --> 00:02:32,520 Speaker 1: the equities that have had the firmest, most confident DPS 43 00:02:32,600 --> 00:02:37,400 Speaker 1: gains UM has increased the most. Now, this latest little 44 00:02:37,480 --> 00:02:39,520 Speaker 1: round here gets a little bit interesting. I mean, there 45 00:02:39,560 --> 00:02:42,640 Speaker 1: aren't many times, if you really look closely, that stocks 46 00:02:42,639 --> 00:02:45,720 Speaker 1: and bonds are giving you different messages. UM. I think 47 00:02:45,760 --> 00:02:47,720 Speaker 1: that this period maybe one of those. That's a little 48 00:02:47,760 --> 00:02:52,000 Speaker 1: suspect where in the US case you've been fallen rates, 49 00:02:52,120 --> 00:02:54,880 Speaker 1: improving credit, and equities all at the same time. And 50 00:02:55,000 --> 00:02:57,440 Speaker 1: but I don't think that's really the case so much globally. 51 00:02:57,680 --> 00:02:59,919 Speaker 1: You know, Stephen, you're the best I know at linking 52 00:03:00,000 --> 00:03:03,399 Speaker 1: in the profit model into our American economy. You've done 53 00:03:03,400 --> 00:03:05,240 Speaker 1: that for years at City Group. And I got one 54 00:03:05,240 --> 00:03:08,760 Speaker 1: simple question. I look at Paul Krugman's one volume in macroeconomics, 55 00:03:08,840 --> 00:03:11,600 Speaker 1: and he gets the profit on page five. I mean, 56 00:03:11,600 --> 00:03:15,639 Speaker 1: it's usually buried in economic textbooks for our audience right now, 57 00:03:16,040 --> 00:03:22,600 Speaker 1: link the American economy into the profit expectations of American business. 58 00:03:22,919 --> 00:03:26,160 Speaker 1: Are they still linked? Are they completely blown up by 59 00:03:26,240 --> 00:03:29,800 Speaker 1: FED action? Well? Look, you know one thing that I 60 00:03:29,840 --> 00:03:34,280 Speaker 1: think that people might not get often is that investment 61 00:03:34,440 --> 00:03:41,080 Speaker 1: restraint right weak CAPEX week supply you know, can boost 62 00:03:41,080 --> 00:03:45,200 Speaker 1: profitability and boost returns. And when you have you know, 63 00:03:45,320 --> 00:03:50,040 Speaker 1: a surgeon investment and weak current profits and lots of supply, 64 00:03:50,560 --> 00:03:53,920 Speaker 1: you know, you you harmor turns UM and you might 65 00:03:54,000 --> 00:03:56,720 Speaker 1: have harmed economic growth because of that. One of the 66 00:03:56,840 --> 00:03:59,520 Speaker 1: areas that's been sort of really strong. If you just 67 00:03:59,560 --> 00:04:02,120 Speaker 1: want to work get a piece of this is what's 68 00:04:02,160 --> 00:04:04,840 Speaker 1: happened in the US. You know where we've invested a 69 00:04:04,880 --> 00:04:08,480 Speaker 1: tremendous amount in oil and petroleum production and and gas 70 00:04:08,480 --> 00:04:11,520 Speaker 1: production in the United States, and you know all this 71 00:04:11,640 --> 00:04:14,400 Speaker 1: investment again is not generating a hell of a lot 72 00:04:14,400 --> 00:04:17,039 Speaker 1: of return. When you take a look at UM, you 73 00:04:17,080 --> 00:04:21,240 Speaker 1: know the performance of those shares and that that's the 74 00:04:21,279 --> 00:04:23,719 Speaker 1: piece again, right, So that you can link this to 75 00:04:24,440 --> 00:04:28,520 Speaker 1: you know, strong supply, we go to Lisa bramoins Now 76 00:04:28,560 --> 00:04:31,280 Speaker 1: oil expert. You've been great on this, Lisa. The markdown 77 00:04:31,440 --> 00:04:34,480 Speaker 1: of high yield oil stuff? Where is that right now? 78 00:04:34,520 --> 00:04:36,600 Speaker 1: I mean a couple of years ago we cleared out 79 00:04:36,600 --> 00:04:39,720 Speaker 1: all the garbage oil stuff right and junk. No, we didn't, 80 00:04:39,720 --> 00:04:42,080 Speaker 1: actually we didn't support to you. And that's the reason 81 00:04:42,120 --> 00:04:44,480 Speaker 1: why you're seeing bankruptcies picked back up. Because what you're 82 00:04:44,520 --> 00:04:47,680 Speaker 1: seeing is the survival of the survivability of some of 83 00:04:47,680 --> 00:04:49,960 Speaker 1: these shell producers is being called into question. They took 84 00:04:49,960 --> 00:04:53,080 Speaker 1: on too much debt and are not that profitable right now, 85 00:04:53,279 --> 00:04:56,440 Speaker 1: given that we expect that to continue. I'm trying to 86 00:04:56,440 --> 00:05:00,200 Speaker 1: to struggle to understand. Stephen. You talked about how some 87 00:05:00,279 --> 00:05:02,839 Speaker 1: stocks seem to be sending different messages in the US, 88 00:05:02,880 --> 00:05:05,039 Speaker 1: and I want to pick up on that idea. How 89 00:05:05,080 --> 00:05:09,279 Speaker 1: long can we persist in this goldilocks environment? Well, I 90 00:05:09,279 --> 00:05:12,040 Speaker 1: think you can. You know, look UM an extreme example 91 00:05:12,080 --> 00:05:14,359 Speaker 1: of that. And there's no way to say so that 92 00:05:14,520 --> 00:05:16,560 Speaker 1: this gets you know, a little crazy when you started 93 00:05:16,600 --> 00:05:19,000 Speaker 1: to say how long it can it last? But UM 94 00:05:19,000 --> 00:05:22,760 Speaker 1: an extreme example this is the late nineteen nine was 95 00:05:22,800 --> 00:05:27,440 Speaker 1: a period of an Asian shock. Southeast Asian GDP contracted 96 00:05:29,320 --> 00:05:32,720 Speaker 1: UM and US growth the strengthened in US asset prices. 97 00:05:32,760 --> 00:05:36,800 Speaker 1: After some volatility, UM went up a lot and they 98 00:05:36,839 --> 00:05:40,280 Speaker 1: continue to go up for another three years. So you know, 99 00:05:40,400 --> 00:05:43,440 Speaker 1: it is possible. You know, I tend to think UM 100 00:05:43,680 --> 00:05:47,839 Speaker 1: this particular issue, this negative shock from a natural disaster, 101 00:05:48,440 --> 00:05:51,919 Speaker 1: the coronavirus UM and the precedent of these things in 102 00:05:51,920 --> 00:05:55,120 Speaker 1: the past not being permanent. Losses and output that we 103 00:05:55,160 --> 00:05:57,520 Speaker 1: can see some against some variability in this very trade. 104 00:05:57,520 --> 00:05:59,680 Speaker 1: It doesn't mean that it all goes away, um, but 105 00:06:00,000 --> 00:06:04,240 Speaker 1: some of the inflows specifically UM to US doll arrassets 106 00:06:04,320 --> 00:06:06,640 Speaker 1: might might reverse a bit and you might see again 107 00:06:06,720 --> 00:06:09,000 Speaker 1: some interest rates increase in some a little bit of 108 00:06:09,040 --> 00:06:12,000 Speaker 1: fading out at some some recovery again in some of 109 00:06:12,000 --> 00:06:15,039 Speaker 1: the some of the other markets. Um. You know, I 110 00:06:15,080 --> 00:06:17,000 Speaker 1: do think that we came into this period, at least 111 00:06:17,000 --> 00:06:20,080 Speaker 1: in the sixed income markets, you know, with US yields 112 00:06:20,120 --> 00:06:23,400 Speaker 1: at a premium to other developed markets. I mean, you know, 113 00:06:23,480 --> 00:06:25,880 Speaker 1: we have we'll call it one and a half percent 114 00:06:25,960 --> 00:06:29,680 Speaker 1: global interest rates including high yield and UH and emerging 115 00:06:29,680 --> 00:06:32,760 Speaker 1: markets take at the US and at zero five. So 116 00:06:33,440 --> 00:06:36,200 Speaker 1: you know, the US bond market. Again from from the 117 00:06:36,200 --> 00:06:38,920 Speaker 1: perspective of figuring out where the economies and where where 118 00:06:38,960 --> 00:06:41,480 Speaker 1: where rates should be, it might be a bit higher rate. 119 00:06:41,720 --> 00:06:43,800 Speaker 1: But we did come into this with a yield premium 120 00:06:43,839 --> 00:06:46,360 Speaker 1: with a central bank. You know that net net had 121 00:06:46,400 --> 00:06:49,360 Speaker 1: six tightenings over the last couple of years, compared to 122 00:06:49,400 --> 00:06:51,400 Speaker 1: the rest of the world, which did nothing stave quick 123 00:06:51,480 --> 00:06:54,440 Speaker 1: yes or no your long copper hair. Um, I think 124 00:06:54,440 --> 00:06:58,480 Speaker 1: we'd be optimistic on a recovery in copper post sort 125 00:06:58,480 --> 00:07:01,479 Speaker 1: of a very severe disruption in the China's economy, which 126 00:07:02,120 --> 00:07:07,400 Speaker 1: you know, just to quit. Yes, well, um, Steve, he's rattled. 127 00:07:07,440 --> 00:07:09,760 Speaker 1: He's gotta buy roses and he's decided where they should 128 00:07:09,760 --> 00:07:13,000 Speaker 1: put him in a copper vase. St We've gotta wrap 129 00:07:13,040 --> 00:07:14,520 Speaker 1: it up, Steve, We've gotta wrap it up. You have 130 00:07:14,520 --> 00:07:17,720 Speaker 1: a wonderful van How How long are you long? That's 131 00:07:17,720 --> 00:07:20,040 Speaker 1: the question he's long about. He's like, I don't know 132 00:07:20,080 --> 00:07:34,720 Speaker 1: that city than yours profit work as well. What we 133 00:07:34,800 --> 00:07:38,560 Speaker 1: decided to do with the virus and epidemic in China 134 00:07:39,240 --> 00:07:42,360 Speaker 1: is really go away from the media and sort of 135 00:07:42,360 --> 00:07:45,680 Speaker 1: the inflammatory articles and speak to pros. We are honored 136 00:07:45,680 --> 00:07:49,160 Speaker 1: that Anthony thought you could join us. Are great immunologist. 137 00:07:49,240 --> 00:07:51,440 Speaker 1: We are honored that Jennifer Rohan would join us from 138 00:07:51,520 --> 00:07:56,080 Speaker 1: ucl yesterday out of University of Washington microbiology. And we're 139 00:07:56,120 --> 00:07:58,960 Speaker 1: particularly thrilled John to have a gentleman who's a legacy 140 00:07:58,960 --> 00:08:02,560 Speaker 1: of Rockefeller you university in this city. It is the 141 00:08:02,720 --> 00:08:07,480 Speaker 1: true foundation of virology worldwide. Mr Baltimore's work and others 142 00:08:07,800 --> 00:08:10,800 Speaker 1: decades ago. And if Peter Hotez on with us again 143 00:08:10,880 --> 00:08:13,080 Speaker 1: is a great. We are really fortunate to have him. 144 00:08:13,160 --> 00:08:16,239 Speaker 1: Dr Peter Hodez, dean of the National School of Tropical 145 00:08:16,240 --> 00:08:18,880 Speaker 1: Medicine at Baylor College of Medicine, joins us now, Dr, 146 00:08:18,960 --> 00:08:21,400 Speaker 1: fantastic to have you with us on the program. I'd 147 00:08:21,440 --> 00:08:23,880 Speaker 1: just like to talk about the politics at the moment 148 00:08:23,880 --> 00:08:26,960 Speaker 1: between the United States and China. The US says they're 149 00:08:27,000 --> 00:08:30,800 Speaker 1: offering China help, and then the help they're offering hasn't 150 00:08:30,840 --> 00:08:34,120 Speaker 1: been accepted by the Chinese. Beijing today is saying they're 151 00:08:34,160 --> 00:08:36,720 Speaker 1: welcome to come, and the w h O has says 152 00:08:36,760 --> 00:08:40,080 Speaker 1: nothing has been decided. Dr. What's your insight and what 153 00:08:40,200 --> 00:08:42,240 Speaker 1: is going on? Just the politics of these kind of 154 00:08:42,280 --> 00:08:45,760 Speaker 1: investigations and various countries trying to get their hands around 155 00:08:45,760 --> 00:08:48,720 Speaker 1: the same data. Well, you know this is not obviously, 156 00:08:48,720 --> 00:08:51,080 Speaker 1: this is not a time to play politics. You know, 157 00:08:51,120 --> 00:08:54,880 Speaker 1: with the Central China, Wuhana's in freefall right now. We're 158 00:08:55,000 --> 00:09:00,360 Speaker 1: we're looking at seventy of the cases and most of 159 00:09:00,360 --> 00:09:05,120 Speaker 1: the deaths occurring in Wuhan. We learned yesterday that more 160 00:09:05,160 --> 00:09:08,800 Speaker 1: than a thousand healthcare workers have been infected, so they're 161 00:09:08,840 --> 00:09:12,360 Speaker 1: on the front lines. Uh. The the economy of China 162 00:09:12,960 --> 00:09:16,160 Speaker 1: is in serious jeopardy, especially because Central China is closed 163 00:09:16,160 --> 00:09:19,839 Speaker 1: out and members it's not just Wuhan and it's Hubei Province. UH. 164 00:09:19,920 --> 00:09:24,920 Speaker 1: Commerce between Hong Kong, Taiwan and Macao has been cut off. 165 00:09:24,960 --> 00:09:28,280 Speaker 1: No flights are going in and to UH. This is 166 00:09:28,280 --> 00:09:31,000 Speaker 1: a time when when the world's you know, it's easy 167 00:09:31,080 --> 00:09:33,280 Speaker 1: to say, but it's it's actually quite true. The world's 168 00:09:33,320 --> 00:09:35,840 Speaker 1: countries need to be get to need to get together. 169 00:09:36,280 --> 00:09:40,440 Speaker 1: We're actually applying ancient technologies to this problem. I mean 170 00:09:40,480 --> 00:09:42,800 Speaker 1: we're talking about these quarantine of ships. I mean, we 171 00:09:42,880 --> 00:09:46,280 Speaker 1: did that in the fourteenth century in Croatia in order 172 00:09:46,280 --> 00:09:49,319 Speaker 1: to prevent bubonic plague from coming in from Asia Minor. 173 00:09:49,360 --> 00:09:51,680 Speaker 1: And that's what we're still doing. We're still talking about 174 00:09:51,679 --> 00:09:58,080 Speaker 1: collecting plasma from previously infectation to administering antibodies are ancient technologies. 175 00:09:58,360 --> 00:10:00,360 Speaker 1: We could do better than that without the Let's talk 176 00:10:00,400 --> 00:10:02,200 Speaker 1: about how we can do better. Because there has been 177 00:10:02,280 --> 00:10:04,240 Speaker 1: all kinds of questions asked over the last couple of 178 00:10:04,360 --> 00:10:09,480 Speaker 1: days on transparency, on under reporting, just how difficult is 179 00:10:09,520 --> 00:10:12,920 Speaker 1: it to get the data anywhere near accurate as an 180 00:10:12,960 --> 00:10:14,760 Speaker 1: assessment to what is happening on the ground right now 181 00:10:14,800 --> 00:10:17,560 Speaker 1: in China. Well, I think you know. What's happening also 182 00:10:17,640 --> 00:10:19,439 Speaker 1: is the Chinese. You know, to be fair, the Chinese 183 00:10:19,440 --> 00:10:22,440 Speaker 1: themselves are struggling collecting the data and where we're learning 184 00:10:22,440 --> 00:10:25,760 Speaker 1: that the diagnostic test that's being used is not adequate, 185 00:10:25,840 --> 00:10:30,240 Speaker 1: maybe only thirty sensitive, so they had to revert to 186 00:10:30,480 --> 00:10:34,679 Speaker 1: a clinical diagnosis, meaning putting patients in a cat scanner 187 00:10:34,720 --> 00:10:37,480 Speaker 1: to see lesions on the lungs. So there are also 188 00:10:37,600 --> 00:10:41,280 Speaker 1: struggling with the data. So it's a race to get 189 00:10:41,320 --> 00:10:45,320 Speaker 1: all these new technologies into China as rapidly as possible, 190 00:10:45,600 --> 00:10:50,040 Speaker 1: including new diagnostics, new drugs, new vaccines, and that requires 191 00:10:50,080 --> 00:10:54,920 Speaker 1: unprecedented levels of international cooperation because no one country as 192 00:10:54,960 --> 00:10:58,360 Speaker 1: a monopoly on technologies for this, I mean all. Basically, 193 00:10:58,440 --> 00:11:01,800 Speaker 1: what's happened is all of the G twenty countries have 194 00:11:01,920 --> 00:11:05,360 Speaker 1: failed to work together to put together technologies to respond 195 00:11:05,440 --> 00:11:08,480 Speaker 1: to these pandemics. This this was and many many aspects 196 00:11:08,520 --> 00:11:12,280 Speaker 1: of this were avoidable. Dr Hote has failed to take 197 00:11:12,360 --> 00:11:14,240 Speaker 1: control of this. I want to pick up on that, 198 00:11:14,360 --> 00:11:17,880 Speaker 1: especially as we get a sense that this is increasingly infectious, 199 00:11:17,920 --> 00:11:21,360 Speaker 1: that even if it's not necessarily fatal, it is spreading quickly. 200 00:11:21,440 --> 00:11:24,120 Speaker 1: We had Ira Longini an advisor to the World Health 201 00:11:24,200 --> 00:11:27,120 Speaker 1: Organization saying yesterday that two thorlds thirds of the world's 202 00:11:27,160 --> 00:11:33,160 Speaker 1: population could catch this particular coronavirus. Do you buy that, Well, 203 00:11:33,200 --> 00:11:34,960 Speaker 1: you know, with the new virus agent, you know, all 204 00:11:35,040 --> 00:11:38,199 Speaker 1: bets are off. We never really know to we know, um, 205 00:11:38,240 --> 00:11:39,920 Speaker 1: you know, there are a number of things, things that 206 00:11:39,960 --> 00:11:42,640 Speaker 1: are positive that could happen, and a number of scary 207 00:11:42,679 --> 00:11:45,640 Speaker 1: things that could happen on the positive side. Sometimes these 208 00:11:45,679 --> 00:11:49,359 Speaker 1: coronaviruses are seasonal in nature, especially in the northern hemisphere, 209 00:11:49,679 --> 00:11:52,280 Speaker 1: so they tend to die down a bit as we 210 00:11:52,320 --> 00:11:55,040 Speaker 1: move into the spring in summer. We've seen this for 211 00:11:55,120 --> 00:11:57,839 Speaker 1: other coronaviruses. We have no idea if that's going to 212 00:11:57,920 --> 00:11:59,839 Speaker 1: happen for this one. So maybe we'll get lucky. But 213 00:12:00,040 --> 00:12:03,680 Speaker 1: and then in the southern hemisphere, in the tropics, viruses 214 00:12:03,720 --> 00:12:07,640 Speaker 1: don't show that same seasonality. We don't know how quickly 215 00:12:07,720 --> 00:12:11,800 Speaker 1: we can accelerate technologies. We do have good surveillance in 216 00:12:11,840 --> 00:12:15,400 Speaker 1: places like western Europe in the United States, so maybe 217 00:12:15,640 --> 00:12:19,600 Speaker 1: those forces will combine. The mitigator limit uh this epidemic 218 00:12:19,640 --> 00:12:22,360 Speaker 1: and prevented from becoming a pandemic. By pandemic, I mean 219 00:12:22,679 --> 00:12:27,000 Speaker 1: transmission and multiple serious levels of transmission in multiple countries. 220 00:12:27,480 --> 00:12:30,400 Speaker 1: But there are places I'm really worried about. We have 221 00:12:30,440 --> 00:12:32,360 Speaker 1: no idea what's going on in North Korea, and I 222 00:12:32,360 --> 00:12:35,880 Speaker 1: would imagine there's certain cases there and there's not the 223 00:12:35,920 --> 00:12:39,800 Speaker 1: ability to adequately detect and contain the virus in places 224 00:12:39,840 --> 00:12:41,800 Speaker 1: like North Korea. I'm worried about any place with a 225 00:12:41,880 --> 00:12:45,880 Speaker 1: depleted health system, the Philippines, mean mar some of the 226 00:12:45,920 --> 00:12:49,480 Speaker 1: Southeast Asian countries like Laos and Cambodia. And then let's 227 00:12:49,480 --> 00:12:52,320 Speaker 1: not forget we've got one to three million Chinese working 228 00:12:52,320 --> 00:12:56,480 Speaker 1: in Africa through Presidentiesze Belt and Road initiative, and so 229 00:12:56,559 --> 00:12:58,760 Speaker 1: there's a high likelihood we're going to see virus entry 230 00:12:58,800 --> 00:13:02,440 Speaker 1: into there. We've already seen now eight cases in the 231 00:13:02,440 --> 00:13:05,280 Speaker 1: Emirates in the Middle East, so we have to assume 232 00:13:05,320 --> 00:13:07,320 Speaker 1: that it's just going to be cases moving into Africa, 233 00:13:07,600 --> 00:13:10,120 Speaker 1: and I doubt many of those African countries are going 234 00:13:10,160 --> 00:13:12,559 Speaker 1: to have a build the ability UH to tect to 235 00:13:12,600 --> 00:13:14,959 Speaker 1: control the virus there. So those are the places I'm 236 00:13:14,960 --> 00:13:17,480 Speaker 1: worried about, and indeed those are the reasons why Dr 237 00:13:17,520 --> 00:13:19,959 Speaker 1: ted ros at w h O declared a public health 238 00:13:19,960 --> 00:13:23,000 Speaker 1: emergency in international concern Less worried about the U S 239 00:13:23,040 --> 00:13:25,800 Speaker 1: and Europe more about some of those other places were discussing. 240 00:13:25,840 --> 00:13:28,400 Speaker 1: He very much shares those concerns. Dughtry mentioned that in 241 00:13:28,440 --> 00:13:32,280 Speaker 1: the news conference, preventing it from becoming a pandemic, Let's 242 00:13:32,280 --> 00:13:36,360 Speaker 1: just round things up by discussing that the quarantines, the 243 00:13:36,400 --> 00:13:40,040 Speaker 1: travel curbs, are they helping to prevent this from becoming 244 00:13:40,040 --> 00:13:44,240 Speaker 1: a pandemic? Well, you know, they're they're they're mixed. You know, 245 00:13:44,400 --> 00:13:48,400 Speaker 1: I understand why the US government declared the travel bands, 246 00:13:48,440 --> 00:13:51,760 Speaker 1: but remember those have a downside too, because other countries 247 00:13:51,800 --> 00:13:54,400 Speaker 1: are looking what happened to China and they're saying, well, 248 00:13:54,440 --> 00:13:57,600 Speaker 1: why would I be transparent about my epidemic? Uh? You know, 249 00:13:57,679 --> 00:14:01,080 Speaker 1: especially countries like Philippines at the hand on a lot 250 00:14:01,120 --> 00:14:04,160 Speaker 1: of commerce. What's the incentive for them to be transparent 251 00:14:04,200 --> 00:14:07,680 Speaker 1: now about this epidemic? So I'm ordinarily not a big 252 00:14:07,720 --> 00:14:11,120 Speaker 1: fan of travel bands. I understand the US government declared 253 00:14:11,120 --> 00:14:12,719 Speaker 1: it because it was a new agent. They needed time 254 00:14:12,760 --> 00:14:14,560 Speaker 1: to get their arms around it. But that could have 255 00:14:14,600 --> 00:14:17,800 Speaker 1: a detrimental effect quarantine. As I say, it's a fourteenth 256 00:14:17,800 --> 00:14:21,960 Speaker 1: century quarantine shift the fourteenth century technology. Uh, we could 257 00:14:21,960 --> 00:14:23,840 Speaker 1: have done better than that. I mean, it's really tragic 258 00:14:23,880 --> 00:14:27,840 Speaker 1: what's happening in Japan where people are actually acquiring infections 259 00:14:27,920 --> 00:14:30,840 Speaker 1: during the quarantine. It's it's unethical in my opinion, Dr Hotel. 260 00:14:30,960 --> 00:14:34,160 Speaker 1: Let's go back to Rockefeller University in virology one oh one. 261 00:14:34,600 --> 00:14:37,520 Speaker 1: Some of us took it, and uh, you know, I'm 262 00:14:37,560 --> 00:14:41,400 Speaker 1: sure it was the beginning course for you. China's reporting 263 00:14:41,640 --> 00:14:46,040 Speaker 1: that they want to take the plasma for antibody development 264 00:14:46,240 --> 00:14:51,120 Speaker 1: from patients that have been quote unquote cured. Is that normal? 265 00:14:51,360 --> 00:14:54,520 Speaker 1: Is that a pipe dream? Is that pop medicine? What 266 00:14:54,720 --> 00:14:58,480 Speaker 1: is that? No, it's it's a real approach. And but 267 00:14:59,320 --> 00:15:02,000 Speaker 1: the point is that it's a pretty old fashioned approach. 268 00:15:02,040 --> 00:15:06,119 Speaker 1: I mean, this was what was done during the pandemic 269 00:15:06,720 --> 00:15:10,000 Speaker 1: influenza epidemic because we have nothing else to offer. And 270 00:15:10,040 --> 00:15:12,360 Speaker 1: it sometimes works. It sometimes does, and it's a bit 271 00:15:12,400 --> 00:15:15,240 Speaker 1: tricky because you have to have the right apply the 272 00:15:15,320 --> 00:15:17,920 Speaker 1: right level of antibody, you have to time it right, 273 00:15:17,960 --> 00:15:21,400 Speaker 1: and there's a lot of uncertainty around it. Um So 274 00:15:21,880 --> 00:15:23,360 Speaker 1: it's I think we have to think of it as 275 00:15:23,400 --> 00:15:26,520 Speaker 1: a desperation measure, just like people are. We're desperate in 276 00:15:26,840 --> 00:15:29,560 Speaker 1: nineteen eighteen. The difference, so we've had a hundred years 277 00:15:29,800 --> 00:15:32,400 Speaker 1: to fine tune our technology that we're not applying to 278 00:15:32,400 --> 00:15:34,760 Speaker 1: this Peter Hotel, thank you so much. From the medieval 279 00:15:34,800 --> 00:15:38,240 Speaker 1: to onto where we are next month of the month 280 00:15:38,360 --> 00:15:46,840 Speaker 1: following in China, he is at Baylor University hand into 281 00:15:46,920 --> 00:15:49,200 Speaker 1: trays with us. This is on Washington and John, I 282 00:15:49,280 --> 00:15:51,840 Speaker 1: know there's like eight ways to go with handing out 283 00:15:51,840 --> 00:15:55,400 Speaker 1: the trays with Veta partners. She's so competent about all this. 284 00:15:55,520 --> 00:15:57,960 Speaker 1: Let me start with one man. Start with the one idea, John, 285 00:15:59,120 --> 00:16:03,560 Speaker 1: how good week His Senate Majority leader McConnell had henrietta 286 00:16:03,800 --> 00:16:07,440 Speaker 1: with all the turmoil here. He's like the senatorial bastion 287 00:16:07,480 --> 00:16:12,960 Speaker 1: for the president. His Senator McConnell had a good week. Morning, guys. 288 00:16:13,040 --> 00:16:15,840 Speaker 1: I think Senator McConnell very often has good weeks. I 289 00:16:15,840 --> 00:16:17,320 Speaker 1: think one of the best things about him is that 290 00:16:17,400 --> 00:16:20,960 Speaker 1: he really knows how to um set expectations and work 291 00:16:21,040 --> 00:16:24,640 Speaker 1: with his caucus and usually ends up on flying high 292 00:16:24,760 --> 00:16:26,520 Speaker 1: at the end of the day. So that would be 293 00:16:26,520 --> 00:16:30,080 Speaker 1: consistent with my experience. Let me bring up another idea, 294 00:16:30,200 --> 00:16:34,240 Speaker 1: the tension between the United States and China over the coronavirus. 295 00:16:34,520 --> 00:16:38,560 Speaker 1: Where in current current I asked National Economic Council Director 296 00:16:38,600 --> 00:16:41,760 Speaker 1: Larry Cuttle on Friday whether he trusted the data coming 297 00:16:41,760 --> 00:16:44,040 Speaker 1: out of China regarding the coronavirus, and he couldn't give 298 00:16:44,040 --> 00:16:47,200 Speaker 1: me a straight answer. A week later, Henrietta, he's being 299 00:16:47,360 --> 00:16:50,520 Speaker 1: way more open about the lack of transparency that he 300 00:16:50,600 --> 00:16:53,200 Speaker 1: thinks the US is getting from China. How much of 301 00:16:53,200 --> 00:16:56,560 Speaker 1: an issue is that right now down in Washington. Well, 302 00:16:56,600 --> 00:16:59,000 Speaker 1: i'll look that in with the previous question about Mitch 303 00:16:59,080 --> 00:17:02,200 Speaker 1: McConnell and speak to what we're hearing from the Senate 304 00:17:02,240 --> 00:17:06,920 Speaker 1: Republican Caucus, which is that they are increasingly pressuring both 305 00:17:07,000 --> 00:17:10,560 Speaker 1: the Majority leader and the White House to be very upfront, 306 00:17:10,640 --> 00:17:15,040 Speaker 1: not just about the coronavirus UM, but about the purchase 307 00:17:15,080 --> 00:17:18,760 Speaker 1: commitments that China is going to be missing or meeting 308 00:17:19,359 --> 00:17:21,399 Speaker 1: uh in the ones that they promised with the Phase 309 00:17:21,440 --> 00:17:24,320 Speaker 1: one trade deal. So they have grown over let's call it, 310 00:17:24,359 --> 00:17:28,960 Speaker 1: the last three weeks, increasingly anxious about the logistics around 311 00:17:29,000 --> 00:17:33,520 Speaker 1: the purchase acquisitions on everything from soy to manufacturing pork, etcetera. 312 00:17:33,520 --> 00:17:36,280 Speaker 1: It's very important for say Joni Earnest, who's up for 313 00:17:36,280 --> 00:17:39,240 Speaker 1: re election in Iowa. UM Senator Tom Killis is up 314 00:17:39,240 --> 00:17:42,240 Speaker 1: for re election in North Carolina to huge pork producing states, 315 00:17:42,480 --> 00:17:44,760 Speaker 1: and they are going directly to the administration and to 316 00:17:44,800 --> 00:17:47,320 Speaker 1: the Majority leaders saying, hey, we need a lot more information. 317 00:17:47,400 --> 00:17:50,880 Speaker 1: Are you using the coronavirus as a crutch to fall 318 00:17:50,920 --> 00:17:53,320 Speaker 1: back on in the event that China is going to 319 00:17:53,320 --> 00:17:56,440 Speaker 1: be missing these purchase commitments, which we suspect that they will. 320 00:17:56,680 --> 00:17:59,040 Speaker 1: I think the administration, as you know, here's the problem. 321 00:17:59,080 --> 00:18:01,320 Speaker 1: I've asked the administrats the same question. I've asked them 322 00:18:01,320 --> 00:18:03,560 Speaker 1: if they're setting themselves up for failure by still trying 323 00:18:03,560 --> 00:18:06,399 Speaker 1: to commit to this agreement that they struck a couple 324 00:18:06,400 --> 00:18:08,840 Speaker 1: of months back. The answer we're getting, though, is not 325 00:18:08,880 --> 00:18:11,479 Speaker 1: just from the administration, it's the Chinese that continue to 326 00:18:11,520 --> 00:18:16,240 Speaker 1: say they'll meet the agreement, they'll meet their economic targets, Henrietta, 327 00:18:16,320 --> 00:18:20,120 Speaker 1: How likely is that Well, I think it's I think 328 00:18:20,119 --> 00:18:22,440 Speaker 1: it's quite unlikely. UM, And I think that's a big 329 00:18:22,440 --> 00:18:24,919 Speaker 1: part of the reason why they didn't lay out exact 330 00:18:24,920 --> 00:18:27,200 Speaker 1: specifics on what those targets were. In a lot of 331 00:18:27,240 --> 00:18:30,600 Speaker 1: different commodity cases. UM, They've given us broad numbers. They've 332 00:18:30,640 --> 00:18:33,879 Speaker 1: also given us a two year time horizon. The first 333 00:18:34,280 --> 00:18:36,560 Speaker 1: basket is over a one year time horizon, and I 334 00:18:36,560 --> 00:18:40,520 Speaker 1: think you get differing responses when you ask, say a 335 00:18:40,520 --> 00:18:44,040 Speaker 1: farmer or a congressman or a senator versus the administration 336 00:18:44,119 --> 00:18:46,439 Speaker 1: or China on what it means to say that you're 337 00:18:46,440 --> 00:18:48,480 Speaker 1: going to commit to making those purchases in year one. 338 00:18:48,560 --> 00:18:50,840 Speaker 1: When does the year one start? Does it start February fourteen? 339 00:18:51,000 --> 00:18:53,080 Speaker 1: Did it start back in December when they made the 340 00:18:53,080 --> 00:18:55,640 Speaker 1: Phase one agreement? Um, the farmers are looking for aid 341 00:18:55,920 --> 00:18:59,720 Speaker 1: or sorry purchases immediately. Um, So I'm I'm expecting that 342 00:18:59,800 --> 00:19:03,240 Speaker 1: the House is going to want to highlight any purchases 343 00:19:03,320 --> 00:19:06,320 Speaker 1: made as soon as today obviously the day the deal 344 00:19:06,359 --> 00:19:08,840 Speaker 1: goes into effect, or in the next couple of days, 345 00:19:09,200 --> 00:19:11,840 Speaker 1: to sort of start telegraphing, hey, we're in the right trajectory, 346 00:19:12,200 --> 00:19:14,760 Speaker 1: even though by twelve months from now we may not 347 00:19:14,840 --> 00:19:17,520 Speaker 1: have hit the full target force. Ay. Um, you know, 348 00:19:17,640 --> 00:19:19,919 Speaker 1: pork exports or poultry or what have you. And I 349 00:19:19,920 --> 00:19:22,200 Speaker 1: think that they're really giving them a lot of wiggle 350 00:19:22,280 --> 00:19:26,240 Speaker 1: room and area to finesse. But the underlying issues that Republicans, 351 00:19:26,280 --> 00:19:29,800 Speaker 1: primarily from those farming states, are extremely anxious that they 352 00:19:29,840 --> 00:19:32,080 Speaker 1: have overpromised and will now under deliver, and that the 353 00:19:32,080 --> 00:19:34,400 Speaker 1: Administration is not giving them all the information they need, 354 00:19:34,440 --> 00:19:36,840 Speaker 1: either on the purchase side or the coronavirus side. Henrietta. 355 00:19:37,000 --> 00:19:40,000 Speaker 1: There is also a question here of how much tensions 356 00:19:40,040 --> 00:19:43,000 Speaker 1: are ratening up between the US and China, given the 357 00:19:43,040 --> 00:19:46,120 Speaker 1: fact that these agreements have to be put into place now, 358 00:19:46,200 --> 00:19:49,720 Speaker 1: and given the fact that China is not allowing US 359 00:19:49,720 --> 00:19:52,760 Speaker 1: specialists to come in and actually help with the on 360 00:19:52,840 --> 00:19:56,480 Speaker 1: the ground effort to contain the coronavirus. Can you give 361 00:19:56,560 --> 00:19:59,600 Speaker 1: us a sense of how much tensions are escalating behind 362 00:19:59,680 --> 00:20:02,960 Speaker 1: the sea means between these gim Pink camp and the 363 00:20:02,960 --> 00:20:07,800 Speaker 1: Trump camp. My understanding is that the tensions are being 364 00:20:07,880 --> 00:20:11,320 Speaker 1: exacerbated not necessarily by the two camps directly, but by 365 00:20:11,320 --> 00:20:14,199 Speaker 1: the external pressures that other people who have you know, 366 00:20:14,800 --> 00:20:18,159 Speaker 1: you know, secondary effects of this trade war want to 367 00:20:18,160 --> 00:20:21,800 Speaker 1: see happen. So I'm sure you're seeing, obviously the escalation 368 00:20:21,880 --> 00:20:25,159 Speaker 1: in rhetoric from the China Hawks, the Marco Rubio's and 369 00:20:25,240 --> 00:20:27,360 Speaker 1: Rick Scotts of the world who are getting all over 370 00:20:27,400 --> 00:20:31,199 Speaker 1: the Huawei angle. UM, the various federal agencies who are 371 00:20:31,280 --> 00:20:34,680 Speaker 1: ratcheting up their focus on Huawei UM and all those 372 00:20:34,680 --> 00:20:39,679 Speaker 1: sort of externalities have had a I don't know, if 373 00:20:39,680 --> 00:20:40,920 Speaker 1: you want to call it sort of like a vice 374 00:20:40,960 --> 00:20:44,320 Speaker 1: force on the administration and in the United States and 375 00:20:44,359 --> 00:20:47,040 Speaker 1: also in China, to make sure that they stay in 376 00:20:47,320 --> 00:20:50,600 Speaker 1: very close communication, are on the on the up, and 377 00:20:50,720 --> 00:20:53,200 Speaker 1: they're spreading that information to the best extent they can 378 00:20:53,200 --> 00:20:54,960 Speaker 1: and to the extent they want to. But those people 379 00:20:54,960 --> 00:20:58,720 Speaker 1: want information and made it very quickly. Here just I 380 00:20:58,720 --> 00:21:00,320 Speaker 1: don't even know how to place this is. To me, 381 00:21:00,359 --> 00:21:03,679 Speaker 1: it's almost gossip. We got an administration where a lot 382 00:21:03,760 --> 00:21:05,959 Speaker 1: of people left a year or two years ago, whatever, 383 00:21:06,640 --> 00:21:09,000 Speaker 1: and now the president wants to come back. Ho Pix 384 00:21:09,040 --> 00:21:11,960 Speaker 1: and others are coming back. What does the body What 385 00:21:12,000 --> 00:21:15,600 Speaker 1: does that mean to you as a Washington insider? What's 386 00:21:15,640 --> 00:21:18,359 Speaker 1: its signal that the President's bringing back the old guard. 387 00:21:18,359 --> 00:21:21,400 Speaker 1: I don't believe I've ever seen that. You know, it's 388 00:21:21,720 --> 00:21:23,879 Speaker 1: this is just anecdotal from my part. But I know 389 00:21:23,960 --> 00:21:28,240 Speaker 1: a lot of highly qualified Senate Republican Council who have 390 00:21:28,480 --> 00:21:32,119 Speaker 1: been working to get different jobs and are extremely qualified 391 00:21:32,280 --> 00:21:35,200 Speaker 1: stay in the U. S. Treasury or um in in 392 00:21:35,560 --> 00:21:39,760 Speaker 1: federal agencies at the banking or financial sector. And instead 393 00:21:39,880 --> 00:21:42,879 Speaker 1: of awarding those jobs to these highly competent folks who 394 00:21:42,920 --> 00:21:47,720 Speaker 1: are ready to sort of level up, the administration has 395 00:21:47,760 --> 00:21:51,080 Speaker 1: tightened its core group, and you have to be deep 396 00:21:51,240 --> 00:21:53,440 Speaker 1: on the end. You have to be extremely trusted full 397 00:21:53,480 --> 00:21:55,560 Speaker 1: MAGA in order to get a position now, and I 398 00:21:55,560 --> 00:21:57,439 Speaker 1: think that's self limiting and they sort of have to 399 00:21:57,480 --> 00:21:59,440 Speaker 1: go and recycle back through the folks that they've already 400 00:21:59,480 --> 00:22:02,320 Speaker 1: seen and in the trade. Thank you so much, VATA partners. 401 00:22:06,480 --> 00:22:08,399 Speaker 1: Let's talk about the data show. We gonna bringing toasting 402 00:22:08,440 --> 00:22:11,159 Speaker 1: slot of Deutsche Bank Chief Economy's toasting. Fantastic to have 403 00:22:11,200 --> 00:22:13,359 Speaker 1: you with us on the program. Let's just talk about 404 00:22:13,359 --> 00:22:18,280 Speaker 1: the data itself before we continue, the control group versus 405 00:22:18,320 --> 00:22:21,480 Speaker 1: the headline print toasting. What should we read into each? 406 00:22:22,680 --> 00:22:25,440 Speaker 1: So the control group is what goes into GDP, and 407 00:22:25,480 --> 00:22:27,440 Speaker 1: what's important about that is that when you have had 408 00:22:27,760 --> 00:22:30,720 Speaker 1: a very strong labor market in January, then it's a 409 00:22:30,760 --> 00:22:34,080 Speaker 1: little bit puzzling why consumption would be slowing down like that. 410 00:22:34,480 --> 00:22:38,040 Speaker 1: So issue continues to be whether there is any inconsistency 411 00:22:38,040 --> 00:22:40,159 Speaker 1: between the labor month indicators and what's going on in 412 00:22:40,200 --> 00:22:42,240 Speaker 1: the consumer side. And it does look like from the 413 00:22:42,320 --> 00:22:45,160 Speaker 1: least of the first glance here that it's a little 414 00:22:45,200 --> 00:22:48,280 Speaker 1: bit worrying consumption has weaken down. So mentals Zonnie and 415 00:22:48,320 --> 00:22:49,879 Speaker 1: you are gonna sit down and well, he's going to 416 00:22:49,960 --> 00:22:52,080 Speaker 1: do the work. You're the big start now, Torsten, so 417 00:22:52,160 --> 00:22:54,359 Speaker 1: you're just gonna get park at him. But you guys 418 00:22:54,400 --> 00:22:57,200 Speaker 1: are going to do the partial differentials of those equations. 419 00:22:57,200 --> 00:23:01,600 Speaker 1: How important is the marginal weakness in the control group 420 00:23:01,920 --> 00:23:05,000 Speaker 1: to the calculation of why will C plus I plus 421 00:23:05,040 --> 00:23:08,760 Speaker 1: G plus the net export mass? It is very important 422 00:23:08,800 --> 00:23:11,760 Speaker 1: because as usual we should always remember that the consumption 423 00:23:11,840 --> 00:23:15,000 Speaker 1: is SEP. That doesn't mean that the other components have 424 00:23:15,160 --> 00:23:17,639 Speaker 1: ex spending in particular, which is fifty percent GDP is 425 00:23:17,680 --> 00:23:20,960 Speaker 1: not important because consumer spending is normally most stable. So 426 00:23:21,040 --> 00:23:23,760 Speaker 1: if you look at this cyclical components of GDP, then 427 00:23:23,760 --> 00:23:27,680 Speaker 1: consumption normally is split into the durables and nondurables path. 428 00:23:27,920 --> 00:23:30,840 Speaker 1: But generally, speaking to your question, consumer spending is very 429 00:23:30,880 --> 00:23:34,919 Speaker 1: critical because simply it is such a significant economy. Ten 430 00:23:37,000 --> 00:23:39,760 Speaker 1: just printed one fifty seven handle. Yes, you're seeing it 431 00:23:39,800 --> 00:23:42,400 Speaker 1: in the same kind of move on the two year touristed. 432 00:23:42,480 --> 00:23:45,280 Speaker 1: I want to connect the line from the job market 433 00:23:45,400 --> 00:23:48,040 Speaker 1: to consumption to retail sales. And you put out a 434 00:23:48,040 --> 00:23:51,920 Speaker 1: really interesting chart today about how the job openings we've 435 00:23:51,960 --> 00:23:54,520 Speaker 1: been falling at the fastest rate since the financial crisis, 436 00:23:54,560 --> 00:23:57,520 Speaker 1: paired with the SMP five hundred reaching new highs, can 437 00:23:57,560 --> 00:24:01,240 Speaker 1: you draw the line from what we're being in retail 438 00:24:01,320 --> 00:24:04,400 Speaker 1: sales to the jobs market and sort of the feedback 439 00:24:04,440 --> 00:24:07,800 Speaker 1: loop there. So what we have worried about for a while, 440 00:24:08,160 --> 00:24:10,639 Speaker 1: and as Tom was saying, is that the labor market 441 00:24:10,720 --> 00:24:13,359 Speaker 1: is looking at a number of different indicators underneath the 442 00:24:13,400 --> 00:24:16,480 Speaker 1: headline to be a little bit more like it's slowing down. 443 00:24:16,720 --> 00:24:19,560 Speaker 1: Most importantly, Waights Girls has started to top out and 444 00:24:19,680 --> 00:24:22,320 Speaker 1: slowly moved sideways, and some indicators begin to move a 445 00:24:22,320 --> 00:24:25,199 Speaker 1: bit down. But more worryingly, indicators we've got earlier this 446 00:24:25,240 --> 00:24:28,439 Speaker 1: week they met job openings. Job openings is now falling 447 00:24:28,520 --> 00:24:32,000 Speaker 1: at the fastest rate since the Financic crisis. This is 448 00:24:32,040 --> 00:24:34,359 Speaker 1: a leading indicator for what's happening in the label market. 449 00:24:34,480 --> 00:24:38,359 Speaker 1: So we are beginning to wonder maybe there is something 450 00:24:38,480 --> 00:24:41,399 Speaker 1: underneath the labor market that is beginning to look a 451 00:24:41,400 --> 00:24:43,359 Speaker 1: little bit weaker. And of course you started asking what 452 00:24:43,400 --> 00:24:45,720 Speaker 1: could it be the reason why the labor market would 453 00:24:45,720 --> 00:24:48,560 Speaker 1: be slowing down, And there could be two reasons. One 454 00:24:48,600 --> 00:24:50,680 Speaker 1: reason could be either that we're getting to the tail 455 00:24:50,920 --> 00:24:54,000 Speaker 1: end of the corporate text cuts. Remember a fiscal lift 456 00:24:54,240 --> 00:24:56,800 Speaker 1: always has a temporary effect and always has a temporary 457 00:24:56,800 --> 00:24:59,440 Speaker 1: boost that lasts. In this case, it lasted for five 458 00:24:59,480 --> 00:25:02,240 Speaker 1: six quarter US, so maybe we're no longer seeing that 459 00:25:02,359 --> 00:25:05,440 Speaker 1: boost from the corporate text guard. Alternatively, the second explanation 460 00:25:05,560 --> 00:25:07,600 Speaker 1: is that maybe in an election year where we could 461 00:25:07,600 --> 00:25:10,760 Speaker 1: either get more business regulation or we could get more 462 00:25:10,760 --> 00:25:14,040 Speaker 1: trick or maybe businesses are beginning to pull a little 463 00:25:14,080 --> 00:25:16,879 Speaker 1: bit back because there is just more uncertainty. Maybe on 464 00:25:16,920 --> 00:25:19,560 Speaker 1: the horizon is a bit more cloudy the outlook than 465 00:25:19,600 --> 00:25:21,639 Speaker 1: what has been for the last several quarters. Source and 466 00:25:21,680 --> 00:25:23,840 Speaker 1: it's still early days. We don't have a huge amount 467 00:25:23,840 --> 00:25:25,720 Speaker 1: of data to go on to say with conviction that 468 00:25:25,760 --> 00:25:28,560 Speaker 1: we've started to see a cyclical peak in the labor 469 00:25:28,600 --> 00:25:30,800 Speaker 1: market and we're starting to roll over. It's a few 470 00:25:30,840 --> 00:25:33,560 Speaker 1: months of data. I would point to initial jobless claims 471 00:25:33,560 --> 00:25:35,920 Speaker 1: to Houston and just ask you the question, is that 472 00:25:36,000 --> 00:25:38,480 Speaker 1: the guide for where we are in the labor market 473 00:25:38,520 --> 00:25:40,240 Speaker 1: at the moment, and given the fact that we're still 474 00:25:40,240 --> 00:25:43,320 Speaker 1: down there two k is the coast clear to some degree? 475 00:25:44,640 --> 00:25:47,440 Speaker 1: For now, it looks like the coast is clear, but 476 00:25:47,480 --> 00:25:50,000 Speaker 1: the horizon, if you will, for that you is a 477 00:25:50,080 --> 00:25:53,359 Speaker 1: little bit shorter. My colleagues Metal Stative, Bred Ryan and 478 00:25:53,400 --> 00:25:56,320 Speaker 1: just In the White basically did a very interesting study 479 00:25:56,480 --> 00:26:00,200 Speaker 1: which exactly found that the best leading indicators still is job. 480 00:26:00,280 --> 00:26:03,720 Speaker 1: This claims it actually outperforms from a forecasting perspective some 481 00:26:03,840 --> 00:26:07,040 Speaker 1: of the other indicators, including the some rules another indicators 482 00:26:07,080 --> 00:26:09,639 Speaker 1: that tried to predict whether slowdown is coming or not. 483 00:26:09,800 --> 00:26:11,800 Speaker 1: So you're right. The weekly data we have from the 484 00:26:11,840 --> 00:26:14,000 Speaker 1: little market to drop this claims it does in the 485 00:26:14,080 --> 00:26:17,160 Speaker 1: strong signal. So in that sense, yes, it is still 486 00:26:17,160 --> 00:26:19,959 Speaker 1: looking like things are okay for now, but we are 487 00:26:19,960 --> 00:26:23,119 Speaker 1: still watching very carefully when some indicators like Jopper, I'm sorry, 488 00:26:23,119 --> 00:26:25,600 Speaker 1: like job openings is slowing down as much as it 489 00:26:25,720 --> 00:26:29,760 Speaker 1: is it Tursten, My head is spinning, okay. I've got 490 00:26:30,040 --> 00:26:32,640 Speaker 1: retail sales saggy, and I got the tenure in it's 491 00:26:32,680 --> 00:26:36,280 Speaker 1: out at one. I've got claims John, which are better 492 00:26:36,320 --> 00:26:38,479 Speaker 1: than ever. I mean back to the Poco when they 493 00:26:38,480 --> 00:26:43,639 Speaker 1: were playing Western nine seventy. And I've got no wage 494 00:26:43,640 --> 00:26:47,160 Speaker 1: growth and you're telling me, Torsten, there's no inflation out there. 495 00:26:47,600 --> 00:26:50,000 Speaker 1: How do you put that together for a g DP 496 00:26:50,200 --> 00:26:53,120 Speaker 1: call at Deutsche Bank? I mean, what's your view? Twelve 497 00:26:53,119 --> 00:26:56,879 Speaker 1: months forward on g d P given this incredible super 498 00:26:56,960 --> 00:27:00,560 Speaker 1: swimming in so they've really good answer to that question 499 00:27:00,680 --> 00:27:03,600 Speaker 1: is that, well, let's do a review of the set 500 00:27:03,680 --> 00:27:07,719 Speaker 1: policy because we don't understand meaning the fit we the market. 501 00:27:07,840 --> 00:27:11,000 Speaker 1: Really nobody has a good idea why inflation is so low, 502 00:27:11,040 --> 00:27:14,560 Speaker 1: the unemployer rate is at the lowest level in fifty years, 503 00:27:14,600 --> 00:27:16,680 Speaker 1: and you're seeing waste growth at the bottom of the 504 00:27:16,680 --> 00:27:20,360 Speaker 1: income distribution has been accelerating, but in aggregate in particular, 505 00:27:20,400 --> 00:27:23,080 Speaker 1: waste growth for the higher parts of linkome distribution has 506 00:27:23,160 --> 00:27:26,160 Speaker 1: not been growing very strongly. On Acrica, that's very limited, 507 00:27:26,520 --> 00:27:29,320 Speaker 1: very limited wage growth, which has basically left the FED 508 00:27:29,400 --> 00:27:32,440 Speaker 1: to the conclusion maybe because of this limited wage growth, 509 00:27:32,480 --> 00:27:34,720 Speaker 1: maybe we do have more room to lower interest rate. 510 00:27:34,760 --> 00:27:36,639 Speaker 1: So let's do a review which will come out, as 511 00:27:36,640 --> 00:27:38,320 Speaker 1: we know, by the middle of this year, and try 512 00:27:38,359 --> 00:27:41,280 Speaker 1: to figure out, well, maybe we can actually allow race 513 00:27:41,320 --> 00:27:44,080 Speaker 1: to below what he just said, there's critical by the 514 00:27:44,119 --> 00:27:47,800 Speaker 1: middle of this year. Does Chairman Powell have that luxury Lisa, 515 00:27:48,160 --> 00:27:50,200 Speaker 1: That's what I don't you know, That's what I find 516 00:27:50,280 --> 00:27:53,760 Speaker 1: fascinating is does Madame mcguarde have that luxury This Chairman 517 00:27:53,800 --> 00:27:56,360 Speaker 1: Powell have that luxury it's a good question because they 518 00:27:56,359 --> 00:27:58,959 Speaker 1: have to move ahead of the actual downturn that they 519 00:27:59,000 --> 00:28:03,600 Speaker 1: actually see in order for that's the theory. The other 520 00:28:03,680 --> 00:28:06,520 Speaker 1: question and the theory is that we're in a Goldilocks 521 00:28:06,600 --> 00:28:10,320 Speaker 1: kind of period, and it seems increasingly tense, given the 522 00:28:10,359 --> 00:28:12,960 Speaker 1: fact that we're seeing a slowdown and job openings, and 523 00:28:12,960 --> 00:28:15,600 Speaker 1: we're seeing uh, you know, retail sales at least in 524 00:28:15,600 --> 00:28:18,359 Speaker 1: the control group come in a little bit softer towardst 525 00:28:18,480 --> 00:28:22,400 Speaker 1: in how long can we be in a goldilocks period? Well, 526 00:28:22,520 --> 00:28:24,560 Speaker 1: if I look at my Bloomberg screen and I tied 527 00:28:24,720 --> 00:28:27,800 Speaker 1: E t FC go, then I will see what consensus 528 00:28:27,840 --> 00:28:30,280 Speaker 1: expectations are to the US Economic O woul looking is 529 00:28:30,320 --> 00:28:33,720 Speaker 1: you're taking the quality profile. It's just absolutely stunning that 530 00:28:33,800 --> 00:28:36,399 Speaker 1: the consensus is completely flat one point nine for the 531 00:28:36,440 --> 00:28:39,360 Speaker 1: next six quarters and GDP growth and also exactly one 532 00:28:39,360 --> 00:28:43,600 Speaker 1: point nine for inflation meaning cops. So we are half 533 00:28:43,680 --> 00:28:45,920 Speaker 1: jokingly said we are in at one point nine economy 534 00:28:45,960 --> 00:28:48,640 Speaker 1: where everything is slat in terms of inflation, everything is 535 00:28:48,640 --> 00:28:51,200 Speaker 1: slat in terms of DDT Outlook, there's a number of 536 00:28:51,280 --> 00:28:53,640 Speaker 1: risks on the horizon, not only virus, which is what 537 00:28:53,760 --> 00:28:55,360 Speaker 1: caused what we spend most of our time on at 538 00:28:55,360 --> 00:28:58,640 Speaker 1: the moment, but also risks in terms of election, risks 539 00:28:58,680 --> 00:29:01,640 Speaker 1: in terms of what's happening with the slowdown in Germany, 540 00:29:02,000 --> 00:29:04,280 Speaker 1: risks in terms of all the other issues that have 541 00:29:04,400 --> 00:29:07,640 Speaker 1: been on the agenda, in terms of debating the outlook, Toursten, 542 00:29:07,720 --> 00:29:10,160 Speaker 1: this is great. I've never seen this function before. E 543 00:29:10,320 --> 00:29:13,520 Speaker 1: C f C go down at the bottom of it. 544 00:29:13,520 --> 00:29:15,840 Speaker 1: It's got a tenure yield at two point one two 545 00:29:16,400 --> 00:29:18,960 Speaker 1: out of bunch of is Torsten, is that even feasible? 546 00:29:19,000 --> 00:29:22,360 Speaker 1: We can get out to a ginormous too twelve. So 547 00:29:22,800 --> 00:29:25,400 Speaker 1: that's the wonders of that screen made that it shows 548 00:29:25,440 --> 00:29:27,280 Speaker 1: you also acpectations of what the fit will do from 549 00:29:27,320 --> 00:29:30,080 Speaker 1: the consensus and what tenuere race will do. And as 550 00:29:30,120 --> 00:29:32,760 Speaker 1: you know, another child that I sent you once in 551 00:29:32,760 --> 00:29:34,880 Speaker 1: a while is that the consensus always have to do 552 00:29:34,960 --> 00:29:37,560 Speaker 1: the rates are going up, and that is often, of 553 00:29:37,560 --> 00:29:40,400 Speaker 1: course wrong, and we're debating now is that likely end 554 00:29:40,400 --> 00:29:43,200 Speaker 1: with this scenario that we're debating also about the downside risks, 555 00:29:43,320 --> 00:29:45,640 Speaker 1: it does look like there's more downside risk to raise 556 00:29:45,680 --> 00:29:48,600 Speaker 1: than there's upside. It's Torsten, And I know it's been 557 00:29:48,640 --> 00:29:51,760 Speaker 1: a mediocre interview because John Farrell didn't participate. He's over 558 00:29:51,840 --> 00:29:56,920 Speaker 1: calculating four dozen and e CFC every week for about 559 00:29:56,960 --> 00:30:02,840 Speaker 1: five years. Get out of the kitchen. But John, you 560 00:30:03,040 --> 00:30:05,440 Speaker 1: four dozen roses? Did you get it down to six dollars? 561 00:30:05,520 --> 00:30:11,520 Speaker 1: Stem about? So we're gonna leave it that. Thank you 562 00:30:11,600 --> 00:30:14,800 Speaker 1: so much greatly. I really want to say that was 563 00:30:14,840 --> 00:30:16,680 Speaker 1: that he's just killed it. You know, is the U 564 00:30:16,760 --> 00:30:19,400 Speaker 1: S economists for Deutsche Bank, is they really shifted down 565 00:30:19,440 --> 00:30:27,560 Speaker 1: towards that one point nine percent number. This is a 566 00:30:27,680 --> 00:30:30,360 Speaker 1: joy And here's what we try to keep our promises. 567 00:30:30,400 --> 00:30:33,200 Speaker 1: And we were freezing on the deck and Davos with 568 00:30:33,720 --> 00:30:36,680 Speaker 1: Jason Bordoff of Columbia University, and because the news flow 569 00:30:36,720 --> 00:30:39,360 Speaker 1: and breaking news or whatever, we short changed him on 570 00:30:39,440 --> 00:30:42,160 Speaker 1: time and we begged him to try to do more 571 00:30:42,240 --> 00:30:44,880 Speaker 1: with us when he was back at Columbia University in 572 00:30:44,920 --> 00:30:47,760 Speaker 1: New York. And we're thrilled, thrilled he could join us 573 00:30:47,760 --> 00:30:49,880 Speaker 1: this morning. And what we're gonna do, folks, to sort 574 00:30:49,880 --> 00:30:54,160 Speaker 1: of adapt to the news, which is the Valentine's Day perfectly, 575 00:30:54,240 --> 00:30:58,120 Speaker 1: So promises kept. We're gonna talk about big oil, We're 576 00:30:58,120 --> 00:31:00,520 Speaker 1: gonna talk about how they're a day opting to the 577 00:31:00,640 --> 00:31:04,480 Speaker 1: zeitgeist and can they make and can they keep promises? 578 00:31:04,600 --> 00:31:09,440 Speaker 1: Jason Bordoff is with Colombia. He's president Senior director for 579 00:31:09,560 --> 00:31:13,440 Speaker 1: Energy and Climate Change, works with the National Security Council, 580 00:31:13,480 --> 00:31:16,080 Speaker 1: and it's truly one of the leading voices on energy 581 00:31:16,440 --> 00:31:19,760 Speaker 1: and climate in America. Jason b p came out with 582 00:31:19,840 --> 00:31:22,920 Speaker 1: a massive splash. You know, it had a whole pr 583 00:31:23,080 --> 00:31:27,480 Speaker 1: feel to it. How do they make those promises? You 584 00:31:27,560 --> 00:31:30,400 Speaker 1: know they're gonna be carbon free, whatever, How do they 585 00:31:30,440 --> 00:31:36,080 Speaker 1: make those promises and then actually execute Those are the 586 00:31:36,120 --> 00:31:37,800 Speaker 1: details that we're thanks for having me on. Those are 587 00:31:37,800 --> 00:31:40,520 Speaker 1: the details were waiting to hear from them, but exactly 588 00:31:40,560 --> 00:31:42,840 Speaker 1: how they're gonna how they're gonna do that. It was 589 00:31:42,880 --> 00:31:46,000 Speaker 1: a significant announcement. They went further than most other companies 590 00:31:46,120 --> 00:31:48,560 Speaker 1: because they said that they would actually bring to net 591 00:31:48,680 --> 00:31:52,840 Speaker 1: zero by the emissions from the use of all the 592 00:31:52,880 --> 00:31:55,200 Speaker 1: oil and gas they produced, not just what they admit, 593 00:31:55,560 --> 00:31:57,360 Speaker 1: but what happens when we put it into our cars 594 00:31:57,360 --> 00:31:59,360 Speaker 1: and everything else. So how do you do that? You 595 00:31:59,400 --> 00:32:01,640 Speaker 1: can capture CEO two and store it. You can maybe 596 00:32:01,720 --> 00:32:05,080 Speaker 1: offset it with trees or or carbon or removal, or 597 00:32:05,160 --> 00:32:06,760 Speaker 1: you produce a lot less oil and gas and a 598 00:32:06,760 --> 00:32:09,960 Speaker 1: lot more of something else like renewables. So they're fundamentally 599 00:32:09,960 --> 00:32:12,080 Speaker 1: promising to be a very different kind of energy company. 600 00:32:12,120 --> 00:32:15,400 Speaker 1: In the question is how do they achieve that and 601 00:32:15,400 --> 00:32:17,240 Speaker 1: how do they do it in the way that delivers 602 00:32:17,240 --> 00:32:19,760 Speaker 1: the kind of turns and dividends that people expect. A 603 00:32:19,760 --> 00:32:22,480 Speaker 1: whole bunch of questions here, Professor bord of do they 604 00:32:22,560 --> 00:32:25,280 Speaker 1: have a model to work on? I mean, is this 605 00:32:25,360 --> 00:32:29,720 Speaker 1: original execution or is somebody in some other area actually 606 00:32:29,760 --> 00:32:34,920 Speaker 1: accomplished this before. Well, we've seen companies like the Danish 607 00:32:35,120 --> 00:32:38,000 Speaker 1: and Oil and Natural Gas company that became worsted they 608 00:32:38,000 --> 00:32:41,719 Speaker 1: became a renewables company. The scale of a company like 609 00:32:41,840 --> 00:32:46,320 Speaker 1: VP Shell Cotell these are so massive, Uh. They have 610 00:32:46,560 --> 00:32:50,680 Speaker 1: the project expert management expertise, the capital budgets, the R 611 00:32:50,720 --> 00:32:53,560 Speaker 1: and D, the engineering resources to develop the kind of 612 00:32:53,600 --> 00:32:57,080 Speaker 1: solutions we're going to need to really achieve deep decarbonization. 613 00:32:57,160 --> 00:32:59,120 Speaker 1: It's not just about solar and wind. If you want 614 00:32:59,160 --> 00:33:01,560 Speaker 1: to think about how going to do airplanes or heavy 615 00:33:01,600 --> 00:33:05,840 Speaker 1: trucks or the industrial sector. We're gonna need hydrogen, carbon capture, 616 00:33:05,880 --> 00:33:09,040 Speaker 1: ammonia host of solutions that you need companies at that 617 00:33:09,120 --> 00:33:13,960 Speaker 1: scale to deliver. Professor on Wednesday, House Republicans began revealing 618 00:33:14,000 --> 00:33:16,560 Speaker 1: their plan to combat climate change, and it was sort 619 00:33:16,560 --> 00:33:21,120 Speaker 1: of this concession to especially younger voters, even within the 620 00:33:21,160 --> 00:33:24,240 Speaker 1: Conservative Party that they had to sort of change their 621 00:33:24,280 --> 00:33:26,640 Speaker 1: stance a bit. Did you have a chance to sort 622 00:33:26,680 --> 00:33:28,480 Speaker 1: of look through it? Do you you have a sense of 623 00:33:28,680 --> 00:33:33,960 Speaker 1: what they're proposing? Yeah? I do, and it's it's encouraging 624 00:33:34,040 --> 00:33:37,200 Speaker 1: to see Republicans in the US responding to the rising 625 00:33:37,200 --> 00:33:40,360 Speaker 1: pressure among especially a younger generation on both sides of 626 00:33:40,360 --> 00:33:42,720 Speaker 1: the aisle, more of the Democrats, but really on both sides, 627 00:33:43,240 --> 00:33:46,400 Speaker 1: to recognize the urgency of the climate challenge. I think 628 00:33:46,480 --> 00:33:49,240 Speaker 1: it is clearly not enough. It has a heavy focus 629 00:33:49,360 --> 00:33:52,600 Speaker 1: on innovation and investing in R and D, and that's 630 00:33:52,600 --> 00:33:56,040 Speaker 1: going to be important, but market forces alone are not 631 00:33:56,080 --> 00:33:58,280 Speaker 1: going to deliver the solutions we need. As much as 632 00:33:58,280 --> 00:34:00,320 Speaker 1: we've seen in a reduction in US emission because of 633 00:34:00,320 --> 00:34:02,640 Speaker 1: shifting from cold to gas. Cheap natural gas has done 634 00:34:02,640 --> 00:34:05,160 Speaker 1: that without much policy. We're gonna need a lot stronger 635 00:34:05,200 --> 00:34:07,280 Speaker 1: policy support to put a price on carbon or do 636 00:34:07,360 --> 00:34:10,680 Speaker 1: something else to drive this transition. So, given that, how 637 00:34:11,120 --> 00:34:14,600 Speaker 1: big of a shift is this for Republicans in the House, 638 00:34:15,120 --> 00:34:18,879 Speaker 1: who have traditionally been associated with climate change denial, and 639 00:34:19,080 --> 00:34:21,960 Speaker 1: certainly President Trump stands here. How big of a shift 640 00:34:22,040 --> 00:34:24,160 Speaker 1: is it to see them actually proposing anything at all. 641 00:34:26,000 --> 00:34:28,040 Speaker 1: I think it's a shift, and it's a very encouraging one, 642 00:34:28,080 --> 00:34:31,840 Speaker 1: and it's a recognition that people widely recognize the climate 643 00:34:31,880 --> 00:34:34,200 Speaker 1: change is a reality. It's an urgent problem and we 644 00:34:34,280 --> 00:34:36,640 Speaker 1: all need to work together toward a solution. But again, 645 00:34:36,680 --> 00:34:38,799 Speaker 1: we're not yet at a level where we're taking the 646 00:34:38,880 --> 00:34:41,480 Speaker 1: scale of the challenge seriously. But you know, these things 647 00:34:41,560 --> 00:34:44,600 Speaker 1: change gradually and change over time. Jason board off with 648 00:34:44,719 --> 00:34:48,760 Speaker 1: us with Columbia University something down the line to challenge. 649 00:34:48,760 --> 00:34:50,720 Speaker 1: Were thrilled that he was with us. Of course, Senior 650 00:34:50,719 --> 00:34:55,120 Speaker 1: Director for Energy and Climate Change uh is well at 651 00:34:55,160 --> 00:35:00,080 Speaker 1: Columbia University and Seper Center on Global Energy and Policy. 652 00:35:00,840 --> 00:35:05,080 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 653 00:35:05,120 --> 00:35:10,440 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 654 00:35:10,480 --> 00:35:14,720 Speaker 1: platform you prefer. I'm on Twitter at Tom Keene before 655 00:35:14,760 --> 00:35:18,600 Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg 656 00:35:18,680 --> 00:35:18,960 Speaker 1: Radio