WEBVTT - A Bond Breakdown and a Yen Rebound 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.960 --> 0:00:15.560 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:15.600 --> 0:00:18.960 with Paul Sweeney. Join us each day for insight from 0:00:18.960 --> 0:00:23.160 the best in economics, finance, investment, and international relations. You 0:00:23.160 --> 0:00:26.520 can also watch the show live on YouTube. Visit the 0:00:26.520 --> 0:00:31.280 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:31.280 --> 0:00:34.320 mornings from seven to ten am Eastern from our global 0:00:34.360 --> 0:00:39.000 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:39.360 --> 0:00:42.920 or anywhere else you listen and always I'm Bloomberg Radio, 0:00:43.080 --> 0:00:47.480 the Bloomberg Terminal, and the Bloomberg Business app Joining us. 0:00:47.520 --> 0:00:49.400 Now as you just talk de equities, we talked about 0:00:49.479 --> 0:00:52.440 snow and yield, Stephen Major joins his global head of 0:00:52.479 --> 0:00:56.520 fixed income research at HSBC. Mister Major appears with us 0:00:56.840 --> 0:00:59.440 because we will not discuss west Ham season and me 0:00:59.440 --> 0:01:01.000 it's the only it's the. 0:01:01.000 --> 0:01:02.160 Only reason he would come out. 0:01:02.600 --> 0:01:06.000 Steve Major, you have been, You've been the bastion and 0:01:06.040 --> 0:01:10.040 Steve Major of saying, yeah, yields are going to go higher, 0:01:10.720 --> 0:01:12.720 but then they're going to work their way back down. 0:01:12.959 --> 0:01:16.039 Is that trend in place yet where yields are going 0:01:16.120 --> 0:01:19.039 to come down from the recent eyes and particularly the 0:01:19.240 --> 0:01:20.960 real yield recent high. 0:01:22.800 --> 0:01:26.319 Yeah, I think we're seeing maybe the third or fourth 0:01:26.560 --> 0:01:29.679 peak in yields in the last couple of years. I mean, 0:01:30.000 --> 0:01:32.760 I've just written about this. It looks like a triple top. 0:01:33.360 --> 0:01:37.720 So any investor who bought in the last couple of 0:01:37.800 --> 0:01:42.319 years has been disappointed unless they were lucky on their timing. Really, so, 0:01:42.600 --> 0:01:46.000 I just think back in January this year, people were 0:01:46.680 --> 0:01:49.559 reluctant to go into fixed income because of the strong 0:01:49.680 --> 0:01:53.240 rally we had from October through December. But now you've 0:01:53.280 --> 0:01:56.720 got a chance to go again. So those that missed 0:01:56.720 --> 0:01:59.680 out the last few months, they got a chance to buy. 0:02:00.280 --> 0:02:05.040 I would challenge the mainstream narrative that inflation is a 0:02:05.120 --> 0:02:09.800 problem because I think the main exploration for the rising 0:02:09.880 --> 0:02:12.640 yields is actually down to growth. It's down to things 0:02:12.639 --> 0:02:17.880 that people didn't forecast, like population increases, fiscal large yes, 0:02:18.040 --> 0:02:21.200 that kind of thing. So I suspect the setup is 0:02:21.240 --> 0:02:25.880 quite fragile for growth going forward, and therefore there's potential 0:02:25.960 --> 0:02:28.480 for yields to fall quite a lot. I mean, if 0:02:28.520 --> 0:02:30.160 you want to look at it through the prism of 0:02:30.200 --> 0:02:35.160 what's priced in to the FED rate outlook, as you know, 0:02:35.360 --> 0:02:37.720 only a few months ago we were all talking about 0:02:37.720 --> 0:02:39.639 six or seven cuts. Now it's gone down to one 0:02:39.720 --> 0:02:43.040 or two. That's just how the market works. The forward 0:02:43.240 --> 0:02:46.800 rate is not a forecast. It can move a long 0:02:46.840 --> 0:02:52.440 way away from the center of gravity. So I suspect 0:02:52.520 --> 0:02:56.240 the probability of rate hikes is much less than the 0:02:56.280 --> 0:03:00.720 probability of rate cuts. Therefore, there is an that's symmetry 0:03:01.280 --> 0:03:05.200 in the setup. So if you enter ten year treasuries today, 0:03:06.480 --> 0:03:09.760 if yields go up one hundred basis points, you lose 0:03:09.960 --> 0:03:12.640 a couple of percent. If they go down one hundred 0:03:12.680 --> 0:03:15.919 basis points, you make out big time. So I think 0:03:15.960 --> 0:03:19.280 that's what matters. You are now paid to go into 0:03:19.320 --> 0:03:19.919 fixed income. 0:03:20.560 --> 0:03:23.440 So Stephen, I guess the question for a lot of 0:03:23.480 --> 0:03:26.320 folks is you know how much duration do I take? 0:03:26.360 --> 0:03:28.399 I mean, we can park somebody in a two year 0:03:28.400 --> 0:03:32.040 treasure and get down near five percent. There is that 0:03:32.120 --> 0:03:33.920 the trade? Or I want to go out a little longer. 0:03:34.040 --> 0:03:38.040 Well, yeah, two year is the safe trade, And I 0:03:38.040 --> 0:03:41.040 imagine some people it depends who you are. So I 0:03:41.080 --> 0:03:44.560 can understand why a retail investor would extend from owning 0:03:44.600 --> 0:03:46.880 bills to twos right here. 0:03:47.000 --> 0:03:47.160 But. 0:03:48.640 --> 0:03:51.960 There's also this idea that you need to take account 0:03:52.000 --> 0:03:55.840 of the opportunity cost. So the danger with owning twos 0:03:55.960 --> 0:03:58.360 is that you're going to regret it in two years 0:03:58.440 --> 0:04:03.680 time when they mature. What you need is tens or longer. 0:04:03.840 --> 0:04:07.400 So I've been recommending people go into the belly. I 0:04:07.400 --> 0:04:14.160 think duration is a much underrated concept here. Obviously I'm 0:04:14.200 --> 0:04:18.200 wrong if equities keep going up every week, and I'm 0:04:18.240 --> 0:04:21.640 wrong if the FED hikes again. But I'm just thinking 0:04:21.680 --> 0:04:24.159 about the balance of risks over the rest of the year, 0:04:24.680 --> 0:04:26.040 and I reckon yields go down. 0:04:26.360 --> 0:04:29.680 Stephen, you're in Hong Kong and you've got a real 0:04:29.760 --> 0:04:33.919 perception about the Pacific rim. I'm going to start with 0:04:33.960 --> 0:04:37.360 the generalization that China is buying gold. Are they buying 0:04:37.480 --> 0:04:40.080 less of our bills notes in bonds? 0:04:41.839 --> 0:04:45.760 Well, it's publicly available information. You can see the numbers 0:04:45.800 --> 0:04:49.880 for March that have just been released. So they have 0:04:50.000 --> 0:04:55.240 been reducing their holdings of dollar product so that they 0:04:55.320 --> 0:04:57.479 might have less treasuries, but they might have more of 0:04:57.520 --> 0:05:01.880 something else. I think it's it's again public clear information 0:05:01.960 --> 0:05:04.160 that the gold holdings have gone up in the private 0:05:04.200 --> 0:05:08.160 and public sector. What's interesting, though, is the entirety of 0:05:08.200 --> 0:05:11.040 the data. When you look at who owns the treasuries, 0:05:11.560 --> 0:05:16.880 about thirty percent are held overseas, and that number isn't 0:05:16.880 --> 0:05:21.320 going down. So for every foreign investor that's been reducing 0:05:21.360 --> 0:05:23.960 their holdings, there's someone else who's picking some bonds up. 0:05:24.600 --> 0:05:27.600 That has to be the case. So look at the 0:05:28.640 --> 0:05:33.159 European investors. For example, what Japan's doing is quite interesting 0:05:33.240 --> 0:05:36.320 because perhaps the official sector could be selling some dollars 0:05:36.360 --> 0:05:39.960 soon given the FX moves. But I think net net, 0:05:40.160 --> 0:05:41.920 the overseas holdings are fairly steady. 0:05:41.960 --> 0:05:46.080 Tom stephen As, I think bout HSBC. I think complete 0:05:46.480 --> 0:05:50.359 global view. Where in a fixed income world do you 0:05:50.400 --> 0:05:52.680 see the best opportunities here? Is it the US ors? 0:05:52.680 --> 0:05:57.720 At other parts of the world, Well, I like emerging 0:05:57.760 --> 0:06:01.760 market sovereigns, and so we've been thinking about an interesting 0:06:01.800 --> 0:06:07.960 comparison between US high yield corporates and high yield emerging 0:06:08.000 --> 0:06:13.800 market sovereigns. Now in that group they'll be Egypt, Turkey, Omahan. 0:06:13.640 --> 0:06:14.359 For example. 0:06:14.600 --> 0:06:18.560 But you can get dollar denominated em sovereigns with a 0:06:18.600 --> 0:06:21.320 really decent yield right now. So I think they compare 0:06:21.400 --> 0:06:27.200 quite nicely to corporate high yield. And I think globally, 0:06:27.360 --> 0:06:30.839 I would would look at duration as being quite attractive 0:06:30.839 --> 0:06:33.039 in Europe as well as the US. In fact, in 0:06:33.040 --> 0:06:37.039 fact the last three months we've favored taking more duration 0:06:37.200 --> 0:06:40.080 exposure in Europe than the US, and that's because we 0:06:40.120 --> 0:06:42.520 think the ECB and or the Bank of England are 0:06:42.520 --> 0:06:44.640 going to cut before the FED. But I think that's 0:06:44.680 --> 0:06:47.720 becoming a bit of a consensus view. It wasn't at 0:06:47.760 --> 0:06:50.520 the start of the year. But it doesn't make it wrong. 0:06:50.880 --> 0:06:52.200 I think Europe cuts first. 0:06:52.440 --> 0:06:55.760 Steve just a minute left, what's a normal ten year 0:06:55.839 --> 0:06:57.600 real yield in the United States? 0:06:58.720 --> 0:06:59.440 We're at two points. 0:06:59.440 --> 0:07:02.520 Well, it should reflect yeah, it should reflect the trend 0:07:02.520 --> 0:07:08.680 GDP over time. So if you can get too you're 0:07:08.920 --> 0:07:13.040 above what the what the FED is forecasted as longer 0:07:13.120 --> 0:07:13.880 run TRENDEDYP. 0:07:14.080 --> 0:07:15.080 So you should be okay. 0:07:16.400 --> 0:07:18.440 If you want to compare the real yield to the 0:07:18.560 --> 0:07:22.320 longer run neutral rate or all Star or what have you. 0:07:22.680 --> 0:07:25.080 I still think you've got enough yield in the So 0:07:25.200 --> 0:07:27.800 the market yield is one hundred and fifty to two 0:07:27.920 --> 0:07:31.640 hundred above the Feds are start. The market yield is 0:07:31.800 --> 0:07:35.960 above the trend GDP, so so take your pick. There's enough. 0:07:36.080 --> 0:07:37.760 There's enough yield there right. 0:07:38.720 --> 0:07:41.280 Steve Major, thank you so much. Will they just be seen? 0:07:51.760 --> 0:07:54.120 And there's something when you have to come in and 0:07:54.240 --> 0:07:55.880 fill very large shoes. 0:07:56.240 --> 0:07:57.160 It's good to Redica. 0:07:57.760 --> 0:08:01.240 It was iconic at Morgan Stanley. He was such a voice, 0:08:01.280 --> 0:08:04.720 particularly with all the turmoil of Europe and Brexit and 0:08:04.760 --> 0:08:07.840 all that. And to come in and try to fix 0:08:07.920 --> 0:08:12.239 and replace Anskun to Rediker is a tough test. James 0:08:12.240 --> 0:08:14.680 Lord joins US now had a foreign exchange and emergency 0:08:14.680 --> 0:08:20.520 market strategy. It Morgan Stanley, you haven't advantaged, James Lord. 0:08:20.760 --> 0:08:25.800 You have Robbie Feldman in Tokyo Dovetail, your foreign exchange 0:08:25.840 --> 0:08:31.600 work with truly the number one English speaking expert on Japan, 0:08:32.280 --> 0:08:37.480 doctor Feldman of MIT in Tokyo Dovetail. Robbie Feldman and 0:08:37.520 --> 0:08:38.600 you together. 0:08:38.440 --> 0:08:41.199 An Yen Well. 0:08:41.320 --> 0:08:44.280 I mean you've just mentioned two of my heroes at 0:08:44.320 --> 0:08:48.840 Morgan Stanley, my former boss Andretica, who was all over 0:08:48.920 --> 0:08:53.360 the Dolly n trade when Abanomics first started in twenty thirteen, 0:08:54.360 --> 0:08:57.240 and Robbie Feldman, who is just absolutely fantastic on all 0:08:57.280 --> 0:08:57.880 things Japan. 0:08:58.000 --> 0:08:58.480 Obviously. 0:08:59.080 --> 0:09:00.880 I mean, I think has happened really. 0:09:00.720 --> 0:09:03.640 With the end this morning is that there are it 0:09:03.920 --> 0:09:06.959 looks as though the Ministry of Finance has has intervened. 0:09:07.400 --> 0:09:09.920 We don't know for sure, there's been no official confirmation. 0:09:09.520 --> 0:09:11.920 Of it, but given the volatility that we saw on 0:09:11.960 --> 0:09:14.800 Friday and then move in dolly En this morning, I mean, 0:09:14.840 --> 0:09:17.800 it certainly seems like the market conditions that they would 0:09:17.840 --> 0:09:18.520 intervene in. 0:09:19.360 --> 0:09:21.360 And yeah, we've seen it. We've seen a reasonable trae 0:09:21.440 --> 0:09:22.520 retracement since then. 0:09:22.960 --> 0:09:25.720 Right, Well, I think the big question is is whether 0:09:25.760 --> 0:09:27.680 it really works, right, I mean, I you know, there's 0:09:27.760 --> 0:09:32.920 very little evidence that effects intervention by by official authorities, 0:09:32.920 --> 0:09:35.840 whether central banks or ministries or finance, actually actually works. 0:09:35.920 --> 0:09:37.960 You kind of need to have a lot of the 0:09:38.000 --> 0:09:41.800 fundamentals lining up for it to really change. And I 0:09:41.960 --> 0:09:44.280 just I just think that really in the case of 0:09:44.360 --> 0:09:46.920 dolly En, the hands the direction of it is going 0:09:46.960 --> 0:09:48.079 to be really more in the hands of. 0:09:48.080 --> 0:09:51.679 J Powell rather than rather than anyone in Japan. 0:09:51.800 --> 0:09:54.800 Let me ask you just a general unsophisticated question. 0:09:54.800 --> 0:09:57.199 I do best on those on Monday. I'm really good 0:09:57.200 --> 0:09:57.920 at those. 0:09:58.240 --> 0:10:01.480 James Ward, If they and out of their piggy bank 0:10:02.320 --> 0:10:06.360 to intervene, what is the cost? Is it a substantial 0:10:06.440 --> 0:10:09.320 cost to Japan to intervene or not. 0:10:11.960 --> 0:10:14.200 Well, they have plenty of reserves that they can use 0:10:14.240 --> 0:10:15.320 to intervene in. 0:10:15.360 --> 0:10:20.080 And given that the kind of the fairly sporadic way 0:10:20.800 --> 0:10:23.479 or a relatively rare nature of these kind of interventions, 0:10:23.480 --> 0:10:27.200 so I think dipping into their piggy bank every now 0:10:27.240 --> 0:10:29.840 and then for these sorts of events is not is 0:10:29.880 --> 0:10:33.160 not hugely costly in the overall context of their reserve position. 0:10:34.559 --> 0:10:36.360 But I guess like you have to sort of think 0:10:36.360 --> 0:10:38.679 about the benefit, right, like, what are they what are 0:10:38.720 --> 0:10:41.520 they getting for the effort that they put in and 0:10:41.559 --> 0:10:43.160 the money that they spend doing it. 0:10:44.200 --> 0:10:46.080 And I'm not entirely sure that they get a huge 0:10:46.160 --> 0:10:47.040 lot huge amount. 0:10:47.080 --> 0:10:49.360 I mean, they can buy some time, right, the benefit 0:10:49.400 --> 0:10:52.439 is that they get some time where the market starts 0:10:52.440 --> 0:10:55.720 to stabilize, temporarily starts to reassess maybe people who are 0:10:55.720 --> 0:10:57.600 long dollar yen kind. 0:10:57.360 --> 0:11:01.160 Of justice the injuries for a little bit. 0:11:01.640 --> 0:11:04.400 But I don't think that the benefit is really is 0:11:04.679 --> 0:11:05.920 really there for the long time. 0:11:05.800 --> 0:11:08.040 Tip to tip on intervention if and I'm want to 0:11:08.080 --> 0:11:11.120 be careful your folks, Bloomberg does not report that there 0:11:11.240 --> 0:11:15.000 was an intervention by institutions in Japan. Mister Lord has 0:11:15.040 --> 0:11:18.400 made clear, that's their interpretation of Morgan Stanley. 0:11:18.440 --> 0:11:20.600 I want to be very careful on that, Paul. 0:11:20.920 --> 0:11:23.960 The yen strength tip to tip on this right now 0:11:24.520 --> 0:11:25.679 is about three. 0:11:25.600 --> 0:11:26.720 Point five percent. 0:11:26.840 --> 0:11:29.320 Okay, that's that's the ginormous move. 0:11:29.640 --> 0:11:33.079 That's like a normal day in the you know, name 0:11:33.559 --> 0:11:34.479 the Polish. 0:11:34.200 --> 0:11:37.960 Lot of here exactly, James. Why doesn't just for those 0:11:37.960 --> 0:11:39.400 of us that don't follow this day to day, why 0:11:39.520 --> 0:11:41.679 wouldn't this center bank come out and say that what 0:11:41.720 --> 0:11:44.560 they did or did not do number one? Number two? 0:11:45.000 --> 0:11:47.000 If they're out there buying yen, aren't they calling your 0:11:47.040 --> 0:11:49.680 trader Morgan stand there goldmen sacks same buy yen for me? 0:11:49.679 --> 0:11:51.520 Wouldn't you guys know? How does that all work? 0:11:53.080 --> 0:11:53.240 Oh? 0:11:53.280 --> 0:11:56.960 I think they'll go mostly by the local banks and 0:11:57.040 --> 0:12:00.440 by local jet banks. I mean not the if not 0:12:00.480 --> 0:12:04.079 the representatives of of foreign banks that are working in Japan. 0:12:04.280 --> 0:12:06.839 I think mostly that will be done by by the 0:12:06.920 --> 0:12:10.920 Japanese banks at least. That's the kind of history and 0:12:10.920 --> 0:12:12.840 and and the market color that that we get when 0:12:12.880 --> 0:12:15.880 when these sorts of events happen, and eventually you know, 0:12:15.920 --> 0:12:17.800 they will confirm it. I mean, I think at the 0:12:17.920 --> 0:12:19.600 end of the month, at the end at the end 0:12:19.640 --> 0:12:23.719 of May, they will report the official intervention data that 0:12:23.760 --> 0:12:26.440 gets that gets reported on a monthly basis, and in 0:12:26.520 --> 0:12:28.640 there we will see whether or not they've intervened. 0:12:29.800 --> 0:12:31.439 And I think, you know, maybe that kind of. 0:12:31.360 --> 0:12:35.199 Strategic ambiguity in the short term is helpful for them, 0:12:35.280 --> 0:12:38.400 because if they come out and say, actually, no, we 0:12:38.400 --> 0:12:41.080 we didn't intervene now, then you know, a lot of 0:12:41.160 --> 0:12:42.840 I think a lot of investors would see that as 0:12:42.880 --> 0:12:44.640 a green light to start buying some dollars again. 0:12:44.720 --> 0:12:47.280 And they and they clearly don't. They don't really want 0:12:47.320 --> 0:12:47.760 to do that. 0:12:48.720 --> 0:12:51.079 And if they, if they confirmed it now, then it 0:12:51.080 --> 0:12:53.280 would it would just result in a lot more questions 0:12:53.320 --> 0:12:55.320 about how much and is this going to be a 0:12:55.360 --> 0:12:57.840 new policy, And so I think for the time being 0:12:57.840 --> 0:13:00.720 they'll just let the market keep guessing and just wait 0:13:00.760 --> 0:13:02.800 for that official confirmation to come out at the end 0:13:02.840 --> 0:13:03.200 of May. 0:13:03.800 --> 0:13:05.959 All right, James, So, if I look at the Bloomberg 0:13:06.160 --> 0:13:09.440 Dollar Spot Index up about four percent, really off of 0:13:09.440 --> 0:13:13.480 that kind of late December mark. Here, if the dollars 0:13:13.800 --> 0:13:16.760 that strong, who's on the other side of that train, 0:13:16.800 --> 0:13:18.160 what currencies are getting hurt the most? 0:13:20.200 --> 0:13:22.440 Well, I mean, yen has been on the other side 0:13:22.440 --> 0:13:25.160 of it clearly for a lot of this year, and 0:13:25.200 --> 0:13:27.280 a lot of the low yielding currencies really have been 0:13:27.280 --> 0:13:28.960 the ones that have suffered the most, Right, I mean, 0:13:29.000 --> 0:13:31.640 we've been in an environment this year where, at least 0:13:31.760 --> 0:13:35.440 up until up until the end of Q one, we. 0:13:35.320 --> 0:13:39.240 Saw appetite for carriage carry trades were very very strong, right. 0:13:39.240 --> 0:13:41.319 I think we include the dollar in that, I mean, 0:13:41.360 --> 0:13:45.400 as the highest yielding G ten currency, it was performing 0:13:45.440 --> 0:13:48.199 extremely well against everything else that was pretty much lower 0:13:48.280 --> 0:13:51.480 yielding then it So euros obviously suffered a bit this year, 0:13:51.800 --> 0:13:53.840 Cables come under and started to come under a little 0:13:53.880 --> 0:13:54.480 bit of pressure. 0:13:54.800 --> 0:13:57.160 But then as we've started to see more and more 0:13:57.200 --> 0:13:57.839 evidence of. 0:13:57.800 --> 0:14:01.640 This reinflation in the the States, it has started to 0:14:01.679 --> 0:14:04.960 impact rates volatility, and it has started to impact effects volatility, 0:14:05.120 --> 0:14:08.040 and when that happy happens, car carry trades come under pressure. 0:14:08.120 --> 0:14:11.120 So even the lights of Mexican, Pesto, Brazilian around real 0:14:11.400 --> 0:14:14.439 they've started to weaken a little bit more meaningfully recently. 0:14:14.600 --> 0:14:17.320 So the dollar strength has really broadened out from what 0:14:17.400 --> 0:14:20.560 was just a low yield of trade to something that's 0:14:20.560 --> 0:14:22.400 had been a little a little bit broader. 0:14:23.040 --> 0:14:25.280 Where are we on dollar strength, I haven't asked this 0:14:25.440 --> 0:14:30.120 question in ages, but unlike trade weighted broad trade weighted 0:14:30.200 --> 0:14:34.360 major real trade weighted dollar. I'll let you pick the series, 0:14:34.440 --> 0:14:38.240 But is it how richly richly priced is US dollar 0:14:38.320 --> 0:14:39.600 right now? 0:14:40.200 --> 0:14:40.400 Yeah? 0:14:40.440 --> 0:14:43.160 I mean we're kind of close to multi decade highs 0:14:43.160 --> 0:14:45.320 really in the real if you take the FEDS trade 0:14:45.320 --> 0:14:49.720 weighted real build dollar index on a real basis, we're 0:14:49.720 --> 0:14:51.960 pretty much in multi decade highs. I mean, you know, 0:14:52.040 --> 0:14:54.360 we haven't quite I don't think in real terms, gone 0:14:54.400 --> 0:14:57.760 back to the level that we saw around October twenty 0:14:57.800 --> 0:15:00.000 twenty two, which incidentally was the last time the minute 0:15:00.080 --> 0:15:03.840 your Finance in Japan intervened like that was coming off 0:15:03.880 --> 0:15:07.480 of a long bear market for US treasuries rate hikes. 0:15:07.520 --> 0:15:10.480 Rate hikes have been priced in quite substantially, and we 0:15:10.520 --> 0:15:12.960 haven't quite got to that level on the broad on 0:15:13.000 --> 0:15:14.720 the broad doll I mean, this was when your dollar 0:15:14.800 --> 0:15:18.040 was kind of trading closer to parity and we had 0:15:18.040 --> 0:15:18.680 a lot more dollars. 0:15:18.920 --> 0:15:21.400 We haven't got back to those levels just yet. 0:15:22.680 --> 0:15:24.640 But yeah, I mean it's interesting that that was the 0:15:24.720 --> 0:15:27.720 last the Minister of Finance intervention in twenty twenty two. 0:15:27.760 --> 0:15:30.040 In October twenty twenty two did mark the peak of 0:15:30.080 --> 0:15:32.720 the dollar. I'm not sure it will be this time 0:15:32.760 --> 0:15:34.840 because I think we really need to see US inflation 0:15:34.960 --> 0:15:35.400 come down. 0:15:35.840 --> 0:15:37.520 But the parallel is there. 0:15:37.480 --> 0:15:39.840 James, I'm running out of time. Let me squeeze this in. 0:15:39.920 --> 0:15:42.720 President Trump and his supporters over the weekend talk about 0:15:42.760 --> 0:15:47.240 managing the dollar. Can any given politician or government manage 0:15:47.280 --> 0:15:47.760 the dollar? 0:15:49.880 --> 0:15:52.200 I think it's going to be really tough. I think 0:15:52.200 --> 0:15:53.240 it's really tough to do that. 0:15:53.320 --> 0:15:56.680 I mean, I think on the one hand, they coordinated 0:15:56.680 --> 0:16:00.120 effects intervention can work, obviously, the most famous example of 0:16:00.120 --> 0:16:02.760 being the Plaza record. So if the US was were 0:16:02.800 --> 0:16:06.920 able to convince this many trading partners to cooperate, then. 0:16:06.840 --> 0:16:08.560 Then that might then that might work. 0:16:08.960 --> 0:16:12.240 But if it's just the US pushing for it itself, 0:16:12.760 --> 0:16:14.960 I'm not sure that it's going to be that affected, 0:16:14.960 --> 0:16:18.200 particularly if it's not again consistent with the outlook for 0:16:18.200 --> 0:16:21.200 the US economy. If you if you continuously get strong 0:16:21.200 --> 0:16:24.080 inflation prints and clearly if you have a week of dollar, 0:16:24.320 --> 0:16:26.360 the risk is that invasion just stays high in the 0:16:26.440 --> 0:16:29.120 US for longer and the FED just keeps hiking, then 0:16:29.280 --> 0:16:30.920 then it will really blunt the impact of it. 0:16:31.200 --> 0:16:34.280 Very informative. Don't be a stranger. He's nicer than hands. 0:16:34.360 --> 0:16:38.920 Redicer Well, hands was sort of always sure, James Lord, 0:16:39.000 --> 0:16:46.920 thank you so much. With Morgan Stanley, it's been too long. 0:16:46.960 --> 0:16:50.720 Tina Fordham joins us right now with Fordham Global Force, 0:16:50.760 --> 0:16:55.960 so she's got some incredible perspective on geopolitics, and Tina, 0:16:55.960 --> 0:16:58.240 I really want to focus on what I haven't focused on. 0:16:58.960 --> 0:17:02.120 We're just to go near on Gaza. I saw a 0:17:02.120 --> 0:17:05.840 photograph over the weekend of the complete total serial like 0:17:05.960 --> 0:17:09.399 devastation of Gaza. What are they going to do down 0:17:09.440 --> 0:17:14.679 the strip in Rafa and how does diplomacy fit in 0:17:14.720 --> 0:17:19.119 to a further devastration of Israel of the geography. 0:17:20.960 --> 0:17:29.480 Well, you've laid out just how complex and depressing the 0:17:29.520 --> 0:17:33.200 picture is. There's no other word for it. We are 0:17:33.240 --> 0:17:37.080 hearing that the ICC, the International Criminal Court, is on 0:17:37.119 --> 0:17:43.040 the verge of issuing arrest warrants to Israeli Prime Minister Natanyahu. 0:17:43.840 --> 0:17:47.000 There are talks going on with Mohammed Ben Solomon and 0:17:47.280 --> 0:17:51.120 other officials in Riad on the sidelines of the World 0:17:51.119 --> 0:17:55.560 Economic Forum meeting there. And I guess it was Friday 0:17:55.600 --> 0:17:59.240 that the IDF, the Israeli Defense Force said that they 0:17:59.720 --> 0:18:04.080 were prepared to begin the offensive in in Rafa unless 0:18:05.320 --> 0:18:08.320 Hamas returns the hostages and aegreates to a peace deal. 0:18:08.440 --> 0:18:09.719 Paul wants to get in here. But I I ask 0:18:09.760 --> 0:18:12.840 a dumb question. If I'm in northern Gaza and they 0:18:12.880 --> 0:18:15.800 blow me out, I go down to Middle Gaza. If 0:18:15.840 --> 0:18:17.960 I'm in middle Gaza and they blow me out, I 0:18:18.040 --> 0:18:21.600 go down to lower Gaza. Gaza is on the border 0:18:21.680 --> 0:18:26.200 with Egypt. If they blow people out of Rafa, where 0:18:26.240 --> 0:18:28.560 do they go well? 0:18:28.600 --> 0:18:31.119 And this is why the talks are going on with 0:18:31.480 --> 0:18:35.680 the Egyptians right now, who who have not accepted Palestinian 0:18:35.760 --> 0:18:39.400 refugees right And a corollary to this, which I think 0:18:39.440 --> 0:18:42.960 people forget, is that during the war in Syria, Turkey 0:18:43.240 --> 0:18:48.840 accepted large numbers of refugees from that war. A similar 0:18:49.320 --> 0:18:54.600 agreement has not been forthcoming with Egypt. They don't want 0:18:54.640 --> 0:18:57.160 to get stuck with a lot of refugees, and they 0:18:57.200 --> 0:19:04.080 have their own security concerns to be mindful of. But yes, 0:19:04.200 --> 0:19:07.679 there's nowhere for the for the refugees to go. There's 0:19:07.680 --> 0:19:12.280 nowhere for the people of Gaza to go, and Israelis 0:19:12.280 --> 0:19:14.600 are ramping up the pressure and we have to wonder 0:19:14.760 --> 0:19:17.320 if what's going on on the sidelines of these meetings 0:19:17.320 --> 0:19:20.600 in Riad is that golf Arab states are doing exactly 0:19:20.600 --> 0:19:21.120 the same thing. 0:19:21.440 --> 0:19:24.280 So, Tina, we're more than six months into this operation 0:19:24.480 --> 0:19:28.399 here by the Israelis, you know, unspeakable levels of destruction 0:19:29.160 --> 0:19:33.720 of Gaza. In hindsight, is there any indication that Hamas 0:19:34.080 --> 0:19:38.119 miscalculated here terribly in their October seventh attack. 0:19:40.560 --> 0:19:45.360 Well, it's hard to see what they've gained apart from 0:19:45.480 --> 0:19:50.320 putting the Palestinians back on the agenda. Remember that, you know, 0:19:50.560 --> 0:19:54.280 just a few well six months ago, really people were 0:19:54.320 --> 0:19:59.880 talking about this impending deal normalization between Israel and sou 0:20:00.240 --> 0:20:02.080 and others that would have paved the way for a 0:20:02.080 --> 0:20:06.679 lot of regional economic integration. Gulf states still want that 0:20:06.800 --> 0:20:09.359 to happen, but a Palestinian state was not part of 0:20:09.400 --> 0:20:13.080 the discussion. And then you know, we've entered this kind 0:20:13.119 --> 0:20:18.120 of hellscape of the offensive in Gaza, the Houthi rebels, 0:20:18.160 --> 0:20:22.880 the recent exchange, you know, kind of unprecedents in exchange 0:20:22.880 --> 0:20:27.520 of missile fire. My question, I mean to myself, is 0:20:27.560 --> 0:20:32.040 this the geopolitical bottom, Like can it get worse? Or 0:20:32.520 --> 0:20:37.359 are is Hamas decided that it's going to accept oslo 0:20:38.119 --> 0:20:40.520 kind of terms. I mean, that is kind of mind blowing. 0:20:40.560 --> 0:20:44.520 But you really have to get to the bottom before 0:20:44.560 --> 0:20:45.400 you can consider. 0:20:45.640 --> 0:20:48.159 Tina, I think you're the most qualified person I know, 0:20:48.280 --> 0:20:51.800 maybe leslie Vena, Muria Chathamouse as well, but Tina Fordham, 0:20:51.840 --> 0:20:55.280 you are more qualified than anyone I know to talk 0:20:55.480 --> 0:21:01.600 about the college protests in America over to nineteen sixty eight. 0:21:02.040 --> 0:21:03.560 In all the work I've done on that with Gui 0:21:03.640 --> 0:21:08.080 Sarman of Paris and others, how do you treat the 0:21:08.240 --> 0:21:13.199 protests in elite schools in America within the filter that 0:21:13.240 --> 0:21:19.640 you have of diplomacy and the history of protest It is. 0:21:21.040 --> 0:21:23.159 Quite a spectacle. I mean, first of all, I'm a 0:21:23.200 --> 0:21:27.399 Columbia alum, and I'm on the advisory board for SIBA, 0:21:27.440 --> 0:21:31.240 the School of International and Public Affairs, which is also 0:21:31.359 --> 0:21:35.199 caught up in these o it's mainly the college. I 0:21:35.240 --> 0:21:37.800 don't think this is nineteen sixty eight, right. I think 0:21:37.880 --> 0:21:41.000 that this is identity politics in the United States that 0:21:41.160 --> 0:21:45.800 has now incorporated a foreign policy angle. I think it's 0:21:45.800 --> 0:21:53.359 incredibly difficult for the university administrations to balance their commitment 0:21:53.400 --> 0:21:57.159 to free speech and to the community that is a 0:21:57.280 --> 0:22:02.639 university with their title six obligations. They've got to protect 0:22:02.680 --> 0:22:07.639 students and the whole sorry spectacle seems to me. And 0:22:07.840 --> 0:22:10.639 you know, I said in London, where I have for 0:22:10.680 --> 0:22:14.680 a long time to be a culmination of the culture 0:22:14.720 --> 0:22:20.280