WEBVTT - Surveillance: Only So Much ECB Can Do, Rai Says 0:00:00.160 --> 0:00:12.960 Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jay Lee. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.400 Bloomberg dot Com, and of course on the Bloomberg We're 0:00:27.400 --> 0:00:29.360 gonna be talking about the markets through the day. Of course, 0:00:29.440 --> 0:00:31.440 a lift to this ecrety market this morning off the 0:00:31.480 --> 0:00:33.480 back of some comments from a Chinese official who said, 0:00:34.840 --> 0:00:37.080 we're gonna ask Matt Kender in just a moment. Let 0:00:37.159 --> 0:00:40.640 me let me just get to the quote of the morning, 0:00:40.680 --> 0:00:43.360 shall we from a Chinese official saying the following. In 0:00:43.360 --> 0:00:45.920 the past two weeks, Top Nego shared has had serious 0:00:45.960 --> 0:00:50.120 constructive discussions and agree to remove additional tariffs in phrases 0:00:50.520 --> 0:00:54.000 as progress is made on the agreement. If China US 0:00:54.200 --> 0:00:56.800 reach a Phase one deal, both sides should roll back 0:00:56.840 --> 0:01:00.760 existing additional tariffs. I should emphasize here any agreement on 0:01:00.800 --> 0:01:04.320 tariff rollback it's ultimately still conditional on a Phase one 0:01:04.319 --> 0:01:07.360 deal being reached. And Tom, a phase one deal still 0:01:07.400 --> 0:01:09.840 hasn't been agreed exactly, and what is so critically and 0:01:09.880 --> 0:01:12.440 I read carefully the comments again, These comments. Folks are 0:01:12.480 --> 0:01:16.560 not manager massage. They're really out of Beijing and straightforward. 0:01:16.959 --> 0:01:21.040 The Chinese are looking sequential. They're looking at this not 0:01:21.240 --> 0:01:25.920 as a one off tariff rollback, but they've verbage a 0:01:26.120 --> 0:01:31.280 sequential rollback, and I would suggest the Americans gonna be 0:01:31.319 --> 0:01:34.280 a long way from that. No comment from the President yet, 0:01:34.319 --> 0:01:36.639 no comment from this administration here in the United States. 0:01:36.760 --> 0:01:38.840 I did mention Max Caton's name, so let's bring him 0:01:38.840 --> 0:01:41.640 in show we as species multi assets strategist. He joins 0:01:41.680 --> 0:01:43.480 us here in New York City. Good morning to Max. 0:01:43.600 --> 0:01:45.840 Good morning. Gonna get to your underweight equity care, which 0:01:45.840 --> 0:01:47.760 I think should be the focus of this conversation in 0:01:47.800 --> 0:01:50.400 just a moment. But first of all, your interpretation of 0:01:50.400 --> 0:01:53.520 what's happening here with the negotiations between the US and China. 0:01:53.840 --> 0:01:56.280 We still have a negotiated a Phase one agreement, yet 0:01:56.280 --> 0:01:58.440 this market is behaving as if we have here we go. 0:01:58.560 --> 0:02:01.160 I mean, you just mentioned it, you say, good morning. 0:02:01.200 --> 0:02:03.520 There's three people doing the happy talk. I'm guessing I 0:02:03.560 --> 0:02:06.200 was invited to do the sort of opposite, and I 0:02:06.200 --> 0:02:09.120 don't think you're gonna invited German strategists to hear some 0:02:09.280 --> 0:02:11.960 happy talk. Really, Um, so there we go. I'm gonna 0:02:11.960 --> 0:02:14.080 be a bit bit more dismal in the next next 0:02:14.080 --> 0:02:17.200 couple of minutes. Um, Look, the only thing really I 0:02:17.280 --> 0:02:20.160 understood from what you were reading out loud is about 0:02:20.160 --> 0:02:23.560 twenties seven subjunctives and ifs and ifs and ifs right. 0:02:24.120 --> 0:02:26.760 So the problem for me is, I mean, there's so 0:02:26.800 --> 0:02:29.720 many things that really have to happen and that have 0:02:29.880 --> 0:02:34.480 to go seamlessly, really really smoothly until I can say, 0:02:34.520 --> 0:02:37.600 okay now that that price level where we are right 0:02:37.639 --> 0:02:40.640 now is justified. And bear in mind that means okay, 0:02:40.680 --> 0:02:43.000 that price level now is justified. That doesn't mean okay, 0:02:43.040 --> 0:02:45.280 now if I got hundred dollars in cash that means 0:02:45.280 --> 0:02:48.280 I need to put more money into equities. It just means, okay, fine, 0:02:48.440 --> 0:02:51.079 this price level is justified. It's not new news, right, 0:02:51.120 --> 0:02:54.160 It's not. It's just confirming news. I'm not like, I'm 0:02:54.200 --> 0:02:57.760 not sort of advocating and utterly bearish stance. I think 0:02:57.800 --> 0:03:00.000 pretty much in six months time, we're probably gonna sit 0:03:00.040 --> 0:03:03.320 around this beautiful table here and and probably going to 0:03:03.360 --> 0:03:06.600 be plus minors zero in equity. It's probably pretty range band. 0:03:06.639 --> 0:03:08.760 But this is an environment where you're saying, look, either 0:03:08.840 --> 0:03:12.359 tales are probably too extreme and you have to continue 0:03:12.360 --> 0:03:14.600 to sell the rally, you have to continue buying the dip. 0:03:14.720 --> 0:03:16.959 Your message so fast sounds like the conditions needed for 0:03:17.000 --> 0:03:19.720 a short squeeze are very different to the conditions needed 0:03:19.720 --> 0:03:23.840 for a sustainable rally. Into you went underweight equities, I 0:03:23.840 --> 0:03:26.840 believe on Monday. Yes, what's the pushback been so far? Um? 0:03:27.240 --> 0:03:29.960 I think so far one of our clients has has 0:03:30.000 --> 0:03:32.919 agreed with me, which kind of you know it's is 0:03:33.000 --> 0:03:36.520 first pretty fun um and and second um, that's the 0:03:36.560 --> 0:03:38.440 one really where you see, oh, this is this is 0:03:38.440 --> 0:03:40.880 getting quite worrisome because you know, if if you think 0:03:40.880 --> 0:03:43.040 about twenty nineteen, if we use the sort of twenty 0:03:43.120 --> 0:03:47.800 nineteen narrative to look into effectively, twenty can be summed 0:03:47.840 --> 0:03:50.200 up in one sentence, you can say, like, fundamentally we 0:03:50.280 --> 0:03:52.760 all want to be much more bearish. The problem is 0:03:52.880 --> 0:03:55.160 the guy left and right of me thinks the same right, 0:03:55.200 --> 0:03:58.000 So positioning is pretty light. It's if anything, if you 0:03:58.000 --> 0:03:59.960 look at equities, if you look at high eild and 0:04:00.040 --> 0:04:01.840 risk assets in general, if you look at some of 0:04:01.840 --> 0:04:04.600 our metrics, we look at beaters, it's it's an unloved relly. 0:04:04.680 --> 0:04:07.720 It's it's unloved, but it's supported by the low interest 0:04:07.800 --> 0:04:10.800 rate environment there. And if there is no trade deal, 0:04:11.000 --> 0:04:13.640 you'll see yields go back down there. We won't that 0:04:13.680 --> 0:04:16.400 be supportive eventually, Liza, But that that is exactly the point. 0:04:16.400 --> 0:04:18.680 And that's why I'm so skeptical about the rally right now, 0:04:18.880 --> 0:04:21.040 because so there's a lot of talk now and there 0:04:21.080 --> 0:04:22.640 has been a lot of talk in the last couple 0:04:22.680 --> 0:04:25.320 of weeks. Oh, this is now rotation into value. This 0:04:25.400 --> 0:04:29.640 is rotation out of duration into cyclical sectors and equities 0:04:29.680 --> 0:04:32.719 for example. The problem, and then much of the Hidgen 0:04:32.880 --> 0:04:36.240 hinges on the sort of narrative that you're saying, financial 0:04:36.240 --> 0:04:39.320 conditions over the last twelve months have loosen so much 0:04:39.360 --> 0:04:42.559 and have become so much easier because of this shift 0:04:42.600 --> 0:04:46.240 in monetary policy really worldwide. The problem, however, is, just 0:04:46.360 --> 0:04:49.159 like you said, if that continues, obviously yields will continue 0:04:49.200 --> 0:04:52.839 to spike, and that means financial conditions will tightened. So 0:04:52.839 --> 0:04:54.960 so if you know what I mean, right, your initial 0:04:55.160 --> 0:04:58.000 your initial argument why you were bullish is at some 0:04:58.080 --> 0:05:00.880 point you're you're hitting a cap, right, You'll you'll inevitably 0:05:01.000 --> 0:05:03.680 we'll be heading your cap got interrupt John, why don't 0:05:03.680 --> 0:05:05.400 you lead us with a real move that we've see 0:05:05.400 --> 0:05:08.440 in Sterling? That GDP forecast out of the Bank of 0:05:08.480 --> 0:05:11.960 England is just cable rolling go over, so Sterling a 0:05:12.000 --> 0:05:14.000 little bit self to hear down two tensive one percent 0:05:14.040 --> 0:05:18.320 at seven Max Canner of HSBC just talking about monetary policy. Easy. 0:05:18.440 --> 0:05:20.520 I believe we have Guy Johnson with us over in 0:05:20.600 --> 0:05:23.080 London because Guy, a Bank of England decision that was 0:05:23.120 --> 0:05:25.280 set to be an absolute snooze just got a little 0:05:25.279 --> 0:05:29.000 bit more interesting with two policymakers. Did they just vote 0:05:29.000 --> 0:05:33.719 for a rate cut? Yeah? I think Saunders, Michael Saunders 0:05:33.800 --> 0:05:36.200 was was largely expected by the market. There's been a 0:05:36.240 --> 0:05:38.719 lot of chat about the fact that he has completely 0:05:38.760 --> 0:05:40.680 turned out from being a hawk to being a dove 0:05:41.120 --> 0:05:42.960 and as a result of which he has voted for 0:05:43.080 --> 0:05:45.920 a cut. The surprise, really, I think is is Haskell 0:05:46.400 --> 0:05:47.840 and I think that is where the market has been 0:05:47.839 --> 0:05:49.919 called on the hop here. So we have two members 0:05:50.000 --> 0:05:52.800 of the MPC voting for a cut this time around. 0:05:52.800 --> 0:05:56.240 We've also seen the Bank John significantly downgrade it's GDP 0:05:56.400 --> 0:05:59.640 forecast one point two versus one point three this year 0:05:59.680 --> 0:06:02.880 twenty twenty one one point eight versus two point three 0:06:03.360 --> 0:06:05.640 um that there is talk of the fact that the 0:06:05.640 --> 0:06:08.440 global risks are a big path of this. Actually what 0:06:08.520 --> 0:06:10.840 they're basing this down grade on is what is happening 0:06:10.839 --> 0:06:13.920 outside the UK. Largely some of it is inside the UK, 0:06:14.000 --> 0:06:16.200 but a lot of it is outside the UK, and 0:06:16.240 --> 0:06:18.760 they are now saying that basically they're looking at a 0:06:18.800 --> 0:06:21.600 situation where they are antisipating that it's going to get 0:06:21.640 --> 0:06:24.320 more difficult from here. Tom, Guy Johnson, what is the 0:06:24.360 --> 0:06:28.359 importance of Jonathan Haskell and Michael Sanders saying let's get going, 0:06:28.880 --> 0:06:33.080 let's cut the rates now define that significance, particularly going 0:06:33.160 --> 0:06:36.400 to the December to election. What you think about it, Tom, 0:06:36.440 --> 0:06:39.240 Given the uncertainty that exists currently in the United Kingdom, 0:06:39.279 --> 0:06:42.960 to make this call pre the election and pre the 0:06:43.000 --> 0:06:46.039 Brexit story actually turning out to be a reality, I 0:06:46.080 --> 0:06:48.920 think is quite a big call. And as I say, 0:06:48.960 --> 0:06:51.480 I think this is largely based on what is happening 0:06:51.560 --> 0:06:54.520 externally to the UK. The UK is a small, open economy. 0:06:54.720 --> 0:06:56.520 You guys are just talking about what was happening with 0:06:56.520 --> 0:06:59.320 the trade story with Max. The UK is being affected 0:06:59.320 --> 0:07:02.200 by this and that is why the data are are 0:07:02.240 --> 0:07:04.400 starting to slow, they believe, and that is why the 0:07:04.440 --> 0:07:06.839 forecasts have been cut. So this is this is in 0:07:06.880 --> 0:07:09.640 relation to what is happening, not with Brexit and not 0:07:09.680 --> 0:07:12.360 with the election, but what's happening with the global macro economy. 0:07:12.400 --> 0:07:14.280 Tom a guy, always great to catch up with you 0:07:14.360 --> 0:07:16.080 to get your thoughts for anyone. Just tuning again the 0:07:16.080 --> 0:07:18.880 Bank of eng Than leaving interest rates unchanged, but two 0:07:18.960 --> 0:07:22.520 policymakers out of the nine actually voting for a rate cut. 0:07:22.600 --> 0:07:25.840 The vote seven to two. Max Kantner, your for you 0:07:25.920 --> 0:07:28.280 one that I think most people just assumed no change 0:07:28.360 --> 0:07:31.640 vote nine zero going into an election next month. Yeah. 0:07:31.920 --> 0:07:33.840 Look I if I put it into an investment contact 0:07:33.920 --> 0:07:36.520 in two, okay, what's what's the trade here? Um? The 0:07:36.600 --> 0:07:39.400 problem is for me, obviously, if I have a sort 0:07:39.440 --> 0:07:41.440 of three to six month view and in our contact 0:07:41.480 --> 0:07:44.840 it's really about guilt, it's about UK equities. The problem 0:07:44.840 --> 0:07:47.960 is I don't want to speculate only on politics, so 0:07:48.160 --> 0:07:51.480 I'm sort of being the maximum carrot and shying away 0:07:51.520 --> 0:07:54.320 from any taking any active stance there really because you know, 0:07:54.360 --> 0:07:56.480 I might be horribly wrong or this might be a 0:07:56.560 --> 0:07:59.360 career breaker. What's interesting to me is that every central 0:07:59.360 --> 0:08:02.800 bank saying that they're doing in action or considering because 0:08:02.840 --> 0:08:05.200 of what's happening globally. There we go, So who are 0:08:05.240 --> 0:08:08.040 you blaming that? That basically tells you central banks as 0:08:08.080 --> 0:08:10.520 are now reacting to something that they actually don't have 0:08:10.640 --> 0:08:13.560 under control. Right, So they're they're reacting to sort of 0:08:13.560 --> 0:08:17.400 global growth, to global phenomena. If we're talking about let's say, 0:08:17.440 --> 0:08:21.360 old school stereotyped textbook monetary policy, Philip's curve and all 0:08:21.400 --> 0:08:24.520 that juwberish, right you you basically then say that we're 0:08:24.560 --> 0:08:28.040 calling the guberish. No, I mean, yeah, you can still 0:08:28.120 --> 0:08:31.880 believe in that. But there we go. The thing the 0:08:31.920 --> 0:08:34.800 thing for me is, look um, the problem there is 0:08:34.960 --> 0:08:37.360 you see a lot of central banks, including the FIT, 0:08:37.600 --> 0:08:40.600 responding to financial conditions now to something that is out 0:08:40.679 --> 0:08:43.400 of their control. Maxicat, now I gotta leave it. They're 0:08:43.440 --> 0:08:47.720 always greater care HSBC assets trying togist. Joining us here 0:08:47.760 --> 0:09:05.640 in New York City, Tel John CIBC bank is out 0:09:05.679 --> 0:09:10.120 of Toronto. It is the old Canadian Imperial Bank of 0:09:10.240 --> 0:09:13.320 Commerce and very quietly over the decades they put together 0:09:13.320 --> 0:09:17.520 absolutely first rate team, including Benjamin tal who is the 0:09:17.640 --> 0:09:20.360 number one guy on the self employed in America. He 0:09:20.480 --> 0:09:24.120 is encyclopedic on this part time, full time debate, and 0:09:24.200 --> 0:09:27.960 it's wonderful when someone from Toronto darkens the door here 0:09:28.320 --> 0:09:31.760 so we can crowbar leafs tickets out of him. Is 0:09:31.760 --> 0:09:33.640 that what he's he That's the only reason these years 0:09:33.720 --> 0:09:36.200 to hand me the leaf stick is that the basketball 0:09:36.200 --> 0:09:38.040 team ins are on. So that is very good. The 0:09:38.320 --> 0:09:42.160 Canadians would be what we're asking for. John right joining 0:09:42.240 --> 0:09:45.360 us now c IBC Capital Market CIA macro Strategist. Good 0:09:45.400 --> 0:09:47.400 morning to Ff and good morning. Should we begin with 0:09:47.400 --> 0:09:49.679 that bank havingdom right decision? Personally, I thought this was 0:09:49.720 --> 0:09:52.080 going to be a total snooze going into the election 0:09:52.160 --> 0:09:54.680 next month. I guess we were wrong. Two people on 0:09:54.760 --> 0:09:56.920 the NPC voting for a rate cut, they didn't get it. 0:09:56.960 --> 0:09:59.599 The vote was seven to two. Your reaction, Yeah, I 0:09:59.640 --> 0:10:02.080 mean I wasn't surprised by the two dissenters, because again, 0:10:02.120 --> 0:10:04.320 if you pay attention to what Saunders and and really 0:10:04.400 --> 0:10:06.800 you've been saying for there the less several months, it's 0:10:06.800 --> 0:10:10.960 certainly seemed like they were more more sympathetic towards Rica 0:10:11.120 --> 0:10:13.840 going forward. Do you think that kind of surprised me 0:10:13.880 --> 0:10:15.520 was the fact that they kept in the language of 0:10:15.600 --> 0:10:18.200 outlimited and gradual rate hikes going forward. I guess they 0:10:18.240 --> 0:10:20.440 didn't want to tip the boat too much during an 0:10:20.440 --> 0:10:23.600 election campaign. I'm trying to understand where the global risks 0:10:23.640 --> 0:10:26.600 are that everyone keeps talking about. If it's not necessarily 0:10:26.640 --> 0:10:28.880 in Europe, which seems to be getting better, if it's 0:10:28.880 --> 0:10:30.880 not coming from the US, not coming from the UK 0:10:31.000 --> 0:10:34.439 with Brexit, right, where is it coming from the trade talks? 0:10:34.640 --> 0:10:36.600 I mean, it's between the US and China, and what 0:10:36.679 --> 0:10:39.040 I think is underappreciated between the US and the EU. 0:10:39.080 --> 0:10:40.679 And nobody ever talks about the U S and the EU. 0:10:40.760 --> 0:10:43.480 But we just had tariffs launched on an airbus last 0:10:44.120 --> 0:10:46.000 a couple of weeks ago, I should say. And we've 0:10:46.040 --> 0:10:48.160 also got the big decision coming on autos. Nobody talks 0:10:48.200 --> 0:10:49.920 about that, but that's a significant macro risk, so we 0:10:49.920 --> 0:10:51.520 need to pay attention. What are your thoughts on that 0:10:51.559 --> 0:10:53.320 at the moment. I caught up with Larry Cardlog, the 0:10:53.400 --> 0:10:56.240 National Economic Council Director, last Friday, and he always points 0:10:56.280 --> 0:10:58.200 to the weakness coming out of Europe weighing on the 0:10:58.280 --> 0:11:00.160 U S economy. Do you think there's an acknowledgement from 0:11:00.200 --> 0:11:02.280 the U S side that actually going after Europe at 0:11:02.280 --> 0:11:05.200 this point might not be a great decision. I think 0:11:05.200 --> 0:11:08.400 there is some sympathy to to, you know, potentially open 0:11:08.480 --> 0:11:10.600 the door towards talks with the EU. I mean, at 0:11:10.640 --> 0:11:12.200 the same time, you don't want to see a trade 0:11:12.320 --> 0:11:14.520 a new front opened on the trade war between the 0:11:14.640 --> 0:11:18.120 U S and the EU. And certainly, you know, taking 0:11:18.160 --> 0:11:20.480 the competence that we heard from World for US last week, 0:11:20.800 --> 0:11:23.200 it certainly seems like they they're willing to push out 0:11:23.200 --> 0:11:25.840 the deadlines for for company to do decision on tariffs. 0:11:25.920 --> 0:11:28.800 The Chinese Ministry of Commerce speaking overnight, saying that the 0:11:28.920 --> 0:11:32.360 Chinese in the United States have agreed on tariff rollback 0:11:32.640 --> 0:11:35.199 with a massive asterisks. They've agreed on it if there's 0:11:35.240 --> 0:11:36.800 a phase one deal that they can agree to, and 0:11:36.880 --> 0:11:38.720 right now there isn't a phase one deal to agree to. 0:11:39.720 --> 0:11:41.360 I have a question for you that I think it's 0:11:41.360 --> 0:11:43.040 going to be increasingly an important one. If we do 0:11:43.080 --> 0:11:46.640 get tariff rollback, it's the boost to economic activity from 0:11:46.640 --> 0:11:50.360 tariff's coming off proportional to the damage dumb from tariff's 0:11:50.360 --> 0:11:52.480 going gone. How should we be thinking about that at 0:11:52.480 --> 0:11:54.079 the moment right I mean, if we're talking about the 0:11:54.080 --> 0:11:55.720 real economy. I don't think so. I think there are 0:11:55.720 --> 0:11:58.600 other structural headwinds towards business investment coming online. I mean, 0:11:58.600 --> 0:12:00.360 we are in a new trade regime. We didn't have 0:12:00.400 --> 0:12:03.239 to deal with a terra far between two largest economies 0:12:03.559 --> 0:12:06.079 UH in the past. This is a new regime the 0:12:06.120 --> 0:12:08.679 business has to have to become accustomed to. And certainly 0:12:08.720 --> 0:12:10.560 if we do see some TERRAF rollbacks, you might see 0:12:10.559 --> 0:12:13.040 some beneficiaries being you know, more so of the U 0:12:13.120 --> 0:12:15.000 S consumer as opposed to US businesses. I think it's 0:12:15.040 --> 0:12:17.360 a new path for them to to wait through the 0:12:17.440 --> 0:12:21.840 Pippen with this with c IBC World Markets, Pippen yen 0:12:22.040 --> 0:12:25.479 is always a proxy for global Wall Street of correlation 0:12:26.160 --> 0:12:28.719 in a safe haven. Well does that math work right 0:12:28.760 --> 0:12:31.960 now and right now one O nine fifteen grinding, But 0:12:32.080 --> 0:12:34.360 it has been a weaker yen. Is that a healthy 0:12:34.440 --> 0:12:37.880 signal of all clear for the time being? I would 0:12:37.880 --> 0:12:41.640 say yes. It's probably conducive towards risk appetite being on 0:12:41.679 --> 0:12:43.680 the rebound. And again it's it's much more of a 0:12:43.679 --> 0:12:46.800 global liquidity story and a positive sentiment story potentially from 0:12:46.800 --> 0:12:49.560 the US. But it's a well behave time series. It's grinding. 0:12:49.600 --> 0:12:52.880 I'll get that, but there's a persistency to this yen weakness. 0:12:52.880 --> 0:12:56.240 What does that signal? It signals to me that again, 0:12:56.280 --> 0:12:58.480 great divergence between the U S and Japan is pretty 0:12:58.559 --> 0:13:00.760 much minimal right now compared to we've seen in the past. 0:13:00.800 --> 0:13:02.439 I mean we're talking about Dad. We have to talk 0:13:02.440 --> 0:13:04.600 about where the policy settings are in the United States, hichus, 0:13:04.640 --> 0:13:06.880 where they are in Japan. And again, if you do 0:13:06.920 --> 0:13:09.319 see a meaning called divergence, then that's when you get 0:13:09.320 --> 0:13:12.040 the direction directional break out. This is this is critical. 0:13:12.080 --> 0:13:14.160 What what Pippan just said, John, we were talking about 0:13:14.160 --> 0:13:17.160 this in the break policy divergence. It doesn't seem to 0:13:17.200 --> 0:13:19.280 be any They're all reacting to what I am f 0:13:19.280 --> 0:13:21.760 flood on, which is lower GDP growth. This has been 0:13:21.760 --> 0:13:23.719 a big question though for effects markets over the last 0:13:23.720 --> 0:13:26.840 couple of years. Bipan as the whether right right differentials 0:13:26.840 --> 0:13:30.160 mats are into what degree right differentials matter for foreign exchange? 0:13:30.559 --> 0:13:33.240 Absolutely in a world or central bankers center banks are 0:13:33.240 --> 0:13:36.439 increasing asset purchasing or balance sheets are exorbitantly large, and 0:13:36.440 --> 0:13:39.320 when they're dominant in the market, rate emergencies will at 0:13:39.400 --> 0:13:42.280 least This was John Lipsky's question to Charles Evans yesterday 0:13:42.400 --> 0:13:45.440 on the correlation of all these central bank messages that 0:13:45.480 --> 0:13:49.079 we're getting well, and there's a question the low inflation environment. 0:13:49.360 --> 0:13:52.880 Have we underestivated how persistent and a long lasting It'll 0:13:52.880 --> 0:13:55.800 be in European Commission today cutting its hero Area growth 0:13:56.000 --> 0:13:57.960 and inflation at look despite some of the better than 0:13:58.000 --> 0:14:00.319 expected data we've gotten out of Germany out with the 0:14:00.400 --> 0:14:03.040 p m s. Do you think they're right? Yeah? I 0:14:03.080 --> 0:14:05.080 do think so, and I don't think central bankers have 0:14:05.120 --> 0:14:07.120 been held accountable for the fact they've been missing their 0:14:07.120 --> 0:14:09.640 inflation targets for the last decade. I do think there's 0:14:09.679 --> 0:14:12.319 a there's a problem with inflation targeting. What's behind that? 0:14:13.240 --> 0:14:15.240 I mean, it might be that the policy is outdated, 0:14:15.360 --> 0:14:16.920 might be that the mandate needs to be updated to 0:14:17.200 --> 0:14:19.120 reflect a different inflation mandate, or maybe they should be 0:14:19.120 --> 0:14:21.520 targeting something else. Central bankers have become very very good 0:14:21.560 --> 0:14:24.160 over the past couple of decades at targeting two percent inflation, 0:14:24.160 --> 0:14:27.760 almost too good to the point where inflation volatilities minimal now, right, 0:14:27.760 --> 0:14:29.640 So maybe there's something else that center bankers should be 0:14:29.680 --> 0:14:32.040 looking at it go forward. Well, when you talk about 0:14:32.080 --> 0:14:35.040 the European outlook right now, they're saying that the worst 0:14:35.200 --> 0:14:37.240 is to come. Do you agree with that too, that 0:14:37.280 --> 0:14:39.360 the worst for the European economy is to come perhaps 0:14:39.400 --> 0:14:42.200 next year. It's a distinct possibility because we haven't seen 0:14:42.200 --> 0:14:44.920 any sort of fiscal movement towards fiscal stimulus from some 0:14:45.000 --> 0:14:47.120 of the larger economies that have the space. How that 0:14:47.200 --> 0:14:51.920 translate in markets at this point, you know, from in 0:14:51.960 --> 0:14:54.000 my space, we still see your dollar range bound, and 0:14:54.000 --> 0:14:57.280 that's predominantly because again US manufacturing it's is somewhat on 0:14:57.360 --> 0:14:58.880 the on the decline as well, and there is some 0:14:59.040 --> 0:15:01.320 risk that could percolate in with the consumer and labor sectors. 0:15:01.680 --> 0:15:03.960 Germany on the brink of recession. Arkably, for some people 0:15:03.960 --> 0:15:08.400 already in one dax is through. How do you reconcile 0:15:08.480 --> 0:15:11.240 some of these things right now? Again, it's a liquidity story. 0:15:11.320 --> 0:15:13.280 I mean, if you have this massive amount of liquidity 0:15:13.280 --> 0:15:14.520 in the system, if you have all this cash in 0:15:14.520 --> 0:15:16.360 the system, it's got to go somewhere. For some people, 0:15:16.960 --> 0:15:18.800 even if there is a slow end of global economy, 0:15:18.840 --> 0:15:20.760 I want to put my cash into something that's yielding 0:15:20.800 --> 0:15:23.840 something positive at least. But isn't it the X axis 0:15:23.920 --> 0:15:26.840 not only the observation of the wall of money out there, 0:15:26.880 --> 0:15:30.400 but lower for longer has a new definition right going 0:15:30.400 --> 0:15:32.920 into the new year. Am I right on that? Yeah? Absolutely, 0:15:33.040 --> 0:15:36.320 I mean there's there's very little. I mean, when you 0:15:36.320 --> 0:15:38.800 talk about monetary policy, you're effectively pushing on a string 0:15:38.880 --> 0:15:40.200 right now. I mean, there's only so much that the 0:15:40.200 --> 0:15:42.320 ECB can do. It's not a story of credit supply. 0:15:42.320 --> 0:15:44.280 It's a story of credit demand. And right now there's 0:15:44.360 --> 0:15:46.400 no credit demand in the Herozone, and that's driven by 0:15:46.880 --> 0:15:49.160 by fiscal growth that there are fiscal stimulus. We had 0:15:49.200 --> 0:15:51.880 Max Kettner of HSPC on the program around about fifty 0:15:51.880 --> 0:15:54.560 five minutes ago, who was pushing back quite strongly against 0:15:54.600 --> 0:15:57.200 some of this enthusiasm for risk assets at the moment. 0:15:57.200 --> 0:15:59.640 Would you do the same thing at this point? Though 0:15:59.680 --> 0:16:01.960 I'm still playing the liquidity story. I still do think that, 0:16:02.120 --> 0:16:03.760 you know, even if you have you're in a global 0:16:03.840 --> 0:16:06.600 environment where the economy is not doing so well, you've 0:16:06.600 --> 0:16:09.720 got enough liquidity out there. It seems like this lower 0:16:09.720 --> 0:16:12.200 for longer environment is gonna last. I'm not so concerned 0:16:12.200 --> 0:16:14.600 about an equity meltdown at this point. So right now 0:16:14.640 --> 0:16:17.320 we are seeing a sell off in bonds, in particular 0:16:17.600 --> 0:16:19.400 in U s ten your treasuries? Would you be a 0:16:19.400 --> 0:16:22.080 buyer here at this point? I mean I'd have to 0:16:22.080 --> 0:16:24.040 look at the technical level, but yeah, i'd look at 0:16:24.080 --> 0:16:27.440 potentially by US months ready, one nine on a tenure 0:16:27.480 --> 0:16:29.720 gets it done? Does that bring the bond back? Were 0:16:29.720 --> 0:16:32.720 in a new regime now? I do think, I do 0:16:32.800 --> 0:16:35.720 think that the risks are skewed towards the FED potentially 0:16:35.720 --> 0:16:37.880 easing again, although that's not our house to our house 0:16:37.920 --> 0:16:40.360 view is potentially that they're going to stay on hold 0:16:40.400 --> 0:16:42.040 for the next a little while. But again, I am 0:16:42.080 --> 0:16:45.360 watching employment numbers, I'm watching the consumer sector in the US, 0:16:45.400 --> 0:16:48.640 and again, if that manufacturing weakness does percolate into that, 0:16:48.640 --> 0:16:50.520 that's a new regime for the FED to navigator, So 0:16:50.560 --> 0:16:53.200 one nine could be the ceiling and what's the what's 0:16:53.240 --> 0:16:55.800 the floor for taking? You're going to make me call that? 0:16:57.240 --> 0:16:59.440 In the US? You call on that and not at 0:16:59.440 --> 0:17:01.640 this point. Now, now we need to be in a 0:17:01.680 --> 0:17:05.359 recession and we need to see some some some other factors. 0:17:05.400 --> 0:17:08.040 We found the outside of recessionary conditions through the cycle 0:17:08.160 --> 0:17:11.040 life below one fifty ten years and really quite tough 0:17:11.119 --> 0:17:14.560 bit pan Yeah you agree, Yeah, I mean again, it 0:17:14.560 --> 0:17:16.280 has to be a deeper, meaning follower recession. I think 0:17:16.320 --> 0:17:19.000 to really to move below that one. But look at 0:17:19.080 --> 0:17:21.359 yields elsewhere. I mean, look at the ten ure yield 0:17:21.359 --> 0:17:23.000 in Japan, look at the ten ure yield. And in 0:17:23.080 --> 0:17:26.640 German boons, I mean where it's very expensively short to U. S. Dollar. 0:17:26.680 --> 0:17:28.400 For a reason, I can get you a positive yield 0:17:28.400 --> 0:17:30.959 in France this morning on a ten year Just your 0:17:31.040 --> 0:17:36.200 yield now zero point zero zero five. There real move 0:17:36.280 --> 0:17:38.919 this morning, Solf. But one final question very quickly here 0:17:39.000 --> 0:17:42.760 on Canadian dollar. Is it a commodity play or is 0:17:42.800 --> 0:17:45.880 it just trading off US and US dollar? It's it's 0:17:45.880 --> 0:17:47.439 a U. S. Dollar play at this point. I mean 0:17:47.680 --> 0:17:50.639 the commodity play, I think that story is. But I 0:17:50.720 --> 0:17:52.760 mean we're barish on the Canadian dollar. We do think 0:17:52.800 --> 0:17:54.760 the Canadian dollar dollar catch you go to one forty 0:17:54.760 --> 0:17:56.360 by the end of next year. Well, the tickets are 0:17:56.359 --> 0:17:59.280 want are only original six? You know, I'll take the St. 0:17:59.280 --> 0:18:01.920 Louis Blues, but just you know, originally not the Ranger. 0:18:02.640 --> 0:18:06.040 The Rangers are so the Rangers are so puny. I 0:18:06.080 --> 0:18:09.840 don't want to see Rangers leaves in Toronto. You yeah, 0:18:10.040 --> 0:18:18.600 thank you. What about the raptors that's oh you're killing 0:18:32.760 --> 0:18:35.480 and joining us now, folks here as we look at ahead, 0:18:35.520 --> 0:18:38.239 you're ahead. Yeah, we'll get to Uber and all that. 0:18:38.280 --> 0:18:41.320 As a woman who writes with a still a stiletto 0:18:41.400 --> 0:18:44.080 knife dipped in ink when she writes every day, that 0:18:44.119 --> 0:18:47.000 would be sure over day. Of course, on technology, we 0:18:47.080 --> 0:18:49.359 want to get to Uber. We could get to we 0:18:49.480 --> 0:18:53.840 work with that lex art. I'm still struggling with that healing. 0:18:53.880 --> 0:18:56.240 Could we could pointy knife like a wicked point, you know, 0:18:56.280 --> 0:18:59.560 like Sarah Jessica Parker's feels and gentlemen in can you 0:18:59.680 --> 0:19:02.240 write a Maren sare over date with us? Right now? 0:19:02.920 --> 0:19:06.680 Miss Sandberg will make an appearance today in our year ahead. 0:19:07.920 --> 0:19:12.480 There will be smiles and giggles and then not what's 0:19:12.520 --> 0:19:17.679 your number one question to the woman running Fortress Zuckerberg? 0:19:20.000 --> 0:19:22.720 Oh boy, that's a really hard question, you know. I 0:19:22.960 --> 0:19:26.600 I think, Um, there was an interview that Kato Kerrik 0:19:26.720 --> 0:19:29.919 did with Sheryl Sandberg novels, which I think was really 0:19:30.000 --> 0:19:33.720 exceptionally well done. Was it well done? Well? She didn't 0:19:33.800 --> 0:19:37.160 let Sheryl Sandberg kind of stick to her car. Yeah, 0:19:37.800 --> 0:19:39.760