1 00:00:09,840 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee. 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 --> 00:00:27,600 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. It's 5 00:00:27,600 --> 00:00:30,440 Speaker 1: called a bad flaming when when the frontd sounds sells 6 00:00:30,480 --> 00:00:33,120 Speaker 1: off and you start to write, So that's the bond market, Tom, 7 00:00:33,159 --> 00:00:36,000 Speaker 1: and then the effects market dollar strength. Can't get away 8 00:00:36,000 --> 00:00:37,640 Speaker 1: from this at the moment. We just had the biggest 9 00:00:37,680 --> 00:00:41,479 Speaker 1: monthly gain on the dollar in death since I know 10 00:00:41,560 --> 00:00:44,199 Speaker 1: someone's patiently went in bites away in from why are 11 00:00:44,280 --> 00:00:48,640 Speaker 1: they talking so much? Talk to person Petison Institute President 12 00:00:48,680 --> 00:00:50,800 Speaker 1: Adam always great to get your insight. Walk me through 13 00:00:50,880 --> 00:00:54,400 Speaker 1: just your thoughts initially from the news conference yesterday as 14 00:00:54,440 --> 00:00:57,240 Speaker 1: we wake up this morning and get started again. Well, 15 00:00:57,240 --> 00:01:01,560 Speaker 1: thank you, John. Um. I think the news conference was messy. 16 00:01:01,800 --> 00:01:04,800 Speaker 1: It had to be because it's very hard to deliver 17 00:01:04,880 --> 00:01:08,360 Speaker 1: the message of one and done mid course correction or 18 00:01:08,440 --> 00:01:12,000 Speaker 1: mid cycle adjustment. I thought was actually a decent attempt 19 00:01:12,600 --> 00:01:16,840 Speaker 1: um but that just raises questions. So is this preemptive 20 00:01:17,319 --> 00:01:23,080 Speaker 1: against procession risks? Is this reversing the error now perceived 21 00:01:23,360 --> 00:01:27,120 Speaker 1: of having tightened in December? Is this about the dollar 22 00:01:27,280 --> 00:01:29,160 Speaker 1: even though they can't really say that, they could have 23 00:01:29,200 --> 00:01:32,039 Speaker 1: been more clear if that was the issue. Or is 24 00:01:32,160 --> 00:01:35,800 Speaker 1: the press conference confused because the committee isn't agreed on 25 00:01:35,840 --> 00:01:38,800 Speaker 1: the reasons, in which case, then pealedad the best he 26 00:01:38,880 --> 00:01:44,120 Speaker 1: could is this is this a process of overthinking, over 27 00:01:44,240 --> 00:01:50,120 Speaker 1: analysis and just the sheer brass of getting out front 28 00:01:50,200 --> 00:01:54,920 Speaker 1: of the data. I think no, I think it's the opposite. 29 00:01:54,960 --> 00:01:57,720 Speaker 1: I think that I mean, sorry, Tom, but I think 30 00:01:58,080 --> 00:02:00,880 Speaker 1: I think they've done a very good job already almost 31 00:02:00,920 --> 00:02:03,120 Speaker 1: a year ago. And Paul's Jackson whole speech, it was 32 00:02:03,480 --> 00:02:07,800 Speaker 1: downplaying our star, youth star, saying that you know, we 33 00:02:07,880 --> 00:02:10,840 Speaker 1: can't be too ahead of things to tempt you that 34 00:02:10,960 --> 00:02:14,600 Speaker 1: confident in our forecasts and precision of forecasts and these abstract, 35 00:02:14,680 --> 00:02:18,600 Speaker 1: unmeasurable concepts. And the chair I thought interacted very well 36 00:02:18,639 --> 00:02:22,480 Speaker 1: with with the Congresswoman of Casio Cortez and others in 37 00:02:22,520 --> 00:02:27,080 Speaker 1: the hearing about that the problem is if if that's 38 00:02:27,120 --> 00:02:31,639 Speaker 1: where you're going, then you usually should follow that by 39 00:02:31,680 --> 00:02:35,040 Speaker 1: being more visibly data dependent, and there was no data 40 00:02:35,120 --> 00:02:38,200 Speaker 1: being pointed to in this decision the data. John Farrell 41 00:02:38,360 --> 00:02:41,480 Speaker 1: was Michael McKee going Jesus in the economy good in 42 00:02:41,560 --> 00:02:44,440 Speaker 1: The Chairman said, absolutely right, we'll tell him. I think 43 00:02:44,480 --> 00:02:46,120 Speaker 1: that was probably one of the most difficult parts of 44 00:02:46,160 --> 00:02:48,960 Speaker 1: the news conference from me. Michael McKee asked pretty much 45 00:02:48,960 --> 00:02:51,880 Speaker 1: the exact same question he'd asked in the previous news conference. 46 00:02:52,160 --> 00:02:55,200 Speaker 1: The chairman, Pale struggle to answa, why will lower rights 47 00:02:55,240 --> 00:02:57,920 Speaker 1: help given the challenges we have at the moment. So 48 00:02:57,960 --> 00:03:00,519 Speaker 1: he repeated the question and guess what, cham and Pal 49 00:03:00,560 --> 00:03:03,079 Speaker 1: didn't really answer it. So Mike followed up once again 50 00:03:03,400 --> 00:03:05,960 Speaker 1: and cham and Pal struggle to answer it. Adam, it's 51 00:03:05,960 --> 00:03:07,920 Speaker 1: a really difficult position for the Fed to be in 52 00:03:08,280 --> 00:03:11,840 Speaker 1: when the cunning interest rates and can't communicate clearly why 53 00:03:11,919 --> 00:03:16,400 Speaker 1: reducing interest rates will offset some of the concerns they have. Yeah, 54 00:03:16,440 --> 00:03:19,080 Speaker 1: I think that's right. I mean, there is a legitimate 55 00:03:19,360 --> 00:03:22,440 Speaker 1: statement to be made by the Fed that the outlook 56 00:03:22,440 --> 00:03:27,000 Speaker 1: going forward is worse, especially with respect to corporate investment, 57 00:03:27,480 --> 00:03:30,520 Speaker 1: because of the trade policies of the Trump administration. It's 58 00:03:30,600 --> 00:03:34,000 Speaker 1: kind of analogous to Brexit that the Bank of England 59 00:03:34,080 --> 00:03:37,400 Speaker 1: can't preemptively act depending on what they're going to do, 60 00:03:37,440 --> 00:03:40,720 Speaker 1: but they can say, given this economic reality, we have 61 00:03:40,760 --> 00:03:43,320 Speaker 1: to downgrade. And so it's reasonable for the chair to 62 00:03:43,400 --> 00:03:47,640 Speaker 1: say that, but that's a fundamental uncertainty, that that that 63 00:03:47,800 --> 00:03:50,480 Speaker 1: the interest rates are going to do very little too offset. 64 00:03:51,120 --> 00:03:53,960 Speaker 1: How does the dollar slip into this dr pose that 65 00:03:54,000 --> 00:03:58,040 Speaker 1: we mentioned earlier, all the history of foreign exchanges, currency 66 00:03:58,120 --> 00:04:02,360 Speaker 1: dynamics tangential to our certain banking and finance now or 67 00:04:02,400 --> 00:04:07,040 Speaker 1: is it really front and center? It's moving further towards 68 00:04:07,080 --> 00:04:09,360 Speaker 1: the center than it's been, but for the US it's 69 00:04:09,440 --> 00:04:13,040 Speaker 1: never quite center. The US is too big and too closed. 70 00:04:13,240 --> 00:04:16,440 Speaker 1: And also the short term market moves are too are 71 00:04:16,480 --> 00:04:20,080 Speaker 1: are are are not important enough? But it is more 72 00:04:20,120 --> 00:04:23,679 Speaker 1: important than it's been for some time, Tom, And that 73 00:04:23,960 --> 00:04:27,440 Speaker 1: is be in part because there's some real changes. And 74 00:04:27,480 --> 00:04:29,159 Speaker 1: here you I do want to give credit to the 75 00:04:29,200 --> 00:04:33,359 Speaker 1: Fed leadership. They've been very clear for several months arguing 76 00:04:33,920 --> 00:04:38,359 Speaker 1: cumulatively that international factors are a bigger impact on the 77 00:04:38,440 --> 00:04:40,800 Speaker 1: US economy right now from the FEDS point of view 78 00:04:40,960 --> 00:04:45,239 Speaker 1: than they've been. Now. The problem is you're you're moving 79 00:04:45,279 --> 00:04:48,919 Speaker 1: to saying this stuff is more important, which is any 80 00:04:48,960 --> 00:04:52,279 Speaker 1: given move of the dollar has a bigger effect or 81 00:04:52,360 --> 00:04:56,080 Speaker 1: any given differential between our interest rates and Euro Area 82 00:04:56,120 --> 00:04:58,680 Speaker 1: interest rates has a bigger effect. But that's not the 83 00:04:58,720 --> 00:05:01,120 Speaker 1: same thaying that dollars massively overweight. I mean the Fed 84 00:05:01,200 --> 00:05:03,560 Speaker 1: is not taking a position on that, nor should they. 85 00:05:04,040 --> 00:05:07,040 Speaker 1: John Ferrell Stirling rallies in the last ten minutes after 86 00:05:07,080 --> 00:05:10,120 Speaker 1: BOI announcement, should return to the Bank of Let's do 87 00:05:10,160 --> 00:05:13,279 Speaker 1: that a little bounce off the bottom cable fifteen still 88 00:05:13,320 --> 00:05:15,080 Speaker 1: lower by a third of one percent of bank having 89 00:05:15,120 --> 00:05:17,800 Speaker 1: the keeping policy unchanged, the vote nine to zero, rates 90 00:05:17,839 --> 00:05:21,080 Speaker 1: still zero points seven five. It was always about the 91 00:05:21,120 --> 00:05:24,800 Speaker 1: outlook in the inflation report and whether the projections would 92 00:05:24,800 --> 00:05:29,239 Speaker 1: include a no deal possibility headline. They do not, so, Adam, 93 00:05:29,240 --> 00:05:32,120 Speaker 1: I just wonder how big a pinch of salt we 94 00:05:32,160 --> 00:05:34,680 Speaker 1: should have for these forecasts today from the Bank of 95 00:05:34,720 --> 00:05:37,360 Speaker 1: England going into this news conference with Governor Carney, because 96 00:05:37,360 --> 00:05:42,920 Speaker 1: they still assume a smooth brexit, well they have to, Johnathan, 97 00:05:42,960 --> 00:05:46,839 Speaker 1: I won't be clear. They are not saying any message 98 00:05:46,880 --> 00:05:49,919 Speaker 1: that a smooth Brexit is likely. Am I totally agree 99 00:05:49,920 --> 00:05:51,520 Speaker 1: with that. I totally agree with that. I'm just saying 100 00:05:51,560 --> 00:05:54,080 Speaker 1: that that's what that's that's the that's the premise that 101 00:05:54,200 --> 00:05:57,440 Speaker 1: understands the fork. I just I just want to be clear. Yeah, absolutely, 102 00:05:57,640 --> 00:06:00,640 Speaker 1: for for for reasons of accountability, the Bank of England 103 00:06:00,680 --> 00:06:04,200 Speaker 1: is not allowed to let itself make a premise other 104 00:06:04,240 --> 00:06:06,320 Speaker 1: than that, and so yeah, of course you should look 105 00:06:06,320 --> 00:06:09,839 Speaker 1: at the forecasts as as totally irrelevant. Essentially at this point, 106 00:06:10,279 --> 00:06:13,640 Speaker 1: the the issue is going back to what we're just 107 00:06:13,680 --> 00:06:16,159 Speaker 1: saying with the with the Fed, but with a with 108 00:06:16,279 --> 00:06:19,920 Speaker 1: a difference, because the UK is casting itself adrift and 109 00:06:20,000 --> 00:06:24,760 Speaker 1: alone through Brexit and all inherently as a smaller economy 110 00:06:24,800 --> 00:06:29,200 Speaker 1: with its own currency, and so the move of currencies 111 00:06:29,279 --> 00:06:31,960 Speaker 1: towards the center is much more pronounced for the Bank 112 00:06:31,960 --> 00:06:35,599 Speaker 1: of England and so they are going to be They're 113 00:06:35,680 --> 00:06:38,280 Speaker 1: just basically trapped. The Bank of England is at this 114 00:06:38,320 --> 00:06:42,000 Speaker 1: point trapped. They can't do anything ahead of bregsit If 115 00:06:42,000 --> 00:06:45,000 Speaker 1: Brexit happens, they have to cut if they if they cut, 116 00:06:45,520 --> 00:06:47,640 Speaker 1: currency is going to fall out of bed and they're 117 00:06:47,640 --> 00:06:50,200 Speaker 1: gonna have to raise later. But those are the fundamentals. 118 00:06:50,240 --> 00:06:51,760 Speaker 1: I don't think the Bank of England has much to 119 00:06:51,760 --> 00:07:11,920 Speaker 1: do about it. Institute, this is a joy because of 120 00:07:11,960 --> 00:07:14,640 Speaker 1: dollar dynamics. We're gonna get a clinic this morning from 121 00:07:14,680 --> 00:07:19,520 Speaker 1: truly one of the world's great international economist economists, as 122 00:07:19,520 --> 00:07:22,680 Speaker 1: we had adam posing on earlier with the Peterson Institute, 123 00:07:22,720 --> 00:07:25,440 Speaker 1: we're honored to bring you the senior economic advisor for 124 00:07:25,520 --> 00:07:29,400 Speaker 1: City Group, Villain broud Bouder, forever associated with the London 125 00:07:29,440 --> 00:07:34,040 Speaker 1: School Economics, Professor Bowder. When you graduated from Yale a 126 00:07:34,120 --> 00:07:38,040 Speaker 1: few years ago, we've enjoyed a forty eight percent appreciation 127 00:07:38,680 --> 00:07:45,480 Speaker 1: of pounds sterling. Does anyone care? I suppose not really 128 00:07:45,800 --> 00:07:51,760 Speaker 1: must has been gradual? Um, it's I think a reflection 129 00:07:51,760 --> 00:07:55,360 Speaker 1: of the in the lying reality that the UK is 130 00:07:55,480 --> 00:07:59,840 Speaker 1: chronic contexticits country didn't need to study of real depreciation. 131 00:08:00,040 --> 00:08:03,360 Speaker 1: Things very good, I agree with that totally. But is 132 00:08:03,400 --> 00:08:06,000 Speaker 1: it a wealth destruction to the property of the United 133 00:08:06,080 --> 00:08:11,000 Speaker 1: Kingdom and critically, is an open invitation for acquisition of 134 00:08:11,200 --> 00:08:16,920 Speaker 1: UK properties by the rest of Europe. Uh. Clearly, any 135 00:08:18,720 --> 00:08:23,440 Speaker 1: material depreciation of the kind that beyond what can be 136 00:08:23,520 --> 00:08:30,720 Speaker 1: justified by underlying credit counter balances, it's an opportunity to buy. 137 00:08:30,880 --> 00:08:35,960 Speaker 1: But so certainly I'd say that the big historians we're 138 00:08:36,000 --> 00:08:40,960 Speaker 1: seeing now is fear did your own Powell yesterday and 139 00:08:41,120 --> 00:08:46,240 Speaker 1: still a strong dollar policy. I think given where the 140 00:08:46,360 --> 00:08:52,880 Speaker 1: markets were, it was stronger then previously expected. Dollar policy 141 00:08:53,440 --> 00:08:58,000 Speaker 1: we're talking about, I think about the minor. It just 142 00:08:58,080 --> 00:09:01,960 Speaker 1: changed this result of this villain Chairman poun on a 143 00:09:01,960 --> 00:09:04,200 Speaker 1: tough spot. Another central banker and a tough spot. And 144 00:09:04,200 --> 00:09:06,720 Speaker 1: he's speaking right now. Is Governor Mark Arney over the 145 00:09:06,720 --> 00:09:09,160 Speaker 1: Bank of England. You've served on the Bank of England before, 146 00:09:09,160 --> 00:09:10,840 Speaker 1: and I just wonder if you could take us around 147 00:09:10,840 --> 00:09:12,400 Speaker 1: that table at the NPC at the moment and walk 148 00:09:12,480 --> 00:09:14,960 Speaker 1: us through how you'd be thinking about policy in a 149 00:09:14,960 --> 00:09:17,520 Speaker 1: place like the UK At the moment, sterling is crazy rink, 150 00:09:17,960 --> 00:09:20,080 Speaker 1: the rest of the market seems okay, guilt are still 151 00:09:20,120 --> 00:09:23,040 Speaker 1: behaving like a developed market, yields are coming in. What 152 00:09:23,120 --> 00:09:26,160 Speaker 1: would you be suggesting to policy makers around the table 153 00:09:26,200 --> 00:09:29,640 Speaker 1: about what the prudent policy response should be to some 154 00:09:29,760 --> 00:09:32,560 Speaker 1: of the issues in the UK economy right now. Potent 155 00:09:32,640 --> 00:09:36,240 Speaker 1: response will be to say, there is pervasive uncertainty about 156 00:09:36,280 --> 00:09:39,240 Speaker 1: the nature of the Brexit deal or no deal that 157 00:09:39,320 --> 00:09:42,559 Speaker 1: they're geting to her. We will be ready to move 158 00:09:43,240 --> 00:09:48,120 Speaker 1: in id a direction bending on what actually material lisis 159 00:09:48,120 --> 00:09:50,520 Speaker 1: in Brexit lab So this is the difficult thing that 160 00:09:50,559 --> 00:09:52,360 Speaker 1: I think a lot of people struggle with the idea 161 00:09:52,400 --> 00:09:55,559 Speaker 1: that rates could move in either direction, just the belief 162 00:09:55,640 --> 00:09:57,800 Speaker 1: that they could actually hike interest rates on a hard 163 00:09:57,840 --> 00:10:00,400 Speaker 1: Brexit because they'd have to stabilize inflation. Do you think 164 00:10:00,400 --> 00:10:04,240 Speaker 1: that could actually happen? No, I see hike only in 165 00:10:04,320 --> 00:10:09,720 Speaker 1: response to a soft Brexit, a deal at least as 166 00:10:09,760 --> 00:10:15,760 Speaker 1: good as well Mrs may negotiated. I can't see the 167 00:10:16,200 --> 00:10:21,640 Speaker 1: Sterling weakening as a result of um of no deal 168 00:10:21,679 --> 00:10:25,000 Speaker 1: Brexit and the Bank of England at that point because 169 00:10:25,000 --> 00:10:29,679 Speaker 1: of their fear the inflationary consequences actually raising rates. That 170 00:10:29,720 --> 00:10:33,280 Speaker 1: would be they would see through the temporary inflationary effect 171 00:10:33,640 --> 00:10:38,880 Speaker 1: of this um breckshit driven depreciation. The Bank afing with 172 00:10:38,920 --> 00:10:42,400 Speaker 1: hansa history of looking through her inflation Governor Irvin King 173 00:10:42,679 --> 00:10:46,120 Speaker 1: and Governor mart Carney Moore. Do you think that continues? Yes, 174 00:10:46,280 --> 00:10:48,920 Speaker 1: it does. Looking at markets right now. Do you think 175 00:10:48,920 --> 00:10:50,800 Speaker 1: there's a challenge for the Bank of England given the 176 00:10:50,800 --> 00:10:53,080 Speaker 1: depreciation in Sterling at the moment? Or we not at 177 00:10:53,080 --> 00:10:55,280 Speaker 1: that tipping point just yet. I don't think you had 178 00:10:55,320 --> 00:10:59,440 Speaker 1: the tipping point yet. They not driven on a day 179 00:10:59,480 --> 00:11:03,320 Speaker 1: to day base by the latest movement is sterling. But 180 00:11:03,400 --> 00:11:07,160 Speaker 1: as Maynard Kane said, when the facts change, I change. 181 00:11:07,520 --> 00:11:11,920 Speaker 1: How close are we the currencies forcing the facts to change? 182 00:11:11,920 --> 00:11:15,480 Speaker 1: For President Trump, for President Reguard of the e c B, 183 00:11:16,320 --> 00:11:21,200 Speaker 1: are we getting to tipping points that foreign Exchange describe. Well, 184 00:11:23,000 --> 00:11:27,600 Speaker 1: both these central banks, the ECB and the and the 185 00:11:27,679 --> 00:11:31,319 Speaker 1: Fed managed to surprise the market in a way that 186 00:11:31,480 --> 00:11:35,720 Speaker 1: causes strengthening of their respective currencies when they took the 187 00:11:35,800 --> 00:11:43,720 Speaker 1: latest decision. And uh, but there's no special threshold that 188 00:11:45,400 --> 00:11:48,920 Speaker 1: that that is crossed when they all have to act 189 00:11:49,160 --> 00:11:51,680 Speaker 1: in a radically different way. I think we're seeing a 190 00:11:51,720 --> 00:11:55,240 Speaker 1: lot of high frequency noise and the central banks are 191 00:11:55,280 --> 00:11:58,280 Speaker 1: best advice to sit back and try and look through it. 192 00:11:58,480 --> 00:12:00,920 Speaker 1: At the moment that villain, they have a communication challenge, 193 00:12:00,920 --> 00:12:03,600 Speaker 1: and in many ways it's a communication challenge of their 194 00:12:03,640 --> 00:12:07,400 Speaker 1: own creation. Chairman Poal is not a great communicator, and 195 00:12:07,440 --> 00:12:10,800 Speaker 1: in the era of radical transparency that central banks have 196 00:12:10,880 --> 00:12:14,280 Speaker 1: delivered to us of the last few years, it exposes weaknesses. 197 00:12:14,640 --> 00:12:16,640 Speaker 1: And then he's added to it. He's introduced the news 198 00:12:16,679 --> 00:12:19,960 Speaker 1: conference to every single meeting, and it leaves him exposed. 199 00:12:20,320 --> 00:12:23,320 Speaker 1: How much harder is it now to communicate policy in 200 00:12:23,360 --> 00:12:29,160 Speaker 1: the era of extreme transparency for central banking? Well, undoubtedly 201 00:12:29,880 --> 00:12:34,440 Speaker 1: it's more difficult to standards, the expectations are higher, but 202 00:12:34,880 --> 00:12:41,680 Speaker 1: objectively Booz Powell and to a lesser extent, Dragon have 203 00:12:42,440 --> 00:12:49,400 Speaker 1: incredibly challenging jobs. The US economy is still doing all right. 204 00:12:50,200 --> 00:12:53,600 Speaker 1: If the next pm I and the next manufacturing data, 205 00:12:54,400 --> 00:12:59,960 Speaker 1: next employment data come out looking reasonable, then the expect 206 00:13:00,040 --> 00:13:02,920 Speaker 1: taste of even another cut might be on the mind. 207 00:13:03,640 --> 00:13:08,000 Speaker 1: UM So there really is pervasive uncertainty about the likely 208 00:13:08,040 --> 00:13:11,320 Speaker 1: future court News economy, since it is not just domestically 209 00:13:11,400 --> 00:13:16,600 Speaker 1: driven but driven by external factors. That I UM high 210 00:13:17,120 --> 00:13:20,160 Speaker 1: incredibly difficult to pred is that the distinction now versus 211 00:13:20,160 --> 00:13:24,240 Speaker 1: two thousand seven or any other crisis, anygother is that 212 00:13:24,280 --> 00:13:30,400 Speaker 1: the external factors now overwhelmed the domestic parakeets of any 213 00:13:30,440 --> 00:13:34,160 Speaker 1: central bank. And this is the first time that I 214 00:13:34,280 --> 00:13:38,559 Speaker 1: can remember this happening for the US, and clearly, and 215 00:13:39,000 --> 00:13:43,080 Speaker 1: we heard that yesterday John, I would suggest for Sterling, 216 00:13:43,240 --> 00:13:47,440 Speaker 1: you know, we've had external events dominating right back to 217 00:13:47,480 --> 00:13:51,720 Speaker 1: the seventies, but in the US multipolicy has been really 218 00:13:51,800 --> 00:13:56,400 Speaker 1: driven historically by domestic economic development. To basically say we 219 00:13:56,480 --> 00:14:00,880 Speaker 1: have to look separately at external risk externally evelopment is 220 00:14:01,360 --> 00:14:04,360 Speaker 1: a new game plan. Can I rip up the script here, 221 00:14:04,960 --> 00:14:08,079 Speaker 1: one of the giants of Dutch soccer is retiring. Arch 222 00:14:08,360 --> 00:14:14,240 Speaker 1: Dobbin Archie Robins. I actually watched him on TV this 223 00:14:14,320 --> 00:14:17,160 Speaker 1: year at some point and he's so electric. I mean, 224 00:14:17,200 --> 00:14:20,640 Speaker 1: even in his older career, this guy was that you've 225 00:14:20,680 --> 00:14:23,000 Speaker 1: got excited about I did. I mean, we all know 226 00:14:23,040 --> 00:14:26,040 Speaker 1: Wayne Rooney, right, everybody knows Wayne Rooney, but he was 227 00:14:26,080 --> 00:14:30,240 Speaker 1: the equivalent. Robin is a great play yeah, play for 228 00:14:30,280 --> 00:14:33,160 Speaker 1: some big clubs take and he is he. I mean, 229 00:14:33,560 --> 00:14:36,320 Speaker 1: Dutch soccer can it move forward? And from this after 230 00:14:36,360 --> 00:14:42,200 Speaker 1: missing the World Cup? Well thats a different gender of 231 00:14:42,240 --> 00:14:45,280 Speaker 1: course from the man that retired just but yes, I 232 00:14:45,320 --> 00:14:47,960 Speaker 1: think Dutch soccer can probably get over it. But it's 233 00:14:47,960 --> 00:14:49,960 Speaker 1: a bit of luck. Okay, there we go. The Dutch 234 00:14:50,040 --> 00:14:53,560 Speaker 1: national team right now is actually fantastic. They arguably have 235 00:14:53,640 --> 00:14:56,440 Speaker 1: two of the best center backs men's team. Yeah, Virgil 236 00:14:56,480 --> 00:14:58,720 Speaker 1: Van Dyke for the men's team, the center back probably 237 00:14:58,720 --> 00:15:00,240 Speaker 1: one of the best defenders in the world Pace for 238 00:15:00,280 --> 00:15:03,080 Speaker 1: Liverpool Events has just signed a very young player from 239 00:15:03,080 --> 00:15:06,120 Speaker 1: my Axe called Delete and he is fantastic. So you 240 00:15:06,200 --> 00:15:09,160 Speaker 1: have two great center backs. Frankie Deyong in midfield just 241 00:15:09,240 --> 00:15:12,640 Speaker 1: came from i AX went over to Barcelona, another fantastic player. 242 00:15:12,680 --> 00:15:14,680 Speaker 1: They actually have a really nice core of the team. 243 00:15:14,760 --> 00:15:17,400 Speaker 1: Did you know that John went to Yankee Stadium to 244 00:15:17,480 --> 00:15:20,960 Speaker 1: see Van Dyke play for Liverpool, except he didn't play. 245 00:15:21,280 --> 00:15:23,240 Speaker 1: I saw me he was on TV. He didn't play 246 00:15:23,280 --> 00:15:25,680 Speaker 1: that long? Oh no, well, when I saw me did 247 00:15:25,800 --> 00:15:28,360 Speaker 1: and did? I watched it. I watched him and he 248 00:15:28,400 --> 00:15:30,720 Speaker 1: didn't play. That one made a cameo appearance. He made 249 00:15:30,760 --> 00:15:33,240 Speaker 1: a cameo appearance in the third inning. There were a 250 00:15:33,280 --> 00:15:35,960 Speaker 1: lot of cameo appearances. Did you get your money's worth? 251 00:15:37,680 --> 00:15:39,800 Speaker 1: Really enjoyed myself. It was nice to watch the football 252 00:15:39,800 --> 00:15:44,120 Speaker 1: of Yankee Stadium. You came in at I came in 253 00:15:44,160 --> 00:15:51,600 Speaker 1: on time. The thank you so much. Wonderful to catch. 254 00:15:52,120 --> 00:16:08,800 Speaker 1: It's really good. This is a joy with This is 255 00:16:08,880 --> 00:16:13,400 Speaker 1: Vincent Reinhart, with exceptional research abilities at the FED for 256 00:16:13,560 --> 00:16:16,440 Speaker 1: many a decade now holding out b and y Melon 257 00:16:17,080 --> 00:16:19,760 Speaker 1: providing perspective and Vince, I want to take the next 258 00:16:19,800 --> 00:16:22,840 Speaker 1: eight minutes to do a clinic on one of the 259 00:16:22,880 --> 00:16:27,160 Speaker 1: most important research papers. And folks, it's beautiful and it's 260 00:16:27,240 --> 00:16:32,760 Speaker 1: nonmathliness and brevity. And this is bernanke Reinhardt two thousand four. 261 00:16:33,440 --> 00:16:37,800 Speaker 1: It is a jewel of a small paper conducting monetary 262 00:16:37,880 --> 00:16:42,080 Speaker 1: policy at very low short term interest rates. Vincent, you 263 00:16:42,280 --> 00:16:45,160 Speaker 1: nailed it in two thousand four. How are you and 264 00:16:45,200 --> 00:16:50,240 Speaker 1: then Governor Bernankey so oppressient Japan? Uh? There were lots 265 00:16:50,280 --> 00:16:53,640 Speaker 1: of concerns and the first part of the decade of 266 00:16:53,680 --> 00:16:58,320 Speaker 1: the Japanese experience the inability of low interest rates to 267 00:16:58,480 --> 00:17:02,360 Speaker 1: generate inflation, and we had an inflation scare UH. In 268 00:17:03,160 --> 00:17:08,520 Speaker 1: and three and four inflation didn't match our forecast. It 269 00:17:09,080 --> 00:17:12,280 Speaker 1: failed to rise even though the unemployment rate was low. 270 00:17:12,880 --> 00:17:15,960 Speaker 1: And so the question then is what the heck would 271 00:17:16,000 --> 00:17:18,480 Speaker 1: you do? Well, what that would you do? I did 272 00:17:18,480 --> 00:17:22,359 Speaker 1: a word search using the surveillance computer and the word 273 00:17:22,480 --> 00:17:26,520 Speaker 1: negative is not in your wonderful jewel with Chairman Bernankey. 274 00:17:27,080 --> 00:17:31,720 Speaker 1: You didn't see negative interest rates coming, did anyone? Uh? 275 00:17:31,880 --> 00:17:36,680 Speaker 1: Mainly because we were transfixed by the zero lower abound 276 00:17:36,720 --> 00:17:40,720 Speaker 1: phenomenal interest rates that currency. And why do why zero? 277 00:17:40,840 --> 00:17:45,320 Speaker 1: Why zero? The speed bump because we just assumed that 278 00:17:45,800 --> 00:17:52,000 Speaker 1: currency dominated I E currencies and iou of the central bank. Uh. 279 00:17:52,080 --> 00:17:55,480 Speaker 1: It is you know, payable on demand, It is a 280 00:17:55,600 --> 00:17:58,800 Speaker 1: secure payment and it gets a return to zero. So 281 00:17:58,800 --> 00:18:00,879 Speaker 1: why would you ever go to the central bank and 282 00:18:01,640 --> 00:18:04,400 Speaker 1: put a deposit for a negative rate. People are still 283 00:18:04,480 --> 00:18:08,880 Speaker 1: asking people are still asking that question. Hey, it's getting chronic, 284 00:18:08,960 --> 00:18:12,640 Speaker 1: and someone suggests it's getting deeper. Give us an update 285 00:18:12,960 --> 00:18:17,879 Speaker 1: on bernanke Reinhardt two. So here's here's the trick. This 286 00:18:17,960 --> 00:18:21,359 Speaker 1: is the magic of central banking. The amount of reserves 287 00:18:21,400 --> 00:18:25,840 Speaker 1: outstanding in the banking system, that is, the deposits commercial 288 00:18:25,840 --> 00:18:29,600 Speaker 1: banks hold, are entirely determined by how many assets the 289 00:18:29,640 --> 00:18:32,080 Speaker 1: central bank holds. Because if you go out and you 290 00:18:32,119 --> 00:18:36,600 Speaker 1: buy a treasure security, you pay for reserves, and banks 291 00:18:37,040 --> 00:18:40,800 Speaker 1: can trade those reserves amongst themselves, but they can't get 292 00:18:40,840 --> 00:18:44,200 Speaker 1: them out of the banking system. It's it's a closed network. 293 00:18:44,680 --> 00:18:48,080 Speaker 1: So therefore you can tax them, and negative interest rates 294 00:18:48,080 --> 00:18:52,440 Speaker 1: are attacks. Now, we were very negative on negative rates 295 00:18:52,520 --> 00:18:55,919 Speaker 1: because generally, when you're in a situation in which you 296 00:18:56,000 --> 00:18:59,880 Speaker 1: want really low rates, your banking system is probably impaired, 297 00:19:00,119 --> 00:19:03,240 Speaker 1: and taxing an impaired banking system isn't going to be 298 00:19:03,280 --> 00:19:06,640 Speaker 1: good for credit. The Europeans have learned, Yeah, that's exactly 299 00:19:06,640 --> 00:19:08,920 Speaker 1: that's right. We wanted to go. The Europeans have learned 300 00:19:08,960 --> 00:19:11,720 Speaker 1: this in spades. And what it comes down to is 301 00:19:11,920 --> 00:19:17,000 Speaker 1: profit is lesson number Nankee's hardwired strength of financial system. 302 00:19:17,040 --> 00:19:20,200 Speaker 1: We've heard this from say Magna decide llse as well. 303 00:19:20,880 --> 00:19:26,000 Speaker 1: The profits have evaporated under negative interest rates, right exactly. 304 00:19:26,040 --> 00:19:30,680 Speaker 1: And by the way, we also have a real impairment 305 00:19:30,960 --> 00:19:35,920 Speaker 1: of cross border banking transactions in Europe. So it's not 306 00:19:36,040 --> 00:19:38,880 Speaker 1: just that they're not making any money, they're not making 307 00:19:38,960 --> 00:19:43,840 Speaker 1: loans domestically and they're not, uh, you know, arbitraging across markets. 308 00:19:43,960 --> 00:19:46,600 Speaker 1: That that's a broken system. Do we do we risk 309 00:19:46,760 --> 00:19:50,719 Speaker 1: Europeanizing or Japanification here in the United States? I've got 310 00:19:50,760 --> 00:19:54,200 Speaker 1: a two zero zero waiting for one on tenure yield, 311 00:19:54,200 --> 00:19:57,000 Speaker 1: We've got the dollar strength, We've got the challenges we 312 00:19:57,040 --> 00:19:59,359 Speaker 1: all know over the last number of days. Do we 313 00:19:59,600 --> 00:20:03,840 Speaker 1: risk catching up with bernanke Reiner two thousand four. Well, 314 00:20:03,880 --> 00:20:07,840 Speaker 1: I don't actually take Japanification anymore as a as a 315 00:20:07,920 --> 00:20:11,960 Speaker 1: bad term. Go go back and read Governor Coroda's Kim 316 00:20:12,080 --> 00:20:14,679 Speaker 1: Do sus speech last month that he gave at the 317 00:20:14,680 --> 00:20:20,520 Speaker 1: I m f H which G seven economy has higher 318 00:20:20,560 --> 00:20:23,560 Speaker 1: inflation in the last five years in the previous five years, 319 00:20:23,960 --> 00:20:27,320 Speaker 1: which G seven economy has had a half percentage point 320 00:20:27,400 --> 00:20:33,640 Speaker 1: increasing per capita GDP answers Japan uh post their quantitative 321 00:20:33,920 --> 00:20:38,240 Speaker 1: uh uh q que policy. They have managed to get 322 00:20:38,280 --> 00:20:41,760 Speaker 1: inflation up. Now they may be given up and UH 323 00:20:41,840 --> 00:20:45,240 Speaker 1: and and satisfied with inflation around one. But but they 324 00:20:45,400 --> 00:20:49,040 Speaker 1: they've succeeded at a cost. The cost is breaking their 325 00:20:49,040 --> 00:20:52,400 Speaker 1: government security. And they did it also by a lot 326 00:20:52,400 --> 00:20:57,159 Speaker 1: of tearing in reserve requirements, i e. They cut some 327 00:20:57,720 --> 00:21:00,879 Speaker 1: slack for for some banks, and so that's how you 328 00:21:00,920 --> 00:21:03,240 Speaker 1: get around negative well, and they did that in Europe. 329 00:21:03,240 --> 00:21:05,320 Speaker 1: They cut some slacks supposedly for the people. I mean 330 00:21:05,359 --> 00:21:09,240 Speaker 1: the citations in Bernankei Reinard. You've got Carl Brunner, Allan 331 00:21:09,320 --> 00:21:12,840 Speaker 1: Meltzer of the Carnegie Rochester School. You got Gudie Uggerson 332 00:21:12,920 --> 00:21:15,879 Speaker 1: and Michael Woodford writing up on the matthewness of all this. 333 00:21:16,240 --> 00:21:20,119 Speaker 1: Forget about it, Vincent Reynard. It's about people. Are listeners 334 00:21:20,720 --> 00:21:24,679 Speaker 1: dealing at the zero bound? Is this just a discussion 335 00:21:24,680 --> 00:21:28,360 Speaker 1: of academics or can people ever see a decent return 336 00:21:28,760 --> 00:21:32,080 Speaker 1: and even a real interest rate return on their savings? 337 00:21:32,760 --> 00:21:36,560 Speaker 1: A big problem problem with zero and a big problem 338 00:21:36,600 --> 00:21:39,320 Speaker 1: with easing generally. And you saw it last week with 339 00:21:40,160 --> 00:21:43,520 Speaker 1: President draw He you saw it yesterday with with with 340 00:21:43,680 --> 00:21:47,680 Speaker 1: chair Pale is they want to justify easing by talking 341 00:21:47,680 --> 00:21:52,120 Speaker 1: the economy down, and that's not necessary recipe for for 342 00:21:52,320 --> 00:21:57,760 Speaker 1: supporting growth. Zero is a magnet for bad feelings. Zero 343 00:21:58,000 --> 00:22:01,800 Speaker 1: is a discouragement to say. I mean, it also probably 344 00:22:01,880 --> 00:22:06,520 Speaker 1: keeps a live zombie firms, um, because you can always 345 00:22:06,640 --> 00:22:10,640 Speaker 1: roll over over the loan book, even even a firm 346 00:22:10,680 --> 00:22:14,679 Speaker 1: that should go away. And so yes, I think that, Uh, 347 00:22:15,600 --> 00:22:18,800 Speaker 1: look you look at that paper there. We should have 348 00:22:18,840 --> 00:22:22,960 Speaker 1: included two more sections, and the one is the UH 349 00:22:23,200 --> 00:22:27,520 Speaker 1: risks to unconventional monetary policy, and the last one would 350 00:22:27,520 --> 00:22:30,240 Speaker 1: be how to exit unconventional monetary Are we anywhere in 351 00:22:30,240 --> 00:22:32,440 Speaker 1: your exiting? I mean, that's the arts question. Bill Gross 352 00:22:32,480 --> 00:22:36,560 Speaker 1: talks about decades of financial repression for savers, But I'm 353 00:22:36,600 --> 00:22:39,080 Speaker 1: looking at my Bloomberg screen with all the turmoil of 354 00:22:39,119 --> 00:22:42,280 Speaker 1: the last twenty four hours, and everybody's got to go 355 00:22:42,320 --> 00:22:45,040 Speaker 1: out and read bernanke Reynard again because it's Germaine and 356 00:22:45,359 --> 00:22:49,639 Speaker 1: fifteen years on. Uh, you shall also read terments papers 357 00:22:49,640 --> 00:22:52,119 Speaker 1: on financial repression. She's the one who who brought the 358 00:22:52,200 --> 00:22:57,040 Speaker 1: term back to life. Um. Yeah, so once you take 359 00:22:57,080 --> 00:22:58,560 Speaker 1: it out of the box, it's hard to put it 360 00:22:58,640 --> 00:23:02,320 Speaker 1: back in the box, both in terms of zero is 361 00:23:02,600 --> 00:23:06,959 Speaker 1: a sticky lower Abound asked the Japanese as asking the hands. 362 00:23:07,440 --> 00:23:12,080 Speaker 1: And once you've done balance sheet transactions, once you've done 363 00:23:12,080 --> 00:23:14,879 Speaker 1: asset persons, the hurdle for doing him again is a 364 00:23:14,920 --> 00:23:18,440 Speaker 1: lot lower. Carmen Rynard and Mr Rogoff and Frankly dr 365 00:23:18,560 --> 00:23:21,720 Speaker 1: Roach as well as Morgan Stanley now Yale. Then you 366 00:23:21,800 --> 00:23:26,480 Speaker 1: go out to the distortions of asset bubbles. Off all 367 00:23:26,560 --> 00:23:29,159 Speaker 1: this monetary ballet is that where we are now, we're 368 00:23:29,160 --> 00:23:35,080 Speaker 1: going to generate new uh do new new uh, discontinuous 369 00:23:35,280 --> 00:23:38,320 Speaker 1: growth in asset bubbles because of this policy we have 370 00:23:38,359 --> 00:23:42,080 Speaker 1: in place. I think you should ask President Rosengron of 371 00:23:42,160 --> 00:23:45,760 Speaker 1: the Boston Fed about that, because I presume that's why 372 00:23:45,800 --> 00:23:50,040 Speaker 1: he dissented yesterday. He's always expressed a lot of concern 373 00:23:50,080 --> 00:23:57,320 Speaker 1: about financial stability and and look, uh, the dirty little 374 00:23:57,320 --> 00:24:01,160 Speaker 1: secret of central banking is she the way you support 375 00:24:01,280 --> 00:24:06,040 Speaker 1: economic growth is inflate atter. Oh, this has been one. 376 00:24:06,240 --> 00:24:08,200 Speaker 1: We're gonna leave it there, Vincy, we just gonna run 377 00:24:08,200 --> 00:24:10,600 Speaker 1: out of him. This has been spectacular. Look for this 378 00:24:10,640 --> 00:24:14,199 Speaker 1: out on our podcast, vincent reinert Off Bernanke reinert of 379 00:24:14,240 --> 00:24:30,560 Speaker 1: a few years ago. This is Bloomberg. What we're gonna 380 00:24:30,600 --> 00:24:34,840 Speaker 1: do now is digress from mcconnobabble, dollar babbel and all 381 00:24:34,880 --> 00:24:37,720 Speaker 1: the other stuff we're knee deep in right now and 382 00:24:37,800 --> 00:24:43,479 Speaker 1: actually do something quaint. What do you actually do with 383 00:24:43,760 --> 00:24:47,200 Speaker 1: your money? He is more than qualified out of Pennsylvania 384 00:24:47,960 --> 00:24:51,119 Speaker 1: in economics, one of our most esteemed programs in the country, 385 00:24:51,119 --> 00:24:54,200 Speaker 1: and also has a shingle from the University of Chicago. 386 00:24:54,280 --> 00:24:57,399 Speaker 1: Andrew Slim and joins us with Morgan Stanley Andrew to 387 00:24:57,480 --> 00:25:01,240 Speaker 1: be to be direct about it, there's differ in strategies, 388 00:25:01,359 --> 00:25:04,760 Speaker 1: there's different approaches. What I love about your work is 389 00:25:04,760 --> 00:25:09,240 Speaker 1: you're not over diversified. You've got a relatively small number 390 00:25:09,240 --> 00:25:13,280 Speaker 1: of holdings. What are you doing right now? If I 391 00:25:13,320 --> 00:25:15,399 Speaker 1: walked in with a pot of money today, you know, 392 00:25:16,119 --> 00:25:19,280 Speaker 1: for in twelve dollars or you know, what would you 393 00:25:19,280 --> 00:25:22,680 Speaker 1: actually do today with my pot of money? Yeah, that's 394 00:25:22,680 --> 00:25:24,680 Speaker 1: a great question. Thanks for having me on. So look, 395 00:25:24,720 --> 00:25:27,520 Speaker 1: I'm I'm I'm an equity manager. My job is to 396 00:25:27,600 --> 00:25:32,680 Speaker 1: be invested in equities. Now, how I reflect my optimism 397 00:25:32,680 --> 00:25:37,080 Speaker 1: about the market is I direct that by the types 398 00:25:37,119 --> 00:25:41,280 Speaker 1: of stocks that I buy? And how much risk I'm taking. 399 00:25:41,560 --> 00:25:43,960 Speaker 1: I think if someone walked in with pot of cash, 400 00:25:44,640 --> 00:25:47,159 Speaker 1: I would say to them, look, then market has had 401 00:25:47,200 --> 00:25:50,400 Speaker 1: a very good move. August is historically not a good 402 00:25:50,520 --> 00:25:53,119 Speaker 1: month for the market, the volatile, it's thet it's the 403 00:25:53,119 --> 00:25:55,679 Speaker 1: most volatile month of the year. I think we're going 404 00:25:55,720 --> 00:25:58,119 Speaker 1: to have a good fourth quarter, but I would be 405 00:25:58,160 --> 00:26:00,840 Speaker 1: a little bit cautious sitting at the highs were at 406 00:26:00,920 --> 00:26:03,000 Speaker 1: right now. Yeah, let's come to the chase. What do 407 00:26:03,040 --> 00:26:04,719 Speaker 1: you do with all the big names stocks? I mean, 408 00:26:04,800 --> 00:26:07,480 Speaker 1: Sweetie and I we keep score. We only talk about 409 00:26:07,480 --> 00:26:09,840 Speaker 1: four stocks all week. What do you do with the 410 00:26:09,840 --> 00:26:13,879 Speaker 1: ones everybody's in love with, including Morgan Stanley, Amazon, Apple, 411 00:26:13,920 --> 00:26:15,640 Speaker 1: blah blah blah. What do you do with the over 412 00:26:15,720 --> 00:26:19,200 Speaker 1: own names? I think those stocks will be higher your end, 413 00:26:20,400 --> 00:26:24,240 Speaker 1: I really do. I think those stocks, yes, they're they're 414 00:26:24,520 --> 00:26:28,080 Speaker 1: they've done very well. But if you compare those stock 415 00:26:28,359 --> 00:26:33,920 Speaker 1: forward valuation versus previous market peaks, they're not nearly as expensive. 416 00:26:34,000 --> 00:26:37,440 Speaker 1: So I think the crowding is going to continue on. 417 00:26:38,000 --> 00:26:40,320 Speaker 1: Maybe not this month, maybe they have a pull back 418 00:26:40,400 --> 00:26:43,119 Speaker 1: this month, but at your end they'll probably hire so 419 00:26:43,200 --> 00:26:45,560 Speaker 1: Andrew tom is a lot more aggressive with his portfolio 420 00:26:45,560 --> 00:26:47,600 Speaker 1: than I'm he likes to roll the dice a little bit. 421 00:26:47,960 --> 00:26:50,560 Speaker 1: I was looking at defensive stocks and you know, whether 422 00:26:50,600 --> 00:26:53,320 Speaker 1: it's utilities or reads or the consumer staples, and they're 423 00:26:53,320 --> 00:26:57,280 Speaker 1: not necessarily cheap. You thinking about on those defensive way point, 424 00:26:57,480 --> 00:27:00,640 Speaker 1: I think you have to be mindful of the market 425 00:27:01,160 --> 00:27:05,800 Speaker 1: and how people where people are situated. The stocks you mentioned, Tom, 426 00:27:05,840 --> 00:27:08,960 Speaker 1: they're not the expensive stocks relative to their history. What's 427 00:27:09,000 --> 00:27:14,879 Speaker 1: expensive is these defensive stocks that the buzzwords that gets 428 00:27:15,040 --> 00:27:20,800 Speaker 1: you know, that gets kind of retail chasing is quality, 429 00:27:20,920 --> 00:27:24,920 Speaker 1: uh low, low risk, and downside capture. If you throw 430 00:27:25,000 --> 00:27:28,119 Speaker 1: those three words out, you get everyone crowded in. So 431 00:27:28,240 --> 00:27:31,360 Speaker 1: it's it's just as you said, Paul, it's the consumer staple. 432 00:27:31,880 --> 00:27:34,600 Speaker 1: It's the stocks that are perceived that should do well. 433 00:27:35,160 --> 00:27:39,440 Speaker 1: If recessions around the corner. Now, if everyone believes were 434 00:27:39,520 --> 00:27:42,280 Speaker 1: late cycle, the question I would ask you is are 435 00:27:42,320 --> 00:27:45,440 Speaker 1: relate cycle? Well, it's just you know, Paul, I want 436 00:27:45,480 --> 00:27:47,640 Speaker 1: you to jump in with an informed question. I would 437 00:27:47,640 --> 00:27:54,159 Speaker 1: just point out downside capture describes the red socks season. So, Andrew, 438 00:27:54,280 --> 00:27:57,240 Speaker 1: you know, we've we're hearing some earnings from some industrial 439 00:27:57,280 --> 00:27:59,399 Speaker 1: companies and they're all kind of calling out the fact 440 00:27:59,400 --> 00:28:02,000 Speaker 1: that you know, they are seeing a slow down. They 441 00:28:02,040 --> 00:28:05,399 Speaker 1: are concerned about global trade, they are concerned about you know, 442 00:28:05,640 --> 00:28:08,240 Speaker 1: Western Europe slowdown in Brexit and how that could impact. 443 00:28:08,320 --> 00:28:10,160 Speaker 1: How are you thinking about some of these big global 444 00:28:10,640 --> 00:28:15,040 Speaker 1: uh conglomerate industrial companies. I just don't think they are 445 00:28:15,200 --> 00:28:19,280 Speaker 1: going to turn positive until you get a China trade deal, 446 00:28:19,320 --> 00:28:20,560 Speaker 1: and then there's going to be a LaGG and I 447 00:28:20,560 --> 00:28:22,840 Speaker 1: don't think you're gonna have a China trade deal in 448 00:28:22,960 --> 00:28:26,200 Speaker 1: July two nineteen when the elections out, till November two 449 00:28:26,200 --> 00:28:29,720 Speaker 1: thousand twenty. So I mean I'm thinking, Tom, I just 450 00:28:29,760 --> 00:28:32,760 Speaker 1: stick with my fang stocks. They've been good to me. Well, 451 00:28:32,800 --> 00:28:35,200 Speaker 1: this is an important point, Andrew. We're at a time, 452 00:28:35,240 --> 00:28:38,040 Speaker 1: but this is really really important. What is the valuation 453 00:28:38,080 --> 00:28:40,680 Speaker 1: of the margaret right now on revenue growth? Because those 454 00:28:40,680 --> 00:28:43,920 Speaker 1: Fang stocks, you know, they're not doing single digit, you know, 455 00:28:44,080 --> 00:28:46,920 Speaker 1: organic revenue growth four percent, that kind of thing. There's 456 00:28:46,960 --> 00:28:51,320 Speaker 1: some legitimate revenue growth number there is that overaccentuated or 457 00:28:51,360 --> 00:28:57,800 Speaker 1: do I want to own absolute and relative revenue growth? Oh? Absolutely? 458 00:28:57,880 --> 00:29:00,960 Speaker 1: I mean I think what's in treating me is people 459 00:29:01,240 --> 00:29:05,200 Speaker 1: keep talking about profit margins peaking, which is true. We're 460 00:29:05,200 --> 00:29:09,160 Speaker 1: having some wage pressure, but actually revenue growth is accelerating 461 00:29:09,200 --> 00:29:14,400 Speaker 1: because economy is accelerating, especially for the consumer oriented companies, 462 00:29:14,920 --> 00:29:18,320 Speaker 1: and so I think the market is rewarding those consumer 463 00:29:18,720 --> 00:29:22,040 Speaker 1: companies that are seeing actually revenue acceleration. Can you own 464 00:29:22,120 --> 00:29:24,600 Speaker 1: foreign stocks with the dollar dynamics we've got right now, 465 00:29:24,960 --> 00:29:28,560 Speaker 1: that's a real issue. That's a real issue. I think 466 00:29:28,680 --> 00:29:31,640 Speaker 1: this overweight in you know, and we'll look, we run 467 00:29:31,680 --> 00:29:35,160 Speaker 1: global strategies, but I think the Europe just continues to 468 00:29:35,200 --> 00:29:38,400 Speaker 1: be the same old story, which is, don't bet on 469 00:29:38,560 --> 00:29:41,440 Speaker 1: the recovery and the cyclicals in Europe and Japan has 470 00:29:41,480 --> 00:29:44,000 Speaker 1: been the lack, you know, the big disappointment of the year. 471 00:29:44,200 --> 00:29:45,680 Speaker 1: We got to do it. It's going to be the 472 00:29:45,760 --> 00:29:47,960 Speaker 1: US again. We gotta do it again. Andrew Slimmon with 473 00:29:48,040 --> 00:29:52,760 Speaker 1: US Morgan Stanley, and he's really an almost applied portfolio construction, 474 00:29:52,800 --> 00:30:08,680 Speaker 1: which is very cool as well. Forget all the fancy stuff, 475 00:30:08,760 --> 00:30:10,960 Speaker 1: let's talk basic now. Joining US is one of the 476 00:30:10,960 --> 00:30:13,840 Speaker 1: great stories of a Democratic party. You're up forty five 477 00:30:13,880 --> 00:30:18,480 Speaker 1: miles north of Bakersfield, California, Wandered Economics with John Taylor 478 00:30:18,840 --> 00:30:22,560 Speaker 1: is Stanford Universities dropped by to play basketball and softball, 479 00:30:22,920 --> 00:30:24,880 Speaker 1: and then it's done a little bit in politics for 480 00:30:24,960 --> 00:30:28,960 Speaker 1: Secretary Clinton. She is a Democrat from California. Amanda renter 481 00:30:29,080 --> 00:30:32,520 Speaker 1: Rea joins us right now with Emerge as well, talking 482 00:30:32,560 --> 00:30:36,640 Speaker 1: about getting more women into politics. You're consulting to these 483 00:30:36,680 --> 00:30:39,880 Speaker 1: survivors today. What's your number one message to make these 484 00:30:39,960 --> 00:30:44,120 Speaker 1: candidates engage with America? You know, listen, this is a 485 00:30:44,160 --> 00:30:48,320 Speaker 1: second debate and more of being who they are, ensuring 486 00:30:48,360 --> 00:30:50,840 Speaker 1: that they're showing they have a fighting spirit, that they 487 00:30:50,880 --> 00:30:53,320 Speaker 1: have a vision for this country. Is exactly what they 488 00:30:53,320 --> 00:30:55,680 Speaker 1: need to be doing and continue to do throughout. This 489 00:30:55,720 --> 00:30:58,959 Speaker 1: is a long process. It's a long process. You know, 490 00:30:59,080 --> 00:31:01,400 Speaker 1: the long process. But you are one that's been in 491 00:31:01,400 --> 00:31:05,120 Speaker 1: the trenches of this literally sent your childhood as well. 492 00:31:05,360 --> 00:31:09,600 Speaker 1: Are they being overconsulted? Are they too fancy? You know, 493 00:31:09,720 --> 00:31:11,920 Speaker 1: I think people showed up with a different energy this 494 00:31:11,960 --> 00:31:13,800 Speaker 1: time around. I would have said that in the first debate. 495 00:31:13,880 --> 00:31:16,240 Speaker 1: The second debate, you saw people leaning a lot more 496 00:31:16,320 --> 00:31:18,680 Speaker 1: from the very beginning. We have to see a lot 497 00:31:18,720 --> 00:31:21,440 Speaker 1: more of that. And there's no doubt that this this 498 00:31:21,600 --> 00:31:24,080 Speaker 1: competition is going to be really intense, not only in 499 00:31:24,120 --> 00:31:25,920 Speaker 1: the primary, but also in the br but you gotta 500 00:31:25,920 --> 00:31:28,360 Speaker 1: win six counties. You've got to memorize in the course, 501 00:31:28,360 --> 00:31:30,640 Speaker 1: Secretary Clinton learn it the hard way. Many would say, 502 00:31:30,680 --> 00:31:33,560 Speaker 1: losing the election, how do they not do a Clinton 503 00:31:34,000 --> 00:31:37,080 Speaker 1: and lose the next election in those key counties. They're 504 00:31:37,120 --> 00:31:40,760 Speaker 1: already talking to folks all across the country directly to them. 505 00:31:40,840 --> 00:31:43,840 Speaker 1: You've seen some specific policies in a way that people 506 00:31:43,960 --> 00:31:47,520 Speaker 1: medicure going to play in Wisconsin. No, listen, I think 507 00:31:47,720 --> 00:31:53,000 Speaker 1: they are absolutely leaning into tangible, tangible, specific ways that 508 00:31:53,080 --> 00:31:55,719 Speaker 1: people are actually affected. You saw that with Elizabeth Warren. 509 00:31:55,960 --> 00:31:57,640 Speaker 1: You saw that last night on the stage, and you're 510 00:31:57,640 --> 00:31:59,320 Speaker 1: going to see more of that. The other thing is 511 00:31:59,360 --> 00:32:01,680 Speaker 1: they're going to them. They're going directly in these places 512 00:32:01,720 --> 00:32:03,440 Speaker 1: to talk to them, to see what's happening on the 513 00:32:04,120 --> 00:32:08,360 Speaker 1: ring Francy in London, Fancy Amanda. How much are Democratic 514 00:32:08,400 --> 00:32:11,480 Speaker 1: voters looking for someone they think can beat Donald Trump 515 00:32:11,600 --> 00:32:15,480 Speaker 1: versus someone that actually matches their view of the world. Well, 516 00:32:15,520 --> 00:32:18,120 Speaker 1: I think that's an important question, and that's why seeing 517 00:32:18,120 --> 00:32:20,240 Speaker 1: the folks who are fighting and who are leaning in, 518 00:32:20,560 --> 00:32:22,960 Speaker 1: not taking a backseat and doing an analysis for you, 519 00:32:23,240 --> 00:32:25,840 Speaker 1: but really that passion and that intensity is going to 520 00:32:25,880 --> 00:32:28,520 Speaker 1: be absolutely important. When you get into the ring in 521 00:32:28,520 --> 00:32:31,080 Speaker 1: the next debate and going forward, this is going to 522 00:32:31,160 --> 00:32:34,200 Speaker 1: be an incredibly intense election, and last night you saw 523 00:32:34,200 --> 00:32:37,160 Speaker 1: the beginning of that. Okay, who do you think has 524 00:32:37,160 --> 00:32:39,880 Speaker 1: a chance of winning against President Trump? Is it a 525 00:32:39,960 --> 00:32:42,720 Speaker 1: moderate or a progressive? I actually think that's the wrong 526 00:32:42,800 --> 00:32:44,680 Speaker 1: question because I don't think it's about policy. I think 527 00:32:44,680 --> 00:32:47,040 Speaker 1: it's what kind of fight you bring. And last night 528 00:32:47,080 --> 00:32:49,560 Speaker 1: what you saw people defending where they were and being 529 00:32:49,600 --> 00:32:52,280 Speaker 1: able to connect to the American people. Elizabeth Warren on 530 00:32:52,320 --> 00:32:55,400 Speaker 1: the first night did that incredibly well. On the second 531 00:32:55,520 --> 00:32:57,800 Speaker 1: night you saw Biden do it. You saw Senator book 532 00:32:57,880 --> 00:33:00,560 Speaker 1: Or do it Kamala Harris did in the first night. 533 00:33:00,840 --> 00:33:04,200 Speaker 1: The more you see, Canada gets very get very comfortable 534 00:33:04,240 --> 00:33:05,920 Speaker 1: with this idea that you're going to be attacked and 535 00:33:05,960 --> 00:33:08,680 Speaker 1: you're gonna answer back. That's what we need to keep 536 00:33:08,720 --> 00:33:10,600 Speaker 1: seeing seeing and that's what makes it possible to win. 537 00:33:11,920 --> 00:33:14,040 Speaker 1: I keep on hearing that because the economy is strong, 538 00:33:14,600 --> 00:33:17,840 Speaker 1: if the economy doesn't go down the drain, then President 539 00:33:17,840 --> 00:33:20,760 Speaker 1: Trump will be reelected, even if he doesn't widen his 540 00:33:20,840 --> 00:33:24,080 Speaker 1: base so much. So, what real chance does a democratic 541 00:33:24,120 --> 00:33:26,600 Speaker 1: candidate stand? Oh? I couldn't disagree more if you looked 542 00:33:26,640 --> 00:33:29,760 Speaker 1: at what happened in the economy was strong as well. 543 00:33:30,040 --> 00:33:32,280 Speaker 1: I know, I know Trump was not on the ticket, 544 00:33:32,280 --> 00:33:35,080 Speaker 1: but people were talking about healthcare, people were talking about humanity, 545 00:33:35,080 --> 00:33:37,200 Speaker 1: people were talking about the values and the things that 546 00:33:37,240 --> 00:33:40,360 Speaker 1: they thought were important for this country and that one 547 00:33:40,720 --> 00:33:43,600 Speaker 1: that will again win in And I think you're gonna 548 00:33:43,680 --> 00:33:46,880 Speaker 1: also see Democrats say who does it work for? And 549 00:33:46,960 --> 00:33:50,720 Speaker 1: that particular question I don't think got got discussed last 550 00:33:50,800 --> 00:33:53,280 Speaker 1: night enough. We're not we're not talking about the Royalty, 551 00:33:53,440 --> 00:33:55,720 Speaker 1: of the Clintons of the Royalty. They'll bones they're gonna 552 00:33:55,720 --> 00:33:58,880 Speaker 1: have a donning Brook at the Democratic Convention. Is a Democrat. 553 00:33:58,920 --> 00:34:01,760 Speaker 1: What's the risk that the Amigratic Party, your party ramam 554 00:34:01,760 --> 00:34:06,240 Speaker 1: Annuals party slips into running through with a progressive that's 555 00:34:06,360 --> 00:34:09,480 Speaker 1: dead on arrival with Middle America. I think you are 556 00:34:09,480 --> 00:34:12,120 Speaker 1: going to see the party come together when you will 557 00:34:12,120 --> 00:34:13,560 Speaker 1: give me a date and a time on this. I 558 00:34:13,560 --> 00:34:16,920 Speaker 1: need to get my shirt April so March, because at 559 00:34:16,920 --> 00:34:20,240 Speaker 1: the end of March the pledge delegates will be decided 560 00:34:20,239 --> 00:34:22,719 Speaker 1: by then and at that point you have from the 561 00:34:22,880 --> 00:34:25,000 Speaker 1: end of March to the beginning of the convention to 562 00:34:25,080 --> 00:34:28,440 Speaker 1: come together so one more question than Amanda, where are 563 00:34:28,440 --> 00:34:31,799 Speaker 1: you getting this from? I mean, die hard Democrats. Do 564 00:34:31,880 --> 00:34:35,440 Speaker 1: they want a Sanders Warren zeitgeist or like Rama Manuello, 565 00:34:35,480 --> 00:34:37,799 Speaker 1: they're saying, wait a minute, we gotta win this thing 566 00:34:37,880 --> 00:34:40,239 Speaker 1: this time. Which is it? I think it's we gotta 567 00:34:40,239 --> 00:34:42,640 Speaker 1: win this same this time. But there's gonna be a 568 00:34:42,640 --> 00:34:45,440 Speaker 1: discussion as to where people are on the ideological timeline 569 00:34:45,480 --> 00:34:47,120 Speaker 1: and where people are in terms of the past and 570 00:34:47,160 --> 00:34:52,359 Speaker 1: the present. What's your dream ticket, Amanda? Is it too 571 00:34:52,400 --> 00:34:54,080 Speaker 1: soon to choose or you know, if you have to 572 00:34:54,120 --> 00:34:57,440 Speaker 1: give me two names, too soon to be way too 573 00:34:57,440 --> 00:34:59,560 Speaker 1: soon to choose. But we need to have somebody who 574 00:34:59,640 --> 00:35:02,399 Speaker 1: can read really address foreign policy issues. I think that's 575 00:35:02,400 --> 00:35:05,000 Speaker 1: a really important one this this time around. Um and 576 00:35:05,040 --> 00:35:06,760 Speaker 1: then I think you need someone else can to excite 577 00:35:06,760 --> 00:35:10,280 Speaker 1: the base. Can I ask one other question? How cool 578 00:35:10,440 --> 00:35:12,520 Speaker 1: was it to see Mike Massina enter the Hall of 579 00:35:12,520 --> 00:35:16,120 Speaker 1: Fame in baseball? To see someone from Stanford with his 580 00:35:16,239 --> 00:35:19,239 Speaker 1: academics like you and Stanford economics and he's in the 581 00:35:19,280 --> 00:35:21,840 Speaker 1: Baseball Hall of Fame? Was that wonderful? I think it is. 582 00:35:21,920 --> 00:35:24,720 Speaker 1: I think being able to see people span the different 583 00:35:24,760 --> 00:35:28,280 Speaker 1: talents you have fantastic God you survived. John Taylor's economic 584 00:35:29,280 --> 00:35:32,279 Speaker 1: very good. Amanda Rendaria with us. She is a Democrat 585 00:35:32,360 --> 00:35:35,200 Speaker 1: and she looks forward to March in April, where maybe 586 00:35:35,239 --> 00:35:38,600 Speaker 1: things will change for the party. Thanks for listening to 587 00:35:38,680 --> 00:35:43,200 Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on 588 00:35:43,239 --> 00:35:49,080 Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm 589 00:35:49,120 --> 00:35:52,440 Speaker 1: on Twitter at Tom Keane before the podcast. You can 590 00:35:52,480 --> 00:36:03,080 Speaker 1: always catch us worldwide. I'm Bloomberg Radio.