WEBVTT - Bloomberg Surveillance TV: October 22nd, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.720 with Lisa Bromwitz and Amerie Hordernt. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.479 Terminal and the Bloomberg Business app. Stocks holding steady? Is 0:00:37.479 --> 0:00:39.599 Wall Street a waste? The next round of corporate results? 0:00:39.800 --> 0:00:42.760 Daryl Kronk of Wells Fargo, writing, based on our expectations 0:00:42.760 --> 0:00:45.760 for accelerated earnings, we believe the next twelve to fifteen 0:00:45.760 --> 0:00:48.800 months will favor us sequities. Darrell joins us now from 0:00:48.800 --> 0:00:51.240 More Darrek Grim Mornig Majah. What is it about the 0:00:51.360 --> 0:00:53.400 US stock market that this story is going to favor? 0:00:54.200 --> 0:00:55.560 Well, I think it's a number of things. 0:00:55.960 --> 0:00:58.360 So beyond the earning story, which I think you guys 0:00:58.400 --> 0:01:00.520 have well socialized and talk about in a kicked in, 0:01:00.960 --> 0:01:03.040 I think you've got a lot of certainty that is 0:01:03.120 --> 0:01:05.679 coming in vogue, right. I mean, we know the Fed's 0:01:05.680 --> 0:01:07.720 going to cut interest rates. We don't know exactly by 0:01:07.760 --> 0:01:10.360 how much and when, but we have a high degree 0:01:10.400 --> 0:01:13.000 of certainty that monetary policy is going to ease financial 0:01:13.000 --> 0:01:15.199 conditions over the next twelve to fifteen months. 0:01:15.800 --> 0:01:18.920 We know the fiscal rules we're playing by. Now. 0:01:18.959 --> 0:01:21.240 We had the One Big Beautiful Bill in July. There 0:01:21.280 --> 0:01:23.800 is no one Big Beautiful Bill two dot zero and 0:01:23.880 --> 0:01:26.720 the remainder of this president's term. So if corporate America 0:01:26.760 --> 0:01:29.560 is waiting around for mergers and acquisitions and capex and 0:01:29.600 --> 0:01:32.560 everything to kick in because they were uncertain let's say 0:01:32.640 --> 0:01:35.520 last April with Tariff's and Liberation Day, now they're much 0:01:35.560 --> 0:01:38.880 more certain, and there's a lot of stimulus corporately in 0:01:38.959 --> 0:01:41.440 that one Big Beautiful Bill. There's also a lot of 0:01:41.480 --> 0:01:43.920 stimulus in there for the consumer as well. I mean, 0:01:43.920 --> 0:01:46.039 there's going to be big tax refunds in the first 0:01:46.080 --> 0:01:48.440 quarter next year that people are underestimating right now. 0:01:48.640 --> 0:01:49.280 That will kick in. 0:01:49.320 --> 0:01:53.520 And history tells you the consumer spends a dollar seventeen 0:01:53.600 --> 0:01:56.120 cents of every dollar they get back in a tax refund, right, 0:01:56.160 --> 0:01:58.800 so they overspend what that is, So there's I think 0:01:58.840 --> 0:02:01.640 a wave coming that will push through for Corporate America 0:02:02.080 --> 0:02:03.960 and continue to drive that margin line in the bottom 0:02:04.000 --> 0:02:04.360 line righter. 0:02:04.440 --> 0:02:07.120 So the secon thing you like, your favorite is financials. 0:02:07.400 --> 0:02:09.399 Just moments again of the team at Bloomberg broke a story. 0:02:09.400 --> 0:02:11.400 I'm going to share it with you. Rate as follows. 0:02:11.680 --> 0:02:13.880 According to people familiar with the matter, the Federal Reserve 0:02:13.919 --> 0:02:16.680 has shown other US regulators the outlines of a revised 0:02:16.720 --> 0:02:19.919 plan that would dramatically relaxed abiden era bank capital proposal 0:02:20.240 --> 0:02:22.080 for Wall Streets largest lenders. 0:02:22.160 --> 0:02:23.560 I'll spare everyone the details. 0:02:23.680 --> 0:02:25.640 You can read through the details and have like the story, 0:02:25.800 --> 0:02:29.160 But ultimately this feels like the direction of travel. Absolutely 0:02:29.320 --> 0:02:32.000 how big a pillar is that if you're long gone financials, 0:02:32.720 --> 0:02:35.680 So deregulation is a is a pillar, and it matters 0:02:35.680 --> 0:02:36.200 greatly to. 0:02:36.160 --> 0:02:38.320 The gcify banks, right, I mean, and I think to 0:02:38.360 --> 0:02:41.200 your point about where Basel three was heading, you know, 0:02:41.240 --> 0:02:43.040 say twelve eighteen months ago to where it is today, 0:02:43.480 --> 0:02:46.240 huge one hundred and eighty degree turn just in the cinement. 0:02:46.680 --> 0:02:49.600 I think what's more important though, is probably two other pillars. 0:02:49.800 --> 0:02:52.160 One is you know, M and. 0:02:52.200 --> 0:02:54.760 A and CAPEX kicking in right, So you get this 0:02:54.800 --> 0:02:57.240 whole kind of you know, what we thought was going 0:02:57.280 --> 0:03:00.000 to be the merger acquisition cycle that was going to 0:03:00.120 --> 0:03:02.560 happen for all twenty five that got delayed because of tariffs, 0:03:02.919 --> 0:03:05.520 and more importantly and most importantly, maybe is the right 0:03:05.560 --> 0:03:07.399 way to say it. We think we have a high 0:03:07.400 --> 0:03:10.120 conviction the yal curve is going to keep steepening, right. 0:03:10.280 --> 0:03:11.880 I know it's kind of flat in the last couple 0:03:11.840 --> 0:03:13.920 of weeks. But if you think about this, if the 0:03:13.960 --> 0:03:18.000 Fed is going to cut interest rates and you're not 0:03:18.040 --> 0:03:21.119 going to get a recession, right, then those term premiums 0:03:21.120 --> 0:03:22.679 on inflation and growth on the long end of the 0:03:22.680 --> 0:03:24.440 curve have to come up, right, So the Fed's going 0:03:24.520 --> 0:03:27.720 to hold let's say short term rates alongside comes up steepening. 0:03:27.840 --> 0:03:28.000 Right. 0:03:28.360 --> 0:03:30.639 If we're wrong and that doesn't happen, Let's say we're 0:03:30.639 --> 0:03:32.840 on the precipice of a recession or a slower event 0:03:32.880 --> 0:03:34.720 that we don't know, then what has to happen. The 0:03:34.720 --> 0:03:37.000 Fed has to cut interest rates more than what's projected 0:03:37.040 --> 0:03:38.480 by the market right now, drives the. 0:03:38.480 --> 0:03:40.280 Short end down steepening, right. 0:03:40.520 --> 0:03:43.360 So in both cases, you know, when you wargame this out, 0:03:43.520 --> 0:03:45.240 I don't see a way that you don't end up 0:03:45.240 --> 0:03:47.840 with a steeper curve. Steeper curve favors financials. 0:03:48.080 --> 0:03:50.200 I'm looking right now on the heels of what John 0:03:50.280 --> 0:03:53.120 is just talking about, Bank of America, Wells Fargo, JP, Morgan, 0:03:53.200 --> 0:03:56.640 the Shire's futures all got a pop on the heels 0:03:56.760 --> 0:04:00.240 of the latest note of deregulation that we're seeing. I'm 0:04:00.280 --> 0:04:02.800 just wondering whether this is a read through to the 0:04:02.840 --> 0:04:06.520 broader economy or whether this is a financial specific sector. 0:04:06.800 --> 0:04:08.280 I mean, this sort of the initial read. 0:04:08.160 --> 0:04:11.760 On earnings has been incredibly positive on the backs of financials, 0:04:11.960 --> 0:04:15.440 but financials haven't been as tied to the broader consumer 0:04:15.480 --> 0:04:18.080 economy as much as in the past. 0:04:18.160 --> 0:04:19.800 So how do you pair those stories? 0:04:20.360 --> 0:04:22.080 Well, I think you know, when you look at the 0:04:22.480 --> 0:04:25.720 after last week's let's call it credit scare, right when 0:04:25.760 --> 0:04:27.880 the regional banks and what's happening in some of the 0:04:27.920 --> 0:04:30.520 private credit markets and stuff, we just don't see it. 0:04:30.680 --> 0:04:34.279 Right in the loan portfolios, the consumer remains strong, the 0:04:34.320 --> 0:04:37.560 small medium sized businesses remain strong, right, so the lending 0:04:37.600 --> 0:04:40.479 portfolios of these banks are pristine. Then you couple that 0:04:40.560 --> 0:04:44.200 with the investment banking piece kicking in and really driving 0:04:44.240 --> 0:04:47.479 earnings a steep or real curve. Right, all the stars 0:04:47.560 --> 0:04:49.279 kind of line up. Now, when you get all the 0:04:49.279 --> 0:04:51.520 stars line up, the problem is something that could go 0:04:51.560 --> 0:04:53.560 wrong in that equation, but we don't see it. To 0:04:53.600 --> 0:04:57.839 your point on deregulation, though, I would unequickly say, it's 0:04:57.880 --> 0:04:59.719 not simply a financial story. 0:04:59.800 --> 0:05:00.000 Right. 0:05:00.640 --> 0:05:02.760 It spills into the healthcare sector. It spills into the 0:05:02.880 --> 0:05:06.120 energy sector, right, it spills into frankly, the industrial sector 0:05:06.160 --> 0:05:12.200 on the reshoring of a lot of the manufacturing and 0:05:13.120 --> 0:05:15.839 that element. So I think all of that plays in 0:05:16.240 --> 0:05:19.360 and probably drives margin and earnings into twenty twenty five. 0:05:19.680 --> 0:05:23.120 We're actually I was twenty twenty six. Sorry, we're actually 0:05:23.200 --> 0:05:24.920 very bullish heading into next year. 0:05:25.240 --> 0:05:26.640 So when was the shift? 0:05:26.800 --> 0:05:28.480 Can you just walk us through the psychology, because I 0:05:28.480 --> 0:05:30.240 remember talking to you a couple months ago and you 0:05:30.279 --> 0:05:32.440 did not sound this positive, and a lot of people 0:05:32.440 --> 0:05:34.480 seemed a lot more worried. And suddenly everyone who comes 0:05:34.520 --> 0:05:36.920 in the show, no one can kind of find the 0:05:36.960 --> 0:05:39.080 real crack in this veneer. 0:05:39.200 --> 0:05:41.080 Right now, they're trying believe me. 0:05:41.880 --> 0:05:44.040 When did you really start to say, hold on a second, 0:05:44.080 --> 0:05:47.080 I need to upgrade my expectations and be more pro risk. 0:05:47.520 --> 0:05:49.400 I think in the middle of the summer, right, I 0:05:49.400 --> 0:05:51.640 think the summer when we started to see where the 0:05:51.640 --> 0:05:54.440 Fed was taking monetary policy, when we knew the fiscal 0:05:54.480 --> 0:05:56.720 clarity was kicking in. You get these big kind of 0:05:56.839 --> 0:06:02.320 multi year secular trends of the re vitalization of manufacturing 0:06:02.520 --> 0:06:05.320 AI of course all that stuff. Those are things that 0:06:05.640 --> 0:06:07.440 when you get I wrote a piece here not so 0:06:07.480 --> 0:06:09.919 long ago called you know, getting through the noise, getting 0:06:09.920 --> 0:06:12.320 the signal above the noise, right, and you start looking 0:06:12.320 --> 0:06:15.320 at these secular trends that we think have legs for 0:06:15.360 --> 0:06:17.520 maybe the next two to four, three to five years. 0:06:17.760 --> 0:06:21.720 They're powerful, right, and when they all align simultaneously, that 0:06:21.760 --> 0:06:24.920 creates a unique environment that you don't see very often, right, 0:06:24.960 --> 0:06:27.920 where you get manufacturing kicking in, you get technology continuing 0:06:27.960 --> 0:06:28.520 to do well. 0:06:28.400 --> 0:06:30.760 You get monetary and fiscal policy alignment. 0:06:30.880 --> 0:06:31.040 Right. 0:06:31.080 --> 0:06:34.320 I mean all those things can actually drive corporate earnings, 0:06:34.360 --> 0:06:37.080 and you also reduce some level uncertainty. I know, the 0:06:37.160 --> 0:06:40.080 day to day noise around uncertainty is high. You know, 0:06:40.080 --> 0:06:43.440 whether we're going to have you know, a g Trump meeting, 0:06:43.520 --> 0:06:45.240 and you know all those kind of things. But I 0:06:45.240 --> 0:06:47.520 think all of that starts to come down and you 0:06:47.560 --> 0:06:49.760 look through that out in the next two to four years. 0:06:50.200 --> 0:06:53.360 I think America does really well in the next couple 0:06:53.360 --> 0:06:53.640 of years. 0:06:53.680 --> 0:06:55.120 So what more was you next year? Then if you 0:06:55.120 --> 0:06:57.559 feel like you've gotten a lot of clarity in twenty 0:06:57.600 --> 0:06:59.440 twenty five, so. 0:07:00.120 --> 0:07:03.040 Question I would say the three eyes, Right, I think 0:07:03.120 --> 0:07:04.760 that this is what I wake up and kind of 0:07:04.800 --> 0:07:07.680 pay attention to inflation of course, right, which we'll get 0:07:07.680 --> 0:07:11.160 the reading Friday, interest rates, what happens because you know, 0:07:11.200 --> 0:07:13.280 if interest rates come down too far, you have to 0:07:13.280 --> 0:07:15.880 start asking the question why are they coming down so far? Right, 0:07:15.880 --> 0:07:18.560 there's a point where lower rates is good and then 0:07:18.600 --> 0:07:20.320 all of a sudden, lower rates start to become bad. 0:07:20.640 --> 0:07:22.520 And the third one that doesn't maybe get as much 0:07:22.560 --> 0:07:25.040 better time as illiquidity. Right, I mean, if you look 0:07:25.040 --> 0:07:28.640 at what's happening in the repo market, you're seeing reserves 0:07:28.720 --> 0:07:30.760 drained down in the banking system, Which is why I 0:07:30.760 --> 0:07:33.320 think here in October, power will come to the table 0:07:33.360 --> 0:07:35.400 and say we're going to start setting the stage to 0:07:35.480 --> 0:07:39.160 ending QT. QT is worth by our math, another twenty 0:07:39.160 --> 0:07:41.760 five basis point interest rate cut. So if we get 0:07:41.920 --> 0:07:45.040 twenty five in actual FED funds in October, you get 0:07:45.120 --> 0:07:47.680 QT happening there's another twenty five. You get twenty five 0:07:47.680 --> 0:07:49.920 in December. Right, All that starts to add up. 0:07:50.080 --> 0:07:52.120 When you say interest rates going saloon, you have to 0:07:52.200 --> 0:07:54.120 question why it's because the economy is so bad. Do 0:07:54.120 --> 0:07:56.000 you think they're being job owned by the White House. 0:07:57.080 --> 0:07:59.119 Well, the reason might be the latter. 0:07:59.400 --> 0:08:02.080 But I think when you start getting interest rates lower, 0:08:02.280 --> 0:08:04.680 you have to start saying, what's going on there? Is 0:08:04.720 --> 0:08:06.400 it a true flight to quality or is it just 0:08:06.440 --> 0:08:07.680 the whole curve shifting down? 0:08:07.880 --> 0:08:08.080 Right? 0:08:08.720 --> 0:08:11.800 Once you get that flight to quality element and narrative 0:08:11.800 --> 0:08:13.880 that enters the discussion, that's where you have to kind 0:08:13.880 --> 0:08:16.000 of pay attention. We're not there yet, we don't think 0:08:16.040 --> 0:08:17.840 we're going to be there, but that's what you would 0:08:17.880 --> 0:08:18.440 want to watch for. 0:08:19.480 --> 0:08:20.120 Stay with us. 0:08:20.400 --> 0:08:33.080 More Bloomberg surveillance coming up After this, trade tensions between 0:08:33.120 --> 0:08:36.000 the United States and China remaining high. President Trump saying 0:08:36.040 --> 0:08:38.280 he expects to reach a good trade deal with China, 0:08:38.360 --> 0:08:41.199 but his meeting with President chiajing Ping in South Korea 0:08:41.240 --> 0:08:44.520 next week may not happen. At Mills of Raymond, James 0:08:44.640 --> 0:08:46.920 writes the following, the big question is how much beyond 0:08:46.920 --> 0:08:49.880 the status quo can get negotiated and it's previously banned 0:08:49.960 --> 0:08:52.280 US technology about to get the green light for the 0:08:52.360 --> 0:08:54.880 Chinese market at join just now for more. And I 0:08:54.880 --> 0:08:57.800 think you're right on the money. What is and isn't 0:08:58.000 --> 0:09:00.720 on the table in these negotiations. What isn't going to 0:09:00.720 --> 0:09:02.240 be pound of any potential deal? 0:09:03.120 --> 0:09:05.080 Yeah, John, I think everything is on the table. I 0:09:05.080 --> 0:09:07.199 think what we're seeing is that if China went into 0:09:07.280 --> 0:09:09.600 this with the status quo, China would come out with 0:09:09.679 --> 0:09:12.760 the status quo. So you're seeing a playbook we've seen 0:09:12.800 --> 0:09:16.280 time and time again. And Trump is moving the goalpost, 0:09:16.480 --> 0:09:17.560 ramping up the pressure. 0:09:17.920 --> 0:09:19.040 She is doing the same. 0:09:19.480 --> 0:09:22.080 She in China has come to Trump two point zero 0:09:22.240 --> 0:09:25.360 much more prepared. They are sending a message We're willing 0:09:25.440 --> 0:09:28.800 to do things that could be mutually a short economic destruction. 0:09:29.200 --> 0:09:31.480 So come to the table and talk. I do think 0:09:31.520 --> 0:09:34.680 the number one thing that she cares about in these 0:09:34.720 --> 0:09:38.640 conversations are these tech controls, the semiconductors and semicap equipment 0:09:38.679 --> 0:09:42.200 that has been banned going into China. The US policy 0:09:42.240 --> 0:09:44.880 is shifting here, John, and it is now the default 0:09:45.440 --> 0:09:48.640 kind of desire of the US government to have the 0:09:48.840 --> 0:09:52.760 US technology be the default full stack globally. And they 0:09:52.760 --> 0:09:55.199 don't think they can kind of shut out the Chinese market. 0:09:55.360 --> 0:09:57.640 So there's more room for negotiation here than I think 0:09:57.679 --> 0:09:58.880 most investors realize. 0:09:58.920 --> 0:10:02.240 And is China basic taking this hardline strategy. And there's 0:10:02.240 --> 0:10:05.040 been some reporting about this because they think Trump will fold. 0:10:06.240 --> 0:10:08.960 I think it's they think Trump will fold, or they 0:10:09.000 --> 0:10:11.480 will think that Trump will give them more if they 0:10:11.480 --> 0:10:15.360 push for more emory. You go back to earlier this year, 0:10:15.679 --> 0:10:18.839 it was their restrictions on rare earths that got Trump 0:10:18.920 --> 0:10:21.440 to walk back those one hundred and forty five percent terrorfs. 0:10:21.960 --> 0:10:25.640 We were dangerously close to having real negative impact on 0:10:25.679 --> 0:10:28.240 our industrial production here in the United States. And while 0:10:28.280 --> 0:10:31.560 we're signing these different critical mineral deals rare earth deals, 0:10:31.800 --> 0:10:34.400 it's going to be five plus years before we're able 0:10:34.440 --> 0:10:37.320 to get most of these. So China does have some 0:10:37.440 --> 0:10:40.160 cards that they can play, and as they play them, 0:10:40.480 --> 0:10:43.600 Trump has been willing to negotiate more. They view Trump 0:10:43.679 --> 0:10:46.479 as a transactor, and so to get him to transact, 0:10:46.600 --> 0:10:48.200 you got to push him in that right direction. 0:10:48.480 --> 0:10:51.600 Do you find it suspect that China hasn't confirmed any meeting. 0:10:53.160 --> 0:10:55.840 It's been the way things have happened all year long. 0:10:55.960 --> 0:10:59.240 What we have seen is the US delegation comes out 0:10:59.280 --> 0:11:01.839 and they give a read out, and then China confirms nothing. 0:11:02.360 --> 0:11:04.560 And then what we've seen is that everything that the 0:11:04.720 --> 0:11:07.200 US side has said has actually followed through. 0:11:08.000 --> 0:11:09.600 I do think this meeting happens. 0:11:09.880 --> 0:11:12.120 I do think part of this is that she does 0:11:12.160 --> 0:11:14.760 not want to appear to be weak. Some of the 0:11:14.760 --> 0:11:17.600 calculus that China has had is that what Trump wanted 0:11:17.640 --> 0:11:19.840 the most was to have this meeting, so they gave 0:11:19.920 --> 0:11:22.600 him a meeting. I'm also okay with the fact that 0:11:22.640 --> 0:11:24.760 we've already set up a home and away after this. 0:11:25.120 --> 0:11:27.840 Trump is supposed to go to Beijing, she is supposed 0:11:27.840 --> 0:11:30.360 to come to the United States, so that takes away 0:11:30.400 --> 0:11:33.120 a little bit of the pressure here. That hasn't been 0:11:33.120 --> 0:11:36.559 confirmed necessarily by the Chinese side either, but we can 0:11:36.600 --> 0:11:40.600 get some flourish, big announcements coming out, but really working 0:11:40.640 --> 0:11:43.880 on these details to be determined later on, which has 0:11:43.880 --> 0:11:46.360 happened on every other trade deal so far this year. 0:11:46.520 --> 0:11:48.640 And it seems like they're both buying time, both the 0:11:48.720 --> 0:11:51.960 Chinese and the United States, and trying to rearrange some 0:11:52.040 --> 0:11:54.160 of the supply chains the technological backdrop. 0:11:54.200 --> 0:11:54.800 In the meantime. 0:11:54.800 --> 0:11:56.800 I just wonder what the negotiating chips are going to 0:11:56.840 --> 0:11:59.360 be to buy time. How much Taiwan is going to 0:11:59.360 --> 0:12:01.960 come into play, how much the Russia Ukraine war is 0:12:01.960 --> 0:12:02.280 going to. 0:12:02.200 --> 0:12:02.800 Come into play. 0:12:02.840 --> 0:12:04.640 Do you have a sense of how much that's on 0:12:04.720 --> 0:12:06.439 the table if there is some sort of meeting. 0:12:07.360 --> 0:12:09.920 Yeah, So Trump has said that he expects there to 0:12:09.920 --> 0:12:13.160 be some level of conversation about Taiwan. I do think 0:12:13.240 --> 0:12:15.600 that this is obviously the big focus of a lot 0:12:15.600 --> 0:12:17.559 of investors, and I get a ton of questions about. 0:12:17.400 --> 0:12:18.400 That at Raymond James. 0:12:19.320 --> 0:12:21.920 Trump has said that they don't have a plan to invade. 0:12:21.960 --> 0:12:24.120 I think trying to bring down a little bit of 0:12:24.160 --> 0:12:27.520 those tensions. The last meeting between a US president and 0:12:27.559 --> 0:12:31.880 she occurred at the last APEC summit, and she supportedly 0:12:32.120 --> 0:12:34.440 said that there was no kind of need for a 0:12:34.440 --> 0:12:38.320 military intervention as long as a peaceful reunification occurs. I 0:12:38.360 --> 0:12:40.040 do think that a lot of folks look at that 0:12:40.080 --> 0:12:43.280 Trump as a transactor to say, is Taiwan more on 0:12:43.320 --> 0:12:47.320 the table than we could normally see? Beyond that, Trump 0:12:47.400 --> 0:12:52.040 has also been very concerned about the agricultural purchases of China. 0:12:52.080 --> 0:12:54.240 So can Chinda make some kind. 0:12:54.160 --> 0:12:57.480 Of agricultural purchases make that commitment for a trillion dollars 0:12:57.480 --> 0:13:00.000 of investment in the United States, and therefore we can 0:13:00.160 --> 0:13:03.600 send them those semiconductors and that semicap equipment, especially if 0:13:03.600 --> 0:13:06.160 we're moving to this idea that US technology needs to 0:13:06.160 --> 0:13:07.480 be the default technology. 0:13:07.960 --> 0:13:10.679 Those are the things that I'm watching here in these negotiations. Lisa, 0:13:11.480 --> 0:13:12.120 stay with us. 0:13:12.440 --> 0:13:25.160 More Bloomberg surveillance coming up after this first turn back 0:13:25.160 --> 0:13:28.000 to markets, what a move and gold extending losses after 0:13:28.000 --> 0:13:30.280 its steepest sell off in over a decade. The precious 0:13:30.280 --> 0:13:34.120 metals record run before yesterday's sparking concern at a US 0:13:34.120 --> 0:13:37.680 debasement trade. Jane Furley of Rabbabank debunking that theory writing 0:13:37.679 --> 0:13:40.040 the basement would imply and move away from the dollar 0:13:40.320 --> 0:13:43.360 and US treasuries into assets such as gold, and there 0:13:43.400 --> 0:13:46.440 is very little evidence to back up these flows. Jane 0:13:46.520 --> 0:13:47.360 joins us now for more. 0:13:47.480 --> 0:13:48.480 Jane, welcome to the program. 0:13:48.520 --> 0:13:51.040 It's been a really curious year because the narrative around 0:13:51.120 --> 0:13:54.400 foreign exchange was born in one quarter, and it was 0:13:54.440 --> 0:13:56.800 the first quarter of twenty twenty five, and I find 0:13:56.840 --> 0:13:58.640 it difficult to find evidence that the rest of the 0:13:58.720 --> 0:14:01.200 year really drives with that narrative at all. We had 0:14:01.240 --> 0:14:05.199 a big blast of dollar weakness. Jane, what's followed, Well, 0:14:05.240 --> 0:14:05.920 you're quite right. 0:14:05.960 --> 0:14:07.800 I mean most of that dollar weakness has really done 0:14:07.840 --> 0:14:10.360 in the first five months of the year and ever since. 0:14:10.400 --> 0:14:13.439 We'll actually over the last month or two, I keep 0:14:13.520 --> 0:14:15.760 on finding myself saying, well, no, actually that the dollar 0:14:15.960 --> 0:14:17.960 isn't we it's been one of the better performers in 0:14:18.200 --> 0:14:20.600 I think it's a better performance right now in the 0:14:20.640 --> 0:14:22.680 months today and perhaps over the one month. 0:14:22.520 --> 0:14:22.960 For you too. 0:14:23.040 --> 0:14:25.600 So actually, essentially, if we look at the dollar index, 0:14:25.600 --> 0:14:28.080 for instance, that's sort of gone nowhere since at the 0:14:28.080 --> 0:14:30.840 beginning of July. And what are we looking at in 0:14:30.880 --> 0:14:33.640 euro dollar? You know, a currency at the dollar that 0:14:33.800 --> 0:14:36.040 is certainly well off. It's those versus the euro. So 0:14:36.840 --> 0:14:39.400 we we aren't looking at a week dollar as as 0:14:39.440 --> 0:14:42.840 we as we stand. But yes, the theme really was 0:14:42.840 --> 0:14:44.840 set at the start of the year by that huge 0:14:44.880 --> 0:14:45.920 bat of dollar weekness. 0:14:46.040 --> 0:14:48.640 So Jane, let's talk about reality and the last few weeks, 0:14:48.640 --> 0:14:50.800 and then we can get to the peculiar move yesterday, 0:14:50.840 --> 0:14:53.600 the wild swing we saw in gold. Well recently we 0:14:53.680 --> 0:14:56.680 have seen gold rip high started to go vertical the 0:14:56.680 --> 0:14:59.160 middle of August and never looked back. And alongside that 0:14:59.200 --> 0:15:01.960 we did have dollar stri and participate as well. So Jane, 0:15:01.960 --> 0:15:04.800 what explains those moves? What's the relationship if there is 0:15:04.840 --> 0:15:07.040 one between the two, you. 0:15:07.000 --> 0:15:08.720 Know what I mean? Normally, of course, when you get 0:15:08.720 --> 0:15:11.240 a stronger dollar, then a profit taking sets in. And 0:15:11.280 --> 0:15:13.200 I think with respect to gold, yeah, there are good 0:15:13.240 --> 0:15:16.320 reasons I think for many portfolios to think about diversification 0:15:17.040 --> 0:15:19.440 this year, and I think that's still a valid theme 0:15:19.480 --> 0:15:21.920 and I think gold, you know, can be held along 0:15:22.000 --> 0:15:24.360 those lines. But you know, I do think there was 0:15:24.400 --> 0:15:27.360 lots of fomo you a phrase that I've heard, you know, 0:15:27.400 --> 0:15:30.160 in your channel quite a lot over the last few weeks, 0:15:30.160 --> 0:15:32.280 and certainly you know, at the start of this week 0:15:32.320 --> 0:15:34.800 the Australian press work we're showing pictures of the retail 0:15:34.880 --> 0:15:37.760 investors queueing around the block to get their hands on 0:15:37.840 --> 0:15:40.560 some gold. And I think for many institutional investors, you know, 0:15:40.600 --> 0:15:43.920 that was perhaps the last stort, so profit taking pushed 0:15:43.920 --> 0:15:47.240 in as well with the stronger dollar. I think as 0:15:47.240 --> 0:15:50.120 we go into the next year, there's probably still a theme, 0:15:50.200 --> 0:15:53.600 a reason to diversify her portfolios, and maybe gold again 0:15:53.720 --> 0:15:56.040 is part of that. But I think it is going 0:15:56.080 --> 0:16:00.320 to struggle quite clearly to match those very recent high 0:16:00.600 --> 0:16:01.960 in the very near future. 0:16:01.840 --> 0:16:05.200 Jane, is the concept of debasement just overly binary. And 0:16:05.240 --> 0:16:08.520 there's something else afoot that is maybe along the same 0:16:08.640 --> 0:16:11.160 kind of theme but isn't quite as strong, which is 0:16:11.480 --> 0:16:14.080 more people are considering that the dollar isn't the only 0:16:14.120 --> 0:16:14.640 thing in town. 0:16:14.680 --> 0:16:16.120 There is a discussion. 0:16:16.000 --> 0:16:19.440 Yesterday about how Ethiopia is trying to transfer loans that 0:16:19.520 --> 0:16:22.200 had been dollars denominated into U and I mean, honestly, 0:16:22.240 --> 0:16:24.560 this is not necessarily something that's going to cause alarm 0:16:24.560 --> 0:16:27.040 bells everywhere, but there is the sense that people are 0:16:27.120 --> 0:16:30.400 looking for alternatives. At what point is that a realistic 0:16:30.520 --> 0:16:33.800 narrative to really play into your calculations. 0:16:34.520 --> 0:16:37.080 You know, I think we'd probably could be having the 0:16:37.120 --> 0:16:40.080 same sort of conversation in twenty or thirty years time 0:16:40.120 --> 0:16:43.520 that there is a theme of you know, reduced dollars 0:16:43.520 --> 0:16:45.760 for instance in global reserves, and you know, we can 0:16:45.760 --> 0:16:48.040 trace that being back, you know, to the start of 0:16:48.080 --> 0:16:50.440 this century if we like. There is a theme also, 0:16:50.840 --> 0:16:53.920 you know, in China they want to internationalize their currency 0:16:54.120 --> 0:16:57.200 a lot more the Euro. We've had several times from 0:16:57.440 --> 0:17:01.080 Christine regard from the ECB sins this year that she 0:17:01.240 --> 0:17:03.480 wants to have a bigger role for the euro on 0:17:03.520 --> 0:17:06.120 an international basis. So we can assume maybe the eural 0:17:06.119 --> 0:17:08.480 will makes some progress, or remember will continue to make 0:17:08.680 --> 0:17:10.800 that the progress that it's been making. But the dollar 0:17:11.000 --> 0:17:15.640 has a massive advantage. It's already a huge transactional currency 0:17:15.720 --> 0:17:20.040 around the globe, across Africa, Latin America, across Asia, and 0:17:20.080 --> 0:17:22.480 the US Treasury will be making attempts, you know, to 0:17:22.560 --> 0:17:25.920 protect that, not the least with you know, with stable coin. 0:17:26.000 --> 0:17:28.480 So it is going to be something that the ustroasure 0:17:28.480 --> 0:17:30.760 will fight back on. But yeah, there might still be 0:17:30.800 --> 0:17:37.600 incremental benefits, perhaps an international loalization for remomb beats or Europe. 0:17:37.600 --> 0:17:41.199 But I still think that that's that those games are 0:17:41.200 --> 0:17:42.399 going to be really quite modest. 0:17:42.680 --> 0:17:44.880 Jane, how many questions do you still get about bitcoin? 0:17:46.960 --> 0:17:49.639 Not that many more about stable coin. I think this 0:17:49.760 --> 0:17:52.679 year less about bitcoin. I mean bitcoin, you know, certainly 0:17:52.840 --> 0:17:55.159 very much in the news, but I think most people 0:17:55.359 --> 0:17:56.960 have come to terms with this. You know, this is 0:17:56.960 --> 0:17:58.960 something that you know, it's an asset. Perhaps it's part 0:17:58.960 --> 0:18:01.919 of that diversifications story again, but it used to be 0:18:02.359 --> 0:18:06.080 perhaps a different type of comprehension about where bitcoin was, 0:18:06.119 --> 0:18:09.560 and perhaps in misunderstanding that it was a currency in 0:18:09.600 --> 0:18:11.320 the way you know that the yen or the euro, 0:18:11.400 --> 0:18:14.320