Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley.
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Speaker 1: sort of a big tension when we talk about China
Speaker 1: trade talks, which is just how much ammunition does the
Speaker 1: Government of China does the PBOC have to stimulate the
Speaker 1: economy amid all of the back and forth between the
Speaker 1: US and China. And Gabrielle Santos has been following this.
Speaker 1: She of course, is a vice president Global market Strategist
Speaker 1: for JPMorgan Asset Management. UM, thank you so much for
Speaker 1: being here. She is in our Bloomberg Interactive Broker Studios. Gabriella,
Speaker 1: what did you make of this record credit growth that
Speaker 1: we saw in January out of China. So China has
Speaker 1: this balancing act they're trying to to play here right there,
Speaker 1: trying to do some structural reforms. They've acknowledged over the
Speaker 1: past couple of years that they have a credit problem. Surprise, UM,
Speaker 1: we can clearly see a big, big increase in corporate
Speaker 1: credit in China, most of them have credit problem. They
Speaker 1: tried to double down on that and you know, try
Speaker 1: to try to do something about it. And now we're
Speaker 1: just seeing them say, all right, actually leverage is great. No, no, no,
Speaker 1: And so that's the balance the act they try to play, right,
Speaker 1: So it's long term, we've got to fix this. Short term,
Speaker 1: we have to guarantee social stability pretty much UM, meaning
Speaker 1: have a decent economic backdrop. So it's a bit of
Speaker 1: a push pull. Long term they want to eventually wind
Speaker 1: down that credit piece. Short term they're happy to step
Speaker 1: on that lever um just to guarantee some stability. But
Speaker 1: what's interesting about the Chinese stimulus is that credit is
Speaker 1: just part of it. They've been relying on some other
Speaker 1: stimulus that's new for them, which is actually reduced saying
Speaker 1: income taxes, corporate taxes. So they have been trying to
Speaker 1: be a little bit more creative UM at the same
Speaker 1: time that unfortunately they have to revert to the old
Speaker 1: playbook from time to time. And yet, Gabby, we've had
Speaker 1: five reserve requirement ratio cuts since early and still growth
Speaker 1: has not stabilized. What is different about the character the
Speaker 1: nature of the stimulus this time around, and why the
Speaker 1: economy isn't stabilizing as it has done in response to
Speaker 1: these kind of measures in previous years, Well because it's
Speaker 1: not a bazooka like they've used in the past post
Speaker 1: global financial crisis, or even they were doing broad based
Speaker 1: monetary easing, broad based stepping on that credit lever This
Speaker 1: time they're doing a little bit of that, but they
Speaker 1: are aware of that structural issues. So they are also
Speaker 1: trying to deal with fiscal uh stimulus, which takes a
Speaker 1: little bit of a there's a bit of a lag
Speaker 1: until that plays out in the economy. Alright. So the
Speaker 1: reason why this all matters, right is because first of all,
Speaker 1: China is the second biggest economy in the world, but
Speaker 1: also we have a situation we're invests are racing, they're
Speaker 1: tripping over themselves to go into emerging markets, debt and
Speaker 1: equities that I have to wonder how much this really
Speaker 1: hinges on the idea that China is going to remain
Speaker 1: a powerhouse come hell or high water, no matter how
Speaker 1: they have to get there, and including adding leverage and
Speaker 1: basically sacrificing their future for the now. So there's very
Speaker 1: much an expectation that China will succeed in stabilizing their economy,
Speaker 1: so it's not that bazook of stimulus, so it's not
Speaker 1: an acceleration and growth, but it is an expectation of
Speaker 1: stabilization and growth. So that's very important of course, as
Speaker 1: you mentioned, because China is a huge economy. It has
Speaker 1: links all over emerging markets, and it has an impact
Speaker 1: on developed markets as well, Europe directly, as as as
Speaker 1: as a big trading partner, but even in the US
Speaker 1: right for US companies, So it matters in so many
Speaker 1: different dimensions, and that's why we have to actually see
Speaker 1: the effect on the data of that stabilization. So let's
Speaker 1: think about the spill over, the potential negative spillover, because
Speaker 1: here are the fears. This morning, you get a decelerating
Speaker 1: PPI reading, perhaps falling back into deflation. There the fearies
Speaker 1: industrial profits will be lower, companies already under pressure from
Speaker 1: a weaker economy. The fear is that the export prices
Speaker 1: are going to roll over, and the fearies you export
Speaker 1: disinflation into the rest of the world. Feels a little
Speaker 1: bit like early perhaps with the volume turned down. Is
Speaker 1: that a decent comparison, that is a decent comparison that
Speaker 1: was that time that we were worried about a Chinese
Speaker 1: hard landing if we recall and all of its negative
Speaker 1: spillover effect on emerging markets developed markets as well. Um So,
Speaker 1: I do think we need to see that stability in
Speaker 1: Chinese data, but that perhaps the old China is not
Speaker 1: where we should look. Right as we were mentioning there
Speaker 1: is more of a fiscal stimulus push. I don't think
Speaker 1: we should overlook the tremendous amount of stimulus they've done
Speaker 1: through their reworking of income taxes. Right, So where we
Speaker 1: should look for that stability is actually on the consumer
Speaker 1: side in China. From an investor perspective, Does this mean
Speaker 1: by Chinese bonds, by Chinese equities? From that perspective, I
Speaker 1: would say it's by you know, emerging market So you
Speaker 1: don't think it's been overplayed this whole em But I
Speaker 1: do not think it's been overplayed. Even though the Bank
Speaker 1: of America Mary Lynch for Manager Survey actually says, for
Speaker 1: the first time in its history, the majority of clients
Speaker 1: think that that the E M long trade is the
Speaker 1: most crowded trade out there. You know, when I actually
Speaker 1: look at flow data for emerging markets, I think the
Speaker 1: best source for for that is the i a F.
Speaker 1: The Institute of International Finance. They do a great job
Speaker 1: of tracking flows to e M. You did see an
Speaker 1: increase in the fourth quarter of last year, but I
Speaker 1: mean it's it's barely a wrinkle in the water. So
Speaker 1: maybe people are saying they're feeling optimistic about emerging markets. Frankly,
Speaker 1: I haven't seen that in the flow days. The market
Speaker 1: seems to be positioning for this reality, just in terms
Speaker 1: of price. I mean, we're up seven and a half
Speaker 1: percent on the Shankai come through en. We're on for
Speaker 1: another week of games for Chinese equities. Gabby, I just
Speaker 1: get the fitting in the market is already behind your
Speaker 1: point of view. The market is already invested to capture
Speaker 1: upside once China stabilizes, and I think the real fear
Speaker 1: and I get a lot of messages about this on
Speaker 1: any given day. Now what happens if we get a
Speaker 1: trade deal and the economy still doesn't stabilize. So, yes,
Speaker 1: we're up seven percent in emerging markets this year, but
Speaker 1: that's after we tanked fifteen percent last year, right, So
Speaker 1: when we look at valuations in e M, still below
Speaker 1: average on a price to book ratio, which is our
Speaker 1: favorite valuation metric. When we look at emerging markets earnings estimates,
Speaker 1: they've been downgraded by seven percent in two months, so
Speaker 1: still very low bar there for earnings, especially in China, Korea, Taiwan.
Speaker 1: Um So, No, I don't think that e M story
Speaker 1: is overplayed, and I think it has further room to go.
Speaker 1: How much is the M e M story uh contingent
Speaker 1: on the dollar continuing to weaken or not strengthening further here,
Speaker 1: that's a really crucial point. It's e M has always
Speaker 1: been very, very highly correlated to dollar moves, not as
Speaker 1: much as in the past because it is less commodity
Speaker 1: focus now, but there is still a strong correlation of
Speaker 1: about zero point seven. Um So, it very much needs
Speaker 1: the dollar to weekend. And I'm somewhat can sarned that
Speaker 1: the dollar has started to strengthen again. Um So, to
Speaker 1: be fair, that's a wrinkle in this positive story that
Speaker 1: we've been discussing. Um I think for em the dollar
Speaker 1: very much trades on growth differentials versus interest rate differentials.
Speaker 1: That's more of a developed market story. Um So. Again,
Speaker 1: going back to that point, if we need to see
Speaker 1: the data stabilized in China, which would get the rest
Speaker 1: of em going well, Lisa, you mentioned the Bank of
Speaker 1: American Mary Lynch Fund Manager survey. The interesting thing about
Speaker 1: it wasn't just the number one most crowded trade, It
Speaker 1: was the number two most crowded traits. The number one
Speaker 1: was long EM. Number two was long the US dollar.
Speaker 1: There's some tension between number one and two. The market
Speaker 1: has positioned for a stronger dollar. It's positioned long EM.
Speaker 1: How of those two things reconcile. No, those are contradictory ideas.
Speaker 1: Very much needs the dollar to weekend. It cannot outperform
Speaker 1: if the dollar is strengthening. Gabby sends us great to
Speaker 1: have you with us JP Morgan Asset Management, Global Market Strategists.
Speaker 1: So the two most crowded trades in the market, according
Speaker 1: to this of contradictory ideas, and most people would agree
Speaker 1: with Gappy. That just makes sense. I just wont to
Speaker 1: how those two traits are going to reconcile in the
Speaker 1: coming months. It shows me just how much confusion there
Speaker 1: is out there. I mean, honestly, right now, uncertainty is
Speaker 1: sort of the key word. You hear sort of a
Speaker 1: bell go off any time anyone says uncertainty, it's saying,
Speaker 1: you know, basically, we don't have conviction because it's really
Speaker 1: hard to know what's going to happen. So who knows.
Speaker 1: Isn't it just a nature of financial markets that there
Speaker 1: is always something to worry about? No, I actually think
Speaker 1: that this is a change. I mean, yes, of course,
Speaker 1: there's always something to worry about. But I think that
Speaker 1: for a number of years there was a don't fight
Speaker 1: the Fed, don't fight the central banks kind of mantra,
Speaker 1: and if people went along with that, they won. And
Speaker 1: I think that there is not the same macro story anymore.
Speaker 1: So essentially, what you're saying is the fedist backed away
Speaker 1: and that is sufficient. That is used to be sufficient
Speaker 1: to stabilize growth and stabilize risk, But now that's just
Speaker 1: the prerequisite and no longer sufficient. No, you're taking the
Speaker 1: morphine away. People actually have to price the market, they
Speaker 1: actually have to figure out You think that's what we're
Speaker 1: doing now. I mean a little bit more than we
Speaker 1: used to. Months of rough market dates and the federals
Speaker 1: of does a full one eight right? I mean, we
Speaker 1: could talk about, you know, whether the morphine actually has
Speaker 1: been pulled away, but that's like guess a conversation for
Speaker 1: another time. I thing, we're still loaded up. We shot
Speaker 1: some more thing worldwide. We can talk about that through this.
Speaker 1: Let's talk about our morphine addiction. Let's not I wanted
Speaker 1: to really dig into the dollar because this seems to
Speaker 1: be one of the biggest conundrums of twenty nineteen. Is
Speaker 1: it going to strengthen or weaken? Joining us now is
Speaker 1: Bip and Rye. He is c IBC head of North
Speaker 1: American Foreign Exchange Strategy, Viben. Thank you so much for
Speaker 1: being with us. Really, this is an area that I
Speaker 1: hear complete lack of conviction on. You've got some people
Speaker 1: saying the dollar is going to weaken because of a
Speaker 1: devilish fed. You have other people saying it's going to
Speaker 1: strengthen because everybody else is going to be more dovish.
Speaker 1: Where do you fall on this, Well, we're on the
Speaker 1: side of the former camp. We do think that's rategically
Speaker 1: the dollar is overvalued by some twelve to fifteen percent,
Speaker 1: and over the longer term, the trend is going to
Speaker 1: be for the dollar to weekend, and of course that's
Speaker 1: reflective of like you said, it dash fed and also
Speaker 1: because of you we we would term is irresponsible fiscal
Speaker 1: policy and as a cyclical deceleration in the U. S. Economy. Now,
Speaker 1: of course, you know tactically that hasn't really born fruit,
Speaker 1: and our view that's because really there's there's a lack
Speaker 1: of alternatives out there worth investing in when you when
Speaker 1: you judge from a fundamental perspective, and that's really what's
Speaker 1: kept the dollar inflow in view for the first month
Speaker 1: or so in two. The argument over the fiscal story
Speaker 1: for foreign exchange that I've heard a couple of times,
Speaker 1: many times over the last couple of years is that
Speaker 1: the fiscal deficit is going to get so big to
Speaker 1: fund it, either you need much high treasury yields or
Speaker 1: you need a much weaker currency. Been why does that
Speaker 1: story play out anytime soon? That's that's probably going to
Speaker 1: be something again, and that's going to weigh on the
Speaker 1: dollar more longer term as opposed to anything short term.
Speaker 1: And again, when we look at deficits or even sorry,
Speaker 1: fiscal deficits versus the dollar, that tends to be a
Speaker 1: fard of five quarter lag. And again you know that
Speaker 1: that was something that was implemented last year, so we
Speaker 1: still expected to be more of a late two eighteen
Speaker 1: early story. And again, you know, the key question to
Speaker 1: ask is that you know you you run the risk
Speaker 1: of running a deficit, a large deficit. Now, what happens
Speaker 1: when the US encounters a recession? Does that depthit blow
Speaker 1: out to say, to nine percent of GDP? We do
Speaker 1: think that that's going to be a little too much
Speaker 1: for foreign investors sy stomach. So you think the reaction
Speaker 1: function of investors, the central bias of investors that has
Speaker 1: existed for a long long time now is going to
Speaker 1: change in the next down term because typically BIP and
Speaker 1: what we used to is if the global economy turns
Speaker 1: to lower, you buy two things, You buy treasuries and
Speaker 1: you buy the US dollar. You think that changes next
Speaker 1: time around. We think that there is a good chance
Speaker 1: because again with the tax cuts last year, what ended
Speaker 1: up happening was a cyclical decoupling of how the year
Speaker 1: zone economic picture it grows, and also how the Japanese
Speaker 1: economic picture goes. And also now with the U s
Speaker 1: economy going undergoing a downturn, I think what's been underappreciated
Speaker 1: is that we're just entering the US cyclical downturn now,
Speaker 1: whereas the euro Zone, Japan have already been going through it.
Speaker 1: So we would expect the years on the Japanese economies
Speaker 1: to come out of this cyclical downturn much sooner than
Speaker 1: the US will. And in our mind, you know, the
Speaker 1: investors will punish the the US fiscal situation because of that. Again,
Speaker 1: you know, that's not a it's not a slide against
Speaker 1: the U S dollars role as a reserve currency. At
Speaker 1: this point, we do think that's much more of a
Speaker 1: longer term theme as opposed to here now. But we
Speaker 1: do think it's going to be more of a story
Speaker 1: about the the decoupling of the cyclical pictures and some
Speaker 1: of the other larger economies in the US. It's so
Speaker 1: interesting because we do talk about the deepening deficit in
Speaker 1: the US, and we talk about, uh, some of the
Speaker 1: concerns around the dollar as a reserve currency, and yet
Speaker 1: there is zero evidence, certainly with rates that people do
Speaker 1: punish the US for borrowing a lot of money. I mean,
Speaker 1: you see people just flooding back to treasuries. So I
Speaker 1: guess where where have we seen any evidence that there
Speaker 1: is any recognition by investors that the fiscal backdrop is weakening?
Speaker 1: You haven't seen it yet. No, that that that's something
Speaker 1: that's going to take a longer time to play out.
Speaker 1: And and again you know you're right. I mean, where's liquidity,
Speaker 1: where's the yield? Right now, it's in the US dollar,
Speaker 1: And that's part and parcel for the reason why the
Speaker 1: US dollars still remained somewhat firm. But again we caution
Speaker 1: that the investors to remember that which which economies are
Speaker 1: running the current account surpluses and where are we seeing
Speaker 1: the portfolio investment really flow out of. And that's of
Speaker 1: course your surplus economies like the Arizone in Japan. So
Speaker 1: what happens when we start to see domestic yields and
Speaker 1: those economy struck to rise when our economies are out
Speaker 1: of from in the US, you would expect to see
Speaker 1: some reversal of portfolio flows that we've seen over the
Speaker 1: last couple of years. So that would be movement out
Speaker 1: of the U s economy and out of US securities
Speaker 1: and back into potentially Japanese, your European or other surplus economies.
Speaker 1: And again that's quite a way on the dollar to
Speaker 1: a certain extent, I want to get your view on
Speaker 1: the prospect for a trade deal. The headlines have dropped
Speaker 1: across the Bloomberg in the last or so and one
Speaker 1: of the headlines that jumped out to me amidst all
Speaker 1: the happy talk about progresses this line right here. The
Speaker 1: United States is focused on technology transfer and currency in
Speaker 1: these talks. But then, how is the currency going to
Speaker 1: be a feature of these negotiations? Well, I mean, there
Speaker 1: is the risk that the Chinese could weaponize the rem
Speaker 1: and b and and and let it depreciate even further.
Speaker 1: And again they if I were the US, I be
Speaker 1: somewhat concerned about that, given the implications for trade, and
Speaker 1: of course we've seen ratcheting up of rhetoric from the
Speaker 1: Trump administration on that. But you know, at the same
Speaker 1: time is the end goal for the Chinese is still
Speaker 1: to liberalize the currency. The only issue is they can't
Speaker 1: do it that quickly because if you were to too quickly,
Speaker 1: you would expect to see massive capital outflows from the
Speaker 1: Chinese economy. Then you get a weaker ribbon be anyway,
Speaker 1: So again, I mean, it's it's kind of a fine
Speaker 1: balancing act for the Chinese to do that. And again,
Speaker 1: the focus on the currency, in our view is still
Speaker 1: very much an important part of the Trump platform when
Speaker 1: it comes to China. But I would argue that the
Speaker 1: technology answer is probably, at least in the near term,
Speaker 1: the more important feature to keep an eye on on
Speaker 1: the currency specifically, though, and then we can get too
Speaker 1: technology transfer just quickly. I find it difficult to see
Speaker 1: how we can push for the Chinese to liberalize the
Speaker 1: currency because, as you say, it will end up with
Speaker 1: a weaker Chinese currency. So what do we effectively asking
Speaker 1: the Chinese to do not to liberalize the currency. I
Speaker 1: think there's still a misplaced, misplace rational among the Trump
Speaker 1: administration that the Chinese are managing the currency to be
Speaker 1: weaker than it really needs to be. In the review, again,
Speaker 1: the current accounts are plus a shrunk over several years,
Speaker 1: and that again alludes to the fact that, you know,
Speaker 1: the currency needs to be somewhat weaker. So again, you know,
Speaker 1: we would chalk it up to somewhat of a misplaced
Speaker 1: view amongst the Trump administration in regards to what the
Speaker 1: Chinese are doing with the currency. It's quite the opposite
Speaker 1: of what we had in the middle part of the
Speaker 1: last decade, where you could make a reagionably sound argument
Speaker 1: that the Chinese we're keeping the currency artificially weak. We
Speaker 1: don't think that's the case anymore. In fact that we
Speaker 1: do think that the Trump administration needs to uptake their
Speaker 1: view on and the Chinese currency and how they're managing it.
Speaker 1: Bib and rye of C I b C. What is
Speaker 1: your highest conviction trade this year? Well, we're some where
Speaker 1: we are bullish on surplus currency such as the Japanese
Speaker 1: yen and UH and the Swiss frank to a degree.
Speaker 1: And again those aren't yield plays naturally, they're more of
Speaker 1: our an expension of our view that liquidity will continue
Speaker 1: to wane and we will be and trading more or
Speaker 1: less of a risk of the environment going forward. We
Speaker 1: do think that this equity rally was overdue, given the
Speaker 1: fact that we we overshot in Q four. But but
Speaker 1: going forward, I mean, given the fact that liquidity is slowing,
Speaker 1: and you can draw a reasonably sounded relationship between the
Speaker 1: flow of liquidity UH and both process of volatility, meaning
Speaker 1: that you know, liquids liquidity does decline. That tends to
Speaker 1: lead to a lot more process of volatility, particularly in
Speaker 1: the f X space. So we expect the Japanese and
Speaker 1: the Swiss frank to have perform in that environment versus
Speaker 1: the US dollar. We're also not entirely optimistic on commodity currencies,
Speaker 1: including the Aussie and and and the kiwi uh weed,
Speaker 1: more or less expect them time to perform. And again,
Speaker 1: you know, if we are looking at the Eurozone, we're
Speaker 1: more or less waiting until the political water has become
Speaker 1: much less uh much much less muddier. Of course, we've
Speaker 1: got the parliamentary elections in May, and of course we've
Speaker 1: got the Spanish election has just been called for on
Speaker 1: a and then you've got the entire the break situation,
Speaker 1: whether or not that represents a shock to the euro Zone. However,
Speaker 1: we remained somewhat optimistic on the Scandinavian currencies, including the
Speaker 1: Swedish chronic and then central bank there's is looking set
Speaker 1: to raise rates going forward. So again it's really a
Speaker 1: story about surplus currencies in our mind going forward, and
Speaker 1: we think that's about perhaps the safest that to play
Speaker 1: in the in the effex markets. So safety above all else.
Speaker 1: Pip and Rye, thank you so much for being with us.
Speaker 1: Pip and Rye, c IBC, head of North American Foreign
Speaker 1: Exchange Strategy. Well, talking about the trade story. Uh, let's
Speaker 1: go to Washington, d C. And talk about what's going
Speaker 1: on there. Let's bring in Isaac Boltanski covers point, Director
Speaker 1: of Policy Research. Isaac, let's start with trade, since that
Speaker 1: is what's moving markets more than staving off another government shutdown.
Speaker 1: Do you think that this time we're actually going to
Speaker 1: get some sort of agreement? Is the happy talk out
Speaker 1: of Washington, d C. And Beijing different this time? Good morning.
Speaker 1: I think this time is different in the both sides
Speaker 1: as you were just discussing, I think are incentivized to
Speaker 1: find some way to Yes. It's still unclear what exactly
Speaker 1: that's going to look like. It's still unclear what the
Speaker 1: enforcement mechanisms will be, which is perhaps the most important
Speaker 1: part of this whole story. But I think that pressures
Speaker 1: on both sides of the Pacific have led us to
Speaker 1: where we are. We have continued negotiations, which is always positive,
Speaker 1: and the President made the biggest point this week, which
Speaker 1: was at least signaling a willingness to push the next
Speaker 1: deadline further if there is progress. And so I think
Speaker 1: this happy talk is different and that it's going to
Speaker 1: at least give us another punt. I would just like
Speaker 1: to also say that happy Talk has a trademark on
Speaker 1: it from Jonathan Farroh, who has absolutely coined the term
Speaker 1: so far, just because I abused it this week doesn't
Speaker 1: mean it's mine. We're gonna give it to you. I
Speaker 1: do have to wonder Kyle Bass of Having Capital Management
Speaker 1: writing a Bloomberg opinion piece in the past few weeks
Speaker 1: talking about how President Trump should double down and ask
Speaker 1: for more from China based on the happy Talk trademark
Speaker 1: registered mark. Based on what we're hearing, do you think
Speaker 1: that President Trump will take a hard enough line on
Speaker 1: China and solidify ideal that is appropriate for what some
Speaker 1: of the concerns are well. This has been one of
Speaker 1: the interesting dynamics the battles within the Trump administration itself. Um.
Speaker 1: And whether that's blight heiser versus minution or you can
Speaker 1: go straight on down the line. I think that what
Speaker 1: we're going to get is a document that broadly outlines
Speaker 1: all of the goals that we've been talking about now
Speaker 1: for the past year almost um. But in terms of
Speaker 1: if it's enough, I don't think there will ever be enough.
Speaker 1: It will simply be a few steps in the right
Speaker 1: direction towards opening up China's markets towards um narrowing that
Speaker 1: trade gap and hopefully providing again this enforcement mechanism where
Speaker 1: this time can indeed be different as long as we
Speaker 1: are able to get some clarity into what those promises
Speaker 1: look like and whether those promises that were made are kept. Isaac,
Speaker 1: I'm really fascinated to get your insight on on how
Speaker 1: you think this story is playing out in Washington, d C.
Speaker 1: And that's Amazon abandoning Long Island City before even arrives.
Speaker 1: There seems to be more broadly a backlash against big
Speaker 1: business on the left of American politics right now, increasingly
Speaker 1: so over the last year or so. What's your read
Speaker 1: on how you think this is going to play out? Sure, well,
Speaker 1: I can tell you that the the read from d
Speaker 1: C can sort of be bucketed into two separate reactions.
Speaker 1: The first is worry that traffic here in the DC
Speaker 1: metropolitan area will get much much worse because of it,
Speaker 1: and the second is simply that I think this is
Speaker 1: one more indication, just one more data point of the
Speaker 1: just herculean battle between governments and these these large tech
Speaker 1: companies that are operating in some ways like clasi governmental
Speaker 1: institutions and so It's not just going to happen here.
Speaker 1: We're going to see it in the halls of Congress
Speaker 1: with hearings in big tech. We're seeing in California and
Speaker 1: even Germany with some of the taxation proposals there. This
Speaker 1: is just one part of a much broader battle between
Speaker 1: governments trying to reassert themselves and large tech companies that
Speaker 1: I think have grown almost unabated over the past decade. Isaac,
Speaker 1: you're saying that you worry about traffic increasing. I'm surprised
Speaker 1: that you say that. I would think that there would
Speaker 1: be a collective cheer uh in Arlington, Virginia and the
Speaker 1: Washington D C. Metro area because it one, it was
Speaker 1: the number one headquarter. It's not going to be split
Speaker 1: between two. I'm surprised to hear. Is there more pushback
Speaker 1: to you in the region against the headquarters coming. No, Look,
Speaker 1: that was that was largely tongue in cheek. I think
Speaker 1: that the reality is that the DC just worried about
Speaker 1: senators getting around the city. That's so sweet of you
Speaker 1: carry on. I think, yeah, No, Look, I think DC
Speaker 1: is happy to get it, and they will be interesting
Speaker 1: to see how the rest goes. But the bigger. The
Speaker 1: bigger battle here, I think is going to be in
Speaker 1: the halls of Congress because what we saw here was
Speaker 1: the progressive left in some ways, and this we've talked
Speaker 1: about before. The herbal Tea Party got a big win
Speaker 1: here and representative of causeyor test is really I think
Speaker 1: the main victor. And this is something that she can
Speaker 1: take from, you know, this battle that was just in
Speaker 1: Queens now to the halls of Congress. But there is
Speaker 1: a big problem here, and that's literacy around certain financial issues, Isaac,
Speaker 1: the belief that if you take away three billion dollars
Speaker 1: of subsidies to Amazon, that you have a parlor cash
Speaker 1: to give away to do something else with um. Is
Speaker 1: the Left trying to sell a pony here and given
Speaker 1: everyone a free pony, or they just misunderstanding what is
Speaker 1: going on. I think I think it depends member to
Speaker 1: member UM in all honesty. But but your your point
Speaker 1: is a fair one. And I think politicians on both
Speaker 1: sides of the aisle have used misinformation and and and
Speaker 1: and I think a broader um mistrust of different entities
Speaker 1: in society to further their cause. And what we have
Speaker 1: here is slaying on a mistrust of big business and
Speaker 1: big tech that is really only just beginning. I actually
Speaker 1: am surprised that you think, uh, that Alexandro Casio Criteles
Speaker 1: can bring this to the halls of Congress as a win.
Speaker 1: I actually that was not my reaction to this. Necessarily,
Speaker 1: there is a lot of backlash to this. You think
Speaker 1: this is going to be viewed as a win or
Speaker 1: do you think that this is going to weaken the
Speaker 1: far left position? I think I think her reaction indicates
Speaker 1: that she believes it's all in, that her supporters believe
Speaker 1: it's to win, and I think it's one where Um
Speaker 1: it's whether whether it longer term is positive for the city,
Speaker 1: No one truly knows, and only time will tell. But
Speaker 1: at the moment, I think it will be spun undeniably
Speaker 1: as a win for uh that particular brand of progressive politics.
Speaker 1: But it was certainly outcomes she wanted, and she can
Speaker 1: turn around and say it was a win as far
Speaker 1: as her objectives were concerned. But I guess the point
Speaker 1: you're trying to make least is that the outcome isn't
Speaker 1: going to be positive. I mean, and I think that
Speaker 1: that's sort of a consensus across the board, is that
Speaker 1: I mean even local politicians in New York City and
Speaker 1: Long Island City have said off the record and on
Speaker 1: the record they kind of were looking for more from Amazon.
Speaker 1: They weren't looking for Amazon to just up and walk
Speaker 1: away from the table. Yeah. The other issue as well, Isaac,
Speaker 1: and I'd love you thought on this, it is the
Speaker 1: battle between cities in America. It's almost been encouraged. Do
Speaker 1: you think that's something we need to take another look
Speaker 1: at good point? Yeah. Look, I think that we saw
Speaker 1: during this entire bidding process a degree of disdain and
Speaker 1: and um and I would say overall sort of discord.
Speaker 1: That is concerning given the state of our local cities,
Speaker 1: given the need for broader sweeping infrastructure spending and ideas
Speaker 1: like that, and so instead of perhaps having cities battle
Speaker 1: wants battle against one another, we should have a broader,
Speaker 1: sweeping agenda that actually handles some of these concerning issues.
Speaker 1: It's great to catch up with you on some really
Speaker 1: important stories in the last couple of days. I sat Boltanski,
Speaker 1: do you want to us from Washington Campus Point director
Speaker 1: of Policy Research, Lisa Jonathan. I think you made a
Speaker 1: fantastic point, which is this whole idea of cities battling
Speaker 1: each other, whether it's for budgets, whether it's for companies
Speaker 1: an Amazon fueled that was trying to play the game
Speaker 1: big time, big time, and I guess that I'm wondering
Speaker 1: when the backlash is going to come from that. I mean, ultimately,
Speaker 1: I mean not to be al Kumbaya, but if cities benefits,
Speaker 1: shouldn't have benefit all the cities under the same umbrella.
Speaker 1: I don't imagine you singing, come buy on. I could
Speaker 1: send Comby. I want to go there. I will take
Speaker 1: your past. Tom Kaine's not here are past? Tomkin is
Speaker 1: the lead singer and DJ alright, alright, I will let
Speaker 1: him continue to all that. Mansel. Paul Sweeney joining me
Speaker 1: in the office here in the Bloomberg Interactive Broker's studios. Paul,
Speaker 1: really interesting to watch what's going on in Nigeria. It's
Speaker 1: being called a bell weather for African democracy. That this
Speaker 1: election has more to do and not just with Nigeria,
Speaker 1: but the fate of democracy in the entire continent. Joining
Speaker 1: us now to discuss Amaca Aku Eurasia Group Practice Head
Speaker 1: for Africa. Amaca, can you just set up for people
Speaker 1: who are not following the African elections. What are we
Speaker 1: looking for? Why are they so crucial? Great? Great? So
Speaker 1: this is my guys, fixed elections since it returns to
Speaker 1: democratic grew in the last two have been fairly competitive,
Speaker 1: the last one incombat off to the opposition who is
Speaker 1: now the president, Mohammadbuhari. This one is also very close
Speaker 1: and Buhari now stands, you know, faces of challenge from
Speaker 1: Atiku Abubaka and people are watching to see, you know,
Speaker 1: will just be another scenario where and incombat users. But if, if,
Speaker 1: if the opposition doesn't win, will there as certain results.
Speaker 1: So there's some tension in the air right now. Think
Speaker 1: how this goes down? Not so Amaka. Obviously this is
Speaker 1: an important election. Nigeria is the is Africa's largest economy. Um,
Speaker 1: what is the impact do you believe from this election
Speaker 1: on the broader economy in Nigeria and maybe the region
Speaker 1: in general. Frankly not much. So we had at the
Speaker 1: AGA Group behind Nigeria on a COP ten Global Risks
Speaker 1: for in part because we were making the point that
Speaker 1: you know, there was some optimism that the opposition candidate
Speaker 1: was to win, it might hear out some drastic change
Speaker 1: for the economy and you know, more publive outlook. The
Speaker 1: truth is that they're really sort of to not so
Speaker 1: great choices before Nigerians tomorrow, and we don't see the
Speaker 1: opposition candidates being able to significantly improve the country's outlook
Speaker 1: in the next four years. And that's because he's dogged
Speaker 1: by sevit allegations of corruption. He has no record of
Speaker 1: really tackling sort of the main problems Nigeria faces, which
Speaker 1: is revenue generation. It collects of one of the littlest,
Speaker 1: smallest revenues on the entire continent. Um so, so both
Speaker 1: are the main issues, and then of course we have
Speaker 1: a huge infrastructure that deficits. Those are the main issues
Speaker 1: that we just don't think that either candidate has either
Speaker 1: the energy to creativity or the competent. Really, yeah, Amaca NCU,
Speaker 1: thank you so much for being with us. Amaca Ku
Speaker 1: is Eurasia Group practice head focused on Africa and talking
Speaker 1: about the Nigerian elections. Really interesting to think given how
Speaker 1: big this economy is, given that this nation has more
Speaker 1: than a hundred billion dollars of debt and has been
Speaker 1: borrowing a lot in recent years, and given the fact
Speaker 1: that it is setting the tone for democracy in the
Speaker 1: entire continent. Definitely something that we are watching very closely, uh,
Speaker 1: just to see if this does show that democracy is
Speaker 1: not necessarily on a back foot in the continent. Thanks
Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen
Speaker 1: to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform
Speaker 1: you prefer. I'm on Twitter at Tom Keane before the podcast.
Speaker 1: You can always catch us worldwide. I'm Bloomberg Radio.