1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Abramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:33,080 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Good 7 00:00:33,120 --> 00:00:35,879 Speaker 1: news from the Conference Board. The Conference Board Leading Economic 8 00:00:35,920 --> 00:00:38,760 Speaker 1: Index for the United States increased in December. Here to 9 00:00:38,800 --> 00:00:41,559 Speaker 1: help us understand the details is Ken Goldstein. He is 10 00:00:41,560 --> 00:00:43,879 Speaker 1: the economist with the Conference Board, and he joins us 11 00:00:43,880 --> 00:00:46,800 Speaker 1: here in our eleven three oh studios. Ken, always a pleasure, 12 00:00:46,840 --> 00:00:49,360 Speaker 1: Thanks for being here. Not only do we have the 13 00:00:49,400 --> 00:00:52,560 Speaker 1: information for December, but we have a number of revisions, 14 00:00:52,800 --> 00:00:54,920 Speaker 1: and I'm wondering if you could just lay out the 15 00:00:55,520 --> 00:00:58,560 Speaker 1: situation for us. Well, I look the revisions and the 16 00:00:58,600 --> 00:01:03,080 Speaker 1: re benchmarking. It's so data cleaning, um, and we didn't 17 00:01:03,080 --> 00:01:05,959 Speaker 1: find out very much that we didn't already know. What 18 00:01:06,160 --> 00:01:09,280 Speaker 1: is interesting I think is that not just this month, 19 00:01:09,319 --> 00:01:12,520 Speaker 1: but the last three months, we've seen this pickup in 20 00:01:12,520 --> 00:01:15,560 Speaker 1: the I S M index for new orders. If you like, 21 00:01:15,680 --> 00:01:18,759 Speaker 1: that's kind of an intention to new order. So even 22 00:01:18,800 --> 00:01:22,280 Speaker 1: though the ordering rate itself hasn't picked up, uh, that 23 00:01:22,440 --> 00:01:25,000 Speaker 1: sort of last you know, leg over the fence, if 24 00:01:25,040 --> 00:01:27,520 Speaker 1: you like, looks like it might be improving. So not 25 00:01:27,560 --> 00:01:30,440 Speaker 1: only is the economy continuing to move along with the 26 00:01:30,480 --> 00:01:32,679 Speaker 1: signal that this is going to continue into the spring, 27 00:01:33,160 --> 00:01:35,760 Speaker 1: but maybe with a little bit more kick, if indeed 28 00:01:35,800 --> 00:01:38,160 Speaker 1: new orders are going to start to give us more strength. 29 00:01:38,319 --> 00:01:41,240 Speaker 1: So ken we know that manufacturing is doing well, we 30 00:01:41,360 --> 00:01:43,600 Speaker 1: know that the stock market is doing well, we know 31 00:01:43,680 --> 00:01:48,320 Speaker 1: that credit markets are really robust. Um, I'm looking at 32 00:01:48,360 --> 00:01:51,440 Speaker 1: these indications. The one thing that we don't know is 33 00:01:52,000 --> 00:01:55,160 Speaker 1: why people aren't getting paid more. And I noticed that 34 00:01:55,240 --> 00:02:02,440 Speaker 1: the one decline in the indicators was for average weekly hours. Yeah, 35 00:02:02,480 --> 00:02:04,480 Speaker 1: that's that's just a bounce. I don't know that there's 36 00:02:04,480 --> 00:02:08,080 Speaker 1: any trend there, but certainly the lack of more pickup 37 00:02:08,120 --> 00:02:11,760 Speaker 1: in wages and therefore more pick up inflation has indeed 38 00:02:11,800 --> 00:02:14,000 Speaker 1: been one of the one of the strange things, one 39 00:02:14,000 --> 00:02:17,000 Speaker 1: of the unanswered questions, not just this month, but really 40 00:02:17,040 --> 00:02:20,040 Speaker 1: for the last two years. We keep saying it's going 41 00:02:20,080 --> 00:02:23,600 Speaker 1: to come. The labor market keeps getting tighter. Um, the 42 00:02:23,680 --> 00:02:27,080 Speaker 1: question is when, and indeed when it does come how much, 43 00:02:27,120 --> 00:02:31,359 Speaker 1: And that's tied two decisions about how much interstrates will 44 00:02:31,360 --> 00:02:34,880 Speaker 1: pick up. Noticed not just that the indicators are also up, 45 00:02:35,200 --> 00:02:37,760 Speaker 1: but that long term interest rates both US and now 46 00:02:37,840 --> 00:02:40,720 Speaker 1: Germany are also starting to pick up. That's another sign 47 00:02:40,720 --> 00:02:42,920 Speaker 1: of optimism, not just for the US, but we did 48 00:02:43,000 --> 00:02:45,920 Speaker 1: across the globe can tell us about a commercial and 49 00:02:46,000 --> 00:02:50,240 Speaker 1: industrial loans. I was looking at those results, well, you know, 50 00:02:50,280 --> 00:02:52,680 Speaker 1: the combination and again coming back to what we're just 51 00:02:52,720 --> 00:02:55,480 Speaker 1: talking about. You know, where's the inflation here? And yet 52 00:02:55,480 --> 00:02:59,200 Speaker 1: profits are still good, loan demand has started to pick up. 53 00:02:59,600 --> 00:03:02,680 Speaker 1: It's like it's hard to see any you know, any 54 00:03:02,760 --> 00:03:06,240 Speaker 1: party economy. Uh, that's beginning to stutter a little bit. 55 00:03:06,280 --> 00:03:09,480 Speaker 1: In fact, just the opposite. If anything, there are these 56 00:03:09,520 --> 00:03:12,919 Speaker 1: sort of signs that I'm suggesting that if growth doesn't 57 00:03:12,919 --> 00:03:15,880 Speaker 1: continue at the same pace, it's more likely that will 58 00:03:15,919 --> 00:03:17,760 Speaker 1: be a little bit stronger than a little bit weaker. 59 00:03:18,400 --> 00:03:22,040 Speaker 1: I guess I'm struggling with this idea of inflation. I mean, 60 00:03:22,040 --> 00:03:24,680 Speaker 1: this is the big question. This is the reason why 61 00:03:25,000 --> 00:03:28,639 Speaker 1: there is so much disagreement with respect to the sort 62 00:03:28,639 --> 00:03:31,560 Speaker 1: of course of of bonds and where they're headed. I mean, 63 00:03:31,639 --> 00:03:34,760 Speaker 1: right now, we're seeing yields take up, perhaps because of 64 00:03:34,800 --> 00:03:38,360 Speaker 1: Mario Dragon what he said today. But but but but 65 00:03:38,360 --> 00:03:40,400 Speaker 1: by ten, your yields have been taking up. Yes, you're right, 66 00:03:40,760 --> 00:03:45,280 Speaker 1: well before that um still though, I mean, I understand 67 00:03:45,320 --> 00:03:47,920 Speaker 1: that the hourly wages is not a trend. But it's 68 00:03:47,960 --> 00:03:51,040 Speaker 1: concerning that there is no momentum there, certainly no. It's 69 00:03:51,080 --> 00:03:55,120 Speaker 1: concerning that it hasn't started yet, that we keep saying 70 00:03:55,160 --> 00:03:58,640 Speaker 1: it's still coming, and everybody believes it's still coming. That 71 00:03:58,760 --> 00:04:01,640 Speaker 1: as the as the labor market continues to generate more 72 00:04:01,960 --> 00:04:05,120 Speaker 1: than a d and fifty jobs a month, as the 73 00:04:05,240 --> 00:04:08,880 Speaker 1: unemployment rate droughts below four percent, So a tight labor 74 00:04:08,920 --> 00:04:11,560 Speaker 1: market getting even tighter, that's going to drive a wayes 75 00:04:11,600 --> 00:04:15,040 Speaker 1: the question when does that begin to start, how strong 76 00:04:15,120 --> 00:04:17,200 Speaker 1: is it going to be, and when does that trick 77 00:04:17,360 --> 00:04:20,760 Speaker 1: tip off into a pick up in inflation. So that 78 00:04:20,839 --> 00:04:24,640 Speaker 1: Phillips Curve argument, very few people believe it's dead. All 79 00:04:24,680 --> 00:04:26,960 Speaker 1: of us believe it's been asleep and it's about to 80 00:04:27,000 --> 00:04:29,040 Speaker 1: wake up. So, just to be clear to Phillips Curve, 81 00:04:29,120 --> 00:04:31,880 Speaker 1: whenever people say these things, just in case anyone doesn't 82 00:04:31,880 --> 00:04:34,560 Speaker 1: know what that is, it's the idea of an inverse 83 00:04:34,640 --> 00:04:40,720 Speaker 1: correlation between a low jobless rate and inflation. So ideally, 84 00:04:41,000 --> 00:04:43,599 Speaker 1: when the market does get really tight and the jobless 85 00:04:43,640 --> 00:04:47,200 Speaker 1: rate goes very far down, you should see increases in 86 00:04:47,279 --> 00:04:50,680 Speaker 1: wages and increases in inflation. We haven't seen that correlation, 87 00:04:50,720 --> 00:04:53,279 Speaker 1: and people are wondering why and whether it just has 88 00:04:53,440 --> 00:04:55,960 Speaker 1: to yet to start. So I just like to describe 89 00:04:55,960 --> 00:04:58,760 Speaker 1: it all. Ken can also help me understand the diffusion 90 00:04:59,040 --> 00:05:02,839 Speaker 1: index and what can we learn from the diffusion index. Well, 91 00:05:03,080 --> 00:05:06,080 Speaker 1: this is really important because as I was just saying before, 92 00:05:06,279 --> 00:05:08,599 Speaker 1: it's like, it's not just the labor market, it's not 93 00:05:08,680 --> 00:05:12,040 Speaker 1: just the financial market, really goes across the board um 94 00:05:12,080 --> 00:05:15,479 Speaker 1: into virtually every segment of the economy. So the fact 95 00:05:15,560 --> 00:05:18,840 Speaker 1: that not only do we have this strong upward momentum 96 00:05:18,839 --> 00:05:21,480 Speaker 1: in the economy, could you know, and we're only talking 97 00:05:21,520 --> 00:05:24,080 Speaker 1: about two to an a percent GDP growth, We're not 98 00:05:24,120 --> 00:05:27,160 Speaker 1: talking about more than that, and yet it's that much 99 00:05:27,360 --> 00:05:29,640 Speaker 1: could even take up a little bit higher. But it's 100 00:05:29,640 --> 00:05:33,000 Speaker 1: spread out across the across all the sectors. They diffuse. 101 00:05:33,240 --> 00:05:36,520 Speaker 1: Hence the name of this is not only diffused across industry, 102 00:05:36,520 --> 00:05:40,039 Speaker 1: it's diffuse also across regions. Uh, And so that is 103 00:05:40,080 --> 00:05:43,040 Speaker 1: a further suggestion that this thing is not going to 104 00:05:43,120 --> 00:05:46,080 Speaker 1: fall apart any time real soon. How far out does 105 00:05:46,120 --> 00:05:50,000 Speaker 1: this to the leading economic indicators predict maybe the next 106 00:05:50,000 --> 00:05:52,440 Speaker 1: three to six months? Okay, because this is this is 107 00:05:52,480 --> 00:05:55,280 Speaker 1: helpful to remember, because we're hearing from Davos a lot 108 00:05:55,360 --> 00:05:58,520 Speaker 1: of big thinkers and big investors and big executives say 109 00:05:58,640 --> 00:06:00,480 Speaker 1: they expect the economy in the u US to be 110 00:06:00,600 --> 00:06:03,520 Speaker 1: good and robust for the next twelve months. But this 111 00:06:03,560 --> 00:06:07,120 Speaker 1: tells us nothing about what happens after that, right, This 112 00:06:07,200 --> 00:06:09,760 Speaker 1: doesn't tell us anything about that. But this kind of momentum, 113 00:06:09,800 --> 00:06:12,320 Speaker 1: as I was just suggesting, you know, it's not going 114 00:06:12,400 --> 00:06:14,920 Speaker 1: to fall up the cliff in one day. If it's 115 00:06:14,960 --> 00:06:18,280 Speaker 1: going to start to decline, that's going to happen gradually. 116 00:06:18,360 --> 00:06:21,680 Speaker 1: And there's no sign here, not in the indicators, not 117 00:06:21,760 --> 00:06:24,000 Speaker 1: in most of the forecast, not in terms of what 118 00:06:24,040 --> 00:06:26,960 Speaker 1: the bond markets telling us that in the next twelve 119 00:06:27,000 --> 00:06:29,400 Speaker 1: to eighteen months we're going to see any big significant 120 00:06:29,440 --> 00:06:34,640 Speaker 1: drop absent a big economic shock, really quickly ten seconds. 121 00:06:35,480 --> 00:06:37,359 Speaker 1: How long does it take before you start seeing the 122 00:06:37,400 --> 00:06:40,640 Speaker 1: signs in the leading indicators before the downturn actually starts? 123 00:06:41,120 --> 00:06:44,840 Speaker 1: Three to six months? Thank you so much, really helpful 124 00:06:44,880 --> 00:06:46,599 Speaker 1: to have you on and break it down as always. 125 00:06:46,640 --> 00:06:49,760 Speaker 1: Ken Goldstein, who is an economist with the Conference Board, 126 00:06:49,760 --> 00:06:56,320 Speaker 1: talking about the December leading economic indicators showing ongoing strength 127 00:06:56,720 --> 00:06:59,200 Speaker 1: certainly over the next three to six months in the 128 00:06:59,279 --> 00:07:02,440 Speaker 1: United States, an increase of six tents of in December. 129 00:07:02,560 --> 00:07:18,760 Speaker 1: That's right. Well, right now I'm looking at a headline 130 00:07:18,840 --> 00:07:22,600 Speaker 1: that gets me a little bit depressed. The doomsday clock 131 00:07:22,720 --> 00:07:26,000 Speaker 1: just moved. It's now two minutes to midnight, the symbolic 132 00:07:26,120 --> 00:07:29,360 Speaker 1: hour of the apocalypse. This is from the Washington Post. 133 00:07:29,800 --> 00:07:32,400 Speaker 1: Here to put my mind at ease, make me more worried. 134 00:07:32,840 --> 00:07:36,160 Speaker 1: Jack Divine He is founding partner and president of the 135 00:07:36,280 --> 00:07:38,600 Speaker 1: ark And Group, also a member of the Council of 136 00:07:38,640 --> 00:07:42,000 Speaker 1: Foreign Relations UH and he is also the author of 137 00:07:42,240 --> 00:07:48,200 Speaker 1: Good Hunting, a Spymaster's Story. Former acting director of the 138 00:07:48,360 --> 00:07:54,520 Speaker 1: c I A. Jack, I'm having too much fun in 139 00:07:54,560 --> 00:07:58,200 Speaker 1: life to be worried about doomsday, so I'm not miss 140 00:07:58,280 --> 00:08:01,440 Speaker 1: all right, let's talk about North Korea right now. Now, 141 00:08:01,640 --> 00:08:04,800 Speaker 1: now we can shift to doomsday. All right, So where 142 00:08:04,840 --> 00:08:07,000 Speaker 1: are we in this? You know, it's been one year 143 00:08:07,000 --> 00:08:12,120 Speaker 1: into Trump's tenure. We are seeing, uh, not a lot 144 00:08:12,160 --> 00:08:15,640 Speaker 1: of progress. Where's the throat right now? I think he 145 00:08:15,680 --> 00:08:20,160 Speaker 1: actually blinked. Who is he? Kim Jong? I mean, I 146 00:08:20,200 --> 00:08:23,160 Speaker 1: think the first of all, I would say off the right, 147 00:08:23,200 --> 00:08:26,760 Speaker 1: off the top, that I don't see any military resolution 148 00:08:26,840 --> 00:08:30,600 Speaker 1: of this. There is no good way to resolve this militarily. 149 00:08:30,680 --> 00:08:34,720 Speaker 1: I don't see how we could engage take out the site. 150 00:08:34,880 --> 00:08:37,720 Speaker 1: So I've been from the very beginning of the most 151 00:08:37,760 --> 00:08:43,840 Speaker 1: recent flare up in the relationships with with North Korea, UH, 152 00:08:44,080 --> 00:08:46,360 Speaker 1: pushing the thought that we need to return to the table. 153 00:08:46,600 --> 00:08:50,360 Speaker 1: So just the Trump administration adhered to that, do they Well, 154 00:08:50,400 --> 00:08:52,840 Speaker 1: it's it's I think the Trump administration has taken a 155 00:08:52,880 --> 00:08:57,680 Speaker 1: strong line. Uh. Interestingly enough, South Korea the new President 156 00:08:57,800 --> 00:09:00,959 Speaker 1: Moon have sort of tried to war arm up relations 157 00:09:01,040 --> 00:09:04,240 Speaker 1: and the question was whether Kim jongan was going to respond. 158 00:09:05,280 --> 00:09:08,360 Speaker 1: And I find it interesting that he has now going 159 00:09:08,400 --> 00:09:12,760 Speaker 1: to participate with the South Koreans and the Olympics and 160 00:09:12,760 --> 00:09:15,880 Speaker 1: and is talking to them now. I would hope that 161 00:09:16,440 --> 00:09:19,560 Speaker 1: behind closed doors, we're trying to expand those talks into 162 00:09:19,760 --> 00:09:24,000 Speaker 1: the old six parties China, Russia, South Korea ourselves and 163 00:09:24,520 --> 00:09:28,800 Speaker 1: try and come up with a eight some sort of 164 00:09:28,840 --> 00:09:31,920 Speaker 1: temporary solution just slow him down. We're not gonna he's 165 00:09:31,920 --> 00:09:35,400 Speaker 1: not gonna roll back his newclear program, but he's moving 166 00:09:35,640 --> 00:09:39,079 Speaker 1: too fast and we don't have a military solution. So 167 00:09:39,200 --> 00:09:42,440 Speaker 1: I think going back to the table, negotiating some sort 168 00:09:42,480 --> 00:09:47,120 Speaker 1: of temporary arrangement, I think it's our best course of action. 169 00:09:48,880 --> 00:09:50,720 Speaker 1: I was just gonna say on China, I was just 170 00:09:50,720 --> 00:09:52,920 Speaker 1: gonna say one thing in China that you know, the 171 00:09:52,960 --> 00:09:57,720 Speaker 1: Trump administration is putting a lot of it's betting on 172 00:09:58,000 --> 00:10:02,079 Speaker 1: China support. I've been agnostic about that at best all along, 173 00:10:02,760 --> 00:10:05,800 Speaker 1: but I do take some comfort recently if you believe 174 00:10:06,000 --> 00:10:10,880 Speaker 1: the Chinese official statement that they've cut off coal and 175 00:10:11,120 --> 00:10:14,840 Speaker 1: oil supplies, fuel supplies to China. I mean, if they 176 00:10:15,120 --> 00:10:18,080 Speaker 1: actually stay the course and increase the pressure, then there's 177 00:10:18,160 --> 00:10:22,120 Speaker 1: more more incentive to get the North Korea to the table. 178 00:10:22,200 --> 00:10:24,320 Speaker 1: But they're not a band in the program. The question 179 00:10:24,400 --> 00:10:26,720 Speaker 1: is whether or not we can stabilize it about where 180 00:10:26,720 --> 00:10:29,400 Speaker 1: it is today. Well, since you mentioned China, then I've 181 00:10:29,400 --> 00:10:33,560 Speaker 1: got to ask you about this, uh continuing news story 182 00:10:33,600 --> 00:10:37,920 Speaker 1: about the Jerry should Shingle naturalized US citizen. He now 183 00:10:37,960 --> 00:10:40,480 Speaker 1: lives in Hong Kong. He was taken into custody at 184 00:10:40,559 --> 00:10:44,760 Speaker 1: the JFK Airport former c I a case officer, and 185 00:10:45,200 --> 00:10:48,400 Speaker 1: he's under unrest on charges of illegally retaining highly classified 186 00:10:48,400 --> 00:10:55,400 Speaker 1: information relating to US spy networks in China. Well, first 187 00:10:55,400 --> 00:10:57,640 Speaker 1: of all, let me self reveal again I'm of the 188 00:10:57,720 --> 00:11:02,600 Speaker 1: view that in the intelligence world, we always have a mall, 189 00:11:03,080 --> 00:11:05,480 Speaker 1: you know, if you're the director of CIA, and I've 190 00:11:05,520 --> 00:11:07,200 Speaker 1: talked a lot of them, and so they've gone in. 191 00:11:08,080 --> 00:11:11,679 Speaker 1: I've made the point that there somewhere in the institution 192 00:11:11,720 --> 00:11:14,920 Speaker 1: there's a there's a mall. It's part of the business. 193 00:11:14,960 --> 00:11:18,360 Speaker 1: We have malls within the Russian system, within the Chinese system, 194 00:11:18,400 --> 00:11:21,920 Speaker 1: I'm sure we have them and and have had for years. 195 00:11:21,920 --> 00:11:25,920 Speaker 1: And they have had ten hours. It's finding those malls 196 00:11:25,960 --> 00:11:28,400 Speaker 1: and finding out how much damage they've done. I was 197 00:11:28,480 --> 00:11:32,840 Speaker 1: very familiar with the Hansen and rick Games cases and 198 00:11:32,880 --> 00:11:35,280 Speaker 1: what was interesting, and this is from the public domain, 199 00:11:36,280 --> 00:11:38,520 Speaker 1: that at the beginning, when they started to lose so 200 00:11:39,280 --> 00:11:43,600 Speaker 1: uh the agency begin lose Chinese assets, it was well, 201 00:11:43,679 --> 00:11:46,880 Speaker 1: it must be bad tradecraft in China, and then it 202 00:11:46,960 --> 00:11:49,080 Speaker 1: was it must have been a communication, it must have 203 00:11:49,120 --> 00:11:52,080 Speaker 1: hacked into something that's very reminiscent of the hunt for 204 00:11:52,360 --> 00:11:54,760 Speaker 1: Rick Games at the beginning, no one could accept the 205 00:11:54,800 --> 00:11:57,719 Speaker 1: fact that you had a trader in your meds who 206 00:11:57,720 --> 00:12:00,840 Speaker 1: could do that, who could be in a be a 207 00:12:00,880 --> 00:12:05,400 Speaker 1: member and be a trader and people should hasten so well, 208 00:12:05,400 --> 00:12:08,240 Speaker 1: why do you think that others betray themselves in our 209 00:12:08,280 --> 00:12:11,480 Speaker 1: work in the system. But eventually it became obvious that 210 00:12:11,679 --> 00:12:16,240 Speaker 1: we had a there was a penetration, and it's part 211 00:12:16,360 --> 00:12:20,199 Speaker 1: of uh part of doing business. But part of doing 212 00:12:20,240 --> 00:12:24,120 Speaker 1: business is also being vigilant on this point. And I 213 00:12:24,160 --> 00:12:27,600 Speaker 1: think I think this is just another reminder too bad, 214 00:12:27,679 --> 00:12:29,840 Speaker 1: is so painful? All right, So I just wanted to 215 00:12:29,840 --> 00:12:32,960 Speaker 1: follow up with this because I'm wondering what your perspective 216 00:12:33,040 --> 00:12:37,320 Speaker 1: is on the president's comments and attitude. It seems to 217 00:12:37,400 --> 00:12:40,360 Speaker 1: be that is sometimes put out in public on Twitter 218 00:12:41,600 --> 00:12:44,760 Speaker 1: characterizing either the FBI but also the CIA and the 219 00:12:44,920 --> 00:12:48,280 Speaker 1: U S Security forces. I think the burden of the 220 00:12:48,440 --> 00:12:52,000 Speaker 1: criticism has been directed more to the FBI and surrounding 221 00:12:52,080 --> 00:12:56,920 Speaker 1: the correct investigation. UM. I think it's worthwhile remembering the 222 00:12:57,080 --> 00:13:01,600 Speaker 1: very first official government act and and visit was to 223 00:13:01,640 --> 00:13:05,520 Speaker 1: the CIA. Okay, I think it's a very good it's 224 00:13:05,880 --> 00:13:10,439 Speaker 1: demonstratively good with the director of of CI A One 225 00:13:10,480 --> 00:13:14,040 Speaker 1: thing about as I reflect on what people in CI 226 00:13:14,240 --> 00:13:18,959 Speaker 1: a military tender like is strong, decisive leadership, and then 227 00:13:19,040 --> 00:13:23,880 Speaker 1: from their flows it's less political after that. Half the 228 00:13:23,960 --> 00:13:27,520 Speaker 1: people in cee I A. I'm sure, sure, I'm inclined 229 00:13:27,600 --> 00:13:30,760 Speaker 1: to believe, vote Democratic Party and the other half vote 230 00:13:30,760 --> 00:13:33,640 Speaker 1: to Republican Party. It's made up pretty much of what 231 00:13:33,720 --> 00:13:36,040 Speaker 1: America is. But there is a common thing, which is 232 00:13:36,559 --> 00:13:41,079 Speaker 1: decisiveness and leadership. So I I question sort of just 233 00:13:41,200 --> 00:13:46,320 Speaker 1: how much um turmoil or is around this issue in 234 00:13:46,440 --> 00:13:48,600 Speaker 1: the CI. The FBI, of course, is going through what 235 00:13:48,679 --> 00:13:53,400 Speaker 1: I think is very horrendous situation. I hope they for 236 00:13:53,480 --> 00:13:56,240 Speaker 1: our country, I hope this passes quickly. For the we 237 00:13:56,280 --> 00:13:58,720 Speaker 1: need the FBI, but there are there are real problems 238 00:13:58,720 --> 00:14:01,800 Speaker 1: that need to be addressed. So with with respect to 239 00:14:02,320 --> 00:14:06,120 Speaker 1: UH President Trump, he's been in office a year, do 240 00:14:06,200 --> 00:14:09,080 Speaker 1: you think that the U. S Is in a more 241 00:14:09,160 --> 00:14:13,719 Speaker 1: dangerous spot because of our perhaps less robust relationships with 242 00:14:13,800 --> 00:14:17,720 Speaker 1: some of our allies like Canada. One of the things 243 00:14:17,720 --> 00:14:20,680 Speaker 1: that I think it always struck me through the years 244 00:14:20,880 --> 00:14:25,200 Speaker 1: is the public and private behavior of foreign governments, perhaps 245 00:14:25,280 --> 00:14:28,600 Speaker 1: even our own, and that is you might have public outcries, 246 00:14:28,680 --> 00:14:30,840 Speaker 1: but I will tell you in the back rooms around 247 00:14:30,840 --> 00:14:33,960 Speaker 1: the world. It's still the predominance of how do you 248 00:14:33,960 --> 00:14:36,320 Speaker 1: get along with the US governed. It's so important to 249 00:14:36,400 --> 00:14:41,440 Speaker 1: the lives of everybody in every country that most most 250 00:14:41,560 --> 00:14:45,400 Speaker 1: of our major allies are looking for ways to deal 251 00:14:45,440 --> 00:14:47,640 Speaker 1: with us. In Davos, it's gonna be very interesting the 252 00:14:47,680 --> 00:14:51,680 Speaker 1: sidebar discussions. So I think what they're not used to 253 00:14:51,840 --> 00:14:57,880 Speaker 1: right now the foreign government is that the president is exerting, uh, 254 00:14:58,360 --> 00:15:03,000 Speaker 1: pretty a very strong position that's not sort of consensus driven. 255 00:15:03,120 --> 00:15:06,760 Speaker 1: And I think they're making adjustments. But um, I don't 256 00:15:06,760 --> 00:15:10,440 Speaker 1: think any of the alliances are are at risk. It's 257 00:15:10,520 --> 00:15:12,720 Speaker 1: just they need to figure out how to deal with 258 00:15:12,760 --> 00:15:16,640 Speaker 1: the new president the United States. Jack Devine, thank you 259 00:15:16,760 --> 00:15:19,760 Speaker 1: very much. Please come back and spend more time with us. 260 00:15:19,800 --> 00:15:23,520 Speaker 1: We've barely touched on a variety of topics that, of 261 00:15:23,560 --> 00:15:26,760 Speaker 1: course are interesting to our listeners and around the world. 262 00:15:26,920 --> 00:15:29,080 Speaker 1: Jack Divine is the founding partner and president of the 263 00:15:29,200 --> 00:15:32,520 Speaker 1: ark And Group, and he is the author of Good Hunting, 264 00:15:32,720 --> 00:15:36,320 Speaker 1: a Spy Master's Story. And he of course is also 265 00:15:36,360 --> 00:15:39,760 Speaker 1: a former acting head of an associate director of the 266 00:15:39,760 --> 00:15:57,920 Speaker 1: CIA Central Intelligence Agency. Right now, I want to turn 267 00:15:57,920 --> 00:16:00,280 Speaker 1: our attention to airlines we talked about them a little 268 00:16:00,280 --> 00:16:04,680 Speaker 1: bit earlier. United shares down wow, oh my goodness, in 269 00:16:04,720 --> 00:16:08,400 Speaker 1: the past two days, down more than fourteen per cent, 270 00:16:08,840 --> 00:16:13,640 Speaker 1: the most for two days going back to June. Here 271 00:16:13,640 --> 00:16:16,720 Speaker 1: to talk about it is George Ferguson, Bloomberg Senior Aerospace, 272 00:16:16,760 --> 00:16:21,760 Speaker 1: Defense and Airline analyst for Bloomberg Intelligence. Uh, George, what 273 00:16:21,920 --> 00:16:23,360 Speaker 1: happened here? Can you just give us a lay of 274 00:16:23,400 --> 00:16:27,640 Speaker 1: the land? Yeah? So, investors very focused right now on 275 00:16:27,680 --> 00:16:30,520 Speaker 1: the amount of capacity coming to the airline market, especially 276 00:16:31,040 --> 00:16:35,160 Speaker 1: the domestic US market. Uh. And uh, you know, United 277 00:16:35,360 --> 00:16:38,320 Speaker 1: a big participant in that market, and so anything that 278 00:16:38,400 --> 00:16:41,680 Speaker 1: was well above GDP was going to concern investors that 279 00:16:41,840 --> 00:16:45,720 Speaker 1: they were going to dilute fairs, push push fairs, just 280 00:16:45,800 --> 00:16:47,880 Speaker 1: to be clear about what capacity is. In other words, 281 00:16:48,160 --> 00:16:52,280 Speaker 1: they are expanding the locations that they're serving. Correct. Oh, yeah, Well, 282 00:16:52,320 --> 00:16:55,520 Speaker 1: so United is trying to serve their hubs better. United 283 00:16:55,520 --> 00:16:57,680 Speaker 1: has a lot of great hubs in the US and 284 00:16:57,720 --> 00:16:59,880 Speaker 1: they want more frequency. They want more flights in and 285 00:17:00,000 --> 00:17:03,960 Speaker 1: out of those hubs, um so that they can. They've 286 00:17:04,000 --> 00:17:06,439 Speaker 1: basically had peeled back some of that service over the 287 00:17:06,520 --> 00:17:09,240 Speaker 1: last decade or so, and so they want they want 288 00:17:09,240 --> 00:17:11,400 Speaker 1: to expand that service. They want more of a domestic 289 00:17:11,520 --> 00:17:14,399 Speaker 1: US footprint. I think it's what it all boils down to. 290 00:17:15,119 --> 00:17:18,600 Speaker 1: Because domestic US yields, which is the price of a 291 00:17:18,600 --> 00:17:21,880 Speaker 1: customer pace per mile they're flown, are higher than any 292 00:17:21,880 --> 00:17:25,679 Speaker 1: other market in the world. Uniteds are lower in the 293 00:17:25,800 --> 00:17:29,959 Speaker 1: US and their peers over at Delta, and so they 294 00:17:30,000 --> 00:17:31,760 Speaker 1: want to change that. They want to get yields from 295 00:17:31,800 --> 00:17:34,400 Speaker 1: the US that are as good as Delta, and they 296 00:17:34,400 --> 00:17:37,000 Speaker 1: see that as their avenue to getting profitability as good 297 00:17:37,000 --> 00:17:41,399 Speaker 1: as Delta. So they're expanding capacity into their hubs. Hey, George, 298 00:17:41,600 --> 00:17:43,760 Speaker 1: do the airlines have a mismatch when it comes to 299 00:17:43,760 --> 00:17:46,480 Speaker 1: the actual equipment the aircraft that they're using on the 300 00:17:46,560 --> 00:17:49,720 Speaker 1: roots that they want to expand? Uh, you know, I 301 00:17:50,280 --> 00:17:53,520 Speaker 1: don't know. I don't know if they have a mismatch, 302 00:17:53,560 --> 00:17:54,960 Speaker 1: you know. I think one of the interesting things about 303 00:17:55,080 --> 00:17:56,919 Speaker 1: United is if you look at some of their service 304 00:17:56,960 --> 00:18:00,199 Speaker 1: in the United States as part of this expansion for 305 00:18:01,000 --> 00:18:04,440 Speaker 1: more US market share, you'll see them flying triple sevens 306 00:18:04,480 --> 00:18:06,760 Speaker 1: coast to coast into l A and things like that. 307 00:18:07,400 --> 00:18:11,360 Speaker 1: You don't see that out of their competitors. I mean, 308 00:18:11,359 --> 00:18:13,480 Speaker 1: I think, you know, United is flying a lot of 309 00:18:13,520 --> 00:18:16,920 Speaker 1: business between their major hubs, and there's a lot of 310 00:18:17,040 --> 00:18:19,920 Speaker 1: traffic back and forth between places like Newark and l 311 00:18:20,000 --> 00:18:22,560 Speaker 1: a UM Actually LA is not their hubs, or in 312 00:18:22,560 --> 00:18:27,160 Speaker 1: Newark and San Francisco, h Newark in Chicago and and 313 00:18:27,160 --> 00:18:29,600 Speaker 1: and into Houston. So they're flying some bigger gauges and 314 00:18:29,600 --> 00:18:32,200 Speaker 1: I think that's part of the problem as United wants 315 00:18:32,240 --> 00:18:35,320 Speaker 1: to be servicing some of the smaller markets. You know, 316 00:18:35,560 --> 00:18:37,480 Speaker 1: I don't know right well, that's where I was going 317 00:18:37,520 --> 00:18:40,120 Speaker 1: because I mean, I was listening to comments from the 318 00:18:40,400 --> 00:18:45,560 Speaker 1: business from the commercial jet head of embra Air, and 319 00:18:45,600 --> 00:18:47,760 Speaker 1: I know embra Air and Boeing, you know, they're talking 320 00:18:47,760 --> 00:18:50,160 Speaker 1: about some kind of type. But they were saying that 321 00:18:50,200 --> 00:18:54,080 Speaker 1: the reason that Boeing is interested in Embra Air is 322 00:18:54,119 --> 00:18:58,280 Speaker 1: because Boeing and air Bus have more difficulty shrinking the 323 00:18:58,400 --> 00:19:01,960 Speaker 1: size of their equi in order to meet the right 324 00:19:02,040 --> 00:19:05,960 Speaker 1: size demand, and it's better to actually focus on smaller 325 00:19:06,000 --> 00:19:09,520 Speaker 1: aircraft that might have to be expanded. And that depends 326 00:19:09,520 --> 00:19:11,320 Speaker 1: what market you're going into. So as I was about 327 00:19:11,320 --> 00:19:13,600 Speaker 1: to say, if you're going into Rochester, Minnesota, which I 328 00:19:13,600 --> 00:19:16,280 Speaker 1: think is one of the examples we heard the other day, yeah, 329 00:19:16,320 --> 00:19:18,720 Speaker 1: you might want a hundred seeds or a hundred thirty 330 00:19:18,760 --> 00:19:23,159 Speaker 1: seed and that looks like an Umbrera, that looks like 331 00:19:23,280 --> 00:19:26,320 Speaker 1: a Bombardier C series. We heard in the jet Blue 332 00:19:26,359 --> 00:19:29,960 Speaker 1: call today. Jet Blue said they're sort of rethinking their 333 00:19:30,040 --> 00:19:36,080 Speaker 1: embraer onet and given the Airbus and Bombardier joint venture 334 00:19:36,119 --> 00:19:39,240 Speaker 1: with C series, they see new opportunities. They are very 335 00:19:39,280 --> 00:19:42,840 Speaker 1: air Bus focus shop. So that's an example where you 336 00:19:42,880 --> 00:19:44,800 Speaker 1: know an airline is looking for the right gauge to 337 00:19:44,840 --> 00:19:48,440 Speaker 1: get into those smaller markets, the right side. What's the 338 00:19:48,520 --> 00:19:52,399 Speaker 1: rational of United and why do they think it's going 339 00:19:52,440 --> 00:19:54,199 Speaker 1: to be good for their business and why is it 340 00:19:54,200 --> 00:19:58,000 Speaker 1: being taken exactly the opposite by the market. Yeah, so 341 00:19:58,480 --> 00:20:00,680 Speaker 1: you know they're they're adding a lot of capa looking 342 00:20:00,720 --> 00:20:03,280 Speaker 1: at four to six percent more capacity this year, which 343 00:20:03,320 --> 00:20:07,280 Speaker 1: is well above GDP growth, which is typically dilete of affairs. 344 00:20:07,880 --> 00:20:10,680 Speaker 1: And what they want to do is they they're trying 345 00:20:10,680 --> 00:20:12,919 Speaker 1: to go after these better fairs that they see in 346 00:20:12,920 --> 00:20:16,440 Speaker 1: the US at Delta an American have captured over the 347 00:20:16,520 --> 00:20:20,000 Speaker 1: last decade or so, going into those smaller markets like 348 00:20:20,160 --> 00:20:23,760 Speaker 1: Rochester and connecting Rochester into a major hub. Because if 349 00:20:23,800 --> 00:20:27,000 Speaker 1: you're if your service, you know there's one or two 350 00:20:27,040 --> 00:20:31,479 Speaker 1: airlines servicing a small market, there's less competition for that flyer. 351 00:20:31,560 --> 00:20:35,240 Speaker 1: That flyer pays more money. United let that go to 352 00:20:35,280 --> 00:20:38,960 Speaker 1: their competitors, and now they want it back because US 353 00:20:39,119 --> 00:20:41,400 Speaker 1: fairs are better than the rest of the world. That's 354 00:20:41,400 --> 00:20:43,840 Speaker 1: going to create a market share battle that's going to 355 00:20:43,960 --> 00:20:47,679 Speaker 1: cost everybody. Uh, you know the fair price. You have 356 00:20:47,720 --> 00:20:50,520 Speaker 1: to push the fair price lower to fill those airplanes. 357 00:20:51,000 --> 00:20:54,200 Speaker 1: Thanks very much, George Ferguson, our senior aerospace, defense and 358 00:20:54,280 --> 00:21:12,280 Speaker 1: airlines analysts for Bloomberg Intelligence. It's a big day to day. Uh. 359 00:21:12,359 --> 00:21:16,000 Speaker 1: In currency markets, I'm looking at the dollar spot right 360 00:21:16,040 --> 00:21:21,480 Speaker 1: now at the weakest level since December fourteen, the euro 361 00:21:21,760 --> 00:21:26,040 Speaker 1: strengthening against the US dollar that has reached the strongest 362 00:21:26,240 --> 00:21:31,240 Speaker 1: levels since twent sixteen. Have we reached a tipping point? 363 00:21:31,680 --> 00:21:34,119 Speaker 1: Steve England are joins us now. He is head of 364 00:21:34,160 --> 00:21:37,680 Speaker 1: research and strategy at Raffiki Capital Management. He is also 365 00:21:38,200 --> 00:21:42,359 Speaker 1: a Bloomberg profit Stephen, thank you so much for being 366 00:21:42,520 --> 00:21:45,040 Speaker 1: with us. So are we are we at some kind 367 00:21:45,200 --> 00:21:49,119 Speaker 1: of threshold of a bigger move? Is this a capitulation? 368 00:21:49,440 --> 00:21:53,040 Speaker 1: Is this sort of the calm before a bigger storm? Look, 369 00:21:53,400 --> 00:21:57,199 Speaker 1: the euro has moved the dollars moved a certain amount, 370 00:21:57,520 --> 00:22:00,159 Speaker 1: and I think to some degree, the questions go to 371 00:22:00,240 --> 00:22:04,200 Speaker 1: be how the FED responds to this. Um. I think 372 00:22:04,240 --> 00:22:07,760 Speaker 1: if they show any kind of tolerance for inflation drifting 373 00:22:07,840 --> 00:22:10,840 Speaker 1: and you know, staying temporarily above two percent, the dollars 374 00:22:10,880 --> 00:22:14,280 Speaker 1: got much further to go. Um. You already see that 375 00:22:14,480 --> 00:22:17,399 Speaker 1: in that US real interest rates haven't gone up despite 376 00:22:17,440 --> 00:22:20,480 Speaker 1: the upward movement inflation expectations, so the market doesn't really 377 00:22:20,480 --> 00:22:23,919 Speaker 1: see that much hawkishness there. Um. You know, if they 378 00:22:24,000 --> 00:22:26,000 Speaker 1: come up and they say, look, two percent is two percent, 379 00:22:26,119 --> 00:22:28,879 Speaker 1: and that's our target, then then what probably see the 380 00:22:28,920 --> 00:22:31,240 Speaker 1: dollars stabilized within a couple of percent of where we 381 00:22:31,280 --> 00:22:35,639 Speaker 1: are right now. Stephen England, could you comment on China, 382 00:22:35,840 --> 00:22:41,240 Speaker 1: It's US treasury holdings and what you see for the future. Yeah, look, 383 00:22:41,280 --> 00:22:45,919 Speaker 1: you know, I think that the UM. I think conventional 384 00:22:45,960 --> 00:22:48,080 Speaker 1: thinking is that they have the US over a barrel 385 00:22:48,119 --> 00:22:51,440 Speaker 1: because they hold so many treasuries. Um. You know, I 386 00:22:51,800 --> 00:22:54,200 Speaker 1: think correct thinking is that their U S has them 387 00:22:54,200 --> 00:22:56,439 Speaker 1: over a barrel. Both ways. One is that they're very 388 00:22:56,520 --> 00:22:59,160 Speaker 1: much dependent on trade with the US. Obviously they ship 389 00:22:59,680 --> 00:23:01,840 Speaker 1: a lot more to the U S and the U 390 00:23:01,880 --> 00:23:04,000 Speaker 1: S ships to them. So if there's a full fledged 391 00:23:04,000 --> 00:23:06,440 Speaker 1: trade ward, there's a lot more Chinese factories and jobs 392 00:23:06,440 --> 00:23:08,879 Speaker 1: are going to be lost in US jobs. And the 393 00:23:08,960 --> 00:23:11,520 Speaker 1: second is that, yeah, they can fire a cannonball through 394 00:23:11,520 --> 00:23:13,760 Speaker 1: the U. S. Treasury market, but that cannonball is going 395 00:23:13,800 --> 00:23:16,119 Speaker 1: to do a boomerang and go right through them because 396 00:23:16,119 --> 00:23:17,880 Speaker 1: they own so many of it and it's really hard 397 00:23:17,920 --> 00:23:20,640 Speaker 1: to sell. So I think that right now they would 398 00:23:20,640 --> 00:23:22,600 Speaker 1: love to be in a different position, but they're they're 399 00:23:22,600 --> 00:23:25,120 Speaker 1: actually kind of on the weaker side. I think of 400 00:23:25,160 --> 00:23:28,199 Speaker 1: these uh, you know, trade issues. Okay, So having said that, 401 00:23:28,400 --> 00:23:31,400 Speaker 1: why is it that you continue that that it's possible 402 00:23:31,440 --> 00:23:34,679 Speaker 1: to find, you know, very smart people who give you 403 00:23:34,720 --> 00:23:37,040 Speaker 1: the opposite version. I mean, clearly they don't pay. They've 404 00:23:37,080 --> 00:23:41,800 Speaker 1: never played poker with some of that owes the money. Um. Yeah, look, 405 00:23:42,119 --> 00:23:45,160 Speaker 1: I I think, you know, it's hard to explain things 406 00:23:45,200 --> 00:23:47,159 Speaker 1: two people that you know to to make a market. 407 00:23:47,200 --> 00:23:49,239 Speaker 1: But there are different ways of approaching gets. And they 408 00:23:49,240 --> 00:23:51,760 Speaker 1: would say that the one advantage of China has not 409 00:23:51,800 --> 00:23:55,040 Speaker 1: all the stickering is that, um, they can pull together 410 00:23:55,240 --> 00:23:58,440 Speaker 1: an army of formal and informal lobbyists to argue their 411 00:23:58,480 --> 00:24:02,159 Speaker 1: case in Washington. Um, you know, it's much harder for 412 00:24:02,160 --> 00:24:05,320 Speaker 1: the US do that to do that in Beijing. So, um, 413 00:24:05,400 --> 00:24:08,600 Speaker 1: they may not have the best position, but they probably 414 00:24:08,800 --> 00:24:12,399 Speaker 1: can handle their position better than the US can, at 415 00:24:12,480 --> 00:24:17,000 Speaker 1: least in you know, the public sphere. So Stephen uh 416 00:24:17,359 --> 00:24:21,040 Speaker 1: Leaving China aside, the US Treasury Department is going to 417 00:24:21,119 --> 00:24:26,280 Speaker 1: sell treasuries in larger chunks throughout the year. This year. 418 00:24:26,320 --> 00:24:28,679 Speaker 1: That is the expectation of a lot of people. The 419 00:24:28,760 --> 00:24:31,320 Speaker 1: US has to fund a deficit that is widely expected 420 00:24:31,359 --> 00:24:34,240 Speaker 1: to increase by a trillion dollars or more over the 421 00:24:34,280 --> 00:24:39,080 Speaker 1: next decade. Um. I'm looking at a ten year treasury 422 00:24:39,160 --> 00:24:42,400 Speaker 1: yield that is the highest in a very long time. 423 00:24:42,440 --> 00:24:45,320 Speaker 1: I'm looking at a German tenure yield also breaching the 424 00:24:45,400 --> 00:24:48,600 Speaker 1: highest levels and years. How high are we headed with 425 00:24:48,680 --> 00:24:51,920 Speaker 1: the US tenure yield? And what's going to be sort 426 00:24:51,960 --> 00:24:55,080 Speaker 1: of the trajectory here? Is it going to be at 427 00:24:55,119 --> 00:24:58,680 Speaker 1: some point a steady upward climb or are we going 428 00:24:58,720 --> 00:25:02,119 Speaker 1: to see kind of a choppy give some takes, some 429 00:25:02,240 --> 00:25:07,000 Speaker 1: give some takes. Well, look, you know, in wallets in motion, 430 00:25:07,040 --> 00:25:09,800 Speaker 1: it's always choppy in retrospect. You know, you can look 431 00:25:09,800 --> 00:25:11,600 Speaker 1: on the chart and state that was a pretty straight line. 432 00:25:12,520 --> 00:25:15,040 Speaker 1: The U S nominal GDP growth is going to be 433 00:25:15,119 --> 00:25:18,280 Speaker 1: somewhere between four and a half and five percent UH 434 00:25:18,320 --> 00:25:22,639 Speaker 1: this year. Treasuries running to sixty five by historical metrics 435 00:25:22,680 --> 00:25:26,879 Speaker 1: are are pretty low. And we've spent the last you know, 436 00:25:27,080 --> 00:25:30,080 Speaker 1: six or seven years telling ourselves that we're in a 437 00:25:30,119 --> 00:25:32,399 Speaker 1: different world that you know, the the the phrase the 438 00:25:32,600 --> 00:25:36,400 Speaker 1: FED talks about our star real insuri strate equity real 439 00:25:36,440 --> 00:25:40,000 Speaker 1: in strates or zero UM. Now it looks as if 440 00:25:40,040 --> 00:25:42,120 Speaker 1: we're kind of getting back into a world that we're 441 00:25:42,119 --> 00:25:45,359 Speaker 1: familiar with, where you know, we've become slightly more worried 442 00:25:45,359 --> 00:25:49,840 Speaker 1: about inflations and disinflation, and where um confidence that investment 443 00:25:49,920 --> 00:25:52,200 Speaker 1: is going to pick up housing is relatively strong. That's 444 00:25:52,240 --> 00:25:54,639 Speaker 1: back there. So yeah, upward pressure on rates, I think 445 00:25:54,680 --> 00:25:56,800 Speaker 1: it is still going to be there. To six five 446 00:25:57,320 --> 00:25:59,960 Speaker 1: is not that high relative to where we are. Steve 447 00:26:00,000 --> 00:26:03,200 Speaker 1: in Englander just quickly, do you think that a falling 448 00:26:03,680 --> 00:26:05,639 Speaker 1: the fallen value of the US dollar is going to 449 00:26:05,680 --> 00:26:09,639 Speaker 1: help the US economy marginally? I I look, you know, 450 00:26:09,680 --> 00:26:12,440 Speaker 1: the sad fact of the last ten years or twenty 451 00:26:12,480 --> 00:26:14,639 Speaker 1: years is that everybody talks about the currency, but the 452 00:26:14,680 --> 00:26:19,320 Speaker 1: actual impact on activity is low. Impact on earnings is 453 00:26:19,400 --> 00:26:22,720 Speaker 1: much higher because of translation effects. But how many jobs 454 00:26:22,720 --> 00:26:25,639 Speaker 1: a week er dollar creates I say it's pretty minimal, 455 00:26:26,080 --> 00:26:28,959 Speaker 1: So no effect in terms of things. Also, like trade policy, 456 00:26:29,000 --> 00:26:32,119 Speaker 1: you think that's going to help the economy, No small effect, right, 457 00:26:32,200 --> 00:26:34,800 Speaker 1: the you know ten percent appreciations with dollars, like you 458 00:26:34,880 --> 00:26:38,920 Speaker 1: put a ten percent subsidy to exports, ten percent tariffy 459 00:26:38,920 --> 00:26:41,880 Speaker 1: and imports. It matters, but it just doesn't matter that much, 460 00:26:42,119 --> 00:26:44,399 Speaker 1: all right. Thanks very much for helping us understand that. 461 00:26:44,440 --> 00:26:46,840 Speaker 1: Steve england Or is the head of research and Strategy 462 00:26:46,880 --> 00:26:51,720 Speaker 1: at Rafiki Capital. He is also a Bloomberg profit. In Bloomberg, 463 00:26:51,760 --> 00:26:56,280 Speaker 1: profits are professionals offering actionable insights on markets, the economy, 464 00:26:56,320 --> 00:26:59,760 Speaker 1: and monetary policy, and contributors may have a stake in 465 00:26:59,840 --> 00:27:06,840 Speaker 1: the areas about which they write. Thanks for listening to 466 00:27:06,880 --> 00:27:09,760 Speaker 1: the Bloomberg p m L podcast. You can subscribe and 467 00:27:09,800 --> 00:27:13,760 Speaker 1: listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast 468 00:27:13,840 --> 00:27:17,320 Speaker 1: platform you prefer. I'm pim Fox. I'm on Twitter at 469 00:27:17,480 --> 00:27:20,840 Speaker 1: pim Fox. I'm on Twitter at Lisa Abramo. It's one 470 00:27:21,080 --> 00:27:23,800 Speaker 1: before the podcast. You can always catch us worldwide on 471 00:27:23,840 --> 00:27:24,680 Speaker 1: Bloomberg Radio.