Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Farrell and Lisa A. Brawnowitz. Daily we bring
Speaker 1: you insight from the best and economics, finance, investment, and
Speaker 1: international relations. Find Bloomberg Surveillance on Apple Podcast, SoundCloud, Bloomberg
Speaker 1: dot Com, and of course on the Bloomberg terminal. John
Speaker 1: Farrell and I are committed to a global stance as
Speaker 1: we go to the World Cup and now representing Denmark
Speaker 1: who is in the World Cup. Torson Slock joins us.
Speaker 1: He's chief economist at Apollo Global Management. Far more than
Speaker 1: that his leadership in economics with Peter Hooper at Deutsche
Speaker 1: Bank over the years and going over to the dark side.
Speaker 1: What what was it change like going Deutsche Bank to Apollo?
Speaker 1: I mean expect on a given Monday when you walked
Speaker 1: in the door to Apollo from a major bank with
Speaker 1: your majors sess there, what was that like? Well, my
Speaker 1: job is to watch the economic data and watch financial
Speaker 1: markets and with that backroup, that's really the same thing
Speaker 1: I do. Well talk about inflation, unemployment and the things
Speaker 1: that you guys talk about. What's going on? Things getting better?
Speaker 1: Are they getting worse. Are the central banks going to
Speaker 1: react differently? The job in is really very similar, very good.
Speaker 1: How how important is the next inflation data after the
Speaker 1: festivities we saw yesterday? I think it's very important because
Speaker 1: what I think is the key issue at the moment
Speaker 1: is the sequencing of hitting the fits dual mandate. So
Speaker 1: what that means that is, yesterday we've got confirmation that
Speaker 1: we have seen now inflation come down from the peak
Speaker 1: in June without an increase in the unemployment rate. That's
Speaker 1: of course telling you that we might actually have a
Speaker 1: scenario where we could have a soft landing because we
Speaker 1: are now seeing inflation begin to come down. Admittedly seven
Speaker 1: point seven is still very elevated, but at least it's
Speaker 1: coming down without the fear increasing the infloma rate because
Speaker 1: the fits dual mandate and Jaypal has been very clear
Speaker 1: about this, we need to see a softening the labor market,
Speaker 1: and we have really not seen any meaning softening. So
Speaker 1: the sequencing happens to be in the right way for markets.
Speaker 1: Name first, inflation is coming down without even seeing an
Speaker 1: increase in the plan. Let's explore that further. So we
Speaker 1: may have seen peak inflation year over a year where's
Speaker 1: the bottom out at next year. So obviously there's a
Speaker 1: very long road. If you compare with what happened in
Speaker 1: the mid nineteen seventies, it took two years in nineteen
Speaker 1: seventy four to get inflation back from the peak to
Speaker 1: where it was before. So if it also takes two years,
Speaker 1: then of course we still have very long road ahead
Speaker 1: of us, and that of course could be associated with
Speaker 1: all kinds of sharks, including of course not only do
Speaker 1: your political sharks, but also to commodity prices and other
Speaker 1: parts of the CPI conplat This is hard to predictive, course,
Speaker 1: but it is. There's something about the nature, the characteristic
Speaker 1: of this inflation story that means it will be difficult
Speaker 1: to go back to the low inflation of the previous
Speaker 1: right game. So there's a number of arguments why you
Speaker 1: could have inflation potentially higher in the long run. First
Speaker 1: of all, you have, of course demographics and immigration that
Speaker 1: looks quite different now you had very little immigration during
Speaker 1: the pandemic, and also the demographics also suggesting that we
Speaker 1: could have a more permanent upward push on inflation. You
Speaker 1: also have that deglobalization that if there is less globalization
Speaker 1: in the future. That's also going to imply that this
Speaker 1: stuff that we buy and to installs and that we
Speaker 1: purchase will of course be more expensive. And finally, technology
Speaker 1: might not be contributing with as much productivity growth as
Speaker 1: it has not historically. So that is all arguing for
Speaker 1: that might be some structural pressures, but it is important
Speaker 1: that the reason why inflation is high at the moment
Speaker 1: it is probably also very importantly for cychnical reasons. So yes,
Speaker 1: as you're saying, John, we need to get down with
Speaker 1: inflation towards two. But it is certainly a long road
Speaker 1: we have ahead of us. Do you aggregate your economic
Speaker 1: analysis or as you mentioned technology, are we now a
Speaker 1: polarized America, a polarized Denmark, a polarized world of the
Speaker 1: technology haves and the technology have not. Well, the main
Speaker 1: implication of that, of course is what an impact has
Speaker 1: on inflation. So of course, one very important debate is
Speaker 1: when you invest, for example, in renewable energy, that's of
Speaker 1: course very big debate about is that inflation area disinflasionary
Speaker 1: because all investment, all capic spending, should be disinflationary. So
Speaker 1: in that sense, there's some very important differences across the
Speaker 1: Atlanting Ocean. In terms of what is the investment outlook
Speaker 1: for the US relative to Euros. Capital deepening dominic customer
Speaker 1: missour has been very good. And let's the idea that
Speaker 1: there's some things going on post pandemic, supply side, demand
Speaker 1: side and all that. But are we seeing a capital
Speaker 1: deepening that we're I would say it's invisible almost right now. Well,
Speaker 1: at least we're seeing very significant capital deepening in the
Speaker 1: interes transition, and that's of course very important because that's
Speaker 1: ultimately the goal with that is to lower energy prices,
Speaker 1: which also really should be disinflationary for inflation. But it's
Speaker 1: true that this is certainly a very important team also
Speaker 1: for the long run outlook for inflation. But I still
Speaker 1: say that in the near term the inflation outlook is
Speaker 1: mainly driven by the cyclical drivers of inflation, naming the
Speaker 1: risk that the US economy is overheating. And that's of
Speaker 1: course the whole reason why they fed is raising rates
Speaker 1: and except to try to cool things down, and they
Speaker 1: haven't really been very successful at cooling things down. They
Speaker 1: have cooled down the good sector or the interest rate
Speaker 1: sensitive components of GDP, but that's only about GDP, the
Speaker 1: service sector, airlines, packed hotels, restaurants, concerts, spawning events, It's
Speaker 1: all packed everywhere. The Shouter conversation a big pace of
Speaker 1: this as well. You mentioned the sequencing. Can you compare
Speaker 1: and contrast the sequencing you're talking about in America and
Speaker 1: what you're saying to what you're also seeing developing Europe
Speaker 1: because we both sent a different story there. Yeah, very
Speaker 1: that's very important because in Europe you're actually seeing inflasion
Speaker 1: is still going up, but economic activity is starting to
Speaker 1: slow down. In fact, if you look at your Bloomberg
Speaker 1: screency it will see, of course contentious expects that both
Speaker 1: Europe and German in particular will be in a recession
Speaker 1: next year. So the conclusion is, of course that if
Speaker 1: you have a very different situation in Europe where it's
Speaker 1: just going to take a little bit longer before you
Speaker 1: begin to see inflation come down, then it becomes a
Speaker 1: debate about, well, is it the case that inflation is
Speaker 1: going to stay higher for longer in the US or
Speaker 1: in the U Area and stacks flation in Europe base case. Now,
Speaker 1: at least today it looks like Europe is facing a
Speaker 1: lot more head winds than the US, because Europe unfortunately
Speaker 1: is facing inflasion that's a higher levels. There are some
Speaker 1: very important issues about that. The composition of inflation in
Speaker 1: Europe consists more of energy, about two thirds of inflation
Speaker 1: in Europe's energy and only a third in the US.
Speaker 1: So if energy prices once we get to the other
Speaker 1: side of February two thousand twenty three, once we get
Speaker 1: to US out of Russia's invasion of Ukraine, the twelve
Speaker 1: month window will begin to no longer take into account
Speaker 1: the big spike that we had an enterprise effects can
Speaker 1: That's exactly when you begin to see European inflation potentially
Speaker 1: coming down a lot harder. So that's why the rate
Speaker 1: space as of a lot of debate of course about
Speaker 1: bonds attractive at these levels if European inflation is potentially
Speaker 1: coming down very very quickly once we get into the
Speaker 1: second quarter of next year. So are you, in summary
Speaker 1: an optimistic tone for Apollo management? Are you telling them
Speaker 1: that transactions can be a benefit now? Are you telling
Speaker 1: them to build cash, to use cash, to keep cash.
Speaker 1: Whether the way I look at it is that in
Speaker 1: March of two thousand twenty the window of opportunity in
Speaker 1: my view was only open for about two weeks, the
Speaker 1: window of opportunity were doing things. At the moment, it
Speaker 1: is probably more like two years, maybe even three. In
Speaker 1: other words, there's a lot of distress. How you markets,
Speaker 1: I sent shut down? Capital Markets, I sent you to
Speaker 1: shut down. And that's where private equa in private capital,
Speaker 1: of course is playing a very very important role as stabilizer,
Speaker 1: stepping in and doing things. Where's the paint? It's the
Speaker 1: question we've been asking around this table and the price
Speaker 1: that we're gonna pay for and to basis points of
Speaker 1: tiening in eight months, is it really just the move
Speaker 1: on SMPT, moving on ASTAC. Well, unless you know the
Speaker 1: debate about all his long and variable lacks. I mean,
Speaker 1: it's still not clear to me personally what the exactly
Speaker 1: that means. But at this point you still say, okay, well,
Speaker 1: where are these long and variable legs? We are now well,
Speaker 1: depending on how you look at it, but we're at
Speaker 1: least six nine months into these long and variable lects
Speaker 1: and we really really haven't seen much impact yet. So
Speaker 1: absolutely the pain he really here is that if inflation
Speaker 1: does not come down, the FED will have to go
Speaker 1: and potentially go a lot more. Do you follow Denmark football? Oh?
Speaker 1: Absolutely I have. I should have warned my red shirt.
Speaker 1: It's a great story. I mean, this guy, Christian Ericson
Speaker 1: had a heart attack. He's come back and Denmark has
Speaker 1: whipped France a number of times and one of maybe
Speaker 1: the most exciting pairing. Such a classy player, and he's
Speaker 1: one of the best players on team, and he plays
Speaker 1: so well today. I love him. He's great. I mean,
Speaker 1: it's just, folks, this is really something. This guy John
Speaker 1: and I'm not exaggerating. He literally almost died on the field,
Speaker 1: not at all, that's not an exaggeration. Came very close,
Speaker 1: and it's great to see him back on the field.
Speaker 1: And they're in the bracket with France, who they've already
Speaker 1: shown they can beat. I mean, it's just that's the
Speaker 1: one game teach you've got on this. I'm working. I'm working, folks.
Speaker 1: I've got my cliff notes out. I've been discussing just
Speaker 1: how much things are going to shut down in Europe
Speaker 1: on a trading flows and how much market volume is
Speaker 1: going to roll over going into Christmas. Well, Denmark is
Speaker 1: being friends on a Saturday. There's a Thanksgiving Saturday and
Speaker 1: Williamsburg watching with all my buddies. Is that what you're
Speaker 1: gonna do. It's a special bar for Denmark. We're going
Speaker 1: to get serveret toss and this was awesome. Thank you,
Speaker 1: sir Torsten Slock. They have a polite management. Let's go
Speaker 1: back to December eighteen. One of the greatest calls in
Speaker 1: equity market strategy the modern times Benjamin Laidler of HSBC
Speaker 1: to shut up the bottoms in. He absolutely nailed it
Speaker 1: with E Toro Today and their global market strategists. He
Speaker 1: has published this morning the bottom is in, then, Laidler,
Speaker 1: is this like Christmas Eve of two thousand eighteen. Yeah,
Speaker 1: it is. I do think the bottoms in um for
Speaker 1: a lot of reasons. I think earning to hang in there.
Speaker 1: I think that sentiments very poor, evaluations are low. We've
Speaker 1: got wild cards like China improving, and now crucially the
Speaker 1: inflations fever is sort of beginning to break and that's
Speaker 1: giving some visibility on the top of the cycle. That's
Speaker 1: not enough to get us off on the next boat market,
Speaker 1: but it's absolutely enough to tell us that the bottom
Speaker 1: is in. So I think that's a similarity. With the
Speaker 1: difference is that then it was a v shaped recovery.
Speaker 1: This I think it's going to be more like a you.
Speaker 1: But this is absolutely the necessary first step. And you know,
Speaker 1: we learned a lot of things yesterday. One of them
Speaker 1: was you've got to be in it to win it, um,
Speaker 1: So I do think investors need to be in this market. Ben,
Speaker 1: What is the character or the human behavior of those
Speaker 1: loaded in cash? There's a lot of cash out there
Speaker 1: right now. I have prospectives portfolios of five percent four percent,
Speaker 1: who are in seven percent cash, et cetera. How all
Speaker 1: cash respond? Yeah, tough to criticize that. I mean, there's
Speaker 1: been a historic year for the failure of diversification. You know,
Speaker 1: basically nothing's worked apart from cash. So I'm sympathetic. But
Speaker 1: we're going into the end of the year. Historically the
Speaker 1: best seasonality of the year. You can pour cold water
Speaker 1: on that, you know many times, but like, don't think
Speaker 1: you can this year, after such a historically bad year
Speaker 1: across all asset classes, there was so much cash on
Speaker 1: the sidelines and looking forward to a less bad three
Speaker 1: I think those are the ingredients for Christmas continuing to
Speaker 1: come early. And then there were some curious moves yesterday
Speaker 1: as well. A lot of people picking on say a
Speaker 1: company called Carvana, which operates an online platform for bank
Speaker 1: used cars running more than on a CPI print, the
Speaker 1: show to use car prices absolutely plunging. So Ben, can
Speaker 1: you help me understand the moves that I should get
Speaker 1: on the train with and the ones I should avoid. Yeah,
Speaker 1: I think that's a reflection of evaluation relief, blower bond yields,
Speaker 1: and just you know, to my just how aggressively underweight
Speaker 1: a lot of people are. So you know, when you
Speaker 1: get the biggest bank to your back, where do you
Speaker 1: get the most leaveries of stuff that collapse the most?
Speaker 1: Were evaluations are being under the most pressure. That's why
Speaker 1: you saw some relief from yesterday. That doesn't mean you
Speaker 1: should chase it. I still think, you know, this is
Speaker 1: a market where you want to be invested, but you
Speaker 1: want to be reasonably defensive. It's gonna be two steps forward,
Speaker 1: one step back. I mean, we may have seen the
Speaker 1: peak for inflation, but I do think it's going to
Speaker 1: be a it's going to be a bump pieces on
Speaker 1: march down. Um, so you know, staying those defensives and
Speaker 1: as we get some more validation that inflation just continues
Speaker 1: to come down and we get to the top of
Speaker 1: that red cycle and begin to look to sort of
Speaker 1: cuts later in twenty three, you just keep adding risk,
Speaker 1: and risk is probably bigger tech in traditional rate dentatives
Speaker 1: like like real estate. I'm not convinced by um the
Speaker 1: sort of disruptive tech names you know at this point,
Speaker 1: even though that's what led the rally yesterday. Let's talk
Speaker 1: about leadership. You touched on it. You're calling the Santa
Speaker 1: rally two weeks before Thanksgiving, Christmas has come early. Let's
Speaker 1: build on that the tech names that you do want
Speaker 1: to own then, and where you're starting to be encouraged
Speaker 1: by some of the work that's being done by the
Speaker 1: c suite. We've seen cuts at places like Meta. We
Speaker 1: saw a report from the Journal yesterday that Amazon was
Speaker 1: getting in on the cuss cunning act as well. Where
Speaker 1: do you want to be? Where do you want to avoid?
Speaker 1: So I think it's a bit of a barber as
Speaker 1: I say, right now, those traditionals are value names. I
Speaker 1: think they continue to the continue to do well right
Speaker 1: both on the defensive and sort of healthcare names, but
Speaker 1: also some of these sort of depressed um some of
Speaker 1: these depressed banks but I think looking forward, I think
Speaker 1: next year is gonna be very different to this year.
Speaker 1: This year was all about um, massive evaluation, de ratings
Speaker 1: and earning holding reasonably firm. I think next year is
Speaker 1: the opposite. I think onlying is gonna come under more
Speaker 1: pressure and you're gonna get some and you're gonna get
Speaker 1: some evaluation relief. I think that's a much better environment
Speaker 1: for for big tech with these dominant market shows, these
Speaker 1: big margins. He's strong cash for portress balance sheet and
Speaker 1: evaluations that will already come down a long way. So
Speaker 1: Ben find a question. Then you're calling for ray cuts
Speaker 1: in twenty three, what's behind that call? Right cuts in
Speaker 1: the end of twenty three, I think just think markets
Speaker 1: are going to start discounting that you know, reasonably early.
Speaker 1: I think every inflation lead indicated, there's not a single
Speaker 1: inflation lead indicator. There's not meaningful office hides at this
Speaker 1: point across housing, labor markets, car prices, inflation expectation to
Speaker 1: community prices. I think that's going to continue to move
Speaker 1: in our direction through through three. That's gonna take a
Speaker 1: lot of the pressure off the bread um, and we
Speaker 1: may get that. I think the question is do we
Speaker 1: get how quickly do we get those rate cuts. I
Speaker 1: think we're looking for an extended pause as long as
Speaker 1: inflation numbers keep drifting down. I think the market is
Speaker 1: going to start discounting cuts later in three reasonly early.
Speaker 1: A better week for Ben later of et Ben. Thank
Speaker 1: you sir as always, this is a joy and we
Speaker 1: did not set ourselves up with a massive market move
Speaker 1: to have in the studios. Also, Lignos Global had of
Speaker 1: Foreign Exchange Strategy at the Royal Bank of Canada RBC.
Speaker 1: She attends from Europe, where she is definitive and the
Speaker 1: linkage of ECB dynamics with the foreign exchange market. Let's
Speaker 1: start right there, because I've been I've had a real
Speaker 1: dearth of euro analysis. What is your call and euro
Speaker 1: given the last twenty four hours play, so it's a
Speaker 1: really interesting moment and actually slightly painful for me because
Speaker 1: I went long You're a dollar a couple of weeks ago,
Speaker 1: got stopped on a little move lower and now pretty
Speaker 1: neutral and watching this rally. But I think yesterday's cp
Speaker 1: I actually gave a lot of people a green light
Speaker 1: to do something they wanted to do already. For me,
Speaker 1: what was striking was listening to our head of spot
Speaker 1: in Europe and a head of spot in North America
Speaker 1: ahead of the number, talking about what they were going
Speaker 1: to do. I've got to say, the difference in opinion
Speaker 1: between Europe and the US is incredible. Shaped it. People
Speaker 1: in Europe really think we're near the end, right, and
Speaker 1: they've been waiting to play that, and this CPI was
Speaker 1: kind of hanging over them. I think even if we'd
Speaker 1: had an inline number, we would have seen people selling
Speaker 1: US d Is that because the news has been better
Speaker 1: in Europe relative to expectations? What is it not at all?
Speaker 1: I think people are just so itching to see the
Speaker 1: end of this fed hiking cycle. And maybe there's just
Speaker 1: more doom and gloom. Maybe there's just more pessimism about
Speaker 1: the state of the U. S economy than I think
Speaker 1: you feel here right here in New York City. But
Speaker 1: it's the difference in opinion between Europe and the US
Speaker 1: at the moment I think is the biggest I've ever seen.
Speaker 1: You mentioned earlier you were stopped out, which is jargoning
Speaker 1: for some people. You set up a trade, you believe
Speaker 1: in stronger euro it comes back you have to you're
Speaker 1: forced out of your trade essentially, and you're on the sidelines.
Speaker 1: How much of the market is on the sidelines for
Speaker 1: this week dollar moment exactly? I think there'll be a
Speaker 1: lot of people in that position, and heading into your end,
Speaker 1: people who have had an incredibly strong performance on the
Speaker 1: back of being long dollars are now scrambling thinking okay,
Speaker 1: do I take it off? I had a lot of
Speaker 1: conviction in this trade. A lot of people I spoke
Speaker 1: to earlier in the week were convinced we go higher
Speaker 1: in three and I think there's a lot of fomo
Speaker 1: in the market right now, people whether in the equity
Speaker 1: market on trying to get how does formal express itself
Speaker 1: in for an exchange? I think our viewers and listeners like, really,
Speaker 1: what our lunch is longer in London when that happens,
Speaker 1: you know, more than anything, it's the fact that effects
Speaker 1: is so liquid, you can put on big positions quickly,
Speaker 1: and I think it might be an easier way for
Speaker 1: a lot of people to reposition their portfolios. Hence we've
Speaker 1: seen this interesting when you did that at Clarages a
Speaker 1: couple of years ago, you were lunch of Clarages, you
Speaker 1: put on a sterling trade. How would you reset this morning. So, look,
Speaker 1: the trade I've been looking at, which I actually really like,
Speaker 1: is across long euro sterling, so buying the euros selling
Speaker 1: the pound. Not because I'm from the UK and just
Speaker 1: very gloomy about our prospects, but I think you've kind
Speaker 1: of got to strip the dollar out of the equation.
Speaker 1: And at the moment we still have another CPI print
Speaker 1: before the December FOMC. We had a bit of a
Speaker 1: head fake earlier this year August September cp I. So
Speaker 1: I've got to be honest, it's a great move if
Speaker 1: you caught it, and had I been in two weeks ago,
Speaker 1: I would be writing it now today. I think it's
Speaker 1: a little harder to buy euro dollar at these levels.
Speaker 1: I like longer a stuff. So is there a positioning
Speaker 1: stories that fundamentals on the euro side? He said, it
Speaker 1: wasn't just pessimism on the sterling side. What is it?
Speaker 1: So what I find really interesting is all the investors
Speaker 1: I speak to, nobody is actually positive on the Euro.
Speaker 1: People might be bullish euro dollar kers, they're barish on
Speaker 1: the US dollar, but nobody is positive on the urine.
Speaker 1: It's not that I think cyclically Europe is looking great
Speaker 1: a lot of people worry about three and the winter
Speaker 1: there how we're going to get through with gas inventories.
Speaker 1: What I think is really interesting is European investors potentially
Speaker 1: repatriating money back home. And if we start to see
Speaker 1: that in size, you could get a lot of euro
Speaker 1: buying from that domestic shift in assets. Where's the e
Speaker 1: M trade right now? Where's the opportunity for a number
Speaker 1: of big figures profit in the e M. Well, you
Speaker 1: touched on crewed earlier, Tom, and I think we're seeing
Speaker 1: some really interesting mops and commodity markets and the wait, wait, wait,
Speaker 1: wait stop. What she's saying there, folks, is she has
Speaker 1: Heleima Croft to help her out here. Link Elsa and
Speaker 1: Helma together and the Helenma Croft oil trade. What do
Speaker 1: you do in foreign exchange? Exactly? So we really like
Speaker 1: the Mexican pace. I have liked it all year. Still
Speaker 1: think that has a bit further to run. Brazil's tricky
Speaker 1: at the moment, given the finance minister from the World Cup.
Speaker 1: I mean, Brazil's are real uncertainty in the World Cup,
Speaker 1: John Roll, Let's do the World Cup right now. The
Speaker 1: heartbeat of foreign exchange worldwide. City of London. What on
Speaker 1: earth is going to happen to volumes in London in
Speaker 1: a couple of weeks off the cliff, you know, heading
Speaker 1: into Christmas it always gets a little bit quieter. Imagine
Speaker 1: how much worse it's going to get. Well, we'll have
Speaker 1: to wait and see. T K Nuts Dollar Mexico twenty
Speaker 1: I remember when it was a parameter for American politics
Speaker 1: nineteen point four three. How many big figures can you
Speaker 1: make your strong Mexico? Well, I think what's interesting about
Speaker 1: Mexico is really the carry that you pick up, and
Speaker 1: I think that's why a lot of people have bought it.
Speaker 1: It's not so much the spot move, but it's the
Speaker 1: fact that you get that very mustive really guild, particularly
Speaker 1: if we're now pricing in lower yields for the US.
Speaker 1: I know you've been traveling, but we'd be thrilled to
Speaker 1: have Yan Dooha for her World Cup covers. I think
Speaker 1: it is all over it as well. Helma's Oh, here's
Speaker 1: a Lina calling right now. Lona Kavassin is down't yeah,
Speaker 1: you know, we could do an RBC obviously. That is
Speaker 1: the same with Tina Fordham, founder and geopolitical strategist Fordham
Speaker 1: global foresight with some serious abilities, including support of the
Speaker 1: University of Cambridge foreign policy effort. Why is she on it?
Speaker 1: It's real simple. Tina Fordham wrote a blistering op ed
Speaker 1: in the Financial Times about the future of America. Tina,
Speaker 1: you do say, use parenthetically from a removed distance, the
Speaker 1: phrase civil war. But what you say is this could
Speaker 1: be a take no prisoners Congress. What do you mean
Speaker 1: that a Republican Congress will be take no prisoners? Well,
Speaker 1: that's me trying to be diplomatic, tom Um. But in
Speaker 1: in this blistering as you called it, op ed piece
Speaker 1: for the FT Alphabel, what I really wanted to do
Speaker 1: was um poke a little bit at um, particularly u
Speaker 1: S investors complacency about a divided Congress being kind of
Speaker 1: reflexively a good thing. We had Elon Musk coming out
Speaker 1: and saying that, and people resorting to what I consider
Speaker 1: some pretty sloppy shortcuts in our thinking when the Republic
Speaker 1: as we know it really faces some serious pressures. Now,
Speaker 1: my peace came out the day of the mid terms,
Speaker 1: and since then, um, the less qualified contingent, shall we say,
Speaker 1: they called this candidate quality in fact in the in
Speaker 1: the parlance um didn't perform very well, and I think
Speaker 1: a lot of the those with fire in their bellies
Speaker 1: have been somewhat chastened. But we still have a number
Speaker 1: of underlying indicators in the US support for political violence,
Speaker 1: you know, the polarization that we've all just sort of
Speaker 1: got used to that are alarming. But I think that
Speaker 1: there were some real reasons for optimism coming out to
Speaker 1: the Air Against the political Air Against led by Tim Keene.
Speaker 1: As it were a two party system, we have learned
Speaker 1: in the last couple of days that were a four
Speaker 1: party system of extremists and two moderate parties. You agree
Speaker 1: with that that it's a four party America. Well, our
Speaker 1: structure is built for a two party system, but within
Speaker 1: each of those parties we have contingents UM which may
Speaker 1: come into any kind of agreement on anything extremely difficult
Speaker 1: on the so called Maga Republicans UM didn't do as
Speaker 1: well as hoped, but they're still hugely influential. And I
Speaker 1: suppose what I'm thinking about the most right now, because
Speaker 1: it's that time of year when we have to do
Speaker 1: the the year ahead outlook is who's going to run America?
Speaker 1: And from where I sit here in London and in Europe.
Speaker 1: What does that mean for the for the future of
Speaker 1: the international system? Um, Trump there is less likely to
Speaker 1: be to return to the White House. I can tell
Speaker 1: you that people here really breathed a sigh of relief.
Speaker 1: But the race is wide open, um, and that you
Speaker 1: know that that is a new variable, I suppose one
Speaker 1: that we hadn't really got our heads around. Let's turn
Speaker 1: to the G twenty and talk about the international story
Speaker 1: the president with some renewed confidence. Some people might say,
Speaker 1: after this week, how do you think that's going to
Speaker 1: play out next week? Well, Biden is entitled I think
Speaker 1: to have a bit of swagger in his step. I
Speaker 1: know that's an unfashionable thing to say, but you know,
Speaker 1: I'm all about providing an analytical framework. Um. You know,
Speaker 1: the president's party normally gets hammered in mid terms, and
Speaker 1: Democrats performed better than anybody thought. Um. Personally, I'm not
Speaker 1: excited about the fact that we have such an elderly leadership.
Speaker 1: I think a gerontocracy for a country that's still quite
Speaker 1: young is worrying. But when Biden goes to to the
Speaker 1: G twenty, Um, you know Putin is going to to
Speaker 1: be there by by a zoom. I think that's remarkable,
Speaker 1: a remarkable change from a few months ago when we
Speaker 1: were talking about, you know, with genuine concern whether UM
Speaker 1: Beijing's announcement in February of a friendship without limits with
Speaker 1: Russia was going to be a major change to the
Speaker 1: weights in the international system. UM China is not UM
Speaker 1: using any of its global political capital to help Russia.
Speaker 1: Russia finds itself marginalized, and we can when we look
Speaker 1: at these kind of big macro dynamic mixed UM. India
Speaker 1: also has you know, not hesitated to be critical to
Speaker 1: use its vote at the u N and Saudi which
Speaker 1: had aligned with Russia, or at least that's how it
Speaker 1: was perceived at OPEC, UM seems to be trying to
Speaker 1: to kind of adjust there. So you know, we're looking
Speaker 1: at a shift in the planetary weights in the global
Speaker 1: solar system and a much more marginalized role for for Russia,
Speaker 1: which has been a spoiler UM really since since the
Speaker 1: collapse of the Soviet Union, since Putin came to power
Speaker 1: in two thousand. Briefly, if you can, we understand now
Speaker 1: it's been confirmed a meeting between the President of the
Speaker 1: United States and the Chinese leader on Monday ahead of
Speaker 1: the G twenty. We often talk about deliverables. Are there
Speaker 1: any gun into this? I don't think we should expect deliverables. Um,
Speaker 1: this is a time, you know, I've just talked about
Speaker 1: some of the tensions in the relationship. Biden goes not
Speaker 1: as as somebody who you know was um defeated in
Speaker 1: mid terms, but as someone who I think intends to
Speaker 1: to run again. Um. He has cloud and the U
Speaker 1: S and China on climate and particularly it was an
Speaker 1: area of cooperation. So I think they're gonna want to
Speaker 1: find a bottom to you know, this relationship, you know,
Speaker 1: find a floor, uh, and move on from there. China
Speaker 1: is not happy about the US cramping its style on
Speaker 1: on tech, but I think, you know, there's the US
Speaker 1: has stood its ground in a way that commands more
Speaker 1: respect on the world stage, particularly after the fiasco, the
Speaker 1: withdrawal in Afghanistan, right, that was a huge blow. Tina.
Speaker 1: Thank you, Tina Affordham Global Foresight. This is the Bloomberg
Speaker 1: Surveillance Podcast. Thanks for listening. Join us live weekdays from
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Speaker 1: Tom Keene, and this is Bloomberg.