1 00:00:05,120 --> 00:00:07,119 Speaker 1: This is the Bloomberg Surveillance Podcast. 2 00:00:07,160 --> 00:00:11,080 Speaker 2: I'm Tom Keene, along with Jonathan Farrell and Lisa Abramowitz. 3 00:00:11,280 --> 00:00:15,760 Speaker 2: Join us each day for insight from the best an economics, geopolitics, 4 00:00:15,760 --> 00:00:20,720 Speaker 2: finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, 5 00:00:20,960 --> 00:00:25,439 Speaker 2: Spotify and anywhere you get your podcasts, and always on 6 00:00:25,520 --> 00:00:29,880 Speaker 2: Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business App. 7 00:00:30,080 --> 00:00:31,880 Speaker 2: A huge debate, and of course our theme on this 8 00:00:31,960 --> 00:00:34,680 Speaker 2: Monday morning is the many narratives that are out there. 9 00:00:34,800 --> 00:00:38,519 Speaker 2: Stephen Major is Global head of Fixed Income Research at HSBC, 10 00:00:38,760 --> 00:00:42,280 Speaker 2: joins us here and on through this half hour. Stephen, 11 00:00:42,360 --> 00:00:46,360 Speaker 2: you are iconic for a lower yield call. There is 12 00:00:46,400 --> 00:00:50,400 Speaker 2: a camp aggressively looking for lower yields, led by the 13 00:00:50,520 --> 00:00:56,080 Speaker 2: IMF in a stunning five year GDP projection globally reaffirm 14 00:00:56,160 --> 00:00:57,240 Speaker 2: now the low yield call. 15 00:00:57,600 --> 00:01:02,560 Speaker 3: Yeah, the IMF also have ident the low are style numbers. 16 00:01:02,800 --> 00:01:04,520 Speaker 3: I know you're not a big fan of that from 17 00:01:04,520 --> 00:01:05,080 Speaker 3: what I've. 18 00:01:05,120 --> 00:01:06,440 Speaker 1: I had to be yesterday and Friday. 19 00:01:06,640 --> 00:01:09,160 Speaker 2: I was sitting next to Olivia Blanchard on Friday at 20 00:01:09,160 --> 00:01:12,800 Speaker 2: a panel, so I love our start at right. 21 00:01:13,000 --> 00:01:14,760 Speaker 3: The reason you have to be a fan of it, 22 00:01:14,880 --> 00:01:16,400 Speaker 3: or at least consider it. Is that you need an 23 00:01:16,440 --> 00:01:19,960 Speaker 3: anchor in your process. Now, the word anchor is sometimes 24 00:01:20,000 --> 00:01:22,880 Speaker 3: taken negatively. Are you that you're starts? You can't change 25 00:01:22,880 --> 00:01:25,679 Speaker 3: your mind? But I like it as a sort of 26 00:01:25,760 --> 00:01:30,199 Speaker 3: ballast to the thinking process in that we're anchored around 27 00:01:30,240 --> 00:01:33,240 Speaker 3: this low our style because we seriously believe it. We 28 00:01:33,400 --> 00:01:36,160 Speaker 3: believe that the debt levels in the system, and the 29 00:01:36,160 --> 00:01:39,679 Speaker 3: demographics and the total factor productivity, these are key drivers 30 00:01:39,720 --> 00:01:43,720 Speaker 3: of this destination point. Now, most people seem to spend 31 00:01:44,000 --> 00:01:46,840 Speaker 3: nearly all their time talking about the policy rate today, right, 32 00:01:46,920 --> 00:01:50,960 Speaker 3: but you need both and I think it's completely reasonable 33 00:01:51,040 --> 00:01:51,800 Speaker 3: to have that debate. 34 00:01:52,000 --> 00:01:54,840 Speaker 2: A strategist away from what you do is Ian Lingen, 35 00:01:54,880 --> 00:01:58,760 Speaker 2: who's widely acclaimed in America. He aggressively said today the 36 00:01:58,840 --> 00:02:01,640 Speaker 2: ten year three point five six percent, if it gets 37 00:02:01,680 --> 00:02:06,080 Speaker 2: to three points sixty five percent, that's a buying opportunity, 38 00:02:06,400 --> 00:02:07,320 Speaker 2: yield down. 39 00:02:07,200 --> 00:02:07,920 Speaker 1: Price up. 40 00:02:08,440 --> 00:02:10,320 Speaker 2: Do you have that nuance now or are you just 41 00:02:10,360 --> 00:02:11,200 Speaker 2: saying by the take? 42 00:02:11,320 --> 00:02:15,799 Speaker 3: Yeah, Well, I think people look at me, they read 43 00:02:15,840 --> 00:02:18,040 Speaker 3: the stuff and they think I'm just one way, just 44 00:02:18,080 --> 00:02:20,560 Speaker 3: the bomb ball, And I guess you guys have done 45 00:02:20,560 --> 00:02:23,160 Speaker 3: that to me as well over the years, and it's 46 00:02:23,160 --> 00:02:26,400 Speaker 3: fair enough. I guess consistently we have forecast lower yields. 47 00:02:26,480 --> 00:02:29,240 Speaker 3: There's a tactical overlay as well. We want to buy 48 00:02:29,360 --> 00:02:32,440 Speaker 3: at more cheap at cheaper levels, right, So I think 49 00:02:32,960 --> 00:02:36,720 Speaker 3: somewhere between here and three and three quarters is a 50 00:02:36,720 --> 00:02:41,119 Speaker 3: good entry level. If if if someone says three sixty five, 51 00:02:41,200 --> 00:02:43,160 Speaker 3: then really you want to go in at three sixty four. 52 00:02:43,760 --> 00:02:47,040 Speaker 3: But you know, I think it's very difficult to imagine 53 00:02:47,120 --> 00:02:49,520 Speaker 3: us getting back to four percent on the tenure. 54 00:02:49,639 --> 00:02:52,240 Speaker 4: I'm actually less interested in the tactical movements that I 55 00:02:52,280 --> 00:02:54,600 Speaker 4: am the sort of larger destination call, because that is 56 00:02:54,639 --> 00:02:57,320 Speaker 4: one that I have never seen such a disagreement on 57 00:02:57,440 --> 00:02:59,600 Speaker 4: as I have seen now or so many people say 58 00:02:59,600 --> 00:03:02,040 Speaker 4: this is a new era, that the fragmentation that we're 59 00:03:02,040 --> 00:03:04,959 Speaker 4: seeing with China and with the US and with Europe 60 00:03:05,120 --> 00:03:08,040 Speaker 4: is going to lead to higher costs, that we're going 61 00:03:08,120 --> 00:03:10,840 Speaker 4: to see some sort of more persistent inflation. Why do 62 00:03:10,880 --> 00:03:11,880 Speaker 4: you push back against that? 63 00:03:12,080 --> 00:03:14,800 Speaker 3: Well, look, I respect these views, and we have to 64 00:03:14,840 --> 00:03:20,720 Speaker 3: try and consider all available information. It's intuitively quite logical 65 00:03:20,760 --> 00:03:24,280 Speaker 3: what you just said, So defense spending, the transition to 66 00:03:24,520 --> 00:03:29,280 Speaker 3: net zero, there are questions about the behavior of aging 67 00:03:29,320 --> 00:03:32,120 Speaker 3: populations as well, so they could change. So there's all 68 00:03:32,120 --> 00:03:34,920 Speaker 3: sorts of pushbacks to the lower for longer view. But 69 00:03:35,000 --> 00:03:37,800 Speaker 3: the thing is, I didn't see much science in any 70 00:03:37,920 --> 00:03:40,960 Speaker 3: in any of this. And I've got an observation that 71 00:03:41,000 --> 00:03:44,480 Speaker 3: goes back for decades that says that there is a 72 00:03:44,480 --> 00:03:49,080 Speaker 3: trend in place and the higher debt has been associated 73 00:03:49,160 --> 00:03:51,640 Speaker 3: with lower yields, and I dare say it's even causal 74 00:03:52,160 --> 00:03:54,640 Speaker 3: now until until we can overcome that, until you have 75 00:03:54,680 --> 00:03:57,000 Speaker 3: a tipping point and it goes the other way. I 76 00:03:57,000 --> 00:04:02,280 Speaker 3: think that's that's the central tenant of the hypothesis, if 77 00:04:02,320 --> 00:04:04,480 Speaker 3: you like. And in science you need to be able 78 00:04:04,520 --> 00:04:07,760 Speaker 3: to reject that what I hear at the moment are anecdotes. 79 00:04:08,640 --> 00:04:12,080 Speaker 3: There's there's going to be this, so this this will happen. Well, really, 80 00:04:12,120 --> 00:04:14,880 Speaker 3: where where's the I mean that there's there's a lack 81 00:04:14,920 --> 00:04:16,840 Speaker 3: of rigor around the whole the whole thing. 82 00:04:17,040 --> 00:04:19,040 Speaker 4: Although you could say this is a very quickly moving 83 00:04:19,080 --> 00:04:21,440 Speaker 4: story and that before the past four decades was a 84 00:04:21,440 --> 00:04:25,599 Speaker 4: different inflationary regime, and so people would argue that the 85 00:04:25,640 --> 00:04:28,120 Speaker 4: fact that we've seen such resilience as evidence today by 86 00:04:28,200 --> 00:04:32,200 Speaker 4: that early new York factory data shows that perhaps there 87 00:04:32,240 --> 00:04:35,640 Speaker 4: is more steam behind this recovery, more steam behind this 88 00:04:36,000 --> 00:04:38,920 Speaker 4: inflation growth that people previously have gave credit for. 89 00:04:39,320 --> 00:04:43,640 Speaker 3: Yeah, fair enough, Look, inflation is high and sticky, and 90 00:04:43,760 --> 00:04:46,080 Speaker 3: it's not going to get back to target anytime soon. 91 00:04:46,440 --> 00:04:49,000 Speaker 3: But we've got so many other things to consider, and 92 00:04:49,040 --> 00:04:52,480 Speaker 3: to me, the common denominator behind a lot of the themes 93 00:04:52,360 --> 00:04:54,840 Speaker 3: that keep running through the market is the debt. Now, 94 00:04:55,000 --> 00:04:56,640 Speaker 3: you spent a lot of time on this program talking 95 00:04:56,680 --> 00:05:02,200 Speaker 3: about the bank stress, that that's one sect of this economy, 96 00:05:02,520 --> 00:05:06,000 Speaker 3: not just the global economy of this economy, and the 97 00:05:06,000 --> 00:05:09,000 Speaker 3: common denominator that runs through all of these inflection points 98 00:05:09,040 --> 00:05:11,800 Speaker 3: seems to be debt. It happened to crypto, it happened 99 00:05:11,839 --> 00:05:14,480 Speaker 3: to SPACs, it happened to the UK pension industry, and 100 00:05:14,680 --> 00:05:15,880 Speaker 3: it's just going to keep happening. 101 00:05:16,600 --> 00:05:18,440 Speaker 4: And it's also going to pressure to your point of 102 00:05:18,520 --> 00:05:20,240 Speaker 4: fiscal spending. So there's not going to be the same 103 00:05:20,320 --> 00:05:22,320 Speaker 4: kind of ability to spend on some of these things 104 00:05:22,320 --> 00:05:24,920 Speaker 4: that people are talking about because of that overhead, that 105 00:05:24,960 --> 00:05:27,480 Speaker 4: weight of the debt. So where we are right now 106 00:05:27,720 --> 00:05:30,680 Speaker 4: is this idea where people don't necessarily say that they 107 00:05:30,720 --> 00:05:32,919 Speaker 4: agree with you, and they fight back against the IMF, 108 00:05:33,240 --> 00:05:35,400 Speaker 4: but their trading as though they do the trading is 109 00:05:35,400 --> 00:05:37,839 Speaker 4: though they're going to see rates get cut significantly by 110 00:05:37,880 --> 00:05:39,200 Speaker 4: the end of this year. Do you agree with that? 111 00:05:39,520 --> 00:05:42,120 Speaker 3: Do you know this right or wrong? Or agreeing or 112 00:05:42,120 --> 00:05:44,120 Speaker 3: that doesn't really matter? And in fact that the most 113 00:05:44,200 --> 00:05:46,400 Speaker 3: the most frustrating thing for me is meeting people who 114 00:05:46,440 --> 00:05:49,279 Speaker 3: totally agree with me because they want the confirmation, and 115 00:05:49,320 --> 00:05:51,599 Speaker 3: then you meet the others who completely disagree, and it 116 00:05:51,600 --> 00:05:54,200 Speaker 3: doesn't seem to be much in the middle. And so 117 00:05:54,839 --> 00:05:57,360 Speaker 3: it's not about right or wrong right, it's the process 118 00:05:57,480 --> 00:05:59,200 Speaker 3: and it's the thinking behind it. 119 00:05:59,320 --> 00:06:02,200 Speaker 1: That the wall of money that's out there. 120 00:06:02,520 --> 00:06:05,840 Speaker 2: Sir John Templeton told me once in my ute that 121 00:06:05,880 --> 00:06:08,239 Speaker 2: there would be a shortage of bonds. 122 00:06:08,360 --> 00:06:09,640 Speaker 1: That's exactly what he said. 123 00:06:09,880 --> 00:06:12,800 Speaker 2: There's a wall of money out there and a shortage 124 00:06:12,800 --> 00:06:15,760 Speaker 2: of bonds. To the Steve major belief of abroad of 125 00:06:15,800 --> 00:06:19,440 Speaker 2: you and Blanchard, I think totally agrees with you on 126 00:06:19,520 --> 00:06:21,839 Speaker 2: the trend is in place of a lower our stard 127 00:06:22,400 --> 00:06:26,719 Speaker 2: is price up yield down? How much price up yield down? 128 00:06:27,360 --> 00:06:30,279 Speaker 2: How much of this off the ten year benchmark? Can 129 00:06:30,279 --> 00:06:34,120 Speaker 2: you model a sub three percent ten. You're yield from here. 130 00:06:34,040 --> 00:06:36,560 Speaker 3: Out X number of quarters quite easily. I mean our 131 00:06:36,600 --> 00:06:39,040 Speaker 3: forecast is two and a half. For what it's worth 132 00:06:39,640 --> 00:06:42,680 Speaker 3: that the lack of safe asset to me is a 133 00:06:43,080 --> 00:06:47,080 Speaker 3: paradox because after all these years of QE trillions and trillions, 134 00:06:47,120 --> 00:06:50,080 Speaker 3: surely there's plenty of safe asset out there. Will Actually 135 00:06:50,440 --> 00:06:53,200 Speaker 3: there's too much of the wrong kind of safe asset. 136 00:06:53,240 --> 00:06:55,960 Speaker 3: You see the excess reserves created by central banks to 137 00:06:56,000 --> 00:06:59,160 Speaker 3: buy the bonds in the QE. That's not something that 138 00:06:59,520 --> 00:07:03,000 Speaker 3: the WEE can that you and I can access. So 139 00:07:03,040 --> 00:07:05,880 Speaker 3: you can't get excess reserves, right, you know, that's for 140 00:07:05,920 --> 00:07:09,320 Speaker 3: banks only. What you want a T bows, You want 141 00:07:09,320 --> 00:07:11,920 Speaker 3: T bills, and there's a lack of those. There is 142 00:07:11,960 --> 00:07:15,520 Speaker 3: not enough T balls around, right, So globally there is 143 00:07:15,560 --> 00:07:19,080 Speaker 3: a lack of liquid safe asset. That is still the case. 144 00:07:19,440 --> 00:07:22,119 Speaker 3: So why are people surprised that the two year yield 145 00:07:22,160 --> 00:07:24,200 Speaker 3: can set one hundred basis of points through the money rate? 146 00:07:24,760 --> 00:07:26,920 Speaker 3: Why would you be surprised about it? Because the price, 147 00:07:28,520 --> 00:07:31,440 Speaker 3: because it's factoring in the average policy rate for the 148 00:07:31,440 --> 00:07:33,600 Speaker 3: next two years. It's saying it could be five for 149 00:07:33,640 --> 00:07:35,400 Speaker 3: eight months, it could be four for eight months, but 150 00:07:35,440 --> 00:07:37,600 Speaker 3: it could be three for the next for the next eight. 151 00:07:37,640 --> 00:07:39,840 Speaker 3: The average of those three numbers, I believe is four, 152 00:07:40,400 --> 00:07:42,360 Speaker 3: so it's quite possible. 153 00:07:42,440 --> 00:07:46,240 Speaker 2: Right, this has been fine. I've got like forty five 154 00:07:46,320 --> 00:07:49,960 Speaker 2: seconds or so. I purposely watched west Ham highlights with 155 00:07:50,160 --> 00:07:51,520 Speaker 2: Arsenal yesterday. 156 00:07:51,720 --> 00:07:51,960 Speaker 5: Wow. 157 00:07:52,040 --> 00:07:53,000 Speaker 1: That was exciting. 158 00:07:53,320 --> 00:07:56,600 Speaker 2: How does west Ham rebuild from the threat of relegation? 159 00:07:57,120 --> 00:07:59,760 Speaker 3: Well, they look like they say it quietly, they look 160 00:07:59,840 --> 00:08:03,200 Speaker 3: like it. They're almost safe at the moment. It's a 161 00:08:03,200 --> 00:08:05,239 Speaker 3: shame you don't watch the whole game because the highlights 162 00:08:05,240 --> 00:08:06,080 Speaker 3: don't do it justice. 163 00:08:07,600 --> 00:08:12,760 Speaker 1: After ten American, after. 164 00:08:12,560 --> 00:08:15,200 Speaker 3: Ten minutes, it could have gone to seven or eight zero. 165 00:08:16,200 --> 00:08:18,360 Speaker 3: I was gonna say nil, but this is an American audience. 166 00:08:18,520 --> 00:08:19,000 Speaker 3: I have to. 167 00:08:22,360 --> 00:08:26,840 Speaker 2: No chance will understand nil. But it's really exciting. I mean, 168 00:08:26,880 --> 00:08:29,160 Speaker 2: Pharaoh's got me into all this. It's your fall as well. 169 00:08:29,400 --> 00:08:32,559 Speaker 3: Yeah, it's partly my fault. But try and watch the 170 00:08:32,600 --> 00:08:33,439 Speaker 3: whole match sometimes. 171 00:08:33,760 --> 00:08:35,840 Speaker 1: Thank you. I'll do that. I think I got my marching. 172 00:08:37,440 --> 00:08:38,479 Speaker 4: This is phenomenal. 173 00:08:38,600 --> 00:08:42,959 Speaker 1: Thank you so much for an entire bitch. Stephen Major, 174 00:08:43,040 --> 00:08:43,880 Speaker 1: thank you so much with that. 175 00:08:44,080 --> 00:08:44,560 Speaker 4: Just get it. 176 00:08:44,640 --> 00:08:45,960 Speaker 1: Please are your thoughts on that? To me? 177 00:08:46,040 --> 00:08:48,840 Speaker 2: This is such a rich conversation, and it's not one 178 00:08:48,920 --> 00:08:49,760 Speaker 2: or two ways it could go. 179 00:08:49,840 --> 00:08:51,280 Speaker 1: It's like four or five ways it could go. 180 00:08:51,440 --> 00:08:55,200 Speaker 4: The science underpinning our assumptions. To me, that's my takeaway. 181 00:08:55,200 --> 00:08:58,160 Speaker 4: People make a lot of proclamations based on logic, but 182 00:08:58,440 --> 00:09:00,760 Speaker 4: how do we look to some sort of science at 183 00:09:00,760 --> 00:09:03,319 Speaker 4: a time of such great uncertainty? And this is the 184 00:09:03,360 --> 00:09:05,800 Speaker 4: difficulty right now. People are coming up with different parameters 185 00:09:05,840 --> 00:09:08,480 Speaker 4: and making different arguments and looking at different data points. 186 00:09:08,960 --> 00:09:10,520 Speaker 4: If you look at history and you think of the 187 00:09:10,559 --> 00:09:13,960 Speaker 4: debt overhang, it does complicate issues. Although you could push 188 00:09:14,000 --> 00:09:16,040 Speaker 4: back and say, well, if everybody piles into bonds, that's 189 00:09:16,040 --> 00:09:18,520 Speaker 4: going to lower the interest rate and that'll increase the 190 00:09:18,559 --> 00:09:21,160 Speaker 4: ability to spend fiscally, and then we get right back 191 00:09:21,200 --> 00:09:23,040 Speaker 4: to it. So it's kind of a lot to wrap 192 00:09:23,040 --> 00:09:23,640 Speaker 4: your head around. 193 00:09:23,800 --> 00:09:25,960 Speaker 1: Are you going to watch a whole soccer game with me? 194 00:09:26,080 --> 00:09:28,080 Speaker 4: I used to play soccer. I would love to watch 195 00:09:28,080 --> 00:09:29,160 Speaker 4: a whole soccer game with you. 196 00:09:30,440 --> 00:09:32,280 Speaker 1: We'll have to schedule one. 197 00:09:32,640 --> 00:09:35,160 Speaker 4: Yeah, in twenty twenty seven. 198 00:09:35,040 --> 00:09:37,120 Speaker 1: We'll do that as well. 199 00:09:37,160 --> 00:09:39,679 Speaker 2: Running green on the screen and this is important coming 200 00:09:39,720 --> 00:09:41,720 Speaker 2: up here. John Ferrell's going to have some really good 201 00:09:41,760 --> 00:09:47,000 Speaker 2: coverage with Edward Ludlow of this rocket ship that's going up. 202 00:09:47,080 --> 00:09:50,880 Speaker 2: It's another day, it's in April day, and this is 203 00:09:50,960 --> 00:09:55,319 Speaker 2: a piece of hardware that America has never seen. I 204 00:09:55,400 --> 00:10:00,640 Speaker 2: can't emphasize enough how original this rocket launch, yeah, will be, 205 00:10:00,760 --> 00:10:03,360 Speaker 2: and we'll see that in the next half hour. Rocket 206 00:10:03,440 --> 00:10:06,080 Speaker 2: launch for US is a VIX of seventeen point seven 207 00:10:06,120 --> 00:10:09,840 Speaker 2: to two. Maybe it was a bear market in ending 208 00:10:09,960 --> 00:10:10,800 Speaker 2: in October. 209 00:10:10,960 --> 00:10:13,520 Speaker 1: Stay with us through the morning. This is Bloomberg. 210 00:10:24,160 --> 00:10:26,320 Speaker 6: Let's frame the debate in the equity market right now 211 00:10:26,800 --> 00:10:28,640 Speaker 6: with a bull and a bear. Here's the bear ist 212 00:10:28,640 --> 00:10:31,080 Speaker 6: for you, Mike Wilson. Morgan Stanley kicking off the week 213 00:10:31,480 --> 00:10:34,520 Speaker 6: with the fastest FED policy shift in forty years. We 214 00:10:34,559 --> 00:10:36,959 Speaker 6: think more negative surprises lie I had for investors. He 215 00:10:37,040 --> 00:10:39,160 Speaker 6: goes on to say, one that we think is in 216 00:10:39,240 --> 00:10:43,240 Speaker 6: plain sight is Earning's forecast that remain too optimistic. That 217 00:10:43,320 --> 00:10:47,160 Speaker 6: has been the message from Morgan Stanley for months now. 218 00:10:47,280 --> 00:10:50,280 Speaker 6: Bink Chaa takes the other side. The chief global strategist 219 00:10:50,280 --> 00:10:52,600 Speaker 6: and head of VASA Allocation at Deutsche Bank joins us 220 00:10:52,679 --> 00:10:54,920 Speaker 6: right now, Binkie, so let's start with this one. A 221 00:10:54,960 --> 00:10:56,640 Speaker 6: good morning to you, sir, Thanks for being with US 222 00:10:57,000 --> 00:11:00,000 Speaker 6: still long, still optimistic. What underpins that view for you? 223 00:11:00,440 --> 00:11:02,920 Speaker 7: So in the very near term, it's earnings, and I 224 00:11:02,920 --> 00:11:05,199 Speaker 7: think you know, the things to keep in mind are 225 00:11:05,440 --> 00:11:10,080 Speaker 7: Number one, the acquity market almost always rallies during earning season. 226 00:11:10,360 --> 00:11:12,280 Speaker 7: It's not a huge rally, it's about to two and 227 00:11:12,280 --> 00:11:15,400 Speaker 7: a half percent, but you know that would put us 228 00:11:15,800 --> 00:11:18,000 Speaker 7: change the handle in the S and P to the 229 00:11:18,000 --> 00:11:21,360 Speaker 7: mid forty two hundreds closer to forty three hundred. I 230 00:11:21,400 --> 00:11:25,600 Speaker 7: think on earnings, the big picture issue is very simple, 231 00:11:25,720 --> 00:11:28,120 Speaker 7: which is that if you look at the top down 232 00:11:28,240 --> 00:11:32,040 Speaker 7: macro drivers, what we had is upgrades to growth in 233 00:11:32,120 --> 00:11:36,120 Speaker 7: the US, in Europe, in China, in Japan, we had 234 00:11:36,360 --> 00:11:40,000 Speaker 7: the dollar come down. All of that argues basically for 235 00:11:40,360 --> 00:11:45,120 Speaker 7: you know upside a rebound or a turn basically in 236 00:11:45,320 --> 00:11:48,559 Speaker 7: earnings up. And if you look at the same time 237 00:11:48,800 --> 00:11:51,640 Speaker 7: as what we are measuring earnings against, which is the 238 00:11:51,640 --> 00:11:55,880 Speaker 7: bottom up consensus, it's been falling since June of last year. 239 00:11:56,440 --> 00:12:00,920 Speaker 7: It's down about sixteen seventeen percent now. And so when 240 00:12:00,960 --> 00:12:05,520 Speaker 7: you take the top down drivers and you you know, 241 00:12:05,640 --> 00:12:09,440 Speaker 7: plug them into our earnings models or frameworks, it's telling 242 00:12:09,440 --> 00:12:12,520 Speaker 7: you should get a pretty significant rebound in earnings, we 243 00:12:12,559 --> 00:12:16,400 Speaker 7: should get a pretty average beat of about five percent. 244 00:12:16,880 --> 00:12:19,080 Speaker 7: So there's this narrative out there that the bottom up 245 00:12:19,120 --> 00:12:23,280 Speaker 7: consensus is forecasting you know, the worst season ever and 246 00:12:23,400 --> 00:12:25,319 Speaker 7: down seven percent. I mean, I think they should be 247 00:12:25,360 --> 00:12:27,840 Speaker 7: a little bit careful with that hypothetical because the earnings 248 00:12:27,880 --> 00:12:30,880 Speaker 7: beat almost always by five percent. So you're already down 249 00:12:30,920 --> 00:12:32,839 Speaker 7: to sort of about one and a half percent. And 250 00:12:32,880 --> 00:12:34,560 Speaker 7: so if you get a little bit bigger beat. You 251 00:12:34,600 --> 00:12:37,840 Speaker 7: saw the results on Friday, you know you're back at zero. 252 00:12:38,160 --> 00:12:41,680 Speaker 2: Well, your twenty stocks doing well, and the S and 253 00:12:41,720 --> 00:12:43,920 Speaker 2: P is so basically made it halfway back out of 254 00:12:43,920 --> 00:12:48,480 Speaker 2: a grim bear market. Institutional portfolios, maybe you've made halfway back. 255 00:12:48,760 --> 00:12:51,000 Speaker 2: Is a basic statement you talk and this is great 256 00:12:51,040 --> 00:12:54,240 Speaker 2: biggie chata, and that you take a longer timeline, a 257 00:12:54,280 --> 00:12:57,640 Speaker 2: more relaxed view, and within that you talk about a 258 00:12:57,720 --> 00:13:01,600 Speaker 2: passing of the baton from earnings to the next thing 259 00:13:02,320 --> 00:13:04,000 Speaker 2: to keep your optimism going. 260 00:13:04,160 --> 00:13:07,079 Speaker 1: What's after our earnings analysis. 261 00:13:06,640 --> 00:13:10,319 Speaker 7: Well, you know it will then depend basically on you know, 262 00:13:10,400 --> 00:13:13,040 Speaker 7: the big cloud and whether it's going to erupt into 263 00:13:13,120 --> 00:13:16,760 Speaker 7: a severe rainfall of the US recession. And there what 264 00:13:16,960 --> 00:13:20,439 Speaker 7: I would say is that basically, you know, instead of 265 00:13:20,480 --> 00:13:22,840 Speaker 7: just looking at the aggregate all the time, we should 266 00:13:22,840 --> 00:13:25,120 Speaker 7: do what we used to do when the pandemic began, 267 00:13:25,200 --> 00:13:28,439 Speaker 7: which is differentiate goods and services. And what you will 268 00:13:28,480 --> 00:13:32,439 Speaker 7: see here is a very very clear picture. And what 269 00:13:32,559 --> 00:13:35,520 Speaker 7: I would argue is that you know now really comes 270 00:13:35,600 --> 00:13:37,880 Speaker 7: to test if you think about a trend line. We've 271 00:13:37,920 --> 00:13:41,000 Speaker 7: got services that fell far below and have been rebounding 272 00:13:41,440 --> 00:13:43,800 Speaker 7: and sort of you know, asimp toting or the growth 273 00:13:43,840 --> 00:13:46,520 Speaker 7: rate is slowing basically towards trend. And the important thing 274 00:13:46,559 --> 00:13:49,480 Speaker 7: to keep in mind about services is they don't generally 275 00:13:49,559 --> 00:13:52,600 Speaker 7: slow very much. You don't get really recessions and services 276 00:13:53,360 --> 00:13:55,439 Speaker 7: and all of the action has really been for the 277 00:13:55,520 --> 00:13:57,800 Speaker 7: last two or three years on the good side, where 278 00:13:57,800 --> 00:14:01,320 Speaker 7: we got massively elevated re to trend. Depending on what 279 00:14:01,440 --> 00:14:04,240 Speaker 7: metric we're talking about, anywhere have between fifteen and twenty 280 00:14:04,240 --> 00:14:07,280 Speaker 7: five percent above trend levels. And it is something that 281 00:14:07,280 --> 00:14:09,320 Speaker 7: we wrote about in the summer of twenty twenty one 282 00:14:09,480 --> 00:14:13,200 Speaker 7: called the COVID speed cycle. And since then, what has happened, 283 00:14:13,679 --> 00:14:16,959 Speaker 7: I would argue, is an incredibly resilient outcome, which is 284 00:14:17,360 --> 00:14:20,560 Speaker 7: we've been going sideways in real terms for two years. 285 00:14:20,720 --> 00:14:23,320 Speaker 7: And the key question is as we come back down 286 00:14:23,360 --> 00:14:26,240 Speaker 7: to trend levels, which we are very near now, are 287 00:14:26,240 --> 00:14:28,160 Speaker 7: we going to start growing or are we going to 288 00:14:28,280 --> 00:14:29,080 Speaker 7: suddenly crash? 289 00:14:29,200 --> 00:14:32,160 Speaker 4: But so as we talk about earning season and the 290 00:14:32,200 --> 00:14:34,520 Speaker 4: expectations are all over the place, you have a more 291 00:14:34,560 --> 00:14:38,960 Speaker 4: bullish expectation Mike Wilson, a more bearish one the overlay 292 00:14:39,200 --> 00:14:42,160 Speaker 4: of a banking crisis that wasn't what are stocks currently 293 00:14:42,160 --> 00:14:45,160 Speaker 4: pricing in taking out some of the regional bank stocks. 294 00:14:45,320 --> 00:14:48,080 Speaker 4: What are they pricing in with respect to contraction of credit? 295 00:14:48,960 --> 00:14:52,320 Speaker 7: I don't think that the equity market is pricing in 296 00:14:52,360 --> 00:14:55,400 Speaker 7: that much in terms of a credit downturn. But you know, 297 00:14:55,560 --> 00:14:58,440 Speaker 7: if you look sort of at you know, what is 298 00:14:58,440 --> 00:15:01,320 Speaker 7: the equity market pricing, It's pricing in ism of forty six, 299 00:15:01,320 --> 00:15:05,080 Speaker 7: which is what we got. So's it's kind of right 300 00:15:05,120 --> 00:15:07,280 Speaker 7: where it should be in terms of the very short 301 00:15:07,360 --> 00:15:10,800 Speaker 7: term near term driver. So nothing really more than that. 302 00:15:11,880 --> 00:15:14,200 Speaker 7: And in terms of the banking stress, you know, to 303 00:15:14,240 --> 00:15:17,080 Speaker 7: the extent that it's already captured basically in the pmis 304 00:15:17,120 --> 00:15:20,080 Speaker 7: and the isms, then you know the market's priced it in. 305 00:15:20,200 --> 00:15:21,400 Speaker 7: So something bigger now. 306 00:15:21,680 --> 00:15:23,760 Speaker 6: But do you think it makes sense that we have 307 00:15:23,880 --> 00:15:26,120 Speaker 6: basically an SP five hundred to anticipate we'll get to 308 00:15:26,120 --> 00:15:28,280 Speaker 6: forty three hundred and a rates market that is pricing 309 00:15:28,400 --> 00:15:31,920 Speaker 6: inst some serious rate cuts. Do you think that can persist? 310 00:15:32,160 --> 00:15:35,320 Speaker 7: So, you know, on the rate cuts issue, what I 311 00:15:35,360 --> 00:15:37,720 Speaker 7: would say, you know, if we're talking about the ten 312 00:15:37,800 --> 00:15:41,120 Speaker 7: year yield, you know the difference of view between the 313 00:15:41,280 --> 00:15:43,640 Speaker 7: Fed when you open it's dot plot, the first thing 314 00:15:43,680 --> 00:15:46,280 Speaker 7: that just shields the rates are coming down massively. So 315 00:15:46,320 --> 00:15:49,120 Speaker 7: the question is really about six months over a ten 316 00:15:49,200 --> 00:15:51,720 Speaker 7: year period, six months, eight months, maybe nine months, but 317 00:15:52,160 --> 00:15:54,680 Speaker 7: it's not a huge move. I think the bigger issue 318 00:15:54,680 --> 00:15:57,640 Speaker 7: for rates really is, you know, all of the forward 319 00:15:57,720 --> 00:16:01,960 Speaker 7: guidance that convinced the market to gotively short kind of 320 00:16:02,240 --> 00:16:05,680 Speaker 7: blew up, and so is the risk appetite to be 321 00:16:05,920 --> 00:16:07,640 Speaker 7: just as short going to come back? 322 00:16:07,680 --> 00:16:10,360 Speaker 6: So just ask the question from active, Thank you. I'm 323 00:16:10,360 --> 00:16:12,840 Speaker 6: just wondering, does the S and P five hundred and 324 00:16:12,880 --> 00:16:16,920 Speaker 6: forty three hundred and CPI five percent does that encourage 325 00:16:16,920 --> 00:16:19,040 Speaker 6: the Federal Reserve to cut interest rights? I mean, I'm 326 00:16:19,080 --> 00:16:19,720 Speaker 6: struggling with them. 327 00:16:19,800 --> 00:16:22,080 Speaker 7: What she doesn't now, I mean it's not our house view, 328 00:16:22,160 --> 00:16:24,360 Speaker 7: but our house view is that we will cut interest 329 00:16:24,400 --> 00:16:27,960 Speaker 7: rates next year. So it's again they're going to get 330 00:16:28,000 --> 00:16:31,680 Speaker 7: overhung up on what is a very fluid calendar and 331 00:16:31,720 --> 00:16:34,280 Speaker 7: precise calendar times, and then they're all. 332 00:16:34,080 --> 00:16:37,320 Speaker 1: Out there in the future. So I'd be a bit 333 00:16:37,400 --> 00:16:38,080 Speaker 1: careful on that. 334 00:16:38,320 --> 00:16:41,040 Speaker 6: Thank you, thank you, sir, thank you chatter at Deutsche. 335 00:16:40,720 --> 00:16:47,800 Speaker 2: Bank joining US now Jordan Rochester G ten Ef, strategist 336 00:16:48,360 --> 00:16:51,520 Speaker 2: at the MURA for a morning brief for Global Wall Street. Jordan. 337 00:16:51,600 --> 00:16:53,840 Speaker 2: What I find interesting is if I triangulate and go 338 00:16:53,840 --> 00:16:57,000 Speaker 2: to euro yen, I've got euro yen butter stuff against 339 00:16:57,000 --> 00:17:00,840 Speaker 2: resistance hit a one forty seven. It's unimaginable strong euro 340 00:17:01,320 --> 00:17:05,200 Speaker 2: week yen on the US dollar pair? Is it about 341 00:17:05,280 --> 00:17:08,440 Speaker 2: strong euro? Or is in the zeitgeist this weekend? Is 342 00:17:08,480 --> 00:17:09,600 Speaker 2: it about week dollar? 343 00:17:10,520 --> 00:17:11,800 Speaker 8: It's been a bit of both, Tom. 344 00:17:11,920 --> 00:17:13,479 Speaker 9: I mean, I think in the past few weeks it's 345 00:17:13,520 --> 00:17:15,960 Speaker 9: been the dollar aside that has really moved the needle 346 00:17:15,960 --> 00:17:19,440 Speaker 9: of four euro dollar. With the banking situation sub's collapsed, 347 00:17:19,440 --> 00:17:21,760 Speaker 9: It's allowed markets to price in the idea of FED cuts, 348 00:17:21,960 --> 00:17:23,920 Speaker 9: and a lot of people would argue too many FED 349 00:17:24,000 --> 00:17:27,359 Speaker 9: cuts priced in. The irony is there are these cuts 350 00:17:27,359 --> 00:17:30,880 Speaker 9: priced in, and I don't see anyone arguing for them 351 00:17:30,920 --> 00:17:32,520 Speaker 9: to be priced in. That way, so there is a 352 00:17:32,520 --> 00:17:35,600 Speaker 9: bit of a dislocation between narratives and actual market pricing. 353 00:17:35,920 --> 00:17:38,080 Speaker 8: But Tom, I think the good news for euro isn't over. 354 00:17:38,280 --> 00:17:40,040 Speaker 9: I think the growth pickup that we've seen in the 355 00:17:40,080 --> 00:17:43,399 Speaker 9: first quarter this year should carry on into the second quarter. 356 00:17:44,080 --> 00:17:46,639 Speaker 9: That should keep the ECB in a more hawkish footing. 357 00:17:47,040 --> 00:17:50,720 Speaker 9: The market is pricing very much a too low terminal 358 00:17:50,800 --> 00:17:53,119 Speaker 9: rate for in our view, for the ECB, so we 359 00:17:53,160 --> 00:17:55,440 Speaker 9: look for four to twenty five four point two five 360 00:17:55,440 --> 00:17:56,640 Speaker 9: percent by July. 361 00:17:56,760 --> 00:17:58,680 Speaker 8: The market's somewhere around three point six. 362 00:17:59,040 --> 00:18:01,480 Speaker 9: Now for the Fed, they could do a rate hike 363 00:18:01,560 --> 00:18:03,000 Speaker 9: of twenty five based points in May. 364 00:18:03,080 --> 00:18:04,680 Speaker 8: Our economics team thinks they won't. 365 00:18:04,760 --> 00:18:06,879 Speaker 9: They think they are done with this rate hiker cycle 366 00:18:07,280 --> 00:18:10,280 Speaker 9: after the banking situation. But the market's pricing twenty one 367 00:18:10,320 --> 00:18:12,560 Speaker 9: basis points or so for that meeting. So if the 368 00:18:12,640 --> 00:18:14,760 Speaker 9: Fed do go ahead and do a twenty five I 369 00:18:14,800 --> 00:18:18,080 Speaker 9: don't see much upside for a dollar from that rate hike, 370 00:18:18,280 --> 00:18:20,840 Speaker 9: where with the ECB, the market's not pricing the fifty 371 00:18:20,880 --> 00:18:23,480 Speaker 9: basis points that we expect to see from the next meeting. 372 00:18:23,520 --> 00:18:26,360 Speaker 9: So from a monetary policy point of view and from 373 00:18:26,359 --> 00:18:28,959 Speaker 9: a growth point of view, there's more upside one fourteen 374 00:18:29,040 --> 00:18:30,720 Speaker 9: in euro in the next three months. 375 00:18:30,920 --> 00:18:34,240 Speaker 6: Jordan, you sound like Christine Legard of Domestic over the 376 00:18:34,280 --> 00:18:37,800 Speaker 6: weekend speaking to CBS now, Jordan, I just wonder if 377 00:18:37,800 --> 00:18:40,800 Speaker 6: there's anything to be optimistic about, is this four twenty 378 00:18:40,800 --> 00:18:43,840 Speaker 6: five on race of the ECB because growth can handle it, 379 00:18:43,960 --> 00:18:46,840 Speaker 6: or growth is really outperforming well. 380 00:18:46,960 --> 00:18:48,919 Speaker 9: Last year was pretty doom and gloom. One of the 381 00:18:48,920 --> 00:18:50,960 Speaker 9: best trades we had was just being short yured dollar 382 00:18:51,080 --> 00:18:55,080 Speaker 9: short cable from pretty much January February time onwards, especially 383 00:18:55,080 --> 00:18:56,800 Speaker 9: when Ukrame is invaded by Russia. 384 00:18:56,840 --> 00:18:58,479 Speaker 8: This year it has been super different. 385 00:18:58,520 --> 00:19:01,359 Speaker 9: It's been all of those negatives last year turned around 386 00:19:01,680 --> 00:19:04,679 Speaker 9: from headwinds into tailwinds. So last year was about very 387 00:19:04,760 --> 00:19:07,119 Speaker 9: high energy prices weighing on the consumer, weighing on the 388 00:19:07,119 --> 00:19:11,359 Speaker 9: government spending situation as well as corporates. Now energy prices 389 00:19:11,400 --> 00:19:13,640 Speaker 9: have pretty much collapsed in terms of natural gas. They've 390 00:19:13,640 --> 00:19:16,960 Speaker 9: gone below where they were before Ukraine was invaded too. 391 00:19:17,240 --> 00:19:20,320 Speaker 9: This is a huge sort of disposable income boost for 392 00:19:20,359 --> 00:19:24,760 Speaker 9: consumers and for firms as well, reducing their costs. So 393 00:19:25,240 --> 00:19:27,080 Speaker 9: from that side of things, the terms of trade for 394 00:19:27,160 --> 00:19:29,760 Speaker 9: euro would put euro dollar between one fifteen and one 395 00:19:29,880 --> 00:19:32,919 Speaker 9: twenty massive good news. But for the Euro Area and 396 00:19:32,920 --> 00:19:35,800 Speaker 9: the monetary policy side, we've got all the inflation from 397 00:19:35,880 --> 00:19:39,920 Speaker 9: last year feeding through to second round of effects, very 398 00:19:39,920 --> 00:19:42,520 Speaker 9: tight labor market, we're seeing wage hikes coming through. 399 00:19:42,560 --> 00:19:44,280 Speaker 8: We're seeing strike action in France. 400 00:19:44,320 --> 00:19:47,600 Speaker 9: As well, these sort of stories in the labor market, 401 00:19:47,880 --> 00:19:50,399 Speaker 9: or keep the easy being a hawkish setting until it 402 00:19:50,440 --> 00:19:53,040 Speaker 9: becomes very clear that inflation is going towards two percent. 403 00:19:53,359 --> 00:19:53,920 Speaker 8: Where in the. 404 00:19:53,960 --> 00:19:56,720 Speaker 9: US the Feds more of a dubbish setting now because 405 00:19:56,760 --> 00:20:00,600 Speaker 9: the banking crisis has seen credit conditions tight and of firms, 406 00:20:00,920 --> 00:20:04,159 Speaker 9: and we're already seeing the forward looking indicators suggest that 407 00:20:04,200 --> 00:20:06,840 Speaker 9: this inflation pressures are on the way, and last week's 408 00:20:06,880 --> 00:20:10,240 Speaker 9: CPI not coming in too hot allows the market to 409 00:20:10,240 --> 00:20:12,960 Speaker 9: carry on looking at those forward looking signals of inflation 410 00:20:13,240 --> 00:20:15,520 Speaker 9: because John, the key difference for me is that the 411 00:20:15,560 --> 00:20:18,520 Speaker 9: Fed is perhaps going to turn from looking just at 412 00:20:18,640 --> 00:20:22,800 Speaker 9: realized inflation to maybe considering forecast of inflation when it 413 00:20:22,800 --> 00:20:26,320 Speaker 9: comes to their policy settings. The ECB they're not yet 414 00:20:26,359 --> 00:20:28,480 Speaker 9: at that stage. They're a few months behind. That's why 415 00:20:28,520 --> 00:20:30,600 Speaker 9: we think they'll keep raising rates through to July. 416 00:20:30,840 --> 00:20:33,280 Speaker 6: So this is a conversation about the cycle. Now, Jordan, 417 00:20:33,359 --> 00:20:35,600 Speaker 6: you know how this works. Euro dollar goes from parity 418 00:20:35,640 --> 00:20:37,760 Speaker 6: to one ten, you get a ten percent move and 419 00:20:37,800 --> 00:20:40,159 Speaker 6: you see those doom and gloom articles about the end 420 00:20:40,160 --> 00:20:43,359 Speaker 6: of the US dollar circulating everywhere. Can we talk about 421 00:20:43,359 --> 00:20:46,640 Speaker 6: the structural shifts that you're expecting from the green back, Jordan, 422 00:20:46,680 --> 00:20:48,720 Speaker 6: and whether you subscribe to this theory that you are 423 00:20:48,760 --> 00:20:51,960 Speaker 6: going to see this structural shift away from the US dollar. 424 00:20:53,520 --> 00:20:58,960 Speaker 9: The digitalization of trade is helping, for example, China's role 425 00:20:59,000 --> 00:21:02,399 Speaker 9: in swift payments increase. The actual choice of currency in 426 00:21:02,440 --> 00:21:05,480 Speaker 9: the past was tied to ease of use, and that 427 00:21:05,560 --> 00:21:06,840 Speaker 9: was one of the factors behind it. 428 00:21:07,080 --> 00:21:09,080 Speaker 8: And now there's needs of use of just using any currency. 429 00:21:09,119 --> 00:21:12,920 Speaker 9: So there is a structural tailwind for alternatives to the dollar. 430 00:21:13,359 --> 00:21:17,280 Speaker 9: But there's also when there's a crisis, you need dollars. 431 00:21:17,520 --> 00:21:19,280 Speaker 9: That's still going to be the case for a quite 432 00:21:19,359 --> 00:21:23,600 Speaker 9: long time. Trusting those other currencies to hold their value 433 00:21:24,359 --> 00:21:26,800 Speaker 9: will be difficult in times of stress, especially if it 434 00:21:26,840 --> 00:21:29,720 Speaker 9: was a Eurozone related crisis, or if it was elsewhere 435 00:21:29,760 --> 00:21:33,320 Speaker 9: in em that we had an alternative crisis. High levels 436 00:21:33,320 --> 00:21:36,280 Speaker 9: of inflation in that other choice of currency would erode 437 00:21:36,280 --> 00:21:39,679 Speaker 9: the value of that so it's not a perfect world 438 00:21:39,680 --> 00:21:42,520 Speaker 9: for alternatives for the dollar when it comes to global trade, 439 00:21:42,560 --> 00:21:46,720 Speaker 9: when it comes to just getting things cross border payments done. 440 00:21:46,880 --> 00:21:51,600 Speaker 9: So John, in essence, there are definitely shifting tithes helping 441 00:21:51,680 --> 00:21:52,679 Speaker 9: alternatives to. 442 00:21:52,680 --> 00:21:53,680 Speaker 8: Become more of an option. 443 00:21:54,040 --> 00:21:55,800 Speaker 9: But I do think that the dollar's going to remain 444 00:21:55,840 --> 00:21:59,360 Speaker 9: the majority reserve currency for probably the rest of our lifetimes. 445 00:22:00,000 --> 00:22:01,720 Speaker 4: Go back to something that you said, which is the 446 00:22:01,760 --> 00:22:04,960 Speaker 4: banking crisis in the US will keep lending conditions tighter, 447 00:22:05,600 --> 00:22:08,520 Speaker 4: which will really cap how far the Fed can raise rates, 448 00:22:08,560 --> 00:22:10,880 Speaker 4: and talking about how that could potentially pressure the dollar, 449 00:22:10,920 --> 00:22:13,159 Speaker 4: even if it's not a long term kind of structural shift, 450 00:22:13,440 --> 00:22:16,280 Speaker 4: as you were just talking about with John. Let's say 451 00:22:16,280 --> 00:22:18,359 Speaker 4: there is no banking crisis. The M and T results 452 00:22:18,359 --> 00:22:20,120 Speaker 4: that we got this morning seems to suggest that it's 453 00:22:20,119 --> 00:22:22,280 Speaker 4: not really a problem. Then all of a sudden do 454 00:22:22,320 --> 00:22:24,919 Speaker 4: you start to price in more fed Rica hikes and 455 00:22:25,000 --> 00:22:27,399 Speaker 4: you end up with perhaps a stronger dollar than you'd 456 00:22:27,440 --> 00:22:28,119 Speaker 4: otherwise assume. 457 00:22:28,920 --> 00:22:31,800 Speaker 8: The biggest risk to the trade we have, Lisa. That's it. 458 00:22:32,000 --> 00:22:33,040 Speaker 8: That is the biggest risk. 459 00:22:33,040 --> 00:22:36,400 Speaker 9: If the banking data massively improves, all of the doom 460 00:22:36,440 --> 00:22:40,280 Speaker 9: and gloom goes away and Let's say it's followed by 461 00:22:40,320 --> 00:22:43,240 Speaker 9: an inflation print or two that comes in het Let's 462 00:22:43,240 --> 00:22:46,119 Speaker 9: say shelter doesn't cool down. Let's say good price is rebound, 463 00:22:46,200 --> 00:22:49,040 Speaker 9: then absolutely the dollar strengthens in that scenario. 464 00:22:49,200 --> 00:22:51,240 Speaker 8: The H eight data this gets released every week. 465 00:22:51,440 --> 00:22:54,200 Speaker 9: The update from Friday showed that actually we didn't have 466 00:22:54,600 --> 00:22:57,080 Speaker 9: consumer credit tighten as much as the previous two weeks, 467 00:22:57,520 --> 00:22:59,040 Speaker 9: So we'll have to keep an eye on that data. 468 00:22:59,040 --> 00:23:01,879 Speaker 9: If it massively rebound, which would be completely shocking and weird. 469 00:23:02,119 --> 00:23:04,160 Speaker 9: But if it was to do that, then you could 470 00:23:04,200 --> 00:23:06,199 Speaker 9: definitely see the Fed carry on hiking. Perhaps not at 471 00:23:06,200 --> 00:23:08,879 Speaker 9: the fifty bases points clips that we saw last year. 472 00:23:09,040 --> 00:23:11,679 Speaker 9: Maybe it's just the twenty fives until something else breaks, 473 00:23:11,760 --> 00:23:13,560 Speaker 9: because it seems that when you get to these levels 474 00:23:13,560 --> 00:23:14,640 Speaker 9: of rates, something does break. 475 00:23:14,640 --> 00:23:16,359 Speaker 8: We've seen it already in the banking sector. 476 00:23:16,359 --> 00:23:18,240 Speaker 9: Of the question will be what else is a commercial 477 00:23:18,240 --> 00:23:21,760 Speaker 9: real estate or other factors to consider? So, yes, that 478 00:23:21,840 --> 00:23:23,960 Speaker 9: is the biggest risk to trade. Oil prices is the 479 00:23:23,960 --> 00:23:26,719 Speaker 9: other one. So oil rebounds gets to ninety dollars one 480 00:23:26,760 --> 00:23:29,040 Speaker 9: hundred dollars a barrow, inflation rebounds, and. 481 00:23:29,040 --> 00:23:30,880 Speaker 8: Therefore the Fed continues to remain hawkish. 482 00:23:31,040 --> 00:23:34,120 Speaker 9: So yes, rebound in banking data and energy prices, two 483 00:23:34,119 --> 00:23:36,560 Speaker 9: main risks is long yeared all of you, which. 484 00:23:36,320 --> 00:23:39,280 Speaker 4: Also raises an issue of positioning right and how fragile 485 00:23:39,440 --> 00:23:41,920 Speaker 4: positioning is at a time of great uncertainty. We've seen 486 00:23:41,960 --> 00:23:45,720 Speaker 4: incredible whipsaws in benchmark rates, which should be a ballast 487 00:23:45,760 --> 00:23:49,480 Speaker 4: for markets of stability. How tenuous is positioning that could 488 00:23:49,520 --> 00:23:53,200 Speaker 4: create some really big moves in currencies in currency pairs 489 00:23:53,400 --> 00:23:55,840 Speaker 4: given some of these big risks. 490 00:23:56,720 --> 00:24:00,600 Speaker 9: So positioning data is clear that essentially folks are on 491 00:24:00,640 --> 00:24:03,200 Speaker 9: board with the short dollar trade. The euro seems to 492 00:24:03,240 --> 00:24:05,720 Speaker 9: be where the consensus has built up given all of 493 00:24:05,760 --> 00:24:07,720 Speaker 9: the bad news from from last year has turned into 494 00:24:07,720 --> 00:24:10,159 Speaker 9: good news this year in terms of trade up. So 495 00:24:10,320 --> 00:24:13,200 Speaker 9: the question is if credit conditions titan, can the Euro 496 00:24:13,320 --> 00:24:16,879 Speaker 9: really rally And we saw that with SCB when we 497 00:24:16,920 --> 00:24:19,720 Speaker 9: had the financial conditions titan. Urine dollar did come off 498 00:24:19,720 --> 00:24:21,720 Speaker 9: that day and then it spread through to credit sweets. 499 00:24:22,359 --> 00:24:24,040 Speaker 9: I actually thought it was remarkable how it didn't go 500 00:24:24,160 --> 00:24:27,440 Speaker 9: much lower during that period of crisis. So the positioning 501 00:24:27,640 --> 00:24:31,639 Speaker 9: is one thing. In FX, yes, it's long euro, but 502 00:24:31,880 --> 00:24:34,280 Speaker 9: I do think about last year. Most of last year 503 00:24:34,480 --> 00:24:38,040 Speaker 9: of real money managers invested away from European stocks because 504 00:24:38,040 --> 00:24:39,960 Speaker 9: of the recession, because of Ukraine and Russia, because of 505 00:24:40,040 --> 00:24:43,879 Speaker 9: higher energy prices. Now we're seeing continued inflows into the 506 00:24:43,920 --> 00:24:48,000 Speaker 9: euro Area, are rebalancing away from US equities towards European 507 00:24:48,240 --> 00:24:51,320 Speaker 9: and that's a structural trade as well. We've had underweights 508 00:24:51,320 --> 00:24:54,720 Speaker 9: in European equities amongst investors for the pretty much ten years. 509 00:24:55,080 --> 00:24:57,679 Speaker 9: All of the growth was in technology stocks in the US. 510 00:24:57,840 --> 00:25:00,720 Speaker 9: That's now changed, So I think that it on the 511 00:25:00,960 --> 00:25:03,640 Speaker 9: FXX future side, it suggests long euro is in vogue, 512 00:25:03,680 --> 00:25:06,719 Speaker 9: but I'm still seeing five months of continued equity inflows 513 00:25:06,760 --> 00:25:09,640 Speaker 9: into euro Area, so I don't think investors are overly 514 00:25:09,800 --> 00:25:12,280 Speaker 9: net long Euro to make a big risk for this 515 00:25:12,320 --> 00:25:14,520 Speaker 9: trade right now, because I'm also looking from a terms 516 00:25:14,520 --> 00:25:18,280 Speaker 9: of trade perspective and from the China reopening perspective too, 517 00:25:18,640 --> 00:25:21,080 Speaker 9: So China's data has all come in quite pretty strong. 518 00:25:21,359 --> 00:25:23,960 Speaker 9: China data surprises are at the highs, and Europe is 519 00:25:24,000 --> 00:25:27,000 Speaker 9: three times more exposed to trade with China than the US. 520 00:25:27,320 --> 00:25:29,439 Speaker 9: So all of those factors make it very difficult for 521 00:25:29,600 --> 00:25:31,560 Speaker 9: positioning to be the big concern for me right now. 522 00:25:31,600 --> 00:25:34,480 Speaker 6: Hey Jordan, thank you mate, and congratulations over the weekend 523 00:25:34,720 --> 00:25:38,080 Speaker 6: to Villa. Thank you, sir Jordan Rochester and Namura. 524 00:25:41,720 --> 00:25:45,800 Speaker 2: One of the great voices of Wall Street counseling patients 525 00:25:45,800 --> 00:25:48,520 Speaker 2: in a reach out three years as David Balen, chief 526 00:25:48,560 --> 00:25:52,160 Speaker 2: investment Officer, Global Head of Investments at City Global Wealth, 527 00:25:52,240 --> 00:25:54,680 Speaker 2: we had a certain courage to the pandemic to say 528 00:25:55,359 --> 00:25:58,679 Speaker 2: stay in the market. David, you lead your essay, it 529 00:25:58,760 --> 00:26:02,080 Speaker 2: is not easy to be an investor right now? How 530 00:26:02,119 --> 00:26:04,680 Speaker 2: do I have confidence to stay in stocks? 531 00:26:06,160 --> 00:26:08,480 Speaker 10: Well, right down, Tom, We're sort of two thirds through 532 00:26:08,520 --> 00:26:11,359 Speaker 10: the bear market, and what's standing between us and our 533 00:26:11,359 --> 00:26:15,600 Speaker 10: recovery in portfolios is the recognition of what earnings are 534 00:26:15,600 --> 00:26:18,040 Speaker 10: going to be and what the level of recession that 535 00:26:18,080 --> 00:26:21,200 Speaker 10: the FED anticipates and has actually talked about now actually occurs. 536 00:26:21,760 --> 00:26:23,520 Speaker 10: We think that earnings, you know, are going to go 537 00:26:23,600 --> 00:26:26,560 Speaker 10: down probably between seven and ten percent, much less than 538 00:26:26,560 --> 00:26:30,200 Speaker 10: what analysts are expecting in terms of they're actually expecting growth. 539 00:26:30,640 --> 00:26:32,399 Speaker 10: And the second thing that you and your team have 540 00:26:32,560 --> 00:26:34,479 Speaker 10: just talked about, which I think is critical, is that 541 00:26:34,520 --> 00:26:38,320 Speaker 10: we already see further tightening due to bank lending standards, 542 00:26:38,359 --> 00:26:41,199 Speaker 10: and we see it across several data sources. First, we 543 00:26:41,240 --> 00:26:43,560 Speaker 10: already see that banks are lending less that the actual 544 00:26:43,600 --> 00:26:46,840 Speaker 10: amount of outstanding loans are going down. Second, we see 545 00:26:46,840 --> 00:26:49,800 Speaker 10: the reporting by companies of the fact that lending standards 546 00:26:49,800 --> 00:26:52,639 Speaker 10: are already tighter. And third, we actually are going to 547 00:26:52,680 --> 00:26:55,440 Speaker 10: see that the ability and capacity of small and medium 548 00:26:55,520 --> 00:26:57,760 Speaker 10: sized banks to lend is going to go down as 549 00:26:57,760 --> 00:27:01,080 Speaker 10: a result of almost a half a trillion do of 550 00:27:01,200 --> 00:27:04,960 Speaker 10: deposits moving into treasuries and money market funds over the 551 00:27:05,080 --> 00:27:08,199 Speaker 10: last three months. So these are already constraints on an 552 00:27:08,200 --> 00:27:09,680 Speaker 10: economy that is already slow. 553 00:27:10,040 --> 00:27:12,679 Speaker 4: David, We've been talking on morning about the dispersion, the 554 00:27:12,760 --> 00:27:16,159 Speaker 4: sort of disagreement between bonds and stocks. Bonds seem to 555 00:27:16,200 --> 00:27:18,840 Speaker 4: be pricing in rate cuts on the heels of exactly 556 00:27:18,840 --> 00:27:21,800 Speaker 4: what you're talking about, credit restriction that really just escalates 557 00:27:21,800 --> 00:27:24,560 Speaker 4: throughout the year, and you see stock traders kind of 558 00:27:24,560 --> 00:27:26,800 Speaker 4: shrugging that off and saying things are so all copacetic. 559 00:27:27,080 --> 00:27:28,040 Speaker 4: Who do you think is right? 560 00:27:29,400 --> 00:27:31,440 Speaker 10: Well, the bond market looks to be right for the moment. 561 00:27:31,480 --> 00:27:34,240 Speaker 10: What's interesting is that, you know, bonds have rallied extraordinarily, 562 00:27:34,280 --> 00:27:36,040 Speaker 10: and you've talked about this for the last you know, 563 00:27:36,080 --> 00:27:38,840 Speaker 10: five weeks. You know, the two year and the ten 564 00:27:38,920 --> 00:27:41,760 Speaker 10: year have moved, you know, yields have moved dramatically lower. 565 00:27:42,359 --> 00:27:45,000 Speaker 10: The stock market is anticipating and saying, well, that's great. 566 00:27:45,000 --> 00:27:47,840 Speaker 10: You know, the discount rate for stocks has actually gone down, bravo. 567 00:27:48,359 --> 00:27:50,520 Speaker 10: But really what's happening is that the bond market is 568 00:27:50,560 --> 00:27:53,040 Speaker 10: saying we have to be much more vigilant about where 569 00:27:53,080 --> 00:27:54,760 Speaker 10: their earnings are going to go down and where they're 570 00:27:54,760 --> 00:27:57,520 Speaker 10: going to go up. So companies that have motes around them, 571 00:27:57,560 --> 00:28:00,440 Speaker 10: you know, different technology companies and other you know, industries 572 00:28:00,440 --> 00:28:03,360 Speaker 10: where you can see both margin growth and revenue growth 573 00:28:03,400 --> 00:28:05,960 Speaker 10: should be rewarded. But you've seen you know, the bank 574 00:28:06,040 --> 00:28:07,639 Speaker 10: stocks in particular, and some of the ones you've been 575 00:28:07,640 --> 00:28:11,240 Speaker 10: discussing this morning do poorly. And the industry averages, you know, 576 00:28:11,280 --> 00:28:13,240 Speaker 10: the S and P and stuff, has been largely range 577 00:28:13,240 --> 00:28:16,119 Speaker 10: bound since October of last year. So what we have 578 00:28:16,200 --> 00:28:18,639 Speaker 10: to see is this digesting of what really is going 579 00:28:18,720 --> 00:28:20,919 Speaker 10: to happen with earnings in order to be able to 580 00:28:20,960 --> 00:28:23,199 Speaker 10: look into twenty four and twenty five. And when we do, 581 00:28:23,240 --> 00:28:26,440 Speaker 10: I think we'll see a substantial recovery. But again, we're 582 00:28:26,440 --> 00:28:28,639 Speaker 10: two thirds of a way through a bear market inequities. 583 00:28:28,720 --> 00:28:31,320 Speaker 4: Earlier this year, people were talking about going outside the 584 00:28:31,440 --> 00:28:34,359 Speaker 4: US to Europe in particular as a place, particularly because 585 00:28:34,359 --> 00:28:37,239 Speaker 4: the ECB was still raising rates potentially much more than 586 00:28:37,280 --> 00:28:39,440 Speaker 4: the FED was poised to do so this year. Do 587 00:28:39,480 --> 00:28:42,120 Speaker 4: you still see that as the narrative that could drive 588 00:28:42,200 --> 00:28:45,000 Speaker 4: investment theses or do you think the US looks like 589 00:28:45,200 --> 00:28:48,240 Speaker 4: a better place to park simply because it will go 590 00:28:48,280 --> 00:28:50,600 Speaker 4: through the cycle quicker and there will be more pain 591 00:28:50,720 --> 00:28:52,440 Speaker 4: on the heels of some of the rate hikes elsewhere. 592 00:28:53,720 --> 00:28:54,480 Speaker 8: It's a great question. 593 00:28:54,520 --> 00:28:56,120 Speaker 10: If I had to predict one thing that we would 594 00:28:56,120 --> 00:28:58,120 Speaker 10: be writing, you know, just a month or two from now, 595 00:28:58,160 --> 00:29:01,120 Speaker 10: it would be that, you know, emerging market exposure is 596 00:29:01,160 --> 00:29:03,120 Speaker 10: going to become or non US exposure is going to 597 00:29:03,120 --> 00:29:06,920 Speaker 10: become extremely important. Right now, we are near the third 598 00:29:06,960 --> 00:29:09,320 Speaker 10: highest dollar peak ever, we haven't come very much off 599 00:29:09,360 --> 00:29:13,320 Speaker 10: of that, and valuations for non US stocks and especially 600 00:29:13,360 --> 00:29:17,040 Speaker 10: emerging market stocks are at all time lows. So if 601 00:29:17,040 --> 00:29:19,840 Speaker 10: you're a US investor today, you would like to buy 602 00:29:19,840 --> 00:29:23,040 Speaker 10: companies right in industries outside of the US to take 603 00:29:23,080 --> 00:29:27,400 Speaker 10: advantage of both the disproportionate devaluation of those shares as 604 00:29:27,440 --> 00:29:29,520 Speaker 10: well as the fact that the dollar is going to fall. 605 00:29:29,560 --> 00:29:31,840 Speaker 10: I think it's going to be a major source of 606 00:29:31,880 --> 00:29:35,080 Speaker 10: income for US for profits for US over the course 607 00:29:35,120 --> 00:29:36,960 Speaker 10: of the next two or three years. 608 00:29:37,160 --> 00:29:39,160 Speaker 6: You're not alone, David. We've heard that a lot. David 609 00:29:39,160 --> 00:29:41,280 Speaker 6: Padding of City Global wowth. 610 00:29:51,560 --> 00:29:53,880 Speaker 2: Right now a brief and this comes off the IMF 611 00:29:53,920 --> 00:29:56,280 Speaker 2: World Bank meetings, and thank you to all in Washington 612 00:29:56,320 --> 00:29:59,320 Speaker 2: that helped us, particularly Peggy Noon and running the ship 613 00:29:59,360 --> 00:30:02,200 Speaker 2: for US in one Washington. Julie Norman joins now co 614 00:30:02,320 --> 00:30:06,120 Speaker 2: director of UCL Center in US Politics, Julie is a 615 00:30:06,120 --> 00:30:09,120 Speaker 2: broad stance. What I noticed at the IMF and World 616 00:30:09,160 --> 00:30:12,840 Speaker 2: Bank meetings were the unspoken Nobody wanted to say China. 617 00:30:12,880 --> 00:30:15,880 Speaker 1: That word was banned from the meeting. You couldn't say China. 618 00:30:15,960 --> 00:30:18,760 Speaker 2: But the other thing that was banned was the word 619 00:30:18,960 --> 00:30:24,080 Speaker 2: allies recalibrate for us now the Western allies. 620 00:30:24,200 --> 00:30:26,200 Speaker 1: How allied are the allies? 621 00:30:27,560 --> 00:30:29,760 Speaker 5: Well? Some I think you mentioned China as well, And 622 00:30:29,920 --> 00:30:32,040 Speaker 5: obviously we've seen in the last couple of weeks, and 623 00:30:32,040 --> 00:30:34,120 Speaker 5: I would say even longer than that, a little bit 624 00:30:34,120 --> 00:30:37,880 Speaker 5: of wobbling and what alliance means and how different partners 625 00:30:37,880 --> 00:30:41,160 Speaker 5: approached the question of China in particular. So obviously we 626 00:30:41,200 --> 00:30:44,280 Speaker 5: see strong alliances in terms of the stands towards Ukraine. 627 00:30:44,280 --> 00:30:46,680 Speaker 5: We've seen that with made with European partners, but with 628 00:30:46,880 --> 00:30:48,840 Speaker 5: and as you like, China, it gets a little bit different. 629 00:30:48,880 --> 00:30:50,600 Speaker 5: There's a lot of different interest at play, as you 630 00:30:50,680 --> 00:30:53,520 Speaker 5: all well know, and so I think we still see alliances, 631 00:30:53,560 --> 00:30:56,200 Speaker 5: but at the same time we see some differences among 632 00:30:56,240 --> 00:30:57,840 Speaker 5: that as well, and so there's a little bit more 633 00:30:57,880 --> 00:31:00,800 Speaker 5: caution in using that term when you're talking about some 634 00:31:00,840 --> 00:31:02,200 Speaker 5: of these more complicated issues. 635 00:31:02,960 --> 00:31:06,720 Speaker 2: The bilateralness or that, I should say, the tension between 636 00:31:06,800 --> 00:31:10,520 Speaker 2: Washington and Beijing, to me is just too simplistic. Who 637 00:31:10,560 --> 00:31:16,200 Speaker 2: are you watching among our allies to change the dynamic 638 00:31:16,320 --> 00:31:18,080 Speaker 2: between Washington and Beijing. 639 00:31:19,160 --> 00:31:21,280 Speaker 5: Well, I think the you know, there's obviously the look 640 00:31:21,360 --> 00:31:24,840 Speaker 5: to Europe first and foremost. The UK, I would say, 641 00:31:24,880 --> 00:31:28,680 Speaker 5: has already shifted its policy notably in the last few years. 642 00:31:28,720 --> 00:31:31,800 Speaker 5: I think even more so because of China's actions against 643 00:31:31,840 --> 00:31:34,120 Speaker 5: Hong Kong more than anything else. We started seeing a 644 00:31:34,120 --> 00:31:36,280 Speaker 5: bit of a tilt and some of the UK policies 645 00:31:36,520 --> 00:31:40,360 Speaker 5: continental Europe otherwise. But I'm actually watching some other allies 646 00:31:40,400 --> 00:31:43,760 Speaker 5: kind of outside of West Western Europe, India in particular, 647 00:31:44,160 --> 00:31:46,960 Speaker 5: states that are kind of in this kind of still 648 00:31:46,960 --> 00:31:48,680 Speaker 5: allies with the US, but a lot of different kind 649 00:31:48,720 --> 00:31:51,080 Speaker 5: of interests going on that do have a big say 650 00:31:51,160 --> 00:31:53,920 Speaker 5: and influence on what's happening in the Pacific, in Asia 651 00:31:53,960 --> 00:31:56,520 Speaker 5: and in other parts of the world. China's we think 652 00:31:56,520 --> 00:31:59,760 Speaker 5: of this bilateral relationship with Washington, but so much of 653 00:31:59,800 --> 00:32:04,240 Speaker 5: word power is in its outside of European. It's in Africa, 654 00:32:04,440 --> 00:32:07,480 Speaker 5: it's in you know, Southern Asia, it's across the world, 655 00:32:07,520 --> 00:32:09,360 Speaker 5: and so those are the countries I'm looking at well. 656 00:32:09,360 --> 00:32:11,440 Speaker 4: But Julie taking a step back, one thing that really 657 00:32:11,440 --> 00:32:14,800 Speaker 4: emerged from last week's IMF meetings was a sense of 658 00:32:14,920 --> 00:32:18,720 Speaker 4: not only fragmentation, but an inability to have leadership to 659 00:32:18,800 --> 00:32:21,400 Speaker 4: address it, to come up with what the framework is 660 00:32:21,760 --> 00:32:25,600 Speaker 4: in the modern bipolar or multipolar era. Larry Summer's, a 661 00:32:25,600 --> 00:32:29,640 Speaker 4: former treasure secretary, on Friday said there's growing acceptance of fragmentation, 662 00:32:29,720 --> 00:32:31,600 Speaker 4: and maybe even more troubling, I think there's a growing 663 00:32:31,640 --> 00:32:34,480 Speaker 4: sense that ours may not be the best fragment to 664 00:32:34,480 --> 00:32:37,120 Speaker 4: be associated with. China gives you an airport, we give 665 00:32:37,120 --> 00:32:39,320 Speaker 4: you a lecture. How much is that really your sense 666 00:32:39,520 --> 00:32:40,280 Speaker 4: of what's going on? 667 00:32:41,680 --> 00:32:43,920 Speaker 5: Well, I think you said it exactly right. There. There's 668 00:32:43,960 --> 00:32:46,600 Speaker 5: a lot of states that are finding it advantageous to 669 00:32:47,040 --> 00:32:49,640 Speaker 5: partner with China because they see it as there's not 670 00:32:49,760 --> 00:32:52,800 Speaker 5: strings attached. There isn't going to be pressure on democracy, 671 00:32:52,840 --> 00:32:54,760 Speaker 5: there isn't going to be pressure on human rights. It's 672 00:32:54,880 --> 00:32:57,560 Speaker 5: very transactional. It's very much a business deal, and so 673 00:32:57,640 --> 00:33:00,160 Speaker 5: that works for again a lot of states, and it 674 00:33:00,200 --> 00:33:03,160 Speaker 5: works very well for China. So I would say in 675 00:33:03,240 --> 00:33:06,880 Speaker 5: terms of Summer's comments, again there's a lot at play here. Again, 676 00:33:06,920 --> 00:33:09,280 Speaker 5: the US is still trading at the highest levels ever 677 00:33:09,360 --> 00:33:11,320 Speaker 5: with China as well, so it's not like the US 678 00:33:11,400 --> 00:33:13,800 Speaker 5: is backing away from that, but the US is coupling 679 00:33:13,840 --> 00:33:16,680 Speaker 5: that again with very strong, you know, arms build up, 680 00:33:16,760 --> 00:33:20,280 Speaker 5: with this very strong confrontational stance as well that other 681 00:33:20,320 --> 00:33:22,959 Speaker 5: states are hesitant to get onto that for their own interests. 682 00:33:23,200 --> 00:33:26,040 Speaker 6: Just getting a couple event lines top diplomats in the 683 00:33:26,080 --> 00:33:29,000 Speaker 6: G seven meeting over in Japan over the next two days. 684 00:33:29,000 --> 00:33:32,360 Speaker 6: So the headlines from one US official, G seven ministers 685 00:33:32,400 --> 00:33:36,280 Speaker 6: agree on engagement with China, agreed to stay tightly coordinated 686 00:33:36,480 --> 00:33:39,520 Speaker 6: on Ukraine, and then linking the two issues, G seven 687 00:33:39,560 --> 00:33:43,240 Speaker 6: cooperation on Ukraine tom leads to unity on China. The 688 00:33:43,320 --> 00:33:46,240 Speaker 6: latest headlines from a US official as top diplomats meet 689 00:33:46,520 --> 00:33:47,520 Speaker 6: over in Japan. 690 00:33:47,520 --> 00:33:50,000 Speaker 2: Seem to be massaged. I mean, it's exactly you know, 691 00:33:50,480 --> 00:33:53,360 Speaker 2: I think it's exactly what you'd expect to see. What's 692 00:33:53,400 --> 00:33:55,720 Speaker 2: important there is it's not a G eight. Russia used 693 00:33:55,760 --> 00:33:57,400 Speaker 2: to be in the club, and Russia's not in the 694 00:33:57,400 --> 00:33:58,040 Speaker 2: club anymore. 695 00:33:58,080 --> 00:34:00,000 Speaker 6: Well, also they've got a massage some of the issues 696 00:34:00,200 --> 00:34:02,320 Speaker 6: of the last week. We keep returning to those comments 697 00:34:02,360 --> 00:34:07,600 Speaker 6: Tom from the French leader a couple of weeks ago, assarching. 698 00:34:06,680 --> 00:34:10,040 Speaker 4: To do it's ignoring. I mean, that's what happened with 699 00:34:10,040 --> 00:34:12,000 Speaker 4: European officials just like la la la la la were 700 00:34:12,000 --> 00:34:12,640 Speaker 4: totally united. 701 00:34:12,680 --> 00:34:14,520 Speaker 6: That's that's what I got from the IMF World Bank 702 00:34:14,600 --> 00:34:16,640 Speaker 6: meetings too, at least from so placed you went there. 703 00:34:18,360 --> 00:34:21,279 Speaker 6: I'm just hoping those comments didn't happen, pretending they didn't 704 00:34:21,280 --> 00:34:22,160 Speaker 6: happen totally. 705 00:34:22,239 --> 00:34:24,080 Speaker 2: I mean, you guys, I had to leave late because 706 00:34:24,080 --> 00:34:26,080 Speaker 2: of this wonderful panel I did the IMF, and of 707 00:34:26,120 --> 00:34:28,600 Speaker 2: course I stopped up on U Street at Ben's Chili Bowl. 708 00:34:28,920 --> 00:34:31,080 Speaker 2: And I can tell you from reporting they're still called 709 00:34:31,120 --> 00:34:31,720 Speaker 2: French fries. 710 00:34:32,600 --> 00:34:36,279 Speaker 6: Is that the latest the ladies they didn't hadn't gone 711 00:34:36,280 --> 00:34:36,719 Speaker 6: there fun It. 712 00:34:36,719 --> 00:34:38,480 Speaker 1: Didn't change it's still frenchiest. 713 00:34:38,480 --> 00:34:40,640 Speaker 6: Why don't you continue, Actually I plan to, Julie. I 714 00:34:40,680 --> 00:34:43,040 Speaker 6: wanted to bring that up. When you listen to US 715 00:34:43,080 --> 00:34:46,480 Speaker 6: and European officials, they're almost pretending this tension between the 716 00:34:46,520 --> 00:34:49,399 Speaker 6: two does not exist, Julie. How much tension is there 717 00:34:49,480 --> 00:34:52,840 Speaker 6: right now over trade? Over big foreign policy issues? 718 00:34:54,120 --> 00:34:56,960 Speaker 5: Yeah, I mean, obviously there are tensions. I would say, 719 00:34:57,080 --> 00:34:59,560 Speaker 5: I don't want to overstate them either. I mean, right now, 720 00:34:59,600 --> 00:35:03,920 Speaker 5: the most immediate issue is Ukraine, and I think the US, 721 00:35:04,200 --> 00:35:07,880 Speaker 5: France and other NATO countries are you know, that is 722 00:35:07,920 --> 00:35:10,160 Speaker 5: where the alliance needs to stay tight, and it has 723 00:35:10,200 --> 00:35:13,399 Speaker 5: stayed tight. China has always been complicated. There has been 724 00:35:13,440 --> 00:35:16,400 Speaker 5: a difference between European and US approaches to China for 725 00:35:16,440 --> 00:35:19,000 Speaker 5: some years now. So this isn't really taking anyone by surprise. 726 00:35:19,280 --> 00:35:22,520 Speaker 5: And even Macrone's comments I think are a bit more 727 00:35:23,080 --> 00:35:25,359 Speaker 5: You're probably shared by some others, even though people are 728 00:35:25,360 --> 00:35:28,279 Speaker 5: pretty quick to Gritique, but I think a lot of 729 00:35:28,520 --> 00:35:31,040 Speaker 5: European states, as well as again other states on the periphery, 730 00:35:31,400 --> 00:35:34,839 Speaker 5: are just realistic about the fact that China is going 731 00:35:34,880 --> 00:35:36,880 Speaker 5: to take a little bit of a more nuanced kind 732 00:35:36,880 --> 00:35:38,960 Speaker 5: of approach from any states where their interests are very 733 00:35:39,160 --> 00:35:42,520 Speaker 5: intertwined there, and that's just a reality Jenny. 734 00:35:42,560 --> 00:35:44,880 Speaker 6: Thanks for this perspective, and the reality check has always 735 00:35:44,920 --> 00:35:48,040 Speaker 6: Jenny Norman, that of the UCL Sensor on US politics. 736 00:35:48,200 --> 00:35:52,040 Speaker 2: Subscribe to the Bloomberg Surveillance Podcast on Apple, Spotify, and 737 00:35:52,160 --> 00:35:56,360 Speaker 2: anywhere else you get your podcasts. Listen live every weekday 738 00:35:56,640 --> 00:36:01,200 Speaker 2: starting at seven am Eastern Bloomberg dot com, the iHeartRadio 739 00:36:01,280 --> 00:36:05,000 Speaker 2: app tune In, and the Bloomberg Business app. You can 740 00:36:05,160 --> 00:36:08,920 Speaker 2: watch us live on Bloomberg Television and always on the 741 00:36:08,920 --> 00:36:09,960 Speaker 2: Bloomberg terminal. 742 00:36:10,360 --> 00:36:14,560 Speaker 1: Thanks for listening. I'm Tom Keen, and this is Bloomberg