1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jai Ley. 2 00:00:13,960 --> 00:00:16,960 Speaker 1: We bring you insight from the best in economics, finance, 3 00:00:17,040 --> 00:00:23,480 Speaker 1: investment and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:34,280 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg Tom. 5 00:00:34,320 --> 00:00:38,120 Speaker 1: British and European officials have hailed progress in Brexit negotiations 6 00:00:38,440 --> 00:00:40,680 Speaker 1: with the EU. We found that out in the last 7 00:00:40,680 --> 00:00:44,400 Speaker 1: couple of days. British and European officials have hailed progress 8 00:00:44,400 --> 00:00:48,400 Speaker 1: in these Brexit negotiations, with the UK leader negotiator Dominic 9 00:00:48,479 --> 00:00:51,120 Speaker 1: rob predicting a deal on the divorce will be finalized 10 00:00:51,440 --> 00:00:54,160 Speaker 1: by November twenty one. Now joining us now with Semma 11 00:00:54,200 --> 00:00:56,360 Speaker 1: La Tra a member of Parliament for the UK Labor 12 00:00:56,440 --> 00:00:59,360 Speaker 1: Party and a member of the Select Committee on Exiting 13 00:00:59,480 --> 00:01:02,120 Speaker 1: the europe In Union, still with us, as well as 14 00:01:02,200 --> 00:01:04,880 Speaker 1: David Owen of Jeffreys that Mr Malanger, thank you so 15 00:01:04,959 --> 00:01:07,560 Speaker 1: much for joining us. What is your basic case scenario 16 00:01:07,880 --> 00:01:12,480 Speaker 1: of what happens and Brexit? Well, I don't believe that 17 00:01:12,680 --> 00:01:17,440 Speaker 1: we're going to see a deal by the twenty one November. 18 00:01:17,480 --> 00:01:20,120 Speaker 1: I think in terms of Dominic Rath prediction that was 19 00:01:20,160 --> 00:01:23,600 Speaker 1: already being backtracked. You know, we're in less than a 20 00:01:23,640 --> 00:01:27,720 Speaker 1: hundred fifty days from Brexit and there is still huge uncertainty, 21 00:01:27,840 --> 00:01:30,520 Speaker 1: huge uncertainty about what we're going to have as the 22 00:01:30,560 --> 00:01:33,720 Speaker 1: final deal, huge uncertainty almost more importantly about what's going 23 00:01:33,760 --> 00:01:36,440 Speaker 1: to be in the Political Declaration which is the forerunner 24 00:01:36,520 --> 00:01:40,120 Speaker 1: to the Future Trade Agreement that we will have in 25 00:01:40,160 --> 00:01:43,920 Speaker 1: the future framework with the European Union, And even of 26 00:01:43,959 --> 00:01:46,800 Speaker 1: more significance as well to members of Parliament, what kind 27 00:01:46,840 --> 00:01:49,800 Speaker 1: of parliamentary process we're going to have, what meaningful vote 28 00:01:49,840 --> 00:01:52,440 Speaker 1: there's going to be, and if our evidence of the 29 00:01:52,560 --> 00:01:55,040 Speaker 1: Select Committee yesterday is anything to go by, this is 30 00:01:55,080 --> 00:01:57,600 Speaker 1: more of a meaning less vote than a meaningful vote 31 00:01:57,640 --> 00:02:04,600 Speaker 1: with huge consequences for scrutiny and accountability of the government. Right, 32 00:02:04,680 --> 00:02:06,840 Speaker 1: what exactly what are you telling me that we'll have 33 00:02:06,880 --> 00:02:09,240 Speaker 1: an agreement? And well banks, how to access are we are? 34 00:02:09,240 --> 00:02:11,600 Speaker 1: Are we staying in the Common Market for a no? 35 00:02:11,600 --> 00:02:15,360 Speaker 1: How or what will the deal look like? Well, we 36 00:02:15,400 --> 00:02:17,040 Speaker 1: don't know what the deal would look like. I think 37 00:02:17,040 --> 00:02:20,680 Speaker 1: in terms of transition we will be saying staying within 38 00:02:20,880 --> 00:02:22,800 Speaker 1: much of the framework that we already have, but we 39 00:02:22,840 --> 00:02:25,880 Speaker 1: will be rule takers rather than be seated around the 40 00:02:25,919 --> 00:02:30,239 Speaker 1: table and having a say in what happened. People are 41 00:02:30,720 --> 00:02:34,480 Speaker 1: very concerned about what this could mean if there is 42 00:02:34,520 --> 00:02:37,080 Speaker 1: no deal as well. For the UK, we there is 43 00:02:37,120 --> 00:02:38,880 Speaker 1: no guarantee that's going to be a deal that gets 44 00:02:38,880 --> 00:02:42,200 Speaker 1: through Parliament. That could mean real challenges in terms of 45 00:02:42,840 --> 00:02:47,760 Speaker 1: um difficulties with trade, delays at the border, questions about 46 00:02:47,760 --> 00:02:50,560 Speaker 1: whether even basics like the European Health Insurance Card would 47 00:02:50,560 --> 00:02:55,320 Speaker 1: be available to citizens, legal certainty around contracts. I mean, 48 00:02:55,639 --> 00:02:59,760 Speaker 1: this uncertainty is not what people voted for, and it's 49 00:02:59,800 --> 00:03:02,480 Speaker 1: in credibly concerning that we may have two cliff edges 50 00:03:02,639 --> 00:03:05,239 Speaker 1: as well facing us, one at the end of March 51 00:03:05,520 --> 00:03:07,400 Speaker 1: and then the second one at the end of our 52 00:03:07,480 --> 00:03:10,560 Speaker 1: transition period as well. So the government has a lot 53 00:03:10,639 --> 00:03:13,040 Speaker 1: to do in a very short space of time, both 54 00:03:13,080 --> 00:03:15,120 Speaker 1: to get a deal, to have a deal that's going 55 00:03:15,160 --> 00:03:17,600 Speaker 1: to win the confidence of Parliament, and then to have 56 00:03:17,760 --> 00:03:20,600 Speaker 1: us be ready for leaving on March twenty nine. There 57 00:03:20,600 --> 00:03:23,079 Speaker 1: are huge questions as well about whether we will be 58 00:03:23,160 --> 00:03:25,800 Speaker 1: ready in terms of having passed the legislation that's needed, 59 00:03:26,080 --> 00:03:30,680 Speaker 1: with over eight hundred statutory instruments still set to go through, 60 00:03:30,760 --> 00:03:33,040 Speaker 1: so we We've got a lot of work to do yet. 61 00:03:35,680 --> 00:03:37,560 Speaker 1: So what does that mean for the Labor Party? Will 62 00:03:37,560 --> 00:03:40,320 Speaker 1: they push for a second referendum if it's not the 63 00:03:40,400 --> 00:03:42,360 Speaker 1: right kind of deal? Do you want elections if it's 64 00:03:42,360 --> 00:03:46,160 Speaker 1: not the right kind of deal? Well, there are increasing 65 00:03:46,280 --> 00:03:49,120 Speaker 1: calls for a second referendum, and for the very simple 66 00:03:49,160 --> 00:03:52,560 Speaker 1: reason that what's emerging and what the Prime Minister has 67 00:03:52,600 --> 00:03:57,280 Speaker 1: been has has now is now doing in terms of 68 00:03:57,280 --> 00:04:01,000 Speaker 1: being forced into a very difficult position, is not what 69 00:04:01,040 --> 00:04:03,840 Speaker 1: people thought was going to happen as a result of Brexit. 70 00:04:04,040 --> 00:04:06,680 Speaker 1: We there is no way in which we are heading 71 00:04:06,720 --> 00:04:09,840 Speaker 1: to be a more prosperous nation. In fact, every scenario 72 00:04:10,000 --> 00:04:13,200 Speaker 1: under the government's own Brexit impact assessments suggested that we 73 00:04:13,240 --> 00:04:15,760 Speaker 1: would be worse of to some scenarios would be less 74 00:04:15,800 --> 00:04:18,680 Speaker 1: worse of than others. So two percent less growth over 75 00:04:18,720 --> 00:04:22,359 Speaker 1: fifteen years which were staying within the European Economic Area. 76 00:04:22,880 --> 00:04:25,760 Speaker 1: So the reason why there's called for a second referendum 77 00:04:25,839 --> 00:04:27,720 Speaker 1: is because people are saying, if, if, if what is 78 00:04:27,800 --> 00:04:30,080 Speaker 1: now on offer isn't what people voted for, surely they 79 00:04:30,080 --> 00:04:33,560 Speaker 1: should have a chance to express a point of view 80 00:04:34,080 --> 00:04:36,200 Speaker 1: when it comes to the final deal, and particularly if 81 00:04:36,240 --> 00:04:39,240 Speaker 1: that deal doesn't go through Parliament. The Labor Party has 82 00:04:39,279 --> 00:04:42,040 Speaker 1: said that if there is no deal that's agreed by Parliament, 83 00:04:42,120 --> 00:04:45,400 Speaker 1: and if there is no general election, which would be 84 00:04:46,120 --> 00:04:48,360 Speaker 1: our preference, so that we can have a different negotiating 85 00:04:48,400 --> 00:04:51,920 Speaker 1: team that's really putting the economy first and not party 86 00:04:52,000 --> 00:04:54,120 Speaker 1: interest first, which is what Theresa May has now become 87 00:04:54,240 --> 00:04:57,320 Speaker 1: known for, then should the people have another say? But 88 00:04:57,400 --> 00:04:59,120 Speaker 1: there is all going to be an important question about 89 00:04:59,160 --> 00:05:02,080 Speaker 1: what they have a say about, and there are increasing 90 00:05:02,600 --> 00:05:05,360 Speaker 1: calls as well from some in Parliament to say, look, 91 00:05:05,400 --> 00:05:07,320 Speaker 1: if there is no end state and we are going 92 00:05:07,400 --> 00:05:10,800 Speaker 1: to leave, then it's better to leave with being a 93 00:05:10,880 --> 00:05:14,360 Speaker 1: member potentially in something like the European Economic Area, with 94 00:05:15,600 --> 00:05:18,080 Speaker 1: with some of the the benefits that go with that, 95 00:05:18,520 --> 00:05:20,880 Speaker 1: rather than leave with no deal, which would be catastrophic 96 00:05:20,960 --> 00:05:23,919 Speaker 1: for our country and our economy. It's wonderful to speak 97 00:05:23,960 --> 00:05:25,720 Speaker 1: to you, and I think I can speak for a 98 00:05:25,760 --> 00:05:28,880 Speaker 1: global audience that finds a Labor Party of the United 99 00:05:29,000 --> 00:05:33,400 Speaker 1: Kingdom and absolute mystery. You've provided leadership to the Fabian 100 00:05:33,520 --> 00:05:37,880 Speaker 1: Society for years, and whether it's Bernard Shaw, or it's 101 00:05:37,920 --> 00:05:42,480 Speaker 1: Harold Laski or maybe even at Balls, everybody wants to 102 00:05:42,560 --> 00:05:45,920 Speaker 1: know how labor gets back to what it used to be. 103 00:05:46,640 --> 00:05:49,560 Speaker 1: Could labor go back to the nostalgia of the favors 104 00:05:49,960 --> 00:05:56,840 Speaker 1: Fabian Society or does labor have to find a new way. Well, 105 00:05:56,880 --> 00:05:59,760 Speaker 1: there's one guarantee in politics, which is the past is 106 00:05:59,800 --> 00:06:02,000 Speaker 1: never redeterminant of the future. And what you've got to 107 00:06:02,040 --> 00:06:05,680 Speaker 1: do is always be reinventing yourself to have your values 108 00:06:05,720 --> 00:06:11,160 Speaker 1: in line with where modern situation seeks political solutions. And 109 00:06:11,520 --> 00:06:13,799 Speaker 1: if you take the budget this week as one example 110 00:06:13,880 --> 00:06:17,320 Speaker 1: and how labors responded, what we've seen is, i would 111 00:06:17,360 --> 00:06:19,280 Speaker 1: quote it is less of the same but certainly the 112 00:06:19,400 --> 00:06:22,240 Speaker 1: same coming from the Tory government with a sense of 113 00:06:22,279 --> 00:06:27,000 Speaker 1: a failed economic How do your own target? Okay, Labor Party, 114 00:06:27,600 --> 00:06:30,000 Speaker 1: it's yes, you're absolutely right. But for the Labor Party 115 00:06:30,160 --> 00:06:33,040 Speaker 1: is about having an economic policy that's going to respond 116 00:06:33,080 --> 00:06:36,000 Speaker 1: to the challenges that Mr Corbin provide that this is 117 00:06:36,080 --> 00:06:40,880 Speaker 1: critical because Jeremy Corbin is miles from the Fabian Society. 118 00:06:41,240 --> 00:06:44,640 Speaker 1: How do you get back to the values of another 119 00:06:44,800 --> 00:06:48,360 Speaker 1: time and place. Well, you know, the Fabian Society is 120 00:06:48,400 --> 00:06:50,560 Speaker 1: one of many voices. The Fabian Society was one of 121 00:06:50,600 --> 00:06:53,000 Speaker 1: the founders of the Labor Party, just as the Unions 122 00:06:53,040 --> 00:06:56,680 Speaker 1: were in the Cooperative Party was also very influential at 123 00:06:56,760 --> 00:06:58,520 Speaker 1: that time. And you know, what you have in the 124 00:06:58,600 --> 00:07:01,920 Speaker 1: labor family is a wide range of views, but set 125 00:07:02,000 --> 00:07:05,880 Speaker 1: around common values where we do believe in fairness and 126 00:07:05,960 --> 00:07:08,400 Speaker 1: equality and in all of us paying our part for 127 00:07:08,720 --> 00:07:11,640 Speaker 1: society as a whole. And you know, when we look 128 00:07:11,680 --> 00:07:13,280 Speaker 1: at the budget this week, I'll take that as an 129 00:07:13,320 --> 00:07:17,040 Speaker 1: indicator of where the policy is now going. They saw 130 00:07:17,160 --> 00:07:20,040 Speaker 1: that they had failed in terms of their previous economics, 131 00:07:20,560 --> 00:07:23,920 Speaker 1: economic plans and strategy. They didn't tell you that. They 132 00:07:24,000 --> 00:07:26,119 Speaker 1: pretended that there was going to be some sort of change, 133 00:07:26,240 --> 00:07:29,880 Speaker 1: potentially an end to austerity. But what they haven't got 134 00:07:30,000 --> 00:07:32,200 Speaker 1: is a plan for investment in our country. This was 135 00:07:32,320 --> 00:07:35,640 Speaker 1: a budget that brought off some of their backbenches and 136 00:07:35,760 --> 00:07:38,200 Speaker 1: did enough to get by for the next six months. 137 00:07:39,360 --> 00:07:41,680 Speaker 1: If you make this point, we won seats in the 138 00:07:41,760 --> 00:07:44,600 Speaker 1: general election last year, and when I'm going around the 139 00:07:44,680 --> 00:07:48,240 Speaker 1: country now, I'm seeing people increasingly dissatisfied with the Tories. 140 00:07:48,640 --> 00:07:49,960 Speaker 1: But I need do they not have a plan for 141 00:07:50,000 --> 00:07:51,800 Speaker 1: break so they don't plan for them? Then here's the 142 00:07:51,880 --> 00:07:55,280 Speaker 1: key question. That's that's absolutely correct, But the key question 143 00:07:55,520 --> 00:07:58,320 Speaker 1: is who did they go to if they don't go 144 00:07:58,480 --> 00:08:01,320 Speaker 1: to the Tories. Is an m P of the Labor Party. 145 00:08:01,640 --> 00:08:05,320 Speaker 1: Does a Labor Party need a new, cogent view with 146 00:08:05,440 --> 00:08:09,240 Speaker 1: the nostalgia of your fabian society and under something new? 147 00:08:09,440 --> 00:08:13,760 Speaker 1: I mean, I don't see a cogent labor voice in 148 00:08:13,920 --> 00:08:20,000 Speaker 1: this Brexit debate. I don't know if it's about a 149 00:08:20,080 --> 00:08:23,080 Speaker 1: sort of romanticizing the past, because it was very different 150 00:08:23,120 --> 00:08:25,080 Speaker 1: at that time. I do think it is about saying, 151 00:08:25,120 --> 00:08:26,920 Speaker 1: what are our solutions for the present? You know, we 152 00:08:27,080 --> 00:08:31,160 Speaker 1: founded the National Health Service, we brought in the minimum wage, 153 00:08:31,520 --> 00:08:35,120 Speaker 1: we invested in early years. We saw huge growth across 154 00:08:35,160 --> 00:08:40,160 Speaker 1: our country and more an increase in equality between our 155 00:08:40,240 --> 00:08:43,400 Speaker 1: regions as well. We've seen inequality rise hugely. We've seen 156 00:08:43,480 --> 00:08:46,679 Speaker 1: child poverty rise significantly under the Conservatives. I see it 157 00:08:46,760 --> 00:08:49,760 Speaker 1: in my own constituency. People want to know that they've 158 00:08:49,800 --> 00:08:51,760 Speaker 1: got access to good jobs. They want to know they've 159 00:08:51,760 --> 00:08:56,040 Speaker 1: got investment in education. They want good prospects for their children. 160 00:08:56,320 --> 00:08:58,520 Speaker 1: This is the first generation where children are set to 161 00:08:58,600 --> 00:09:01,280 Speaker 1: do worse than their parents. Now, those are the things 162 00:09:01,400 --> 00:09:05,440 Speaker 1: homeownership or a secure place to live in, decent education, 163 00:09:05,760 --> 00:09:08,559 Speaker 1: and that's where the Labor Party's answers are. What people 164 00:09:08,600 --> 00:09:14,040 Speaker 1: are now responding to very very strongly. Are you frustrated 165 00:09:14,160 --> 00:09:16,800 Speaker 1: that many people are proving many voters still going a 166 00:09:16,920 --> 00:09:21,680 Speaker 1: hundred percent know where the Labor stands on Brexit? Sorry 167 00:09:21,679 --> 00:09:25,280 Speaker 1: I couldn't hear your question fully. Am I frustrated with 168 00:09:25,400 --> 00:09:29,640 Speaker 1: the question? Is? Are you frustrated that the voters don't 169 00:09:29,800 --> 00:09:36,320 Speaker 1: understand where Labor is on Brexit? I do think we've 170 00:09:36,360 --> 00:09:38,520 Speaker 1: got to be clearer about that. You know, we had 171 00:09:38,559 --> 00:09:41,200 Speaker 1: a big debate at party conference which was just last month, 172 00:09:41,800 --> 00:09:44,640 Speaker 1: and in that we move the position of the party 173 00:09:45,160 --> 00:09:48,280 Speaker 1: in favor of a second referendum as well under the 174 00:09:48,320 --> 00:09:52,200 Speaker 1: circumstances where there isn't a deal that's agreed by Parliament 175 00:09:52,320 --> 00:09:54,839 Speaker 1: and also where there isn't a general election. Now I 176 00:09:54,960 --> 00:09:58,080 Speaker 1: have called since the week after the referendum, in fact 177 00:09:58,200 --> 00:10:00,320 Speaker 1: that you know, from from my person all the point 178 00:10:00,320 --> 00:10:02,440 Speaker 1: of view thinking about the economy and what I think 179 00:10:02,559 --> 00:10:04,880 Speaker 1: is right for our country, we should be seeking to 180 00:10:04,920 --> 00:10:07,400 Speaker 1: stay in the Single Market as far as possible. I 181 00:10:07,520 --> 00:10:09,800 Speaker 1: do think that we need need to have greater controls 182 00:10:09,880 --> 00:10:13,319 Speaker 1: over freedom of movement and that's something which the EU 183 00:10:13,520 --> 00:10:16,000 Speaker 1: can deliver if it chooses to it. There is no 184 00:10:16,200 --> 00:10:19,599 Speaker 1: legal reason why it couldn't. It's a political reason and 185 00:10:19,679 --> 00:10:21,679 Speaker 1: I do believe that we need to stay within a 186 00:10:21,960 --> 00:10:24,679 Speaker 1: Customs Union or the Customs Union so that we have 187 00:10:24,960 --> 00:10:29,040 Speaker 1: that security for Northern Ireland as well and an Ireland. Now, 188 00:10:29,120 --> 00:10:32,000 Speaker 1: the reason why Ireland is such an issue is because 189 00:10:32,040 --> 00:10:34,320 Speaker 1: the border in Northern Ireland won't just be a border 190 00:10:34,360 --> 00:10:37,199 Speaker 1: between the Republic and Northern Ireland. It will be a 191 00:10:37,520 --> 00:10:41,480 Speaker 1: border between the European Union and a third country that 192 00:10:41,720 --> 00:10:45,640 Speaker 1: is fundamentally different. And we have to accept a responsibility 193 00:10:45,720 --> 00:10:47,760 Speaker 1: in that and say, well, look, if we don't want 194 00:10:47,800 --> 00:10:50,640 Speaker 1: this to have a negative impact on the economy and 195 00:10:50,720 --> 00:10:55,040 Speaker 1: the free flow of trade and goods and supplies between 196 00:10:55,200 --> 00:10:57,360 Speaker 1: the Northern Ireland and the Republic of Ireland, we have 197 00:10:57,480 --> 00:10:59,560 Speaker 1: to say, what's a solution for the UK as a whole. 198 00:10:59,800 --> 00:11:01,959 Speaker 1: And that's why I do think that the custom Genie 199 00:11:02,000 --> 00:11:03,400 Speaker 1: has got to be a big part of that. We 200 00:11:03,600 --> 00:11:07,959 Speaker 1: must leave it there. A Member of Parliament for the 201 00:11:08,040 --> 00:11:10,640 Speaker 1: Labor spirited discussion on the future of the Labor Party 202 00:11:10,679 --> 00:11:27,360 Speaker 1: as well, thank you so much so. The sleepy days 203 00:11:27,400 --> 00:11:30,079 Speaker 1: of seventeen well, they are long gone. There was the 204 00:11:30,240 --> 00:11:33,400 Speaker 1: Vole Shock of February and then there was that ugly October, 205 00:11:33,520 --> 00:11:36,600 Speaker 1: A warm welcome to November. Is there more to come? 206 00:11:36,720 --> 00:11:40,199 Speaker 1: Steve Whining? Dropping behind the studio, City Global Chief Investment 207 00:11:40,240 --> 00:11:42,559 Speaker 1: officer joins us. Now, good morning to Steve, good morning. 208 00:11:42,640 --> 00:11:44,600 Speaker 1: So it is there more to come? Steve? Well, look 209 00:11:44,960 --> 00:11:48,800 Speaker 1: the way the market dropped so sharply and as rebounding 210 00:11:49,000 --> 00:11:52,440 Speaker 1: so sharply tells us that we're still in a volatile environment. 211 00:11:53,080 --> 00:11:55,280 Speaker 1: And that environment is one where you can still have 212 00:11:55,559 --> 00:11:58,079 Speaker 1: fairly big draw downs and it can be unclear that 213 00:11:58,120 --> 00:12:00,520 Speaker 1: we're in an exact bottom. You don't do that in 214 00:12:00,559 --> 00:12:02,599 Speaker 1: a matter of a couple of days. But I do 215 00:12:02,800 --> 00:12:05,839 Speaker 1: think that the absolute declines that we've seen in US 216 00:12:05,920 --> 00:12:09,920 Speaker 1: shares uh and particularly global shares um really points to 217 00:12:10,120 --> 00:12:14,679 Speaker 1: a larger slowdown than is likely for two thousand nineteen, 218 00:12:15,440 --> 00:12:18,559 Speaker 1: and if we simply know where interest rates are and 219 00:12:18,720 --> 00:12:21,959 Speaker 1: get through a few other issues. Obviously, trade has been 220 00:12:22,080 --> 00:12:25,520 Speaker 1: a major major surprise for markets in two thousand nineteen, 221 00:12:26,040 --> 00:12:28,440 Speaker 1: but I don't think that we can really shock markets 222 00:12:28,480 --> 00:12:31,160 Speaker 1: again with things like tariffs. You know, this expectation is 223 00:12:31,240 --> 00:12:33,400 Speaker 1: high and embedded in the marketplace. So I think that 224 00:12:33,480 --> 00:12:35,960 Speaker 1: we recover from here. I think that that's the story, 225 00:12:36,360 --> 00:12:39,000 Speaker 1: you know, independent of h the volatility continuing in the 226 00:12:39,080 --> 00:12:41,240 Speaker 1: near term. So we had a big vull shelk in February. 227 00:12:41,280 --> 00:12:43,600 Speaker 1: So he essentially sang to the playbook. The post February 228 00:12:43,600 --> 00:12:47,160 Speaker 1: playbook is still intact. If you think about what had 229 00:12:47,200 --> 00:12:50,440 Speaker 1: happened in February, we were in a strong earnings period, 230 00:12:51,040 --> 00:12:54,360 Speaker 1: we were about to rebound UH the March April period. 231 00:12:54,840 --> 00:12:58,679 Speaker 1: The notion of a larger global trade wark was first 232 00:12:58,760 --> 00:13:01,920 Speaker 1: initiated in the marketplace we stop for example, you know, 233 00:13:02,040 --> 00:13:05,640 Speaker 1: the policy uncertainty industries related to trade just absolutely surged 234 00:13:05,640 --> 00:13:08,120 Speaker 1: from nowhere. It shouldn't have been nowhere. Now. I don't 235 00:13:08,120 --> 00:13:10,679 Speaker 1: think that shock can hold us back again. What I 236 00:13:10,760 --> 00:13:13,280 Speaker 1: do think is that we will expect a slower pace 237 00:13:13,360 --> 00:13:16,840 Speaker 1: of earnings gains just you know, three consecutive quarters well 238 00:13:16,920 --> 00:13:21,120 Speaker 1: above that doesn't continue. But I think again, the combination 239 00:13:21,200 --> 00:13:24,160 Speaker 1: of a market that is down, one in which we 240 00:13:24,280 --> 00:13:27,040 Speaker 1: have a good deal of trade warrior priced in around 241 00:13:27,080 --> 00:13:31,000 Speaker 1: the world, and UH a good decent earnings gain still 242 00:13:31,040 --> 00:13:33,079 Speaker 1: ahead of us at a slower pace is enough for 243 00:13:33,240 --> 00:13:35,560 Speaker 1: us to to make a recovery. You've drown a clear 244 00:13:35,600 --> 00:13:41,719 Speaker 1: distinction between peacunnings growth and pecunning absolutely growth because a 245 00:13:41,800 --> 00:13:44,080 Speaker 1: lot of people are sort of confusing the two at 246 00:13:44,080 --> 00:13:45,800 Speaker 1: the moment when they come on programs like this, I 247 00:13:45,880 --> 00:13:48,000 Speaker 1: hear a mix of the two absolutely, and you just 248 00:13:48,040 --> 00:13:50,480 Speaker 1: see it all the time. So that's the thing. If 249 00:13:50,559 --> 00:13:53,559 Speaker 1: you want to say that share prices need to drop 250 00:13:53,640 --> 00:13:56,440 Speaker 1: and level because they embedded too strong a growth rate, 251 00:13:56,480 --> 00:13:59,560 Speaker 1: you can do that. But if we're still going to grow, 252 00:14:00,240 --> 00:14:03,360 Speaker 1: eventually you arrest those declines and prices, you know, And 253 00:14:03,480 --> 00:14:05,599 Speaker 1: that's my point. I think that there's enough inertia for 254 00:14:05,720 --> 00:14:08,480 Speaker 1: us to continue to grow earnings in the coming year, 255 00:14:08,559 --> 00:14:10,079 Speaker 1: both in the U S and the and the rest 256 00:14:10,120 --> 00:14:12,280 Speaker 1: of the world. It was somewhat interesting in the last 257 00:14:12,360 --> 00:14:14,160 Speaker 1: month that actually we find you still some cracks and 258 00:14:14,240 --> 00:14:17,480 Speaker 1: credit in high yield and triple sees whether resiliency has 259 00:14:17,559 --> 00:14:20,360 Speaker 1: been through much of What do you take from that, 260 00:14:20,520 --> 00:14:23,240 Speaker 1: and it's that a sign of fragility. The biggest drag 261 00:14:23,520 --> 00:14:26,040 Speaker 1: on high yield markets, the biggest drags on credit has 262 00:14:26,080 --> 00:14:29,240 Speaker 1: been on the rate front. You know. Again, absolute spread 263 00:14:29,400 --> 00:14:32,720 Speaker 1: levels are low. I do think that you're going to 264 00:14:32,800 --> 00:14:37,360 Speaker 1: see bank credit continuing to be fairly robust. Um. I 265 00:14:37,480 --> 00:14:39,840 Speaker 1: look at credit is more or less a coincident variable. 266 00:14:39,840 --> 00:14:42,280 Speaker 1: I think that's happening from the FED, and what's happening 267 00:14:42,320 --> 00:14:45,000 Speaker 1: in the yield curve is a real leading variable. So 268 00:14:45,760 --> 00:14:48,360 Speaker 1: I think that we're going to see as equities recover some, 269 00:14:48,560 --> 00:14:52,160 Speaker 1: as growth expectations probably stabilize, and the big uncertainty here 270 00:14:52,200 --> 00:14:55,000 Speaker 1: you've got to admit as trade that away from all 271 00:14:55,040 --> 00:14:58,360 Speaker 1: of that, we're going to see credit is not really 272 00:14:58,440 --> 00:15:00,920 Speaker 1: going to be a big inhibitor of of equity markets. 273 00:15:01,040 --> 00:15:03,280 Speaker 1: We're just not going to get any push from credit. 274 00:15:03,440 --> 00:15:05,720 Speaker 1: What have we done with I mean I saw a 275 00:15:05,800 --> 00:15:10,040 Speaker 1: nice matrix from uh Gentleman in Edinburgh yesterday which was 276 00:15:10,120 --> 00:15:12,320 Speaker 1: get out of small caps getting large caps? Do this? 277 00:15:12,440 --> 00:15:14,480 Speaker 1: Do this, do this, do this? What's the do this? 278 00:15:14,640 --> 00:15:17,920 Speaker 1: Do this? Do this for city private bank? Look, since midyear, 279 00:15:18,160 --> 00:15:22,120 Speaker 1: we took down our absolute risk budget some of the 280 00:15:22,200 --> 00:15:25,600 Speaker 1: emerging markets that we might rebound very nicely in a 281 00:15:25,920 --> 00:15:29,160 Speaker 1: very high beta markets for example Eastern Europe, you know 282 00:15:29,240 --> 00:15:32,320 Speaker 1: the ones um These are markets that were underweight, and 283 00:15:32,520 --> 00:15:34,760 Speaker 1: even in a rebound, we're just not going to put 284 00:15:34,800 --> 00:15:37,800 Speaker 1: a lot of money there. We're going to take take 285 00:15:37,800 --> 00:15:39,800 Speaker 1: our risks in Asia to a certain extent and we're 286 00:15:39,800 --> 00:15:42,520 Speaker 1: gonna have a small overweight. And as we mentioned on television. 287 00:15:42,880 --> 00:15:44,960 Speaker 1: You know, we now have an underweight in US small 288 00:15:45,080 --> 00:15:47,840 Speaker 1: caps right for the first time in the cycle. I 289 00:15:47,880 --> 00:15:49,640 Speaker 1: don't think performance is going to be that bad, but 290 00:15:49,760 --> 00:15:51,960 Speaker 1: I think when we look out, you know, we're not 291 00:15:52,040 --> 00:15:54,240 Speaker 1: gonna want to have a massive, massive amount of risk 292 00:15:54,320 --> 00:15:57,280 Speaker 1: in that. But it's still a positive equity environment anticipated 293 00:15:57,400 --> 00:16:01,000 Speaker 1: at least for two thousand. What do earnings grow, because yeah, 294 00:16:01,080 --> 00:16:03,360 Speaker 1: I get the idea that we're phasing out the text cut. 295 00:16:03,400 --> 00:16:05,720 Speaker 1: You can argue if there's a persistent value to its 296 00:16:05,800 --> 00:16:08,760 Speaker 1: good morning, Mr Cudlow, or or if there's a one 297 00:16:08,800 --> 00:16:10,640 Speaker 1: off of vent or a two quarter of it you okay, 298 00:16:10,680 --> 00:16:12,560 Speaker 1: over there, John, I'm doing you were a trick or 299 00:16:12,600 --> 00:16:14,480 Speaker 1: treating too like ton of clocks. I'm hanging in there. 300 00:16:14,720 --> 00:16:17,600 Speaker 1: I was having oysters at Elise at ninety one in Madison, 301 00:16:17,680 --> 00:16:19,800 Speaker 1: and you went by me. You look so good as 302 00:16:19,880 --> 00:16:23,000 Speaker 1: quantitative tightening. Yeah, thank you. It was great. Appreciate that 303 00:16:23,760 --> 00:16:26,120 Speaker 1: you just you know, he looks as good as quantitative tighten. 304 00:16:26,240 --> 00:16:29,200 Speaker 1: He went his quantitative tightening and went to bed with 305 00:16:29,600 --> 00:16:32,200 Speaker 1: lemon and honey and some hot water. My suit is 306 00:16:32,280 --> 00:16:34,600 Speaker 1: quantitatively tightening, as I get found. Yeah, well, no, I 307 00:16:34,640 --> 00:16:37,640 Speaker 1: want his quantitative easy because that's what's happening. But but 308 00:16:37,840 --> 00:16:40,040 Speaker 1: what what is the profit model for it? I mean, 309 00:16:40,080 --> 00:16:43,760 Speaker 1: you're one of the best I know gaming earnings. What's 310 00:16:43,840 --> 00:16:47,160 Speaker 1: the game forward? So if you take a look at 311 00:16:47,600 --> 00:16:50,920 Speaker 1: the level of production and demand in the United States, 312 00:16:51,000 --> 00:16:54,040 Speaker 1: and you say, we can quibble the third quarter, we 313 00:16:54,200 --> 00:16:57,440 Speaker 1: pulled in a lot of imports ahead of tariffs, We 314 00:16:57,560 --> 00:17:01,480 Speaker 1: built some inventories on the external saw Um, we have, 315 00:17:01,920 --> 00:17:04,320 Speaker 1: you know, some modest weakness in some of the cyclical 316 00:17:04,359 --> 00:17:08,639 Speaker 1: areas and housing and autos, but sort of the production level, uh, 317 00:17:08,760 --> 00:17:11,679 Speaker 1: and the cost problems that we have, you know, are 318 00:17:11,720 --> 00:17:15,040 Speaker 1: still not large enough to completely erase the inertia we 319 00:17:15,119 --> 00:17:18,240 Speaker 1: have up in property. This conversation is way too sophisticated 320 00:17:18,280 --> 00:17:21,000 Speaker 1: for this program. What are you doing? No, I'm waiting 321 00:17:21,040 --> 00:17:23,000 Speaker 1: for Steve to end on profits because what he says 322 00:17:23,119 --> 00:17:27,000 Speaker 1: is really important. Profits still Amazon, Just so everyone knows, 323 00:17:27,119 --> 00:17:29,960 Speaker 1: Tom Keane has an alpen prime box. What's in it? 324 00:17:30,680 --> 00:17:33,000 Speaker 1: I don't know? Maybe you do? You know two of 325 00:17:33,040 --> 00:17:36,160 Speaker 1: the kids laptops have broken in the last forty Why 326 00:17:36,160 --> 00:17:41,080 Speaker 1: are you opening your post? What if you got Oh? 327 00:17:41,640 --> 00:17:46,080 Speaker 1: Is it Anthony Anthony from Sparta? Is it it's pink? 328 00:17:46,240 --> 00:17:49,200 Speaker 1: Whatever it is it's John. You it's going to bring 329 00:17:49,240 --> 00:17:51,600 Speaker 1: a tear to your eye. I try to open if 330 00:17:51,640 --> 00:17:57,760 Speaker 1: you bought by this. This is a gift Anthony from Sparta. 331 00:17:57,960 --> 00:18:00,639 Speaker 1: It's a breakfast set for you and me and the studio. 332 00:18:00,720 --> 00:18:03,480 Speaker 1: You've got a child's breakfast set. It is. It's a 333 00:18:03,560 --> 00:18:07,760 Speaker 1: tea set for girls, child's breakfast, so you and I 334 00:18:07,880 --> 00:18:10,080 Speaker 1: can dine and style. I don't think this is the 335 00:18:10,160 --> 00:18:14,040 Speaker 1: studio who gave you this said came Amazon, you know, 336 00:18:14,920 --> 00:18:21,080 Speaker 1: Anthony from Sparta. It's it's it's children breakfast set. Yeah, 337 00:18:21,160 --> 00:18:24,120 Speaker 1: we can put it right here. You like that, John, 338 00:18:24,200 --> 00:18:28,440 Speaker 1: Steve Pink, I can only apologize to my colleague honestly, 339 00:18:29,359 --> 00:18:32,840 Speaker 1: how much did you drink yesterday? I didn't. I didn't. 340 00:18:33,680 --> 00:18:36,520 Speaker 1: You didn't? You didn't? Did you drink? Actually? Can we 341 00:18:36,560 --> 00:18:39,160 Speaker 1: say good morning to Candy on Madison went in huge 342 00:18:39,240 --> 00:18:42,760 Speaker 1: John Farrell fans. I'll write the Dina Yeah yeah, yeah, 343 00:18:42,800 --> 00:18:45,040 Speaker 1: they came in and you know we're having a beverage 344 00:18:45,080 --> 00:18:47,960 Speaker 1: of our choice, Candy Dinas. Good morning to those up 345 00:18:48,040 --> 00:18:53,240 Speaker 1: Madison Avenue, every on Lexington on Lexion. Now this is Candy. 346 00:18:53,400 --> 00:18:57,240 Speaker 1: This is a beverage store. The store, yes you're familiar 347 00:18:57,280 --> 00:19:01,280 Speaker 1: with that. Yes. Yeah. At the Feral Wall on the 348 00:19:01,920 --> 00:19:06,280 Speaker 1: side store on ninety four, I walked in a Quantitative 349 00:19:06,320 --> 00:19:07,959 Speaker 1: Easy and they said good morning. You know they they, 350 00:19:08,840 --> 00:19:11,560 Speaker 1: you know, said thoughts to you. Yeah, I think you 351 00:19:11,680 --> 00:19:14,720 Speaker 1: like pay the rent. I like the Amarona in the 352 00:19:15,400 --> 00:19:18,160 Speaker 1: top left of the store, in the left corner. The amaroni. 353 00:19:18,400 --> 00:19:20,760 Speaker 1: What is the amaroni? I don't know, Amarondi. It's a 354 00:19:20,880 --> 00:19:23,320 Speaker 1: very good red wine. I'll buy you a ball. Steve 355 00:19:23,359 --> 00:19:25,000 Speaker 1: Whine is going why are we having brought toast in 356 00:19:25,080 --> 00:19:27,760 Speaker 1: the studio? What's going on this show? Well, this is 357 00:19:27,760 --> 00:19:30,199 Speaker 1: a lot easier than talking about markets and whether it's 358 00:19:30,280 --> 00:19:32,560 Speaker 1: rates of growth or slower rates of growth. But I 359 00:19:32,600 --> 00:19:36,040 Speaker 1: mean the cacophony of October and John we got a 360 00:19:36,119 --> 00:19:39,040 Speaker 1: salvation day yesterday, right seriously at a couple of That 361 00:19:39,119 --> 00:19:42,440 Speaker 1: was the first two day gain on the SMP for September. 362 00:19:42,920 --> 00:19:47,560 Speaker 1: What what do you do into November into December? Steve 363 00:19:47,600 --> 00:19:50,440 Speaker 1: Whining rights is here in report. So let's just remember 364 00:19:50,560 --> 00:19:54,280 Speaker 1: first that knowing what's going on in the market now 365 00:19:55,040 --> 00:19:57,560 Speaker 1: often tells you very very little about what is a 366 00:19:57,640 --> 00:20:01,320 Speaker 1: good investment, what is a longer term holding? And you're 367 00:20:02,280 --> 00:20:05,040 Speaker 1: listeners really really should decide on whether they're trading this 368 00:20:05,240 --> 00:20:08,240 Speaker 1: or they're investing in this. Now, my point of view 369 00:20:08,320 --> 00:20:13,720 Speaker 1: here is that panic is unnecessary, that the economic outlook 370 00:20:13,840 --> 00:20:17,960 Speaker 1: will again is not going to yield eternal growth, but 371 00:20:18,119 --> 00:20:21,560 Speaker 1: it's good enough to yield us further profit games and 372 00:20:21,680 --> 00:20:23,720 Speaker 1: the constraints that we have on the interest rate front, 373 00:20:23,720 --> 00:20:26,080 Speaker 1: they are not enough to knock us over. They're not 374 00:20:26,119 --> 00:20:28,199 Speaker 1: gonna They're not going to compete with equity. See why 375 00:20:28,200 --> 00:20:44,200 Speaker 1: did you thank you so much? I was just wonderful, John? 376 00:20:44,280 --> 00:20:49,159 Speaker 1: Can I just say it? Granger's causality. Clyde Granger was 377 00:20:49,240 --> 00:20:53,040 Speaker 1: a British giant of mathematics. He ended up and of 378 00:20:53,119 --> 00:20:55,240 Speaker 1: course one of the climbs of the United Kingdom. The 379 00:20:55,320 --> 00:20:58,680 Speaker 1: University of San Diego, Usity of California, San Diego want 380 00:20:58,680 --> 00:21:01,520 Speaker 1: a Nobel Prize for garch with the Robert angle and 381 00:21:01,600 --> 00:21:05,840 Speaker 1: all that. Okay, Does wage growth in a better economy 382 00:21:06,080 --> 00:21:10,840 Speaker 1: cause better productivity? Or does better productivity cause better wage grows? 383 00:21:11,000 --> 00:21:14,640 Speaker 1: The chicken and the egg of economics exactly, And I'm 384 00:21:14,760 --> 00:21:17,959 Speaker 1: sorry there. It is better productivity with a revision up 385 00:21:18,000 --> 00:21:22,800 Speaker 1: for previous productivity. It's interesting head to pay rolls tomorrow. 386 00:21:22,840 --> 00:21:24,240 Speaker 1: Do you want to bring in our guest. No, no, 387 00:21:24,480 --> 00:21:27,560 Speaker 1: you like eating into important times, someone really important? But 388 00:21:27,880 --> 00:21:30,000 Speaker 1: west Ham? Is it? What do we start? Well done? 389 00:21:30,600 --> 00:21:33,880 Speaker 1: I guess start with East London. Please starting with west Ham. 390 00:21:34,000 --> 00:21:37,800 Speaker 1: Steve Major, HSBC Global head of Fixed Income Research, Steve, 391 00:21:38,040 --> 00:21:39,720 Speaker 1: I'm sure that most of our listeners want to talk 392 00:21:39,760 --> 00:21:42,400 Speaker 1: fixed income. Let's start with west Ham. How are we doing. 393 00:21:42,560 --> 00:21:46,280 Speaker 1: There's a lack of productivity there, certainly last night. So 394 00:21:46,720 --> 00:21:49,919 Speaker 1: so this is interesting because productivity must be going up 395 00:21:50,040 --> 00:21:53,040 Speaker 1: in the US economy and in the UK economy by 396 00:21:53,119 --> 00:21:56,800 Speaker 1: the way, because if wages are going at what three 397 00:21:56,840 --> 00:21:59,760 Speaker 1: and a half percent, and the Fed's preferred measures of 398 00:22:00,000 --> 00:22:03,800 Speaker 1: relation they all stuck around two and frankly, the FEDS 399 00:22:03,880 --> 00:22:07,119 Speaker 1: deflator has been falling all year. It's even less than that. 400 00:22:07,840 --> 00:22:10,200 Speaker 1: So if you if you assume too and three and 401 00:22:10,200 --> 00:22:12,680 Speaker 1: a half on wages and someone's working a bit harder, 402 00:22:13,880 --> 00:22:16,240 Speaker 1: if the hours haven't changed, I've got like five we 403 00:22:16,359 --> 00:22:18,920 Speaker 1: could go for two hours and easily none Stop with 404 00:22:19,000 --> 00:22:21,960 Speaker 1: you on this fascinating fixting income. Let us go to 405 00:22:22,080 --> 00:22:23,760 Speaker 1: what we just saw with the Bank of England. You 406 00:22:23,880 --> 00:22:27,160 Speaker 1: are the arch call of lower interest rates. I think 407 00:22:27,200 --> 00:22:30,879 Speaker 1: everybody's sobered at the rate stability we've seen through this 408 00:22:31,080 --> 00:22:35,280 Speaker 1: ugly October. Do you maintain a low rate cart totally 409 00:22:35,440 --> 00:22:39,720 Speaker 1: that The latest that's allocation published yesterday was called a 410 00:22:39,880 --> 00:22:43,360 Speaker 1: bucket of cold water, and so you know, I don't 411 00:22:43,359 --> 00:22:46,000 Speaker 1: know if that works in American English kind of it 412 00:22:46,080 --> 00:22:48,280 Speaker 1: worked less. Say we went I went his quantity ative 413 00:22:48,320 --> 00:22:52,000 Speaker 1: easing for Halloween, John went for quantitative tightening, and he 414 00:22:52,119 --> 00:22:54,760 Speaker 1: threw a bucket of cold water. I mean, was it 415 00:22:54,840 --> 00:22:57,800 Speaker 1: the fifth Guinness so you so you get it. At 416 00:22:57,800 --> 00:23:00,200 Speaker 1: The point is October was a bucket of cold water 417 00:23:00,359 --> 00:23:03,800 Speaker 1: for the SMP and for risky assets around the world. 418 00:23:03,880 --> 00:23:05,800 Speaker 1: The last few months have been a bucket of cold water. 419 00:23:06,240 --> 00:23:08,800 Speaker 1: The point is is that yields in Europe and lower 420 00:23:08,880 --> 00:23:11,760 Speaker 1: than where we started the year, for Germany and France, 421 00:23:12,320 --> 00:23:15,800 Speaker 1: not Italy, by the way, The UK yields are low. Um, 422 00:23:16,240 --> 00:23:19,520 Speaker 1: China yields have been falling all year. Japan's doing nothing 423 00:23:19,960 --> 00:23:23,240 Speaker 1: so um. The US is the outlier, and I'm happy 424 00:23:23,320 --> 00:23:25,320 Speaker 1: to sit here and talk about US treasuries as well. 425 00:23:25,400 --> 00:23:27,880 Speaker 1: But the point is that those yields look too high 426 00:23:28,240 --> 00:23:29,760 Speaker 1: given what's going on in the rest of the world. 427 00:23:29,800 --> 00:23:31,600 Speaker 1: Pretty interesting though, that we get a bucket of cold 428 00:23:31,640 --> 00:23:33,919 Speaker 1: water on U S sequities, and the US thirty ye 429 00:23:34,000 --> 00:23:37,040 Speaker 1: yield actually climbs through October. Steve, Yeah, well this didn't 430 00:23:37,080 --> 00:23:39,320 Speaker 1: happen in February because in February, when we had a 431 00:23:39,359 --> 00:23:43,840 Speaker 1: wobble on the Chinese, Hong Kong and US exchanges, the 432 00:23:44,119 --> 00:23:47,200 Speaker 1: treasury is rallid, so you had a risk of money 433 00:23:47,280 --> 00:23:49,800 Speaker 1: went from equities into bonds. This time it didn't happen. 434 00:23:50,240 --> 00:23:53,240 Speaker 1: And so the whole risk parity framework, if you like, 435 00:23:53,480 --> 00:23:56,800 Speaker 1: seems to be unraveling. And look, this shouldn't be a 436 00:23:56,880 --> 00:24:00,879 Speaker 1: complete surprise. If you have unconventional poll this is you 437 00:24:00,920 --> 00:24:06,639 Speaker 1: should expect unconventional outcome. So I'm worried about investment grade credit, 438 00:24:06,800 --> 00:24:10,760 Speaker 1: for example, I'm worried about equities and worried about emerging markets. 439 00:24:11,080 --> 00:24:13,240 Speaker 1: It doesn't seem so far or certainly in the last 440 00:24:13,280 --> 00:24:16,000 Speaker 1: few weeks that the money is going into treasuries. Doesn't 441 00:24:16,040 --> 00:24:18,240 Speaker 1: mean to say isn't going to let me ask you 442 00:24:18,520 --> 00:24:20,639 Speaker 1: what do you get on your bank account? Here? Not 443 00:24:20,800 --> 00:24:23,760 Speaker 1: a lot, assuming you've got any money in the account. 444 00:24:24,160 --> 00:24:26,840 Speaker 1: For some money, so would you get nothing ten basis 445 00:24:26,880 --> 00:24:29,119 Speaker 1: points if you're lucky, how much can you get for 446 00:24:29,200 --> 00:24:31,280 Speaker 1: one month on treasury bills, you would get a couple 447 00:24:31,320 --> 00:24:34,800 Speaker 1: of you can get three. To go a bit further 448 00:24:34,880 --> 00:24:38,560 Speaker 1: out with within your fixed income game of trying to 449 00:24:38,760 --> 00:24:41,280 Speaker 1: figure out what full faith and credit is going to do, 450 00:24:41,359 --> 00:24:43,360 Speaker 1: with what corporate is going to do, what how yield 451 00:24:43,400 --> 00:24:46,159 Speaker 1: is going to do? You're now dealing with central banks 452 00:24:46,359 --> 00:24:49,400 Speaker 1: with a date calendar which I've never seen, where they're 453 00:24:49,480 --> 00:24:54,360 Speaker 1: gaming policy after the end of summer two thousand. Relate 454 00:24:54,440 --> 00:24:58,280 Speaker 1: two to a grizzled pro like you, Steve Major rights, 455 00:24:58,320 --> 00:25:01,320 Speaker 1: Steve Major wrong? What does that mean to you when 456 00:25:01,359 --> 00:25:05,920 Speaker 1: you see dragging currently doing that well with Druggie. I 457 00:25:06,000 --> 00:25:12,480 Speaker 1: think the market is collectively giggling, laughing at this idea 458 00:25:12,560 --> 00:25:15,399 Speaker 1: that wages are going up and therefore CPI is going 459 00:25:15,440 --> 00:25:17,840 Speaker 1: to rise. I mean the causality you mentioned before, Tom 460 00:25:17,880 --> 00:25:19,720 Speaker 1: could be the other way around. It could be headline 461 00:25:19,720 --> 00:25:22,200 Speaker 1: into core. That tends to be how it works in Europe. 462 00:25:22,200 --> 00:25:24,040 Speaker 1: You get prices higher in the shops and people are 463 00:25:25,160 --> 00:25:27,040 Speaker 1: But anyway, the point is is that he thinks inflation 464 00:25:27,080 --> 00:25:29,280 Speaker 1: is going up, but the market doesn't believe it. I 465 00:25:29,359 --> 00:25:32,359 Speaker 1: just told you yield to going down, and um look, 466 00:25:32,960 --> 00:25:35,800 Speaker 1: think think this through. If the ECB thinks they're going 467 00:25:35,840 --> 00:25:39,120 Speaker 1: to hike next year or the year after. So many 468 00:25:39,280 --> 00:25:41,320 Speaker 1: things have to be aligned. The stars have to be 469 00:25:41,359 --> 00:25:43,920 Speaker 1: aligned in such a way that first of all, Brexit's 470 00:25:43,920 --> 00:25:47,359 Speaker 1: no problem. Secondly, Italy is no problem. Thirdly, the US 471 00:25:47,400 --> 00:25:50,800 Speaker 1: presumably isn't easing at some point in the next couple 472 00:25:50,840 --> 00:25:55,040 Speaker 1: of years. Then there's the data, inflation and reactivity data. Frankly, 473 00:25:55,040 --> 00:25:56,480 Speaker 1: there's a lot of stuff there that's going to be 474 00:25:56,560 --> 00:25:59,680 Speaker 1: lined up. Strikes me as it's not a hype of 475 00:25:59,720 --> 00:26:02,280 Speaker 1: a bit t that the ECB can manage a normal 476 00:26:02,400 --> 00:26:06,160 Speaker 1: tightening cycle. To run a marathon now you were cut 477 00:26:06,280 --> 00:26:11,040 Speaker 1: and chiseled, but of a certain vintage. How do you 478 00:26:11,119 --> 00:26:14,160 Speaker 1: run a marathon now versus how you would have run 479 00:26:14,200 --> 00:26:16,440 Speaker 1: it ten years ago? It's a good question. I ran 480 00:26:16,800 --> 00:26:20,480 Speaker 1: five last year, and I've run about fifty and I 481 00:26:20,680 --> 00:26:23,320 Speaker 1: was running them thirty years ago. I ran New York 482 00:26:23,720 --> 00:26:27,680 Speaker 1: last twenty years ago. So short answer to the question 483 00:26:27,800 --> 00:26:30,800 Speaker 1: is I do a lot less running because I'm fifty 484 00:26:30,880 --> 00:26:32,920 Speaker 1: five next year, so I do a lot less running 485 00:26:32,920 --> 00:26:34,680 Speaker 1: than I used to. I probably do half of the 486 00:26:34,760 --> 00:26:37,800 Speaker 1: mileage to get ready and are there do a lot more, 487 00:26:37,880 --> 00:26:41,120 Speaker 1: a lot more conditioning, a lot more strength and stretching, 488 00:26:41,240 --> 00:26:44,320 Speaker 1: so it's a lot less pounding the streets. How is 489 00:26:44,359 --> 00:26:46,719 Speaker 1: the New York Marathon different from all the other mean 490 00:26:46,800 --> 00:26:51,040 Speaker 1: Boston Terrible Hill and Newton at the end, but but 491 00:26:51,320 --> 00:26:54,360 Speaker 1: there's got to be something unique here. I've done, I've 492 00:26:54,400 --> 00:26:57,520 Speaker 1: done them. Are that that It's it's dead straight from 493 00:26:57,560 --> 00:26:59,440 Speaker 1: Staten Island until you get to the park and you 494 00:26:59,520 --> 00:27:02,040 Speaker 1: turn around more or less, so it's a straight marathon. 495 00:27:02,280 --> 00:27:04,560 Speaker 1: It's got the bridges. I think there's five bridges, and 496 00:27:04,760 --> 00:27:09,120 Speaker 1: there's a lot of concrete. So as opposed to tarmac, 497 00:27:09,240 --> 00:27:11,040 Speaker 1: you have you run that risk. I mean, I'm not 498 00:27:11,119 --> 00:27:12,639 Speaker 1: looking forward to that because I know my legs are 499 00:27:12,680 --> 00:27:16,040 Speaker 1: gonna get a pounding. Elsewhere in the world like Berlin 500 00:27:16,320 --> 00:27:22,520 Speaker 1: or Athens, London is mainly tarmac, but here it's pavement. 501 00:27:22,600 --> 00:27:25,000 Speaker 1: I know Paula Radcliffe complained about it when she went 502 00:27:25,119 --> 00:27:27,879 Speaker 1: for the record, But anyway, I'm looking forward to the Sacos. 503 00:27:27,880 --> 00:27:29,800 Speaker 1: Hope it's not too hot. It's even great you have. 504 00:27:29,920 --> 00:27:31,480 Speaker 1: The heat is an issue. It was of course the 505 00:27:31,520 --> 00:27:34,840 Speaker 1: lovely here today and for Hellowen yesterday. That's a TCS 506 00:27:34,960 --> 00:27:39,720 Speaker 1: New York City Marathon. Tata Consultancy Services behind the force 507 00:27:39,800 --> 00:27:42,760 Speaker 1: behind that as well, and again Steve Major with us 508 00:27:42,800 --> 00:27:44,960 Speaker 1: today of course running the New York Marathon and also 509 00:27:45,040 --> 00:27:47,800 Speaker 1: the marathon. Of when rates will go up, it's the 510 00:27:48,000 --> 00:27:52,280 Speaker 1: great wrong call. You're in a camp with a select few. 511 00:27:52,640 --> 00:27:55,879 Speaker 1: Shout out to Gary Shilling, who has been there, is 512 00:27:55,960 --> 00:28:00,639 Speaker 1: well in still rates are going higher. Yeah, you see that. 513 00:28:00,880 --> 00:28:03,600 Speaker 1: No forecast is actually wrong until you get to the 514 00:28:03,640 --> 00:28:07,199 Speaker 1: forecast horizon. But granted tom yields have been going up 515 00:28:07,240 --> 00:28:10,200 Speaker 1: this year, I forecast they'd be going down. I'm still 516 00:28:10,240 --> 00:28:12,720 Speaker 1: forecasting they're going to go down. And I think that, 517 00:28:13,040 --> 00:28:15,840 Speaker 1: you know, ten eleven years into recoveries, six years into 518 00:28:15,880 --> 00:28:19,760 Speaker 1: reducing the long dot, four years into tightening with a 519 00:28:19,880 --> 00:28:23,240 Speaker 1: fed chair doesn't know where the stars are. Doesn't strike 520 00:28:23,359 --> 00:28:25,399 Speaker 1: me that they're going to accelerate from here. What is 521 00:28:25,440 --> 00:28:27,280 Speaker 1: the prole like you think about the stars? I mean, 522 00:28:27,400 --> 00:28:30,800 Speaker 1: economists can talk theoretical about the stars, Vice Chairman Clara. 523 00:28:30,920 --> 00:28:35,440 Speaker 1: Of course, with prodigious ability in D s g E dynamics, 524 00:28:35,520 --> 00:28:39,160 Speaker 1: stochastic general equilibrium theory, you've got to go out to 525 00:28:39,400 --> 00:28:43,560 Speaker 1: HSBC clients and say here's how you can plan. Yeah, 526 00:28:43,600 --> 00:28:46,440 Speaker 1: it's a big difference, right, So with the stars, nobody knows. 527 00:28:47,240 --> 00:28:50,480 Speaker 1: With any certainty until afterwards we know what the real 528 00:28:50,600 --> 00:28:52,800 Speaker 1: natural rate of interest is. It's not a new thing. 529 00:28:52,840 --> 00:28:57,080 Speaker 1: It's an eighteenth century concept from from Wixall. Actually, that's 530 00:28:57,120 --> 00:29:00,200 Speaker 1: what the real natural rates of interest is. To me, 531 00:29:00,560 --> 00:29:03,600 Speaker 1: one percent real rates in the US is going to 532 00:29:03,720 --> 00:29:07,000 Speaker 1: be sufficient given this amount of debt and given where 533 00:29:07,040 --> 00:29:09,600 Speaker 1: we are in the cycle, and we're sort of getting 534 00:29:09,680 --> 00:29:13,200 Speaker 1: towards one percent one percent real. And I'm looking at 535 00:29:13,240 --> 00:29:16,880 Speaker 1: this in terms of modeling this, I think it's difficult 536 00:29:16,920 --> 00:29:19,880 Speaker 1: to find any model with these unconventional policies. But think 537 00:29:19,920 --> 00:29:25,240 Speaker 1: about prospect theory, think about interesting you think about loss Yeah, 538 00:29:25,520 --> 00:29:30,600 Speaker 1: think about investor behavior when you're in the domain of 539 00:29:30,760 --> 00:29:33,560 Speaker 1: certain losses, which is when you had minus minus two 540 00:29:33,640 --> 00:29:36,480 Speaker 1: real yields ten years ago compared to today, where you've 541 00:29:36,520 --> 00:29:39,719 Speaker 1: got a certain gain in real, real terms, presumably your 542 00:29:39,760 --> 00:29:42,400 Speaker 1: more cautious Steve major critical question, and this is for 543 00:29:42,480 --> 00:29:46,600 Speaker 1: global Wall Street listening worldwide. If you're gonna look at 544 00:29:46,640 --> 00:29:50,000 Speaker 1: a real rate study, where on the X axis do 545 00:29:50,120 --> 00:29:52,000 Speaker 1: you look at that? Are you looking at a two 546 00:29:52,080 --> 00:29:54,040 Speaker 1: year rate, are you looking at a three month library? 547 00:29:54,360 --> 00:29:58,080 Speaker 1: Or do you where where's the most advantageous study point 548 00:29:58,440 --> 00:30:01,880 Speaker 1: a real rate real dynamics. That's a really good question. 549 00:30:02,000 --> 00:30:03,800 Speaker 1: You've got to go to the five year point if 550 00:30:03,840 --> 00:30:05,600 Speaker 1: you want to get if you want to get a 551 00:30:05,720 --> 00:30:09,200 Speaker 1: cycle number. So so we think about where will the 552 00:30:09,320 --> 00:30:12,280 Speaker 1: five year rate being five years time? Currently the five 553 00:30:12,400 --> 00:30:16,200 Speaker 1: year US treasury five five year, five year four exactly. 554 00:30:16,920 --> 00:30:20,080 Speaker 1: So in the US the Treasury is at three thirty 555 00:30:20,160 --> 00:30:22,840 Speaker 1: three forty. That's the five year rate. The FED says 556 00:30:22,880 --> 00:30:25,600 Speaker 1: they're going to three three and a quarter. Some people 557 00:30:25,640 --> 00:30:27,520 Speaker 1: in the FEDS say they're going to go higher first, 558 00:30:28,160 --> 00:30:30,160 Speaker 1: which to me is ludicrous. I mean, the idea that 559 00:30:30,200 --> 00:30:32,600 Speaker 1: you're going to overtighten so you can cut seems to 560 00:30:32,680 --> 00:30:35,800 Speaker 1: be some kind of nonsense. But but if it's so 561 00:30:35,880 --> 00:30:38,080 Speaker 1: obvious you're going to hike four times and cut twice, 562 00:30:38,760 --> 00:30:41,960 Speaker 1: just hike twice. When you and Ben Laser Lasler, your 563 00:30:42,040 --> 00:30:45,760 Speaker 1: equity strategist, when you get together, how do you dovetails 564 00:30:45,840 --> 00:30:51,000 Speaker 1: Steve major fixed income theory with Ben Laidler equity theory. Well, 565 00:30:51,000 --> 00:30:52,960 Speaker 1: I think it works quite well because for him, he'll 566 00:30:53,040 --> 00:30:56,520 Speaker 1: take the longer term rate forecast is his input into 567 00:30:56,680 --> 00:30:59,800 Speaker 1: his dividend yield calculations and his assumptions, which says we 568 00:30:59,840 --> 00:31:01,640 Speaker 1: got to be in equity. If I believe in a 569 00:31:01,640 --> 00:31:03,880 Speaker 1: Steve Major world, I'm going to stay in equities. Right. 570 00:31:04,040 --> 00:31:07,880 Speaker 1: It does if your valuations are fair. Though the thing is, Tom, 571 00:31:08,680 --> 00:31:11,880 Speaker 1: is are the valuations fair? Because you've got to add 572 00:31:11,920 --> 00:31:13,920 Speaker 1: on top of this, not just the interest rate level, 573 00:31:14,160 --> 00:31:17,840 Speaker 1: it's the withdrawal of liquidity that you mentioned quantitative tightening before. 574 00:31:18,120 --> 00:31:21,440 Speaker 1: There's fifty billion dollars per month of reduced balance sheet. 575 00:31:21,800 --> 00:31:24,200 Speaker 1: The rest of the world is shifting the impulse on 576 00:31:24,280 --> 00:31:28,320 Speaker 1: the QUEUEI so it so the rates are one thing 577 00:31:28,800 --> 00:31:31,880 Speaker 1: for the equity market forecast, but what about the liquidity 578 00:31:31,960 --> 00:31:34,320 Speaker 1: that pumped up the process of those stocks. I have 579 00:31:34,400 --> 00:31:37,320 Speaker 1: to ask one more question the chronic nature of negative 580 00:31:37,360 --> 00:31:41,160 Speaker 1: interest rates in Europe? What is the price Well, we're 581 00:31:41,240 --> 00:31:46,080 Speaker 1: seeing actually sort of slow zombification of some parts of 582 00:31:46,720 --> 00:31:52,040 Speaker 1: the industrial base. Um. It strikes me that that maybe 583 00:31:52,400 --> 00:31:55,520 Speaker 1: is very difficult to remove them. That that's the other 584 00:31:55,720 --> 00:31:58,160 Speaker 1: the other thing, I mean, how do they remove negative 585 00:31:58,280 --> 00:32:01,600 Speaker 1: rates very quickly? Um, there's there's a there's a lot 586 00:32:01,680 --> 00:32:04,080 Speaker 1: of thought behind the negative right policy because it is 587 00:32:04,160 --> 00:32:06,800 Speaker 1: linked to the forward guidance and the asset pertions is 588 00:32:06,880 --> 00:32:10,200 Speaker 1: extremely potent. But the circumstances are never going to be 589 00:32:10,400 --> 00:32:13,400 Speaker 1: right to reverse them. But this is this is the thing. 590 00:32:13,480 --> 00:32:15,600 Speaker 1: I mean, how do you know when it's safe to 591 00:32:15,720 --> 00:32:17,720 Speaker 1: actually we move them. You're gonna go off to talk 592 00:32:17,800 --> 00:32:19,800 Speaker 1: to John Farrell and one of his other properties. We 593 00:32:19,880 --> 00:32:22,280 Speaker 1: need to say thank you. And also we're hoping for 594 00:32:22,440 --> 00:32:26,040 Speaker 1: forty two degree weather with no wind, no rain. No, 595 00:32:26,240 --> 00:32:29,640 Speaker 1: that's forty two degrees for the marathon. About a following wind, okay, 596 00:32:29,760 --> 00:32:33,040 Speaker 1: following win as well. Stephen Major with HSBC he is 597 00:32:33,160 --> 00:32:36,480 Speaker 1: in New York of course with HSBC clients coast to 598 00:32:36,560 --> 00:32:39,800 Speaker 1: coast and of course to running the TCS New York 599 00:32:39,840 --> 00:32:56,720 Speaker 1: City Marathon is well, pim Fox and Tunkey, thank you 600 00:32:56,840 --> 00:33:00,000 Speaker 1: for being with us. And if you're a bit confused, 601 00:33:00,080 --> 00:33:06,200 Speaker 1: used or intrigued by the election, always good to speak to. 602 00:33:06,280 --> 00:33:10,800 Speaker 1: Greg Vllier of Horizon Investments. Greg David Wasserman writing for 603 00:33:10,840 --> 00:33:14,240 Speaker 1: the Cook Political Report with a at the margin nudge. 604 00:33:14,280 --> 00:33:16,680 Speaker 1: You looked at six races and he nudged it a 605 00:33:16,800 --> 00:33:20,120 Speaker 1: little bit Democrat? Is that where you are you nudging 606 00:33:20,360 --> 00:33:25,080 Speaker 1: on a Thursday towards the Democrat or Democratic Party? Yeah? 607 00:33:25,160 --> 00:33:28,160 Speaker 1: A little bit. Tom, good morning. I think that you know, 608 00:33:28,240 --> 00:33:33,280 Speaker 1: maybe the Democrats take up seats in the House. That's enough, 609 00:33:33,360 --> 00:33:35,760 Speaker 1: they only need twenty three. But in the in the 610 00:33:35,880 --> 00:33:38,960 Speaker 1: Senate there's been a real momentum shift. I feel pretty 611 00:33:39,000 --> 00:33:42,240 Speaker 1: confident the Republicans not only will hold on to the Senate, 612 00:33:42,480 --> 00:33:44,600 Speaker 1: but they're going to gain a seat or two. Where 613 00:33:45,040 --> 00:33:47,920 Speaker 1: is turnout? I think with all the polls, I still 614 00:33:48,000 --> 00:33:51,320 Speaker 1: can't tell on both sides who's going to actually darken 615 00:33:51,400 --> 00:33:54,720 Speaker 1: the door of the voting booth. Who is it? Well, 616 00:33:54,800 --> 00:33:57,080 Speaker 1: traditionally it's people who are angriest, and I think the 617 00:33:57,160 --> 00:34:01,000 Speaker 1: angriest people are Democrats, Uh, some urban women who don't 618 00:34:01,040 --> 00:34:03,920 Speaker 1: like Trump who want to send a message. But it's 619 00:34:03,920 --> 00:34:07,280 Speaker 1: impossible for poll takers to predict. I mean, they'll tell 620 00:34:07,320 --> 00:34:11,520 Speaker 1: you in private that they may get their demographic mix correct, 621 00:34:11,840 --> 00:34:16,919 Speaker 1: but they can't quite figure out turnout. Greg Value, as 622 00:34:17,239 --> 00:34:21,320 Speaker 1: someone that previously worked at the Schwab and was the 623 00:34:21,440 --> 00:34:24,960 Speaker 1: director of research for the Charles Schwab Research Group, you're 624 00:34:25,120 --> 00:34:30,799 Speaker 1: great at connecting political events to financial outcomes, and you've 625 00:34:30,880 --> 00:34:35,759 Speaker 1: described a red hot economy and rising interest rates. Do 626 00:34:35,880 --> 00:34:40,160 Speaker 1: you see President Donald Trump getting into a real public 627 00:34:40,400 --> 00:34:45,799 Speaker 1: slanging match with Federal Reserve Chairman Jerome Powell? Absolutely, Pam, 628 00:34:45,960 --> 00:34:48,160 Speaker 1: I think that's a real risk for the market, says 629 00:34:48,200 --> 00:34:51,080 Speaker 1: the year unfold. I still think we get a rate 630 00:34:51,160 --> 00:34:55,160 Speaker 1: hike in December, Copple more, maybe three next year, and 631 00:34:55,360 --> 00:34:57,960 Speaker 1: Trump will tweet. I mean, if Trump's angry, now, just 632 00:34:58,080 --> 00:35:01,320 Speaker 1: imagine what you'll be like, seventy five basis points higher. 633 00:35:02,719 --> 00:35:06,880 Speaker 1: All right, so let's imagine that it's seventy five basis 634 00:35:07,080 --> 00:35:14,799 Speaker 1: points higher. Is President Trump already running for election? Absolutely? 635 00:35:14,920 --> 00:35:18,080 Speaker 1: I don't think there's any doubt. He's got his foils. 636 00:35:18,400 --> 00:35:21,399 Speaker 1: I mean, nobody plays against foils better than this guy. 637 00:35:21,480 --> 00:35:24,799 Speaker 1: I mean, he's got a foil in uh Paul Ryan, 638 00:35:24,880 --> 00:35:27,600 Speaker 1: He's got a foil in Jerome Powell at the FED. 639 00:35:28,000 --> 00:35:30,400 Speaker 1: So yes, he is running. And you know, I've been 640 00:35:30,440 --> 00:35:33,319 Speaker 1: saying in all of my talks lately, I think he's 641 00:35:33,360 --> 00:35:37,239 Speaker 1: the favorite to win reelection. What do you believe is 642 00:35:37,480 --> 00:35:43,000 Speaker 1: causing the market volatility that we've experienced in the last month, Well, 643 00:35:43,040 --> 00:35:45,239 Speaker 1: there's a lot of there's a lot of villains here, 644 00:35:45,520 --> 00:35:48,000 Speaker 1: you know, whether it's people getting too euphoric towards the 645 00:35:48,080 --> 00:35:51,160 Speaker 1: end of the summer, whether it's the FED. I think 646 00:35:51,239 --> 00:35:53,840 Speaker 1: Powell was a little indiscreet when he said we're not 647 00:35:54,040 --> 00:35:56,560 Speaker 1: close to neutral yet. I don't think he should have 648 00:35:56,640 --> 00:35:59,200 Speaker 1: said that, But there are so many other factors, and 649 00:35:59,320 --> 00:36:02,160 Speaker 1: I would also at it looks like things could get 650 00:36:02,200 --> 00:36:07,200 Speaker 1: even worse before they get better on trade. Greg. Then 651 00:36:07,280 --> 00:36:11,040 Speaker 1: this is five days to the election. What's the plan 652 00:36:11,239 --> 00:36:14,800 Speaker 1: right now for the big money? I love how yesterday 653 00:36:15,640 --> 00:36:21,600 Speaker 1: everything got quiet. Obviously, all the pros working at the margin. 654 00:36:21,920 --> 00:36:25,880 Speaker 1: What's the VALI a margin for the pros getting through 655 00:36:25,920 --> 00:36:29,719 Speaker 1: the weekend, getting to the Sunday talk shows, including thank 656 00:36:29,760 --> 00:36:32,800 Speaker 1: you facing hn CBS for joining us every Friday. But 657 00:36:33,040 --> 00:36:38,000 Speaker 1: what's what's the vliate to do list for pros right now? Well? 658 00:36:38,080 --> 00:36:42,960 Speaker 1: I think for the pros the outlook is surprisingly sanglord h. 659 00:36:43,080 --> 00:36:45,799 Speaker 1: It's in the market that the House flips to the Democrats. 660 00:36:45,880 --> 00:36:48,239 Speaker 1: It's in the market that the Senate gets a little 661 00:36:48,320 --> 00:36:51,400 Speaker 1: more Republicans. I think the big story and the reason 662 00:36:51,440 --> 00:36:54,399 Speaker 1: why Tom I don't think this election is a huge 663 00:36:54,480 --> 00:36:57,839 Speaker 1: deal for the markets. The big story is that even 664 00:36:57,880 --> 00:37:01,480 Speaker 1: if the Democrats took both houses, Trump's Vito was good. 665 00:37:01,840 --> 00:37:04,920 Speaker 1: So any fear that Trump's economic agenda would get undone 666 00:37:05,600 --> 00:37:08,560 Speaker 1: kill kill the tax cuts, It's not gonna happen because 667 00:37:08,840 --> 00:37:11,399 Speaker 1: veto it. I mean, this is fascinating Pivot's the first 668 00:37:11,480 --> 00:37:14,560 Speaker 1: time I've ever heard anybody talk about Mr Trump with 669 00:37:14,600 --> 00:37:17,160 Speaker 1: a veto pen in hand. I mean, give us a 670 00:37:17,200 --> 00:37:20,359 Speaker 1: clinic on that, Greg, right now. I mean presidents are 671 00:37:20,440 --> 00:37:24,320 Speaker 1: reluctant to veto, etcetera. But this is an original president, 672 00:37:24,480 --> 00:37:28,560 Speaker 1: isn't it? Original? Is an understatement a couple of points. 673 00:37:28,640 --> 00:37:31,879 Speaker 1: Number One time, I do think that Trump will play 674 00:37:31,920 --> 00:37:35,759 Speaker 1: against a more liberal House that may talk about impeachment. 675 00:37:36,200 --> 00:37:39,360 Speaker 1: But I think the big thing for investors to remember 676 00:37:39,800 --> 00:37:42,360 Speaker 1: is that you need sixty seven votes in the Senate 677 00:37:42,600 --> 00:37:45,640 Speaker 1: to override a veto. It's not going to be sixty 678 00:37:45,680 --> 00:37:48,760 Speaker 1: seven votes. I think the Republicans will actually add seats 679 00:37:48,760 --> 00:37:51,239 Speaker 1: in the Senate. So I think the Trump agenda is 680 00:37:51,360 --> 00:37:56,000 Speaker 1: safe for two more years, Greg Valuer, Who in the 681 00:37:56,160 --> 00:38:02,840 Speaker 1: White House do you believe is making economic policy? Donald Trump? That, 682 00:38:02,960 --> 00:38:05,759 Speaker 1: maybe a few others, maybe Larry cud Lolo. I think 683 00:38:05,760 --> 00:38:08,160 Speaker 1: a lot of the policies go against what Larry has 684 00:38:08,239 --> 00:38:12,400 Speaker 1: said for his entire career. Uh, it's it's it's at 685 00:38:12,440 --> 00:38:13,920 Speaker 1: the end of the day, I think you've got to 686 00:38:14,000 --> 00:38:18,239 Speaker 1: say it's Trump and um right now, I think he's 687 00:38:18,360 --> 00:38:21,200 Speaker 1: thinking exactly what you guys said what's going to happen 688 00:38:21,239 --> 00:38:25,640 Speaker 1: in Well, we know that there's going to be a 689 00:38:25,800 --> 00:38:29,440 Speaker 1: G twenty meeting in Buenos Aires. We also know that 690 00:38:29,640 --> 00:38:32,920 Speaker 1: President Donald Trump is going to meet the Chinese President 691 00:38:33,000 --> 00:38:36,759 Speaker 1: j Pink. In fact, Larry Cudlow coming out just now 692 00:38:36,840 --> 00:38:39,480 Speaker 1: and saying that the meeting would be very formal. Do 693 00:38:39,640 --> 00:38:43,160 Speaker 1: you believe anything will be resolved at that meeting? Well, 694 00:38:43,560 --> 00:38:46,760 Speaker 1: that's a key issue for the market, so obviously November thirty, 695 00:38:46,840 --> 00:38:51,440 Speaker 1: December one. So I would think that the personal chemistry 696 00:38:51,600 --> 00:38:55,759 Speaker 1: between z and Trump might get resurrected a little. Maybe 697 00:38:55,840 --> 00:38:58,719 Speaker 1: there's a nice photo of they might even agree to 698 00:38:58,840 --> 00:39:02,240 Speaker 1: resurrect the talks between the two countries. But any hope 699 00:39:02,520 --> 00:39:05,360 Speaker 1: that there would be a dramatic breakthrough in Buenos Areas, 700 00:39:05,640 --> 00:39:08,279 Speaker 1: I think that hope is unrealistic. And now, folks, we 701 00:39:08,400 --> 00:39:10,920 Speaker 1: move forward with Greg Villier. Yes, we can only do 702 00:39:11,200 --> 00:39:14,799 Speaker 1: with a man from New Hampshire. Greg. It's five days 703 00:39:14,840 --> 00:39:17,759 Speaker 1: to the mid terms and your entire note today is 704 00:39:17,840 --> 00:39:22,560 Speaker 1: out exactly two years in one week. How many Democrat 705 00:39:22,760 --> 00:39:26,640 Speaker 1: candidates are there right now? You know, I gotta say, Tom, 706 00:39:26,920 --> 00:39:30,200 Speaker 1: it could be twenty five. It's a huge list. I mean, 707 00:39:30,360 --> 00:39:34,440 Speaker 1: if if if your top three is Biden, Bernie and 708 00:39:34,680 --> 00:39:37,160 Speaker 1: Elizabeth Lawren. I mean, there's a lot of room for 709 00:39:37,239 --> 00:39:41,040 Speaker 1: other candidates, so maybe are a little younger, maybe you 710 00:39:41,120 --> 00:39:44,160 Speaker 1: got some fresh blood, and there is So we'd be 711 00:39:44,200 --> 00:39:46,880 Speaker 1: on until noon if we talked about you know, Ali 712 00:39:47,000 --> 00:39:52,760 Speaker 1: out of Life, Corey Booker, Kirsten gillibrand uh Amy klob Shark, obviously, 713 00:39:52,840 --> 00:39:55,279 Speaker 1: CaMLA Harris. The list goes on and on and on. 714 00:39:55,480 --> 00:39:58,080 Speaker 1: But I do say, and some people don't like me 715 00:39:58,400 --> 00:40:00,920 Speaker 1: and me saying this, I do say that as of now, 716 00:40:01,040 --> 00:40:03,800 Speaker 1: Trump is the favorite. He's easily going to win the 717 00:40:03,880 --> 00:40:06,719 Speaker 1: nomination in that party, and I don't see anyone right 718 00:40:06,760 --> 00:40:10,520 Speaker 1: now is a clear likely opponent who could beat Trump. 719 00:40:12,360 --> 00:40:15,960 Speaker 1: Having said that, do you believe that the Democrats have 720 00:40:16,120 --> 00:40:20,000 Speaker 1: a coherent plan. Well, there's a lot of friction. I mean, 721 00:40:20,040 --> 00:40:23,239 Speaker 1: you've got what I call the Bronx Socialists, and you've 722 00:40:23,280 --> 00:40:26,880 Speaker 1: got the old Guard and people like Joe Biden, and 723 00:40:26,960 --> 00:40:30,000 Speaker 1: the party is divided. I think they need to resolve this. 724 00:40:30,200 --> 00:40:34,000 Speaker 1: I mean, the young Bronx socialist has some very seductive ideas, 725 00:40:34,280 --> 00:40:37,480 Speaker 1: but they can't describe how they would pay for these ideas. 726 00:40:37,760 --> 00:40:39,640 Speaker 1: So that's going to be a big problem. For them 727 00:40:39,960 --> 00:40:45,239 Speaker 1: in describing how you can get this done without consiscuatory taxation. Greg, 728 00:40:45,280 --> 00:40:47,480 Speaker 1: Thank you so much. Greg, with a nice update there 729 00:40:47,560 --> 00:40:56,120 Speaker 1: on what we make gazette next Tuesday. Thanks for listening 730 00:40:56,239 --> 00:41:00,800 Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews 731 00:41:00,840 --> 00:41:06,040 Speaker 1: on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 732 00:41:06,600 --> 00:41:09,920 Speaker 1: I'm on Twitter at Tom Keene before the podcast. You 733 00:41:10,000 --> 00:41:13,360 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio