WEBVTT - Surveillance: Pound Must Have Upside From Lows, Barth Says 0:00:00.120 --> 0:00:02.920 Brought you by Bank of America, Mary Lynch. Investing in 0:00:03.000 --> 0:00:07.840 local communities, economies and a sustainable future. That's a power 0:00:08.080 --> 0:00:12.360 of global connections. Mary Lynch, Pierce Fenner and Smith Incorporated 0:00:12.760 --> 0:00:27.400 Member s I p C. Welcome to the Bloomberg Surveillance Podcast. 0:00:27.840 --> 0:00:31.520 I'm Tom Keene with David Gura. Daily we bring you 0:00:31.560 --> 0:00:36.600 insight from the best in economics, finance, investment and international relations. 0:00:37.000 --> 0:00:41.600 Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com and 0:00:41.680 --> 0:00:49.080 of course on the Bloomberg. This is a joy. David 0:00:49.120 --> 0:00:52.920 Gura and Tom Keene in our radio studios. I'm Finsbury Square, 0:00:53.040 --> 0:00:55.040 north of the city. We're sort of on the edge 0:00:55.040 --> 0:00:57.560 of the city and tomorrow we're gonna go take a 0:00:57.600 --> 0:01:00.480 tour of our new office. We'll put on the hard hats, boots, 0:01:01.640 --> 0:01:05.400 look at those screwts addresses allowed. Yeah, it's very st 0:01:05.520 --> 0:01:09.200 it's like a whole strict thing about like taking a 0:01:09.280 --> 0:01:11.640 tour of it. But it's really coming together. We hope 0:01:11.640 --> 0:01:15.240 within the year to be the largest stone building in London. Well, 0:01:15.280 --> 0:01:19.319 I don't tell Parliament, you know it's gonna be good. 0:01:19.360 --> 0:01:21.720 Near Mansion House in the heart of the city, near 0:01:21.760 --> 0:01:23.640 the look for Twitter phos. Why don't you bring in 0:01:23.640 --> 0:01:26.080 our good guests. Who's dark in the door of mansion house? 0:01:26.120 --> 0:01:28.360 Any number? Very good? Mr Marvin barth here, a head 0:01:28.360 --> 0:01:30.560 of European f ex Strategy Barclays, joins this here in 0:01:30.600 --> 0:01:33.520 our studios in London. As Tom mentioned, and Marvin, let 0:01:33.560 --> 0:01:34.800 me ask you just first of all, we're seeing a 0:01:34.800 --> 0:01:37.360 lot of anxiety play out here in the currency markets. 0:01:37.520 --> 0:01:39.120 Why is this the venue for it? Why why are 0:01:39.120 --> 0:01:41.479 we seeing so much anxiety and currencies right now? Well, 0:01:41.480 --> 0:01:44.000 I think it's one of the UH markets that touches 0:01:44.040 --> 0:01:47.080 every other market, is the key point. In fact, generally 0:01:47.120 --> 0:01:50.280 the way we look at currencies is it is the 0:01:50.320 --> 0:01:53.200 market that clears all other markets, trading goods and services, 0:01:53.200 --> 0:02:00.440 trading financial services, whether it's UH equities, bonds, whichever. So 0:02:01.160 --> 0:02:04.440 it's one of the first ones that reacts um to 0:02:04.840 --> 0:02:08.400 economic news from the trade side. But also financial flows 0:02:08.440 --> 0:02:12.480 clearly are the biggest driver UH and so that you 0:02:12.520 --> 0:02:15.840 can have much more significant reactions there. And then the 0:02:15.840 --> 0:02:18.600 final reason is is that frankly, it's the most liquid 0:02:18.639 --> 0:02:20.919 market out there, so it's the easiest one for people 0:02:20.919 --> 0:02:23.639 to express and hedge themselves. Tom has been playing a 0:02:23.760 --> 0:02:27.200 lepidopter is stall week talking about butterflies. Since we got 0:02:27.200 --> 0:02:30.360 here talking about emerging markets. Let me ask you how 0:02:30.320 --> 0:02:32.040 what we're seeing in Turkey this morning with with the 0:02:32.080 --> 0:02:35.280 Turkish lira we had the central bank they're intervening. What 0:02:35.400 --> 0:02:38.560 has caused that dramatic shift in the lira over these 0:02:38.639 --> 0:02:42.280 last few days. Well, it's a it's a continuation of 0:02:42.320 --> 0:02:48.040 the political uncertainty uh there, and how the government is 0:02:48.080 --> 0:02:52.720 going to look at the banking system and their um 0:02:53.280 --> 0:02:58.160 dollar loans and deposits, by the way, they have both 0:02:58.600 --> 0:03:02.640 um what onshore rents and start going to do with those, uh. 0:03:02.680 --> 0:03:06.120 And the continued political uncertainty as we go into the 0:03:06.120 --> 0:03:09.520 referendum which will probably take place uh in April. So 0:03:09.560 --> 0:03:12.480 all of those things have been sort of percolating for 0:03:12.480 --> 0:03:14.840 a while here, and this is just a further extension that, 0:03:14.960 --> 0:03:17.959 particularly as we come into the central bank meeting later 0:03:18.040 --> 0:03:19.720 this month. How does a strategist like you, how does 0:03:19.720 --> 0:03:22.600 an investor incurrencies react to intervention like the kind we 0:03:22.639 --> 0:03:25.280 saw today? Does it does it cheer you to see it? 0:03:25.320 --> 0:03:28.480 Does it raise more concerns than it delays? Well, you know, 0:03:29.240 --> 0:03:33.399 I have a unique experience and I used to work 0:03:33.440 --> 0:03:36.440 in the Federal Reserve um in the form of exchange 0:03:36.480 --> 0:03:39.120 the global market section. And so I used to see 0:03:39.360 --> 0:03:42.280 intervention as it was happening. All the central banks would 0:03:42.320 --> 0:03:44.760 report to each other. And so I remember back in 0:03:45.400 --> 0:03:49.520 you know, the early two thousand's, watching Japan jump or 0:03:49.720 --> 0:03:53.240 dump several billion dollars at a time into the market 0:03:53.480 --> 0:03:57.240 and watch it just dissipate and evaporate like nothing. And 0:03:57.320 --> 0:04:00.160 so one of the things I've come away with is 0:04:00.160 --> 0:04:04.160 that foreign exchange intervention, unless it's accompanied by a real 0:04:04.240 --> 0:04:07.800 shift in policy, just doesn't work, or you're at extremes. 0:04:08.160 --> 0:04:10.240 And I don't think you can claim that either of 0:04:10.240 --> 0:04:12.160 those in the case with Turkey right now. I mean 0:04:12.160 --> 0:04:14.440 the headline on Turkey, folks, and this goes to the 0:04:14.480 --> 0:04:17.159 cash spent. I'm going to use a working number that 0:04:17.400 --> 0:04:18.960 I may be wrong on, but I think it was 0:04:19.000 --> 0:04:23.560 six billion uh used by Mexico to support Paso. You're 0:04:23.560 --> 0:04:26.680 a few days ago and the headline is there Turkeys 0:04:26.800 --> 0:04:34.039 urdam sites operation to rapidly depreciate lira. What I that's 0:04:34.120 --> 0:04:37.560 lost in translation for me, David Marvin, help me, what 0:04:37.560 --> 0:04:40.760 what the hell does that headline mean? I think your 0:04:40.800 --> 0:04:45.719 guesses is actually, I'm sure it's accurate. I don't I 0:04:45.760 --> 0:04:48.760 don't you know, I don't mean to. I just you know, 0:04:48.800 --> 0:04:50.960 you see the headlines come across the Bloomberg and you say, 0:04:51.000 --> 0:04:53.880 what Turkish lee or a weaker right now three seventy seven. 0:04:54.680 --> 0:04:57.680 But um, you know it's not blowing out to a 0:04:57.720 --> 0:05:02.479 weaker Turkish lear right now. As you say there's unilateral 0:05:02.960 --> 0:05:07.320 depreciation or management of a currency, I should say, and 0:05:07.360 --> 0:05:10.719 the textbook says it just never never, never works. Who's 0:05:10.760 --> 0:05:13.719 the elephant in the room for Turkey or Malaysia or 0:05:13.720 --> 0:05:15.560 the others right now? Is it the I M F 0:05:15.680 --> 0:05:19.279 Or is it the United States? Well? I think in 0:05:19.440 --> 0:05:22.560 many of those cases, it's actually their own citizens, right um, 0:05:22.640 --> 0:05:25.240 particularly in the case of Turkey, when you think about 0:05:25.360 --> 0:05:30.640 how much um uh Turkish citizens typically keep uh in 0:05:30.720 --> 0:05:33.880 dollar accounts. And you know, one of the interesting things 0:05:33.880 --> 0:05:37.640 about Turkey in the sort of post crisis period relative 0:05:37.680 --> 0:05:41.320 to the pre crisis period is you know, you remember 0:05:41.360 --> 0:05:45.320 the old days when the Turkish lyricist went one direction umu, 0:05:45.839 --> 0:05:50.080 when it even had a different currency code. Um. Those 0:05:50.560 --> 0:05:54.680 in those days, when you had anything like this, the 0:05:54.760 --> 0:05:59.239 locals would immediately shift all their lira into dollars today. 0:05:59.360 --> 0:06:02.760 What you're seeing, or what you have seen in the 0:06:02.839 --> 0:06:05.760 post crisis period is they've shown greater confidence in their 0:06:05.760 --> 0:06:09.920 own policymakers and actually when the lira um dips down 0:06:10.000 --> 0:06:12.640 to low levels like this, they've come back and bought. 0:06:13.640 --> 0:06:16.520 But that is the real question right now, that's the 0:06:16.560 --> 0:06:22.400 elephant in the room here, is in this incredible political uncertainty? 0:06:22.480 --> 0:06:24.920 Is that going to continue to happen? Thank you so much. 0:06:25.520 --> 0:06:28.560 Great to see it with Barclay's giving us perspective today 0:06:28.640 --> 0:06:42.919 on foreign exchange, Let's talk to Paul mort and more 0:06:43.080 --> 0:06:45.000 Lee now he's chief of commis bnp PA about joining 0:06:45.080 --> 0:06:47.040 us at by phone at Paul Morn would lead great 0:06:47.080 --> 0:06:49.240 to speak with you here this morning, joining us here, 0:06:49.360 --> 0:06:51.599 Thanks very much for your time today. Let's pick up 0:06:51.640 --> 0:06:53.160 from what we're talking about a few moments where we're 0:06:53.200 --> 0:06:56.200 talking about trade. Boris Johnson, the Foreign Secretary of visiting 0:06:56.240 --> 0:06:59.240 the US UH, some senators talking about the relationship between 0:06:59.240 --> 0:07:01.039 the U S and the UK. Let's talk about US 0:07:01.080 --> 0:07:03.560 trade policy first year. How big a weight is that 0:07:03.600 --> 0:07:08.480 as you forecast out growth in the US going forward. Oh, 0:07:07.880 --> 0:07:11.320 we don't really know what's going to happen with trade policy. 0:07:11.400 --> 0:07:14.760 I think that's that there's a major uncertainty about whether 0:07:14.800 --> 0:07:18.440 we will see very big moves or whether we'll see 0:07:18.440 --> 0:07:23.520 a more piecemeal, piecemeal approach. I think what we probably 0:07:23.520 --> 0:07:27.200 will see some really negotiation of some trade deal and 0:07:27.320 --> 0:07:31.440 therefore probably not a big surgey in protection is m 0:07:31.800 --> 0:07:34.440 but I think it's a worry and very probably it's 0:07:34.520 --> 0:07:39.400 dampening investment in some parts of the world in emerging 0:07:39.440 --> 0:07:41.840 markets who were thinking about are they going to have 0:07:42.000 --> 0:07:45.560 problems exporting to the US in the future. And I 0:07:45.600 --> 0:07:48.880 think it is an uncertainty that will weigh somewhat on business. 0:07:49.320 --> 0:07:53.400 If we were to see major protectionist moves by the US, 0:07:53.480 --> 0:07:57.240 then we'd have to revise down our US growth forecast, 0:07:57.640 --> 0:08:01.840 and we'd have to revise up our inflation forecast in 0:08:01.880 --> 0:08:06.240 the US because clearly, if we're sourcing it currently from 0:08:06.240 --> 0:08:09.600 outside the US, and we source it, that's because it's cheaper, 0:08:10.200 --> 0:08:12.800 and so if there is protectionism, inflation is going to 0:08:12.880 --> 0:08:15.160 go up, and that will add to the risk that 0:08:15.240 --> 0:08:18.120 the fens titans policy more than it's currently planning. Now, 0:08:18.120 --> 0:08:22.080 what's your growth forecast right now? Well, you know, we 0:08:22.080 --> 0:08:24.240 we think we think growth is going to be pretty 0:08:24.280 --> 0:08:27.720 strong this year, we're going to be up around two 0:08:27.720 --> 0:08:29.800 and a half two and a half market, and it 0:08:29.880 --> 0:08:34.120 depends on how much we get a fiscal boost that 0:08:34.160 --> 0:08:39.440 will more probably affect two thousand and eighteen. What we 0:08:39.480 --> 0:08:41.360 are seeing at the moment, and we saw this this 0:08:41.400 --> 0:08:46.880 morning with the National Federation of Independent Business Optimism Index, 0:08:46.960 --> 0:08:52.120 which surged for the most We're seeing a huge surgery 0:08:52.120 --> 0:08:56.600 and optimism in businesses and in consumers. What's not clear 0:08:56.760 --> 0:08:59.439 is how much that's going to s spilled through to 0:08:59.600 --> 0:09:03.680 spend hother in capex or in consumer spending. The consumer 0:09:03.720 --> 0:09:07.280 credit numbers this morning we're pretty strong, So there seems 0:09:07.280 --> 0:09:10.440 to be some evidence, and so I think there's definitely 0:09:10.480 --> 0:09:14.280 a possibility that we may be surprised on the upside 0:09:14.280 --> 0:09:17.120 by US growth, particularly in the first half of the year. 0:09:17.240 --> 0:09:20.600 Tam Keene and David David Palm momerately with US chief 0:09:20.600 --> 0:09:22.800 economist at BNP at pair about what we're talking about 0:09:22.800 --> 0:09:26.600 trade economic growth in the US. You were mentioning emerging markets, 0:09:26.600 --> 0:09:28.280 and I wonder which are the ones that you see 0:09:28.320 --> 0:09:31.240 most likely to sort of feel pain going forward here. 0:09:32.640 --> 0:09:34.800 I just feel what to feel fling from trade or 0:09:34.840 --> 0:09:38.439 just yes, from from trade in particular from in particular, 0:09:38.600 --> 0:09:42.480 you're gont worry about China and therefore Southeast Asia. I 0:09:42.480 --> 0:09:46.480 mean it's you know, basically, commodity exporters should be fine, 0:09:46.600 --> 0:09:50.360 right because they're complementary to US production. It's people who 0:09:50.440 --> 0:09:55.719 were producing competing with US style production that need to 0:09:55.760 --> 0:09:58.760 be worried. And I think particularly those who got big 0:09:58.800 --> 0:10:01.840 trade surpass, like China. And I think that's where the 0:10:01.880 --> 0:10:04.760 concern is. Because so much of the US empathy is 0:10:04.760 --> 0:10:07.640 with China. It's got to be a focus, and therefore 0:10:08.000 --> 0:10:10.920 all the economies that supply China in the regional linked 0:10:10.920 --> 0:10:14.200 to China have got reason to be concerned where we're going. 0:10:14.840 --> 0:10:18.560 I think when when you look at what this administration 0:10:18.600 --> 0:10:21.320 to pursue, it's been a pretty strong strong dollar policy 0:10:21.360 --> 0:10:23.600 here over the last eight years. Do we have indications 0:10:23.640 --> 0:10:26.400 here that a president Donald Trump is going to pursue 0:10:26.400 --> 0:10:29.920 the same strong dollar policy. No one. I'm not convinced 0:10:29.920 --> 0:10:32.360 he will, because to some extent, the stronger the dollar, 0:10:32.920 --> 0:10:36.040 the more it's going to work against these um the 0:10:36.200 --> 0:10:39.520 impetus to boost manufacturing in the US. And so I 0:10:39.600 --> 0:10:41.439 think that I think that is a concern. I mean, 0:10:41.480 --> 0:10:43.960 that might be one of the things. Why we've seen 0:10:44.000 --> 0:10:49.720 Southern Federal Reserve officials talking about moving the ball because 0:10:50.240 --> 0:10:53.200 the exchange rate seems much more sensitive to short term 0:10:53.240 --> 0:10:57.000 interest rates than to long term rates. So tightening of 0:10:57.080 --> 0:11:01.520 monetary policy switches a little away from raising spot rates 0:11:01.600 --> 0:11:04.280 but redging the FED funtons and towards running off the 0:11:04.320 --> 0:11:07.000 balance sheet. That could allow the Fed to tighten but 0:11:07.200 --> 0:11:12.480 not damage the exchange rate and therefore manufacturing. You Oh, 0:11:12.520 --> 0:11:14.719 go ahead, please, They didn't mean to interrupt. Excuse me, No, 0:11:15.120 --> 0:11:17.000 I was going to say, you know that. I mean 0:11:17.040 --> 0:11:18.920 I think there are a number of other things but 0:11:19.400 --> 0:11:24.160 could push the exchange rate higher. You know, the cash 0:11:24.200 --> 0:11:31.480 based um cash flow based corporate tax change could could 0:11:31.559 --> 0:11:36.840 push the dollar higher. We could see some repatriation by 0:11:37.080 --> 0:11:40.199 corporates to the US that comes about push the dollar higher. 0:11:40.480 --> 0:11:43.920 So I think too strong dollar is a threat to 0:11:44.000 --> 0:11:48.440 President Trum's ambitions to boost manufacturing. Definitely. You have a 0:11:48.480 --> 0:11:52.480 beautiful research headline which captures the emotion of so much 0:11:52.520 --> 0:11:57.000 of our listeners. Body yields burning down the house. There's 0:11:57.040 --> 0:12:03.160 an innate fear price down yield up not good for me? 0:12:03.800 --> 0:12:06.760 Are we going to burn down the house? I don't 0:12:06.800 --> 0:12:08.640 think we're going to burn down the house. But you know, 0:12:08.760 --> 0:12:11.480 we looked back at two thousand and thirteen when we 0:12:11.520 --> 0:12:14.959 had to taper tantrum and long bondul by other hundred 0:12:15.040 --> 0:12:19.760 basis points. It definitely slows the housing market very, very sharply, 0:12:20.280 --> 0:12:24.960 and we've seen not not far off the same backup 0:12:25.040 --> 0:12:27.600 in bonduels, And the question is that going to hurt 0:12:27.640 --> 0:12:30.280 the housing market this time now? I think there are 0:12:30.360 --> 0:12:33.240 quite a lot of differences now between where we are 0:12:33.280 --> 0:12:36.160 and where we were in two thousands and thirteen. The 0:12:36.240 --> 0:12:40.240 unemployment rates three almost three percentage points lower for a start, 0:12:41.160 --> 0:12:43.720 but I think we will see something of a setback. 0:12:43.800 --> 0:12:47.160 The lags back then. We're about six months, and I 0:12:47.200 --> 0:12:50.480 think we will see a slightly slower paced, probably more 0:12:50.520 --> 0:12:54.080 of the existing sales than new home sales. But I 0:12:54.120 --> 0:12:56.439 don't think it's a massive threat to the economy. Might 0:12:56.480 --> 0:13:00.160 not not point one maybe point two off growth as 0:13:00.160 --> 0:13:04.000 bond you go higher, but the consumer is not using 0:13:04.040 --> 0:13:07.800 mortgage finance in the same way as a decade ago 0:13:07.920 --> 0:13:11.800 to the fuel consumption, for example, and so I think 0:13:11.840 --> 0:13:13.920 the economy is going to be pretty resilient for the 0:13:14.000 --> 0:13:16.959 higher bond you and the higher bond deals. The really 0:13:17.120 --> 0:13:20.840 a reflection of good news. Were expecting good news on 0:13:20.880 --> 0:13:23.840 the economy. What is back in thirteen it just like 0:13:23.960 --> 0:13:26.200 looked like the Fed was going to tighten without the 0:13:26.240 --> 0:13:28.760 good news coming. But this time the economy should be 0:13:28.840 --> 0:13:31.760 less sensitive. David, this is fascinating. I mean, you know, 0:13:31.760 --> 0:13:34.240 mortgage Jack, will you withdraw? Was a phrase of the 0:13:34.240 --> 0:13:36.440 ear in the moment. Shout at the young heart seas 0:13:36.480 --> 0:13:39.559 at Goldman Sex was great work back then. But David, 0:13:39.600 --> 0:13:41.480 I just think this is a huge deal where it's 0:13:41.520 --> 0:13:45.880 a new world of rising rates. We just don't know, 0:13:46.160 --> 0:13:48.960 a new world of rising rates and and a big 0:13:48.960 --> 0:13:52.199 opportunity here for potential conflict. Imagine Palm Winimer Lee. If 0:13:52.200 --> 0:13:54.160 you have the Fed going forward raising rates at the 0:13:54.200 --> 0:13:57.920 same time as you have the Congress, expect the Congress 0:13:57.920 --> 0:14:00.280 here to pass a big fiscal stimulus and some tax reform. 0:14:00.360 --> 0:14:02.079 How thorny is this going to be? How difficult is 0:14:02.120 --> 0:14:04.719 it going to be to navigate the economic landscape in 0:14:04.760 --> 0:14:07.560 Washington as you have these two institutions what a mile 0:14:07.559 --> 0:14:10.240 and a half apart from each other in Washington doing 0:14:10.280 --> 0:14:13.880 things they're sort of detrimental to each other. Why I 0:14:13.920 --> 0:14:15.920 think it's going to be very tricky. He's going to 0:14:16.000 --> 0:14:18.800 be very tricky in particular for the FED because I think, 0:14:19.240 --> 0:14:22.080 you know, the administration will say, look, you know, a 0:14:22.160 --> 0:14:26.520 lot of stimulus is not just the manse stimulus, supply stimulus. 0:14:26.560 --> 0:14:30.520 And if you guys raise raised too quickly and stop 0:14:31.000 --> 0:14:35.200 this process, you're going to squeeze out supply. And therefore, 0:14:35.240 --> 0:14:37.520 I think the administration is going to be putting quite 0:14:37.520 --> 0:14:40.360 a lot of pressure on the FED not to overdo 0:14:40.400 --> 0:14:43.600 its tightening, but at the same time, the faise. I 0:14:43.640 --> 0:14:46.920 think that the key thing for the FED therefore will 0:14:46.960 --> 0:14:54.160 be how inflation and costs, including wages evolved. Because strong demand, 0:14:54.920 --> 0:14:58.760 I think, because of the arguments from the Trump administrational supply, 0:14:59.480 --> 0:15:02.400 it makes quite difficult for the THREAD to snuff out demand. 0:15:02.960 --> 0:15:06.480 But if they see inflation move higher, that's a bit easier. 0:15:06.520 --> 0:15:09.960 And so I think the freds reaction functions changing and 0:15:10.040 --> 0:15:13.720 they're going to be more sensitive to inflation signals than 0:15:13.800 --> 0:15:16.480 than growth going forward, which is a kind of reverse 0:15:16.680 --> 0:15:18.880 when we were in the past year. I think that 0:15:18.920 --> 0:15:20.760 we get minutes from the e CB this week on 0:15:20.760 --> 0:15:22.960 on Thursday, from its last meeting, and I think when 0:15:23.000 --> 0:15:24.520 when that happens I'm going to open it up and 0:15:24.520 --> 0:15:27.880 do control f for fine and typing the word taper 0:15:27.920 --> 0:15:30.160 to see if it appears. What do you are you 0:15:30.280 --> 0:15:32.840 going to be looking that? What are you going to 0:15:32.880 --> 0:15:35.480 be looking for those minutes far? I think you've come 0:15:35.560 --> 0:15:38.480 up with a big zero that I think that he's 0:15:38.520 --> 0:15:44.280 not tapering, it's sailing back. I think the really disagreement. Yeah, yeah, 0:15:44.480 --> 0:15:47.360 I think there'd just be some There'll be some disagreement, clearly. 0:15:47.400 --> 0:15:51.080 I think I think the Halts probably wanted to have 0:15:51.600 --> 0:15:57.240 a shorter extension of the QWI, some of the Doves 0:15:57.280 --> 0:16:00.440 wanted a longer extension, and basically we did up with 0:16:00.520 --> 0:16:04.040 something of a compromise. I don't think they're very optimistic 0:16:04.120 --> 0:16:07.040 on growth. I think they think growth is pretty fragile. 0:16:07.400 --> 0:16:10.520 And I think they're underlying picture on core inflation. Although 0:16:10.600 --> 0:16:13.600 headlines moving up, I don't think they have a big 0:16:13.640 --> 0:16:17.880 face in terms of core inflation shifting. But I think 0:16:17.920 --> 0:16:20.240 the message will continue to be to be dove it. 0:16:20.400 --> 0:16:23.840 I mean, I think they did a great job in tapering, 0:16:24.320 --> 0:16:27.560 and that they did taper, they did scale back, and 0:16:27.640 --> 0:16:30.520 yet the market interpreted it as very dumbish, which is 0:16:30.560 --> 0:16:33.200 a huge contract to what happened in two thousand and third, 0:16:34.240 --> 0:16:37.120 if you remember so, I believe I think they handled 0:16:37.120 --> 0:16:39.280 it pretty skillfully. I have to leave it there. Palm 0:16:39.360 --> 0:16:43.520 order relief, thank you so much. With in New York 0:16:43.520 --> 0:16:46.920 is just a great set of opinions, and as usual David, 0:16:46.960 --> 0:16:50.640 it centers around the view of someone an economic growth 0:16:51.000 --> 0:16:53.160 and we haven't had that dovetailing of the housing market 0:16:53.160 --> 0:16:56.160 into into it before. Well the housing market there, but 0:16:56.200 --> 0:17:00.160 just basic g d P. There's two versus. Those were 0:17:00.200 --> 0:17:02.920 optimistic and of course that's what makes for the debate. 0:17:03.320 --> 0:17:14.439 Absolutely brought you by Bank of America, Mary Lynch. Dedicated 0:17:14.760 --> 0:17:18.199 to bringing our clients insights and solutions to meet the 0:17:18.280 --> 0:17:22.679 challenges of a transforming world. That's the power of global connections, 0:17:23.080 --> 0:17:28.000 Mary Lynch, Pierce fennerin Smith Incorporated, Member s I p C. 0:17:33.640 --> 0:17:35.640 What been Charles Dumont Now he's the chairman in chief 0:17:35.640 --> 0:17:38.040 economist at Lambard Street Research, joining us here in this 0:17:39.920 --> 0:17:43.720 he wants join the spect of Enterprise phone line, Spectum 0:17:43.800 --> 0:17:47.560 Enterprise Nationwide fiber based network and I T Infrastructure solutions. Charles, 0:17:47.560 --> 0:17:50.600 Great to speak with you again. Yeah, nice to talk 0:17:50.640 --> 0:17:55.080 to you, very good. Does your optimism persist here? We 0:17:55.240 --> 0:17:57.520 we we. We heard the comments from Theresa a Prime 0:17:57.520 --> 0:18:02.000 Minister over the weekend. Uh she feuding observations that the 0:18:02.000 --> 0:18:04.159 Brexit process is mudeled. What is your sense of of 0:18:04.160 --> 0:18:06.800 how it's going at this point? Well, I think it's 0:18:06.960 --> 0:18:09.240 certainly muddeled, but it was bound to be muddeled. I mean, 0:18:09.640 --> 0:18:12.560 no one mainly plans for Brexit. It was the civil 0:18:12.600 --> 0:18:17.800 services completely side swiped by it, and and and now 0:18:17.840 --> 0:18:20.119 they're having to sort of get themselves together now. The 0:18:20.160 --> 0:18:22.280 other thing is that you can't really have a negotiation 0:18:22.359 --> 0:18:24.600 until the other side is in place. And the other 0:18:24.600 --> 0:18:26.600 side is not in place. I know the Commission is 0:18:27.000 --> 0:18:31.080 supposedly sitting there in Brussels with the negotiators sitting around waiting, 0:18:31.119 --> 0:18:34.440 but the decisions can't really get made until the French 0:18:34.480 --> 0:18:38.320 elections happened and the German elections happened. So Mrs May 0:18:38.520 --> 0:18:41.159 is not going to sort of show her hand in 0:18:41.200 --> 0:18:45.680 any kind of detailed way or even specify what she's 0:18:45.680 --> 0:18:48.160 aiming for until she can get a sense from them 0:18:48.160 --> 0:18:51.200 of what's feasible. And what's feasible is going to depend 0:18:51.280 --> 0:18:55.160 very much on how the sort of people in France 0:18:55.160 --> 0:18:58.840 and Germany who were skeptical about free movement of labor 0:18:59.440 --> 0:19:03.280 um do in these elections. So the whole thing is 0:19:03.800 --> 0:19:08.680 a whole whole sort of nexus of uncertainty, and people 0:19:08.680 --> 0:19:09.919 are just going to have to live with that for 0:19:09.960 --> 0:19:12.120 several months. I think. I just want to like something 0:19:12.119 --> 0:19:13.879 to your term that our colleague friends in Lockwood just 0:19:14.080 --> 0:19:16.960 sent this here. Dollar Mexico foundly with fresh all time 0:19:17.000 --> 0:19:20.600 low six to seven. Yeah, it was sudden and abrupt. 0:19:20.680 --> 0:19:22.800 I mentioned that out of Karen Moscow's data check, and 0:19:22.840 --> 0:19:24.720 we see that in the e M currencies. Let's rip 0:19:24.800 --> 0:19:27.600 up the script. Charles Duma will usually talk G seven, 0:19:27.640 --> 0:19:31.080 G five, G one with you. Do you have a 0:19:31.160 --> 0:19:36.480 concern about erosion in currencies of emerging markets? Not really No, 0:19:36.760 --> 0:19:41.200 I think that the emerging market currencies have well. I 0:19:41.240 --> 0:19:45.760 mean too a year ago they got grossly oversold. A 0:19:45.760 --> 0:19:49.240 lot of these economies are doing quite are doing quite well. Um. 0:19:49.840 --> 0:19:52.920 The biggest issue for them clearly is what happens with 0:19:53.000 --> 0:19:56.360 the Chinese. UM you on, because if that goes done 0:19:56.359 --> 0:19:59.320 a long way, then of course that therese competitive pressure 0:19:59.320 --> 0:20:03.000 and difficulties. Um. But we don't think that that is 0:20:03.000 --> 0:20:05.639 going to happen. Um. Starting from where we are now 0:20:05.720 --> 0:20:07.320 it is in the sort of a low six and 0:20:07.400 --> 0:20:10.919 nineties for the for the Ran dollar, and so I 0:20:10.960 --> 0:20:14.080 don't see any particular reason why the emerging markets should 0:20:14.119 --> 0:20:18.679 fill themselves under particularly heavy pressure. That's going to change 0:20:19.119 --> 0:20:20.879 according to which one you're looking at. I mean, the 0:20:20.920 --> 0:20:23.800 main thing that emerging markets have in common is that 0:20:24.359 --> 0:20:27.359 therefore than us. The other thing that's important is to 0:20:27.920 --> 0:20:33.040 politics matter more than economics, or relatively more visibly economics 0:20:33.080 --> 0:20:35.639 than than in developed markets. But of course, as we're 0:20:35.680 --> 0:20:40.600 seeing nowadays, um, you've got rapidly increasing importance of politics 0:20:40.600 --> 0:20:44.439 in the in Europe and in the United States. You 0:20:44.480 --> 0:20:47.159 talk about the Chinese currency, and I wonder sort of 0:20:47.200 --> 0:20:49.639 what your outlook is for it here in the year ahead. 0:20:49.640 --> 0:20:51.760 You think it's not gonna perhaps weekend as much as 0:20:51.840 --> 0:20:54.879 as as others would. What's your outlook for the the 0:20:55.080 --> 0:21:00.639 after you went this year for the for the Chinese? Yes, yeah, well, 0:21:00.840 --> 0:21:02.880 I think we're expecting it to go down a bit. 0:21:02.920 --> 0:21:05.480 But starting from where we are now, it's gone quite 0:21:05.480 --> 0:21:08.480 a long way. And you're looking at a country where 0:21:09.560 --> 0:21:12.159 the you know, the ruling communist party is most of 0:21:12.200 --> 0:21:14.840 all naturally inclined to try to control things and they've 0:21:15.080 --> 0:21:19.040 particularly started to clamp down and try to control capital 0:21:19.080 --> 0:21:21.240 movements on on a big scale as you probably know, 0:21:21.920 --> 0:21:26.120 um and where, and they're going to want to preserve 0:21:27.000 --> 0:21:30.840 because the the sort of confidence and general feeling of 0:21:31.480 --> 0:21:34.639 good times at least through the Big Congress at the 0:21:34.760 --> 0:21:36.800 end of this year, which is the halfway mark for 0:21:36.840 --> 0:21:40.800 the current leadership in its fire in his tenure, his 0:21:40.920 --> 0:21:44.160 tenure spelling power. The halfway mark is is this autumn 0:21:44.160 --> 0:21:46.880 so so on the whole we think that the Chinese 0:21:48.119 --> 0:21:52.000 currencies is going to go down, not up, but it's 0:21:52.040 --> 0:21:54.760 not going to go down big time. Charles Duma, thank 0:21:54.800 --> 0:21:57.040 you so much. Too short today with Lamber Street Research. 0:21:57.119 --> 0:21:59.120 Much to talk. I will come back with Charles Duma. 0:21:59.720 --> 0:22:01.639 Uh in the coming weeks on the Netherlands in the 0:22:01.680 --> 0:22:18.240 French election as Uh well, I guess it is a 0:22:18.280 --> 0:22:23.920 passing of technological history. Mersa Mayor Alex Yahoo. Brian Weezer 0:22:24.880 --> 0:22:27.480 does detailed reports and usually in the back there's some 0:22:27.600 --> 0:22:31.560 form of discounted cash flow model. Brian Weezer joins us 0:22:31.560 --> 0:22:36.080 from Pivotal Research. Brian in an October note, you slotted 0:22:36.119 --> 0:22:39.080 in one, two, three, four or five, six, seven, eight 0:22:39.160 --> 0:22:42.240 nine lines with a couple of plug ins, and the 0:22:42.320 --> 0:22:45.520 mother law plugins is what Verizon is gonna pay for Yahoo? 0:22:45.920 --> 0:22:48.919 Is that the bombshell to come that Verizon is going 0:22:48.960 --> 0:22:52.480 to say, no, this is the new price. I think 0:22:52.520 --> 0:22:55.679 that's entirely plausible. I mean it's it's difficult to know 0:22:55.840 --> 0:22:59.280 with any precision whatsoever. Um, we don't know how much 0:23:00.000 --> 0:23:04.920 a goal flexibility they have. Um, you know, but the 0:23:05.160 --> 0:23:08.480 thing from a Yahoo perspective and from a materiality perspective, 0:23:08.520 --> 0:23:11.280 it doesn't really matter very much. I mean, a billion here, 0:23:11.320 --> 0:23:14.280 a billion there. Of course, pretty soon we're talking real money. 0:23:14.320 --> 0:23:18.000 But um, for the purposes of how one looks at 0:23:18.040 --> 0:23:21.920 the stock still presently knows Yahoo. It's pretty irrelevant. Okay, 0:23:21.920 --> 0:23:24.320 I'll go with that. And David, these numbers are important, David, 0:23:24.320 --> 0:23:27.399 I want want to jump in here. Weezer has the 0:23:27.520 --> 0:23:31.160 core business at three point eight billion, and the value 0:23:31.160 --> 0:23:34.560 of Japan is in the vicinity of six point eight billion. 0:23:35.520 --> 0:23:37.919 I mean that gives you an idea of the the 0:23:37.960 --> 0:23:42.560