WEBVTT - 61: Here's What's Going to Happen in 2017 0:00:08.560 --> 0:00:12.760 Hello, and welcome to another episode of the Odd Lots podcast, 0:00:12.840 --> 0:00:17.079 the first for twenty seventeen. I'm Joe Wisenthal and I'm 0:00:17.120 --> 0:00:22.480 Tracy Allaway. So Tracy, I'm really excited about our episode 0:00:22.520 --> 0:00:25.919 today because, of course, in the last episode we did 0:00:26.120 --> 0:00:29.960 the look back for where we had some of our 0:00:30.200 --> 0:00:33.280 colleagues tell us their favorite stories of the year. But 0:00:33.479 --> 0:00:39.000 it's always fun and challenging to make predictions. To look forward. 0:00:39.280 --> 0:00:43.839 The future is pretty difficult to figure out. Was of 0:00:43.880 --> 0:00:46.239 course a very tough year to have called correctly in 0:00:46.280 --> 0:00:49.400 many ways. And I think it's a good and mental 0:00:49.440 --> 0:00:52.639 exercise to try. I you know, it's always sort of foolish, 0:00:52.920 --> 0:00:56.760 but I'm a strong believer that people should make an 0:00:56.800 --> 0:01:00.840 attempt to say what the future holds. So this is 0:01:00.880 --> 0:01:03.360 the this is the tough episode, right, This is where 0:01:03.360 --> 0:01:07.120 people have to exercise their mental muscles. They have to 0:01:07.160 --> 0:01:11.360 think rationally and um all for the purposes of being 0:01:11.400 --> 0:01:15.720 exposed to ridicule and shame when we're inevitably wrong twelve 0:01:15.760 --> 0:01:19.320 months from now, yeah, exactly. And you know, there's a 0:01:19.319 --> 0:01:23.240 lot of journalists are sort of anti predictions. They think 0:01:23.280 --> 0:01:27.840 it's a foolish thing. They think that it's always going 0:01:27.880 --> 0:01:30.520 to be wrong. But I just I think that's missing 0:01:30.520 --> 0:01:33.840 the point. I think it's a it's a good mental exercise, 0:01:34.680 --> 0:01:38.120 and it's sort of what you predict is an insight 0:01:38.160 --> 0:01:42.280 into how you've digested what you've seen so far, and 0:01:42.600 --> 0:01:45.160 it's just fun to say things that could be proven 0:01:45.240 --> 0:01:48.720 right or wrong. Okay, Well, in the spirit of fun, uh, 0:01:48.840 --> 0:02:02.240 let's let's go to our our panelist with us for 0:02:02.520 --> 0:02:05.040 the second episode in a row. We heard them tell 0:02:05.080 --> 0:02:09.480 their favorite stories of twenties sixteen. Now we're forcing them 0:02:09.520 --> 0:02:12.600 to go out and tell us, look at their crystal balls, 0:02:12.639 --> 0:02:17.400 what exactly is going to happen in ten Joining us 0:02:17.480 --> 0:02:21.080 this week we have Ed Hammond, who covers deals for 0:02:21.120 --> 0:02:24.840 Bloomberg News. Joe, Welcome Ed, Thank you, Thank you for 0:02:24.880 --> 0:02:28.760 coming back. Mike Reagan, who covers markets for Bloomberg News. 0:02:28.840 --> 0:02:33.079 He has launched a new markets live blog venture for 0:02:33.280 --> 0:02:37.960 terminal users. Happy New Year. Thank you. Max Abelson, our 0:02:38.360 --> 0:02:41.480 Wall Street expert at Wall Street Whisperers. I think I 0:02:41.520 --> 0:02:43.880 described him. Thank you for coming back. I can't wait 0:02:43.960 --> 0:02:46.440 to hear your call for the year. Thanks to you. 0:02:47.080 --> 0:02:50.560 Megan Murphy, who covered politics for Bloomberg all year and 0:02:50.600 --> 0:02:53.840 now has taken on a new mission as editor of 0:02:53.880 --> 0:02:56.360 Business Week. Thank you for coming on. Can't wait to 0:02:56.360 --> 0:03:00.320 get your prediction. Excited about it see if be as 0:03:00.320 --> 0:03:03.280 crazy as it was from politics or whatever as two 0:03:03.360 --> 0:03:07.160 thousand and sixteen was. And Dan Moss, who has a 0:03:07.200 --> 0:03:10.239 great track record of predictions, thanks for coming back again. 0:03:10.480 --> 0:03:13.320 Great to be here. And Ed, Uh, why don't you 0:03:13.480 --> 0:03:19.920 uh tell us about your prediction for seventeen? Well, I 0:03:19.919 --> 0:03:22.200 think crystal ball. What's going to be this year? Sprayer 0:03:22.280 --> 0:03:23.920 than Yeah? Well, I think last year I just went 0:03:23.960 --> 0:03:26.240 with the kind of stock m and a bank nonsense 0:03:26.280 --> 0:03:27.839 of you know, we're going to see more deals in 0:03:29.160 --> 0:03:31.640 and we didn't see more deals in twenty six we 0:03:31.639 --> 0:03:34.320 did see lots of fifteen deals get blown up, which 0:03:34.360 --> 0:03:37.240 was it was quite interesting. I think almost six hundred 0:03:37.240 --> 0:03:39.960 billion of deals that was that was struck in twenty 0:03:40.520 --> 0:03:44.880 fifteen was sort of torpedoed in. What's my prediction for 0:03:44.920 --> 0:03:48.480 this year? I think, um, I think Nigel Farage, the 0:03:48.600 --> 0:03:52.840 sort of populist, slightly right wing um political figure in 0:03:52.840 --> 0:03:56.960 the UK, is going to end uh well, I mean 0:03:57.040 --> 0:04:00.080 slightly by I suppose by global standards why UK and 0:04:00.120 --> 0:04:02.240 as I would say extremely I think he's going to 0:04:02.400 --> 0:04:07.640 end up in a celebrity based reality TV competition, Jule. 0:04:08.920 --> 0:04:11.240 I was actually thinking Celebrity Apprentice because it would fit 0:04:11.280 --> 0:04:15.360 well with this sort of Trump loving persona. So that's 0:04:15.400 --> 0:04:17.400 that's my prediction. I think he is going to finally 0:04:17.440 --> 0:04:20.359 bow out from politics for a career in reality television. 0:04:20.480 --> 0:04:23.840 That's a good one. Did you vote in the referendum? Yes, 0:04:23.960 --> 0:04:25.520 I did. I went home to vote in a referend 0:04:25.520 --> 0:04:29.360 and that's our Seriously, it was quite quite depressing being 0:04:29.360 --> 0:04:32.360 in London the day afterwards, like the world had ended, 0:04:32.360 --> 0:04:35.160 because obviously London was desperately against this, and not only 0:04:35.200 --> 0:04:39.120 that they had had their recently departed mayor be the 0:04:39.200 --> 0:04:42.720 sort of flag bearer for the for the for the Brexiteers, 0:04:42.760 --> 0:04:44.600 and that was I think, very very depressing obviously for 0:04:44.640 --> 0:04:48.240 all concern Alright, Well, I love that prediction because it's con'tcrete, 0:04:48.320 --> 0:04:49.960 and at the end of the year we can actually 0:04:49.960 --> 0:04:54.440 test very clearly whether it happened or not. Max A. Wilson, 0:04:54.880 --> 0:05:00.719 what is your prediction for Well, Joe, because I'm a 0:05:00.720 --> 0:05:06.520 complicated man, I've got some complicated predictions. Let's talk about 0:05:06.520 --> 0:05:09.040 New York City. I got a prection for New York City. When, uh, 0:05:10.000 --> 0:05:13.119 when Jesse and Zach Mieder and I wrote our story 0:05:13.160 --> 0:05:15.320 on Trump Tower. But you may remember a couple of 0:05:15.320 --> 0:05:18.000 months ago. Great story. Everybody should go look it up. 0:05:18.080 --> 0:05:22.239 Thank you, Joe, Thank you Joe. One of Donald Trump's 0:05:22.279 --> 0:05:25.360 friends an Italian man, a man who says he's account actually, 0:05:25.360 --> 0:05:28.960 although we couldn't confirm that independently, he's he's a friend 0:05:29.000 --> 0:05:31.000 of Trump's. He's he lives in the building. He's in 0:05:31.040 --> 0:05:34.839 the far right, he's affiliated with far right Italian politics. 0:05:35.120 --> 0:05:37.799 He predicted to us, he said, if Donald Trump wins 0:05:37.800 --> 0:05:40.920 the election, I believe he's not gonna be able to 0:05:41.000 --> 0:05:43.560 leave Trump Tower because he loves it so much. So 0:05:43.720 --> 0:05:46.800 I'm stealing his prediction. Of course, that was before the election. 0:05:46.839 --> 0:05:48.880 I'm stealing it to turn into a post election prediction 0:05:48.960 --> 0:05:52.520 that after Donald Trump becomes president, sure he'll be in 0:05:52.560 --> 0:05:54.080 the White House, but I predict he is going to 0:05:54.160 --> 0:05:56.159 spend a ton of time here in New York City 0:05:56.160 --> 0:05:59.799 on Fifth Avenue. We need to say an exact number 0:05:59.839 --> 0:06:02.280 of nights that he spent and so that we can 0:06:02.320 --> 0:06:05.080 see if he gets it right. So over, what's the line? 0:06:05.640 --> 0:06:08.440 All right, Well, let's let's say they're fifty two weeks. Yeah, 0:06:08.760 --> 0:06:12.160 Friday and Saturday. You know, that's a hundred, just over 0:06:12.200 --> 0:06:14.680 a hundred. Could you imagine if you spent more than 0:06:14.720 --> 0:06:17.719 a hundred knights in New York City in over that 0:06:17.720 --> 0:06:19.560 that would that would be one year. Okay, let's say 0:06:19.600 --> 0:06:23.359 four years a hundred nights in New York. Wait, so 0:06:23.440 --> 0:06:27.720 just twenty five nights a year, that's a lot. Mm hmm. Okay, 0:06:27.800 --> 0:06:29.480 al right, it seems like you're sitting the bar a 0:06:29.480 --> 0:06:33.400 little load, Victor. You gotta it's got to be higher 0:06:33.440 --> 0:06:36.880 because just vacations alone and stuff like that. Let's go 0:06:36.960 --> 0:06:42.520 for the first year. Okay, this is an eccentric more Okay, 0:06:42.560 --> 0:06:44.680 So this is we're going to test. At the end 0:06:44.680 --> 0:06:49.360 of Max Abelson will have been right if Trump spent 0:06:49.440 --> 0:06:54.040 more than fifty nights at Trump Tower. It's a bold prediction, 0:06:54.120 --> 0:06:57.560 but we're bold bold people here. I really like it. 0:06:57.680 --> 0:07:01.599 And given the issues that will cause New York in 0:07:01.680 --> 0:07:04.680 terms of security and traffic and everything, into prediction that 0:07:04.720 --> 0:07:08.560 has ramifications. Did you see that Tiffany and co branded 0:07:08.720 --> 0:07:12.120 the police barricks barricades brilliant And you know, analysts have 0:07:12.160 --> 0:07:16.440 come out and warned that because that Tiffany store, which 0:07:16.480 --> 0:07:18.679 is right there, a Trump tower right next to it 0:07:18.760 --> 0:07:23.600 is their flagship store. It could materially hit earnings due 0:07:23.680 --> 0:07:26.040 to the proximity next to Trump. It's not clear that 0:07:26.040 --> 0:07:28.480 that's actually developing, but that is a concern of analysts. 0:07:28.520 --> 0:07:31.360 Capitalism is amazing only only in New York City? Would 0:07:31.360 --> 0:07:34.040 you have that baby blue Tiffany on the on the 0:07:34.040 --> 0:07:37.880 police backcadse Alright, Max A Wilson, great prediction and looking 0:07:37.880 --> 0:07:39.560 forward to seeing if it turns out right or wrong? 0:07:39.760 --> 0:07:45.040 All right? Uh, Mike Reagan, what is your prediction for teventeen? 0:07:45.160 --> 0:07:49.200 Yourur markets? Babing on the panel? Uh? What are we 0:07:49.240 --> 0:07:51.640 going to be? H? What's the story going to be? Well, 0:07:52.160 --> 0:07:56.000 I'm gonna make a very cliche prediction. I know, I know, 0:07:56.160 --> 0:08:00.240 and I also say I'm not confident in this, but 0:08:00.520 --> 0:08:02.680 you do say, go out on the limb. I do 0:08:02.760 --> 0:08:05.520 think we will finally see, if not a bear market 0:08:05.520 --> 0:08:08.520 in stocks, a very sharp correction. Uh. And I'll tell 0:08:08.560 --> 0:08:13.840 you why everybody and their brother has become so optimistic 0:08:13.880 --> 0:08:17.000 about the Trump administration. It's interesting to me here was 0:08:17.000 --> 0:08:20.440 a guy that from day one as a politician was underestimated. 0:08:20.560 --> 0:08:22.440 You know, he's not gonna win a single state in 0:08:22.440 --> 0:08:24.840 the primaries. He's not gonna take the primaries out, He'll 0:08:24.840 --> 0:08:29.000 never win the election. And the sort of intersection of 0:08:29.040 --> 0:08:34.120 politics and markets this year has been very fascinating. Um, 0:08:34.440 --> 0:08:37.480 and both saw basically the death of conventional wisdom. You know, 0:08:37.520 --> 0:08:40.559 all the poll numbers and Brexit. Uh, you know it 0:08:40.640 --> 0:08:42.840 turned out to be wrong, not all of them, but 0:08:42.920 --> 0:08:46.400 the you know, the consensus. Trump the you know, no 0:08:46.400 --> 0:08:48.640 one really thought he would win. That turned out to 0:08:48.640 --> 0:08:51.520 be wrong. Now I just feel like everyone's gone to 0:08:51.600 --> 0:08:55.440 the opposite side of the boat. There. Their way too optimistic. Uh, 0:08:55.640 --> 0:08:58.559 you know, I keep hearing the phrase animal spirits. Ray 0:08:58.640 --> 0:09:04.840 Dalio used it recently to describe this exuberance over his policies, 0:09:05.640 --> 0:09:08.520 and I just think, um, you know, we've had this 0:09:08.679 --> 0:09:10.720 huge rally at the end of the year. Now, I 0:09:10.760 --> 0:09:15.640 went from flat flat stock market September. Cent Lazo Berrini, 0:09:15.720 --> 0:09:19.160 who's a money manager and analyst, who you know, I 0:09:19.240 --> 0:09:22.760 have a lot of interest in, very very smart guy, 0:09:22.920 --> 0:09:26.800 describes the phases of a bull market, and that exuberance 0:09:27.760 --> 0:09:31.000 phase where you have this really last giant rally at 0:09:31.040 --> 0:09:34.240 the end is often the sign of the end of 0:09:34.240 --> 0:09:36.880 the bull market. And when I say a possible bear market, 0:09:36.920 --> 0:09:39.360 I don't think I'm not even sure that the market 0:09:39.400 --> 0:09:41.720 will well. If we talk about the market next December, 0:09:41.800 --> 0:09:44.040 it will be down that much on the year. But 0:09:44.200 --> 0:09:45.960 during the year, I just feel like there's bound to 0:09:46.000 --> 0:09:48.559 be some disappointment that will cause maybe a ten to 0:09:49.280 --> 0:09:51.440 drop in the market. Can I just jump in place. 0:09:51.559 --> 0:09:54.200 I was just gonna say, as someone who had was 0:09:54.280 --> 0:09:57.839 on the Trump beat all year, I think that Mike 0:09:57.960 --> 0:10:01.160 is exactly right, and that the biggest phenomenon in the 0:10:01.280 --> 0:10:03.920 sort of arc of storytelling of twenty six, both in 0:10:04.000 --> 0:10:06.120 terms of Brexit and in terms of the U S election, 0:10:06.400 --> 0:10:09.960 is just the inability of people to correctly price what 0:10:10.120 --> 0:10:13.360 was actually going on um in terms of how this 0:10:13.400 --> 0:10:15.400 would turn out. And I think that the one thing 0:10:15.440 --> 0:10:19.719 that I think you have never underestimate his ability to 0:10:19.920 --> 0:10:25.480 seemingly unbelievably against sort of all expectations of normalcy, normal discourse, 0:10:25.559 --> 0:10:29.080 normal policy decision making, to sort of bump along in 0:10:29.160 --> 0:10:32.040 a sort of vaguely positive way. When when I think 0:10:32.080 --> 0:10:34.760 the biggest risk to the market is going to be 0:10:35.520 --> 0:10:37.760 big political risk, you know, we look at the drone 0:10:37.800 --> 0:10:39.880 that happened or some type of incident in the Middle 0:10:39.920 --> 0:10:41.760 East or isis. But I think that when you look 0:10:41.760 --> 0:10:43.440 at his policy and what he's been able to do 0:10:43.559 --> 0:10:46.000 in the first sort of you know, six months, nine months, 0:10:46.040 --> 0:10:48.800 if we do see the Affordable Care Act getting scale back, 0:10:48.800 --> 0:10:51.120 and we do see a comprehensive tax reform package getting 0:10:51.120 --> 0:10:54.000 put through, if we do see an infrastructure that actually, 0:10:54.520 --> 0:10:56.200 you know, for me, when I look at it, I 0:10:56.240 --> 0:10:58.199 can't decide whether the risk is to the upside of 0:10:58.240 --> 0:11:01.440 the downside. You know, in terms of estic policy, I 0:11:01.480 --> 0:11:04.199 see the market to the upside, and I see corporates 0:11:04.240 --> 0:11:07.920 really seeing repatriation, investment and sort of sentiment being buoyed. 0:11:08.520 --> 0:11:15.040 But then this really incalculable political um, foreign policy disaster 0:11:15.240 --> 0:11:18.320 possibility that the market really does not seem to be 0:11:18.360 --> 0:11:20.280 pricing in right now. And I see that as a 0:11:20.440 --> 0:11:24.360 huge downside risk that no one's quite grappling with right absolutely, 0:11:24.440 --> 0:11:27.120 even if it just ends up being China stopped buying 0:11:27.160 --> 0:11:29.920 treasuries for example, uh, you know, as a sort of 0:11:29.920 --> 0:11:33.240 protest measure. But you know, to me, even from the 0:11:33.360 --> 0:11:35.600 policy standpoint, I mean, it's hard for me to believe 0:11:36.760 --> 0:11:39.119 that this is a Trump Congress. It's still a Republican 0:11:39.160 --> 0:11:43.040 controlled Congress. And it's hard for me to believe that 0:11:43.160 --> 0:11:45.240 all these Republicans are gonna turn into Keynesians all of 0:11:45.240 --> 0:11:48.360 a sudden and agree to blow out the deficit um 0:11:48.520 --> 0:11:51.800 after shutting the government down because of the deficit. Uh 0:11:51.840 --> 0:11:54.120 you know, in this last term, well, they turned into 0:11:54.240 --> 0:11:59.440 Keynesians under George W. Bush, who inherited a surplus from 0:11:59.520 --> 0:12:03.200 Bill in a situation where the US was actually talking 0:12:03.240 --> 0:12:07.679 about buying back debt. Right, so they can get religion, 0:12:08.360 --> 0:12:11.480 and that's not a reflection of their increasingly south base. 0:12:11.880 --> 0:12:15.960 They can get religion, no pun intended, quite quickly. But 0:12:16.120 --> 0:12:19.400 making to your point, I wonder whether we in the media, 0:12:20.000 --> 0:12:24.600 let's acknowledge that and financial markets have had difficulty pricing 0:12:24.720 --> 0:12:29.120 risk because we are concentrated in the northeast and the 0:12:29.160 --> 0:12:33.080 West coast, and in the UK concentrated in the London area. 0:12:33.440 --> 0:12:38.440 So to an extent, we were talking among ourselves, there 0:12:38.440 --> 0:12:44.760 aren't that many financial heavyweight Wall Street prognosticators based in Appalachia, 0:12:44.920 --> 0:12:49.160 and there aren't that many based in Stoke on Trent. 0:12:49.960 --> 0:12:54.000 Is that part is that part of what's happeningsolutely, I mean, 0:12:54.040 --> 0:12:56.160 I think we have to be completely candid about that. 0:12:56.200 --> 0:12:58.040 I think we have to be completely candid about how 0:12:58.080 --> 0:13:02.000 this dynamic is completely upended the convention of reporting. And frankly, 0:13:02.040 --> 0:13:04.680 some people just cannot accept that. They cannot accept what 0:13:04.720 --> 0:13:06.600 they what they fail to accept is that people who 0:13:06.600 --> 0:13:09.920 live in different parts of the country are frankly less progressive, 0:13:10.280 --> 0:13:13.360 not just on a sort of um social mores things 0:13:13.400 --> 0:13:17.480 like abortion or LGBT rights, they're just less progressive in 0:13:17.559 --> 0:13:19.600 times in terms of believing in a vision of the 0:13:19.600 --> 0:13:22.040 country that is very different than the Obama vision than 0:13:22.080 --> 0:13:24.560 the Tony Blair vision of this country. Happened and I 0:13:24.559 --> 0:13:28.160 think that is what the election really reawakened, is that, 0:13:28.360 --> 0:13:30.360 guess what what you think in New York is very 0:13:30.400 --> 0:13:32.520 different than what people think. And not just Appalachia, but 0:13:32.559 --> 0:13:35.160 the submers, Milwaukee, the some of the northern subers, Philadelphia. 0:13:35.200 --> 0:13:37.360 So there hasn't been that great let's call it the 0:13:37.400 --> 0:13:39.880 Great rotation and media. We'll have to see if disruptive 0:13:39.880 --> 0:13:43.960 forces really upend this landscape going forward. How many Americans 0:13:43.960 --> 0:13:50.160 have passports? I'm googling it as we start. Um, wait, wait, 0:13:50.200 --> 0:13:57.280 let's get our let's I'm going there passport. Guess how many? 0:13:59.800 --> 0:14:02.240 And I'm going there, Megan, because of that group you 0:14:02.360 --> 0:14:08.040 described that you categorized as less progressive than people on 0:14:08.080 --> 0:14:11.360 the northeast people on the west coast do they also 0:14:11.720 --> 0:14:16.320 care less about the world and have less interest in 0:14:18.400 --> 0:14:21.680 it's complexity and it's rich tapestry. That's why I asked 0:14:21.680 --> 0:14:27.440 the passport question. It's thirty according toistics. But I think 0:14:27.480 --> 0:14:30.160 that you know, this is why I've always strongly resisted 0:14:30.280 --> 0:14:33.520 that that sort of move to characterize this as ignorant 0:14:33.640 --> 0:14:36.400 or less worldly, it isn't. It's just that people are 0:14:36.400 --> 0:14:38.800 familiar with what they're familiar and a lot of people 0:14:39.160 --> 0:14:43.400 who voted for Trump live in less diverse communities. That's 0:14:43.440 --> 0:14:46.000 just a fact. That's not a negative or a positive. 0:14:46.040 --> 0:14:49.400 And the attempt to sort of put some normative stance 0:14:49.440 --> 0:14:51.760 on this that they's somehow less or you know, that 0:14:51.760 --> 0:14:53.280 there's a good or a bad I think that's sort 0:14:53.280 --> 0:14:55.240 of the trap the media falls into. And I don't 0:14:55.240 --> 0:14:58.080 think they're less interested. I think they're just they have 0:14:58.240 --> 0:15:01.760 less experience with the rich tapestry, as you so eloquently 0:15:01.760 --> 0:15:04.520 put it down, um, the rich tapestry of of the world. 0:15:05.200 --> 0:15:07.520 But yeah, that doesn't make it a good thing or 0:15:07.560 --> 0:15:10.720 a bad thing, Megan, can we get your your prediction 0:15:10.840 --> 0:15:14.920 for two thousand seventeen. Yeah, unsurprisingly, it's going to keep 0:15:14.920 --> 0:15:18.760 a little bit into politics. But I think that we 0:15:18.840 --> 0:15:22.480 will see UM again a mispricing of political risk in 0:15:23.600 --> 0:15:27.080 particularly in Europe. I was actually going through Goldman's predictions 0:15:27.120 --> 0:15:29.240 this morning, and we have Teresa May speaking right now, 0:15:29.320 --> 0:15:31.560 and I think there's a real chance of UM an 0:15:31.600 --> 0:15:34.560 outlier event in Germany, France or the UK. I think 0:15:34.560 --> 0:15:38.160 in France, yes, of course, Philon, will we we assume 0:15:38.360 --> 0:15:39.920 we'll win in a run, you know, in a second 0:15:40.000 --> 0:15:43.200 round against Marine le pat And in Germany this expectation 0:15:43.240 --> 0:15:45.880 of Grand Coalition. I think Merkele is going to face 0:15:46.040 --> 0:15:48.800 real challenges. I think that people are a little bit 0:15:48.840 --> 0:15:51.160 too saying one about that, but I think the UK 0:15:51.360 --> 0:15:53.440 is a real going to be really one to watch 0:15:53.480 --> 0:15:57.080 this year. I think when you know Theresa May, yeah, 0:15:57.360 --> 0:16:00.240 is vulnerable in terms of where the UK economy is 0:16:00.280 --> 0:16:03.280 going to directionally trend, and I think that that is 0:16:03.280 --> 0:16:06.280 still a story UM that's going to play out. And 0:16:06.360 --> 0:16:07.880 I think we're going to see some more real, real 0:16:07.920 --> 0:16:11.480 convulsions in Europe politically, not just because of populisma, because 0:16:11.520 --> 0:16:15.800 of just simple really really bad politics. What would tail 0:16:15.920 --> 0:16:20.240 risk in the UK look like, because already people assume 0:16:20.360 --> 0:16:24.600 that there's going to be Article fifty is triggered sometime 0:16:24.680 --> 0:16:26.200 in the early part of the year and then there's 0:16:26.240 --> 0:16:29.640 going to be a very tough negotiation. What would be 0:16:29.840 --> 0:16:33.800 a scenario that people aren't thinking could happen. Well, I 0:16:33.800 --> 0:16:36.280 think that we it's been so buffeted by you know, 0:16:36.400 --> 0:16:40.240 booming retail sales, by you know, um, sort of consumer contempt, 0:16:40.280 --> 0:16:43.920 confidence by people actually not yet understanding what brags it. 0:16:43.960 --> 0:16:46.160 I think once we get a few announcements such as 0:16:46.640 --> 0:16:49.440 you know, big corporates leaving, big banks taking out, they 0:16:49.480 --> 0:16:52.520 know that's going to happen. But I think the reality 0:16:52.560 --> 0:16:55.040 of that happening, in the reality of sort of um, 0:16:55.080 --> 0:16:58.600 you know, an ability to forge a new manufacturing community 0:16:58.600 --> 0:17:01.000 in the North, you know, or of all this sort 0:17:01.040 --> 0:17:03.960 of a technological investment in making Britain a hub of 0:17:04.080 --> 0:17:07.639 entrepreneurship and you know tech innovation that's not going to happen, 0:17:07.800 --> 0:17:10.520 so people that and and and that's and that's the 0:17:10.600 --> 0:17:13.320 realism of it sinking in over time. And I think 0:17:13.359 --> 0:17:16.520 that Britain's um. I think you know, obviously, as Dan knows, 0:17:16.520 --> 0:17:19.400 and everyone who's is tracing house prices such a bedrock 0:17:19.600 --> 0:17:22.680 of the British economy. We see further declines in that 0:17:22.720 --> 0:17:26.439 particular in the higher end market, which essentially supports a 0:17:26.560 --> 0:17:28.320 large degree of London. We have to remember, you know, 0:17:28.640 --> 0:17:31.800 Financial Services GDP in London alone is still hovers it 0:17:31.920 --> 0:17:34.879 something like across the country it's eleven still, you know, 0:17:34.920 --> 0:17:37.320 a real erosion in that market is over and I 0:17:37.320 --> 0:17:38.879 think over the next twelve months we will see that 0:17:39.000 --> 0:17:42.520 is going to be causes a severe, severe disruptive elopment. 0:17:42.800 --> 0:17:45.960 How do you think Theresa May is doing? Megan? The 0:17:46.040 --> 0:17:50.040 government seems to tilt one way one week on Breasit, 0:17:50.200 --> 0:17:52.840 but on other issues as well, then tilt the other 0:17:52.880 --> 0:17:56.000 way the next week. It's probably fair to say she 0:17:56.000 --> 0:17:58.879 didn't begin this year anticipating she would be in number 0:17:58.960 --> 0:18:01.639 ten at Christmas. How is she doing? I mean, I 0:18:01.640 --> 0:18:03.320 think when you talk to people, I mean, I don't 0:18:03.359 --> 0:18:04.719 want to give my own verdict, but I think when 0:18:04.760 --> 0:18:06.840 you talk to people, when you talk to sort of 0:18:07.040 --> 0:18:11.359 you know, other senior, very senior politicians, her peers, or 0:18:11.440 --> 0:18:13.879 senior corporate leaders in Britain or corpor leaders in America, 0:18:14.280 --> 0:18:17.679 they are stunned by the seemingly lack of ability to 0:18:17.680 --> 0:18:20.359 stick to a single plan by this sort of article 0:18:20.400 --> 0:18:23.280 fifty heartenline to a softening once you see, you know, 0:18:23.320 --> 0:18:26.640 sort of by election results and and and the Conservatives, uh, 0:18:26.720 --> 0:18:28.840 you know, sort of responding on a dime to how 0:18:29.040 --> 0:18:32.359 the sentiment is. She does seem to be policy by 0:18:32.400 --> 0:18:35.800 a central, underlying moral compass that the Brexit vote was, 0:18:36.160 --> 0:18:37.800 you know, a vote to leave that there's no going 0:18:37.840 --> 0:18:39.240 back for that. I think they were in a real 0:18:39.359 --> 0:18:41.800 risk of that that as the economy I don't want 0:18:41.800 --> 0:18:44.800 to say weekends, but in certain sections deteriorates, as you know, 0:18:45.359 --> 0:18:48.520 Sterling continues, you know, to remain where it's at that 0:18:48.640 --> 0:18:51.399 you know, you cannot take a single event, even as 0:18:51.480 --> 0:18:55.840 an event as you know, cataclysmic as Brexit was, and 0:18:55.920 --> 0:18:59.840 ignore the reality the economic reality facing your country and 0:19:00.080 --> 0:19:03.040 or people in trying to reforge an independent Britain. That 0:19:03.119 --> 0:19:05.280 will increasingly weigh on her and she's going to have 0:19:05.359 --> 0:19:07.560 to have smarter people around her and she's going to 0:19:07.600 --> 0:19:10.640 have to make much smarter decisions. Is she getting a 0:19:10.680 --> 0:19:15.520 pass on this? Because labor is so weak, week is 0:19:15.560 --> 0:19:17.760 not even a to begin to describe it. In terms 0:19:17.840 --> 0:19:19.920 of formulating a credible and I'm not talking in terms 0:19:19.960 --> 0:19:21.840 of party because party membership is up, but in terms 0:19:21.880 --> 0:19:24.920 of forming a credible policy counterpoint to her. Yes, she's 0:19:24.960 --> 0:19:27.639 getting a pass because you know that that party is 0:19:27.680 --> 0:19:30.080 so splintered, particularly among the elite of the Labor Party, 0:19:30.080 --> 0:19:31.960 not being able to weigh and be effectual. But I 0:19:31.960 --> 0:19:35.119 think the UK again just continues to be one to watch, 0:19:35.240 --> 0:19:38.159 just more of. It's just a fascinating political um journey 0:19:38.280 --> 0:19:42.280 right now. All right, I like this call. I so 0:19:42.480 --> 0:19:47.399 another year of political risk, this time in Europe. Dan Moss, 0:19:47.800 --> 0:19:49.920 you have a little bit of pressure on you with 0:19:50.000 --> 0:19:55.800 your prediction because your sixteen prediction ended up being really, 0:19:55.800 --> 0:19:59.800 really good. So, um, you've set the bar high for 0:19:59.840 --> 0:20:02.920 your self. What is it. I'm going to go out 0:20:02.920 --> 0:20:06.120 on a limb and say that Donald Trump will reappoint 0:20:06.240 --> 0:20:12.640 Janet Yellen as FED chair. Now, technically speaking, Janet Yellen's 0:20:12.760 --> 0:20:19.040 term does not expire to January thirteen. However, typically by 0:20:19.119 --> 0:20:21.560 the end of the year before the President of the 0:20:21.640 --> 0:20:26.240 day has made his choice known. And I'm shaped somewhat 0:20:26.240 --> 0:20:31.600 by history here and somewhat by what we can ascertain 0:20:31.800 --> 0:20:34.320 so far from what the President elect has been saying 0:20:34.320 --> 0:20:38.600 and doing. First history, presidents, regardless of what is said 0:20:38.600 --> 0:20:41.600 on a campaign trail, tend to love low interest rates 0:20:41.600 --> 0:20:44.719 when they're in office. There is also a track record 0:20:44.800 --> 0:20:50.360 in recent decades of reappointing chairs appointed by your predecessor. 0:20:53.480 --> 0:20:56.919 Ronald Reagan was under some pressure to replace Paul Volker. 0:20:57.600 --> 0:21:00.800 Jim Baker, looking at the election climate, thought no, let's 0:21:00.880 --> 0:21:04.320 keep Vulca. The last thing we want is a market upset. 0:21:04.560 --> 0:21:07.639 As we're getting ready to run for re election. It 0:21:07.760 --> 0:21:10.760 was thought that Bill Clinton at some point might appoint 0:21:10.760 --> 0:21:15.320 a Democrat. Instead, he reappointed Greenspan not once, but twice. 0:21:16.160 --> 0:21:21.720 Barack Obama reappointed Ben Banankey, and Ben Banankey wasn't interested 0:21:21.760 --> 0:21:24.600 in the second term, so that gave Obama the opening 0:21:25.080 --> 0:21:29.040 to a point um his own fit chair. So I'm 0:21:29.119 --> 0:21:32.440 somewhat informed by history here. The other thing is, look, 0:21:33.760 --> 0:21:36.680 it's probably fair to say, and Megan can guide me here. 0:21:37.280 --> 0:21:43.959 Consistency has not necessarily been a hallmark of this political season, 0:21:44.359 --> 0:21:47.200 none of this political season, but interestingly of Donald Trump. 0:21:47.240 --> 0:21:48.960 Since his election, one of the things I've been most 0:21:48.960 --> 0:21:51.000 fascinated by is people saying, oh my god, I can't 0:21:51.000 --> 0:21:53.240 believe we have all these generals and Wall Street people 0:21:53.240 --> 0:21:55.720 and in corporate leaders apport to the cabinet. It's like, 0:21:56.080 --> 0:21:58.159 that's what he said he was going to do. He 0:21:58.200 --> 0:21:59.879 was going to go to the military. He believed in it. 0:21:59.880 --> 0:22:03.920 IF and approaching and incorporators, he is actually executed completely consistently. 0:22:04.359 --> 0:22:08.280 He's tweeting policy by tweet this sort of crazy, sort 0:22:08.280 --> 0:22:10.600 of early morning That's what he's been doing all along. 0:22:10.760 --> 0:22:12.879 I think more people now are just wake up and 0:22:12.880 --> 0:22:14.520 seeing it. So I think you're completely right in that 0:22:14.600 --> 0:22:17.200 consistency hasn't been a hallmark of the season written large, 0:22:17.320 --> 0:22:20.199 but of the approach he's taken. This is who he 0:22:20.280 --> 0:22:22.199 is and I definitely don't expect him to change for 0:22:22.200 --> 0:22:25.320 four more years. I'm glad you mentioned tweeting. There was 0:22:25.359 --> 0:22:29.240 a lot of speculation before December's f o MC meeting 0:22:29.280 --> 0:22:32.280 where they finally raised interest rates that the president elect 0:22:32.280 --> 0:22:36.639 would start tweeting about the faith. Didn't happen. Silence from 0:22:36.640 --> 0:22:41.040 the BlackBerry, Megan, Can we infer anything in that? I 0:22:41.040 --> 0:22:44.199 think that you can infer nothing from his tweet policy. 0:22:44.200 --> 0:22:45.800