WEBVTT - Surveillance: BOE May Need to Ease Again in 2017, Maher Says 0:00:00.040 --> 0:00:02.640 Who you put your trust in matters. Investors have put 0:00:02.680 --> 0:00:07.000 their trust and independent registered investment advisors to the two 0:00:07.000 --> 0:00:10.680 and four trillion dollars. Why learn more and find your 0:00:10.760 --> 0:00:26.360 independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 0:00:26.760 --> 0:00:30.480 I'm Tom Keene with David Gura. Daily we bring you 0:00:30.520 --> 0:00:35.560 insight from the best in economics, finance, investment, and international relations. 0:00:35.960 --> 0:00:40.559 Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 0:00:40.640 --> 0:00:47.440 of course on the Bloomberg. You want to bring in 0:00:47.440 --> 0:00:49.000 Dirk Mater Now he is, as I said, head of 0:00:49.040 --> 0:00:51.760 Epic Strategy of hs BC. Give us the backdrop here 0:00:51.760 --> 0:00:54.280 to this BIOE decision. First of all, again the BOE 0:00:54.560 --> 0:00:57.120 leaving that key interest rate unchanged. We've seen that some 0:00:57.200 --> 0:01:00.240 strengthening in sterling here over the last a few weeks. Yeah, 0:01:00.280 --> 0:01:03.120 we have, and uh, in part, I guess it has 0:01:03.160 --> 0:01:05.640 been an echo of that that shift in the b 0:01:05.760 --> 0:01:08.160 O We you know, post Brexit voter it was meant 0:01:08.160 --> 0:01:10.560 to be run for the hills um and then we 0:01:10.600 --> 0:01:13.640 suddenly saw the data coming through better than expected and 0:01:13.640 --> 0:01:16.360 and the language changed at the last couple of meetings. 0:01:16.360 --> 0:01:18.960 So as you say, we arrived at today's meeting, expecting 0:01:19.200 --> 0:01:22.039 absolutely what we got, which is to say nothing at all. 0:01:22.200 --> 0:01:24.080 I'm not to be honest, I'm not really sure it 0:01:24.080 --> 0:01:26.200 matters that much for sterling generally what the bank thing 0:01:26.360 --> 0:01:29.080 is doing, and the sterling is a political currency is 0:01:29.160 --> 0:01:31.440 It's not a interest rate story. It's not a fed 0:01:31.480 --> 0:01:33.640 and the doll and these kind of bits and pieces. 0:01:33.640 --> 0:01:36.760 Sterling is a political story. I think it completely disregards today. 0:01:37.280 --> 0:01:39.760 The market cares more about what what Mr Hammond has 0:01:39.760 --> 0:01:44.000 to say, perhaps about fiscal policy potentially, though you know, 0:01:44.040 --> 0:01:46.559 we had the autumn statement and he, I guess he 0:01:46.560 --> 0:01:48.000 he kind of put a bit of a wet blanket 0:01:48.040 --> 0:01:50.600 on the idea that, you know, this this new Prime 0:01:50.640 --> 0:01:53.480 ministership would deliver fiscal easing. He all he really said 0:01:53.520 --> 0:01:55.960 is we're not going to tighten quite so aggressively. So 0:01:56.080 --> 0:01:58.760 I mean that could have been a very sterling positive angle, 0:01:58.800 --> 0:02:01.120 as we're seeing in the US the idea of a 0:02:01.160 --> 0:02:04.040 fiscal surge is very currency positive. But in the UK 0:02:04.440 --> 0:02:05.920 they just don't have the money to do it. Maybe 0:02:05.960 --> 0:02:07.760 the US doesn't but they're gonna do it anyway. But 0:02:07.800 --> 0:02:09.680 in the UK they've decided they don't have enough money 0:02:09.720 --> 0:02:11.919 to do it, so, you know, fiscal policy pretty neutral 0:02:11.960 --> 0:02:13.520 over there. Let's talk a bit about what we saw 0:02:13.600 --> 0:02:15.920 yesterday from from the Federal Reserve. Going into the meeting. 0:02:15.919 --> 0:02:17.960 I think you thought there'd be indications on the dot 0:02:18.000 --> 0:02:21.000 plot of two rate rises in two thousand seventeen, as 0:02:21.040 --> 0:02:24.040 many economists did. How surprised were you by the change 0:02:24.040 --> 0:02:27.240 to the dots? Yeah? Generally surprised. Um, you know, it's 0:02:27.280 --> 0:02:30.000 a what's interesting today? And you started by saying in 0:02:30.040 --> 0:02:31.720 the US raise race start. I don't think oh did 0:02:31.760 --> 0:02:33.680 they because it was like what that wasn't what we 0:02:33.680 --> 0:02:35.440 were talking about yesterday. We were talking about the dots 0:02:35.440 --> 0:02:38.080 all day U. So yeah, that was that was a surprise. 0:02:38.160 --> 0:02:40.680 And look they when you do a revision like that, 0:02:40.760 --> 0:02:43.080 you know the market impact is going to have. And 0:02:43.200 --> 0:02:46.399 that's what they played to. It's triangulation. Thursday, We're gonna 0:02:46.440 --> 0:02:49.079 do that here in a moment, David, time for a 0:02:49.120 --> 0:02:54.160 pro conversation. What the pros do, folks when something moves 0:02:54.280 --> 0:02:57.160 is they try to triangulate. It's no different than you know, 0:02:57.240 --> 0:02:59.360 you're in boy Scouts or Girl Scouts and you're out 0:02:59.360 --> 0:03:01.000 in the field with a compass and you go, why 0:03:01.000 --> 0:03:03.880 am I doing this. You know, John Tucker, where you're 0:03:03.880 --> 0:03:08.320 did you do this is before GPS? You know that? 0:03:08.480 --> 0:03:10.360 You know I was out in the bow of the Nina, 0:03:10.480 --> 0:03:12.280 the pint of the sander where one of those so 0:03:12.360 --> 0:03:15.120 darmy er. Here's what I did. When we get Carney's moved. 0:03:15.280 --> 0:03:19.239 I look at sterling sterling dollar, I look at euro 0:03:19.400 --> 0:03:23.760 dollar and I look at euro sterling and they're not correlated. 0:03:24.240 --> 0:03:27.960 They scream week euro. Why am I going to get 0:03:28.000 --> 0:03:31.160 a one oh three print on euro dollar off of 0:03:31.200 --> 0:03:34.160 what Carney says? You're getting the one oh three on 0:03:34.200 --> 0:03:36.360 euro dollar off the fact that we've just broken that 0:03:36.400 --> 0:03:39.320 support level. I really think this is a stop lost 0:03:39.320 --> 0:03:42.760 story rather than a reaction it's getting and a yeah 0:03:42.960 --> 0:03:44.440 on the usual. I mean to be honest, I just 0:03:44.480 --> 0:03:45.800 think this is like when you go to your doctor 0:03:45.840 --> 0:03:47.400 and he hasn't a clue what's wrong, so he says 0:03:47.400 --> 0:03:50.520 a stress related, when astrologist says it's positioning related. It's 0:03:50.520 --> 0:03:52.480 pretty much the equivalent. Where is the stress going to 0:03:52.560 --> 0:03:56.000 be within those three currency pairs? How does our audience 0:03:56.480 --> 0:04:01.400 monitor or heaven forbid, David even spaculate on what's going 0:04:01.440 --> 0:04:06.320 to happen between sterling, euro dollar in eurosterling. I think 0:04:06.360 --> 0:04:08.360 that price action we've seen this morning on euro dollar 0:04:08.480 --> 0:04:11.400 that will be the dominant element of that triangle. Um 0:04:11.440 --> 0:04:13.480 So what it points to is for now people are 0:04:13.480 --> 0:04:15.720 going to be exploring the downside and euro dollar they're 0:04:15.720 --> 0:04:18.880 gonna be looking for some downside less so on euro sterling. 0:04:18.880 --> 0:04:20.719 I mean you're you're acting right? Is that that that triangle? 0:04:21.040 --> 0:04:23.320 Normally it's kind of a nice relationship and Sterling is 0:04:23.400 --> 0:04:25.839 kind of the middle guy on your conversation exactly. But 0:04:25.960 --> 0:04:29.200 now at that break of of the March low, it 0:04:29.240 --> 0:04:32.080 opens up an entirely new conversation on euro dollar. David 0:04:32.080 --> 0:04:36.080 Garrow one of one oh four thirteen interday Low weakness 0:04:36.400 --> 0:04:39.880 one oh four zero five on euro dollar getting some 0:04:39.880 --> 0:04:41.960 headlines now with the economic outlook that it companied that 0:04:42.000 --> 0:04:45.320 statement from the Bank of England near term global outlook improved. 0:04:45.400 --> 0:04:48.760 Risks have elevated here this this remains the story will 0:04:48.760 --> 0:04:51.240 be the story you're going into two thousand seventeen. Yeah, 0:04:51.240 --> 0:04:54.200 I mean risks elevated. I love when a center bank 0:04:54.200 --> 0:04:57.400 tells us uncertainties high. I mean uncertainties always high. When 0:04:57.400 --> 0:04:59.880 have you ever had a certain outlook? So, but this 0:05:00.080 --> 0:05:02.560 is what they're coping with. But what's interesting is they're 0:05:02.560 --> 0:05:05.400 putting a positive spin on the global outlook, whereas what 0:05:05.480 --> 0:05:07.599 I would argue, we don't know what the global outlook is. 0:05:07.600 --> 0:05:09.240 We don't know what Trump's gonna give us, we don't 0:05:09.240 --> 0:05:12.160 know what the China response might be to a protectionist angle. 0:05:12.440 --> 0:05:14.720 There's a lot of moving parts out there, and so 0:05:14.880 --> 0:05:16.919 I still think the Bank of England, if although they 0:05:16.960 --> 0:05:19.280 won't say it, maybe overtly, they're still kind of thinking 0:05:19.279 --> 0:05:21.159 we might need to ease again in twenty seventeen, I 0:05:21.160 --> 0:05:23.000 still think that's the direction of travel. There a line 0:05:23.000 --> 0:05:24.479 from your most recent note you said that the FED 0:05:24.520 --> 0:05:26.960 is a cyclical driver here in the US dollar is 0:05:27.000 --> 0:05:29.960 more preoccupied with political drivers for now. Explain that a 0:05:30.000 --> 0:05:33.120 little bit. Yeah, So, if you think in terms of 0:05:33.160 --> 0:05:34.880 tradition how you approach the dollar, used to just just always 0:05:34.880 --> 0:05:36.640 look at the FED data, depend and FED so that 0:05:36.680 --> 0:05:40.240 was all about the economic cycle. The US election changed 0:05:40.279 --> 0:05:42.640 the dollar into a political beast because suddenly we came 0:05:42.680 --> 0:05:45.200 fixated on the politics of US, and I think yesterday's 0:05:45.240 --> 0:05:49.120 moved by the FED really reflected an acknowledgement that that 0:05:49.240 --> 0:05:52.839 the U s economic outlook is, if not partly, but 0:05:53.240 --> 0:05:55.640 I would say quite dominantly a political story now, and 0:05:55.680 --> 0:05:57.680 they have to take account of that in their forecasting, 0:05:58.000 --> 0:06:00.200 and they've done it to an extent in the It's 0:06:00.240 --> 0:06:02.400 not so much in GDP. They hardly revised GDP. It 0:06:02.480 --> 0:06:05.960 doesn't doesn't suggest their factoring in a big fiscal steaments. 0:06:05.960 --> 0:06:08.000 Imagine when if we do get a fiscal stiaminus, they 0:06:08.000 --> 0:06:09.880 have to revise their GDP forecast again, they have to 0:06:09.920 --> 0:06:12.000 revise their doults again, you know. So we're only they're 0:06:12.040 --> 0:06:14.479 only beginning that process. But the financial markets as ever 0:06:14.880 --> 0:06:17.560 ahead of the central Bank anticipating that process, and that's 0:06:17.560 --> 0:06:19.080 why we've had a strong dollar. That doesn't make the 0:06:19.120 --> 0:06:21.159 dollar an outlier. Right when you look at currency Perris, 0:06:21.320 --> 0:06:24.120 it seems like politics is what's driving most absolutely, I mean, 0:06:24.400 --> 0:06:26.159 and well, I guess we got used to it in 0:06:26.200 --> 0:06:28.279 emerging markets for a long time. We got used to 0:06:28.279 --> 0:06:30.840 it in Sterling post the Brexit vote. But now the 0:06:30.920 --> 0:06:34.719 dollars coming around give us some levels of where not 0:06:35.000 --> 0:06:39.400 that we unravel or we find instability. But in the 0:06:39.600 --> 0:06:44.839 HSBC grind every day, what's the trip point on dollar? Yet, 0:06:45.120 --> 0:06:49.120 what's the trip point on euro? What's the trip point 0:06:49.480 --> 0:06:53.599 on Malaysian ring something obscure, like I mean even Mexican 0:06:53.640 --> 0:06:56.599 pay so weekends out here. Yeah, I think um on 0:06:56.680 --> 0:06:59.040 Doliana doesn't feel quite so scary, doesn't because we've we've 0:06:59.040 --> 0:07:01.080 been up, let's around the twenty five and this kind 0:07:01.080 --> 0:07:03.800 of number before, so we've got so you're comfortable going 0:07:03.800 --> 0:07:08.239 to two week Yet I think it's it's conceivable without 0:07:08.240 --> 0:07:10.720 it being destabilizing, which I think is your your your question. 0:07:10.760 --> 0:07:13.960 But the first Secretary Treasury Monution's gonna have a strong 0:07:14.040 --> 0:07:17.920 dollar policy. Where's the trip point on this house of cards? 0:07:18.240 --> 0:07:20.720 I think the trip point comes for the Fed, not 0:07:20.800 --> 0:07:24.840 for the Treasury. You know, we've seen let's say Bullpark 0:07:24.840 --> 0:07:26.480 at ten percent moves and moving them. But let's say 0:07:26.480 --> 0:07:29.800 Bullpark ten ten percent move on the FEDS reckoning that 0:07:29.920 --> 0:07:33.760 somewhere between sixty basis points of tightening. So I think 0:07:33.800 --> 0:07:36.600 that the pain point is already coming through, like they 0:07:36.760 --> 0:07:39.520 already coming through. But you're a dollar. Obviously, people are 0:07:39.520 --> 0:07:42.120 going to talk about parody as being the weird level 0:07:42.160 --> 0:07:44.280 that we need to be cognizant of. I don't think 0:07:44.280 --> 0:07:46.200 we'll get there, to be honest, even with the momentum 0:07:46.200 --> 0:07:48.440 this morning. But that's going to be the conversation. I mean, 0:07:48.640 --> 0:07:51.640 David grew very quickly here. I don't want to monopolize, 0:07:51.640 --> 0:07:55.040 but we got off the election, and the worst case 0:07:55.160 --> 0:07:59.080 this is worst case, folks, humor me. Six percent move 0:07:59.160 --> 0:08:03.080 in the Bloomberg Dollar index, which is good math, but 0:08:03.120 --> 0:08:05.000 it's a six percent move. It's not a ten percent, 0:08:05.040 --> 0:08:07.480 right move. Yet, we haven't talked about oil yet. This morning, 0:08:07.520 --> 0:08:11.240 I'm seeing a brent here barrel. That upward momentum still there. 0:08:11.320 --> 0:08:13.960 To what extent is that driving currencies right now? Energy 0:08:14.400 --> 0:08:17.560 It's been a big story for ruble, for example, Canadian dollar. 0:08:17.560 --> 0:08:19.040 I mean you have to pick and choose. I mean, 0:08:19.360 --> 0:08:21.920 posts US election. As of yesterday, at least before the FED, 0:08:22.240 --> 0:08:24.760 the ruble was the best performing currency in the world. 0:08:25.400 --> 0:08:27.840 That's oil um or maybe it's a little bit of 0:08:27.920 --> 0:08:32.320 Trump like putin the um, you know, but Canadian dollar 0:08:32.400 --> 0:08:34.640 was the third best. So it's it's definitely a big 0:08:34.679 --> 0:08:36.680 part of the story. Of course, we've had the good news. 0:08:36.679 --> 0:08:39.080 Now they're gonna cut production. Now you have to see 0:08:39.200 --> 0:08:40.960 do they match what they've said they're going to do 0:08:41.000 --> 0:08:43.080 with what they actually do, you know, And so I 0:08:43.080 --> 0:08:45.360 have to have to follow that. But certainly good news 0:08:45.360 --> 0:08:47.800 for now and good news for those currencies go. I've 0:08:47.800 --> 0:08:52.400 been talking about a theme of overcome by events, and 0:08:52.440 --> 0:08:54.880 I'm bringing this up with great respect for the President 0:08:54.960 --> 0:08:59.520 elect because in a time of certitude and a methodology 0:08:59.559 --> 0:09:05.360 of certainitude, sometime parachuting in we are overcome by events. 0:09:05.360 --> 0:09:08.800 Der Mayor in London outside the South Hotel? Hotel is 0:09:08.840 --> 0:09:11.840 that wonderful statue of a worthy of the Crimean War 0:09:12.840 --> 0:09:17.040 where they were overcome by events? What's the event you're 0:09:17.080 --> 0:09:21.400 watching now within the financial system? I mean we can know, oh, 0:09:21.440 --> 0:09:26.120 Italian banks, or we can go President elect Trump Bologny. 0:09:26.559 --> 0:09:29.640 What's the thing that you want to observe into two 0:09:29.679 --> 0:09:34.840 thousand seventeen and monitor. Well, I wouldn't say Bologne, because 0:09:34.840 --> 0:09:36.480 I do actually think the thing we're gonna have to 0:09:36.520 --> 0:09:39.360 work out as Trump. I mean, we're still still struggling 0:09:39.360 --> 0:09:42.040 with that constantly. The market at the moment is assuming 0:09:42.040 --> 0:09:43.560 we get all the nice bits, we don't get any 0:09:43.600 --> 0:09:45.440 of the ugly bits. And I think that's a huge 0:09:45.520 --> 0:09:48.400 leap of faith that's been taken. Um. So you know, 0:09:48.440 --> 0:09:50.320 we look, we should have a little bit more cloudy 0:09:50.360 --> 0:09:52.760 and of Q one, But do you know, I really 0:09:52.800 --> 0:09:56.959 hate forecasting. Currency forecasters don't like forecasting generally. When it's 0:09:57.000 --> 0:09:58.760 just economics you gotta worry about. But when you've got 0:09:58.760 --> 0:10:00.800 to try and work out what's going non in politics, 0:10:00.840 --> 0:10:03.160 it becomes a whole lot messier. And that's but that's 0:10:03.160 --> 0:10:06.440 happening across the board now and currency, So Bologna or not, 0:10:06.679 --> 0:10:08.280 I think we do come back to just trying to 0:10:08.320 --> 0:10:10.120 figure Trump out and see what we're going to get 0:10:10.160 --> 0:10:13.120 in terms of actual policy, not promises. Comparing that in mind, 0:10:13.120 --> 0:10:15.960 I imagine you're watching their redmen be very closely. Yeah, 0:10:16.000 --> 0:10:18.520 I mean, look, this strong dollar complicates things. You know, 0:10:18.520 --> 0:10:21.000 it does complicate things for the Chinese authorities. They I 0:10:21.000 --> 0:10:22.920 think they would prefer that the dollar were not this strong. 0:10:23.559 --> 0:10:26.040 We saw overnight, you know, the fixing pushing higher again 0:10:26.040 --> 0:10:29.240 on dollar m and b um. And you're coming to January, 0:10:29.240 --> 0:10:32.760 and January is this seasonal part of the year where 0:10:32.760 --> 0:10:35.000 you have the biggest pressure on the balance of payments 0:10:35.000 --> 0:10:38.400 in China. There's Chinese demand for foreign currency tends to 0:10:38.400 --> 0:10:41.440 be peaking around this time, and the and the current account, 0:10:41.520 --> 0:10:44.440 the trade side tends to deterierate. So this is awkward 0:10:44.480 --> 0:10:46.679 timing and you just raise that flag. Do we do 0:10:46.760 --> 0:10:49.520 we start next year as we started this one, worried 0:10:49.520 --> 0:10:52.160 about worried about currencies and worried about em currencies. What 0:10:52.240 --> 0:10:54.880 does the US What the US policymakers want to see 0:10:54.920 --> 0:10:58.320 the Chinese currency doing at this point in terms of weakness, 0:10:59.320 --> 0:11:01.959 If they're prisible, they I think they should suggest that 0:11:02.000 --> 0:11:04.920 they don't see it do very much because the reman 0:11:05.000 --> 0:11:07.960 bey is is a vital anchor in terms of a 0:11:07.960 --> 0:11:10.240 stable remby is a vital anker in terms of just 0:11:10.280 --> 0:11:14.559 global financial markets. If if that currency d anchors, then 0:11:14.640 --> 0:11:18.200 then you've got a whole other whirlwind of issues to 0:11:18.320 --> 0:11:20.680 cope with. So if they're sensible, I think they'd prefer 0:11:20.800 --> 0:11:23.320 to see a stable I think obviously, if you're going 0:11:23.400 --> 0:11:26.440 to call China currency manipulator going down that path of trade, 0:11:26.520 --> 0:11:29.080 you know, wars, etcetera, then you want to see your 0:11:29.120 --> 0:11:30.520 reman be strengthened. But I mean, at the end of 0:11:30.520 --> 0:11:31.880 the day, the dollar is the one of the strengthening 0:11:32.120 --> 0:11:34.960 reman bees not doing very much. So that's that's the 0:11:34.960 --> 0:11:36.880 conundrum for them. I guess at the moment, ahead of 0:11:36.920 --> 0:11:39.360 the meeting yesterday, the FED meeting yesterday, we we speculated 0:11:39.880 --> 0:11:41.800 on the degree to which Danny Yellen would comment on 0:11:41.800 --> 0:11:44.600 the possibility of a big fiscal stimulus of tax reform. 0:11:44.840 --> 0:11:46.600 What did you make of what she did say yesterday. 0:11:46.640 --> 0:11:50.520 She wasn't completely silent on the matter. She did address 0:11:50.559 --> 0:11:52.560 the fact that some members of the committee were concerned 0:11:52.600 --> 0:11:55.000 about it. What does that tell you about the thinking 0:11:55.040 --> 0:11:57.280 of policy makers at the federal's roof right now? Yeah, 0:11:57.679 --> 0:12:01.840 I honestly thought that was interesting because they have had 0:12:01.880 --> 0:12:03.720 at least the option at the Fed to say, we're 0:12:03.760 --> 0:12:06.240 going to be reactive in the context of fiscal policy. 0:12:06.240 --> 0:12:08.240 We don't know what we're going to get, so let's 0:12:08.240 --> 0:12:09.959 see what we get and then we can adjust. We're 0:12:09.960 --> 0:12:11.760 not in a rush to hike anyway, so we can 0:12:11.800 --> 0:12:13.960 afford to be patient. But as you say, what she 0:12:14.040 --> 0:12:18.319 introduced yesterday was just this concept that we have to anticipate, 0:12:18.720 --> 0:12:21.760 you know, what the impact might be of politics. You know, 0:12:21.800 --> 0:12:24.320 the currency market, the bond market has said, look, politics 0:12:24.400 --> 0:12:27.080 is the driver here, and now the Fed yesterday is 0:12:27.160 --> 0:12:29.400 just taking the first few steps down that road. So 0:12:29.400 --> 0:12:32.360 it was a significant departure and one they didn't need 0:12:32.400 --> 0:12:33.920 to do, so they've chosen to do it. So I 0:12:33.920 --> 0:12:37.079 think that, as I say, significant. What are the lessons 0:12:37.120 --> 0:12:39.360 you've learned here in the wake of what we've seen 0:12:39.400 --> 0:12:41.640 that with the U S election, obviously the Brexit photo 0:12:41.640 --> 0:12:43.520 as well, and then the Italian referendum, we saw so 0:12:43.600 --> 0:12:47.800 little market reaction, at least comparatively. What does that tell 0:12:47.840 --> 0:12:49.760 you as we head to the next elections in France 0:12:49.800 --> 0:12:52.640 and the Netherlands across Europe. Well, one takeaway is the 0:12:52.640 --> 0:12:56.440 the euro it's just so bored with European politics, you know, 0:12:56.520 --> 0:13:00.880 it's um. We We've just had so much stuff to digest. 0:13:01.040 --> 0:13:03.440 I think that the the sensitivity. In fact, I think 0:13:03.440 --> 0:13:07.360 we're just completely desensitized to political turmoil. Um And so 0:13:07.400 --> 0:13:09.320 we had this kind of sell the rumor by the 0:13:09.320 --> 0:13:11.400 fact in euro And I think we're going to get 0:13:11.440 --> 0:13:13.160 to the Dutch elections in March, we're gonna get to 0:13:13.200 --> 0:13:15.200 the French election, You're gonna get the general elections, and 0:13:15.240 --> 0:13:17.840 we'll talk about and we'll spend endless hours negotiating it. 0:13:17.840 --> 0:13:19.760 But I suspect at the end of the day, yours 0:13:19.800 --> 0:13:22.760 not breaking up the political discount, however big it is 0:13:22.800 --> 0:13:24.440 that's in the currency, it's going to disappear. It will 0:13:24.480 --> 0:13:26.320 be done by the end of next year. Critically with 0:13:26.360 --> 0:13:29.200 the one of four five breaking down a euro down 0:13:29.200 --> 0:13:32.440 to a two thousand three weakness. Is it a different 0:13:32.559 --> 0:13:36.679 debate at a point nine five euro, I would suggest 0:13:36.679 --> 0:13:39.320 it is. I mean the dialogue changes. Yeah, it does. 0:13:39.920 --> 0:13:43.319 And you know, the if we were worrying about European 0:13:43.360 --> 0:13:45.360 political risk, when you had a little bit of breathing 0:13:45.440 --> 0:13:48.760 space above parity, then you can kind of say, okay, fine, 0:13:48.800 --> 0:13:50.200 we can we can see a few big figures lower 0:13:50.200 --> 0:13:52.760 it doesn't really matter. But if political risk in Europe 0:13:52.840 --> 0:13:54.800 is the thing that drives us to parody or drags 0:13:54.840 --> 0:13:57.200 us to parody, then it becomes much more of an issue, 0:13:57.280 --> 0:14:00.559 just just from a market psychology perspective, congrat relations to 0:14:00.760 --> 0:14:03.640 mayor and making all of us lean forward with a 0:14:03.720 --> 0:14:08.880 one ten call on Sterling out in the distance. But nevertheless, 0:14:08.920 --> 0:14:24.440 he maintains that even with what we've seen, you can 0:14:24.440 --> 0:14:26.920 it's a funny quirk of this incoming administration that so 0:14:27.000 --> 0:14:29.640 much of a spectacle is rested on Trump Tower, just 0:14:29.680 --> 0:14:31.760 a few blocks from here, and there's a camera trained 0:14:31.760 --> 0:14:34.680 on the elevators therein and last week we saw one 0:14:34.720 --> 0:14:37.760 Admiral James strid Us at Trump Tower meeting with the 0:14:37.760 --> 0:14:39.720 President elect He is now at the dean of the 0:14:39.720 --> 0:14:42.440 Fletcher School of Law and Diplomacy at Tufts University reportedly 0:14:42.680 --> 0:14:44.960 was in the running to become a Secretary of State. 0:14:44.960 --> 0:14:46.720 And it's great to have you on the show, as always, 0:14:46.760 --> 0:14:49.360 admirals to read us. Great to be with you, guys. 0:14:49.360 --> 0:14:52.080 How's it going today? Great? Give us a sense here. 0:14:52.680 --> 0:14:54.320 I'll let you let you decide what you want to 0:14:54.320 --> 0:14:56.080 share from that meeting. But I imagine that one of 0:14:56.120 --> 0:14:58.760 the things you guys discussed you in the president elect 0:14:58.880 --> 0:15:03.240 is what he is looking for in a Secretary of State? 0:15:03.240 --> 0:15:05.080 What are the parameters he's looking for? Who does he 0:15:05.120 --> 0:15:06.960 want to have in that job? What kind of person? 0:15:07.720 --> 0:15:11.200 I think he's looking for someone with a global perspective, 0:15:11.320 --> 0:15:15.720 who has experience on a world stage, as someone who 0:15:15.840 --> 0:15:20.560 has a broad circle of friends and colleagues in the world, 0:15:20.680 --> 0:15:24.240 and someone with whom he has a strong personal chemistry. 0:15:24.560 --> 0:15:26.920 When when you look at Rex Taylorson, the former now 0:15:26.960 --> 0:15:29.480 former ex Nonmobile executive, whom he's picked for that job, 0:15:29.960 --> 0:15:32.640 give us a sense of how he meets those those bars. 0:15:32.920 --> 0:15:34.520 I don't know if you've met him before, but what 0:15:34.520 --> 0:15:37.080 do you make of the pick? I have met him 0:15:37.240 --> 0:15:40.160 and I think he meets those bars quite well. He 0:15:40.240 --> 0:15:45.400 has uh an enormous global set of connections. He's run 0:15:45.440 --> 0:15:52.400 a huge, complex organization. He's someone that is instantly likable. Uh. 0:15:52.520 --> 0:15:55.800 There's very little to criticize. The only thing that I 0:15:55.840 --> 0:15:58.600 think is out there, and it's a legitimate concern given 0:15:58.640 --> 0:16:01.080 the way the wind is owing at the moment, is 0:16:01.160 --> 0:16:05.520 his evidently extraordinarily close relationship with Vladimir Putin. I think 0:16:05.560 --> 0:16:08.320 that's going to be a subject of considerable scrutiny on 0:16:08.400 --> 0:16:11.080 the hill. I'll probably watch football or soccer on Sky 0:16:11.160 --> 0:16:14.560 TV as well. David Gurrow. Very quickly, twentieth century Fox 0:16:14.600 --> 0:16:18.240 formalizes UH their purchase of Sky TV. The rest of 0:16:18.280 --> 0:16:21.960 Sky TV. The value is eleven point seven billion. That's 0:16:21.960 --> 0:16:24.640 a calculation, but it gets you out to a twelve 0:16:24.640 --> 0:16:29.200 billion sterling transaction. That gets me up to I don't 0:16:29.200 --> 0:16:31.640 know what that is. I'm doing the math quickly. I'm 0:16:31.680 --> 0:16:35.080 gonna say it's a fourteen billion dollar transactions. Track here 0:16:35.120 --> 0:16:37.440 owner of about thirty nine percent of that That company 0:16:37.440 --> 0:16:40.200 already something that he's that he's wanted to to acquire 0:16:40.720 --> 0:16:42.720 anmial strad as you mentioned that Russia connection, and we 0:16:42.960 --> 0:16:45.120 look forward to to these hearings, to to hearing more 0:16:45.160 --> 0:16:47.240 about that. What does it tell you and what did 0:16:47.240 --> 0:16:49.000 your meeting with Donald Trump tell you about the degree 0:16:49.000 --> 0:16:52.400 to which Russia foreign policy toward and involving Russia is 0:16:52.400 --> 0:16:55.080 going to be a priority for this administration. Well, I 0:16:55.120 --> 0:16:57.240 think it's got to be a priority for a couple 0:16:57.240 --> 0:17:00.600 of reasons. First of all, we have three enormous contations 0:17:00.800 --> 0:17:05.440 in progress with Russia. One is Putin's support for Vladimir 0:17:05.640 --> 0:17:09.520 a correction, his support for Assad in Syria. Uh, someone 0:17:09.560 --> 0:17:12.280 who's just butchering the city of Aleppo only the most 0:17:12.320 --> 0:17:15.640 recent of his war crimes. Secondly, the annexation of Crime, 0:17:15.840 --> 0:17:19.439 and thirdly, and most obviously, the cyber hack into the 0:17:19.520 --> 0:17:23.560 U S electoral process. So Russia really de facto is 0:17:23.600 --> 0:17:25.840 at the top of the agenda as we go into 0:17:25.920 --> 0:17:28.880 this new administration. Ed. Well, I've I've read a couple 0:17:28.920 --> 0:17:33.280 of articles on the uproar over the number of generals 0:17:33.400 --> 0:17:37.440 within the new cabinet. We need a Stevidia's dissertation. Now, 0:17:37.720 --> 0:17:40.520 is there a difference between a Marine general and an 0:17:40.640 --> 0:17:43.760 army general or a Navy admiral? Are they all the 0:17:43.800 --> 0:17:47.919 same rank? Etcetera? Um? All the ones. We're talking about 0:17:47.960 --> 0:17:52.840 our four star admirals or generals. Uh. The difference between 0:17:52.920 --> 0:17:56.600 them is in the specialty within the armed forces. So 0:17:56.640 --> 0:18:02.680 the Army four star general command soldiers on battlefields on land. 0:18:03.080 --> 0:18:06.120 The marine is kind of amphibious. He can be out 0:18:06.160 --> 0:18:08.359 at sea with his marines, or he can take his 0:18:08.480 --> 0:18:12.600 marines ashore. Also four star officer, a Navy admiral is 0:18:12.640 --> 0:18:17.520 in command of naval at sea forces, aircraft, terriers, cruisers, 0:18:17.880 --> 0:18:20.680 and can also command that amphibious force as it closes 0:18:20.760 --> 0:18:23.360 on the beach. Are they going to bring to Mr 0:18:23.480 --> 0:18:28.280 Trump a humility about certitude? He is a guy who's 0:18:28.440 --> 0:18:31.000 certain of what he's doing. Are they going to bring 0:18:31.520 --> 0:18:36.760 the humility of their military experience? I think they will, Tom. 0:18:36.800 --> 0:18:39.320 What they will bring is an appreciation of the fog 0:18:39.359 --> 0:18:42.119 of war, which can be extended to the fog of 0:18:42.200 --> 0:18:46.679 foreign relations. It's hard. This is complicated stuff, and to 0:18:46.760 --> 0:18:49.240 think you're gonna just cut through it like another through 0:18:49.320 --> 0:18:52.320 butter is a mistake. Moments ago, Richard Greenfield, one of 0:18:52.320 --> 0:18:56.800 the class acts of security analysts analysis at bt I 0:18:56.880 --> 0:19:01.800 G on viacom, we mentioned TV David, why bring this up? 0:19:01.920 --> 0:19:05.800 Viacom may never be great again? Reducing price target, but 0:19:06.040 --> 0:19:11.840 expectations are simply too low. This is classic Rich Greenfield. 0:19:11.880 --> 0:19:15.359 Our upgrade of Viacom to buy on June six was 0:19:15.440 --> 0:19:18.600 undoubtedly a mistake, as it was driven by our conviction 0:19:18.640 --> 0:19:23.480 that Viacom and CBS would merge, so they adjust, but 0:19:23.560 --> 0:19:26.600 they do maintain their by wrating just because it's been 0:19:26.640 --> 0:19:31.000 beat to death. There's not enough of that. A guy 0:19:31.040 --> 0:19:34.000 like Greenfield is really just out front. Dennis Garment does 0:19:34.040 --> 0:19:36.120 the same thing. He talks about the disasters as much 0:19:36.160 --> 0:19:40.040 as the successes. We'd expect that from Adimals Trevitas as well, 0:19:40.119 --> 0:19:44.400 joining US James Travitis at Fletcher School, Tough University, UM 0:19:44.480 --> 0:19:48.199 Admiral I'm sure there's a point is a young Navy 0:19:48.240 --> 0:19:51.760 type amidshipman. I don't know what the right phrases. Where 0:19:51.960 --> 0:19:54.600 there's somebody who's certain that they're certain, that they're certain, 0:19:55.240 --> 0:19:58.480 and they're sat down by a chief petty officer, says 0:19:58.520 --> 0:20:04.800 young lad out of Annapolis. This the certitude emanating from 0:20:04.840 --> 0:20:08.080 the Trump transition team is remarkable. Everybody is certain that 0:20:08.160 --> 0:20:10.920 there's certain. How do you deal with that? How within 0:20:11.040 --> 0:20:15.240 government are we going to deal with the ebbing away 0:20:15.280 --> 0:20:19.000 from certitude? To war, a more towards a more measured 0:20:19.080 --> 0:20:23.120