Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you.
Speaker 1: Along with my co host Lisa Brahmas. Each day we
Speaker 1: bring you the most noteworthy and useful interviews for you
Speaker 1: and your money. Whether at the grocery store or the
Speaker 1: trading floor. Find a Bloomberg Penl podcast on Apple podcast
Speaker 1: or wherever you listen to podcasts, as well as at
Speaker 1: Bloomberg dot com. It's time to read the tarot cards
Speaker 1: of the global economy for and look into the stars
Speaker 1: and figure out what the world will bring. Joining us now,
Speaker 1: Bart van Arc, executive vice president and chief economist for
Speaker 1: the Conference Board, Bart, thank you so much for joining us.
Speaker 1: I just but you did put together a outlook for
Speaker 1: the world economy, and you have some perhaps better than
Speaker 1: expected news. Mainly we'll avoid a recession. Is that right?
Speaker 1: That's right? I think I'm perhaps we picked a right
Speaker 1: day for this, given you know, pretty positive news on
Speaker 1: the trade disputes as well as on Brexit. Right, so
Speaker 1: so this might be the days maybe we can actually
Speaker 1: avoid the global recession. But you know, again, things may
Speaker 1: change next week. Let's hope it won't. But more seriously,
Speaker 1: we we do think that there is reason to believe
Speaker 1: that there is a very plausible scenario that we're really
Speaker 1: hitting the low point in the global economy right now,
Speaker 1: and that really has to do with the very rapid
Speaker 1: decline that we've been seeing in adust production around the world,
Speaker 1: and that's probably going to continue even into quarter four,
Speaker 1: but we think it will eventually bottom out, particularly because
Speaker 1: China is taking out a lot of excessive overcapacity, but
Speaker 1: also begins to stimulate the economy a little bit, not
Speaker 1: to drop off further. But then, you know, perhaps even
Speaker 1: more important, the consumers and the labor markets pretty much
Speaker 1: around the world are still so strong that we believe
Speaker 1: that I will really pull the economy along in two
Speaker 1: thousand twenty. So part, you're exactly right. The consumer has
Speaker 1: been the strong part of this economy relative to manufacturing
Speaker 1: and business investment. But we have seen some signs that
Speaker 1: employment growth is slowing. Um is that a concern of
Speaker 1: yours now? Of course it is, And and you know again,
Speaker 1: I mean the gap between consumer confidence and business confidence
Speaker 1: is usually large at the moment. So you know, why
Speaker 1: is the consumer hanging in there well? Because this job
Speaker 1: market has been so strong that have been seeing their
Speaker 1: wages increasing and the incomes improving, and frankly that's true
Speaker 1: around the world, um, and we see that reflected in
Speaker 1: consumer confidence. We we just released earlier this week our
Speaker 1: Global Consumer Confidence Index at the Conference Board, and you
Speaker 1: know there there we actually are showing the pretty much
Speaker 1: around the world, we still see very high levels of
Speaker 1: of consumer confidence. Now, employment is a very important leading
Speaker 1: economic indicator underlying this, and we do see some leveling
Speaker 1: off here, but again, unemployment rates are very low in
Speaker 1: the US and Europe, in Japan, in many emerging markets,
Speaker 1: demand for labor is still very strong. So so we
Speaker 1: can really see at the moment this is still very
Speaker 1: much in positive territory and you would expect, i think
Speaker 1: nothing else at this point that the rapid girl of
Speaker 1: that we've been seen in employment over the past couple
Speaker 1: of quarters is beginning to slow down a little bit.
Speaker 1: So now we're not we don't have a major concern
Speaker 1: about the numbers we're seen right now. Another interesting production
Speaker 1: that you have here is that the decline and industrial
Speaker 1: production will ease and eventually bottom out. How far away
Speaker 1: are we from that. Yeah, it's very important that we
Speaker 1: have the diagnosis around this clear. We think that a
Speaker 1: lot of this decline industrial production started already early in
Speaker 1: two thousand eighteen in China, and China, as I referred
Speaker 1: to earlier, had the huge amount of overcapacity, and China
Speaker 1: essentially stopped continuing to support it, particularly in the state
Speaker 1: or the enterprises. And you know in the first pace
Speaker 1: that we didn't feel that in two thousand and eighteen
Speaker 1: because it happens sort of upstream and supply chains. But
Speaker 1: then later on in the year, you know, multinationals started
Speaker 1: to feel this, and certainly into two thousand and nineteen,
Speaker 1: the countries that are most exposed, like you know, Japan
Speaker 1: and Germany, really started to feel the pain. As this
Speaker 1: worked itself with the global supply chain, a lot of
Speaker 1: excessive overcapacity has been taken out. China doesn't doesn't want
Speaker 1: to make a transition towards a more higher value added
Speaker 1: manufacturing sector, you know, go back to the to the
Speaker 1: trade disputes and discrestions that we're currently having. They're beginning
Speaker 1: to see some results of that. So so you know,
Speaker 1: even the latest numbers for China are giving us a
Speaker 1: little bit more comfort that this may begin to to
Speaker 1: do bottom out a little on top of that, you know,
Speaker 1: provided that the trade disputes indeed go a little bit
Speaker 1: to the background and the fact that technology and innovation
Speaker 1: are creating some more productivity growth. That's all good signs
Speaker 1: for for industrial production. That's why we believe it will
Speaker 1: begin to bottom out over the next couple of months.
Speaker 1: So part if the U s economy does manage to
Speaker 1: avoid recession in your forecasting is there how do you
Speaker 1: view the concern that maybe this economy is just going
Speaker 1: to be uh lower for longer, slower growth for longer
Speaker 1: one and a half to two percent for the foreseeable futures.
Speaker 1: That's something you think is is possible likely. Yeah, that's
Speaker 1: a great point, Paul, because you know, we should be
Speaker 1: careful not to mix up the fact that we'll see
Speaker 1: some recovering in two thousand twenty. We have the fact
Speaker 1: that in the longer term we are looking at the
Speaker 1: slowing economy and most of the mature economy is including
Speaker 1: the United States, so that this sort of long term
Speaker 1: growth rate underlying the economy in the US is probably
Speaker 1: around two percent, and that's quite a bit weaker than
Speaker 1: what we had in the previous decades. A lot of
Speaker 1: that has to do with gradually lowing, gradually slowing supply
Speaker 1: of labor. There's just more people retiring and fewer people
Speaker 1: entering the labor force. We're not really making that up
Speaker 1: rapidly enough by things like immigration or speeding up participation
Speaker 1: in some segments of the population. So so that slowing
Speaker 1: labor supply is a major driver of that. Now you
Speaker 1: can make up for that by productivity growth, but that
Speaker 1: has been dismal for a long time. Now we see
Speaker 1: we see some good signs as I just mentioned earlier,
Speaker 1: that productivity is beginning to pick up a little bit.
Speaker 1: Some of that may just have been cyclical related to
Speaker 1: the strong growth in two thousands, seventeen and eighteen, but
Speaker 1: it might be that indeed, you know, technology digital transformation
Speaker 1: is beginning to results in companies, and that would help
Speaker 1: us to keep growth in the United States still at
Speaker 1: you know ABUF to pent in the longer term, and
Speaker 1: that would probably be good enough to support and sustain
Speaker 1: growth going forward. Part Van Ark, thank you so much
Speaker 1: for joining us bart as executive vice president and chief
Speaker 1: economists for the conference board. Oil is up today once again,
Speaker 1: Brent crude up about one point three five cents per
Speaker 1: barrel at some response to some news that I Rand
Speaker 1: said that missile struck one of its tankers in the
Speaker 1: Red Sea, which is would be the latest in a
Speaker 1: series of attacks on oil infrastructure in the region that
Speaker 1: have royal energy markets of late. To get a sense
Speaker 1: of what is going on, we welcome Will Kennedy. Will,
Speaker 1: as a managing editor covering all things energy and commodities
Speaker 1: for Bloomberg, joins us from London. So, well, what's the
Speaker 1: latest on this tanker attack in the Red Sea. So,
Speaker 1: an Irvanian tanker with about one million bottels of crude
Speaker 1: oil was sailing north through the Red Sea um it
Speaker 1: was attacked in the earlier this morning. The National Avanian
Speaker 1: Tanker Company, which owns the ship, says two missiles hit it.
Speaker 1: They're not saying exactly where they came from, although they
Speaker 1: one said one stage said they probably came from Saudi Abia,
Speaker 1: although later they decided to walk that back. As we
Speaker 1: understand it, the tanker shared a little bit of crude
Speaker 1: oil into the Red Sea, but that situation is now
Speaker 1: under control and the tanker has turned around and is
Speaker 1: sailing back towards the Persian Gulf. The fact that these
Speaker 1: attacks keep happening is a bit concerning and sort of
Speaker 1: points to the escalating tensions between Iran and Saudi Arabia.
Speaker 1: Are you at all surprised that oil prices aren't up more?
Speaker 1: I mean, this takes us back, I think to the
Speaker 1: attack we saw miss a month ago on the Abcate
Speaker 1: crude processing plant in so the Arabia, at the very
Speaker 1: heart of the Saudi oil industry, five million dollars a day,
Speaker 1: and when that got hit by some missile strikes, possibly
Speaker 1: sponsored by Iran, we saw oil react as you'd expect,
Speaker 1: it rose in one day. But what's been really interesting
Speaker 1: about the event is that we've grown up all those
Speaker 1: gains and more. I there is no that that attack
Speaker 1: has produced no risk premium in the market, and I
Speaker 1: think what it really speaks to is the over riding
Speaker 1: inncern of the oil market is that there's just too
Speaker 1: much oil around and that situation is only going to
Speaker 1: get worse next year, where most analysts see a mismatch
Speaker 1: between supply and demand. The International Energy Agency says early
Speaker 1: next year they expect global inventories to build more than
Speaker 1: a million dollars a day, and I think the market
Speaker 1: is much more focused on that and the same concerns
Speaker 1: of everyone else about the trade war and the slowing
Speaker 1: US economy than they are on geopolitics so well. One
Speaker 1: of the things I think these series of attacks in
Speaker 1: the Middle East oil infrastructure have shown those of us
Speaker 1: who don't follow the supply side in the Middle East
Speaker 1: oil supply that closely is just maybe how vulnerable the
Speaker 1: supply chain is. What is the thinking within energy circles
Speaker 1: about can anything be done to make it more secure?
Speaker 1: It's very difficult. I mean, tankers are not armed, there's
Speaker 1: no real way to protect them. They have to sail
Speaker 1: close to coastlines at times, so you know, they are
Speaker 1: easily targeted. But this is not the first time that
Speaker 1: we've seen this. In the Avan of Ark War in
Speaker 1: the nineties there was a so called tanker war where
Speaker 1: tankers would repeatedly attacked as they sailed through the Persian Gulf.
Speaker 1: Of course, you know we've seen tankers attacked more recently
Speaker 1: or for Yemen by al qada um in in you know,
Speaker 1: ten years ago or so. So it has something that
Speaker 1: becomes a problem every now and again. Um and though
Speaker 1: there's very little you can do. The only thing you
Speaker 1: can do is to try and make sure that no
Speaker 1: one's no one wants to attack them from the shore
Speaker 1: to to to the you know, de escalate the issue
Speaker 1: behind the attacks. Here's here's one thing that I'm struggling
Speaker 1: to understand today. Not only do we have this attack
Speaker 1: on supply, but also there is better than expected trade development.
Speaker 1: So why isn't that giving people a little bit more
Speaker 1: hope when it comes to demand for oil and they're
Speaker 1: sending prices even higher. Well, that's true, and you might
Speaker 1: have expected to see a better day. But we also
Speaker 1: had a report this morning from the International Energy Agency
Speaker 1: that again locked a little bit off its demand forecast
Speaker 1: for next year. And you know, just to go back
Speaker 1: to this idea that at the moment, the supply demand
Speaker 1: bances next year don't look good. And that's going to
Speaker 1: put a lot of focus as we go towards the
Speaker 1: end of the year on OPEX politic to reaction. Will
Speaker 1: Saudi Arabia have to cut more production? Isn't OPAQ in
Speaker 1: a position to do that or not? And you know,
Speaker 1: until we get some really firm uh policy clarity from
Speaker 1: OPEC plus that they're going to do what it takes
Speaker 1: to bring the market into what they call balance. I
Speaker 1: support prices up above six seals about I think the
Speaker 1: the oil market may struggle to really get a lot higher. Well, Kennedy,
Speaker 1: thank you so much for being with us. Will Kennedy,
Speaker 1: Bloomberg News Managing editor for Energy and Commodities. Talking about
Speaker 1: that attack on the Iranian oil tanker, it just is
Speaker 1: uh an interesting idea that even as we have those
Speaker 1: tensions rising, people don't really care that much. Not only
Speaker 1: are we getting positive discussion out of Washington, but Boris
Speaker 1: Johnson and the European Union evidently are working well together.
Speaker 1: They have entered the tunnel, the cone of secrecy as
Speaker 1: they try to hash out a Brexit deal, and evidently
Speaker 1: things are going pretty well. That lack of d tell
Speaker 1: is sending the pound to its biggest two day rally
Speaker 1: on a percentage basis since December two thousand and eight.
Speaker 1: This has been a just incredibly slow process, but a
Speaker 1: little bit of light at the end of the tunnel
Speaker 1: perhaps here as we get down to that, you know,
Speaker 1: October thirty one date, which is really the hard, hard data.
Speaker 1: I think. Meanwhile, we are seeing the more happy the
Speaker 1: talk yets, the less there is a bid for gold.
Speaker 1: We have gold today down sharply at one point two
Speaker 1: percent lower, joining us now Frank Holmes, chief executive officer
Speaker 1: and chief investment officer of US Global Investors. Gold had
Speaker 1: been in the sweet spot, a lot of investors saying
Speaker 1: it was headed straight to sixteen hundred dollars. Currently is
Speaker 1: at one thousand, four hundred and seventy five dollars and
Speaker 1: some change. I'm wondering what it will take to prop
Speaker 1: the prices back up, given the fact that we are
Speaker 1: not done with the uncertainties and yet people still seeing
Speaker 1: a time to sell. Well, there's two big drivers for
Speaker 1: the demand for gold, and I've characterized as the fear
Speaker 1: trade and the love trade. And what's interesting is the
Speaker 1: love trade is of all demand for gold and really
Speaker 1: is highly correlated the use of Bloomberg functions to the
Speaker 1: GDP per capita of Chindia affectually known as China and India,
Speaker 1: which is the world's population. So what they're rising g
Speaker 1: D people income to consumption of gold cold jewelry has
Speaker 1: been in stellar. The fear training is what's really been
Speaker 1: driving gold this year, and that's negative real interest rates
Speaker 1: and uh, I'm precedent around the globe slowed down with
Speaker 1: p m s. It'll take a while before you get
Speaker 1: get those to turn and be sustainable. So I think
Speaker 1: that we're living in an era where governments still have
Speaker 1: not got with the program that we need fiscal stimulus
Speaker 1: by extremelining all the regulations. Uh, it's all now by
Speaker 1: negative real interest rates and printing money. So this makes
Speaker 1: gold a very attractive asset class. And there's actually peak
Speaker 1: golds coming from minds. There's been no major discoveries and
Speaker 1: so I think that's gold is in a very served
Speaker 1: unique secular trend. Again. So Frankie, we're in the month
Speaker 1: of October that's historically been a very volatile month for
Speaker 1: the equity markets. Is that an argument to maybe increase
Speaker 1: allocations to gold here, No, I don't think so. I
Speaker 1: think that you have to take the thought process of
Speaker 1: the largest head spot in the world, Bridge Water, Brade, Dalios,
Speaker 1: Pilosity having said six to ten percent and gold, and
Speaker 1: you rebalance it and it has the volti of the
Speaker 1: stock markets only one sort of component to it. I
Speaker 1: think it's really important is real is what's called real
Speaker 1: interest rates and uh, and I think that the world
Speaker 1: is going to continue to try to stimulate with negative
Speaker 1: real interest rates and this is bullets for gold. Now,
Speaker 1: go ahead, of spectacular run. It was up three standard deviations.
Speaker 1: We like to look at it over sixty trade days.
Speaker 1: Is now back to almost at par now with this
Speaker 1: correction today, we're just back to where it's a very
Speaker 1: healthy way to take a look of entering into gold.
Speaker 1: So you like gold, where do you think it goes
Speaker 1: by the end of say the next six months? Um.
Speaker 1: You know, the DNA of altally of gold is now
Speaker 1: over a ten day or in period, the SMP is
Speaker 1: three percent, and that means severy percent of the time
Speaker 1: it's non event for goal to go up, but down
Speaker 1: two percent was the SMPS three percent? So I think
Speaker 1: that you know, asked by year end, I think that
Speaker 1: the goal could easily be seventeen hundred dollars. I think that,
Speaker 1: and it could also correct the hundred dollars from here.
Speaker 1: That's sort of the normal trading range. It's going to
Speaker 1: be much more important is what Europe is doing in
Speaker 1: Japan is doing on this negative real interest rate scenario.
Speaker 1: And I don't see anything of fiscal policy changes and
Speaker 1: regulations to say we're going to have a complete sea
Speaker 1: change and what we how we're going to try to
Speaker 1: grow our economy. I want to shaft gears a little bit.
Speaker 1: I know that not only do you focus on precious metals,
Speaker 1: but you also focus on the airline industry with your
Speaker 1: e t F that trades as jets on the New
Speaker 1: York Stock Exchange and Delta shares have been doing pretty
Speaker 1: poorly after they said that they're seeing rising costs and
Speaker 1: slowing revenue growth. Do you think that the outlook has
Speaker 1: materially deteriorated for the airline industry. No, I don't. You
Speaker 1: know so much of this sentiment just recently, just prior
Speaker 1: to this conversation we're having, we talked about the Pound
Speaker 1: having one of the biggest rallies so much as sentiment
Speaker 1: driven right now, and so they say costs of risings
Speaker 1: or sentiment and meeting sells off. But there's it's very
Speaker 1: difficult to build an airport. The baris to entry are
Speaker 1: extremely high. And uh. And when you take a look
Speaker 1: at global travel and tourism, one of the things I
Speaker 1: just noted when I was in New York Stock Exchanged
Speaker 1: yesterday tours or Chinese tourists. I was in Salzburg last
Speaker 1: week and the same thing there. So I think that
Speaker 1: you're seeing a global tourism is growing much faster out
Speaker 1: of the middle class of China and India in particular China. UH,
Speaker 1: it was always led by America, and now there's three
Speaker 1: entities that are dominating it. And there's just difficult to
Speaker 1: get the building of these new airports and and UH,
Speaker 1: I think is a very boyish scenario. And the incillary
Speaker 1: fees ten years ago with three big in dollars a
Speaker 1: year with a charge for a bag or change your ticket,
Speaker 1: I can go out the whole list of them. They're
Speaker 1: now pushing. They're going to push through a hundred day
Speaker 1: in next year, so the cost of fuel is not
Speaker 1: as significant because they're making so much money from these
Speaker 1: incillary fees. And Delta, yes, they talked about their Amics
Speaker 1: Matter Express contract. Well that and that was almost fourth
Speaker 1: big in the revue last year, and I think could
Speaker 1: be seven big in dollars over the next year. So
Speaker 1: we look at American airlines what they're making for their
Speaker 1: credit card um so I think that the airline's industry
Speaker 1: is buying the tips. Do I buy et f R.
Speaker 1: I just go out and buy a basket of these
Speaker 1: airlines stocks, global stocks. You go out and buy his ets,
Speaker 1: not the football team. You buy jets because it diversified
Speaker 1: your risk. And we also have airports in there. Did
Speaker 1: you know, like, um, the airport for Bangkok is public. Uh.
Speaker 1: Some of the airports in Mexico or public h istern bowls,
Speaker 1: public Beijing is public. So you get these airports as
Speaker 1: a mixture, but they have to have a quant model
Speaker 1: of very high returns to investor capital and make to
Speaker 1: the jets etf So I I mean very very bullish,
Speaker 1: and I think that Bowling will in the next next
Speaker 1: year with the worst behind this quarter and uh, and
Speaker 1: I think that will then turn around also help Southwest
Speaker 1: Airlines and American Airlines uh increase their uh, their their
Speaker 1: their routes. Right. Frank Colins, thanks so much for joining us.
Speaker 1: We appreciate your thoughts on both the gold sector as
Speaker 1: well as the global airlines business. Frank Colmins is the
Speaker 1: CEO and she investment officer for us A Global Investors.
Speaker 1: They're based in San Antonio, Texas well. It is certainly
Speaker 1: a risk on day today A great way to end
Speaker 1: the week for equity bulls. All took was a little
Speaker 1: bit of positive news on the geopolitical front to help
Speaker 1: us get a sense of kind of how to think
Speaker 1: about this market going forward. We welcome and Witty Bahuguna
Speaker 1: and widy as a senior portfolio manager and head of
Speaker 1: multi asset strategy for Columbia Threadneedle Investments, joining us on
Speaker 1: the phone from Boston. And Witty, thanks so much for
Speaker 1: joining us. What do you make of today's action in
Speaker 1: the market. Um, it's certainly optimist, Sick Paul. Sounds like
Speaker 1: progress on several funds on the trade front on the Brexit,
Speaker 1: but I will say that I haven't seen details yet
Speaker 1: of either. It's really just optimistic sounds a missing sounds
Speaker 1: good enough for a lot of people out there, evidently
Speaker 1: to try to cash in. I mean, given the fact
Speaker 1: that we've got zero details or at least to give
Speaker 1: you any tangible sense that this is actually going to
Speaker 1: go through, would you be selling this rally? We are
Speaker 1: actually underweight in our portfolios, so yes, it's definitely not
Speaker 1: something that I would trade client money on rumors alone.
Speaker 1: At this point, we need to see what is actually
Speaker 1: agreed upon, whether it's temporary or another one of those
Speaker 1: ten or so head fakes we have seen in the
Speaker 1: last one year. Lisa, so on when when when you
Speaker 1: think about your positioning again, you mentioned your underweight global equities.
Speaker 1: Is it give us a sense of kind of how
Speaker 1: you weight that or what drives that? Is it evaluation?
Speaker 1: Is it slowing global economic growth? Or is it you know,
Speaker 1: kind of like the global macro uncertainty, trade and so
Speaker 1: and so forth. So it's several of those factors. Evaluation
Speaker 1: is one component. Fundamentals is really the driving component of
Speaker 1: how we think about the world. And on that front,
Speaker 1: we have seen nothing but downgrades to global growth outlook
Speaker 1: this entire year. Whether you look at what the bond
Speaker 1: market has done, whether you look at how equity markets
Speaker 1: have performed outside of the US, we have seen nothing
Speaker 1: but downgrades to growth for the entire year. Now, it's
Speaker 1: better priced in in some markets than others. But what
Speaker 1: I would what would what would really matter to us
Speaker 1: is how does the growth outlook change going forward? And
Speaker 1: trade and b exit our component of that. Um We
Speaker 1: will wait to see the details of all those, but
Speaker 1: it won't be just a day's sentiment change. For example,
Speaker 1: I was looking at at some of your calls. You
Speaker 1: also are saying that it's a good time to maintain
Speaker 1: treasury allocations just because of some of the bearishness in
Speaker 1: the economic outlook going forward. I guess what would it
Speaker 1: take for you to reverse that call? Right? So that
Speaker 1: is important on the multi asset portfolios, since we take
Speaker 1: risks in equities commodities to have some hedges, and treasuries
Speaker 1: have been excellent hedge this entire yearly, sir, The thing
Speaker 1: that would matter to me on the treasury front is
Speaker 1: beginning of what you're seeing now a little bit in
Speaker 1: the bond market. I would like to see the front
Speaker 1: end of the curve stabilize a little. So the front
Speaker 1: end of the curve's been signaling this entire year downgrades
Speaker 1: to growth expectations. And if that stabilizes, and I don't
Speaker 1: expect a whole lot of movement up in the front end,
Speaker 1: maybe a little bit, that would be a sign that
Speaker 1: maybe markets beginning to price out the recession here. The
Speaker 1: back end is very much driven by premium. PA's driven
Speaker 1: by so many factors other than just the US economy.
Speaker 1: But it will be very good to see this, you know,
Speaker 1: one day of this inversion that we have seen in
Speaker 1: the curve become a little more permanent. So and with
Speaker 1: one of the stories at least and I've been following
Speaker 1: this morning, is this news from the Federal Reserve that
Speaker 1: will begin buying about sixty billion dollars of treasury bills
Speaker 1: per month. How do you view that move? Is this
Speaker 1: a stealth quee on your from your perspective, or is
Speaker 1: it in fact kind of what they're suggesting, which is,
Speaker 1: you know, something to just kind of stabilize the short
Speaker 1: end of the curve. So I I agree with such
Speaker 1: description of this. I think it's very much a plumbing
Speaker 1: mechanism to stabilize the funding on the short end. I
Speaker 1: definitely don't view it as stealth QUEUEI um remember, Paul,
Speaker 1: this was a very standard operation for the Fed before
Speaker 1: the crisis. It's simply helping and aiding movement of efforts
Speaker 1: in the ranking system, very much a function of the fit,
Speaker 1: which is the lender of the last resort. One other
Speaker 1: call that you have is underweight emerging market stocks in particular,
Speaker 1: and I'm wondering what it would take for you to
Speaker 1: reverse that call, given the fact that you do have
Speaker 1: central bank easing around the world, which typically is positive
Speaker 1: for emerging market assets. Right, So that was very much
Speaker 1: driven by this manufacturing slowdown, or I would even go
Speaker 1: as far as to call it a manufacturing procession. We
Speaker 1: have seen in the last nine months or so, we
Speaker 1: are beginning to see some signs of improvement there, Lisa.
Speaker 1: We've seen in the month of September the UH manufacturing
Speaker 1: p m I s for emerging market stabilize plus very
Speaker 1: central bank easing, as you pointed out, Um, that would
Speaker 1: be a driver for us. Continuous movement in that direction
Speaker 1: would be a driver for us to change our view
Speaker 1: on emerging markets. How about Western Europe? We you know,
Speaker 1: I'm just looking at Germany with his negative rates and
Speaker 1: slowing economy in Western Europe uncertainly continues with Brexit. Is
Speaker 1: it just too risky for you to or for anyone
Speaker 1: to really maybe increase an allocation to Europe. Well, we
Speaker 1: are actually over it Europe and have been for a while. Um.
Speaker 1: Europe has that central bank support that Lisa spoke about,
Speaker 1: and there is UM. Europe is the one market where
Speaker 1: for the past few years a lot of pessimism have
Speaker 1: been priced in, so our valuation component had come in
Speaker 1: handy to look at your connectuity markets, and we are
Speaker 1: over it Europe. Just going forward, do you have a
Speaker 1: sense of how far away from the bottom we are
Speaker 1: in this manufacturing downturn. Um, it's early days. Yes, I
Speaker 1: am um, you know, mildly optimistic, Lisa. It looks like
Speaker 1: things are stabilizing, you know, very watch a function of
Speaker 1: the sentiment driven down draft that we saw the last
Speaker 1: two months. I would say so last two months has
Speaker 1: been particularly volatile as uh. There have been movement driven
Speaker 1: very much more by sentiments other than data. So data
Speaker 1: had been weakening all year around, but last two months
Speaker 1: have been constant bombardment of markets whipping around in one
Speaker 1: direction or the other by the trade news worsening, the
Speaker 1: brekfit news worsening than maybe going back and getting better
Speaker 1: a little bit. We would love to see some stabilization
Speaker 1: on that front. And wet by Hugana. Thank you so
Speaker 1: much for being with a senior portfolio manager and head
Speaker 1: of multi asset strategy at Columbia Threat Needle Investments, joining
Speaker 1: us from Boston, Massachusetts. Thanks for listening to the Bloomberg
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Speaker 1: Paul Sweeney, I'm on Twitter at pt sweet. I'm Lisa
Speaker 1: abram Woods. I'm on Twitter at Lisa Abramo WOOS one
Speaker 1: before the podcast. You can always catch us worldwide on
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