WEBVTT - Surveillance: A Strong Dollar Kills The EM Story, Maher Says 0:00:09.840 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:32.240 Bloomberg dot Com, and of course on the Bloomberg. Very 0:00:32.280 --> 0:00:34.080 pleased to say that joining us here in New York 0:00:34.120 --> 0:00:38.800 City is Darra Maya, HSBC's US head of FX strategy. 0:00:38.880 --> 0:00:41.360 Can morning chit Dara in just a moment, when Tom 0:00:41.440 --> 0:00:43.960 King's finished doing his hair, He'll join us on bloom 0:00:44.000 --> 0:00:47.160 Black Radio. What are you doing? They put in this pillar? 0:00:47.320 --> 0:00:49.880 Thank you for all the comments and our beautiful news studio, 0:00:50.000 --> 0:00:53.240 the Interactive Broker's Studio. We had a huge comments yesterday, 0:00:53.320 --> 0:00:57.280 John and some photos are Chris Rosh down at Carolina 0:00:57.480 --> 0:01:00.360 wrote us up in Talking Busines News and you see 0:01:00.400 --> 0:01:04.280 the mirror. The noticed that continues. None of the articles 0:01:04.319 --> 0:01:08.160 writing about the new studio mentioned your mirror behind your 0:01:08.240 --> 0:01:13.000 mic position which at the moment you're staring at you 0:01:13.760 --> 0:01:15.920 this vein at home. Do you compete for mirror time 0:01:15.959 --> 0:01:20.600 with Mrs Keane? No, no, no, afterthoughts the mirror? Okay, 0:01:20.760 --> 0:01:22.600 I put a mortgage PM and what am I meant 0:01:22.640 --> 0:01:24.120 to do with this for the next two hours, I 0:01:24.160 --> 0:01:28.200 don't talk to Dara about the dollars? Can I do that? Now? 0:01:28.400 --> 0:01:30.280 You're going to engage, You're going to focus on the 0:01:30.360 --> 0:01:33.480 market just quickly. Yeah, you're in great. Let's get to 0:01:33.560 --> 0:01:37.600 the note. The consensus is consistent on the dollar consistently wrong, 0:01:37.680 --> 0:01:40.120 it seems, having missed the rally in April. The medium 0:01:40.160 --> 0:01:42.160 forecast is for the dollar to week and by seven 0:01:42.200 --> 0:01:45.080 percent in the coming year, according to Bloomberg Data. While 0:01:45.160 --> 0:01:48.000 this is a medium term view, we believe it is 0:01:48.080 --> 0:01:52.000 fostering an attitude of denial. That's the research from HSBC. 0:01:52.280 --> 0:01:55.320 Who is that? Who did write that? Come on, Dara, 0:01:55.840 --> 0:01:57.880 what's the takeaway at the moment? Why is that your 0:01:57.880 --> 0:02:00.600 takeaway right now? Well, because I do think they're just 0:02:00.880 --> 0:02:03.920 constantly the markets looked at the dollar rally that we've 0:02:03.960 --> 0:02:05.480 had since the end of April and they said, well, 0:02:05.560 --> 0:02:07.600 that doesn't make sense. I think it does, but they 0:02:07.640 --> 0:02:09.239 said it doesn't make sense, so therefore I want to 0:02:09.280 --> 0:02:12.480 sell into it. And it's it's created this positioning, tactical 0:02:12.560 --> 0:02:15.119 position where we're always looking for an opportunity to sell 0:02:15.160 --> 0:02:17.160 the dollar. When I go and see clients. They don't say, hey, 0:02:17.720 --> 0:02:19.560 that's how much for do you think this dollar rally 0:02:19.600 --> 0:02:21.600 can go? It's always is now the time to sell? 0:02:21.720 --> 0:02:23.679 Is now the time to sell? And I think that's 0:02:23.720 --> 0:02:26.320 the problem, is credit this bias in the background. I 0:02:26.400 --> 0:02:30.160 suspect because a strong dollar kills the whole E M story, 0:02:30.280 --> 0:02:32.880 which they're all desperate to work. And I think that's 0:02:32.880 --> 0:02:35.480 the problem because it hasn't been working for some EM 0:02:35.680 --> 0:02:37.600 of late. Well, there's some signs at the moment that 0:02:37.680 --> 0:02:39.880 the long U s versus e M crowd that started 0:02:39.919 --> 0:02:42.040 to emerge over the last couple of months, they're riching 0:02:42.120 --> 0:02:44.760 to pivot and there's some signs right now that they're pivoting. 0:02:44.840 --> 0:02:47.160 Are you saying they're gonna get burned? Well, I think 0:02:47.160 --> 0:02:49.679 they're at risk, and particularly if if it's if they're 0:02:49.680 --> 0:02:52.040 relying on the dollar weakness has been a key leg 0:02:52.080 --> 0:02:54.200 of that equation. I mean, great if you get reduced 0:02:54.280 --> 0:02:58.400 EM risk for whatever reason, political developments, growth, trade wars, whatever, 0:02:59.160 --> 0:03:01.760 But if they're relying on dollar weakness when the Fed 0:03:01.880 --> 0:03:04.280 is going to tighten and continue to tighten along the dots, 0:03:04.800 --> 0:03:06.840 I just don't see where you get there. The rate 0:03:06.880 --> 0:03:08.560 story is a bit of a pain trade right now. 0:03:08.720 --> 0:03:11.400 I was looking at tens the US versus Germany on 0:03:11.480 --> 0:03:15.160 a ten year maturity, fresh whites, fresh multi decade whites, 0:03:15.200 --> 0:03:18.520 and everyone's looking for that convergence to push up euro dollar, 0:03:18.560 --> 0:03:20.639 for rates to move in the euro's favorite you saying 0:03:20.680 --> 0:03:22.639 that's not going to happen. It doesn't feel like but 0:03:22.760 --> 0:03:25.040 you know what's weird. Even just yesterday we had a 0:03:25.120 --> 0:03:27.119 push up in US yells. You you know, Tom's talking 0:03:27.120 --> 0:03:29.120 about it, You've talked about it, and the dollar didn't 0:03:29.440 --> 0:03:33.160 move with it, and it's created a twitchiness I think 0:03:33.200 --> 0:03:34.880 in the market that are we for a rerun of 0:03:34.920 --> 0:03:37.400 twenty seventeen? You know, are we for a rerun where 0:03:38.040 --> 0:03:39.920 rates seem to say the dollars going hird but the 0:03:39.960 --> 0:03:43.080 dollar is not going Asker is just critical And the 0:03:43.240 --> 0:03:47.080 idea here, the yield, folks of the United States and John, 0:03:47.120 --> 0:03:49.840 when you take Germany is compared to the yield of 0:03:50.000 --> 0:03:54.640 Germany is as wide as it's bend since basically time began, 0:03:54.920 --> 0:03:58.640 since records began. Whatever majority it's two d and fifty 0:03:58.720 --> 0:04:04.040 nine bases dreams instability, right, I mean the Green Book 0:04:04.040 --> 0:04:07.480 of the I m F. It screams instability. Right, Well, 0:04:07.560 --> 0:04:10.040 certainly screams divergence. I mean, honestly, you could you could 0:04:10.040 --> 0:04:12.560 say that that's as much as we're seeing. But what 0:04:12.720 --> 0:04:14.880 it what it points to me is, you know, the 0:04:15.240 --> 0:04:17.800 FED is delivering and the ECB is snow playing, snow 0:04:17.839 --> 0:04:21.200 plowing red expectations further and further into the future, as 0:04:21.240 --> 0:04:24.760 there are many other central banks. So it's a peculiar divergence. 0:04:24.960 --> 0:04:26.680 But and I think when the market always sat would 0:04:26.680 --> 0:04:29.279 close and it just hasn't happened such on something important. 0:04:29.320 --> 0:04:33.960 In seventeen, great differentials weren't the dominant story driving euro dollar. 0:04:34.279 --> 0:04:36.640 Why is twenty eighteen different? Why does it stay different? 0:04:37.120 --> 0:04:38.799 I think, well, one of the reasons it was different 0:04:38.839 --> 0:04:41.040 in twenty seventeen was, if you remember, inflation in the 0:04:41.160 --> 0:04:44.160 US was undershooting, but the FED were still able to 0:04:44.279 --> 0:04:46.840 tighten because the dollar was weaker. You know, there was 0:04:46.839 --> 0:04:48.880 an offset there in terms of what it did to 0:04:49.000 --> 0:04:53.200 monetary conditions. At the moment, it feels different because you 0:04:53.240 --> 0:04:56.040 obviously don't have inflation undershooting. The US economy is is 0:04:56.080 --> 0:04:59.760 growing pretty strongly, and whereas in the Eurozone core inflation. 0:05:01.760 --> 0:05:04.560 So I think that's the key difference. And also I 0:05:04.600 --> 0:05:07.240 think in terms of how the markets position in the 0:05:07.279 --> 0:05:09.800 market thought the dollars should be stronger and great differentials, 0:05:09.880 --> 0:05:11.560 and it wasn't, so they got killed. And now I 0:05:11.640 --> 0:05:14.280 think you shouldn't be where's your big figure call right now? 0:05:14.360 --> 0:05:16.000 I mean dollar And you say, yen is not going 0:05:16.040 --> 0:05:18.280 to move that much versus the dollar. But if I 0:05:18.400 --> 0:05:20.920 really want to make a big figure opportunity, which e 0:05:21.200 --> 0:05:24.080 M is the one that's most vulnerable as compared to 0:05:24.200 --> 0:05:27.120 dollar strength. Honestly, Tom is gonna be the usual suspects. 0:05:27.120 --> 0:05:30.560 It's Argentina, It's Brazil. Argentina at a forty and it 0:05:30.640 --> 0:05:32.960 hasn't given it back. It's going to move out to 0:05:33.080 --> 0:05:37.000 even week we got it at fifty five zero big figures. Yeah, 0:05:37.320 --> 0:05:40.120 I mean bear in mind, look that's what moved, but 0:05:40.400 --> 0:05:42.919 a lot of that inflation. That's important for John Ferrell 0:05:42.960 --> 0:05:46.520 because it's usually leverage seven to one. I thought we 0:05:46.600 --> 0:05:49.520 were both in an all cash portfolio. The leverage cash portfolio. 0:05:50.080 --> 0:05:53.839 That's what I'm in, the double leverage in the leverage. 0:05:55.480 --> 0:05:57.440 Could see a bit of risk appetite around the around 0:05:57.480 --> 0:06:02.119 the tableaun sounds and risk appetite irimple effects surveillance Darrek 0:06:02.200 --> 0:06:04.120 just looking at the situation in the United States, there 0:06:04.160 --> 0:06:07.080 was a fear through seventeen that high yields would be 0:06:07.120 --> 0:06:09.120 accompanied by a week of dollar. That's the dynamic we 0:06:09.200 --> 0:06:11.200 see right now. And I think the narrative that's going 0:06:11.240 --> 0:06:13.880 to quickly emerge, and I've already hearing it, is that 0:06:14.000 --> 0:06:17.160 to finance the fiscal deficit in the United States, to 0:06:17.320 --> 0:06:20.080 attract the foreign capital, you can have one or the 0:06:20.160 --> 0:06:22.840 other or both. And essentially it's high yields and a 0:06:22.920 --> 0:06:24.960 weaker dollar, and the weaker dollar is going to what 0:06:25.120 --> 0:06:27.440 what is going to be what it takes to attract 0:06:27.520 --> 0:06:30.160 the foreign capital. Does that narrative start to emerge again? 0:06:30.640 --> 0:06:33.920 It could, it could, but it's the structural story that 0:06:34.120 --> 0:06:36.120 So this is the thing that that's the structural line 0:06:36.200 --> 0:06:38.760 on a on a fiscal deficit. The cyclical line on 0:06:38.800 --> 0:06:41.839 a fiscal deficit is, hey, it's given us tremendous growth. 0:06:42.400 --> 0:06:45.840 It's inflationary, it's supporting affair that wants to tighten through 0:06:45.880 --> 0:06:48.640 neutral it will force the rates market to say, actually, 0:06:48.680 --> 0:06:51.040 they're going to deliver. So look there is so there 0:06:51.120 --> 0:06:52.960 is an offset, and you have to decide which one 0:06:53.040 --> 0:06:54.840 is going to be dominant. I mean, to my opinion, 0:06:55.080 --> 0:06:56.960 and the evidence of the last few months has been 0:06:57.000 --> 0:06:59.240 the cyclical side of that equation is the dominant one, 0:06:59.279 --> 0:07:03.359 the structure one really in the background. Well with within 0:07:03.480 --> 0:07:06.160 this and again you know the strong dollar call. Can 0:07:06.240 --> 0:07:10.679 you fold it into equity markets, HSBC. We talked about 0:07:10.760 --> 0:07:13.400 Steve Major, we talked about Derrenyer, but bring it over 0:07:13.480 --> 0:07:16.520 to equity markets and what it means. Well for me, 0:07:16.720 --> 0:07:18.600 what it means is I'm going to see a lot 0:07:18.640 --> 0:07:20.640 more equity clients. You know, they used to be the 0:07:20.680 --> 0:07:22.360 time where I go out marketing and I just see 0:07:22.360 --> 0:07:24.160 a bond guy or just see an FX guy. Now 0:07:24.320 --> 0:07:26.200 the equity fund managers want to speak to me because 0:07:26.200 --> 0:07:28.440 they recognize that this is a swing fact, that this 0:07:28.520 --> 0:07:30.200 could be a chief determinant. I don't want to call 0:07:30.240 --> 0:07:33.120 the equity make the equity call, but that's definitely a 0:07:33.120 --> 0:07:36.800 point of interest dying to get along, emerging market equities dying, 0:07:37.080 --> 0:07:40.680 and a lot of most people. The prerequisite, the prerequisite 0:07:40.720 --> 0:07:43.400 for that to succeed, as UBS pointed out, is a 0:07:43.480 --> 0:07:47.200 weaker dollar coll dere HSBC. Thank you so much for 0:07:47.320 --> 0:08:02.360 being with us today right now, uh speaking to us 0:08:02.400 --> 0:08:05.240 on policy, Terry Haines, and as we do Terry All 0:08:05.360 --> 0:08:08.720 policy in Washington bounces off the mood of the president, 0:08:09.320 --> 0:08:11.600 which is on oil. It's too I do we have 0:08:11.720 --> 0:08:15.840 a US energy policy inside the Beltway. I think the 0:08:15.960 --> 0:08:19.760 energy policy would be expressed by the President and Republicans 0:08:19.800 --> 0:08:23.240 as drill, baby, drill, and by the Democrats and don't 0:08:23.280 --> 0:08:25.120 do any of that stuff. So we don't really. I mean, 0:08:25.160 --> 0:08:29.480 I remember talking years ago to various secretaries of energy. 0:08:30.120 --> 0:08:32.120 We I mean, I think it's a mystery of a 0:08:32.240 --> 0:08:35.760 lot of people. We really don't have a view on 0:08:36.040 --> 0:08:38.320 energy as a nation. It's just sort of left up 0:08:38.360 --> 0:08:41.360 to private enterprise to figure it out. Right. Well, it is, yeah, 0:08:41.400 --> 0:08:44.920 but in part because the circumstances have changed greatly. I mean, 0:08:45.200 --> 0:08:48.360 people of of our vintage think of you know, energy 0:08:48.440 --> 0:08:50.400 is scarce and all the rest and noworder the point 0:08:50.440 --> 0:08:54.080 where the United States is a net exporter of oil 0:08:54.160 --> 0:08:56.480 and the like. So it's a very different situation than 0:08:56.520 --> 0:08:58.360 it was when that first got to got to be 0:08:58.400 --> 0:09:00.600 the vogue. John, you go back ten twenty years here, 0:09:00.720 --> 0:09:03.160 and it was just raging about energy, and a lot 0:09:03.200 --> 0:09:06.719 of people would say the reason we succeeded because we 0:09:06.880 --> 0:09:10.199 didn't have a Washington base. I remember I remember you 0:09:10.360 --> 0:09:15.319 saying on Bloomberg Surveillance TV many many years ago, Saudi America. 0:09:15.679 --> 0:09:17.679 Do you remember when we had the big shell boom 0:09:17.760 --> 0:09:20.599 Saudi America and we started referring to the country as that. 0:09:21.000 --> 0:09:24.080 And I just wanted to tell whether, I do whether 0:09:24.480 --> 0:09:28.000 whether the United States is actually entitled to do its 0:09:28.080 --> 0:09:30.880 best to influence the cartel which is opaque at a 0:09:31.000 --> 0:09:34.040 time where actually the United States is a major oil 0:09:34.080 --> 0:09:37.520 producer from one of the biggest on the planet entitled sure, 0:09:38.280 --> 0:09:41.439 you know, the you know, the the bump up of 0:09:42.160 --> 0:09:46.160 the sovereign nations and trading blocks is always open for 0:09:47.480 --> 0:09:50.120 for influence. So yeah, absolutely, why not? It just seems 0:09:50.160 --> 0:09:52.880 that the president is also intent on trading foreign policy 0:09:53.240 --> 0:09:55.160 for help on the eco side. We saw that with 0:09:55.280 --> 0:09:57.080 China in North Korea. Is that what we're seeing now 0:09:57.160 --> 0:09:59.280 with Saudi Arabia and the Middle East? Yeah? I think 0:09:59.320 --> 0:10:01.440 a little bit. But and again I think that's always 0:10:01.480 --> 0:10:04.679 been true to the uh. You know, geopolitics always plays 0:10:04.679 --> 0:10:07.920 a role in the in the domestic policies of the 0:10:08.040 --> 0:10:11.000 United States, and that's no less true today. What are 0:10:11.040 --> 0:10:12.920 you looking at? I want to ask an open question here. 0:10:12.960 --> 0:10:16.280 You're a grizzled veteran of the Washington scene. You've um, 0:10:16.720 --> 0:10:18.360 You've got a brass plaque on a chair at the 0:10:18.360 --> 0:10:21.679 hay Adams right lunch, you know, in the lunch room 0:10:21.720 --> 0:10:25.040 there my door, they Hay Adams. But no, well they 0:10:25.120 --> 0:10:27.439 do a good sale. The ice tea is everyone in 0:10:27.480 --> 0:10:29.199 the room, John, you're going to Hey Adams. Are sixty 0:10:29.280 --> 0:10:34.240 hitters in the room. Oh man, Hey Adams? Is we 0:10:34.280 --> 0:10:37.320 could go an hour on the joint house of Hay 0:10:37.480 --> 0:10:41.400 and Adams. John hay are iconic Secretary State Panama Canal 0:10:41.480 --> 0:10:45.080 and all that tore it down and they build a hotel. Okay, 0:10:45.160 --> 0:10:48.760 and that's where guys like Terry Haynes go. No, No, 0:10:48.840 --> 0:10:51.400 I've never been there, you know, don't. Redd O, keeper 0:10:51.400 --> 0:10:53.640 of the m X is listening to this. But at 0:10:53.679 --> 0:10:55.679 the Hay Adams, what are they talking about right now 0:10:55.960 --> 0:10:59.480 into the election? What's the theme? Open question? Terry Haynes. 0:11:00.080 --> 0:11:03.800 The Well, the theme is that the the result is 0:11:03.920 --> 0:11:06.439 very very uncertain. You know, you've got it, I would say, 0:11:06.520 --> 0:11:08.679 both ways, Oh yeah, absolutely. I mean you've got a 0:11:08.720 --> 0:11:10.920 very evenly divided country and and you know this this 0:11:11.040 --> 0:11:12.920 plays out. You can see this playing out a lot 0:11:12.960 --> 0:11:16.400 of ways in public from individual races to the kavan 0:11:16.480 --> 0:11:19.079 on matter all kinds of things where uh, you know, 0:11:19.160 --> 0:11:22.400 a very evenly divided country and a very evenly divided Congress, 0:11:22.480 --> 0:11:25.800 and uh, and these parties are pushing forward and backward 0:11:25.840 --> 0:11:29.120 against each other very strongly, and with a you know, 0:11:29.200 --> 0:11:31.520 with a very open question about who's going to prevail 0:11:31.600 --> 0:11:33.839 from speaking to many investors on a regular basis and 0:11:33.880 --> 0:11:36.000 getting in touch with what our audience really cares about. 0:11:36.040 --> 0:11:38.160 I think the number one thing that many people listening 0:11:38.520 --> 0:11:41.320 right now worried about who have money in this market 0:11:41.800 --> 0:11:44.640 is the prospect for policy rollback. What is the prospect 0:11:44.679 --> 0:11:47.720 of policy rollback? And talk to me about that through 0:11:47.800 --> 0:11:50.360 the prism of the midterms coming up. Yeah, of course, 0:11:50.559 --> 0:11:56.000 the the short answer is that policy rollback is very 0:11:56.200 --> 0:11:59.319 very unlikely in any of the three scenarios. And today 0:11:59.440 --> 0:12:02.760 I have as my six base case a very small 0:12:02.800 --> 0:12:05.280 Democratic majority in the House of ten seats are less 0:12:05.960 --> 0:12:10.000 a slightly increased Republican Senate. In that circumstance, I think 0:12:10.040 --> 0:12:13.600 how markets will will react initially is a concern about 0:12:13.640 --> 0:12:15.920 whether or not there will be policy rollback, and they 0:12:15.960 --> 0:12:20.319 will they will understand very quickly that that is not possible. 0:12:21.160 --> 0:12:24.840 In a first of all, in a divided government, but secondly, 0:12:25.000 --> 0:12:28.400 where the Democrats themselves are going to be riven between 0:12:28.880 --> 0:12:33.439 progressives and centrists, to the centrist will probably be responsible 0:12:33.520 --> 0:12:36.440 for giving them the small majority. Uh. And a lot 0:12:36.520 --> 0:12:39.679 of those people are much more business friendly. Uh. They 0:12:39.760 --> 0:12:43.720 are many of them pledged not to vote for Nancy 0:12:43.760 --> 0:12:46.920 Pelosi's speaker, that sort of thing. So I think that 0:12:47.080 --> 0:12:49.319 there there will be an understanding very early on that 0:12:49.480 --> 0:12:53.079 divided government will not roll back anything. It won't It 0:12:53.160 --> 0:12:55.880 won't allow for another uh well you know, tax bill 0:12:55.960 --> 0:12:57.960 or anything like that. But there won't be a rollback, 0:12:58.000 --> 0:13:00.319 and it will stay away from impeachment and all the 0:13:00.400 --> 0:13:04.240 other you know, the stirma daying of cable news. You're 0:13:04.320 --> 0:13:10.079 suggesting that the new Democrats will lessen or dampen the 0:13:10.240 --> 0:13:14.880 progressive Democrats need to get things done if the House 0:13:15.000 --> 0:13:18.400 takes over. I am interesting. What kind of Democrats are 0:13:18.440 --> 0:13:22.520 these new Democrats? Are these Scoop Jacks and Hubert Humphrey Democrats? 0:13:22.960 --> 0:13:25.000 Are they a new breed? I would suggest they're a 0:13:25.040 --> 0:13:27.959 new breed. It's it's it's the nostalgia we have for 0:13:28.120 --> 0:13:31.520 maybe a middle ground Republican and Democrat from another time. 0:13:31.840 --> 0:13:34.480 But it's not the same as it It's not the same, 0:13:34.600 --> 0:13:39.240 but there there are there are similarities. Uh, a lot 0:13:39.320 --> 0:13:41.680 of people on the coast. And again nothing against the coasts, 0:13:42.280 --> 0:13:44.840 but go ahead, I can see the ocean. I mean, 0:13:44.920 --> 0:13:48.079 not not nothing. It's a coast. But the coasts think 0:13:48.120 --> 0:13:51.599 that somebody like Ocasio Cortez here in Queens is a 0:13:51.679 --> 0:13:54.800 big story. Whatever else that is. That is not a 0:13:54.920 --> 0:13:58.040 Democratic pickup. That is somebody who that That is somebody 0:13:58.120 --> 0:14:01.280 who is replacing another Democrat. The people who are going 0:14:01.320 --> 0:14:03.920 to be responsible for the pickups are people like who 0:14:04.000 --> 0:14:07.599 we saw in the March special election in western Pennsylvania 0:14:07.720 --> 0:14:10.679 Shape Country, Connor Lamb. These are people who are trying 0:14:10.679 --> 0:14:14.400 to actually represent the views of their districts. And somebody 0:14:14.480 --> 0:14:17.679 like Lamb is you know, not Pelosi Second Amendment pro 0:14:17.880 --> 0:14:19.800 all that. I want to bring this right over to England. 0:14:19.960 --> 0:14:22.840 Can there be labor pickups in conservative I mean, I 0:14:22.960 --> 0:14:26.880 think Terry's observation in America is really a can labor 0:14:27.040 --> 0:14:29.720 take a seat from conservatives? The interesting thing about the 0:14:29.800 --> 0:14:32.360 United Kingdom right now is not a traditional left right 0:14:32.360 --> 0:14:37.480 split anymoxact. It's very much about nationalism and populism. Versus globalism, 0:14:37.560 --> 0:14:40.240 and that traditionally does not go through left wing right 0:14:40.280 --> 0:14:42.880 wing lines. I mean that's changed, that's changed massively in 0:14:42.920 --> 0:14:45.520 the political landscape in the UK has changed because of that. 0:14:45.880 --> 0:14:47.360 But I think Terry, what you pick up on is 0:14:47.400 --> 0:14:50.200 really important. Many of our listeners are worried about a 0:14:50.600 --> 0:14:54.080 massive radical shift to the left. Um are you saying 0:14:54.160 --> 0:14:56.480 the socialists that are out there right now promising everyone 0:14:56.520 --> 0:14:59.240 of free pony, unfunded, They're not gonna make it. They're 0:14:59.280 --> 0:15:02.040 not going to change the Democrat Party. I am saying that. 0:15:02.200 --> 0:15:05.080 I think I think the Sanders moment has passed. I 0:15:05.160 --> 0:15:07.680 think there are is certainly passion for those those points 0:15:07.720 --> 0:15:10.880 of view in pockets of the country, in the in 0:15:10.960 --> 0:15:13.840 the northeast and in the coast. But what's going to 0:15:13.920 --> 0:15:17.760 bring Democrats majorities in in a continuation as a viable 0:15:17.840 --> 0:15:20.960 party are going to be the Centrists who don't share 0:15:21.000 --> 0:15:23.960 those views. Fascinating stuff, Tom, I think this is really 0:15:24.000 --> 0:15:26.480 really important. And I also think it goes to Terry's 0:15:26.520 --> 0:15:29.240 point that on the coast, and I will speak for London, 0:15:29.320 --> 0:15:31.920 this happened in the United Kingdom. When you're in London 0:15:32.320 --> 0:15:35.160 and you were reporting on a story like Brexit, whatever 0:15:35.240 --> 0:15:37.480 it might be. You were surrounded by a certain group 0:15:37.520 --> 0:15:39.840 of people and you have literally no idea what is 0:15:39.840 --> 0:15:41.560 happening in the rest of the country. And when we 0:15:41.640 --> 0:15:43.920 were going through the Brexit vote, I remember going literally 0:15:43.960 --> 0:15:46.280 a couple of hours outside the capital back home to 0:15:46.360 --> 0:15:47.800 the Midlands just to sit in the pub with my 0:15:47.920 --> 0:15:50.480 friends to get their thoughts on Brexit. And guess what, 0:15:50.760 --> 0:15:53.200 they had a very very different view on the future 0:15:53.240 --> 0:15:56.400 of the country to my friends down when the cosmopolitan 0:15:56.680 --> 0:15:59.280 home of the elites in the capital of the country, 0:15:59.400 --> 0:16:01.600 it's a very very different scene. And here in New 0:16:01.680 --> 0:16:05.280 York you do get this idea that somehow the socialist 0:16:05.320 --> 0:16:07.280 and the Democrat wing are going to come out and 0:16:07.360 --> 0:16:10.760 revolutionize the party, um terry. You just need to travel 0:16:10.800 --> 0:16:12.560 out to the rest of America, don't you to get 0:16:12.600 --> 0:16:16.400 an idea of what's really going on? Oh? I think so, yeah, absolutely, 0:16:16.640 --> 0:16:20.040 Uh yeah. A lot of politics today to me looks 0:16:20.120 --> 0:16:23.960 like the old joke about university faculty politics. The uh 0:16:25.640 --> 0:16:27.880 the fight is so vicious because the issues are so small. 0:16:28.240 --> 0:16:31.680 Uh So, there's an aspect of that, but it is 0:16:31.720 --> 0:16:34.640 by no means true that what what the coasts care 0:16:34.720 --> 0:16:37.600 about is is what anybody else cares about here, Terry, 0:16:37.800 --> 0:16:41.240 thank you so much whatever I s I greatly appreciate 0:16:41.360 --> 0:16:55.200 this morning. Joining us now is Snolly Bassika Bloomberg to 0:16:55.280 --> 0:16:58.720 tell us all about Canna Fitzgerald and how they have 0:16:58.920 --> 0:17:02.920 really change their their entire business and all. It's always 0:17:02.920 --> 0:17:05.800 a pleasure tell us about this story about Howard Lutnick 0:17:06.160 --> 0:17:10.240 and how he turned Cantor Fitzgerald into this big little guy, 0:17:10.480 --> 0:17:13.560 big little guy. Absolutely, it's been a real interesting journey 0:17:13.640 --> 0:17:16.760 to watch. I was sitting there last New Year's Day 0:17:17.240 --> 0:17:19.720 when on show Jaine, the former CITYO of Deutsche Bank, 0:17:19.960 --> 0:17:22.760 joined and we were sitting there thinking, what's the plan, 0:17:22.960 --> 0:17:26.600 what's going on? And since then they've hired some of um, 0:17:26.680 --> 0:17:29.960 the you know, really really prominent traders on Wall Street, 0:17:30.280 --> 0:17:32.760 sometimes paying more than ten million dollars a piece to 0:17:32.840 --> 0:17:35.680 bring them over from Credit SUITEZ or JP Morgan, and 0:17:36.040 --> 0:17:38.560 we saw them rebuilding trading desks and we found out 0:17:39.000 --> 0:17:41.879 through series of filings that he's a billionaire. Um, so 0:17:41.960 --> 0:17:45.240 it's the first time Howard Lutnik is a billionaire. UM. 0:17:45.480 --> 0:17:48.919 You know, people suspected, but nobody knew. And now um, 0:17:49.040 --> 0:17:51.920 we know that his stake in Candor Fitzgerald has grown 0:17:52.000 --> 0:17:54.800 to more than about sixty and so you know, he 0:17:54.880 --> 0:17:57.600 owns most of the thing, and now he's also spending 0:17:57.680 --> 0:18:01.080 hundreds of millions of his own dollar lers to push 0:18:01.119 --> 0:18:04.440 it into new businesses, including prime brokerage. And they're financing 0:18:04.480 --> 0:18:07.120 hedge funds, especially smaller hedge funds at the largest banks 0:18:07.119 --> 0:18:09.800 are not really taking on Why why is he making 0:18:09.880 --> 0:18:13.280 that push into those particular areas and maybe you could 0:18:13.359 --> 0:18:17.680 just describe what has been their main focus absolutely so, um, 0:18:17.840 --> 0:18:19.960 you know, prime brokerage is an area on Wall Street 0:18:20.080 --> 0:18:22.159 that um, you know, the larger it takes a lot 0:18:22.240 --> 0:18:24.560 of risk, right, you do have to lend these hedge 0:18:24.560 --> 0:18:27.320 funds a significant amount of money. And you know, talent 0:18:27.600 --> 0:18:29.800 really has been moving around on Wall Street quite a bit. 0:18:30.119 --> 0:18:31.840 So it's a good time for him to you know, 0:18:31.960 --> 0:18:34.199 take a lot of people who are disgruntled at JPMorgan 0:18:34.359 --> 0:18:37.280 or disgruntled that Credit Suites, or discruntled that Bank of America, 0:18:37.760 --> 0:18:40.080 UM who where they don't want you know, they're they're 0:18:40.119 --> 0:18:43.080 really discerning about how they're spending their balance sheets. What's 0:18:43.080 --> 0:18:44.760 interesting here is we spent a lot of time about 0:18:44.800 --> 0:18:47.680 the future of Deutsche Bank or future of big European platforms. 0:18:47.720 --> 0:18:51.399 Here's a smaller firm everyone I think, including Hardwood degree. 0:18:51.400 --> 0:18:56.280 It's very entrepreneurial, almost quartered a quarter definitely year to year. 0:18:56.920 --> 0:19:00.440 Where do they fit in in New York? Not a 0:19:00.520 --> 0:19:04.639 regional decidedly. Where do they slot in with the names 0:19:04.720 --> 0:19:07.280 we know better? Well, for one thing, they're actually located 0:19:07.320 --> 0:19:10.119 across the street from Bloomberg's offices. They fit in and 0:19:10.240 --> 0:19:12.560 they actually are right there. But they also, you know, 0:19:12.640 --> 0:19:14.199 you were talking about the big guys, they don't want 0:19:14.240 --> 0:19:16.719 to be one of the big guys. What they want 0:19:16.760 --> 0:19:18.480 to be the biggest little guy. They wanna you know. 0:19:18.600 --> 0:19:20.520 The one thing that he kept saying was he wants 0:19:20.560 --> 0:19:22.040 to be on a certain side, one side of the 0:19:22.080 --> 0:19:26.240 Grand Canyon, not the other. His biggest rival is Jefferies. Ironically, 0:19:26.520 --> 0:19:30.760 he's stolen dozens of bankers from Jeffreys in the last 0:19:30.880 --> 0:19:33.639 year year and a half. UM. Most recently he's um, 0:19:33.840 --> 0:19:38.240 you know, took over twenty four power and energy bankers 0:19:38.280 --> 0:19:41.000 to build out an entirely new power and energy team. 0:19:41.560 --> 0:19:45.000 They're UM working a lot on convertible bond offerings as well, 0:19:45.240 --> 0:19:48.800 so esoteric things that you know, you need specialized talent for. 0:19:49.840 --> 0:19:51.639 He also wants to get into real estate, or I 0:19:51.680 --> 0:19:53.640 guess he already is in real estate, but he wants 0:19:53.680 --> 0:19:55.480 to get into real estate in a bigger way. Yes, 0:19:55.560 --> 0:19:58.280 people forget that b GC is part of the cantor Um. 0:19:58.359 --> 0:20:01.440 You know, Howard Lutnox Empire. There's b GC and Newmark 0:20:01.840 --> 0:20:05.520 and those contribute significantly to his um wealth and and 0:20:05.880 --> 0:20:07.879 you know to what he's really building. And all the 0:20:07.920 --> 0:20:10.880 pieces kind of fit together in a not so obvious way. 0:20:11.359 --> 0:20:14.440 But um, you know he he does have these huge 0:20:14.480 --> 0:20:17.879 real estate platforms where he wants to own the entire 0:20:18.160 --> 0:20:22.399 structure of the financing of real estate. A little bit 0:20:22.480 --> 0:20:25.639 on the history of Canador Fitzgerald, and we always have 0:20:25.760 --> 0:20:28.320 to mention not eleven when we think of it. It 0:20:29.320 --> 0:20:33.840 is everywhere in Canador Fitzgerald. Um, Howard's office and it's 0:20:34.000 --> 0:20:36.360 you know, studded throughout this entire story. But you walk 0:20:36.440 --> 0:20:38.919 in and their steel plates from the building. Um, there 0:20:38.960 --> 0:20:42.720 are pictures of people He's lost. And yeah, the Candorfitsgerald 0:20:42.840 --> 0:20:46.159 charity day, you know Tom was there. You you go 0:20:46.560 --> 0:20:49.879 and you know there's a ton of celebrities and and 0:20:50.119 --> 0:20:54.200 they're raising money and but you know, I'm not there 0:20:54.280 --> 0:20:56.119 like a celebrity. They just want me to teach the 0:20:56.200 --> 0:20:58.520