1 00:00:00,080 --> 00:00:12,960 Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jai Ley. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:33,720 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Do 5 00:00:33,760 --> 00:00:35,920 Speaker 1: you want to steal from John Ferroll right now, folks? 6 00:00:35,960 --> 00:00:37,599 Speaker 1: You do that when you're speaking to the lawyer at 7 00:00:37,640 --> 00:00:41,800 Speaker 1: Michael Spence of New York University, and that when you're 8 00:00:41,840 --> 00:00:47,120 Speaker 1: a gentleman who changed graduate school education across this nation profoundly, 9 00:00:47,159 --> 00:00:51,319 Speaker 1: as Michael Spence did it Stanford gsb Um a few 10 00:00:51,400 --> 00:00:53,960 Speaker 1: years ago, and when you do what he did within 11 00:00:54,040 --> 00:00:59,240 Speaker 1: economics across numerous economics platforms, including our study of information, 12 00:00:59,680 --> 00:01:03,320 Speaker 1: how we receive, how we push, how we miss information? 13 00:01:03,840 --> 00:01:07,520 Speaker 1: With his Nobel Prize, with Mr Aklof and Mr Stiglitz. 14 00:01:08,080 --> 00:01:09,959 Speaker 1: There's a lot of ways to go. And of course 15 00:01:09,959 --> 00:01:13,399 Speaker 1: Pharaoh is brilliant and goes right to the moment, which 16 00:01:13,480 --> 00:01:18,120 Speaker 1: is in crisis. What do we do? Turkey's in crisis. 17 00:01:18,560 --> 00:01:21,520 Speaker 1: The Central Bank comes out what John forty minutes ago says, 18 00:01:21,560 --> 00:01:25,200 Speaker 1: we will take the necessary steps, whatever that means. And 19 00:01:25,200 --> 00:01:26,800 Speaker 1: then the reports come out of Turkey that he'll be 20 00:01:26,840 --> 00:01:32,520 Speaker 1: mating with them the president, Mr do models work? Everybody's 21 00:01:32,560 --> 00:01:36,040 Speaker 1: got all this advice and help in that, and yet 22 00:01:36,120 --> 00:01:40,039 Speaker 1: after Guy Jonson's interview with Mr Aeroine yesterday, nobody uses 23 00:01:40,040 --> 00:01:43,520 Speaker 1: the models in crisis? Do they know? Because they don't 24 00:01:43,520 --> 00:01:45,840 Speaker 1: work at crisis. I mean, what you have instead of 25 00:01:45,880 --> 00:01:51,360 Speaker 1: models is m experience, a growing body of experience. And 26 00:01:51,440 --> 00:01:55,240 Speaker 1: so if you if your currency comes under attack, um, 27 00:01:55,320 --> 00:01:58,000 Speaker 1: you basically have to let it decline a bit and 28 00:01:58,040 --> 00:02:01,640 Speaker 1: then and then raise interest rates and and do a 29 00:02:01,680 --> 00:02:06,360 Speaker 1: balancing act. But the mode, the models themselves just don't 30 00:02:06,400 --> 00:02:10,639 Speaker 1: capture this. How difficult is it to regain credibility with 31 00:02:10,720 --> 00:02:14,600 Speaker 1: markets when markets no longer believe you have any Argentina 32 00:02:14,600 --> 00:02:16,720 Speaker 1: with a great example of that over the last couple 33 00:02:16,760 --> 00:02:19,799 Speaker 1: of weeks, How difficult is its response to that? Well, 34 00:02:19,840 --> 00:02:22,799 Speaker 1: if you respond, I mean is you can do it, 35 00:02:23,880 --> 00:02:28,720 Speaker 1: but but it's not easy. And if you make several 36 00:02:28,760 --> 00:02:31,560 Speaker 1: mistakes in a row, then it's then it gets a 37 00:02:31,600 --> 00:02:33,960 Speaker 1: lot harder. So I mean, I think, and you know, 38 00:02:34,000 --> 00:02:36,040 Speaker 1: and then it takes a long time. But the Russian 39 00:02:36,080 --> 00:02:40,080 Speaker 1: case was a good example. I mean the Russia Central Bank, 40 00:02:40,840 --> 00:02:43,840 Speaker 1: it took quite a while, but then eventually re established 41 00:02:43,919 --> 00:02:48,160 Speaker 1: its credibility and the and the currency stabilized several years ago. 42 00:02:48,240 --> 00:02:53,520 Speaker 1: Remember this episode, So it um, it's better, it's certainly 43 00:02:53,600 --> 00:02:58,160 Speaker 1: better not to make you know, well known mistakes in 44 00:02:58,240 --> 00:03:01,200 Speaker 1: dealing with this. You mentioned the AMIS rate. Yeah, for 45 00:03:01,200 --> 00:03:03,560 Speaker 1: for central banks looking at that currencies, walk us through 46 00:03:03,919 --> 00:03:06,720 Speaker 1: what central banks may or may not have learned um 47 00:03:07,400 --> 00:03:10,040 Speaker 1: economic history. Well, what I was saying is that, you know, 48 00:03:10,840 --> 00:03:13,920 Speaker 1: I mean in the Asian financial crisis, I mean, some 49 00:03:14,000 --> 00:03:16,720 Speaker 1: of these countries tried to hold up their currencies because 50 00:03:17,160 --> 00:03:20,640 Speaker 1: they had um dollar or hard you know, hard currency 51 00:03:20,720 --> 00:03:24,720 Speaker 1: denominated dead and they basically ran out of reserves doing that, 52 00:03:24,919 --> 00:03:29,200 Speaker 1: at which point, you know, chaos ensues. That's the one 53 00:03:29,240 --> 00:03:32,359 Speaker 1: side that's propping up your currency and you run out 54 00:03:32,360 --> 00:03:35,880 Speaker 1: of ammunition. You know, you have the British case, a 55 00:03:35,960 --> 00:03:39,040 Speaker 1: whole lot of experience. On on the other side, you 56 00:03:39,080 --> 00:03:41,880 Speaker 1: can it's not necessarily a good idea if you overdo it, 57 00:03:41,960 --> 00:03:44,640 Speaker 1: but you can hold down the currency by by accumulating 58 00:03:44,640 --> 00:03:48,240 Speaker 1: reserves for a fairly long period of time. And so 59 00:03:48,600 --> 00:03:54,040 Speaker 1: that's the asymmetry. There's there's much less severe limits in 60 00:03:54,920 --> 00:03:58,440 Speaker 1: on that side of the Ledger. What you wrought It's 61 00:03:58,480 --> 00:04:03,400 Speaker 1: Stanford was all intimately about executive leadership and government. We 62 00:04:03,480 --> 00:04:05,720 Speaker 1: have not been able to speak to you since President 63 00:04:05,760 --> 00:04:09,840 Speaker 1: g decided he would take more lengthy term with a 64 00:04:09,960 --> 00:04:14,960 Speaker 1: new communist experiment in China. Your comments please on the 65 00:04:15,080 --> 00:04:19,800 Speaker 1: distinction of one or two terms or forever terms, and 66 00:04:19,880 --> 00:04:24,239 Speaker 1: particularly within the new template of a new more totalitarian 67 00:04:24,320 --> 00:04:27,919 Speaker 1: regime in China. Right, So, China has moved in the 68 00:04:27,960 --> 00:04:31,560 Speaker 1: direction of being having the party both clean up its 69 00:04:31,600 --> 00:04:35,600 Speaker 1: act and be much more intrusive in multiple parts of 70 00:04:35,600 --> 00:04:39,800 Speaker 1: the society and the economy. UM. I think Chinese are 71 00:04:39,960 --> 00:04:42,719 Speaker 1: you know, when you get to find get them to 72 00:04:42,800 --> 00:04:46,080 Speaker 1: speak frankly, you know, sort of off the record. Uh. 73 00:04:46,480 --> 00:04:50,520 Speaker 1: Understand that the reform program is sufficiently large that they're 74 00:04:50,520 --> 00:04:54,560 Speaker 1: willing to grant that maybe two terms wasn't ideal at 75 00:04:54,600 --> 00:04:57,440 Speaker 1: this stage, you know, because he'd become a lame duck 76 00:04:57,480 --> 00:05:00,640 Speaker 1: in the second term, and and therefore they they might 77 00:05:00,680 --> 00:05:03,640 Speaker 1: have thought that, you know, extending that UM is not 78 00:05:03,760 --> 00:05:06,840 Speaker 1: a bad idea. That's a little different than, you know, 79 00:05:07,040 --> 00:05:10,040 Speaker 1: than leader for life. Uh. And so I I do 80 00:05:10,120 --> 00:05:13,280 Speaker 1: think in within China there are people who are nervous 81 00:05:13,320 --> 00:05:20,159 Speaker 1: about that um, that rather extreme version of UH, altering 82 00:05:20,279 --> 00:05:23,800 Speaker 1: the term limits that they that they abided by for 83 00:05:24,440 --> 00:05:28,800 Speaker 1: several transitions. Very quickly here on the linkage the correlations 84 00:05:28,839 --> 00:05:30,760 Speaker 1: of the markets, I feel like I'm talking to professor 85 00:05:30,800 --> 00:05:34,800 Speaker 1: Engel over. Do you see correlations that can cause challenges? 86 00:05:37,279 --> 00:05:39,120 Speaker 1: I mean, I'm not an expert at this, but my 87 00:05:39,320 --> 00:05:42,400 Speaker 1: sense is that correlations go up when there's turmoil or 88 00:05:42,440 --> 00:05:46,840 Speaker 1: crisis for sure, UH. And and that certainly does cause problems. 89 00:05:46,880 --> 00:05:49,279 Speaker 1: I mean it cause problems for investors because you know, 90 00:05:49,839 --> 00:05:55,680 Speaker 1: reduces the benefits of diversification. UM. But it's also a 91 00:05:55,680 --> 00:05:59,320 Speaker 1: signal that there's trouble somewhere. We're going to leave there. 92 00:05:59,320 --> 00:06:02,000 Speaker 1: Michael Spence, thank you so much, greatly appreciated. He is 93 00:06:02,560 --> 00:06:05,880 Speaker 1: at New York University, among other things. Can't say enough 94 00:06:05,920 --> 00:06:08,520 Speaker 1: about his book. I'll throw it out my book Twitter 95 00:06:08,560 --> 00:06:12,200 Speaker 1: site here from five, six, seven years ago as well, 96 00:06:26,600 --> 00:06:31,280 Speaker 1: seen foreign exchange was boring. I can sally seen FX 97 00:06:31,520 --> 00:06:34,719 Speaker 1: is anything but boring. Joining us now David Ranney Blue Bay, 98 00:06:34,920 --> 00:06:38,200 Speaker 1: a set of management chief investment strategist. David just talked 99 00:06:38,200 --> 00:06:40,360 Speaker 1: to me about what is happening in foreign exchange and 100 00:06:40,400 --> 00:06:45,880 Speaker 1: how it is changing your world. Well, The big story 101 00:06:46,160 --> 00:06:49,720 Speaker 1: is that we've seen this resurgence in the U S. Dollar, 102 00:06:49,760 --> 00:06:53,200 Speaker 1: and I think that's a pain trade for the market 103 00:06:53,400 --> 00:06:56,800 Speaker 1: more generally, I think for risk assets, and we've clearly 104 00:06:56,839 --> 00:07:01,760 Speaker 1: seen that spill over into emerging markets. And you know, 105 00:07:01,839 --> 00:07:05,280 Speaker 1: I think that rather than actually higher US rate has 106 00:07:05,360 --> 00:07:09,880 Speaker 1: been the catalyst for exposing those emerging markets which have 107 00:07:10,160 --> 00:07:14,040 Speaker 1: either weak fell up fundamentals and weak policy credibility. And 108 00:07:14,080 --> 00:07:18,040 Speaker 1: that's really been Argentina and has been Turkey. So this 109 00:07:18,120 --> 00:07:20,600 Speaker 1: raises the question, David. Over the last several weeks when 110 00:07:20,600 --> 00:07:24,680 Speaker 1: I've asked many investors and strategists about the renewed resurgent 111 00:07:25,200 --> 00:07:28,760 Speaker 1: US dollar strength story, the pushback I get is this 112 00:07:28,840 --> 00:07:31,360 Speaker 1: is just a squaring of positions. I struggle to find 113 00:07:31,400 --> 00:07:35,640 Speaker 1: the belief in the move um. The short story has 114 00:07:35,680 --> 00:07:39,560 Speaker 1: been a slow burn to eventually capitulate. David, where are 115 00:07:39,600 --> 00:07:42,080 Speaker 1: we Do people believe in this yet? That this could last? 116 00:07:44,840 --> 00:07:48,160 Speaker 1: I still don't think people believe it will last. And 117 00:07:48,240 --> 00:07:50,840 Speaker 1: Buddhist speaking, I mean I'd share that view. And I 118 00:07:50,880 --> 00:07:54,240 Speaker 1: think what's fundamental to that view is during the course 119 00:07:54,280 --> 00:07:58,280 Speaker 1: of seventeen and coming into this year, it was a 120 00:07:58,320 --> 00:08:02,680 Speaker 1: global reflation story. The US was not the only economy 121 00:08:02,720 --> 00:08:05,400 Speaker 1: that was growing strongly and where you could get both 122 00:08:05,480 --> 00:08:10,960 Speaker 1: higher rates but also higher equities and risk grows sensitive 123 00:08:11,040 --> 00:08:14,840 Speaker 1: risk assets. Emerging markets were doing well, China was doing well, 124 00:08:14,880 --> 00:08:19,120 Speaker 1: Europe was really powering ahead and was a big upside surprise. 125 00:08:20,080 --> 00:08:22,160 Speaker 1: What we have now is that we've had some weak data. 126 00:08:22,200 --> 00:08:25,040 Speaker 1: We've got Japan printing a negative print on Q one GDP, 127 00:08:25,280 --> 00:08:30,400 Speaker 1: Europe has come off the boil, and so I think 128 00:08:30,520 --> 00:08:34,160 Speaker 1: the dollar move is really reflecting going back to that 129 00:08:34,360 --> 00:08:38,400 Speaker 1: story whereby maybe the US is the only place in town, 130 00:08:38,400 --> 00:08:41,160 Speaker 1: and that has implications both in terms of divergence in 131 00:08:41,400 --> 00:08:44,439 Speaker 1: in rates, but also in terms of where you can 132 00:08:44,480 --> 00:08:48,920 Speaker 1: get um, where you can get returns. If I think 133 00:08:48,960 --> 00:08:52,040 Speaker 1: the market and we do believe here that we will 134 00:08:52,080 --> 00:08:54,920 Speaker 1: get a rebounding global growth in the second quarter that 135 00:08:55,000 --> 00:08:58,760 Speaker 1: slowed down in Europe is is largely transitory. China still 136 00:08:58,760 --> 00:09:01,160 Speaker 1: holding up. And if had occurred and I think this 137 00:09:01,480 --> 00:09:03,760 Speaker 1: rally and the dollar kind of runs out of steam, 138 00:09:03,800 --> 00:09:06,839 Speaker 1: well you bring up rates though, and rate differentials are 139 00:09:06,880 --> 00:09:09,360 Speaker 1: clearly a story that we should be talking about. It 140 00:09:09,400 --> 00:09:13,120 Speaker 1: looks like rates of recoupling with foreign exchange. If you 141 00:09:13,160 --> 00:09:16,080 Speaker 1: look at rates in the United states relative to rates 142 00:09:16,120 --> 00:09:19,040 Speaker 1: in say Europe and look at Germany, that two year 143 00:09:19,080 --> 00:09:22,520 Speaker 1: BUN treasury spread has blown out to three hundred and 144 00:09:22,559 --> 00:09:27,760 Speaker 1: fourteen three hundred and fifteen basis points. That screams dollar strength. 145 00:09:27,840 --> 00:09:30,559 Speaker 1: It screams euro dollar must go lower, David, Why does 146 00:09:30,600 --> 00:09:33,960 Speaker 1: that relationship not re established itself in a more material 147 00:09:34,000 --> 00:09:39,240 Speaker 1: way that is lasting. But I think that spread, the 148 00:09:39,400 --> 00:09:42,200 Speaker 1: gap or that you yield gap on the two year 149 00:09:42,840 --> 00:09:47,320 Speaker 1: is reflecting that the market has been pricing in higher 150 00:09:48,320 --> 00:09:51,840 Speaker 1: fed hiking path uh. And we saw that in the 151 00:09:51,840 --> 00:09:56,040 Speaker 1: back of yesterday's US sales data. Well, they've actually been 152 00:09:57,679 --> 00:10:02,200 Speaker 1: taking out some sort of past or normalization starting next 153 00:10:02,280 --> 00:10:05,840 Speaker 1: year in terms of ECB rates. And that's what's been 154 00:10:05,920 --> 00:10:09,160 Speaker 1: driving What's what's been driving it. It's been disappointing growth 155 00:10:09,200 --> 00:10:12,200 Speaker 1: data coming out of Europe and better than expected data 156 00:10:12,240 --> 00:10:14,280 Speaker 1: coming out of the US. I think once we start 157 00:10:14,280 --> 00:10:16,640 Speaker 1: getting convergence in the economic data, we'll start getting a 158 00:10:17,640 --> 00:10:19,880 Speaker 1: closing in that two year gap, and then the dollar 159 00:10:19,960 --> 00:10:22,760 Speaker 1: runs out of team David. What is fascinating to me 160 00:10:23,080 --> 00:10:25,280 Speaker 1: is how all of us have any ilk have forgotten 161 00:10:25,280 --> 00:10:28,719 Speaker 1: a ten percent correction in eighteen percent bear market and 162 00:10:28,800 --> 00:10:30,800 Speaker 1: stocks and of course folks, we can go much worse 163 00:10:31,280 --> 00:10:35,320 Speaker 1: than an eighteen percent bear market. Is our rationalization of 164 00:10:35,400 --> 00:10:39,959 Speaker 1: these new instabilities different now because we really don't remember 165 00:10:40,440 --> 00:10:43,439 Speaker 1: the volatility you and I studied and lived for years. 166 00:10:45,640 --> 00:10:49,760 Speaker 1: I think it's a good point, Tom, that the market 167 00:10:50,240 --> 00:10:53,520 Speaker 1: and investors for a very long period now have got 168 00:10:53,640 --> 00:10:56,880 Speaker 1: used to having central banks and particularly the FED at 169 00:10:56,920 --> 00:11:01,600 Speaker 1: your back, and therefore you know, they crust volatility. I think, 170 00:11:01,920 --> 00:11:06,319 Speaker 1: um Jerome Pou made a remark some time ago about 171 00:11:06,400 --> 00:11:10,560 Speaker 1: the FED balance sheet was essentially taking volatility out of 172 00:11:10,559 --> 00:11:13,000 Speaker 1: the market. I had a sort of short volatility position, 173 00:11:13,520 --> 00:11:17,479 Speaker 1: and with the FED running down his balance sheet gradually 174 00:11:17,520 --> 00:11:21,880 Speaker 1: normalizing interest rates the famous FED put, I think is 175 00:11:22,000 --> 00:11:25,040 Speaker 1: quite a long way out of the money. Then I 176 00:11:25,040 --> 00:11:28,839 Speaker 1: think we're going to get more volatility. And where I 177 00:11:28,840 --> 00:11:30,680 Speaker 1: think we're getting caught out a little bit on on 178 00:11:30,720 --> 00:11:35,800 Speaker 1: the investor side is that we have not fully built 179 00:11:35,800 --> 00:11:39,360 Speaker 1: that into the way that we're positioning. So I think 180 00:11:39,440 --> 00:11:42,840 Speaker 1: part of the volatility that we've seen in uer sequities 181 00:11:43,360 --> 00:11:46,319 Speaker 1: with the short et F and in places like Argentina 182 00:11:46,440 --> 00:11:49,200 Speaker 1: for example, if we bring it to to there has 183 00:11:49,280 --> 00:11:52,520 Speaker 1: been very crowded positioning, then you get a volatility shock 184 00:11:52,559 --> 00:11:56,839 Speaker 1: called capitalist for volatility, and then everyone's scrambling and it's 185 00:11:56,960 --> 00:12:00,520 Speaker 1: one way marketing, everyone scrambling for an exit. That's very narrow, David, 186 00:12:00,520 --> 00:12:02,360 Speaker 1: we're talking about shocks. But I just wonder whether this 187 00:12:02,440 --> 00:12:05,760 Speaker 1: is all sort of a natural, gradual process of rebalancing 188 00:12:05,760 --> 00:12:08,120 Speaker 1: portfolios away from risk. If you think about what QUE 189 00:12:08,440 --> 00:12:14,000 Speaker 1: was for, it was about rebalancing portfolios towards risk assets. Now, 190 00:12:14,000 --> 00:12:17,320 Speaker 1: as they wind down QUEUE on a global basis and 191 00:12:17,440 --> 00:12:22,400 Speaker 1: QUE becomes QT quantitative tightening, shouldn't the opposite apply that 192 00:12:22,480 --> 00:12:28,679 Speaker 1: you rebalance away from risk to some degree. But it's 193 00:12:28,760 --> 00:12:34,480 Speaker 1: also remember that QUEUE was taking um, you know, duration, 194 00:12:34,880 --> 00:12:39,439 Speaker 1: and was squeezing the term premium. So if you're a 195 00:12:39,520 --> 00:12:43,560 Speaker 1: Euro investor right now, um, is it an obvious thing 196 00:12:43,600 --> 00:12:46,040 Speaker 1: to do to go out and buy ten year buns 197 00:12:46,360 --> 00:12:49,040 Speaker 1: sixty basis points? Is it an obvious thing to do 198 00:12:49,160 --> 00:12:51,959 Speaker 1: to go out and buy UK guilt which are given 199 00:12:51,960 --> 00:12:57,120 Speaker 1: you a negative real rate of between one and two percent. 200 00:12:57,600 --> 00:12:59,920 Speaker 1: I think treasury is for a U S investor as 201 00:13:00,040 --> 00:13:03,680 Speaker 1: donting to look potentially pretty attractive. So I think we 202 00:13:03,720 --> 00:13:06,760 Speaker 1: may well get some of that rotation that you're describing 203 00:13:07,400 --> 00:13:10,559 Speaker 1: UM in in the US. But I think What's crucial 204 00:13:10,600 --> 00:13:14,280 Speaker 1: in Europe is that even as the ECB brings Queie 205 00:13:14,360 --> 00:13:18,520 Speaker 1: to an end, is their forward guidance do they anchor 206 00:13:18,800 --> 00:13:23,920 Speaker 1: short term interest rate? And if they do, volatility remain constrained. 207 00:13:24,080 --> 00:13:26,720 Speaker 1: And I think on that basis, things like you know, 208 00:13:26,800 --> 00:13:30,400 Speaker 1: sovereign credit as well as corporate credit can actually do. Okay, David, 209 00:13:30,440 --> 00:13:32,760 Speaker 1: what's a cash right now? I mean there's there's John 210 00:13:32,800 --> 00:13:36,480 Speaker 1: mentioned earlier. On a real basis, cash has value and 211 00:13:36,480 --> 00:13:41,319 Speaker 1: on a percent growth of yield, cash is outrageously wonderful 212 00:13:41,440 --> 00:13:45,760 Speaker 1: versus what John six months ago is cash is cash 213 00:13:45,800 --> 00:13:50,360 Speaker 1: like the new asset. Well, I think cash and that 214 00:13:50,400 --> 00:13:54,360 Speaker 1: move higher in cash rates in the United States has 215 00:13:54,440 --> 00:13:58,160 Speaker 1: been one of the most profound shifts during the first 216 00:13:58,200 --> 00:14:01,800 Speaker 1: part of this year. I think some again, some of 217 00:14:01,840 --> 00:14:06,920 Speaker 1: the repricing we've seen of emerging market credit has been 218 00:14:07,760 --> 00:14:12,360 Speaker 1: uh a response to that higher US cash rate and 219 00:14:12,400 --> 00:14:16,280 Speaker 1: also the higher effics hedging costs of that implied basically, 220 00:14:16,320 --> 00:14:20,440 Speaker 1: you needed wider spreads UM and a repricing in order 221 00:14:20,480 --> 00:14:23,320 Speaker 1: to justify why you would be holding UM an emerging 222 00:14:23,400 --> 00:14:28,720 Speaker 1: market credit dollar asset versus exactly as you've alluded to, Tom, 223 00:14:28,720 --> 00:14:32,520 Speaker 1: holding US cash. I think absolutely right. Like us, cash 224 00:14:32,520 --> 00:14:35,960 Speaker 1: has become, you know, a factor. But again a comeback 225 00:14:36,000 --> 00:14:39,240 Speaker 1: to the rest of the world. When we as investors 226 00:14:39,320 --> 00:14:42,080 Speaker 1: decided that we're going to part some money into cash 227 00:14:42,120 --> 00:14:45,560 Speaker 1: on some of our Euro denominator strategies, it's actually costing 228 00:14:45,680 --> 00:14:49,160 Speaker 1: us fifty basis points to actually do that, let alonely 229 00:14:49,200 --> 00:14:52,160 Speaker 1: apply because of the loss of carrier as well. So 230 00:14:52,840 --> 00:14:54,760 Speaker 1: the moment is more of a U S story than 231 00:14:54,800 --> 00:14:56,760 Speaker 1: a than the European and rest of the world story. 232 00:14:56,960 --> 00:14:59,280 Speaker 1: David Raley, thank you so much from them this morning 233 00:14:59,640 --> 00:15:16,840 Speaker 1: with a I'm really pleased to say that. A quick 234 00:15:16,880 --> 00:15:18,960 Speaker 1: phone call away and Jane Foley joins us head of 235 00:15:19,000 --> 00:15:21,240 Speaker 1: FX Strategy at rubber Bank and joining us out of 236 00:15:21,280 --> 00:15:24,040 Speaker 1: the capital, the global capital of the foreign exchange, the 237 00:15:24,160 --> 00:15:26,160 Speaker 1: city of London. Jen, it's always great to catch up 238 00:15:26,200 --> 00:15:29,040 Speaker 1: with you. There is some euro weakness and dollar strength. 239 00:15:29,320 --> 00:15:32,040 Speaker 1: How much of a pain trade is evolving in the 240 00:15:32,120 --> 00:15:35,360 Speaker 1: FX market at the moment, Jane, Well, I think actually 241 00:15:35,440 --> 00:15:37,240 Speaker 1: we can go back to February to see the beginning 242 00:15:37,320 --> 00:15:38,800 Speaker 1: of this, and I think if you look back then 243 00:15:38,880 --> 00:15:41,280 Speaker 1: we do see the dollar really began to perform well 244 00:15:41,320 --> 00:15:44,320 Speaker 1: against the emerging markets, which are called suberhaps more sensitive 245 00:15:44,320 --> 00:15:48,680 Speaker 1: to risk capitaes any more sensitive to hire US rates 246 00:15:49,240 --> 00:15:52,040 Speaker 1: than perhaps some of the other markets. But it was 247 00:15:52,040 --> 00:15:54,880 Speaker 1: any really a few weeks ago where the breakdown in 248 00:15:54,920 --> 00:15:57,560 Speaker 1: neural dollar really began to focus on markets attention on 249 00:15:57,640 --> 00:16:01,120 Speaker 1: the strength of the dollar. But I think really today 250 00:16:01,240 --> 00:16:04,760 Speaker 1: there's there's now more attention on Italian politics and perhaps 251 00:16:04,880 --> 00:16:08,280 Speaker 1: more attention on the structural weaknesses within the Euro as 252 00:16:08,320 --> 00:16:10,400 Speaker 1: well as on dollar strength as well. Before we get 253 00:16:10,400 --> 00:16:12,200 Speaker 1: to the European side of the trade, let's begin with 254 00:16:12,240 --> 00:16:16,360 Speaker 1: the US dollar. Is the consensus short dollar position for 255 00:16:17,360 --> 00:16:20,720 Speaker 1: is it capitulating? Jane, I think it probably is, and 256 00:16:20,760 --> 00:16:22,680 Speaker 1: we changed the view it was. It was much the 257 00:16:22,720 --> 00:16:24,600 Speaker 1: fift when when I took out the view for the 258 00:16:24,800 --> 00:16:27,560 Speaker 1: higher year a dollar and put in a stronger dollar. 259 00:16:27,600 --> 00:16:29,880 Speaker 1: And this was partly because of that that picture that 260 00:16:29,920 --> 00:16:32,720 Speaker 1: was emerging with with lower levels of risk appetite, the 261 00:16:33,160 --> 00:16:36,080 Speaker 1: fact that emerging markets were beginning to get a little 262 00:16:36,080 --> 00:16:38,920 Speaker 1: bit more worried, and that I think was treating from 263 00:16:38,920 --> 00:16:42,000 Speaker 1: these high risk or high yield trades back into the U. 264 00:16:42,120 --> 00:16:45,120 Speaker 1: S dollar. So I think at that point also the 265 00:16:45,160 --> 00:16:48,480 Speaker 1: market had built up pretty short dollar positions and was 266 00:16:48,480 --> 00:16:51,440 Speaker 1: also pretty long in a lot of high risk markets 267 00:16:51,440 --> 00:16:56,120 Speaker 1: and including long in euro as well. Within this chane. 268 00:16:56,560 --> 00:16:58,880 Speaker 1: And we heard this yesterday from one guest, which is 269 00:16:58,880 --> 00:17:03,200 Speaker 1: the rationalization and the people bet one way for whatever reason, 270 00:17:03,240 --> 00:17:07,359 Speaker 1: we're removing another way. It will go on a step basis. 271 00:17:08,040 --> 00:17:11,919 Speaker 1: To me, that's a market chat in trader chat for 272 00:17:12,000 --> 00:17:17,480 Speaker 1: the idea of rationalizing moves. Is the rationalizing you see 273 00:17:17,520 --> 00:17:20,800 Speaker 1: um a rabble bunk desks. Is it the same as 274 00:17:20,880 --> 00:17:26,640 Speaker 1: other instabilities we've seen or is there something different this time? Well, 275 00:17:26,960 --> 00:17:29,479 Speaker 1: I think that's I mean, this is this is not 276 00:17:29,680 --> 00:17:32,520 Speaker 1: a crisis in the way that we've had prices before. 277 00:17:32,960 --> 00:17:35,000 Speaker 1: And to be honest, I think with this one, I 278 00:17:35,040 --> 00:17:37,600 Speaker 1: think a large part of it might be just positioned. 279 00:17:37,600 --> 00:17:40,679 Speaker 1: And I think the market really got excited last year 280 00:17:40,720 --> 00:17:43,520 Speaker 1: there was so much risk capitite in seventeen. We had 281 00:17:43,560 --> 00:17:47,040 Speaker 1: far better global growth than most people had anticipated from 282 00:17:47,080 --> 00:17:50,359 Speaker 1: places like Europe and places like Japan, and that really 283 00:17:50,400 --> 00:17:54,560 Speaker 1: lifted a risk capitite and people were really pushing ahead 284 00:17:54,560 --> 00:17:56,320 Speaker 1: of themselves to to get hold of a high risk, 285 00:17:56,400 --> 00:17:59,119 Speaker 1: high yield et cetera. And I think that took it 286 00:17:59,240 --> 00:18:01,480 Speaker 1: into this very first part of this year. But I 287 00:18:01,520 --> 00:18:04,359 Speaker 1: think as we moved into February, that began to change, 288 00:18:04,520 --> 00:18:07,200 Speaker 1: and I think the market was just positioned perhaps all right, 289 00:18:07,720 --> 00:18:10,760 Speaker 1: in order to face a new world of Lester's appetite. 290 00:18:10,800 --> 00:18:12,760 Speaker 1: I mean, just as an example in Folks, a bank 291 00:18:12,840 --> 00:18:15,680 Speaker 1: like Robble Bank deals with this in the trenches. We're 292 00:18:15,680 --> 00:18:20,960 Speaker 1: all talking dollar based speculation. Business has to get done 293 00:18:21,119 --> 00:18:24,879 Speaker 1: and with a strong chairman Powell dollar for whatever reason, 294 00:18:24,880 --> 00:18:29,639 Speaker 1: whatever anybody's theory, the fact is oil and goods in 295 00:18:29,720 --> 00:18:34,200 Speaker 1: an e M economy, a non opec EM economy really 296 00:18:34,280 --> 00:18:38,160 Speaker 1: begins to pain the public, which folds into the political process. 297 00:18:38,200 --> 00:18:42,480 Speaker 1: I'm describing. Turkey is one example. What's that tension right now, 298 00:18:42,600 --> 00:18:47,359 Speaker 1: Jane Foley that robble Bank hedger c not speculators. What 299 00:18:47,440 --> 00:18:50,840 Speaker 1: are the hedger c in terms of domestic pain in 300 00:18:50,960 --> 00:18:56,200 Speaker 1: e M. There's a huge amount of attention, a huge 301 00:18:56,200 --> 00:18:59,359 Speaker 1: amount of pain, certainly in countries such as Turkeys, countries 302 00:18:59,359 --> 00:19:01,879 Speaker 1: such as Urgent tina Um, and I think if we 303 00:19:01,920 --> 00:19:04,560 Speaker 1: look at Poland also, I think the movement in that 304 00:19:04,640 --> 00:19:07,919 Speaker 1: currency is not anticipated by the majority this year, so 305 00:19:08,400 --> 00:19:12,640 Speaker 1: the companies that are trying to deal are certainly feeling 306 00:19:12,800 --> 00:19:14,960 Speaker 1: a bronson and this will have an impact on investment 307 00:19:15,080 --> 00:19:17,000 Speaker 1: and potentially on growth for a while to come. And 308 00:19:17,080 --> 00:19:19,520 Speaker 1: what's so important, Jane, as you see it not you 309 00:19:19,560 --> 00:19:22,040 Speaker 1: know they're not doing in Argentina, but Brazil was pretty 310 00:19:22,160 --> 00:19:25,840 Speaker 1: ugly yesterday. Or Malaysia's bringing back at ninety two year old. 311 00:19:25,920 --> 00:19:28,960 Speaker 1: I get it, and there's a popular recovery. But they're 312 00:19:29,000 --> 00:19:33,359 Speaker 1: these set of tensions, folks, that aren't about three zip 313 00:19:33,359 --> 00:19:35,879 Speaker 1: codes in New York. They're not about three zip codes 314 00:19:35,880 --> 00:19:38,199 Speaker 1: in London. They're not about two zip codes in Hong 315 00:19:38,280 --> 00:19:43,040 Speaker 1: Kong or Singapore, Jane. They're about these domestic economies. When 316 00:19:43,080 --> 00:19:46,640 Speaker 1: do they begin to snap or break? Well, I think 317 00:19:46,680 --> 00:19:49,560 Speaker 1: perhaps they are, and I would you know, in Argentina, 318 00:19:49,600 --> 00:19:52,400 Speaker 1: I think they have broken Turkey. I think it's coming 319 00:19:52,400 --> 00:19:54,159 Speaker 1: to a boiling point because we have an election in 320 00:19:54,200 --> 00:19:56,919 Speaker 1: around about a month's time, and that's going to be 321 00:19:56,960 --> 00:19:58,720 Speaker 1: really really telling whether they're not this stiff and or 322 00:19:58,760 --> 00:20:01,680 Speaker 1: this this conge in the currency makes any difference in 323 00:20:01,760 --> 00:20:05,320 Speaker 1: that result. So that's another really interesting one. But but certainly, 324 00:20:05,480 --> 00:20:08,760 Speaker 1: you know, we are seeing very significant moves in foreign exchange, 325 00:20:09,160 --> 00:20:11,200 Speaker 1: and some of these moves have been brewing for some time. 326 00:20:11,240 --> 00:20:13,640 Speaker 1: And when I again, I would say go back to February, 327 00:20:13,720 --> 00:20:15,760 Speaker 1: and we do see a lot of these these movements, 328 00:20:15,800 --> 00:20:18,679 Speaker 1: a lot of these um distallar move really begin to 329 00:20:18,720 --> 00:20:21,399 Speaker 1: take place. Back then, let's talk about Turkey and the 330 00:20:21,440 --> 00:20:24,880 Speaker 1: Turkish laer a record weakness once again. Earlier in the session, 331 00:20:25,119 --> 00:20:27,240 Speaker 1: a bit of strength came through as the central bank 332 00:20:27,560 --> 00:20:31,240 Speaker 1: started talking about taking the necessary steps Jane, what are 333 00:20:31,280 --> 00:20:35,800 Speaker 1: the necessary steps for the Turkish Central Bank to take now? Well, 334 00:20:36,119 --> 00:20:37,719 Speaker 1: if you ask that question a week ago, I might 335 00:20:37,760 --> 00:20:39,880 Speaker 1: give you a different answer because it was earlier than week. 336 00:20:39,920 --> 00:20:42,200 Speaker 1: We did have president earlier and in London we had 337 00:20:42,200 --> 00:20:45,680 Speaker 1: that interview with Bloomberg TV and you seemed to indicate 338 00:20:45,760 --> 00:20:49,399 Speaker 1: that the central bank is no longer an independent central 339 00:20:49,440 --> 00:20:52,240 Speaker 1: bank now. Really, for for many people in the foreign 340 00:20:52,280 --> 00:20:54,920 Speaker 1: exchange market, that we would assume that if the currency 341 00:20:54,920 --> 00:20:56,720 Speaker 1: goes into free fall, et central bank can come in 342 00:20:57,040 --> 00:20:59,480 Speaker 1: and hike interest rates for protecting a temporary period of 343 00:20:59,520 --> 00:21:01,800 Speaker 1: time and then start to draw back on that. If 344 00:21:01,840 --> 00:21:05,040 Speaker 1: that center bank it is not independent, can they really 345 00:21:05,080 --> 00:21:07,199 Speaker 1: do that? Argon was saying that he wants rights to 346 00:21:07,200 --> 00:21:10,080 Speaker 1: be lower, and he thinks that needs to be down 347 00:21:10,119 --> 00:21:12,440 Speaker 1: for the benefit of the Turkish economy, and that's really 348 00:21:12,480 --> 00:21:16,399 Speaker 1: difficult for investors to to reconcile. It's a really important question, folks, 349 00:21:16,400 --> 00:21:20,000 Speaker 1: and we must point out that since Ms Foley trumpets 350 00:21:20,000 --> 00:21:22,520 Speaker 1: the Guy Johnson interview, Guy Johnson just email me and 351 00:21:22,520 --> 00:21:25,920 Speaker 1: say you can have Jane back on again. But within 352 00:21:25,960 --> 00:21:28,920 Speaker 1: that Jane is the old crux which you won't see 353 00:21:28,960 --> 00:21:31,880 Speaker 1: in a CEFA exam, which is the idea that the 354 00:21:31,920 --> 00:21:36,080 Speaker 1: markets test a central bank, whether it's the huns and 355 00:21:36,200 --> 00:21:39,680 Speaker 1: silver a million years ago blah blah blah, or sorrows 356 00:21:39,800 --> 00:21:43,480 Speaker 1: and sterling zillion years ago. Jane, is that what happens 357 00:21:43,720 --> 00:21:49,800 Speaker 1: markets test a institution in trouble, Well, they can do, 358 00:21:49,960 --> 00:21:52,800 Speaker 1: but you know these degrees of being in trouble, and 359 00:21:52,800 --> 00:21:54,800 Speaker 1: and Turkey is always vulnerable because it does have a 360 00:21:54,880 --> 00:21:58,440 Speaker 1: very large current account deficit, and that means it's it's 361 00:21:58,480 --> 00:22:02,080 Speaker 1: more susceptible to the whims of of non domestic investors. 362 00:22:02,480 --> 00:22:05,680 Speaker 1: And that is perhaps why you would expect a cential 363 00:22:05,720 --> 00:22:08,520 Speaker 1: bank like Turkey or the government of Turkey to to 364 00:22:08,520 --> 00:22:11,960 Speaker 1: to actually want to applicate the international investing community a 365 00:22:11,960 --> 00:22:14,119 Speaker 1: little bit more than we saw at the start of 366 00:22:14,160 --> 00:22:16,800 Speaker 1: this week. So um, that is a currency that can 367 00:22:16,840 --> 00:22:21,840 Speaker 1: be volatile if you had a current account surplus currency, 368 00:22:21,960 --> 00:22:25,840 Speaker 1: it's not so vulnerable to the whims of of of 369 00:22:25,960 --> 00:22:30,040 Speaker 1: investors taking their money home. And unfortunately with Turkey, yes 370 00:22:30,080 --> 00:22:33,560 Speaker 1: it can be quite it can be tested quite ferociously 371 00:22:33,840 --> 00:22:36,600 Speaker 1: because of that current account deficit. Jane Foley, it's great 372 00:22:36,600 --> 00:22:38,160 Speaker 1: to catch other you. Thank you for giving us your 373 00:22:38,160 --> 00:22:40,720 Speaker 1: time at such short notice. This morning, as the foreign 374 00:22:40,720 --> 00:22:57,280 Speaker 1: exchange starts to generate a few really interesting stories. One 375 00:22:57,280 --> 00:23:00,560 Speaker 1: of the joys we have is to dive into economic 376 00:23:00,600 --> 00:23:05,800 Speaker 1: research and investment research from firms that are hyper focused. 377 00:23:06,240 --> 00:23:09,520 Speaker 1: Now would include High Tongue out of London. High Tongue 378 00:23:09,680 --> 00:23:13,680 Speaker 1: really digs into Asia, tries to you know the phrase 379 00:23:13,720 --> 00:23:15,800 Speaker 1: I use go beneath the headline data and really find 380 00:23:15,800 --> 00:23:18,720 Speaker 1: out what is going on. Miranda car joins us now 381 00:23:19,240 --> 00:23:22,560 Speaker 1: head of China China Thematic Research at High Tongue. Miranda, 382 00:23:22,560 --> 00:23:24,960 Speaker 1: if you were to have a cup of coffee, not 383 00:23:25,080 --> 00:23:28,159 Speaker 1: so much with the president, but just within anybody in Washington, 384 00:23:29,000 --> 00:23:33,359 Speaker 1: what would you instruct them of how they are viewed 385 00:23:33,520 --> 00:23:43,920 Speaker 1: or perceived from Beijing? How does Beijing perceive greater political Washington. Well, 386 00:23:43,960 --> 00:23:47,920 Speaker 1: I think the Washington under Trump has thrown a lot 387 00:23:47,960 --> 00:23:51,320 Speaker 1: of the sort of Beijing's calculations into into a slight 388 00:23:51,359 --> 00:23:54,040 Speaker 1: disarray because it's it's it's much more difficult to deal 389 00:23:54,440 --> 00:23:58,760 Speaker 1: with someone who's um where where you're conflicating a lot 390 00:23:58,800 --> 00:24:03,919 Speaker 1: of the different issues where there it's trade, intellectual property UM, 391 00:24:04,160 --> 00:24:07,200 Speaker 1: dominance in different global markets, plus with sort of North 392 00:24:07,280 --> 00:24:10,679 Speaker 1: Korea UM. So how you then go and tackle that 393 00:24:11,119 --> 00:24:15,920 Speaker 1: um in is raising quite a lot of questions domestically, 394 00:24:16,359 --> 00:24:18,720 Speaker 1: But I think I mean, obviously sort of Leo her 395 00:24:18,840 --> 00:24:21,920 Speaker 1: is over in over in Washington just now, and he's 396 00:24:21,960 --> 00:24:24,040 Speaker 1: able to probably to offer sort of quite a bit 397 00:24:24,240 --> 00:24:28,239 Speaker 1: in terms of trade concessions, but that they're still not 398 00:24:28,280 --> 00:24:30,719 Speaker 1: going to give much ground on terms of you know, 399 00:24:30,920 --> 00:24:34,040 Speaker 1: the made in China I p UM and trying to 400 00:24:34,119 --> 00:24:39,159 Speaker 1: sort of stop trying technological process. Well, what so it 401 00:24:39,200 --> 00:24:41,720 Speaker 1: was so valuable about you being on the show is 402 00:24:41,760 --> 00:24:43,960 Speaker 1: I think many of our listeners, if that most of 403 00:24:43,960 --> 00:24:47,399 Speaker 1: our listeners sort of kind of like understand when the 404 00:24:47,400 --> 00:24:50,320 Speaker 1: president says he wants to make a deal what that means, 405 00:24:50,840 --> 00:24:53,840 Speaker 1: or maybe we want to understand what Mitch McConnell thinks 406 00:24:54,119 --> 00:24:55,760 Speaker 1: when he says he wants to make a deal to 407 00:24:55,800 --> 00:24:59,040 Speaker 1: get Republicans to vote with the Democrats to vote with them. 408 00:24:59,080 --> 00:25:01,800 Speaker 1: I get that when the Chinese say they want to 409 00:25:01,800 --> 00:25:06,120 Speaker 1: make a deal, what do they mean. Well, the thing 410 00:25:06,200 --> 00:25:09,439 Speaker 1: is a lot of the sort of trade war is 411 00:25:09,480 --> 00:25:12,760 Speaker 1: not at all in China's interests. This is not something 412 00:25:12,760 --> 00:25:15,080 Speaker 1: that's that's good for them, and they want to you know, 413 00:25:15,119 --> 00:25:17,480 Speaker 1: continue to trade, but also to continue to develop their 414 00:25:17,560 --> 00:25:22,680 Speaker 1: their domestic side. So if they can get something where um, 415 00:25:23,280 --> 00:25:26,640 Speaker 1: if they can increase imports, even on a temporary basis, 416 00:25:27,040 --> 00:25:31,040 Speaker 1: and and get that side sorted out as but still 417 00:25:31,080 --> 00:25:33,720 Speaker 1: be allowed to develop their their sort of own technologies 418 00:25:33,720 --> 00:25:36,520 Speaker 1: in their own companies, then that's the most important. But 419 00:25:36,560 --> 00:25:39,359 Speaker 1: in terms of it being a I mean, I think 420 00:25:39,440 --> 00:25:43,159 Speaker 1: getting a getting a deal done is going to be 421 00:25:43,240 --> 00:25:46,640 Speaker 1: the obviously the main focus, but then the longer term 422 00:25:46,720 --> 00:25:49,479 Speaker 1: it raises more and more issues about how you control 423 00:25:49,480 --> 00:25:52,600 Speaker 1: that intellectual property and then the ongoing and I think 424 00:25:52,680 --> 00:25:56,159 Speaker 1: what's happened the really problem this time and getting a 425 00:25:56,240 --> 00:26:01,960 Speaker 1: deal done is it's China realize they cannot rely on 426 00:26:02,040 --> 00:26:04,959 Speaker 1: the US and US technology in the long term. So 427 00:26:05,000 --> 00:26:08,240 Speaker 1: you've actually just raised the States quite significantly in the 428 00:26:08,240 --> 00:26:11,960 Speaker 1: sort of long term game. Miranda, what does realistic success 429 00:26:12,800 --> 00:26:15,359 Speaker 1: look like? We send the demands from the United States, 430 00:26:15,359 --> 00:26:17,600 Speaker 1: and I have to say most people would agree most 431 00:26:17,600 --> 00:26:20,320 Speaker 1: of those demands are very reasonable. The Chinese need to 432 00:26:20,320 --> 00:26:23,200 Speaker 1: open up. They haven't been doing it quickly enough. What's 433 00:26:23,240 --> 00:26:25,200 Speaker 1: realistic though, in terms of what the Chinese can give 434 00:26:25,200 --> 00:26:29,639 Speaker 1: the United States? Well, I think the focus China is 435 00:26:29,680 --> 00:26:33,639 Speaker 1: probably going to very much focus on UM increasing imports, 436 00:26:33,760 --> 00:26:37,280 Speaker 1: and so it will it will offer to to reduce 437 00:26:37,359 --> 00:26:41,080 Speaker 1: the trade trade trade deficits through the through that through 438 00:26:41,240 --> 00:26:46,680 Speaker 1: increasing trade imports quite significantly. UM. It can also say 439 00:26:46,880 --> 00:26:49,720 Speaker 1: opening up the financial markets, opening up the auto markets 440 00:26:49,720 --> 00:26:52,199 Speaker 1: for luxury goods, et cetera, because that's something that's been 441 00:26:52,200 --> 00:26:54,800 Speaker 1: on the cars for quite some time. So it might 442 00:26:54,840 --> 00:26:57,399 Speaker 1: it maybe seem as a concession during the current talks, 443 00:26:57,400 --> 00:27:00,239 Speaker 1: but it's actually been something which is UM. You know, 444 00:27:00,720 --> 00:27:04,359 Speaker 1: there's no major hurdle to that happening. That. The big 445 00:27:04,359 --> 00:27:06,679 Speaker 1: issue where there's going to be massive pushback though, is 446 00:27:06,720 --> 00:27:10,160 Speaker 1: the request to stop the MAID in China into five 447 00:27:10,200 --> 00:27:15,200 Speaker 1: program and to stop the technological progress in China, because that, 448 00:27:15,320 --> 00:27:20,680 Speaker 1: particularly with the whole d d um um disruption potential, 449 00:27:21,000 --> 00:27:24,320 Speaker 1: then China is not going to want to rely on 450 00:27:24,440 --> 00:27:26,639 Speaker 1: US technology. It's going to want to build more of 451 00:27:26,720 --> 00:27:29,719 Speaker 1: its own domestic technology and and that sort of long 452 00:27:29,880 --> 00:27:31,800 Speaker 1: term is not going to be not going to be 453 00:27:31,840 --> 00:27:34,399 Speaker 1: really be negotiable, So rerender. What do you suggest is 454 00:27:34,400 --> 00:27:36,240 Speaker 1: the best way for the United States to tackle what 455 00:27:36,400 --> 00:27:39,480 Speaker 1: is a blatant attempt to dominate certain industries and using 456 00:27:39,520 --> 00:27:42,680 Speaker 1: protectionist methods to do so. Um, that is basically what 457 00:27:42,760 --> 00:27:48,400 Speaker 1: met in China. Is actually the United States tackle that? Um, 458 00:27:48,440 --> 00:27:51,959 Speaker 1: It's it's very difficult to do so because the US 459 00:27:53,119 --> 00:27:57,280 Speaker 1: is the US companies obviously rely on the Chinese market 460 00:27:57,320 --> 00:28:01,399 Speaker 1: for quite a high proportion of sales. So is they 461 00:28:01,560 --> 00:28:05,000 Speaker 1: is they try to put up barriers to China and 462 00:28:05,040 --> 00:28:07,640 Speaker 1: sort of say, well, you can't develop this industry. Then 463 00:28:07,680 --> 00:28:09,600 Speaker 1: I think one of the one of the threats has 464 00:28:09,680 --> 00:28:13,800 Speaker 1: been that then China could take action against companies like Apple, 465 00:28:14,760 --> 00:28:18,359 Speaker 1: which could obviously have they have very high revenues in 466 00:28:18,440 --> 00:28:20,880 Speaker 1: China and that and that could come under threat, um 467 00:28:20,920 --> 00:28:25,240 Speaker 1: if you did have a complete breakdown in in in negotiations. 468 00:28:25,320 --> 00:28:27,200 Speaker 1: But in terms of the I mean, I think the 469 00:28:27,840 --> 00:28:31,679 Speaker 1: key thing is to try to the US and Japan 470 00:28:31,760 --> 00:28:35,040 Speaker 1: stays similar issues back in the nine nineties, and there 471 00:28:35,080 --> 00:28:37,280 Speaker 1: was constant tension and there was three or three or 472 00:28:37,320 --> 00:28:42,200 Speaker 1: one investigations, and there was constant negotiations. But now you 473 00:28:42,240 --> 00:28:47,200 Speaker 1: have a situation where both sides are developing their technologies. 474 00:28:47,240 --> 00:28:51,880 Speaker 1: They're competitive, um, but they're also complementary. Now that would 475 00:28:51,880 --> 00:28:53,600 Speaker 1: be the that would be the long term goal I 476 00:28:53,600 --> 00:28:57,200 Speaker 1: think for for China. Miranda Karr, thank you. Similar to 477 00:28:57,240 --> 00:29:00,920 Speaker 1: the High Time, greatly appreciate perspective, their sea matic perspective 478 00:29:00,960 --> 00:29:18,160 Speaker 1: on China. I got good news, folks. Kevin Currel is 479 00:29:18,200 --> 00:29:21,200 Speaker 1: with US, our chief Launchington correspondent. The bad news is 480 00:29:21,240 --> 00:29:24,960 Speaker 1: he's a slow reader and he's only on page eight 481 00:29:25,320 --> 00:29:31,120 Speaker 1: hundred pages of Donald Trump Jr. Transcripts and I guesses total, Kevin, 482 00:29:31,200 --> 00:29:34,440 Speaker 1: let's cut to the broader view here. Does Mr Mueller 483 00:29:34,640 --> 00:29:37,640 Speaker 1: care about these documents? Is there anything in here that 484 00:29:37,680 --> 00:29:40,360 Speaker 1: would be news to a Special Council? Or is this 485 00:29:40,520 --> 00:29:44,120 Speaker 1: old news and a media frenzy versus what the Special 486 00:29:44,200 --> 00:29:47,360 Speaker 1: Council knows already? Good morning, Tom. I'm embarrassed to say 487 00:29:47,360 --> 00:29:48,960 Speaker 1: that I'm even slower than that. I'm only on about 488 00:29:48,960 --> 00:29:53,040 Speaker 1: page twenty six of these documents of hundred page document dump, 489 00:29:53,120 --> 00:29:54,800 Speaker 1: but so far from what I've gathered, as well as 490 00:29:55,120 --> 00:29:58,680 Speaker 1: what other of my colleagues have gathered across the Beltway 491 00:29:58,760 --> 00:30:01,680 Speaker 1: media is that there does appear to be new information 492 00:30:01,760 --> 00:30:04,960 Speaker 1: regarding that meeting that Donald Trump Jr. Had met with 493 00:30:05,280 --> 00:30:09,280 Speaker 1: Paul Man for the president's previous campaign manager or campaign chairman. 494 00:30:09,680 --> 00:30:12,960 Speaker 1: Uh too, with regards to a Russian lawyer. You'll remember 495 00:30:13,040 --> 00:30:14,800 Speaker 1: that they had said they had walked out they thought 496 00:30:14,800 --> 00:30:17,200 Speaker 1: it was nothing. They were promised dirt on quote unquote 497 00:30:17,240 --> 00:30:21,560 Speaker 1: dirt political dirt on former Democratic presidential nomine Hillary Clinton. 498 00:30:21,880 --> 00:30:24,280 Speaker 1: I did get in touch with Donald Trump Junior through 499 00:30:24,280 --> 00:30:28,600 Speaker 1: a spokesperson, and he released a statement that he says, quote, 500 00:30:28,600 --> 00:30:31,680 Speaker 1: he appreciates the opportunity to have assisted the Judiciary Committee, 501 00:30:32,040 --> 00:30:35,040 Speaker 1: and he also actually thanked Chairman Grassley and ranking Member 502 00:30:35,040 --> 00:30:38,720 Speaker 1: Fine Steiner Republican and Democrat, respectively, for their quote unquote professionally. 503 00:30:38,720 --> 00:30:40,520 Speaker 1: And we read it on air, Kevinists sounded like, you know, 504 00:30:40,520 --> 00:30:43,440 Speaker 1: one of his good attorneys wrote it, which is great 505 00:30:43,520 --> 00:30:47,200 Speaker 1: and all that help our global audience and our audience 506 00:30:47,240 --> 00:30:49,600 Speaker 1: coast to coast. It's not addicted to this like you 507 00:30:49,640 --> 00:30:53,280 Speaker 1: are to the Philadelphia Eagles. What's the so what of 508 00:30:53,360 --> 00:30:56,280 Speaker 1: this moment this morning? Well, I think the so what 509 00:30:56,880 --> 00:31:01,640 Speaker 1: is that it continues Congressional and investigations, which are separate 510 00:31:02,200 --> 00:31:06,320 Speaker 1: from Bob Mueller's investigation, which quite frankly, I mean, both 511 00:31:06,360 --> 00:31:08,360 Speaker 1: investigations matter, but if you're in the global audience, Bob 512 00:31:08,440 --> 00:31:10,840 Speaker 1: Muller's investigation is the one that matters the most because 513 00:31:10,880 --> 00:31:13,680 Speaker 1: it's the one that could lead to a host of 514 00:31:13,760 --> 00:31:17,440 Speaker 1: other potential problems such as impeachment proceedings or whatnot. Not 515 00:31:17,440 --> 00:31:19,520 Speaker 1: that I'm suggesting that there's any appetite for that right now, 516 00:31:19,720 --> 00:31:24,640 Speaker 1: but that investigation from from Bob Muller is much more 517 00:31:24,680 --> 00:31:29,840 Speaker 1: independent than the political investigations up on Capitol Hill, And 518 00:31:30,000 --> 00:31:32,600 Speaker 1: the political investigations up on Capitol Hill really are only 519 00:31:33,400 --> 00:31:37,360 Speaker 1: at this point used to kind of frame the goal 520 00:31:37,440 --> 00:31:40,680 Speaker 1: post of what's out of bounds and inbounds, and Bob 521 00:31:40,800 --> 00:31:44,840 Speaker 1: Muller's investigation is really the one that is the most notable. 522 00:31:44,840 --> 00:31:49,520 Speaker 1: Does that make sense, No, it does not make sense. Sorry, well, Kevin, 523 00:31:49,600 --> 00:31:53,000 Speaker 1: I I want to know why what was the impetus 524 00:31:53,080 --> 00:31:56,080 Speaker 1: for Senator Grassly to release the documents. Well, I think 525 00:31:56,080 --> 00:31:59,200 Speaker 1: that there's a couple of things. I think that that 526 00:31:59,520 --> 00:32:01,920 Speaker 1: folks want to know what's what's going on, what was said, 527 00:32:01,960 --> 00:32:06,120 Speaker 1: and and I think from the administration standpoint, phim if 528 00:32:06,160 --> 00:32:08,920 Speaker 1: they get the documents out there all at once, they're 529 00:32:08,920 --> 00:32:12,200 Speaker 1: not they're not being beholden to selective leakage. We should 530 00:32:12,240 --> 00:32:15,040 Speaker 1: know that Senate Democrats did leak some excerpts ahead of 531 00:32:15,040 --> 00:32:19,720 Speaker 1: the the entire dump at nine AM, and then I 532 00:32:19,760 --> 00:32:21,920 Speaker 1: think the Democrats, you know, they don't mind keeping this 533 00:32:22,000 --> 00:32:26,760 Speaker 1: in the headlines as well. That said, it's hard, it's 534 00:32:26,760 --> 00:32:30,040 Speaker 1: hard to see how how these congressional investigations are not 535 00:32:30,120 --> 00:32:33,320 Speaker 1: political at this point. So does that make it more 536 00:32:33,360 --> 00:32:38,840 Speaker 1: difficult for UH for investigator Mueller to actually continue his 537 00:32:38,960 --> 00:32:43,400 Speaker 1: investigation if this is really leak versus leak. No, in 538 00:32:43,440 --> 00:32:46,880 Speaker 1: the sense that I think that it also allow if 539 00:32:46,920 --> 00:32:50,120 Speaker 1: you talk to folks who are very much carefully following 540 00:32:50,120 --> 00:32:53,680 Speaker 1: this in the political world, it allows for Bobbler's investigation 541 00:32:53,720 --> 00:32:57,320 Speaker 1: team to kind of get things out in the public 542 00:32:57,400 --> 00:33:01,120 Speaker 1: forum that otherwise might not be in all so to 543 00:33:01,400 --> 00:33:04,800 Speaker 1: to to again set the parameters of of really what's 544 00:33:05,360 --> 00:33:08,800 Speaker 1: an investigation here? I mean, when you have congressional committees, 545 00:33:08,840 --> 00:33:12,800 Speaker 1: Bob Muller's investigation, as well as UH intelligence saying that 546 00:33:12,800 --> 00:33:15,880 Speaker 1: that Russia tried to to influence and the election and 547 00:33:15,920 --> 00:33:19,640 Speaker 1: divide Americans along every which way, I mean, that's that's 548 00:33:19,720 --> 00:33:22,840 Speaker 1: now a fact. Well, I know you're gonna be busy. 549 00:33:22,880 --> 00:33:25,239 Speaker 1: You've got a lot of pages to read today. I 550 00:33:25,240 --> 00:33:27,640 Speaker 1: want to thank you very much, Kevin Serlian to our 551 00:33:28,040 --> 00:33:31,040 Speaker 1: chief White House correspondent, knows all about what's going on 552 00:33:31,080 --> 00:33:42,240 Speaker 1: in Washington. Thanks for listening to the Bloomberg Surveillance podcast. 553 00:33:42,600 --> 00:33:47,600 Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or 554 00:33:47,680 --> 00:33:52,000 Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom 555 00:33:52,080 --> 00:33:55,920 Speaker 1: Keane before the podcast. You can always catch us worldwide. 556 00:33:56,440 --> 00:34:04,920 Speaker 1: I'm Bloomberg Radio