Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane
Speaker 1: Jai Ley. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Do
Speaker 1: you want to steal from John Ferroll right now, folks?
Speaker 1: You do that when you're speaking to the lawyer at
Speaker 1: Michael Spence of New York University, and that when you're
Speaker 1: a gentleman who changed graduate school education across this nation profoundly,
Speaker 1: as Michael Spence did it Stanford gsb Um a few
Speaker 1: years ago, and when you do what he did within
Speaker 1: economics across numerous economics platforms, including our study of information,
Speaker 1: how we receive, how we push, how we miss information?
Speaker 1: With his Nobel Prize, with Mr Aklof and Mr Stiglitz.
Speaker 1: There's a lot of ways to go. And of course
Speaker 1: Pharaoh is brilliant and goes right to the moment, which
Speaker 1: is in crisis. What do we do? Turkey's in crisis.
Speaker 1: The Central Bank comes out what John forty minutes ago says,
Speaker 1: we will take the necessary steps, whatever that means. And
Speaker 1: then the reports come out of Turkey that he'll be
Speaker 1: mating with them the president, Mr do models work? Everybody's
Speaker 1: got all this advice and help in that, and yet
Speaker 1: after Guy Jonson's interview with Mr Aeroine yesterday, nobody uses
Speaker 1: the models in crisis? Do they know? Because they don't
Speaker 1: work at crisis. I mean, what you have instead of
Speaker 1: models is m experience, a growing body of experience. And
Speaker 1: so if you if your currency comes under attack, um,
Speaker 1: you basically have to let it decline a bit and
Speaker 1: then and then raise interest rates and and do a
Speaker 1: balancing act. But the mode, the models themselves just don't
Speaker 1: capture this. How difficult is it to regain credibility with
Speaker 1: markets when markets no longer believe you have any Argentina
Speaker 1: with a great example of that over the last couple
Speaker 1: of weeks, How difficult is its response to that? Well,
Speaker 1: if you respond, I mean is you can do it,
Speaker 1: but but it's not easy. And if you make several
Speaker 1: mistakes in a row, then it's then it gets a
Speaker 1: lot harder. So I mean, I think, and you know,
Speaker 1: and then it takes a long time. But the Russian
Speaker 1: case was a good example. I mean the Russia Central Bank,
Speaker 1: it took quite a while, but then eventually re established
Speaker 1: its credibility and the and the currency stabilized several years ago.
Speaker 1: Remember this episode, So it um, it's better, it's certainly
Speaker 1: better not to make you know, well known mistakes in
Speaker 1: dealing with this. You mentioned the AMIS rate. Yeah, for
Speaker 1: for central banks looking at that currencies, walk us through
Speaker 1: what central banks may or may not have learned um
Speaker 1: economic history. Well, what I was saying is that, you know,
Speaker 1: I mean in the Asian financial crisis, I mean, some
Speaker 1: of these countries tried to hold up their currencies because
Speaker 1: they had um dollar or hard you know, hard currency
Speaker 1: denominated dead and they basically ran out of reserves doing that,
Speaker 1: at which point, you know, chaos ensues. That's the one
Speaker 1: side that's propping up your currency and you run out
Speaker 1: of ammunition. You know, you have the British case, a
Speaker 1: whole lot of experience. On on the other side, you
Speaker 1: can it's not necessarily a good idea if you overdo it,
Speaker 1: but you can hold down the currency by by accumulating
Speaker 1: reserves for a fairly long period of time. And so
Speaker 1: that's the asymmetry. There's there's much less severe limits in
Speaker 1: on that side of the Ledger. What you wrought It's
Speaker 1: Stanford was all intimately about executive leadership and government. We
Speaker 1: have not been able to speak to you since President
Speaker 1: g decided he would take more lengthy term with a
Speaker 1: new communist experiment in China. Your comments please on the
Speaker 1: distinction of one or two terms or forever terms, and
Speaker 1: particularly within the new template of a new more totalitarian
Speaker 1: regime in China. Right, So, China has moved in the
Speaker 1: direction of being having the party both clean up its
Speaker 1: act and be much more intrusive in multiple parts of
Speaker 1: the society and the economy. UM. I think Chinese are
Speaker 1: you know, when you get to find get them to
Speaker 1: speak frankly, you know, sort of off the record. Uh.
Speaker 1: Understand that the reform program is sufficiently large that they're
Speaker 1: willing to grant that maybe two terms wasn't ideal at
Speaker 1: this stage, you know, because he'd become a lame duck
Speaker 1: in the second term, and and therefore they they might
Speaker 1: have thought that, you know, extending that UM is not
Speaker 1: a bad idea. That's a little different than, you know,
Speaker 1: than leader for life. Uh. And so I I do
Speaker 1: think in within China there are people who are nervous
Speaker 1: about that um, that rather extreme version of UH, altering
Speaker 1: the term limits that they that they abided by for
Speaker 1: several transitions. Very quickly here on the linkage the correlations
Speaker 1: of the markets, I feel like I'm talking to professor
Speaker 1: Engel over. Do you see correlations that can cause challenges?
Speaker 1: I mean, I'm not an expert at this, but my
Speaker 1: sense is that correlations go up when there's turmoil or
Speaker 1: crisis for sure, UH. And and that certainly does cause problems.
Speaker 1: I mean it cause problems for investors because you know,
Speaker 1: reduces the benefits of diversification. UM. But it's also a
Speaker 1: signal that there's trouble somewhere. We're going to leave there.
Speaker 1: Michael Spence, thank you so much, greatly appreciated. He is
Speaker 1: at New York University, among other things. Can't say enough
Speaker 1: about his book. I'll throw it out my book Twitter
Speaker 1: site here from five, six, seven years ago as well,
Speaker 1: seen foreign exchange was boring. I can sally seen FX
Speaker 1: is anything but boring. Joining us now David Ranney Blue Bay,
Speaker 1: a set of management chief investment strategist. David just talked
Speaker 1: to me about what is happening in foreign exchange and
Speaker 1: how it is changing your world. Well, The big story
Speaker 1: is that we've seen this resurgence in the U S. Dollar,
Speaker 1: and I think that's a pain trade for the market
Speaker 1: more generally, I think for risk assets, and we've clearly
Speaker 1: seen that spill over into emerging markets. And you know,
Speaker 1: I think that rather than actually higher US rate has
Speaker 1: been the catalyst for exposing those emerging markets which have
Speaker 1: either weak fell up fundamentals and weak policy credibility. And
Speaker 1: that's really been Argentina and has been Turkey. So this
Speaker 1: raises the question, David. Over the last several weeks when
Speaker 1: I've asked many investors and strategists about the renewed resurgent
Speaker 1: US dollar strength story, the pushback I get is this
Speaker 1: is just a squaring of positions. I struggle to find
Speaker 1: the belief in the move um. The short story has
Speaker 1: been a slow burn to eventually capitulate. David, where are
Speaker 1: we Do people believe in this yet? That this could last?
Speaker 1: I still don't think people believe it will last. And
Speaker 1: Buddhist speaking, I mean I'd share that view. And I
Speaker 1: think what's fundamental to that view is during the course
Speaker 1: of seventeen and coming into this year, it was a
Speaker 1: global reflation story. The US was not the only economy
Speaker 1: that was growing strongly and where you could get both
Speaker 1: higher rates but also higher equities and risk grows sensitive
Speaker 1: risk assets. Emerging markets were doing well, China was doing well,
Speaker 1: Europe was really powering ahead and was a big upside surprise.
Speaker 1: What we have now is that we've had some weak data.
Speaker 1: We've got Japan printing a negative print on Q one GDP,
Speaker 1: Europe has come off the boil, and so I think
Speaker 1: the dollar move is really reflecting going back to that
Speaker 1: story whereby maybe the US is the only place in town,
Speaker 1: and that has implications both in terms of divergence in
Speaker 1: in rates, but also in terms of where you can
Speaker 1: get um, where you can get returns. If I think
Speaker 1: the market and we do believe here that we will
Speaker 1: get a rebounding global growth in the second quarter that
Speaker 1: slowed down in Europe is is largely transitory. China still
Speaker 1: holding up. And if had occurred and I think this
Speaker 1: rally and the dollar kind of runs out of steam,
Speaker 1: well you bring up rates though, and rate differentials are
Speaker 1: clearly a story that we should be talking about. It
Speaker 1: looks like rates of recoupling with foreign exchange. If you
Speaker 1: look at rates in the United states relative to rates
Speaker 1: in say Europe and look at Germany, that two year
Speaker 1: BUN treasury spread has blown out to three hundred and
Speaker 1: fourteen three hundred and fifteen basis points. That screams dollar strength.
Speaker 1: It screams euro dollar must go lower, David, Why does
Speaker 1: that relationship not re established itself in a more material
Speaker 1: way that is lasting. But I think that spread, the
Speaker 1: gap or that you yield gap on the two year
Speaker 1: is reflecting that the market has been pricing in higher
Speaker 1: fed hiking path uh. And we saw that in the
Speaker 1: back of yesterday's US sales data. Well, they've actually been
Speaker 1: taking out some sort of past or normalization starting next
Speaker 1: year in terms of ECB rates. And that's what's been
Speaker 1: driving What's what's been driving it. It's been disappointing growth
Speaker 1: data coming out of Europe and better than expected data
Speaker 1: coming out of the US. I think once we start
Speaker 1: getting convergence in the economic data, we'll start getting a
Speaker 1: closing in that two year gap, and then the dollar
Speaker 1: runs out of team David. What is fascinating to me
Speaker 1: is how all of us have any ilk have forgotten
Speaker 1: a ten percent correction in eighteen percent bear market and
Speaker 1: stocks and of course folks, we can go much worse
Speaker 1: than an eighteen percent bear market. Is our rationalization of
Speaker 1: these new instabilities different now because we really don't remember
Speaker 1: the volatility you and I studied and lived for years.
Speaker 1: I think it's a good point, Tom, that the market
Speaker 1: and investors for a very long period now have got
Speaker 1: used to having central banks and particularly the FED at
Speaker 1: your back, and therefore you know, they crust volatility. I think,
Speaker 1: um Jerome Pou made a remark some time ago about
Speaker 1: the FED balance sheet was essentially taking volatility out of
Speaker 1: the market. I had a sort of short volatility position,
Speaker 1: and with the FED running down his balance sheet gradually
Speaker 1: normalizing interest rates the famous FED put, I think is
Speaker 1: quite a long way out of the money. Then I
Speaker 1: think we're going to get more volatility. And where I
Speaker 1: think we're getting caught out a little bit on on
Speaker 1: the investor side is that we have not fully built
Speaker 1: that into the way that we're positioning. So I think
Speaker 1: part of the volatility that we've seen in uer sequities
Speaker 1: with the short et F and in places like Argentina
Speaker 1: for example, if we bring it to to there has
Speaker 1: been very crowded positioning, then you get a volatility shock
Speaker 1: called capitalist for volatility, and then everyone's scrambling and it's
Speaker 1: one way marketing, everyone scrambling for an exit. That's very narrow, David,
Speaker 1: we're talking about shocks. But I just wonder whether this
Speaker 1: is all sort of a natural, gradual process of rebalancing
Speaker 1: portfolios away from risk. If you think about what QUE
Speaker 1: was for, it was about rebalancing portfolios towards risk assets. Now,
Speaker 1: as they wind down QUEUE on a global basis and
Speaker 1: QUE becomes QT quantitative tightening, shouldn't the opposite apply that
Speaker 1: you rebalance away from risk to some degree. But it's
Speaker 1: also remember that QUEUE was taking um, you know, duration,
Speaker 1: and was squeezing the term premium. So if you're a
Speaker 1: Euro investor right now, um, is it an obvious thing
Speaker 1: to do to go out and buy ten year buns
Speaker 1: sixty basis points? Is it an obvious thing to do
Speaker 1: to go out and buy UK guilt which are given
Speaker 1: you a negative real rate of between one and two percent.
Speaker 1: I think treasury is for a U S investor as
Speaker 1: donting to look potentially pretty attractive. So I think we
Speaker 1: may well get some of that rotation that you're describing
Speaker 1: UM in in the US. But I think What's crucial
Speaker 1: in Europe is that even as the ECB brings Queie
Speaker 1: to an end, is their forward guidance do they anchor
Speaker 1: short term interest rate? And if they do, volatility remain constrained.
Speaker 1: And I think on that basis, things like you know,
Speaker 1: sovereign credit as well as corporate credit can actually do. Okay, David,
Speaker 1: what's a cash right now? I mean there's there's John
Speaker 1: mentioned earlier. On a real basis, cash has value and
Speaker 1: on a percent growth of yield, cash is outrageously wonderful
Speaker 1: versus what John six months ago is cash is cash
Speaker 1: like the new asset. Well, I think cash and that
Speaker 1: move higher in cash rates in the United States has
Speaker 1: been one of the most profound shifts during the first
Speaker 1: part of this year. I think some again, some of
Speaker 1: the repricing we've seen of emerging market credit has been
Speaker 1: uh a response to that higher US cash rate and
Speaker 1: also the higher effics hedging costs of that implied basically,
Speaker 1: you needed wider spreads UM and a repricing in order
Speaker 1: to justify why you would be holding UM an emerging
Speaker 1: market credit dollar asset versus exactly as you've alluded to, Tom,
Speaker 1: holding US cash. I think absolutely right. Like us, cash
Speaker 1: has become, you know, a factor. But again a comeback
Speaker 1: to the rest of the world. When we as investors
Speaker 1: decided that we're going to part some money into cash
Speaker 1: on some of our Euro denominator strategies, it's actually costing
Speaker 1: us fifty basis points to actually do that, let alonely
Speaker 1: apply because of the loss of carrier as well. So
Speaker 1: the moment is more of a U S story than
Speaker 1: a than the European and rest of the world story.
Speaker 1: David Raley, thank you so much from them this morning
Speaker 1: with a I'm really pleased to say that. A quick
Speaker 1: phone call away and Jane Foley joins us head of
Speaker 1: FX Strategy at rubber Bank and joining us out of
Speaker 1: the capital, the global capital of the foreign exchange, the
Speaker 1: city of London. Jen, it's always great to catch up
Speaker 1: with you. There is some euro weakness and dollar strength.
Speaker 1: How much of a pain trade is evolving in the
Speaker 1: FX market at the moment, Jane, Well, I think actually
Speaker 1: we can go back to February to see the beginning
Speaker 1: of this, and I think if you look back then
Speaker 1: we do see the dollar really began to perform well
Speaker 1: against the emerging markets, which are called suberhaps more sensitive
Speaker 1: to risk capitaes any more sensitive to hire US rates
Speaker 1: than perhaps some of the other markets. But it was
Speaker 1: any really a few weeks ago where the breakdown in
Speaker 1: neural dollar really began to focus on markets attention on
Speaker 1: the strength of the dollar. But I think really today
Speaker 1: there's there's now more attention on Italian politics and perhaps
Speaker 1: more attention on the structural weaknesses within the Euro as
Speaker 1: well as on dollar strength as well. Before we get
Speaker 1: to the European side of the trade, let's begin with
Speaker 1: the US dollar. Is the consensus short dollar position for
Speaker 1: is it capitulating? Jane, I think it probably is, and
Speaker 1: we changed the view it was. It was much the
Speaker 1: fift when when I took out the view for the
Speaker 1: higher year a dollar and put in a stronger dollar.
Speaker 1: And this was partly because of that that picture that
Speaker 1: was emerging with with lower levels of risk appetite, the
Speaker 1: fact that emerging markets were beginning to get a little
Speaker 1: bit more worried, and that I think was treating from
Speaker 1: these high risk or high yield trades back into the U.
Speaker 1: S dollar. So I think at that point also the
Speaker 1: market had built up pretty short dollar positions and was
Speaker 1: also pretty long in a lot of high risk markets
Speaker 1: and including long in euro as well. Within this chane.
Speaker 1: And we heard this yesterday from one guest, which is
Speaker 1: the rationalization and the people bet one way for whatever reason,
Speaker 1: we're removing another way. It will go on a step basis.
Speaker 1: To me, that's a market chat in trader chat for
Speaker 1: the idea of rationalizing moves. Is the rationalizing you see
Speaker 1: um a rabble bunk desks. Is it the same as
Speaker 1: other instabilities we've seen or is there something different this time? Well,
Speaker 1: I think that's I mean, this is this is not
Speaker 1: a crisis in the way that we've had prices before.
Speaker 1: And to be honest, I think with this one, I
Speaker 1: think a large part of it might be just positioned.
Speaker 1: And I think the market really got excited last year
Speaker 1: there was so much risk capitite in seventeen. We had
Speaker 1: far better global growth than most people had anticipated from
Speaker 1: places like Europe and places like Japan, and that really
Speaker 1: lifted a risk capitite and people were really pushing ahead
Speaker 1: of themselves to to get hold of a high risk,
Speaker 1: high yield et cetera. And I think that took it
Speaker 1: into this very first part of this year. But I
Speaker 1: think as we moved into February, that began to change,
Speaker 1: and I think the market was just positioned perhaps all right,
Speaker 1: in order to face a new world of Lester's appetite.
Speaker 1: I mean, just as an example in Folks, a bank
Speaker 1: like Robble Bank deals with this in the trenches. We're
Speaker 1: all talking dollar based speculation. Business has to get done
Speaker 1: and with a strong chairman Powell dollar for whatever reason,
Speaker 1: whatever anybody's theory, the fact is oil and goods in
Speaker 1: an e M economy, a non opec EM economy really
Speaker 1: begins to pain the public, which folds into the political process.
Speaker 1: I'm describing. Turkey is one example. What's that tension right now,
Speaker 1: Jane Foley that robble Bank hedger c not speculators. What
Speaker 1: are the hedger c in terms of domestic pain in
Speaker 1: e M. There's a huge amount of attention, a huge
Speaker 1: amount of pain, certainly in countries such as Turkeys, countries
Speaker 1: such as Urgent tina Um, and I think if we
Speaker 1: look at Poland also, I think the movement in that
Speaker 1: currency is not anticipated by the majority this year, so
Speaker 1: the companies that are trying to deal are certainly feeling
Speaker 1: a bronson and this will have an impact on investment
Speaker 1: and potentially on growth for a while to come. And
Speaker 1: what's so important, Jane, as you see it not you
Speaker 1: know they're not doing in Argentina, but Brazil was pretty
Speaker 1: ugly yesterday. Or Malaysia's bringing back at ninety two year old.
Speaker 1: I get it, and there's a popular recovery. But they're
Speaker 1: these set of tensions, folks, that aren't about three zip
Speaker 1: codes in New York. They're not about three zip codes
Speaker 1: in London. They're not about two zip codes in Hong
Speaker 1: Kong or Singapore, Jane. They're about these domestic economies. When
Speaker 1: do they begin to snap or break? Well, I think
Speaker 1: perhaps they are, and I would you know, in Argentina,
Speaker 1: I think they have broken Turkey. I think it's coming
Speaker 1: to a boiling point because we have an election in
Speaker 1: around about a month's time, and that's going to be
Speaker 1: really really telling whether they're not this stiff and or
Speaker 1: this this conge in the currency makes any difference in
Speaker 1: that result. So that's another really interesting one. But but certainly,
Speaker 1: you know, we are seeing very significant moves in foreign exchange,
Speaker 1: and some of these moves have been brewing for some time.
Speaker 1: And when I again, I would say go back to February,
Speaker 1: and we do see a lot of these these movements,
Speaker 1: a lot of these um distallar move really begin to
Speaker 1: take place. Back then, let's talk about Turkey and the
Speaker 1: Turkish laer a record weakness once again. Earlier in the session,
Speaker 1: a bit of strength came through as the central bank
Speaker 1: started talking about taking the necessary steps Jane, what are
Speaker 1: the necessary steps for the Turkish Central Bank to take now? Well,
Speaker 1: if you ask that question a week ago, I might
Speaker 1: give you a different answer because it was earlier than week.
Speaker 1: We did have president earlier and in London we had
Speaker 1: that interview with Bloomberg TV and you seemed to indicate
Speaker 1: that the central bank is no longer an independent central
Speaker 1: bank now. Really, for for many people in the foreign
Speaker 1: exchange market, that we would assume that if the currency
Speaker 1: goes into free fall, et central bank can come in
Speaker 1: and hike interest rates for protecting a temporary period of
Speaker 1: time and then start to draw back on that. If
Speaker 1: that center bank it is not independent, can they really
Speaker 1: do that? Argon was saying that he wants rights to
Speaker 1: be lower, and he thinks that needs to be down
Speaker 1: for the benefit of the Turkish economy, and that's really
Speaker 1: difficult for investors to to reconcile. It's a really important question, folks,
Speaker 1: and we must point out that since Ms Foley trumpets
Speaker 1: the Guy Johnson interview, Guy Johnson just email me and
Speaker 1: say you can have Jane back on again. But within
Speaker 1: that Jane is the old crux which you won't see
Speaker 1: in a CEFA exam, which is the idea that the
Speaker 1: markets test a central bank, whether it's the huns and
Speaker 1: silver a million years ago blah blah blah, or sorrows
Speaker 1: and sterling zillion years ago. Jane, is that what happens
Speaker 1: markets test a institution in trouble, Well, they can do,
Speaker 1: but you know these degrees of being in trouble, and
Speaker 1: and Turkey is always vulnerable because it does have a
Speaker 1: very large current account deficit, and that means it's it's
Speaker 1: more susceptible to the whims of of non domestic investors.
Speaker 1: And that is perhaps why you would expect a cential
Speaker 1: bank like Turkey or the government of Turkey to to
Speaker 1: to actually want to applicate the international investing community a
Speaker 1: little bit more than we saw at the start of
Speaker 1: this week. So um, that is a currency that can
Speaker 1: be volatile if you had a current account surplus currency,
Speaker 1: it's not so vulnerable to the whims of of of
Speaker 1: investors taking their money home. And unfortunately with Turkey, yes
Speaker 1: it can be quite it can be tested quite ferociously
Speaker 1: because of that current account deficit. Jane Foley, it's great
Speaker 1: to catch other you. Thank you for giving us your
Speaker 1: time at such short notice. This morning, as the foreign
Speaker 1: exchange starts to generate a few really interesting stories. One
Speaker 1: of the joys we have is to dive into economic
Speaker 1: research and investment research from firms that are hyper focused.
Speaker 1: Now would include High Tongue out of London. High Tongue
Speaker 1: really digs into Asia, tries to you know the phrase
Speaker 1: I use go beneath the headline data and really find
Speaker 1: out what is going on. Miranda car joins us now
Speaker 1: head of China China Thematic Research at High Tongue. Miranda,
Speaker 1: if you were to have a cup of coffee, not
Speaker 1: so much with the president, but just within anybody in Washington,
Speaker 1: what would you instruct them of how they are viewed
Speaker 1: or perceived from Beijing? How does Beijing perceive greater political Washington. Well,
Speaker 1: I think the Washington under Trump has thrown a lot
Speaker 1: of the sort of Beijing's calculations into into a slight
Speaker 1: disarray because it's it's it's much more difficult to deal
Speaker 1: with someone who's um where where you're conflicating a lot
Speaker 1: of the different issues where there it's trade, intellectual property UM,
Speaker 1: dominance in different global markets, plus with sort of North
Speaker 1: Korea UM. So how you then go and tackle that
Speaker 1: um in is raising quite a lot of questions domestically,
Speaker 1: But I think I mean, obviously sort of Leo her
Speaker 1: is over in over in Washington just now, and he's
Speaker 1: able to probably to offer sort of quite a bit
Speaker 1: in terms of trade concessions, but that they're still not
Speaker 1: going to give much ground on terms of you know,
Speaker 1: the made in China I p UM and trying to
Speaker 1: sort of stop trying technological process. Well, what so it
Speaker 1: was so valuable about you being on the show is
Speaker 1: I think many of our listeners, if that most of
Speaker 1: our listeners sort of kind of like understand when the
Speaker 1: president says he wants to make a deal what that means,
Speaker 1: or maybe we want to understand what Mitch McConnell thinks
Speaker 1: when he says he wants to make a deal to
Speaker 1: get Republicans to vote with the Democrats to vote with them.
Speaker 1: I get that when the Chinese say they want to
Speaker 1: make a deal, what do they mean. Well, the thing
Speaker 1: is a lot of the sort of trade war is
Speaker 1: not at all in China's interests. This is not something
Speaker 1: that's that's good for them, and they want to you know,
Speaker 1: continue to trade, but also to continue to develop their
Speaker 1: their domestic side. So if they can get something where um,
Speaker 1: if they can increase imports, even on a temporary basis,
Speaker 1: and and get that side sorted out as but still
Speaker 1: be allowed to develop their their sort of own technologies
Speaker 1: in their own companies, then that's the most important. But
Speaker 1: in terms of it being a I mean, I think
Speaker 1: getting a getting a deal done is going to be
Speaker 1: the obviously the main focus, but then the longer term
Speaker 1: it raises more and more issues about how you control
Speaker 1: that intellectual property and then the ongoing and I think
Speaker 1: what's happened the really problem this time and getting a
Speaker 1: deal done is it's China realize they cannot rely on
Speaker 1: the US and US technology in the long term. So
Speaker 1: you've actually just raised the States quite significantly in the
Speaker 1: sort of long term game. Miranda, what does realistic success
Speaker 1: look like? We send the demands from the United States,
Speaker 1: and I have to say most people would agree most
Speaker 1: of those demands are very reasonable. The Chinese need to
Speaker 1: open up. They haven't been doing it quickly enough. What's
Speaker 1: realistic though, in terms of what the Chinese can give
Speaker 1: the United States? Well, I think the focus China is
Speaker 1: probably going to very much focus on UM increasing imports,
Speaker 1: and so it will it will offer to to reduce
Speaker 1: the trade trade trade deficits through the through that through
Speaker 1: increasing trade imports quite significantly. UM. It can also say
Speaker 1: opening up the financial markets, opening up the auto markets
Speaker 1: for luxury goods, et cetera, because that's something that's been
Speaker 1: on the cars for quite some time. So it might
Speaker 1: it maybe seem as a concession during the current talks,
Speaker 1: but it's actually been something which is UM. You know,
Speaker 1: there's no major hurdle to that happening. That. The big
Speaker 1: issue where there's going to be massive pushback though, is
Speaker 1: the request to stop the MAID in China into five
Speaker 1: program and to stop the technological progress in China, because that,
Speaker 1: particularly with the whole d d um um disruption potential,
Speaker 1: then China is not going to want to rely on
Speaker 1: US technology. It's going to want to build more of
Speaker 1: its own domestic technology and and that sort of long
Speaker 1: term is not going to be not going to be
Speaker 1: really be negotiable, So rerender. What do you suggest is
Speaker 1: the best way for the United States to tackle what
Speaker 1: is a blatant attempt to dominate certain industries and using
Speaker 1: protectionist methods to do so. Um, that is basically what
Speaker 1: met in China. Is actually the United States tackle that? Um,
Speaker 1: It's it's very difficult to do so because the US
Speaker 1: is the US companies obviously rely on the Chinese market
Speaker 1: for quite a high proportion of sales. So is they
Speaker 1: is they try to put up barriers to China and
Speaker 1: sort of say, well, you can't develop this industry. Then
Speaker 1: I think one of the one of the threats has
Speaker 1: been that then China could take action against companies like Apple,
Speaker 1: which could obviously have they have very high revenues in
Speaker 1: China and that and that could come under threat, um
Speaker 1: if you did have a complete breakdown in in in negotiations.
Speaker 1: But in terms of the I mean, I think the
Speaker 1: key thing is to try to the US and Japan
Speaker 1: stays similar issues back in the nine nineties, and there
Speaker 1: was constant tension and there was three or three or
Speaker 1: one investigations, and there was constant negotiations. But now you
Speaker 1: have a situation where both sides are developing their technologies.
Speaker 1: They're competitive, um, but they're also complementary. Now that would
Speaker 1: be the that would be the long term goal I
Speaker 1: think for for China. Miranda Karr, thank you. Similar to
Speaker 1: the High Time, greatly appreciate perspective, their sea matic perspective
Speaker 1: on China. I got good news, folks. Kevin Currel is
Speaker 1: with US, our chief Launchington correspondent. The bad news is
Speaker 1: he's a slow reader and he's only on page eight
Speaker 1: hundred pages of Donald Trump Jr. Transcripts and I guesses total, Kevin,
Speaker 1: let's cut to the broader view here. Does Mr Mueller
Speaker 1: care about these documents? Is there anything in here that
Speaker 1: would be news to a Special Council? Or is this
Speaker 1: old news and a media frenzy versus what the Special
Speaker 1: Council knows already? Good morning, Tom. I'm embarrassed to say
Speaker 1: that I'm even slower than that. I'm only on about
Speaker 1: page twenty six of these documents of hundred page document dump,
Speaker 1: but so far from what I've gathered, as well as
Speaker 1: what other of my colleagues have gathered across the Beltway
Speaker 1: media is that there does appear to be new information
Speaker 1: regarding that meeting that Donald Trump Jr. Had met with
Speaker 1: Paul Man for the president's previous campaign manager or campaign chairman.
Speaker 1: Uh too, with regards to a Russian lawyer. You'll remember
Speaker 1: that they had said they had walked out they thought
Speaker 1: it was nothing. They were promised dirt on quote unquote
Speaker 1: dirt political dirt on former Democratic presidential nomine Hillary Clinton.
Speaker 1: I did get in touch with Donald Trump Junior through
Speaker 1: a spokesperson, and he released a statement that he says, quote,
Speaker 1: he appreciates the opportunity to have assisted the Judiciary Committee,
Speaker 1: and he also actually thanked Chairman Grassley and ranking Member
Speaker 1: Fine Steiner Republican and Democrat, respectively, for their quote unquote professionally.
Speaker 1: And we read it on air, Kevinists sounded like, you know,
Speaker 1: one of his good attorneys wrote it, which is great
Speaker 1: and all that help our global audience and our audience
Speaker 1: coast to coast. It's not addicted to this like you
Speaker 1: are to the Philadelphia Eagles. What's the so what of
Speaker 1: this moment this morning? Well, I think the so what
Speaker 1: is that it continues Congressional and investigations, which are separate
Speaker 1: from Bob Mueller's investigation, which quite frankly, I mean, both
Speaker 1: investigations matter, but if you're in the global audience, Bob
Speaker 1: Muller's investigation is the one that matters the most because
Speaker 1: it's the one that could lead to a host of
Speaker 1: other potential problems such as impeachment proceedings or whatnot. Not
Speaker 1: that I'm suggesting that there's any appetite for that right now,
Speaker 1: but that investigation from from Bob Muller is much more
Speaker 1: independent than the political investigations up on Capitol Hill, And
Speaker 1: the political investigations up on Capitol Hill really are only
Speaker 1: at this point used to kind of frame the goal
Speaker 1: post of what's out of bounds and inbounds, and Bob
Speaker 1: Muller's investigation is really the one that is the most notable.
Speaker 1: Does that make sense, No, it does not make sense. Sorry, well, Kevin,
Speaker 1: I I want to know why what was the impetus
Speaker 1: for Senator Grassly to release the documents. Well, I think
Speaker 1: that there's a couple of things. I think that that
Speaker 1: folks want to know what's what's going on, what was said,
Speaker 1: and and I think from the administration standpoint, phim if
Speaker 1: they get the documents out there all at once, they're
Speaker 1: not they're not being beholden to selective leakage. We should
Speaker 1: know that Senate Democrats did leak some excerpts ahead of
Speaker 1: the the entire dump at nine AM, and then I
Speaker 1: think the Democrats, you know, they don't mind keeping this
Speaker 1: in the headlines as well. That said, it's hard, it's
Speaker 1: hard to see how how these congressional investigations are not
Speaker 1: political at this point. So does that make it more
Speaker 1: difficult for UH for investigator Mueller to actually continue his
Speaker 1: investigation if this is really leak versus leak. No, in
Speaker 1: the sense that I think that it also allow if
Speaker 1: you talk to folks who are very much carefully following
Speaker 1: this in the political world, it allows for Bobbler's investigation
Speaker 1: team to kind of get things out in the public
Speaker 1: forum that otherwise might not be in all so to
Speaker 1: to to again set the parameters of of really what's
Speaker 1: an investigation here? I mean, when you have congressional committees,
Speaker 1: Bob Muller's investigation, as well as UH intelligence saying that
Speaker 1: that Russia tried to to influence and the election and
Speaker 1: divide Americans along every which way, I mean, that's that's
Speaker 1: now a fact. Well, I know you're gonna be busy.
Speaker 1: You've got a lot of pages to read today. I
Speaker 1: want to thank you very much, Kevin Serlian to our
Speaker 1: chief White House correspondent, knows all about what's going on
Speaker 1: in Washington. Thanks for listening to the Bloomberg Surveillance podcast.
Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or
Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom
Speaker 1: Keane before the podcast. You can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio