1 00:00:05,120 --> 00:00:08,480 Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along 2 00:00:08,520 --> 00:00:12,360 Speaker 1: with Jonathan Farrow and Lisa Abramowitz. Join us each day 3 00:00:12,400 --> 00:00:16,840 Speaker 1: for insight from the best an economics, geopolitics, finance and investment. 4 00:00:17,280 --> 00:00:22,079 Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and 5 00:00:22,320 --> 00:00:26,600 Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot Com, 6 00:00:26,640 --> 00:00:29,840 Speaker 1: the Bloomberg Terminal, and the Bloomberg Business App. 7 00:00:30,040 --> 00:00:32,400 Speaker 2: This to me is the question how much do we 8 00:00:32,440 --> 00:00:37,080 Speaker 2: see shares absolutely pummeled? If anything is disappointed. 9 00:00:37,120 --> 00:00:40,599 Speaker 1: There's only one person to answer the question, Walgreen's analyst 10 00:00:40,720 --> 00:00:45,680 Speaker 1: Stuart Geiser, US equity trading strategy head. It's any group, Stewart. 11 00:00:45,720 --> 00:00:48,159 Speaker 1: I know you don't talk about individual stocks, but this 12 00:00:48,320 --> 00:00:51,120 Speaker 1: is just a microcosm of the earnings battle over the 13 00:00:51,159 --> 00:00:51,960 Speaker 1: next six weeks. 14 00:00:52,360 --> 00:00:54,280 Speaker 3: Yeah, yeah, I think look at earnings have been obviously 15 00:00:54,280 --> 00:00:57,080 Speaker 3: a very pleasant surprise or a very painful surprise. If 16 00:00:57,120 --> 00:00:59,160 Speaker 3: you've been bearish on a your date basis, you know 17 00:00:59,360 --> 00:01:01,720 Speaker 3: I would agree with you. The bar is pretty high 18 00:01:01,760 --> 00:01:04,679 Speaker 3: going into earnings this quarter, particularly in the tech space, 19 00:01:05,360 --> 00:01:07,360 Speaker 3: so that's going to be I think a very very 20 00:01:07,400 --> 00:01:10,240 Speaker 3: strong test. We have seen investors kind of gravitating towards 21 00:01:10,280 --> 00:01:13,040 Speaker 3: stocks that have strong EPs momentum. This kind of happened 22 00:01:13,040 --> 00:01:15,399 Speaker 3: to head a last earning season as well, so you know, 23 00:01:15,400 --> 00:01:17,039 Speaker 3: when the bar is high, you try to go with 24 00:01:17,040 --> 00:01:18,600 Speaker 3: the stocks I think you feel like you can rely 25 00:01:18,640 --> 00:01:20,039 Speaker 3: on from an earnings perspective, what are. 26 00:01:19,920 --> 00:01:22,480 Speaker 1: Your securities analysts say? It's City Group, They've got this. 27 00:01:22,640 --> 00:01:24,959 Speaker 1: I get all the feed from City Group for some reason. 28 00:01:25,319 --> 00:01:28,319 Speaker 1: And you know, Jane Frazier's she's long on you know, IBM, 29 00:01:28,360 --> 00:01:30,440 Speaker 1: I hear about it first. But the bottom line is 30 00:01:30,480 --> 00:01:33,319 Speaker 1: what do the troops say about this pending season? 31 00:01:33,840 --> 00:01:35,320 Speaker 3: Look, I think it's I think it's going to be 32 00:01:35,360 --> 00:01:37,839 Speaker 3: a mixed bag. And the question is, you know where 33 00:01:37,840 --> 00:01:40,000 Speaker 3: do you put the most focus? You know, to me 34 00:01:40,240 --> 00:01:43,280 Speaker 3: a lot of you know, to continue the Walgridge conversation, 35 00:01:43,600 --> 00:01:45,759 Speaker 3: it's it's the services side of the economy, and it's 36 00:01:45,760 --> 00:01:48,360 Speaker 3: the labor market and consumer spending that that are the 37 00:01:48,400 --> 00:01:50,240 Speaker 3: things I think you need to pay most most close 38 00:01:50,280 --> 00:01:52,800 Speaker 3: attention to going to the second half of the year. 39 00:01:53,200 --> 00:01:55,560 Speaker 2: I'm looking right now. Walgreen shares down seven point four 40 00:01:55,600 --> 00:01:58,120 Speaker 2: percent in pre market trading on the heels of this disappointment. 41 00:01:58,120 --> 00:02:01,120 Speaker 2: It wasn't a severe disappointment, but it was appointment. What 42 00:02:01,160 --> 00:02:04,000 Speaker 2: does that say about the potential sell off if there 43 00:02:04,120 --> 00:02:07,440 Speaker 2: is any crack in any of the big tech names, 44 00:02:07,480 --> 00:02:11,519 Speaker 2: given where valuations are, given where expectations are, and given 45 00:02:11,840 --> 00:02:15,760 Speaker 2: how lofty some of these stock prices really are right now. 46 00:02:15,720 --> 00:02:17,560 Speaker 3: Yeah, it's going to be a minefield, I think, you know, 47 00:02:17,639 --> 00:02:19,480 Speaker 3: for tech earnings. And the tough part too is you 48 00:02:19,480 --> 00:02:23,080 Speaker 3: look at that week between July twenty fourth and July thirty. 49 00:02:23,080 --> 00:02:25,079 Speaker 3: First you get the FMC and that's when you get 50 00:02:25,080 --> 00:02:26,880 Speaker 3: you know, large cap earning. So you know that last 51 00:02:26,880 --> 00:02:28,560 Speaker 3: week in July I think is going to be very 52 00:02:28,560 --> 00:02:30,760 Speaker 3: busy for you all and obviously very busy for us. 53 00:02:31,040 --> 00:02:32,720 Speaker 3: And yeah, to your point, I think that the bar 54 00:02:32,800 --> 00:02:34,200 Speaker 3: is very high here for a lot of those stocks, 55 00:02:34,200 --> 00:02:36,560 Speaker 3: particularly if you look back to last quarter, you know, 56 00:02:36,639 --> 00:02:40,280 Speaker 3: stocklike Microsoft, A stocklike and Video, which were considered consensus longs, 57 00:02:40,919 --> 00:02:44,880 Speaker 3: still managed to rise considerably on earnings, and I think 58 00:02:44,880 --> 00:02:46,480 Speaker 3: they've now face the challenge of backing that. 59 00:02:46,560 --> 00:02:51,040 Speaker 1: Up headline out right now. Delta Airlines thanks the Abramowitz 60 00:02:51,120 --> 00:02:54,120 Speaker 1: fan for profit making travel in July. 61 00:02:54,960 --> 00:02:57,080 Speaker 4: Thank you. Yeah, are you just basically just. 62 00:02:57,000 --> 00:03:01,760 Speaker 1: Continue to Walgreen's tank as we go and delta out 63 00:03:01,760 --> 00:03:04,200 Speaker 1: with a complete reado. Lisa, why don't you visit it? 64 00:03:04,360 --> 00:03:07,639 Speaker 1: Your free cash flow was greater than two billion. They 65 00:03:07,680 --> 00:03:12,040 Speaker 1: popped FCF up to three billion dollars. I believe that's 66 00:03:12,040 --> 00:03:14,080 Speaker 1: a fifty percent lift on free cash. 67 00:03:14,360 --> 00:03:16,400 Speaker 2: Well, this has been the perennial story, right, that people 68 00:03:16,480 --> 00:03:20,799 Speaker 2: keep traveling, that the distortions post pandemic have continued. Given 69 00:03:21,000 --> 00:03:23,560 Speaker 2: some of these post pandemic distortions, And we were talking 70 00:03:23,600 --> 00:03:26,280 Speaker 2: before we went on about how people do keep on 71 00:03:26,320 --> 00:03:29,600 Speaker 2: spending and maybe they were conditioned by remaining cooped up 72 00:03:30,080 --> 00:03:32,040 Speaker 2: and feeling like they have to seize life at the 73 00:03:32,080 --> 00:03:35,280 Speaker 2: horns or whatever kind of psychological rationale you want to 74 00:03:35,280 --> 00:03:37,560 Speaker 2: put on it. But Stuart, how does that color your 75 00:03:37,680 --> 00:03:41,560 Speaker 2: view of whether you're more optimistic or more pessimistic once 76 00:03:41,600 --> 00:03:43,119 Speaker 2: we get the reality of these earnings. 77 00:03:43,520 --> 00:03:44,400 Speaker 1: Look, I think. 78 00:03:44,320 --> 00:03:46,560 Speaker 3: It's earnings and to your point, is consumer spending employment. 79 00:03:46,640 --> 00:03:48,120 Speaker 3: And you know, if we're going to have a recession 80 00:03:48,120 --> 00:03:49,480 Speaker 3: in the second half of the year, it's going to 81 00:03:49,520 --> 00:03:51,560 Speaker 3: have to come from the consumer side of the market, right, 82 00:03:51,600 --> 00:03:53,600 Speaker 3: So that's why there's so much focus on the labor 83 00:03:53,640 --> 00:03:56,200 Speaker 3: market I think going into earnings. Yet there's a high 84 00:03:56,200 --> 00:03:58,760 Speaker 3: bar for tech, mostly because tech has been leadership of 85 00:03:58,800 --> 00:04:00,560 Speaker 3: the market, and I think there's a higher, you know, 86 00:04:00,600 --> 00:04:03,160 Speaker 3: a high bar. A lot of focus on consumer companies 87 00:04:03,200 --> 00:04:05,080 Speaker 3: just to see if the spending is following through. Are 88 00:04:05,080 --> 00:04:07,680 Speaker 3: they continuing to be able to pass through inflation or 89 00:04:07,720 --> 00:04:09,560 Speaker 3: are they starting to have to discount, you know, to 90 00:04:09,600 --> 00:04:11,640 Speaker 3: get to get people in the door. So I think, 91 00:04:11,680 --> 00:04:13,840 Speaker 3: you know, those are the two areas will probably focused 92 00:04:13,840 --> 00:04:15,640 Speaker 3: on the most f earnings coming up is can tech 93 00:04:15,720 --> 00:04:18,039 Speaker 3: hit the bar? And what signal are we getting on 94 00:04:18,040 --> 00:04:18,680 Speaker 3: consumer spend? 95 00:04:18,839 --> 00:04:20,880 Speaker 2: What does it mean that tech is that tech earnings 96 00:04:21,080 --> 00:04:23,560 Speaker 2: is a minefield, that that whole period is a minefield 97 00:04:23,600 --> 00:04:26,360 Speaker 2: at a time when you've been pretty optimistic about where 98 00:04:26,400 --> 00:04:27,119 Speaker 2: the market's heading. 99 00:04:27,520 --> 00:04:30,400 Speaker 3: Yeah, look, the tech the tech trade is obviously not 100 00:04:30,520 --> 00:04:32,400 Speaker 3: as we say, as clean as it was you know 101 00:04:32,440 --> 00:04:33,920 Speaker 3: at the beginning of the year. You know, I think 102 00:04:33,960 --> 00:04:36,799 Speaker 3: the bottom line here is if you look at sales revisions, 103 00:04:36,839 --> 00:04:39,280 Speaker 3: if you look at EBITDA revisions, they've been you know, 104 00:04:39,440 --> 00:04:41,880 Speaker 3: higher for tech and even higher in the AI space. 105 00:04:42,120 --> 00:04:43,960 Speaker 3: So that kind of sets your bar, you know a 106 00:04:43,960 --> 00:04:46,560 Speaker 3: little bit higher for expectations, and you know what we've 107 00:04:46,560 --> 00:04:49,120 Speaker 3: seen the last I would say one to two months 108 00:04:49,120 --> 00:04:51,960 Speaker 3: is is long only investors in particular starting to have 109 00:04:52,000 --> 00:04:54,280 Speaker 3: some fatigue in terms of tech buying. We're starting to 110 00:04:54,279 --> 00:04:56,560 Speaker 3: see some outflows from the space. So you put those 111 00:04:56,560 --> 00:04:58,760 Speaker 3: two things together, you have a high bar and what 112 00:04:58,839 --> 00:05:01,839 Speaker 3: looks like some fatigue on the institutional side, and that 113 00:05:02,000 --> 00:05:03,600 Speaker 3: just to your point, sets it up that you need 114 00:05:03,640 --> 00:05:06,159 Speaker 3: to need to deliver results here to kind of justify 115 00:05:06,200 --> 00:05:07,680 Speaker 3: your performance out of your today basis. 116 00:05:07,720 --> 00:05:10,600 Speaker 1: I want you to talk to market timers right now. 117 00:05:10,720 --> 00:05:13,479 Speaker 1: You have been brilliant bailing the rest at City Group 118 00:05:13,560 --> 00:05:16,520 Speaker 1: about saying you got to be in the game to win. 119 00:05:16,920 --> 00:05:21,800 Speaker 1: Talk about market timing right now, the efficacy of being 120 00:05:21,960 --> 00:05:25,200 Speaker 1: hyper cautious versus the optimism I hear from City Group. 121 00:05:25,720 --> 00:05:28,000 Speaker 3: Yeah, look, I think even our optimism is starting to 122 00:05:28,000 --> 00:05:29,760 Speaker 3: get a little bit tired, you know, to be completely 123 00:05:29,760 --> 00:05:32,320 Speaker 3: honest with you, you know, partly its price action and partly 124 00:05:32,360 --> 00:05:34,400 Speaker 3: it's one of the reasons we were kind of more 125 00:05:34,440 --> 00:05:37,200 Speaker 3: bullish coming into the year was so much stock had 126 00:05:37,200 --> 00:05:39,680 Speaker 3: been sold last year, and we thought that that those 127 00:05:39,680 --> 00:05:42,599 Speaker 3: positions kind of needed to be rebuilt. And just the 128 00:05:42,680 --> 00:05:46,000 Speaker 3: data we're seeing on flows suggests that those positions have 129 00:05:46,120 --> 00:05:48,719 Speaker 3: largely been rebuilt, call it your seventy five percent of 130 00:05:48,720 --> 00:05:52,080 Speaker 3: the way you know, along that path. So from our perspective, 131 00:05:52,440 --> 00:05:54,520 Speaker 3: it does kind of impact risk reward a little bit. 132 00:05:54,560 --> 00:05:56,880 Speaker 3: So look, you know, we are still relatively positive, you know, 133 00:05:56,920 --> 00:05:58,920 Speaker 3: gun to our head, we'd say up up rather than 134 00:05:58,960 --> 00:06:03,160 Speaker 3: down at this point. But the risk reward is definitely. 135 00:06:02,920 --> 00:06:04,960 Speaker 1: The nature of a bull market. I mean, I mean, 136 00:06:05,200 --> 00:06:07,039 Speaker 1: I'm sorry, we're not in the first leg off the 137 00:06:07,080 --> 00:06:10,400 Speaker 1: Matt Bramo was wicked gloomy the third week of October 138 00:06:10,480 --> 00:06:12,279 Speaker 1: last year, and guess what, we all got off the 139 00:06:12,320 --> 00:06:15,800 Speaker 1: mat and went, it's not supposed to be like that now, right, No, 140 00:06:16,040 --> 00:06:16,320 Speaker 1: it's not. 141 00:06:16,440 --> 00:06:18,800 Speaker 3: I mean for a number of reasons. One is, you've 142 00:06:18,839 --> 00:06:22,360 Speaker 3: had a tremendously positive economic data surprise to start the year. 143 00:06:22,440 --> 00:06:24,800 Speaker 3: That's flowed through to earnings expectations as well. I think 144 00:06:24,839 --> 00:06:27,360 Speaker 3: that's that's helped lift the market. Look, you get above 145 00:06:27,400 --> 00:06:31,400 Speaker 3: forty four hundred, you know, and it looks like institutional 146 00:06:31,400 --> 00:06:34,880 Speaker 3: investors at least have started to you know, just sort 147 00:06:34,880 --> 00:06:36,800 Speaker 3: of call pause a little bit in terms of their 148 00:06:36,800 --> 00:06:38,720 Speaker 3: inflows into the market. So that that means one of 149 00:06:38,800 --> 00:06:40,799 Speaker 3: two things. Either, I think you need to take recession 150 00:06:40,839 --> 00:06:42,640 Speaker 3: risk out of the system, which would be your next 151 00:06:42,720 --> 00:06:45,280 Speaker 3: leg higher or you're going to need, you know, retail 152 00:06:45,320 --> 00:06:47,279 Speaker 3: to continue to sponsor this market to the upside. 153 00:06:47,320 --> 00:06:48,840 Speaker 2: Are you one of those people who says if there 154 00:06:48,880 --> 00:06:51,359 Speaker 2: is a sell off in tech, it's a biable dip. 155 00:06:51,400 --> 00:06:53,280 Speaker 2: That's what I keep hearing from everyone. 156 00:06:54,240 --> 00:06:56,320 Speaker 3: Look, I think if there's a cello in tech, I 157 00:06:56,320 --> 00:06:58,560 Speaker 3: think that means markets are down in general. You're not 158 00:06:58,560 --> 00:07:01,480 Speaker 3: going to get tech down with markets off, right, So 159 00:07:01,880 --> 00:07:04,120 Speaker 3: every dip is a Bible tip, I guess. But you know, 160 00:07:04,120 --> 00:07:06,080 Speaker 3: from our perspective, I think if you get a pull 161 00:07:06,160 --> 00:07:07,479 Speaker 3: back here, I agree with you. I think there are 162 00:07:07,480 --> 00:07:09,400 Speaker 3: a lot of people waiting to get into the market, 163 00:07:09,440 --> 00:07:12,920 Speaker 3: you know, a bit lower, which probably mean like right 164 00:07:12,920 --> 00:07:15,000 Speaker 3: now we're in the pain trade. To the upside, you know, 165 00:07:15,000 --> 00:07:16,720 Speaker 3: people didn't want to chase it. I think what you'll 166 00:07:16,720 --> 00:07:18,800 Speaker 3: probably have is people buy a little too quickly on 167 00:07:18,840 --> 00:07:20,760 Speaker 3: the way down and then and then kind of have 168 00:07:20,840 --> 00:07:23,760 Speaker 3: to average themselves in the floor is clearly higher than 169 00:07:23,800 --> 00:07:26,240 Speaker 3: it was to start the year. Again, Yeah, I agree 170 00:07:26,240 --> 00:07:27,480 Speaker 3: with you. I do think you'll see so I don't 171 00:07:27,480 --> 00:07:29,360 Speaker 3: want to call it value picking, but you'll definitely see 172 00:07:29,360 --> 00:07:31,480 Speaker 3: some people who'd be happy to buy the market call 173 00:07:31,520 --> 00:07:33,920 Speaker 3: it five to ten percent lower here, which, as you know, 174 00:07:34,040 --> 00:07:34,880 Speaker 3: lives the downside. 175 00:07:35,240 --> 00:07:37,280 Speaker 1: I don't know if you knew this. This is brilliant Stewart, 176 00:07:37,320 --> 00:07:39,720 Speaker 1: thank you so much. But Bramo's got the east Bay 177 00:07:39,800 --> 00:07:43,000 Speaker 1: forty four from grand Banks on delivery later this summer. 178 00:07:43,280 --> 00:07:47,760 Speaker 1: Gorgeous with a light blue and she's named Bible Dip. 179 00:07:50,200 --> 00:07:52,760 Speaker 1: This is great. It's a picnic boat for Bramo to 180 00:07:52,760 --> 00:07:55,320 Speaker 1: have a picnic. It's like the Hinkley one. But actually 181 00:07:55,320 --> 00:07:58,200 Speaker 1: I think it has more character than the Hinkley picnic boat. 182 00:07:58,440 --> 00:08:01,160 Speaker 2: I think I got lost in me paddle to blow 183 00:08:01,240 --> 00:08:02,600 Speaker 2: up paddle board instead. 184 00:08:02,800 --> 00:08:04,120 Speaker 4: That sort of my speed. 185 00:08:04,200 --> 00:08:06,960 Speaker 1: But here out it was great. I love the site Thrusters, 186 00:08:06,960 --> 00:08:09,520 Speaker 1: but I'm sorry the East Space betteran you know you 187 00:08:09,600 --> 00:08:10,200 Speaker 1: might this. 188 00:08:10,280 --> 00:08:11,720 Speaker 4: Was the last time you were on a boat. 189 00:08:11,960 --> 00:08:14,960 Speaker 1: I mean, come on, it was boat was called the 190 00:08:15,120 --> 00:08:16,600 Speaker 1: USS Drama. 191 00:08:16,880 --> 00:08:18,840 Speaker 2: Yeah exactly, that sounds more like it. 192 00:08:19,080 --> 00:08:22,320 Speaker 1: Yeah, Stuart Kaiser, just bringing in come back, bring Jeff 193 00:08:22,400 --> 00:08:25,120 Speaker 1: you with you from b and ymel every day. Kaiser 194 00:08:25,200 --> 00:08:38,080 Speaker 1: in you it is with our question the Hallmark Research 195 00:08:38,200 --> 00:08:42,080 Speaker 1: analysis of the year. You could hear the silence in 196 00:08:42,200 --> 00:08:45,679 Speaker 1: Washington is the International Monetary Fund, led by the economics 197 00:08:45,720 --> 00:08:49,760 Speaker 1: of gidigopin F looked out to twenty twenty eight and 198 00:08:49,840 --> 00:08:54,120 Speaker 1: saw a growth trajectory that took us back decades to 199 00:08:54,280 --> 00:08:59,880 Speaker 1: nineteen ninety. It was an extraordinary call on tepid economic growth. 200 00:09:00,240 --> 00:09:03,400 Speaker 1: We need an update. We go to Portugal and CenTra 201 00:09:03,520 --> 00:09:07,000 Speaker 1: the meetings of the European Central Bank. Francine Lacroix of 202 00:09:07,040 --> 00:09:10,920 Speaker 1: the Pulse in conversation with doctor Gopineth Francine, good morning, 203 00:09:11,120 --> 00:09:11,800 Speaker 1: Good morning Tom. 204 00:09:11,840 --> 00:09:14,160 Speaker 5: I am delighted to be joined by Gita Goopinoff, of 205 00:09:14,160 --> 00:09:16,760 Speaker 5: course of the IMF, who yesterday also really opened the 206 00:09:16,800 --> 00:09:20,400 Speaker 5: forum here in Syndrome with a very powerful speech linking 207 00:09:20,520 --> 00:09:23,480 Speaker 5: fiscal policy and montary policy and really reminding everyone that 208 00:09:23,720 --> 00:09:25,400 Speaker 5: they had to work in tantem So, Gita, thank you 209 00:09:25,440 --> 00:09:27,760 Speaker 5: so much for joining us. When you look at the 210 00:09:27,800 --> 00:09:31,760 Speaker 5: fight against inflation, there's now a lot of talk about recession. 211 00:09:32,080 --> 00:09:34,480 Speaker 5: You know the fact that core inflation is still high, 212 00:09:34,559 --> 00:09:37,520 Speaker 5: but headline inflation is coming down. What does a policy 213 00:09:37,559 --> 00:09:39,200 Speaker 5: mistake from central banks now look like? 214 00:09:40,320 --> 00:09:42,920 Speaker 6: First of all, it's the pressure to join your friends scene. 215 00:09:43,720 --> 00:09:47,760 Speaker 6: What are you experiencing is that inflation is taking a 216 00:09:47,800 --> 00:09:49,800 Speaker 6: long time to get back to its target. And yes, 217 00:09:49,880 --> 00:09:53,120 Speaker 6: headline is coming down significantly, but core inflation, what it 218 00:09:53,200 --> 00:09:57,760 Speaker 6: has eased, is still persistently high. So in this environment, 219 00:09:58,559 --> 00:10:00,760 Speaker 6: our advice is a central bank will need to stay 220 00:10:00,760 --> 00:10:01,200 Speaker 6: the course. 221 00:10:01,640 --> 00:10:04,680 Speaker 4: In the case of the ECB, that will mean that some. 222 00:10:04,480 --> 00:10:07,880 Speaker 6: More continued tightening and then to stay on hold to 223 00:10:07,960 --> 00:10:10,640 Speaker 6: make sure that you're confident that inflation is coming back 224 00:10:10,720 --> 00:10:13,840 Speaker 6: durably down and that that could come along with more 225 00:10:13,880 --> 00:10:16,320 Speaker 6: weakness in liberal markets that we've seen so far and 226 00:10:16,400 --> 00:10:19,640 Speaker 6: more weakness in the economy in general, but that's what 227 00:10:19,800 --> 00:10:21,320 Speaker 6: is needed to bring inflation down. 228 00:10:21,640 --> 00:10:22,840 Speaker 4: Do you worry about the markets? 229 00:10:22,880 --> 00:10:24,320 Speaker 5: And I know you don't look at the market send 230 00:10:24,360 --> 00:10:25,840 Speaker 5: day out, but there seems to be a bias in 231 00:10:25,880 --> 00:10:28,319 Speaker 5: the markets that are actually inflation is coming down and 232 00:10:28,400 --> 00:10:32,040 Speaker 5: that central banks will be ready to not hike as 233 00:10:32,120 --> 00:10:35,120 Speaker 5: much as maybe they will. So is there a danger 234 00:10:35,160 --> 00:10:38,080 Speaker 5: that the market is mispricing something that will then create 235 00:10:38,120 --> 00:10:38,880 Speaker 5: an event. 236 00:10:38,840 --> 00:10:40,720 Speaker 6: When the markets have been off since the start of 237 00:10:40,760 --> 00:10:44,359 Speaker 6: this year. I mean, if you look at their expectations 238 00:10:44,360 --> 00:10:48,360 Speaker 6: of the policy rate part in some countries, especially the US, 239 00:10:48,880 --> 00:10:51,720 Speaker 6: they were expecting three rate cuts this year for US 240 00:10:51,760 --> 00:10:55,120 Speaker 6: FED policy, and they have adjusted, they've come back now 241 00:10:55,200 --> 00:10:58,719 Speaker 6: to recognizing that no, we are there here for longer 242 00:10:58,760 --> 00:11:02,400 Speaker 6: than was expected. So I think markets have been very optimistic, 243 00:11:02,480 --> 00:11:06,000 Speaker 6: and I suspect there's still somewhat optimistic about the path 244 00:11:06,040 --> 00:11:07,040 Speaker 6: for interest rates. 245 00:11:07,280 --> 00:11:09,880 Speaker 5: What do they most misunderstand is that the fact that 246 00:11:09,920 --> 00:11:13,120 Speaker 5: interest rates have to remain higher for longer, which Christine 247 00:11:13,160 --> 00:11:15,800 Speaker 5: Laguard actually laid out beautifully in her speech, or that 248 00:11:15,840 --> 00:11:17,760 Speaker 5: they have to rise higher than expected. 249 00:11:18,160 --> 00:11:20,720 Speaker 4: I think it's how long they're going to stay at that. 250 00:11:20,840 --> 00:11:23,439 Speaker 6: I think that's the part where there is a disconnect 251 00:11:23,480 --> 00:11:27,120 Speaker 6: between the markets and what central banks are signaling, and 252 00:11:27,200 --> 00:11:29,520 Speaker 6: so far it's the markets that have had to correct 253 00:11:30,040 --> 00:11:33,440 Speaker 6: to the central bank paths as opposed to other way around. 254 00:11:33,880 --> 00:11:35,800 Speaker 6: So I still think that they're off a bit on 255 00:11:36,120 --> 00:11:37,120 Speaker 6: the duration. 256 00:11:37,000 --> 00:11:38,760 Speaker 4: For which they have to keep rates high. 257 00:11:39,120 --> 00:11:41,560 Speaker 5: What's the path forward for growth should we worry about? 258 00:11:41,760 --> 00:11:44,240 Speaker 5: Once we get inflation in control. 259 00:11:45,640 --> 00:11:49,600 Speaker 6: We are seeing growth weakening, We are seeing slowing activity. 260 00:11:49,679 --> 00:11:52,960 Speaker 6: At this point, we need to bring inflation down to 261 00:11:52,960 --> 00:11:55,640 Speaker 6: have sustainable growth, which is why it's super important to 262 00:11:55,640 --> 00:11:58,360 Speaker 6: do this this time around, since it's not just a 263 00:11:58,400 --> 00:12:03,800 Speaker 6: demand phenomenon. Had supply disruptions correct themselves. We've had energy 264 00:12:03,840 --> 00:12:06,440 Speaker 6: prices come down. I think both those factors are helping 265 00:12:06,640 --> 00:12:10,480 Speaker 6: bring inflation down without needing too much of a hit 266 00:12:10,600 --> 00:12:11,400 Speaker 6: to the economy. 267 00:12:11,920 --> 00:12:13,840 Speaker 4: But I think we have to wait and see. 268 00:12:13,880 --> 00:12:16,120 Speaker 6: We're only just seeing the effects of market policy work 269 00:12:16,160 --> 00:12:18,240 Speaker 6: through the system now, and we can see much more slowing. 270 00:12:18,360 --> 00:12:20,360 Speaker 5: But is that why, I mean, why is correntflation so 271 00:12:20,400 --> 00:12:22,640 Speaker 5: stubbornly high. No one can quite figure it out, which 272 00:12:22,640 --> 00:12:25,080 Speaker 5: is why it keeps on surprising us to the upside. 273 00:12:25,360 --> 00:12:27,839 Speaker 6: It's a big part of the conversation we're having at CenTra, 274 00:12:28,240 --> 00:12:30,840 Speaker 6: which is is it the fact that market policy transmission 275 00:12:31,080 --> 00:12:32,920 Speaker 6: is now wicked than it used to be, or is 276 00:12:32,960 --> 00:12:35,760 Speaker 6: it the fact that you haven't raised interest rates by 277 00:12:35,800 --> 00:12:38,040 Speaker 6: an app I think these are questions that are coming up. 278 00:12:38,679 --> 00:12:39,240 Speaker 4: We have a. 279 00:12:39,120 --> 00:12:43,040 Speaker 6: Situation where it has been the case that household balance 280 00:12:43,080 --> 00:12:46,480 Speaker 6: sheets corporate balance sheets have been strong, which has helped 281 00:12:47,240 --> 00:12:48,240 Speaker 6: hold up resilience. 282 00:12:48,559 --> 00:12:49,720 Speaker 4: Labor markets are ties. 283 00:12:49,840 --> 00:12:52,440 Speaker 6: People believe that they will have a job, they can 284 00:12:52,520 --> 00:12:56,959 Speaker 6: keep a job, Wages are going up, and services pending 285 00:12:57,040 --> 00:13:00,240 Speaker 6: tends to be much less intrasensitive than when it comes 286 00:13:00,280 --> 00:13:04,320 Speaker 6: to durable goods, which consumers piled up on already during 287 00:13:04,360 --> 00:13:06,520 Speaker 6: the peak up the pandemic. So I think all these 288 00:13:06,520 --> 00:13:11,079 Speaker 6: factors could be muting the effect of Montre policy transmission. 289 00:13:11,559 --> 00:13:15,280 Speaker 6: But now as those effects decline, we could start seeing 290 00:13:15,760 --> 00:13:17,400 Speaker 6: more of a slowing inactivity. 291 00:13:17,559 --> 00:13:19,560 Speaker 5: I mean, to put it simply, a night mercenario would 292 00:13:19,559 --> 00:13:21,440 Speaker 5: be some kind of spiral. So you have wages going up, 293 00:13:21,480 --> 00:13:23,840 Speaker 5: prices go up, and then you lose control. 294 00:13:23,960 --> 00:13:26,800 Speaker 6: Are we there yet? I don't think so. Don't We're 295 00:13:26,840 --> 00:13:30,520 Speaker 6: not seeing that in like in the US or in 296 00:13:30,559 --> 00:13:33,360 Speaker 6: the Euro Area. We certainly are seeing wage cash up 297 00:13:33,400 --> 00:13:34,839 Speaker 6: and that has happened, That's happened. 298 00:13:34,600 --> 00:13:35,679 Speaker 4: In previous cycles too. 299 00:13:35,720 --> 00:13:38,640 Speaker 6: We should expect to see that, But we're not seeing 300 00:13:38,640 --> 00:13:42,560 Speaker 6: wages pushing up prices. The concern, of course, is that 301 00:13:42,600 --> 00:13:45,280 Speaker 6: if it takes so long to bring inflation down, then 302 00:13:45,320 --> 00:13:48,480 Speaker 6: you might unhinge inflation expectations and then trigger a wage 303 00:13:48,480 --> 00:13:51,280 Speaker 6: price file. This is why President god spends a lot 304 00:13:51,320 --> 00:13:54,440 Speaker 6: of time talking about, you know, the persistence of inflation 305 00:13:54,559 --> 00:13:56,880 Speaker 6: and the reason to stay high for long. 306 00:13:57,160 --> 00:13:59,240 Speaker 5: So is that why interest rates you think have to 307 00:13:59,240 --> 00:14:00,480 Speaker 5: stay higher for longer? 308 00:14:00,600 --> 00:14:01,360 Speaker 4: Is it really? 309 00:14:01,440 --> 00:14:03,440 Speaker 5: I mean, it's to get inflation two percent, but really 310 00:14:03,440 --> 00:14:06,440 Speaker 5: it's to try to break through that spiral. That could 311 00:14:06,520 --> 00:14:08,640 Speaker 5: be impossible actually almost to get out. 312 00:14:08,760 --> 00:14:11,640 Speaker 6: If you look at projections for when inflation gets back 313 00:14:11,679 --> 00:14:14,040 Speaker 6: to targets in the Euro Area, that's the middle of 314 00:14:14,040 --> 00:14:15,000 Speaker 6: twenty twenty five. 315 00:14:15,600 --> 00:14:16,680 Speaker 4: That's two years from now. 316 00:14:16,760 --> 00:14:19,680 Speaker 6: This is a long time and that's why it is 317 00:14:19,760 --> 00:14:23,440 Speaker 6: critical that you can't have any further risks to de 318 00:14:23,560 --> 00:14:26,120 Speaker 6: anchoring of inflation, because it's two years is a long 319 00:14:26,160 --> 00:14:28,800 Speaker 6: time to bring inflation back down to target. To make 320 00:14:28,800 --> 00:14:30,920 Speaker 6: sure it happens, you have to stay the course and 321 00:14:31,040 --> 00:14:34,440 Speaker 6: keep interest ras high and until you see durable signs 322 00:14:34,960 --> 00:14:36,960 Speaker 6: that core inflation is coming down, then of course you 323 00:14:37,040 --> 00:14:38,240 Speaker 6: have to be data dependent. 324 00:14:38,440 --> 00:14:40,160 Speaker 5: I mean, all the world central bankers are here. It 325 00:14:40,200 --> 00:14:42,080 Speaker 5: was quite exciting for me to see j Powell also 326 00:14:42,120 --> 00:14:44,520 Speaker 5: walk in and the sneakers. I don't often see him 327 00:14:44,520 --> 00:14:47,720 Speaker 5: actually in sneakers or face to face. Is a gravitational 328 00:14:47,760 --> 00:14:50,600 Speaker 5: pull of what the FED does. Too heavy to hand 329 00:14:50,720 --> 00:14:52,920 Speaker 5: for the UCB, but also the Bank of England, the 330 00:14:52,920 --> 00:14:53,560 Speaker 5: Bank of Japan. 331 00:14:54,800 --> 00:14:58,280 Speaker 6: What the FED does matters for the whole world, including 332 00:14:58,320 --> 00:15:01,080 Speaker 6: for other major central banks. But I think this is 333 00:15:01,120 --> 00:15:03,280 Speaker 6: a time when central bankers are coming together also to 334 00:15:03,360 --> 00:15:05,640 Speaker 6: understand inflation dynamics better. 335 00:15:06,120 --> 00:15:08,040 Speaker 4: There are still several questions. 336 00:15:08,080 --> 00:15:11,320 Speaker 6: There's a lot of uncertainty on the outlook, and centralize 337 00:15:11,320 --> 00:15:13,360 Speaker 6: a good learning experience for all central bankers. 338 00:15:13,760 --> 00:15:16,120 Speaker 5: How hard is it for a monetary policy to counter 339 00:15:16,160 --> 00:15:19,680 Speaker 5: fiscal policy? And again, because we're seeing inflationarized. 340 00:15:18,880 --> 00:15:20,880 Speaker 4: That means the cost of living goes up. 341 00:15:20,920 --> 00:15:23,600 Speaker 5: So it's understandable that politicians want. 342 00:15:23,480 --> 00:15:24,880 Speaker 4: To be there for their citizens. 343 00:15:25,880 --> 00:15:29,160 Speaker 6: I think it's perfectly good for governments to want to 344 00:15:29,200 --> 00:15:32,720 Speaker 6: be there for their vulnerable citizens and to provide targeted support. 345 00:15:33,680 --> 00:15:37,040 Speaker 6: What is not really good at this point would be 346 00:15:37,080 --> 00:15:41,320 Speaker 6: to have broad based support that generates very large fiscal deficits, 347 00:15:41,440 --> 00:15:45,160 Speaker 6: especially increases in fiscal deficits, and then feeds into inflation. 348 00:15:45,680 --> 00:15:46,560 Speaker 4: That is a problem. 349 00:15:46,600 --> 00:15:48,800 Speaker 6: I mean, all the indicators, the fact that we have 350 00:15:48,880 --> 00:15:51,480 Speaker 6: high inflation now, the fact that debt is high and 351 00:15:51,520 --> 00:15:53,360 Speaker 6: we need to build buffers because they're going to be 352 00:15:53,360 --> 00:15:57,000 Speaker 6: future shocks. All of that point towards fiscal tightening, and 353 00:15:57,080 --> 00:15:58,239 Speaker 6: that's what we're recommending. 354 00:15:58,640 --> 00:16:00,680 Speaker 5: When you look at central the big center bankers around 355 00:16:00,680 --> 00:16:03,600 Speaker 5: the world, and of course you know, dealing with inflation 356 00:16:03,640 --> 00:16:05,400 Speaker 5: and growth, who do you think has the toughest job 357 00:16:05,680 --> 00:16:06,400 Speaker 5: bank of England? 358 00:16:07,680 --> 00:16:09,520 Speaker 6: I think at this point among the major ones. If 359 00:16:09,520 --> 00:16:11,240 Speaker 6: I put the US, the Euro Area on the Bank 360 00:16:11,280 --> 00:16:15,160 Speaker 6: of England, I think in the UK the inflation problem 361 00:16:15,240 --> 00:16:19,320 Speaker 6: looks more difficult than in the other parts because they 362 00:16:19,320 --> 00:16:22,480 Speaker 6: have a self supply shock problem that came from the 363 00:16:22,560 --> 00:16:26,320 Speaker 6: energy prices, and they also have the demand side, which 364 00:16:26,360 --> 00:16:28,440 Speaker 6: is very tight labor markets and if you look at 365 00:16:28,480 --> 00:16:31,520 Speaker 6: wages in fact, in England, this is where you see 366 00:16:31,520 --> 00:16:34,640 Speaker 6: the most amount of wage pressures coming in. 367 00:16:34,880 --> 00:16:36,000 Speaker 4: So how do they get out of it? 368 00:16:36,200 --> 00:16:39,720 Speaker 5: Again, there's also huge reliability on mortgages, so it's not 369 00:16:39,760 --> 00:16:41,840 Speaker 5: as easy as you just keep on hiking because the 370 00:16:41,880 --> 00:16:43,560 Speaker 5: housing market is so sensitive to that. 371 00:16:44,360 --> 00:16:44,520 Speaker 4: Well. 372 00:16:44,560 --> 00:16:46,360 Speaker 6: I think personally the fact that the Bank of England 373 00:16:46,440 --> 00:16:49,720 Speaker 6: raised rates by fifty basis points recently in the most 374 00:16:49,720 --> 00:16:50,560 Speaker 6: recent meeting, I. 375 00:16:50,480 --> 00:16:51,560 Speaker 4: Think that's a welcome step. 376 00:16:51,640 --> 00:16:55,160 Speaker 6: That's a clear signal that they are in the fight 377 00:16:55,240 --> 00:16:58,920 Speaker 6: to bring inflation down. One of the reasons they've been 378 00:16:59,080 --> 00:17:01,760 Speaker 6: somewhat cautious is exactly what can happen to mortgages and 379 00:17:01,840 --> 00:17:04,760 Speaker 6: the housing market. But you know, there's been an increase 380 00:17:04,800 --> 00:17:07,600 Speaker 6: in the duration of fixed rate mortgages in the UK, 381 00:17:07,800 --> 00:17:11,240 Speaker 6: so you have some attenuation of that effect, and household 382 00:17:11,280 --> 00:17:13,440 Speaker 6: balance sheets are much stronger than they were in the. 383 00:17:13,400 --> 00:17:15,000 Speaker 4: Past, so that should also help. 384 00:17:16,080 --> 00:17:18,080 Speaker 5: Tom Keen was also talking about, of course your at 385 00:17:18,080 --> 00:17:21,400 Speaker 5: look and what we saw just a couple of weeks 386 00:17:21,440 --> 00:17:24,640 Speaker 5: ago by the IMF. Are you more optimistic now about 387 00:17:24,720 --> 00:17:27,399 Speaker 5: the world economy in twenty twenty four than new were 388 00:17:27,480 --> 00:17:28,160 Speaker 5: six months ago? 389 00:17:30,280 --> 00:17:33,480 Speaker 6: We had a projection for the world economy to grow 390 00:17:33,480 --> 00:17:35,560 Speaker 6: as around two point eight percent this year, which was 391 00:17:36,400 --> 00:17:38,680 Speaker 6: you know, coming down from three point four percent last 392 00:17:38,760 --> 00:17:42,199 Speaker 6: year and then going up to around three percent. Our 393 00:17:42,240 --> 00:17:45,119 Speaker 6: new numbers will be out in July. We don't have 394 00:17:45,200 --> 00:17:49,480 Speaker 6: it ready at this point. We're getting different data from 395 00:17:49,480 --> 00:17:52,040 Speaker 6: different countries at this point, but I think the overall 396 00:17:52,200 --> 00:17:54,480 Speaker 6: story of an economy that's. 397 00:17:54,320 --> 00:17:56,600 Speaker 4: Slower this year than it was last year will remain. 398 00:17:57,080 --> 00:17:59,440 Speaker 5: So how much of the conversation here is also trying 399 00:17:59,440 --> 00:18:02,320 Speaker 5: to understand and some of these forecasts going forward, and 400 00:18:02,320 --> 00:18:04,280 Speaker 5: how central banks actually can do a better job in 401 00:18:04,359 --> 00:18:07,760 Speaker 5: understanding the impact that monetary policy has on future inflation. 402 00:18:08,800 --> 00:18:11,959 Speaker 6: I think everybody's trying to understand how economic activity is 403 00:18:11,960 --> 00:18:15,080 Speaker 6: being impacted by the rate increases that have happened so far, 404 00:18:15,160 --> 00:18:18,640 Speaker 6: because they've been sizable. The expectation was that we would 405 00:18:18,640 --> 00:18:21,320 Speaker 6: have seen more slowing down already than we've seen so far. 406 00:18:21,720 --> 00:18:25,560 Speaker 6: So the surprise is on the resilience of economic activity. Now, 407 00:18:25,560 --> 00:18:28,320 Speaker 6: of course, we don't want to extrapolate and just assume 408 00:18:28,359 --> 00:18:29,960 Speaker 6: that this resilience is going to continue. 409 00:18:29,960 --> 00:18:31,000 Speaker 4: So it's a difficult. 410 00:18:30,720 --> 00:18:33,600 Speaker 6: Job for central bank because at this point they have 411 00:18:33,800 --> 00:18:37,360 Speaker 6: to wash the data very carefully, but at the same 412 00:18:37,359 --> 00:18:40,920 Speaker 6: time they have to show real commitment to bringing inflation down. 413 00:18:41,200 --> 00:18:43,720 Speaker 5: Gita, thank you so much for joining us. Kikita governor 414 00:18:43,800 --> 00:18:46,080 Speaker 5: there of course of the IMF. I also spotted Tom 415 00:18:46,200 --> 00:18:48,280 Speaker 5: the new central bank governor of the Bank of Japan. 416 00:18:48,320 --> 00:18:50,600 Speaker 5: I have to say, it's like a rock concert for nerds. 417 00:18:50,600 --> 00:18:52,680 Speaker 5: We were quite excited because the first time I think 418 00:18:52,880 --> 00:18:56,040 Speaker 5: he's been traveling for an event since he was made 419 00:18:56,040 --> 00:18:57,119 Speaker 5: governor outside of Japan. 420 00:18:57,320 --> 00:18:59,800 Speaker 1: Yeah, the invite got lost in the mail. Lisa was 421 00:18:59,800 --> 00:19:02,600 Speaker 1: looking forward through our meal today. All I can say, 422 00:19:02,640 --> 00:19:06,120 Speaker 1: Francine is you and doctor Gopineth. I can just see 423 00:19:06,160 --> 00:19:13,439 Speaker 1: you having the Travis Sieriro at Casa Pequida in CenTra Lisa, 424 00:19:13,520 --> 00:19:16,560 Speaker 1: this is very important. It's a sweet eggy almond cream 425 00:19:16,800 --> 00:19:20,280 Speaker 1: dusted with cast or sugar on top. 426 00:19:20,640 --> 00:19:22,800 Speaker 2: I'm sure it'll be enjoyable. Francine, thank you so. 427 00:19:22,880 --> 00:19:30,760 Speaker 1: M joining us now, someone who's been of immense value 428 00:19:30,800 --> 00:19:33,760 Speaker 1: to us over the years. Kitchuk is with a Derivative 429 00:19:34,040 --> 00:19:39,760 Speaker 1: Society General, their chief foreign exchange strategist. Is there a 430 00:19:39,880 --> 00:19:43,680 Speaker 1: clear vision to the jukes memo? Kit? I mean, it's 431 00:19:43,240 --> 00:19:46,280 Speaker 1: the death of summer. You're going to spend all of 432 00:19:46,400 --> 00:19:50,720 Speaker 1: July and August and some shock in Spain on the beach, 433 00:19:50,840 --> 00:19:54,560 Speaker 1: and I just want to know, is there a Juke's 434 00:19:54,880 --> 00:19:57,440 Speaker 1: vision of where we're going or you, like everybody else, 435 00:19:57,480 --> 00:19:59,080 Speaker 1: waiting to see what happens. 436 00:20:00,119 --> 00:20:02,640 Speaker 7: There's a vision, but there's uncertainty about time. I mean, 437 00:20:02,680 --> 00:20:05,600 Speaker 7: this is an extraordinary cycle. But the one thing that 438 00:20:05,600 --> 00:20:08,560 Speaker 7: I was listening to really gobin At, you know, sort 439 00:20:08,600 --> 00:20:10,320 Speaker 7: of getting gobin A was sort of saying, you know, 440 00:20:10,960 --> 00:20:13,960 Speaker 7: we're uncertain about the lags. The lags are long and variable, 441 00:20:14,480 --> 00:20:18,840 Speaker 7: and everybody's impatient for the lag to play out. It'll 442 00:20:18,840 --> 00:20:21,280 Speaker 7: play out in its own time, because the single most 443 00:20:21,359 --> 00:20:24,199 Speaker 7: unique feature of this cycle is that we ended up 444 00:20:24,240 --> 00:20:27,479 Speaker 7: with really easy monetary policy, really easy fiscal policy, and 445 00:20:27,600 --> 00:20:32,040 Speaker 7: really really tight labor markets because of a pandemic, and 446 00:20:32,080 --> 00:20:35,119 Speaker 7: then from there tightening and getting that out is taking 447 00:20:35,160 --> 00:20:38,800 Speaker 7: longer than we thought. Well gosh, But so I sit 448 00:20:38,840 --> 00:20:42,200 Speaker 7: there and thinking, in one of the next twenty six thursdays, 449 00:20:42,400 --> 00:20:43,919 Speaker 7: I'm going to come in one day and I'm going 450 00:20:43,960 --> 00:20:46,280 Speaker 7: to see a weekly jobless claims number that makes my 451 00:20:46,760 --> 00:20:49,480 Speaker 7: mouth sort of hang open, and I think, Wow, here 452 00:20:49,480 --> 00:20:52,120 Speaker 7: we are. I mean, this cycle is going to end. 453 00:20:52,240 --> 00:20:56,840 Speaker 7: This plane is going to land. But we're completely at 454 00:20:56,880 --> 00:20:59,200 Speaker 7: a loss to try to figure out how long those 455 00:20:59,280 --> 00:21:01,600 Speaker 7: lags are. And we're nervous that when it does land, 456 00:21:01,600 --> 00:21:03,520 Speaker 7: will it land as soft as we hope, and so 457 00:21:03,560 --> 00:21:06,560 Speaker 7: on and so forth. But I think that vision's super clear. 458 00:21:07,600 --> 00:21:10,879 Speaker 7: What is terribly difficult is to guess how long it 459 00:21:10,920 --> 00:21:11,240 Speaker 7: takes to. 460 00:21:11,240 --> 00:21:14,040 Speaker 2: Play out one definitive thing that get a Gopinas said, 461 00:21:14,240 --> 00:21:16,400 Speaker 2: or is it she thinks that the UK Your UK 462 00:21:16,720 --> 00:21:18,160 Speaker 2: is in the worst spot of all of the central 463 00:21:18,200 --> 00:21:22,280 Speaker 2: banks in terms of combating inflation. Is this supportive of 464 00:21:22,359 --> 00:21:25,359 Speaker 2: the pound or negative for the pound because it means 465 00:21:25,640 --> 00:21:27,440 Speaker 2: higher rates and slower growth? 466 00:21:27,960 --> 00:21:31,960 Speaker 7: Well, right now markets are more myopically focused on short 467 00:21:32,040 --> 00:21:34,760 Speaker 7: term interest rate differentials than I can remember them in 468 00:21:34,800 --> 00:21:37,840 Speaker 7: the foreign exchange market, So right now the plan's doing well. 469 00:21:38,440 --> 00:21:40,280 Speaker 7: In the long run, though, if you've got a really 470 00:21:40,400 --> 00:21:43,119 Speaker 7: lousy growth inflating trade off, which is what we've got. 471 00:21:43,640 --> 00:21:45,160 Speaker 7: You know, you have to get raids up a lot, 472 00:21:45,200 --> 00:21:47,240 Speaker 7: and then you get a worse economic slowdown, and then 473 00:21:47,280 --> 00:21:50,199 Speaker 7: you'll get more rate cuts. So we are supposed to 474 00:21:50,200 --> 00:21:52,080 Speaker 7: be taking our pans and as strong as we can 475 00:21:52,080 --> 00:21:53,920 Speaker 7: get them, we're supposed to be turning them into something 476 00:21:54,000 --> 00:21:57,320 Speaker 7: useful like Swedish kronas, so that this time next June, 477 00:21:57,320 --> 00:21:59,880 Speaker 7: when the sun's shining in Sweden, I'm on a boat. 478 00:22:00,119 --> 00:22:01,760 Speaker 7: So I'd stuck them with my feet up on a 479 00:22:01,800 --> 00:22:04,400 Speaker 7: glass of beer in my hand, having loads of fun 480 00:22:04,440 --> 00:22:07,760 Speaker 7: at today's exchange, right, because it'll be completely different by then, 481 00:22:08,160 --> 00:22:10,800 Speaker 7: and each week I just kind of sell a few 482 00:22:10,800 --> 00:22:11,320 Speaker 7: more pounds. 483 00:22:12,680 --> 00:22:15,879 Speaker 1: Lisa, you and I got to get our heads examined. 484 00:22:16,080 --> 00:22:19,080 Speaker 1: Do you see how Jukes talks there about vacation like 485 00:22:19,160 --> 00:22:19,840 Speaker 1: Pharaoh does. 486 00:22:20,160 --> 00:22:21,080 Speaker 4: Well, it's like a. 487 00:22:21,080 --> 00:22:24,200 Speaker 1: God given right. It's like the king descended and said, 488 00:22:24,680 --> 00:22:28,120 Speaker 1: Lord Jukes, Lord Pharaoh, take augustars well. 489 00:22:28,160 --> 00:22:30,399 Speaker 2: And I will say, Lord Jukes, Lord Pharaoh, come do 490 00:22:30,480 --> 00:22:32,680 Speaker 2: that in the US. I'm curious from your vanda. You're 491 00:22:32,720 --> 00:22:36,960 Speaker 2: right as we look for no, I am supported wholeheartedly I'm. 492 00:22:36,800 --> 00:22:39,680 Speaker 4: Going you can the Americas boat. 493 00:22:39,800 --> 00:22:42,160 Speaker 1: Yet I need to go to Spain for one day. 494 00:22:42,200 --> 00:22:42,920 Speaker 1: Where do I fly? 495 00:22:43,359 --> 00:22:48,040 Speaker 2: My goodness? No, absolutely, kid, Well, we talk about our 496 00:22:48,080 --> 00:22:50,359 Speaker 2: travel plans. Let's talk about the dollars. Since we're going 497 00:22:50,400 --> 00:22:52,439 Speaker 2: to go there. How strong is the dollar going to be? 498 00:22:52,640 --> 00:22:56,320 Speaker 2: This is all these currencies to plan our one day vacations. 499 00:22:56,400 --> 00:22:58,000 Speaker 2: And this has sort of been one of the surprising 500 00:22:58,040 --> 00:23:01,439 Speaker 2: features is are we entering a reversal period of the 501 00:23:01,480 --> 00:23:04,080 Speaker 2: dollar weakness of the first half of the year, or 502 00:23:04,080 --> 00:23:06,680 Speaker 2: does what we've heard from the ECB, or we've heard 503 00:23:06,680 --> 00:23:09,280 Speaker 2: from the Bank of England, or we've heard just generally 504 00:23:09,320 --> 00:23:12,679 Speaker 2: around the world really challenge that and indicate more weakness ahead. 505 00:23:13,480 --> 00:23:15,119 Speaker 7: I think you're going to get more weakness ahead for 506 00:23:15,160 --> 00:23:17,120 Speaker 7: the dollar over time from here. I mean, it's still 507 00:23:17,240 --> 00:23:20,159 Speaker 7: very strong and it would be it would be amazing 508 00:23:20,160 --> 00:23:22,320 Speaker 7: if you didn't actually weaken at some point. You know, 509 00:23:23,040 --> 00:23:25,560 Speaker 7: we have seen I think Jeff, you've put it very well. 510 00:23:25,680 --> 00:23:27,639 Speaker 7: You know, we've seen buying of dollars from people who 511 00:23:27,680 --> 00:23:31,280 Speaker 7: are trading US exceptionalism in AIS dogs for example, who 512 00:23:31,320 --> 00:23:34,280 Speaker 7: are trading The US economy is not slowing down yet 513 00:23:34,320 --> 00:23:37,679 Speaker 7: as a theme, and the market's pricing in, you know, 514 00:23:37,760 --> 00:23:40,000 Speaker 7: the idea that the FED hasn't peaked yet in terms 515 00:23:40,000 --> 00:23:41,800 Speaker 7: of rates, and it's pushing a little bit more in there. 516 00:23:41,960 --> 00:23:43,720 Speaker 7: And there will be some people who will turn around 517 00:23:43,760 --> 00:23:45,920 Speaker 7: and say that there will never be another US recession 518 00:23:45,920 --> 00:23:49,119 Speaker 7: because the US economy is so wonderful as those people 519 00:23:49,200 --> 00:23:51,320 Speaker 7: get themselves fully priced in, which I don't think is 520 00:23:51,600 --> 00:23:54,040 Speaker 7: terribly far from here. That's as good as the dollar 521 00:23:54,080 --> 00:23:56,680 Speaker 7: can get from here with the rest of the world recovering. 522 00:23:56,760 --> 00:23:59,040 Speaker 7: So you're a bit like me, you know, you have 523 00:23:59,440 --> 00:24:01,879 Speaker 7: a strongarrency today. It's not going to be strong forever 524 00:24:02,440 --> 00:24:03,240 Speaker 7: on that basis. 525 00:24:03,560 --> 00:24:06,560 Speaker 1: To frame out the opportunity on the Pacific Rim, and 526 00:24:06,600 --> 00:24:09,199 Speaker 1: particularly with the shaku and awe of y Wan, I 527 00:24:09,240 --> 00:24:12,320 Speaker 1: mean it is a devaluation of the Chinese you want, 528 00:24:12,359 --> 00:24:15,040 Speaker 1: I'll let you decide where that tip point is. But 529 00:24:15,280 --> 00:24:18,280 Speaker 1: seven all eyes on seven point fifteen. We blow through 530 00:24:18,320 --> 00:24:21,760 Speaker 1: that to a seven twenty three. Right now, my eyes 531 00:24:21,760 --> 00:24:24,359 Speaker 1: are failing. He's seven point two to two. And yu 532 00:24:24,440 --> 00:24:28,600 Speaker 1: Wan frame out the opportunity on the Pacific Rim. 533 00:24:29,680 --> 00:24:32,440 Speaker 7: Well, that the Chinese opportunity is that the Chinese, the 534 00:24:32,520 --> 00:24:34,720 Speaker 7: Chinese have a problem reviving their economy they don't have 535 00:24:34,760 --> 00:24:37,240 Speaker 7: much inflation. I mean, these are not big moves in 536 00:24:37,320 --> 00:24:39,560 Speaker 7: percentage terms compared to what we see in lots of 537 00:24:39,560 --> 00:24:42,560 Speaker 7: other places, so they could go further. There's certainly nothing 538 00:24:42,840 --> 00:24:45,399 Speaker 7: to help it now. I worry that China, if it 539 00:24:45,440 --> 00:24:48,399 Speaker 7: tries for a viov It's economy, it can't easily go 540 00:24:48,520 --> 00:24:51,320 Speaker 7: back to the old kind of boost the real estate 541 00:24:51,400 --> 00:24:54,359 Speaker 7: market yet again, you know that they'll probably have to 542 00:24:54,920 --> 00:24:57,640 Speaker 7: make manufactured goods and sell them to the rest of us, 543 00:24:58,320 --> 00:25:00,880 Speaker 7: and they'll welcome a weak current to help them do that. 544 00:25:01,280 --> 00:25:04,000 Speaker 7: The real so they may get some pain in China, 545 00:25:04,800 --> 00:25:07,320 Speaker 7: the pain will then spread to the other people who 546 00:25:07,320 --> 00:25:09,440 Speaker 7: rely on them. It's you know, I wouldn't want to 547 00:25:09,480 --> 00:25:12,120 Speaker 7: be terribly along the Australian dollar to day if they're 548 00:25:12,200 --> 00:25:16,480 Speaker 7: trying to sell iron ore to a Chinese economy that's struggling, 549 00:25:17,600 --> 00:25:20,200 Speaker 7: you know. So, I think as you can see this year, 550 00:25:20,600 --> 00:25:23,240 Speaker 7: one of the features of this year, the strongest currencies 551 00:25:23,240 --> 00:25:26,560 Speaker 7: have been Central Eastern European ones that fought inflation hard 552 00:25:26,840 --> 00:25:29,960 Speaker 7: and Latin American ones that ford inflation hard. There are 553 00:25:30,040 --> 00:25:34,680 Speaker 7: no strong Asian currencies this year. None of the top 554 00:25:34,680 --> 00:25:37,359 Speaker 7: two currents are I think that's what tells you that 555 00:25:37,520 --> 00:25:40,080 Speaker 7: the market is kind of getting this to some degree. 556 00:25:40,359 --> 00:25:42,520 Speaker 7: I quite like selling the other Asian currencies against the 557 00:25:42,560 --> 00:25:45,320 Speaker 7: yen because the end is going to frustrate me, and 558 00:25:45,400 --> 00:25:47,879 Speaker 7: so it starts going up when they make some voicity changes. 559 00:25:48,240 --> 00:25:50,240 Speaker 7: Mister Wader could could do the world a big favor 560 00:25:50,280 --> 00:25:52,520 Speaker 7: by getting on board ebody else today, but that's not 561 00:25:52,520 --> 00:25:53,000 Speaker 7: going to happen. 562 00:25:53,040 --> 00:25:55,280 Speaker 1: I need to extend this conversation, but we don't have 563 00:25:55,320 --> 00:25:57,120 Speaker 1: the time to do it. I really want to talk 564 00:25:57,160 --> 00:26:00,479 Speaker 1: to Kit Jukes folks on the coming days from Spain. 565 00:26:11,000 --> 00:26:13,320 Speaker 2: The question around the earning surprise and whether this is 566 00:26:13,320 --> 00:26:16,479 Speaker 2: going to be something that becomes a pattern is really 567 00:26:16,640 --> 00:26:18,719 Speaker 2: the main theme. I keep hearing fro people joining us 568 00:26:18,720 --> 00:26:21,040 Speaker 2: now to discuss. Cameron Dawson, I'm so pleased to say, 569 00:26:21,160 --> 00:26:23,880 Speaker 2: Chief investment officer at New Edge Wealth, Cameron, how much 570 00:26:23,960 --> 00:26:26,679 Speaker 2: is that on your radar that earnings may be the 571 00:26:26,760 --> 00:26:29,760 Speaker 2: catalysts the downturn to the caution that so many people 572 00:26:29,760 --> 00:26:30,560 Speaker 2: have been warning about. 573 00:26:30,760 --> 00:26:33,560 Speaker 8: Yeah, I think it is the important factor because even 574 00:26:33,600 --> 00:26:36,439 Speaker 8: though we still see a lot of dire economic forecasts, 575 00:26:36,560 --> 00:26:39,399 Speaker 8: effectively economists have us starting a recession in just a 576 00:26:39,400 --> 00:26:42,399 Speaker 8: few days in the third quarter. You don't see that 577 00:26:42,520 --> 00:26:44,840 Speaker 8: in the earnings forecast. You see a big recovery in 578 00:26:44,880 --> 00:26:46,680 Speaker 8: the back half of the year and then an even 579 00:26:46,720 --> 00:26:50,520 Speaker 8: bigger recovery into twenty twenty four and twenty twenty five, 580 00:26:50,960 --> 00:26:54,560 Speaker 8: driven by resilient economy and big margin expansion. So that 581 00:26:54,600 --> 00:26:57,719 Speaker 8: would be the key source of downside surprise if we 582 00:26:57,760 --> 00:27:01,480 Speaker 8: don't see those earnings materialize. We're watching the margins really 583 00:27:01,520 --> 00:27:05,400 Speaker 8: closely because inflation has been actually very good for margins. 584 00:27:05,600 --> 00:27:07,720 Speaker 8: It's why we think we got to record margins in 585 00:27:07,760 --> 00:27:10,880 Speaker 8: twenty one and early twenty twenty two. So as inflation 586 00:27:10,960 --> 00:27:15,040 Speaker 8: continues to moderate, pricing power moderates that could put downward 587 00:27:15,080 --> 00:27:16,320 Speaker 8: pressure on those margins. 588 00:27:16,520 --> 00:27:19,240 Speaker 2: You've been cautious for quite a while. Are you getting 589 00:27:19,280 --> 00:27:20,680 Speaker 2: more cautious or less cautious? 590 00:27:21,560 --> 00:27:25,080 Speaker 8: So we've been cautious in expressing it by remaining invested 591 00:27:25,119 --> 00:27:27,800 Speaker 8: but staying in quality and saying that we don't want 592 00:27:27,840 --> 00:27:31,600 Speaker 8: to be taking big risks on very cyclical economic sensitive 593 00:27:31,640 --> 00:27:33,959 Speaker 8: parts of the market. At the same time, is not 594 00:27:34,000 --> 00:27:36,880 Speaker 8: wanting to take risks with things that are more speculative 595 00:27:36,960 --> 00:27:39,919 Speaker 8: that really require the boost that you get from central 596 00:27:39,960 --> 00:27:43,880 Speaker 8: banks easing policy to see their stock prices do really well. 597 00:27:44,080 --> 00:27:47,320 Speaker 8: What's interesting is that we have seen those stocks lead 598 00:27:47,400 --> 00:27:49,959 Speaker 8: this year, and that's been one of our biggest surprises 599 00:27:50,080 --> 00:27:52,399 Speaker 8: is that you have seen the Fed continue to remain 600 00:27:52,520 --> 00:27:55,359 Speaker 8: very hawkish, but at the same time you've been seeing 601 00:27:55,359 --> 00:27:58,480 Speaker 8: liquidity sensitive parts of the market lead the charge higher 602 00:27:58,840 --> 00:28:01,199 Speaker 8: because there has been a huge vergence of yields and 603 00:28:01,280 --> 00:28:02,440 Speaker 8: valuations at. 604 00:28:02,359 --> 00:28:05,480 Speaker 1: Knew Edge Wealth. How do you respond to people that say, 605 00:28:05,520 --> 00:28:09,280 Speaker 1: I'm scared stiff, I don't want to participate any equity market. 606 00:28:10,480 --> 00:28:13,680 Speaker 8: Have a long term perspective, and have a plan, because 607 00:28:13,680 --> 00:28:15,879 Speaker 8: at the end of the day, we have two things 608 00:28:15,880 --> 00:28:18,360 Speaker 8: that we need to avoid as financial advisors. We need 609 00:28:18,359 --> 00:28:20,960 Speaker 8: to keep people from selling at the bottom and buying 610 00:28:21,000 --> 00:28:21,480 Speaker 8: at the top. 611 00:28:21,600 --> 00:28:23,600 Speaker 1: She used to drive Peril and he would lecture on 612 00:28:24,240 --> 00:28:27,080 Speaker 1: the giant at Fidelity. He actually went in one day. 613 00:28:27,080 --> 00:28:30,119 Speaker 1: He was so angry. They actually went into Magellan. This 614 00:28:30,160 --> 00:28:33,480 Speaker 1: is folks in the heyday of Fidelity Magellan, and he 615 00:28:33,680 --> 00:28:35,639 Speaker 1: ordered a survey of who bought at the top and 616 00:28:35,680 --> 00:28:38,240 Speaker 1: at the bottom sold at the bottom, and it was stunning. 617 00:28:38,280 --> 00:28:42,040 Speaker 1: The percentages were just stunning. On your observation, and one of. 618 00:28:42,000 --> 00:28:44,520 Speaker 8: The things how we navigate this is by focusing on 619 00:28:44,600 --> 00:28:48,600 Speaker 8: quality through cycles, those companies that go down less than 620 00:28:48,680 --> 00:28:51,800 Speaker 8: they went up in the prior up cycle. And what 621 00:28:51,840 --> 00:28:54,560 Speaker 8: that leads us to do is not necessarily chase big, 622 00:28:54,680 --> 00:28:56,920 Speaker 8: huge rallies like we've seen in certain pockets of the 623 00:28:56,960 --> 00:28:59,680 Speaker 8: market this year and take kind of a tortoise versus 624 00:28:59,680 --> 00:29:02,040 Speaker 8: the hair approach. We'll probably get to the same place 625 00:29:02,080 --> 00:29:02,960 Speaker 8: at the end of the day. 626 00:29:03,560 --> 00:29:05,240 Speaker 2: Thank you, Thank you, Tom, I appreciate it. 627 00:29:05,560 --> 00:29:08,640 Speaker 8: Carry on, We'll probably get to the same place without 628 00:29:08,680 --> 00:29:11,560 Speaker 8: having the big wild swings of volatility as you chase 629 00:29:11,600 --> 00:29:12,960 Speaker 8: to the upside and then see. 630 00:29:12,800 --> 00:29:14,120 Speaker 4: Big reversals to the downside. 631 00:29:14,120 --> 00:29:17,200 Speaker 2: So here's I think the existential question of the year. 632 00:29:17,600 --> 00:29:22,440 Speaker 2: People are saying it's a recession delayed, not necessarily deterred completely. 633 00:29:22,760 --> 00:29:24,800 Speaker 2: You're talking about some of the sectors that did really 634 00:29:24,800 --> 00:29:27,120 Speaker 2: well this year, even in the face of the rate 635 00:29:27,160 --> 00:29:29,920 Speaker 2: hikes that will play out just later. When do you 636 00:29:29,960 --> 00:29:32,800 Speaker 2: say the models are broken and that this is something new, 637 00:29:33,000 --> 00:29:35,720 Speaker 2: something different at a time when this economy, in these 638 00:29:35,760 --> 00:29:38,760 Speaker 2: markets seem much more resilient to rate hikes than ever before. 639 00:29:38,880 --> 00:29:41,080 Speaker 8: That's the key point, and I think that this is 640 00:29:41,120 --> 00:29:44,800 Speaker 8: a function of ten plus years of quantitative easing, that 641 00:29:44,920 --> 00:29:48,360 Speaker 8: kept long interest rates down, It allowed people to term 642 00:29:48,400 --> 00:29:51,880 Speaker 8: out their debt and effectively dulled the power of monetary 643 00:29:51,920 --> 00:29:54,640 Speaker 8: policy going forward, because one of the things that you've 644 00:29:54,680 --> 00:29:56,840 Speaker 8: seen this year is that you're not seeing the impact 645 00:29:56,840 --> 00:30:01,000 Speaker 8: from higher rates of impact consumers or corporation simply because 646 00:30:01,040 --> 00:30:03,400 Speaker 8: they were able to turn out debt and have very 647 00:30:03,440 --> 00:30:06,480 Speaker 8: long maturities. And so now as you see rates rise, 648 00:30:06,600 --> 00:30:09,560 Speaker 8: people kind of shrug simply because there is not that 649 00:30:09,600 --> 00:30:10,320 Speaker 8: same impact. 650 00:30:10,520 --> 00:30:12,720 Speaker 2: Cameron, I'd love your thoughts on this, because this is 651 00:30:12,720 --> 00:30:16,000 Speaker 2: something we were talking about yesterday that markets basically shrug 652 00:30:16,040 --> 00:30:17,920 Speaker 2: this off because it was a number of tail risks 653 00:30:17,920 --> 00:30:20,080 Speaker 2: that you couldn't really price in. Do you have a 654 00:30:20,080 --> 00:30:20,920 Speaker 2: renewed thought on that? 655 00:30:21,880 --> 00:30:25,680 Speaker 8: Our thinking is that unless there's something that keeps Russia 656 00:30:25,720 --> 00:30:28,640 Speaker 8: from continuing to be able to flood markets with heavily 657 00:30:28,680 --> 00:30:31,880 Speaker 8: discounted oil, that markets probably will look in the other 658 00:30:31,960 --> 00:30:34,640 Speaker 8: direction because one of the key things that has been 659 00:30:34,680 --> 00:30:38,000 Speaker 8: bullish for markets is the moderation and oil prices. Part 660 00:30:38,040 --> 00:30:40,680 Speaker 8: of that is a function of Russia selling so much 661 00:30:40,720 --> 00:30:43,920 Speaker 8: oil at discounted prices. So if we start to see 662 00:30:43,920 --> 00:30:47,280 Speaker 8: something that could impact Russia's oil production or their ability 663 00:30:47,320 --> 00:30:49,640 Speaker 8: to be able to continue to sell. That would be 664 00:30:49,640 --> 00:30:53,160 Speaker 8: the key upward impact on inflation, and that's downward impact 665 00:30:53,160 --> 00:30:53,720 Speaker 8: on markets. 666 00:30:53,880 --> 00:30:57,280 Speaker 1: One more question, were you on a sixty forty reallocation 667 00:30:57,480 --> 00:31:01,080 Speaker 1: here it's midyear, I got to reallocate even sixty forty. 668 00:31:01,520 --> 00:31:05,320 Speaker 8: We believe in sixty forty plus alternatives because there are 669 00:31:05,480 --> 00:31:09,920 Speaker 8: still fantastic opportunities outside of traditional asset classes where we 670 00:31:09,960 --> 00:31:12,800 Speaker 8: see dislocations because of all the turmoil of the past 671 00:31:12,840 --> 00:31:15,920 Speaker 8: couple of years, where we are starting to allocate two 672 00:31:16,000 --> 00:31:19,200 Speaker 8: things like venture very selectively in private credit. It's a 673 00:31:19,240 --> 00:31:22,560 Speaker 8: popular place to be, but we are finding great opportunities 674 00:31:22,600 --> 00:31:24,040 Speaker 8: outside of your traditional assets. 675 00:31:24,120 --> 00:31:31,520 Speaker 1: Karen Dawson, thank you so much, greatly appreciated. The right 676 00:31:31,600 --> 00:31:34,280 Speaker 1: person at the right time. That must mean it's a 677 00:31:34,280 --> 00:31:37,840 Speaker 1: conversation with David Rubinstein. And if Sana besch Loss is 678 00:31:37,880 --> 00:31:40,600 Speaker 1: one of my favorite people in the world, she is 679 00:31:40,840 --> 00:31:47,400 Speaker 1: prodigious in knowledge of international hydrocarbons. This is exceptionally well 680 00:31:47,440 --> 00:31:52,120 Speaker 1: timed from Rock Creek. Sanna besh Loss with David Rubstein, 681 00:31:52,160 --> 00:31:55,880 Speaker 1: looked for that tonight at nine pm. An important conversation 682 00:31:56,360 --> 00:31:59,560 Speaker 1: and in hindsight, even more important given the uproar that 683 00:31:59,600 --> 00:32:03,320 Speaker 1: we see in Russia, Belarus in Ukraine. He is with 684 00:32:03,360 --> 00:32:06,760 Speaker 1: the Carlisle Group. David Rubinstein joins us this morning. David, 685 00:32:06,840 --> 00:32:09,240 Speaker 1: I little got goosebump. She is just the perfect person 686 00:32:09,320 --> 00:32:12,600 Speaker 1: to talk to. Tell us what Missus Beslav brings to 687 00:32:12,680 --> 00:32:13,120 Speaker 1: the table. 688 00:32:14,040 --> 00:32:17,040 Speaker 9: For those who don't know, Asana Beschloss is an immigrant 689 00:32:17,080 --> 00:32:20,240 Speaker 9: from Iran. She was educated at Oxford. She was the 690 00:32:20,280 --> 00:32:23,320 Speaker 9: treasurer and Chief Investment Officer of the World Bank and 691 00:32:23,400 --> 00:32:26,640 Speaker 9: subsequently started her own firm called Rock Creek, which is 692 00:32:26,720 --> 00:32:31,000 Speaker 9: now probably the largest woman owned investment firm in the 693 00:32:31,080 --> 00:32:34,240 Speaker 9: United States, certainly the largest woman owned firm by a 694 00:32:34,240 --> 00:32:38,640 Speaker 9: woman who's an immigrant, managing about seventeen billion dollars Afsana 695 00:32:38,680 --> 00:32:41,600 Speaker 9: is involved in a lot of philanthropic activities as well, 696 00:32:41,640 --> 00:32:44,880 Speaker 9: on the board of the Council and Formulations Rockefeller Foundation, 697 00:32:45,200 --> 00:32:49,440 Speaker 9: Chairman of the PBS Board, and so forth PBS Foundation Board, 698 00:32:49,720 --> 00:32:53,120 Speaker 9: and she's really very insightful about where the economy is going. 699 00:32:53,200 --> 00:32:56,120 Speaker 9: But she's investing this seventeen billion dollars on a daily basis. 700 00:32:56,120 --> 00:32:59,800 Speaker 9: She's really actively involved in the markets. And he has 701 00:32:59,840 --> 00:33:02,800 Speaker 9: a very good knowledge as well about the energy world 702 00:33:02,840 --> 00:33:04,760 Speaker 9: because that was what she first studied when she was 703 00:33:04,760 --> 00:33:05,320 Speaker 9: at Oxford. 704 00:33:05,760 --> 00:33:08,200 Speaker 1: I'll say she's really quite good at it in conversation 705 00:33:08,280 --> 00:33:11,600 Speaker 1: after conversation over the years. David Rubinstein. Just in the 706 00:33:11,680 --> 00:33:14,959 Speaker 1: last twenty four hours we've seen Lawrence Fink, I believe, 707 00:33:14,960 --> 00:33:18,880 Speaker 1: over in China with a World Economic Forum, not backtracking 708 00:33:18,960 --> 00:33:23,680 Speaker 1: but finessing the new ESG message. To me, Doctor Beschlof 709 00:33:24,400 --> 00:33:29,440 Speaker 1: is hugely focused on the realities of hydrocarbon. What were 710 00:33:29,440 --> 00:33:34,160 Speaker 1: her thoughts on climate change and on this recalibration of ESG. 711 00:33:35,320 --> 00:33:38,520 Speaker 9: Well, her view is that the energy transition is underway. 712 00:33:38,600 --> 00:33:42,400 Speaker 9: Obviously it's not going to be happening overnight. Well in ESG, 713 00:33:42,480 --> 00:33:45,560 Speaker 9: she's been a big believer in ESG and is very 714 00:33:45,760 --> 00:33:49,440 Speaker 9: focused on it. Clearly this pushback now, but in the end, 715 00:33:49,480 --> 00:33:51,720 Speaker 9: I think it's trying to put your finger in a dyke, 716 00:33:51,800 --> 00:33:55,400 Speaker 9: trying to stop ESG from coming forward. Many people around 717 00:33:55,440 --> 00:33:57,800 Speaker 9: the world are not as worried about the politics of 718 00:33:58,000 --> 00:34:00,120 Speaker 9: ESG as many people in the United States might be, 719 00:34:00,400 --> 00:34:02,520 Speaker 9: and as a result, you're seeing in Europe and other 720 00:34:02,560 --> 00:34:04,880 Speaker 9: parts of the world a real concern about ESG and 721 00:34:04,880 --> 00:34:07,960 Speaker 9: the need to be more sensitive to environmental concerns. And 722 00:34:08,000 --> 00:34:11,000 Speaker 9: Avsana reflects that because she's really a global citizen in 723 00:34:11,040 --> 00:34:13,600 Speaker 9: many ways. She's lived in many different places and invest 724 00:34:13,680 --> 00:34:14,440 Speaker 9: all over the world. 725 00:34:14,840 --> 00:34:19,400 Speaker 1: She's in Washington, as are you. It's a cutthroat job environment. 726 00:34:19,880 --> 00:34:23,080 Speaker 1: What is the distinction of Rock Creek and their shop 727 00:34:23,600 --> 00:34:28,640 Speaker 1: is they try to keep, find and retain outstanding women 728 00:34:28,760 --> 00:34:30,160 Speaker 1: employees and managers. 729 00:34:30,880 --> 00:34:34,359 Speaker 9: The firm has about fifty percent of its investment professionals 730 00:34:34,719 --> 00:34:38,200 Speaker 9: and employees are are women. There aren't that many investment 731 00:34:38,239 --> 00:34:40,960 Speaker 9: firms with that higher percentage of that size. It's a 732 00:34:41,080 --> 00:34:43,680 Speaker 9: very large firm at this point, managing, as I mentioned, 733 00:34:43,719 --> 00:34:46,720 Speaker 9: seventeen billion dollars. So it's been a bit of a struggle, 734 00:34:46,719 --> 00:34:48,640 Speaker 9: I would say, to be an immigrant and to be 735 00:34:48,680 --> 00:34:51,560 Speaker 9: a woman trying to build a firm like that. I've 736 00:34:51,560 --> 00:34:53,840 Speaker 9: known her for a while and briefly she worked at Carlisle, 737 00:34:53,920 --> 00:34:56,879 Speaker 9: I should say, and before she started her own independent firm. 738 00:34:57,120 --> 00:35:00,000 Speaker 9: And I would say that she's known to many people 739 00:35:00,080 --> 00:35:02,960 Speaker 9: around the world for being very smart, very articulate, and 740 00:35:04,160 --> 00:35:08,279 Speaker 9: very conscious about the importance of ESJ. I should also note, 741 00:35:08,280 --> 00:35:11,240 Speaker 9: for those people that recognize the last name, her husband 742 00:35:11,560 --> 00:35:14,480 Speaker 9: is Michael Beschloss, who's a distinguished presidential historian. 743 00:35:15,440 --> 00:35:18,560 Speaker 1: Well he's not only a distinguished presidential historian. But David, 744 00:35:18,640 --> 00:35:22,680 Speaker 1: let's be clear, her husband has kept Twitter saying here 745 00:35:23,120 --> 00:35:27,080 Speaker 1: in all the uproar, he's a national institution with informing 746 00:35:27,120 --> 00:35:32,840 Speaker 1: the public of presidential history out on at Twitter. I look, David, 747 00:35:33,000 --> 00:35:35,640 Speaker 1: at where we are right now, and I want to 748 00:35:35,640 --> 00:35:37,839 Speaker 1: speak to you with your public service to the nation 749 00:35:38,000 --> 00:35:42,560 Speaker 1: and the Carter administration. But almost a nation starving off 750 00:35:42,560 --> 00:35:46,920 Speaker 1: the recent NBC poll for some form of middle ground 751 00:35:47,520 --> 00:35:52,799 Speaker 1: or moderate politics from both parties. Do how does do 752 00:35:52,880 --> 00:35:57,160 Speaker 1: you perceive that the moderate voice maybe what agnew would 753 00:35:57,200 --> 00:36:00,840 Speaker 1: call the silent America? How do they find their voice 754 00:36:00,960 --> 00:36:06,200 Speaker 1: in this crazy presidential campaign to come both Republican and Democrat. 755 00:36:07,200 --> 00:36:10,160 Speaker 9: Well, that's a very fair and very difficult question answer. 756 00:36:10,760 --> 00:36:13,480 Speaker 9: Politicians typically raise their money from the far left and 757 00:36:13,520 --> 00:36:16,280 Speaker 9: the far right. It's very difficult to raise money saying 758 00:36:16,400 --> 00:36:18,080 Speaker 9: I'm going to be right down the middle, I'm going 759 00:36:18,120 --> 00:36:19,680 Speaker 9: to balance the left and the right. I'm going to 760 00:36:19,680 --> 00:36:21,840 Speaker 9: come up with a good compromise that everybody should be 761 00:36:21,840 --> 00:36:24,239 Speaker 9: pleased with. That doesn't raise a lot of money. And 762 00:36:24,280 --> 00:36:27,359 Speaker 9: as we know in politics, money is very important. People 763 00:36:27,400 --> 00:36:30,040 Speaker 9: are spending all their time raising money in Washington, d C. 764 00:36:30,520 --> 00:36:35,080 Speaker 9: So the moderate voice is very difficult to prevail. Hopefully 765 00:36:35,120 --> 00:36:38,239 Speaker 9: we'll have more moderate voices. Last night, for example, I 766 00:36:38,280 --> 00:36:40,960 Speaker 9: interviewed somebody that some may not say it's moderate, but 767 00:36:40,960 --> 00:36:42,960 Speaker 9: at the ninety second Street Why in New York, I 768 00:36:43,000 --> 00:36:47,399 Speaker 9: interviewed Lis Cheney. Now, clearly people on the right side 769 00:36:47,400 --> 00:36:50,000 Speaker 9: of the spectrum would say she's not moderate. People on 770 00:36:50,000 --> 00:36:52,160 Speaker 9: the left side would say, well, she was very conservative. 771 00:36:52,200 --> 00:36:55,120 Speaker 9: Now she's doing good public service kinds of things. But 772 00:36:55,200 --> 00:36:57,840 Speaker 9: whatever you think of Liz Cheney, finding people down the 773 00:36:57,880 --> 00:37:00,160 Speaker 9: middle that people on the left and the right can 774 00:37:00,239 --> 00:37:03,160 Speaker 9: agree on is very, very difficult. And I would say 775 00:37:03,200 --> 00:37:05,840 Speaker 9: it's the biggest challenge that we have in our presidential 776 00:37:05,840 --> 00:37:09,000 Speaker 9: campaign is how do you get your head above water 777 00:37:09,080 --> 00:37:12,440 Speaker 9: and get some attention unless you get something done on 778 00:37:12,480 --> 00:37:15,320 Speaker 9: the far right or the far left, which gets the attention, 779 00:37:15,719 --> 00:37:17,800 Speaker 9: coming down the middle doesn't get much attention. 780 00:37:18,080 --> 00:37:20,560 Speaker 1: Well, Ronald, I'm going to suggest, and I defer to you, David, 781 00:37:20,560 --> 00:37:24,040 Speaker 1: but Ronald Reagan codified this process. There's this, no question. 782 00:37:24,200 --> 00:37:27,360 Speaker 1: Ronald Reagan was the one literally, as an FDR Democrat 783 00:37:27,400 --> 00:37:30,640 Speaker 1: in his childhood, came over the Republicans, grabbed the right, 784 00:37:30,680 --> 00:37:34,920 Speaker 1: and moved to the center. Is that process dead well. 785 00:37:34,960 --> 00:37:37,160 Speaker 9: Ronald Reagan was seen as being on the far right, 786 00:37:37,400 --> 00:37:40,440 Speaker 9: far more on the right than his competitor at the time, 787 00:37:40,560 --> 00:37:43,800 Speaker 9: Gerald Ford. But ultimately the far right became the center, 788 00:37:44,160 --> 00:37:46,520 Speaker 9: and so today Ronald Reagan would not be seen on 789 00:37:46,560 --> 00:37:48,800 Speaker 9: the far right. Donald Trump might be seen on the 790 00:37:48,840 --> 00:37:51,840 Speaker 9: far right, but not Ronald Reagan. But Reagan is somebody 791 00:37:51,920 --> 00:37:56,360 Speaker 9: who had a way to communicate that was great compared 792 00:37:56,360 --> 00:37:59,600 Speaker 9: to other politicians. He was called the great communicator for 793 00:37:59,680 --> 00:38:02,160 Speaker 9: a good reason. And even though I was not his 794 00:38:02,160 --> 00:38:04,560 Speaker 9: political supporter, I like to quote him from time to time. 795 00:38:04,560 --> 00:38:07,720 Speaker 9: And my favorite Ronald Reagan quote is the most dangerous 796 00:38:07,760 --> 00:38:10,640 Speaker 9: words in the English language are I'm from the federal government. 797 00:38:10,680 --> 00:38:11,400 Speaker 9: I'm here to help you. 798 00:38:12,640 --> 00:38:15,200 Speaker 1: Well, I think there's a little bit of that going 799 00:38:15,200 --> 00:38:18,360 Speaker 1: on based on the zeitgeist right now, David, let us 800 00:38:18,400 --> 00:38:22,680 Speaker 1: bring it back to hydrants here, hydrocarbon here, Doctor Beschloss, 801 00:38:23,040 --> 00:38:26,439 Speaker 1: what's her view on a barrel of oil out one 802 00:38:26,560 --> 00:38:28,960 Speaker 1: year or a rock creek three years? 803 00:38:30,520 --> 00:38:32,440 Speaker 9: Well, as a general rule, if you ask the CEO 804 00:38:32,480 --> 00:38:34,640 Speaker 9: of an energy company where oil price is going to 805 00:38:34,680 --> 00:38:36,959 Speaker 9: be in a month or a year, they will laugh 806 00:38:37,000 --> 00:38:40,200 Speaker 9: because nobody can really know at the moment. Given the 807 00:38:40,280 --> 00:38:44,120 Speaker 9: uncertainties in Russia, I suspect oil will drift up for 808 00:38:44,120 --> 00:38:47,040 Speaker 9: a while, and as the Saudis seem to be trying 809 00:38:47,040 --> 00:38:49,200 Speaker 9: to cut down production a bit, I suspect we'll be 810 00:38:49,200 --> 00:38:51,920 Speaker 9: a further drift up. But again, I don't see one 811 00:38:52,000 --> 00:38:55,120 Speaker 9: hundred dollars oil anytime in the near future, but I 812 00:38:55,160 --> 00:38:56,800 Speaker 9: do think you'll probably see it drift up from the 813 00:38:56,840 --> 00:38:59,000 Speaker 9: high sixties to the low seventies and the not too 814 00:38:59,000 --> 00:38:59,680 Speaker 9: distant future. 815 00:39:00,200 --> 00:39:02,279 Speaker 1: David, thank you so much for the generous time today. 816 00:39:02,360 --> 00:39:05,560 Speaker 1: David Rumstein in the Carlis Group. Subscribe to the Bloomberg 817 00:39:05,600 --> 00:39:09,600 Speaker 1: Surveillance podcast on Apple, Spotify and anywhere else you get 818 00:39:09,640 --> 00:39:14,480 Speaker 1: your podcasts. Listen live every weekday starting at seven am Eastern. 819 00:39:14,880 --> 00:39:18,920 Speaker 1: I'm Bloomberg dot Com, the iHeartRadio app, tune In, and 820 00:39:19,000 --> 00:39:22,520 Speaker 1: the Bloomberg Business app. You can watch us live on 821 00:39:22,600 --> 00:39:27,360 Speaker 1: Bloomberg Television and always I'm the Bloomberg Terminal. Thanks for listening. 822 00:39:27,840 --> 00:39:30,640 Speaker 1: I'm Tom Keen, and this is Bloomberg