Speaker 1: Welcome to Bloomberg Opinion. I'm Vonnie Quinn. This week has
Speaker 1: brought perhaps not won, but a couple Garfield Reynolds on
Speaker 1: the Bank of Japan's surprise to the markets later. Had
Speaker 1: January six not happened, January eight would probably not have
Speaker 1: happened either. Eduard op Porter on the similarities and differences
Speaker 1: between January eighth and Brazil and January six in the
Speaker 1: United States. Will also hear from Justin Fox on the
Speaker 1: ongoing propensity to drink alcohol post pandemic. First though, to
Speaker 1: John Authors and the resurgence of emerging markets to start three. So, John,
Speaker 1: a few things happened in Q four of two. China
Speaker 1: obviously abroptly started to reopen. US markets were extraordinarily volatile,
Speaker 1: the FED was ramping on Parkish language. It was all
Speaker 1: to be a little bit expected. But it has given
Speaker 1: rise to a spectacular performance by emerging markets. Does it continue?
Speaker 1: It certainly can, and I think on balance it probably does.
Speaker 1: There's no such thing as a freelancer or certainty in
Speaker 1: these things, but I think the case for staying overweight
Speaker 1: in emerging markets is pretty strong. These days. Emerging markets
Speaker 1: have been cheap relative to develop for a very long
Speaker 1: time now, for over a decade, they've just persistently underperformed
Speaker 1: further and they've looked ever cheaper. So there have always
Speaker 1: been those reasons which give room for a lot of
Speaker 1: out performance once they finally begin to recover. The two
Speaker 1: critical catalysts are you've mentioned China, obviously, and a week dollar,
Speaker 1: which would happen with the US slowdown or a relatively
Speaker 1: early easing in rates. If the dollar does weaken on
Speaker 1: cue and China does seriously stimulate, it's pretty hard to
Speaker 1: see how emerging markets don't be developed for the next
Speaker 1: year or two, right, And there's a lot of questions
Speaker 1: in there, because we don't know how much China can stimulate,
Speaker 1: or how much China is willing to stimulate or blow
Speaker 1: out its deficit, for example. But you have to wonder
Speaker 1: why it's all happening now, given that many of the
Speaker 1: same conditions that we were dealing with last year is
Speaker 1: still in place, including chip wars, the actual war on Ukraine,
Speaker 1: shortages of certain materials, and even China's poor performance. Yes,
Speaker 1: but if you try to discount future performance, which is
Speaker 1: what you're trying to do, you don't buy a stock
Speaker 1: or a bond's passed. You buy its future, and you
Speaker 1: buy it. The arguments that emerging markets can move ahead
Speaker 1: do look stronger than they did. I mean, one of
Speaker 1: the other critical points here is that synchronization is less
Speaker 1: than it was. We had a moment of extreme synchronization
Speaker 1: obviously with the pandemic, but what we have had since then,
Speaker 1: Countries like Brazil had to start hiking rates pretty aggressively
Speaker 1: in one as we know, the FED didn't for another
Speaker 1: year after that, the ECB waited longer. That means that
Speaker 1: you've got differentials in emerging markets favors if you're looking
Speaker 1: for carry trades, if you're looking to make money from
Speaker 1: yields or whatever, there's that much greater of an appeal.
Speaker 1: It also means that some of them are already at
Speaker 1: the other end of the cycle and beginning to pick
Speaker 1: up growth again. Obviously China, with the extreme change in
Speaker 1: its COVID policy, is a very big part of that,
Speaker 1: but it's not just China. Yes, the conditions are generally
Speaker 1: not so different from twelve months ago, but we have
Speaker 1: moved on twelve months. The US has hiked a lot,
Speaker 1: and the emerging markets have already earned some of the
Speaker 1: advantages of having hiked earlier. Now, Goldman Sachs, as you
Speaker 1: point out, is suggesting a three percentage point differential and
Speaker 1: growth between e M and d M. How does Goldman
Speaker 1: explain that, Again, it's primarily about China is just very
Speaker 1: very important, very big, and the likelihood is that they
Speaker 1: will be able to drive growth, not just in China
Speaker 1: and everywhere else if if China starts demanding more and
Speaker 1: this is one of the more interesting questions, whether that
Speaker 1: will help commodity producers as much as it's used to,
Speaker 1: or whether it will help people might be wanted to
Speaker 1: export consumer goods to China, but it does help everybody
Speaker 1: if China is beginning to grow again. Most importantly, though,
Speaker 1: you are at a different point in the cycle. The
Speaker 1: central banks in the developed world are waiting for growth
Speaker 1: to slow down and wanting that to happen, and in
Speaker 1: emerging markets they are at the point of emerging from
Speaker 1: those precise conditions. We don't have the synchronization we did.
Speaker 1: Another point is back in the big emerging market boom
Speaker 1: that came before the global financial crisis, one of the
Speaker 1: great buzzwords was decoupling. That the emerging markets now got
Speaker 1: to the point where their middle classes were growing. They
Speaker 1: were trying to mature their economies, become consumer led all
Speaker 1: the rest of it, and as they did that, they
Speaker 1: would decouple from the different world. That turned out be wrong,
Speaker 1: as we discovered in two thousand and eight. However, it's
Speaker 1: conceivable now in for less healthy reasons, there might be
Speaker 1: more truth to it. Deglobalization has happened to a fairly
Speaker 1: significant extent, and there is somewhat more need for emerging
Speaker 1: markets to create their own growth. I don't want to
Speaker 1: take this too far. Obviously, the dollar is still extremely
Speaker 1: important emerging markets, but the world has moved on in
Speaker 1: a way that does make some form of decoupling much
Speaker 1: more plausible than it was fifteen years ago. It's going
Speaker 1: to be difficult for emerging markets to carry that off, right,
Speaker 1: I mean, you can't materialize materials literally or demand or
Speaker 1: GDP growth. Risks of politics and governance would be high
Speaker 1: on the list. People are concerned about whether Lula is
Speaker 1: going to be a much more left wing prime minister
Speaker 1: president this time around compared to his first dint in office.
Speaker 1: Lopezador in Mexico, who's coming towards the end of his term,
Speaker 1: has has been moving in a generally rather disquiet ing
Speaker 1: authoritarian and anti market direction, those being two of the
Speaker 1: most obvious countries to do well. Otherwise, Yes, there are
Speaker 1: there are plainly political risks, but there always are. Um
Speaker 1: Lula has been president for ten years. In the past,
Speaker 1: Lopez Obrador was mayor of Mexico City, which is effectively
Speaker 1: the second biggest job in Mexican politics. Before. These aren't
Speaker 1: complete political novices shouting to burn everything down in charge.
Speaker 1: They are people whose politics are to the left of
Speaker 1: where many investors feel comfortable. But I don't myself see
Speaker 1: those dangerous as particularly serious. We've seen that you rally
Speaker 1: in the equities, obviously, but there are fascinating opportunities in
Speaker 1: the m debt and obviously Mama Area and Rob Kunnigsberger
Speaker 1: Grammercy Fonds have been pointing this out as well. They're
Speaker 1: very excited about it, not just in the very immediate
Speaker 1: term but over the next almost twenty four months. Perhaps, Yes,
Speaker 1: I think the point that they made, which I was
Speaker 1: fascinated to see because I hadn't noticed it before. In
Speaker 1: terms of draw downs, emerging market debt last year on
Speaker 1: a total return basis had its worst draw down since
Speaker 1: the Russian default in, which is crazy, right, yes, because
Speaker 1: there wasn't actually an emerging market crisis last year, but
Speaker 1: there's not a large part of these. There was no
Speaker 1: vintage emerging markets in trouble. There was no worry about sudden,
Speaker 1: massive devaluation anywhere in the emerging world or default. The
Speaker 1: only bigger draw down since the MB benchmark has been
Speaker 1: in place since the beginning of ninety four were around
Speaker 1: the Tequila crisis in Mexico ninety four, which was an
Speaker 1: epic crisis at a point, you know, when the emerging
Speaker 1: world was in a very different place, and then only
Speaker 1: a few years later when Russia folded down to yeltin.
Speaker 1: I mean, obviously not the first to point out that
Speaker 1: last year was a very unusually synchronized year and absolutely
Speaker 1: everything fell. It's a bit hard to see that there's
Speaker 1: a good reason for emerging markets to have done as
Speaker 1: badly as they did. If you believe in a continuing
Speaker 1: week dollar, then you benefit just from the weakening of
Speaker 1: the dollar. If you're holding onto emerging market assets, the yields,
Speaker 1: both because of the sell off and because with higher
Speaker 1: rates anyway they're offering more, the yields are very much
Speaker 1: more appealing than they've been for a very long time.
Speaker 1: A lot of these arguments do seem to be contingent
Speaker 1: on a continuing weakening dollar, though I guess it looks
Speaker 1: like we may have a continuing weakening dollar anyway. Um,
Speaker 1: what about some of the other currencies though, I mean,
Speaker 1: are they stable enough that they can hold their own?
Speaker 1: The other huge wild cards in the financial world at
Speaker 1: the moment is the end, which obviously matters quite a
Speaker 1: lot to some the key emerging markets on the Age Pacific.
Speaker 1: I think it's close to certain that the Bank of
Speaker 1: Japan will have to be considerably tighter in its monetary
Speaker 1: policy by the end of this year than it is
Speaker 1: now because the kind of intervention it's having to do
Speaker 1: at presence is truly unsustainable. There will be new leadership
Speaker 1: in the first week of April, and something will happen there,
Speaker 1: and I could throw a real spanner in the works.
Speaker 1: Right We're gonna be speaking with Garfield Reynolds in a
Speaker 1: few minutes about the Bank of Japan and how it
Speaker 1: did nothing this time around on yield curve control, which
Speaker 1: was a surprise to markets, and the end reacted. But
Speaker 1: the end has been really a sort of a wild card,
Speaker 1: as you say. What was interesting to me about that
Speaker 1: reaction Garfield knows more about this than I do, but
Speaker 1: the the speed with which the yen weakened again in
Speaker 1: the immediate aftermath decision to show that a lot of
Speaker 1: people really did think that Corona, who's been in charge
Speaker 1: for more than a decade, hugely important figure, was going
Speaker 1: to basically give up on his signature policy right before leaving,
Speaker 1: which was always unlikely, but it was obvious from the
Speaker 1: market reaction that people really had thought this was going
Speaker 1: to happen. But the end came all the way back
Speaker 1: within ten hours. I think it was I think because
Speaker 1: you still reverted to the fact that this is only
Speaker 1: a matter of time. You still don't really want to
Speaker 1: be too far short the end for much longer this year,
Speaker 1: because it's very likely to appreciate and yes, depending on
Speaker 1: how it's handled, and obviously making sure that there isn't
Speaker 1: some big disruption caused by a major surprise to the market,
Speaker 1: and the end would be one of the other wild
Speaker 1: cards that could mess up the pitch we're looking at.
Speaker 1: And we're not even going to talk about oil, not
Speaker 1: this time. Bloomberg Opinions, John authors stay tuned. Chief Asia
Speaker 1: Rates correspondent Garfield Reynolds next on the Bank of Japan's
Speaker 1: surprise to the markets. This is Bloomberg Opinion. You're listening
Speaker 1: to Bloomberg Opinion. I'm Vonnie Quinn. This week, the Bank
Speaker 1: of Japan surprised markets. Not economists necessarily, just markets which
Speaker 1: were expecting another tweak to the Bank of Japan's yield
Speaker 1: curve control mechanism. Well, markets didn't get that. I spoke
Speaker 1: with Chief Asia Rates correspondent Garfield Reynalds, there's no economic
Speaker 1: reason to expect the tenure j g B yields to
Speaker 1: continue trading above the point five percent band. I don't
Speaker 1: think the Bank of Japan needs to widen a tenure
Speaker 1: j g B trading range, as the bank is continuing
Speaker 1: to manage market adjustments through the nimble use of y
Speaker 1: C C and fund supplying operations. So the b O
Speaker 1: J kept the band does is at about zero percent.
Speaker 1: The market was looking for another tweak. Did the December
Speaker 1: tweak then failed? Garfield well, similar tweak certainly failed to
Speaker 1: improve market function, which was supposed to be the aim
Speaker 1: of it, and said it set off an enormous credit
Speaker 1: Really pumped for the j and spread turn all around
Speaker 1: by the bond markets. They now seem to be trying
Speaker 1: to put the gene back into the bottle, as it were,
Speaker 1: by insisting they're going to stick with their current policy,
Speaker 1: they're going to be flexible about the way they pursue
Speaker 1: bond buying. The several warning shots being fired across the
Speaker 1: bond bears vowels right now. The message from the yen,
Speaker 1: which is down more than is very much that this
Speaker 1: is a doublished surprise. Did the currency move play into
Speaker 1: this decision? Well, it's interesting the b o J has
Speaker 1: actually said in its announcement that it is taking currency
Speaker 1: into account, so that as an extra layer of uncertainty.
Speaker 1: If the end continues to drop, then will that make
Speaker 1: it harder for the b o J to move ahead
Speaker 1: with trying to control the bond market or is it
Speaker 1: willing to go on spending trulley astonishing amounts of yen
Speaker 1: every day to contain j g P yields. Yen swamps
Speaker 1: were trading your one percent versus the y c C
Speaker 1: bond target of about half a percent, so hedging if
Speaker 1: he was rife and swaps. Does that now come down
Speaker 1: or does the market still try to tell the central
Speaker 1: bank what to do. Well, that's going to be one
Speaker 1: of the key battlegrounds, especially because the b o J
Speaker 1: is has announced that it will adjust the rate at
Speaker 1: which it lends money to banks in order for banks
Speaker 1: to buy g g vs. And certainly we've seen the
Speaker 1: ten year swap rate that you were talking about, which
Speaker 1: at one stage was almost one percent. It came into
Speaker 1: the meeting at about zero point nine two. It's now
Speaker 1: down ten basis points from that. So for the moment,
Speaker 1: that's a sign that the market is pondering how strongly
Speaker 1: it can act to take on the b because the
Speaker 1: b o J has signaled a very strong willingness to
Speaker 1: take the market and that it is looking to potentially
Speaker 1: expand its arsenal in doing so. When Governor Cruder took office,
Speaker 1: the o J owned eleven percent of the j g
Speaker 1: B markets. What is it now, Garfield? And how high
Speaker 1: can it go? Well, that's that's that's the one quadrillion questions.
Speaker 1: Think that's how large the Japanese bond markets. It's stood
Speaker 1: at about of the market at the end of last year.
Speaker 1: That's based on face BOJ holdings versus the bonds outstanding,
Speaker 1: not taking tables of account. So far this month they've
Speaker 1: probably expanded that to about fifty three and doing what's
Speaker 1: going on. So they can't keep going at this pace
Speaker 1: because certain they literally will run out of bonds to buy.
Speaker 1: That's part of why they're perhaps trying to be expanded.
Speaker 1: Arsenal as I said. It also does raise the potential
Speaker 1: that they will expand as rapidly for a while until
Speaker 1: they do convince the market that they're willing to do
Speaker 1: whatever it takes to contain bondings. It's almost a little
Speaker 1: bit like the u US market at the moment, with
Speaker 1: the central Bank here in the US continually trying to
Speaker 1: convince the market that it's going to stick to its guns.
Speaker 1: Is that something similar that's playing out in Japan. Yeah,
Speaker 1: there's definitely something something similar. I mean, there are different
Speaker 1: dynamics play in something is going. If you think back
Speaker 1: early last year, we had President pal saying that he
Speaker 1: was fairly certain inflation would be transitory and so it
Speaker 1: wouldn't have to raise rights too fast, too fast. But
Speaker 1: then the market was saying no, no no, no, you're going
Speaker 1: to have to hike a lot, and ultimately the Fed
Speaker 1: came around to that thinking it's just now the market
Speaker 1: thinks it's done enough. We're right at the beginning of
Speaker 1: that process with the b o J, where the b
Speaker 1: o J is still effectively saying it thinks inflation is transitory.
Speaker 1: One of the surprises for traders and investors was that
Speaker 1: the b o J maintained CPI forecast under two percent,
Speaker 1: and that two percent level is what the bj has
Speaker 1: targeted as the aim of the policies. So if they're
Speaker 1: thinking that CPI is going to come back count they
Speaker 1: had then that back to the idea that they will
Speaker 1: not be tightening policy from here. Well. Interestingly, all of
Speaker 1: the economists and the Bloomberg survey had forecast that the
Speaker 1: Bank of Japan would stand pat So clearly economists are
Speaker 1: looking at the inflation data where markets are really looking
Speaker 1: at maybe momentum or some kind of credibility issue, as
Speaker 1: you said, but we are getting some wage inflation in
Speaker 1: Japan at the moment. Is the Bank of Japan correct?
Speaker 1: One part of what's going on is somewhat thinking that
Speaker 1: the Lasting of Berg wants to do as soon as
Speaker 1: it gets a little bit of wage growth is act
Speaker 1: in a way that could deter that wage growth from
Speaker 1: really taking off, because after all, if it did do
Speaker 1: much more along the lines of what some of the
Speaker 1: market bets were, then that would raise borrowing costs in
Speaker 1: the economy, that would make it harder to get sustained
Speaker 1: wage increases. So you sort of nip it in the bud.
Speaker 1: The other thing, of course, that and going honest that
Speaker 1: well markets are following the money. If you bet going
Speaker 1: into the last BAJAM meeting that they were going to
Speaker 1: do something which could allow yields to rise, you did
Speaker 1: very well. Indeed, despite the fact that there was a
Speaker 1: very strong consensus it was unlikely the b o J
Speaker 1: would do anything like what they actually did. So when
Speaker 1: you see people make money betting against the Bank of Japan,
Speaker 1: it makes sense for people to follow in and to
Speaker 1: keep betting. There are plenty of people who weren't paying
Speaker 1: against the last time they've been telling us they're still
Speaker 1: been against the Bank of Japan. They think the current
Speaker 1: setup is unsustainable, and so many of them are realistic
Speaker 1: enough to acknowledge that they might up get what they
Speaker 1: want this time, but they still see bonds that's being
Speaker 1: vulnerable to further the clients going forward, because that global
Speaker 1: inflation backdrop isn't going away. Haruhiko Kuroda is going away
Speaker 1: to April one, So change is in the air. There's
Speaker 1: your or confirmation that this is being taken as very debblish.
Speaker 1: The BOJ has brought perhaps not one berz but a couple.
Speaker 1: So while this round may go to the b o J,
Speaker 1: it's also going to be fascinating looking forward to what
Speaker 1: exactly the b o J means when it says it
Speaker 1: will be nimble in its bond purchases going forward. Does
Speaker 1: this narrow the field as to his successor now not necessarily.
Speaker 1: You could actually argue that if he manages to stave
Speaker 1: off the damage that had been done to the BOJS
Speaker 1: credibility the last meeting and provides flexibility that in fact
Speaker 1: opens the field back up. It gives the government more
Speaker 1: opportunities to uh, you sit back and decide, okay, what
Speaker 1: kind of policy do they want, rather than being a
Speaker 1: situation where they feel they might need to plump for
Speaker 1: one candidate or the other as being the one who
Speaker 1: could best resolve this pawnee situation. Finally, Garfield Equities seem
Speaker 1: to take this news in their st ride. Most of
Speaker 1: the indices in Japan were higher. Yeah. Well, I mean
Speaker 1: that's a couple of things they have. One is, you know,
Speaker 1: there are some companies that actually benefit from a week
Speaker 1: again and not two weeks of again. So that's welcome.
Speaker 1: And I think just the idea that the bj is
Speaker 1: going to seek to store literally and isn't going to
Speaker 1: drive up interest rates earlier than most had expected, that's
Speaker 1: being welcomed by equity trailers Nuomeberg's chief Asia Rates correspondent,
Speaker 1: Garfield Reynolds. There, stay tuned. We move continent to Brazil
Speaker 1: next and speak with Bloomberg Opinions Eduardo Porter. Because the
Speaker 1: January six insurrection in the United States was so clearly
Speaker 1: identified with a political party, I can see that creating,
Speaker 1: you know, frictions and and and and forces and and
Speaker 1: disruptive forces within that party. The case in Brazil, the
Speaker 1: forces that have drawn the in the rebels together are
Speaker 1: not quite as coherent. This is Bloomberg opinion. You're listening
Speaker 1: to Bloomberg Opinion. I'm Vonnie Quinn now to Brazil, where
Speaker 1: election denile continues to fester following the January eighth storming
Speaker 1: of empty Brazilian institutions. I spoke to Bloomberg opinions. Eduardo
Speaker 1: Porter Edward a lots of commarisons between January eighth and
Speaker 1: Brazilia and January six, obviously in the United States, but
Speaker 1: moving beyond that, January six did seem to be the
Speaker 1: event that splintered the Republican Party. It was already pretty fractious.
Speaker 1: Now I think it's even more so. Is that what
Speaker 1: happens with these populist uprisings. Do we see Brazil's election
Speaker 1: denier startist splinter or is it more likely that they
Speaker 1: could be galvanized by these events. That's a very good question,
Speaker 1: and I don't have an easy answer. Because the the
Speaker 1: January six insurrection in the United States was so clearly
Speaker 1: identified with a political party, the Republican Party, I can
Speaker 1: see that creating you know, frictions and forces and disruptive
Speaker 1: forces within that party. The case in Brazil, the forces
Speaker 1: that have drawn the rebels together are not quite as coherent,
Speaker 1: not quite as cohesive. It's not like a political party
Speaker 1: where all this belongs. I would say that there are groups, so,
Speaker 1: for instance, the agribusiness sector of the Brazilian economy, the
Speaker 1: ranchers that are in you know, and in the amazon
Speaker 1: A lot of the hostility towards the Lula regime come
Speaker 1: from those sectors, but I don't see them as coherently
Speaker 1: grouped up. So I don't see a party that would
Speaker 1: fragment Brazil's politics are already extremely fragmented. There's a huge
Speaker 1: number of parties represented in the Congress, and so it's
Speaker 1: not clear that this would actually have an effect in
Speaker 1: the legislature. On the other hand, you of people like
Speaker 1: Steve Bannon, who probably would like to take some credit
Speaker 1: for this. How much influence did somebody like that have
Speaker 1: down there? I would say that had January six not happened,
Speaker 1: January eight would probably not have happened either. I do
Speaker 1: think that there was a clear force of example, the
Speaker 1: biggest democracy in the in the Hemisphere can do this,
Speaker 1: why can't we? It looks like a good idea might
Speaker 1: be fun. I mean, if you put video side to side,
Speaker 1: they'd look pretty much identical, except for in Brazil everybody
Speaker 1: was wearing a yellow T shirt. But to the more
Speaker 1: specific point that people close to Trump, particular Mr bann
Speaker 1: and had their hand in this, they certainly did. Also.
Speaker 1: Naosnlado was here even before the Brazilian election talking about
Speaker 1: how all the electoral technology in Brazil was susceptible to
Speaker 1: being manipulated and how the election could be stole. They
Speaker 1: were preparing the ground to make an argument very similar
Speaker 1: to the one that was made in the United States,
Speaker 1: and then they made it once also not lost the election.
Speaker 1: We heard all about how this was fraudulent. In fact,
Speaker 1: Wilson NADOs group tried to make their case before the
Speaker 1: electoral tribunal and it was shot down. And so the
Speaker 1: parallels with what happened here go beyond the day. You know,
Speaker 1: there was these efforts through Brazilian institutions to to to
Speaker 1: make them call the election fraudulent, and when they lost,
Speaker 1: they just unleashed the people onto the Congress. So then
Speaker 1: Lula should also learn from the response to January six.
Speaker 1: What should he do is a crackdown on his part.
Speaker 1: Advisable should get to the criminal justice system. Absolutely, I mean,
Speaker 1: I think it's critically important that he established that this
Speaker 1: is not okay, and I think that it might be
Speaker 1: easier for him than it was for the Democrats, because
Speaker 1: you know, the Democrats meant acting against Republicans and many
Speaker 1: of which were sitting legislators in Brazil. You'll have less
Speaker 1: of that. So, I mean, I think you'll have less
Speaker 1: of that because we don't we don't really know where
Speaker 1: the chain of culpability leads. But I do think that
Speaker 1: the Lula government must go very very forcefully against the
Speaker 1: people who instigated It's the people who financed this. It's
Speaker 1: still not clear who these boul are. So. A former
Speaker 1: central banker in Brazil, Tony Volpon told Exante Data that
Speaker 1: this Embolden's President Lula to push ahead with expansionary fiscal
Speaker 1: plans now that could help economic growth expenditure, though might
Speaker 1: also set off investor concerns. What say you, is that
Speaker 1: a little bit of an outlier argument? Yeah, I'm not
Speaker 1: convinced that this gives Lula that much, you know, additional
Speaker 1: power to enact an aggressive policy strategy. The country is
Speaker 1: still very, very divided, and I don't think that this
Speaker 1: is going to change that. I mean, maybe, you know,
Speaker 1: the right looks a little bit crazier, but remember that
Speaker 1: Bolsonnado had already celebrated strategies that involving the death of
Speaker 1: his political rivals and the torture of his political rivals.
Speaker 1: I mean, Brazilians already knew the craziness on that side
Speaker 1: of the political spectrum. So I don't really think that
Speaker 1: this opens great new space for Lula the government. In
Speaker 1: terms of Bolson Arrow, is he planning some kind of comeback.
Speaker 1: I mean, he's in Florida, apparently was hospitalized for a
Speaker 1: time for abdominal issues. There is a little bit of
Speaker 1: diplomatic pressure on the US government. We'll talk about that
Speaker 1: on a second. But is he planning some kind of comeback,
Speaker 1: a triumphant comeback to politics in Brazil. I mean, I
Speaker 1: do think that that is off the cards now. I
Speaker 1: wouldn't be surprised if the administration goes after him criminally,
Speaker 1: if they can prove some more direct responsibility. I do
Speaker 1: think that this does at the very least end his
Speaker 1: political career and those of his proxies that I'm not
Speaker 1: sure that it ends a political career of everybody that
Speaker 1: are associated and associated with this kind of of this movement,
Speaker 1: but of him personally. Yes, I mean, now he says
Speaker 1: he's going to go back to Brazil, and I think
Speaker 1: that he is legally vulnerable. There are fans of Bolsonarow
Speaker 1: on Wall Street. There are obviously investors who are less
Speaker 1: concerned about the human and the social aspects of these
Speaker 1: types of things, and more about what happens to assets,
Speaker 1: basset prices and so on. Do they get placated enough
Speaker 1: that they find Brazil investable again. I think they're going
Speaker 1: to eventually find Brazilian investable. I mean, I think it's
Speaker 1: less that they love bol Tonado and more that they
Speaker 1: fear Lula. They fear of the notion of a leftist
Speaker 1: government that's going to go in, you know, do a
Speaker 1: lot of redistribution and engage in deficit spending on a
Speaker 1: large scale. But I think that ultimately Lula has already
Speaker 1: been the president. He's already proven that he can be
Speaker 1: a pragmatic, pretty reasonable steward of the Brazilian economy, and
Speaker 1: I wouldn't be surprised if he does that again. That
Speaker 1: ultimately Wall Street and investors, like they did when he
Speaker 1: governed last time around, will ultimately come to terms with
Speaker 1: a Lula government and not flee Brazil at all. I mean,
Speaker 1: in fact, if you look at the performance of the
Speaker 1: Brazilian stock market, it did way better under Lula than
Speaker 1: it did under This is true. And also we should
Speaker 1: point out that the latest Atlas Pool has President Lula's
Speaker 1: pool rating at one percent is disapprovals at forty one
Speaker 1: point six. That's not a terrible performance, but I mean
Speaker 1: for Lula, it's not great, you know. I mean it
Speaker 1: does show a country that's pretty split. Lula, when he
Speaker 1: was president, he was extremely popular. He left the presidency
Speaker 1: with popularly rating substantially higher than so for him, it's
Speaker 1: a low And I do think that that underscores how
Speaker 1: divided Brazil is. I mean, in the American context that
Speaker 1: looks great, but I you know, but I it looks
Speaker 1: to me that one of Brazilian still reject him and
Speaker 1: probably are still enamored of Bolsao strikes me as maybe
Speaker 1: the main obstacle that he will have to govern. This
Speaker 1: notion that there is such a large share of the
Speaker 1: population that really rejects him. So I want to be
Speaker 1: diplomatic about this. The US has a mixed record at
Speaker 1: being involved in Latin America at best. I think that's
Speaker 1: the best word you can use for it. What's the
Speaker 1: U supposed to do here? I mean, it's all right involved.
Speaker 1: It can't ignore the situation. Bill Sceonnaro is here, this
Speaker 1: pressure on President Biden to revoke his visa in some way. Yeah,
Speaker 1: but I think the US can do things. I think
Speaker 1: so far so good. President Biden invited Lula over and
Speaker 1: called him up and told him that, you know, insurrection
Speaker 1: was unacceptable and he stood behind Brazilian democracy and so forth.
Speaker 1: I think that was good. I think there's other things
Speaker 1: that could happen, kind of like in a less public way. So,
Speaker 1: for instance, there are very close military to military ties
Speaker 1: between the Brazilian military and the US military. I mean,
Speaker 1: a lot of the Brazilian top brass comes to the
Speaker 1: US to train and so so that could be a
Speaker 1: channel where because that's the most worrisome institution right now
Speaker 1: in Brazil, the military. Do we know how much support
Speaker 1: Lula has in the military, because we do know the
Speaker 1: Jaira Bolscenaro had a huge amount of support at least
Speaker 1: among the police, if not the wider security abroad US.
Speaker 1: The optimistic take is that the military are so far
Speaker 1: behaving pretty responsibly. You know, they did allow many of
Speaker 1: these protesters to encamp in military basis in the capital
Speaker 1: and another around other cities. I mean, the protesters were
Speaker 1: really expecting the armed forces to join in and try
Speaker 1: to overturn the election, but they didn't and they haven't
Speaker 1: and so I don't think they're super in love with
Speaker 1: Lula as an institution, but they have proven to be
Speaker 1: institutionalists defenders of democracy. So far, so good. And I
Speaker 1: think that the US could kind of like help that
Speaker 1: cause by, you know, just making sure that Brazilians know
Speaker 1: that the United States would not be happy if the
Speaker 1: Brazilian military war to like take a more active role
Speaker 1: and say undermining the administration numer opinions. Eduardo Porter, Well,
Speaker 1: if you're not among the dry January clew out there,
Speaker 1: you've got to listen to this next interview. Justin Fox
Speaker 1: had a look at the data and found people are
Speaker 1: spending more on alcohol even post pandemic. So, Justin you
Speaker 1: wrote a very consoling recent column. Not consoling in the
Speaker 1: sense that it told us that the pandemic drinking binge
Speaker 1: just kept on going after the pandemic was ostensibly over,
Speaker 1: but consoling for those of us who've had a couple
Speaker 1: of drinks in the last week or two. Tell us
Speaker 1: what are the data saying, Well, I wrote, I guess
Speaker 1: a year and a half or so ago about how
Speaker 1: much alcohol sales and seemingly consumption increased over the course
Speaker 1: of the pandemic. And I just sort of checked in
Speaker 1: again with the highest frequency data we can look at,
Speaker 1: which is just the consumer spending that the Bureau of
Speaker 1: Economic Analysis puts out. They actually give you in some
Speaker 1: detail how much is spent on beer, wine, and liquor
Speaker 1: at stores, and then how much has spent in general
Speaker 1: on drinks at bars and restaurants. And it's just kept
Speaker 1: going up, even in inflation adjusted terms. And a little
Speaker 1: bit of that is maybe people are buying fancier stuff,
Speaker 1: but I think it's mostly overall Americans are drinking more.
Speaker 1: How much do we know about the internals of those
Speaker 1: data in the sense that I feel like many of
Speaker 1: the large companies put out things like X zero or
Speaker 1: X double. Oh. I don't want to give any bond
Speaker 1: names here, but are some of these zero alcohol drinks
Speaker 1: considered alcohol in this Not that they don't, they don't
Speaker 1: show they shouldn't show up in any of this day.
Speaker 1: It is possible to spend a lot of money on
Speaker 1: non alcoholic liquor, and I now do that weirdly enough,
Speaker 1: but that should just show up as a non alcoholic beverage. Right. Well,
Speaker 1: there's been an explosion of those kinds of products within
Speaker 1: the brands, right and there's been definitely this increase in
Speaker 1: demand for I forget the term that the Distilled Spirits
Speaker 1: Council uses hyper super duper premium spirits, and and there's
Speaker 1: a lot more growth in the high end sales than
Speaker 1: in the low end sales. So in terms of the
Speaker 1: actual volume of at least with liquor being consumed, and
Speaker 1: probably with beer and wine too, it's not completely reflected
Speaker 1: by those increases in sales. Some of that is just
Speaker 1: people paying more money, not drinking more volume. But there
Speaker 1: there are lots of signs that there's more problematic drinking
Speaker 1: going on, the main one being a big increase in
Speaker 1: alcohol related deaths. What's going on with alcohol related deaths?
Speaker 1: Alcohol consumption in the US peaked in that i teen
Speaker 1: seventies and had been on this long decline, partly because
Speaker 1: of less beer consumption but also less liquor consumption. Wine
Speaker 1: consumption kept going up, but not radically. Sometime in the
Speaker 1: last couple of decades, spirits consumption started rising again. And
Speaker 1: it's pretty you know, the whole cocktail boom. This's been
Speaker 1: this explosion in the number of small distilleries all over
Speaker 1: the US, and it's kind of cool in general, but
Speaker 1: it means that per capita alcohol consumption has been rising
Speaker 1: now for more than a decade, and then it seems
Speaker 1: to have just taken a leap a couple of months
Speaker 1: into the pandemic. I guess I had thought that would
Speaker 1: have fallen back, but it hasn't. Really. Another interesting thing
Speaker 1: is this increased drinking is not young people, oh, for
Speaker 1: like the eighteen to twenty four set, I think they're
Speaker 1: probably drinking less, but it's middle aged and older are
Speaker 1: the ones drinking there well? And also legalization of wheat
Speaker 1: and having weed dispensaries New York City just sort of
Speaker 1: pushed it aside for a certain generation. I think also
Speaker 1: in the survey data, it's mostly women who are drinking more,
Speaker 1: with men maybe more flat interesting alcohol related deaths, do
Speaker 1: we know how they're happening? I mean, this is very
Speaker 1: grim and gruesome, but you know you're good at looking
Speaker 1: at grusom data, right. I mean, I think the c
Speaker 1: d C has this database and you can just click
Speaker 1: alcohol induce deaths, but it's some mix of cirrostis to deliver,
Speaker 1: And I mean what the CDC says is that that's
Speaker 1: actually only a portion of deaths that are somehow related
Speaker 1: to alcohol. Those are ones where it's basically you can
Speaker 1: very directly lay it down to alcohol use. There are
Speaker 1: lots of others in terms of accidents violence, that are
Speaker 1: probably alcohol related but don't show up. So, Justin, is
Speaker 1: there any hope for those of us who drink and
Speaker 1: haven't been cutting back. I mean, I'm not a great
Speaker 1: self help journalist. My own personal situation is it's January
Speaker 1: and I'm drinking a lot less. But yeah, I just
Speaker 1: agreed to go meet a friend for drinks. Maybe I'll
Speaker 1: see if they have good mock tails there. Even the
Speaker 1: name is just a little too boogie Bloomberg Opinions, Justin Fox,
Speaker 1: That does it for this week's Bloomberg Opinion. Do send
Speaker 1: us your thoughts though, Email me at v Quinn at
Speaker 1: Bloomberg dot net and as always, were produced by Eric
Speaker 1: mollow Till next time on Bloomberg Opinion