WEBVTT - MUFG's Brown: Biggest Risk is Italian Banking Meltdown (Audio)

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<v Speaker 1>Global business news twenty four hours a day at Bloomberg

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<v Speaker 1>dot com, the Radio plus Mobile Act and on your radio.

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<v Speaker 1>This is a Bloomberg Business Flash from Bloomberg World Headquarters.

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<v Speaker 1>I'm Charlie. Public of Brexit selling continues on this Monday,

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<v Speaker 1>the Dow, the SMP, NASDAK all declining. Let's head right

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<v Speaker 1>over the first word Breaking Views Desk four, Today's afternoon call,

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<v Speaker 1>and here he is Bill Maloney. Good afternoon, Charlie. That's right.

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<v Speaker 1>The breaks that followed continues, with it DAL currently down

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<v Speaker 1>two hundred nine points, SMDs dropped forty one and NAZAC

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<v Speaker 1>declines a hundred and twenty three. The SMP five hundred

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<v Speaker 1>dropped back below the two hungine moving average for the

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<v Speaker 1>first time since March over in New York. Germany and

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<v Speaker 1>France each fell three percent. Italy slipped three point nine percent.

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<v Speaker 1>The United Kingdom was cut to double A from triple

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<v Speaker 1>A by s MP back In the US A small

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<v Speaker 1>cap six hundred falls twenty two points, and the US

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<v Speaker 1>ten YELL dropped to one point for six percent. Eight

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<v Speaker 1>out of tennants to be sectors are lowered, led by

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<v Speaker 1>losses in financials, materials and energy utilities and Telecom gained down,

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<v Speaker 1>transports fall three point two percent, and as a biotech

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<v Speaker 1>dropped eighty points, and the vix is down by nine

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<v Speaker 1>point four percent. Leaders to the downside of the down

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<v Speaker 1>included American Express, DuPont and JP Morgan, Small Games for

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<v Speaker 1>Verizon and J and J. Western Digital sank twelve percent.

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<v Speaker 1>Seagate dropped ten percent, while Dr Pepper Snapple outperformed, gaining

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<v Speaker 1>four percent. Live from the First Bacon News to de

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<v Speaker 1>Scot Bill Maloney, Charlottean, all right, thank you very much, Bill,

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<v Speaker 1>And do hear live breaking news over your Bloomberg type

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<v Speaker 1>squawk el sq you a w K on your terminal.

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<v Speaker 1>I'm Charlie howled. That's a Bloomberg business flash you're listening

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<v Speaker 1>to taking stock with Kathleen Hay and pin box on

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<v Speaker 1>Bloomberg radio stocks selling off the United Stays around the

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<v Speaker 1>world for that matter, second day in a row. The

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<v Speaker 1>bond market is on fire, certainly with the US Treasury

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<v Speaker 1>market with the third year bond up about three points today,

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<v Speaker 1>the yell down below two point three per cent. I

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<v Speaker 1>could go on and on about the big moves in

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<v Speaker 1>these markets. Is this going to last? Our markets overreacting

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<v Speaker 1>or are we heading for some kind of crisis that

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<v Speaker 1>could keep markets up ended for a while and economies

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<v Speaker 1>as well. Joining me now right here in our New

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<v Speaker 1>York studio is Brendan Brown. He's chief economist at m

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<v Speaker 1>u f G in London, that's ground zero for the

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<v Speaker 1>bregsit vote. But he's here in New York with us today. Brendan,

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<v Speaker 1>welcome to the show. Thank you. So, uh, let's start

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<v Speaker 1>with the market reaction. Is it overdone? It's difficult to

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<v Speaker 1>say it's overdone, because there are all some really bad

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<v Speaker 1>scenarios out there, um and one in particular we see

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<v Speaker 1>focused on is a possibility of some sort of Italian

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<v Speaker 1>banking meltdown. And of course, given the possibility with the

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<v Speaker 1>euro or EU may not even be here in a

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<v Speaker 1>few years time, it's reasonable euro falls in value, a

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<v Speaker 1>dollar stronger, and a big spike in the dollar is

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<v Speaker 1>not such great news for US corporate profits. So there

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<v Speaker 1>is some there is some rhythm behind this. You wrote

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<v Speaker 1>quite quite markedly, quite impressively, something I think everyone's been

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<v Speaker 1>wondering about in a recent note actually on Friday, that

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<v Speaker 1>the UK referendum result is not a Leman moment. It's

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<v Speaker 1>not two thousand eight all over again. If I may

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<v Speaker 1>put some words in your mouth, but it is is

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<v Speaker 1>the start of a European journey away from the failure

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<v Speaker 1>of the EU. How do you know when something is

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<v Speaker 1>a Leman moment or when it isn't well? A Leman

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<v Speaker 1>moment would be characterized by terrific liquidity pressures, and what

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<v Speaker 1>we're not seeing UM today or Friday is a shortage

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<v Speaker 1>of liquidity. What we are seeing as a fairly I

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<v Speaker 1>think judicious re pricing of assets UM to take account

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<v Speaker 1>of some of the dangers ahead along a route which

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<v Speaker 1>may end up well for Europe and the world economy,

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<v Speaker 1>but there are dangerous from getting here to that final destination.

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<v Speaker 1>If this is the beginning of a European journey away

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<v Speaker 1>from the failure of the EU, is that your conclusion

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<v Speaker 1>is that your view that how are painful breaks? It

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<v Speaker 1>may be it is the right path for the UK

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<v Speaker 1>to take. I would put it this way that the

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<v Speaker 1>the EU had failed in three or four fundamental respects.

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<v Speaker 1>UM didn't deliver prosperity, it delivered monetary failure, it increased

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<v Speaker 1>political geopolitical instability, and it didn't deliver political democracy. So

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<v Speaker 1>the UK, in deciding to move away from that were

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<v Speaker 1>there were very powerful grounds and and and reasons for

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<v Speaker 1>hoping that a better future would lie going along an

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<v Speaker 1>independent route, and that that independence may in turn shock

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<v Speaker 1>Europe into something better. Now, none of this is for certain.

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<v Speaker 1>There are dangers, and ultimately people have to decide themselves

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<v Speaker 1>as to whether the risks worth the candle of the journey.

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<v Speaker 1>But there were definite reasons for thinking along that way

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<v Speaker 1>and and and hoping for a better future. You have

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<v Speaker 1>spenttioned the possibility of banking meltdown in Italy, and of

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<v Speaker 1>course the weakness of their banks has been an issue

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<v Speaker 1>for some time. France has its own issues, strikes and

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<v Speaker 1>you know, struggles with its economy. Uncle Merkel now is

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<v Speaker 1>going to be left without the UK in the EU,

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<v Speaker 1>two of major major partners within the EU with their

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<v Speaker 1>own difficulties. How does she respond? What does all this

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<v Speaker 1>mean for her future? Well? I think the pressures on

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<v Speaker 1>on Angela Merkel are tremendous from inside the German political system.

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<v Speaker 1>Even ahead of this, we saw support for the anti

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<v Speaker 1>euro Party rising where they were getting fifteen percent of

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<v Speaker 1>the vote in recent regional elections. And given Philip now

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<v Speaker 1>of seeing the UK having voted for Brexit. Um one

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<v Speaker 1>can only imagine that support is going to rise, particularly

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<v Speaker 1>as without the UK budgetary contributions and as you say,

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<v Speaker 1>Germany on its own, the prospects are Germany is going

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<v Speaker 1>to be having to finance this much more than previously

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<v Speaker 1>relative to the other partners. So as the anti euro

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<v Speaker 1>vote grows, I would imagine that the precious within Merkel's

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<v Speaker 1>own party c DU for Merkel to take a harder

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<v Speaker 1>line on European bailouts and on immigration is going to increase.

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<v Speaker 1>So ultimately, because the CDU does not want to see

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<v Speaker 1>more and more support being taken away by the far right,

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<v Speaker 1>we have to get some of that support back ahead

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<v Speaker 1>of elections next year. So the Mirkel's going to either

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<v Speaker 1>have to go along with this mood of harder line

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<v Speaker 1>towards easy being not too many bailouts, more more control

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<v Speaker 1>of immigration or or or yield power. And I think

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<v Speaker 1>that's what we're going to see. And that does open up,

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<v Speaker 1>of course, a conflict with the rest of the EU

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<v Speaker 1>and with France, and I would imagine retentions are going

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<v Speaker 1>to grow on that critical access between France and Germany.

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<v Speaker 1>Let get one more quick question before we continue this

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<v Speaker 1>conversation just a moment. What's the worst outcome in all

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<v Speaker 1>of this for the financial markets right now? The worst

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<v Speaker 1>outcome I could imagine in the in terms of the

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<v Speaker 1>next few weeks would be an Italian type um banking

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<v Speaker 1>meltdown and concern that because of the German situation we described,

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<v Speaker 1>where isn't going to be for support for them. We're

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<v Speaker 1>gonna continue this fascinating conversation with Brendan Brown, chief economist

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<v Speaker 1>at m uf G in London, joining me in our

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<v Speaker 1>New York studios today here at Bloomberg World Headquarters, Italy,

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<v Speaker 1>the Spanish elections, the Bank of Japan trying to cope

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<v Speaker 1>with a sergeant Yen that causes great difficulties for them

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<v Speaker 1>as they try to stimulate the Japanese economy. All this

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<v Speaker 1>and more coming up. I'm Kathleen Hayes taking Stock on

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<v Speaker 1>Bloomberg Radio. Bloomberg Taking Stock is brought to you by

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<v Speaker 1>Bentley University. What to rebooting America's oldest ski shop and

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<v Speaker 1>crunching numbers at Vistaferent Having common an NBA from Bentley

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<v Speaker 1>University that prepares graduates to innovate and lead because businesses

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<v Speaker 1>everywhere prepare here broadcasting live to New York, Bloomberg eleventh,

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<v Speaker 1>Rio to Washington, d C, Bloomberg to Boston, Bloomberg twelve,

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<v Speaker 1>under It to San Francisco, Bloomberg nine six to the Country,

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<v Speaker 1>Series X and General one nine and around the globe

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<v Speaker 1>the Bloomberg Radio Plus app and Bloomberg dot Com. This

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<v Speaker 1>is taking stock. I'm Kathleen Hayes, my close pim Fox

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<v Speaker 1>on vacation, the Brexit vote, a political earthquakes, sending reverberations

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<v Speaker 1>across Europe, around the world. We're gonna be looking at Italy,

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<v Speaker 1>Japan and more right here on Bloomberg Radio. Now we're

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<v Speaker 1>gonna toss that over to Charlie Pellett. He's in the

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<v Speaker 1>newsroom with a Bloomberg Business flash. Thank you very much,

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<v Speaker 1>Kathleen Hayes. Those aftershocks include continues selling in the US

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<v Speaker 1>equity market, with the DAL, the SMP and nastac Hall

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<v Speaker 1>extending Friday's declines. Right now, the SMP pine hunted in

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<v Speaker 1>text down forty three points of n a drop of

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<v Speaker 1>two point one percent. Those aftershocks reverberating across financial markets

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<v Speaker 1>after a weekend of political turmoil, the pound extending its

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<v Speaker 1>record sell off right now, we've got the NASDA Compositive

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<v Speaker 1>Index down one eight declining two point seven percent down,

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<v Speaker 1>industriels down three oh two, a drop of one point

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<v Speaker 1>seven percent, sm D down two point one percent, the

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<v Speaker 1>ten year up thirty one thirty seconds, looking at the

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<v Speaker 1>yield now of one point four or five percent, Gold

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<v Speaker 1>up nine eighty ounce now to thirteen thirty two again

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<v Speaker 1>there of seven tenths of one percent. A Bloomberg exclusive

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<v Speaker 1>this morning, as we sat down with the former Chairman

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<v Speaker 1>of the Federal Reserve, Alan Greenspan, he was on Bloomberg surveillance.

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<v Speaker 1>He talked at length about last week's UK for referendum

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<v Speaker 1>and what it means for the future of the United Kingdom,

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<v Speaker 1>significant renewals, Scotland and I'm almost certain school. It was

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<v Speaker 1>part of a Bloomberg Breakfast conversation hosted by Bloomberg N

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<v Speaker 1>one in Washington, d C. So again, taking a look

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<v Speaker 1>at what's happening with US markets, we've got crude oil

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<v Speaker 1>slumping two point three percent, down one ten of arrol

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<v Speaker 1>forty six fifty five right now. On West Texas intermediate

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<v Speaker 1>crude grant is at thirty two, a drop there of

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<v Speaker 1>two point three percent, and the SMP five hundred index

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<v Speaker 1>down forty one to a drop of two. Tow industrials

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<v Speaker 1>now down to a decline of one point seven percent

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<v Speaker 1>at three thirty two on Wall Street. Now, let's take

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<v Speaker 1>a look at other news from around the world right

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<v Speaker 1>here on Bloomberg Radio. Thank you, Charlie from the Bloomberg

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<v Speaker 1>News Room. I'm Jill Schneider. This news update is brought

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<v Speaker 1>to you by the Jeep Grand Cherokee, the most awarded

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<v Speaker 1>suv ever. The Grand Cherokee continues to raise the bar

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<v Speaker 1>with its luxurious interior and legendary four by four capability.

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<v Speaker 1>Drive on at your local Jeep dealer today. British Prime

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<v Speaker 1>Minister David Cameron says the UK will not trigger formal

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<v Speaker 1>EU EXITOX at this stage. He says the RAF random

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<v Speaker 1>result is quote not the outcome I think is best

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<v Speaker 1>for Britain, but says the result must be respected and

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<v Speaker 1>implemented in the best possible way. Britain is leaving the

0:11:17.360 --> 0:11:19.640
<v Speaker 1>European Union, but we must not turn our back on

0:11:19.720 --> 0:11:23.559
<v Speaker 1>Europe or on the rest of the world. The nature

0:11:23.679 --> 0:11:26.000
<v Speaker 1>of the relationship we secure with the EU will be

0:11:26.040 --> 0:11:28.679
<v Speaker 1>determined by the next government, but I think everyone has

0:11:28.679 --> 0:11:31.640
<v Speaker 1>agreed that we will want the strongest possible economic links

0:11:31.840 --> 0:11:34.319
<v Speaker 1>with our European neighbors, as well as with our close

0:11:34.360 --> 0:11:37.520
<v Speaker 1>friends in North America, the Commonwealth and important partners like

0:11:37.640 --> 0:11:40.800
<v Speaker 1>India and China. Cameron says there will be no immediate

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<v Speaker 1>changes for EU citizens now living in the UK. Hillary Clinton,

0:11:44.520 --> 0:11:47.199
<v Speaker 1>on the campaign trail in Cincinnati today, took the stage

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<v Speaker 1>in a first joint appearance with Elizabeth Warren. Clinton praised

0:11:50.800 --> 0:11:54.200
<v Speaker 1>the Massachusetts senator law, offering a harsh critique of Donald Trump.

0:11:54.280 --> 0:11:58.800
<v Speaker 1>She exposes him for what he is, temperamentally unfit and

0:11:58.880 --> 0:12:03.079
<v Speaker 1>totally unqualified by to be president of the United States.

0:12:06.200 --> 0:12:09.280
<v Speaker 1>Senator Warren called Clinton a fighter who has never backed down.

0:12:09.679 --> 0:12:12.120
<v Speaker 1>The Stone Wall in has officially claimed its spot in

0:12:12.120 --> 0:12:15.080
<v Speaker 1>American history, The site of the nineteen sixty nine riots

0:12:15.120 --> 0:12:17.679
<v Speaker 1>that launched the gay rights movement, was recognized as a

0:12:17.800 --> 0:12:21.040
<v Speaker 1>national monument in a ceremony today. Global News twenty four

0:12:21.080 --> 0:12:24.080
<v Speaker 1>hours a day, powered by more than twenty hundred journalists

0:12:24.080 --> 0:12:27.040
<v Speaker 1>and analysts in more than one twenty countries. From the

0:12:27.040 --> 0:12:30.200
<v Speaker 1>Bloomberg News Room, I'm Jill Schneider. This is Bloomberg, Charlie,

0:12:31.040 --> 0:12:33.880
<v Speaker 1>and we thank you and again recapping a forty point

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<v Speaker 1>loss now for the SMP five hundred index at nine

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<v Speaker 1>down two. I'm Charlie Pellett. That's a Bloomberg business flash.

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<v Speaker 1>You're listening stock with kath on Bloomberg Radio. Problem with

0:12:50.960 --> 0:12:54.080
<v Speaker 1>any kind of big move in markets, particularly when you

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<v Speaker 1>see a move like the British pound where it fell.

0:12:57.600 --> 0:13:02.599
<v Speaker 1>Uh had his biggest drop on Friday since the Japanese

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<v Speaker 1>yen on Friday, also coming within six n of the

0:13:05.200 --> 0:13:08.000
<v Speaker 1>point where Prime Minister Amy jumped in with his three

0:13:08.040 --> 0:13:10.600
<v Speaker 1>pronged stimulus plan three years ago. The problem is that

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<v Speaker 1>you really don't know what one move can mean for

0:13:12.960 --> 0:13:16.080
<v Speaker 1>the markets more broadly, and is the Brexit vote reverberates

0:13:16.280 --> 0:13:19.240
<v Speaker 1>across Europe. I'm continuing my conversation with Brendan Brown. He's

0:13:19.280 --> 0:13:22.240
<v Speaker 1>chief economist at m u f G. Brendan, you just

0:13:22.400 --> 0:13:26.480
<v Speaker 1>mentioned Italy and it's banks. This has been a festering problem,

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<v Speaker 1>but it seemed like it like it kind of float

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<v Speaker 1>along right with the rest of the EU. But the

0:13:30.840 --> 0:13:34.880
<v Speaker 1>bank stocks in many countries, but particularly Europe, have gotten hammered.

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<v Speaker 1>What does this mean totally? What's going to happen well

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<v Speaker 1>Italy in many ways is the most exposed banking system

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<v Speaker 1>to sovereign debt and also to bad loans, and Italy

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<v Speaker 1>has been gaining from the fact that of the QI

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<v Speaker 1>operations by the ECB and all a cheap funding. In fact,

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<v Speaker 1>many German voters are sort of cynco draggy in his

0:13:59.240 --> 0:14:02.120
<v Speaker 1>position is ec BE chief has been using the e

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<v Speaker 1>c B basically to help Italy, and and that's true

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<v Speaker 1>to a considerable extent. When when when you look at

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<v Speaker 1>the numbers, so now, with the pressures being very much

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<v Speaker 1>towards EU disintegration and possibly a harder German line as

0:14:16.120 --> 0:14:19.640
<v Speaker 1>we've been discussing a few minutes ago on ECB funding,

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<v Speaker 1>the question really does rise as to whether this Italian

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<v Speaker 1>situation is sustainable or whether the banks are going to

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<v Speaker 1>have to face a much harder environment. Look at that

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<v Speaker 1>mean for Italy? What could it mean for the EU?

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<v Speaker 1>Is this what you're going to see? Are these are

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<v Speaker 1>kind of stresses that pull the E together because somehow

0:14:37.320 --> 0:14:39.240
<v Speaker 1>they all come together and help Italy? Are these are

0:14:39.280 --> 0:14:41.280
<v Speaker 1>kind of things that pull up further apart? I think

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<v Speaker 1>in the present climate it would pull apart because the

0:14:45.240 --> 0:14:49.840
<v Speaker 1>German electorate is all very already very intense and upset

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<v Speaker 1>about the amount of funds which have gone onto this project,

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<v Speaker 1>and seeing British example of being able to walk away

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<v Speaker 1>with it, walk away from it, the question is whether

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<v Speaker 1>why shouldn't Germany be able to do the same thing.

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<v Speaker 1>Now certainly allowed voice in Germany over the year saying

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<v Speaker 1>just that. Let's look at the Bank of Japan. Last

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<v Speaker 1>night in the New York early in the morning in Asia,

0:15:08.760 --> 0:15:11.000
<v Speaker 1>we learned that there was an emergency meeting being held

0:15:11.040 --> 0:15:12.920
<v Speaker 1>with the Bank of Japan Prime Minister Abby and his

0:15:13.080 --> 0:15:15.800
<v Speaker 1>many of his members of his cabinet to look at

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<v Speaker 1>this distress on the end and what it could mean

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<v Speaker 1>for their markets, What does this surge in the end

0:15:22.440 --> 0:15:25.800
<v Speaker 1>mean for their economy, for their policy going ahead. Well,

0:15:25.840 --> 0:15:27.400
<v Speaker 1>what one has to realize first of all is that

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<v Speaker 1>Japan has a huge net investment position in European bonds,

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<v Speaker 1>with Japanese investors over the last ten years or more

0:15:35.720 --> 0:15:38.400
<v Speaker 1>have basically been piling into the so called high coupon

0:15:38.480 --> 0:15:41.920
<v Speaker 1>European bond markets. So when they see anything like this

0:15:42.000 --> 0:15:44.360
<v Speaker 1>happened and the unknowns as to how the brexits going

0:15:44.400 --> 0:15:47.720
<v Speaker 1>to emerge, they all rushed to hedge. And so you

0:15:47.800 --> 0:15:52.600
<v Speaker 1>seem tremendous upward pressure on the yen dutifous hedging by

0:15:52.720 --> 0:15:56.480
<v Speaker 1>japan UM institutions. Now on top of that, when you

0:15:56.520 --> 0:15:59.360
<v Speaker 1>get for yen rising, this is bad news with Japanese

0:15:59.360 --> 0:16:03.560
<v Speaker 1>stock market. In the stock market for in turn increases

0:16:03.760 --> 0:16:08.080
<v Speaker 1>risk aversion, and in turn that means less capital leaving Japan.

0:16:08.560 --> 0:16:10.840
<v Speaker 1>So a sort of a sort of a whole vicious

0:16:10.880 --> 0:16:14.920
<v Speaker 1>circle here developing. UM. And of course our be economics

0:16:15.040 --> 0:16:18.120
<v Speaker 1>is founded on the two principles of using monetary policy

0:16:18.160 --> 0:16:20.920
<v Speaker 1>to boost the stock market and to appreciation to appreciate en,

0:16:21.280 --> 0:16:25.120
<v Speaker 1>both of which now have gone completely into reverse. UM.

0:16:25.280 --> 0:16:27.760
<v Speaker 1>I don't I if you ask me what's going to happen.

0:16:27.760 --> 0:16:29.320
<v Speaker 1>I think at some stage it's going to be intervention

0:16:29.400 --> 0:16:32.360
<v Speaker 1>by by the government of Japan. Currency market intervention. Currency

0:16:32.360 --> 0:16:34.720
<v Speaker 1>market intervention. But it's so important to stop all of

0:16:34.760 --> 0:16:37.800
<v Speaker 1>this andthing well at working the latterly if it's we

0:16:37.840 --> 0:16:40.920
<v Speaker 1>have to join them. I think ultimately their first intention

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<v Speaker 1>would have been to do this jointly with the United States,

0:16:43.280 --> 0:16:45.200
<v Speaker 1>but there's really no prospect of the US joining in

0:16:45.240 --> 0:16:50.880
<v Speaker 1>any intervention, so the Japan would do this unilaterally. Dollar

0:16:51.160 --> 0:16:53.640
<v Speaker 1>gold What does all this mean? Keep buying into the

0:16:53.680 --> 0:16:56.600
<v Speaker 1>paling into the gold. What about the dollar? Well, by

0:16:57.200 --> 0:16:59.120
<v Speaker 1>to go do you have to think that here the

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<v Speaker 1>second biggest currency in the world, Euro is now now

0:17:04.320 --> 0:17:06.480
<v Speaker 1>it's an EU currency, and yet we don't know where

0:17:06.480 --> 0:17:08.439
<v Speaker 1>the EU is headed or whether you will even be

0:17:08.520 --> 0:17:12.520
<v Speaker 1>here according to some extreme scenarios within a few years.

0:17:12.520 --> 0:17:14.840
<v Speaker 1>If we really see pressure between Germany and France building

0:17:14.920 --> 0:17:19.840
<v Speaker 1>up so that that that means that investors should that

0:17:20.040 --> 0:17:22.600
<v Speaker 1>there were no longer in a multi currency universe anymore.

0:17:23.000 --> 0:17:26.359
<v Speaker 1>They have to think seriously, but from only alternative to

0:17:26.480 --> 0:17:29.480
<v Speaker 1>the dollar is gold. So it makes sense that gold

0:17:29.680 --> 0:17:32.840
<v Speaker 1>is pushed up here as as a result of these happening,

0:17:32.880 --> 0:17:35.480
<v Speaker 1>and the dollar of course gains as being the only

0:17:35.560 --> 0:17:39.919
<v Speaker 1>fat money which is not negative interest rates and doesn't

0:17:39.960 --> 0:17:43.080
<v Speaker 1>face some sort of existential risk or exploding budget deficit

0:17:43.160 --> 0:17:46.399
<v Speaker 1>risks such as we have in Japan. Brendan Brown for investors,

0:17:46.680 --> 0:17:49.119
<v Speaker 1>are we gonna look back in five years and say, wow,

0:17:49.280 --> 0:17:51.359
<v Speaker 1>that that's when it really all turned. That's one that

0:17:51.400 --> 0:17:54.240
<v Speaker 1>was the beginning sort of the the end of the world,

0:17:54.240 --> 0:17:58.119
<v Speaker 1>but still big, big negative moment for markets. Uh, you know,

0:17:58.200 --> 0:18:01.760
<v Speaker 1>between the Brexit vote, between eight point seven trillion dollars

0:18:01.760 --> 0:18:03.800
<v Speaker 1>worth of negative bond yields around the world. Is this

0:18:03.840 --> 0:18:07.040
<v Speaker 1>an ominous sign? I think the most ominous sign I

0:18:07.080 --> 0:18:11.360
<v Speaker 1>would look at in recent months has been this steady

0:18:11.560 --> 0:18:14.080
<v Speaker 1>decline in Tokyo. I mean, Tokyo is the second biggest

0:18:14.119 --> 0:18:17.439
<v Speaker 1>equity market in the world, and it's it's crashed by

0:18:17.480 --> 0:18:21.440
<v Speaker 1>around That has to be a warning because very often

0:18:21.480 --> 0:18:24.639
<v Speaker 1>when you look at global asset price deflation, it's it

0:18:24.680 --> 0:18:27.520
<v Speaker 1>doesn't all start at once everywhere. You normally get a lead,

0:18:27.600 --> 0:18:30.399
<v Speaker 1>a leader at the same time as other markets may

0:18:30.400 --> 0:18:32.680
<v Speaker 1>still be going up. And I think that's what we've

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<v Speaker 1>seen in the first six months of this year. But

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<v Speaker 1>it does make one much more anxious. I think about

0:18:36.600 --> 0:18:39.320
<v Speaker 1>what follows Brendon Brown. But you know, you're less anxious

0:18:39.320 --> 0:18:41.359
<v Speaker 1>if you have a sense of white what might be coming,

0:18:41.440 --> 0:18:43.359
<v Speaker 1>because you can prepare for Thank you so much for

0:18:43.440 --> 0:18:46.600
<v Speaker 1>joining us. Brendon Brown is chief you as economist. Excuse me,

0:18:46.600 --> 0:18:50.479
<v Speaker 1>he's chief economist at m u f G based in London.

0:18:50.920 --> 0:19:00.840
<v Speaker 1>Joining me. Kathleen Hayes on taking Stock on Bloomberg Radio today.

0:19:02.119 --> 0:19:05.320
<v Speaker 1>Bloomberg Taking Stock is brought to you by Bentley Universe.

0:19:06.800 --> 0:19:09.399
<v Speaker 1>We are filling to tell you a moment of the

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<v Speaker 1>coming up on Bloomberg Radio, which is I'll look at

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<v Speaker 1>the stock market right here,