1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,040 Speaker 1: us live on YouTube. 6 00:00:27,320 --> 00:00:31,920 Speaker 2: Chambov joined us absolutely definitive at Blackrock here Global had 7 00:00:31,920 --> 00:00:36,000 Speaker 2: a research for Blackrock Investment Institute and with the Canadian 8 00:00:36,720 --> 00:00:40,960 Speaker 2: feel as well. Jean, I see the moment here. I 9 00:00:41,000 --> 00:00:45,640 Speaker 2: was reading very carefully way Lee the other day synthesize 10 00:00:45,680 --> 00:00:50,080 Speaker 2: the Blackrock view of the software shock of four or five, 11 00:00:50,200 --> 00:00:51,040 Speaker 2: six days ago. 12 00:00:53,200 --> 00:00:57,000 Speaker 3: Yeah, I think it's interesting maybe to start by comparing 13 00:00:57,040 --> 00:00:59,080 Speaker 3: this to last fall. Right, So, last fall we had 14 00:00:59,080 --> 00:01:01,200 Speaker 3: market selling off and that was all on the back 15 00:01:01,280 --> 00:01:04,360 Speaker 3: of doubts about whether AI with the real thing. And 16 00:01:04,400 --> 00:01:06,440 Speaker 3: now we got this kind of as you say, shock 17 00:01:06,520 --> 00:01:08,360 Speaker 3: over the last few a couple of weeks, which is 18 00:01:09,160 --> 00:01:12,200 Speaker 3: also a sell off, also a sell off story, but 19 00:01:12,280 --> 00:01:15,559 Speaker 3: it's it's because of AI is a real thing this time, 20 00:01:15,920 --> 00:01:18,720 Speaker 3: and now market extrapolating to the disruption is going to 21 00:01:18,800 --> 00:01:22,000 Speaker 3: really cause So I guess one takeaway is that you know, 22 00:01:22,200 --> 00:01:24,560 Speaker 3: we see that as increasing the conviction of this AI 23 00:01:25,120 --> 00:01:30,119 Speaker 3: mega force being real, it's happening, it's disrupting now, uh, 24 00:01:30,160 --> 00:01:33,080 Speaker 3: and now markets are starting to think through what that 25 00:01:33,240 --> 00:01:34,920 Speaker 3: means for winners and losers. 26 00:01:35,160 --> 00:01:36,959 Speaker 4: I think it's early though on that question. 27 00:01:37,080 --> 00:01:39,800 Speaker 3: So we're going to see markets start to run to 28 00:01:39,880 --> 00:01:45,720 Speaker 3: conclusion and make big, you know, sweeping software type labels 29 00:01:45,720 --> 00:01:47,720 Speaker 3: and stuff and run with this. But I think it's 30 00:01:47,760 --> 00:01:50,480 Speaker 3: going to be a story that's gonna, you know, be 31 00:01:50,680 --> 00:01:54,400 Speaker 3: a much more nuance. And yeah, I think we're gonna 32 00:01:54,600 --> 00:01:56,680 Speaker 3: likely to see overreaction along the way as we've seen. 33 00:01:57,120 --> 00:02:00,680 Speaker 5: John, I'm wondering if this market can perform if technology 34 00:02:00,800 --> 00:02:04,800 Speaker 5: is not leading it. We've become so accustomed to technology 35 00:02:04,840 --> 00:02:08,680 Speaker 5: and then most recently the magazis magnificent seven leading this market. 36 00:02:09,600 --> 00:02:11,560 Speaker 5: Do you sort of have confidence that that's the case. 37 00:02:12,880 --> 00:02:15,799 Speaker 3: Yeah, Well, I mean the we we in our outlook 38 00:02:16,240 --> 00:02:19,200 Speaker 3: we call that micro is macro, right, So the idea 39 00:02:19,280 --> 00:02:22,280 Speaker 3: that like it's it's a it's a mega for story's 40 00:02:22,360 --> 00:02:24,880 Speaker 3: AI is at the center not only of this market 41 00:02:24,919 --> 00:02:27,480 Speaker 3: but of the economy, to be honest. So the growth 42 00:02:27,520 --> 00:02:29,840 Speaker 3: we've been having and we're going to continue that is 43 00:02:29,880 --> 00:02:34,000 Speaker 3: heavily dependent on AI continuing to grow. But I would 44 00:02:34,040 --> 00:02:35,359 Speaker 3: say that what we've seen in the last couple of 45 00:02:35,360 --> 00:02:40,440 Speaker 3: weeks is now visibility into that breaking out of you know, 46 00:02:40,520 --> 00:02:43,360 Speaker 3: out of the pure kind of builders. So yes, we 47 00:02:43,400 --> 00:02:46,560 Speaker 3: are focused on the potential losers, but that means that 48 00:02:46,600 --> 00:02:48,000 Speaker 3: they're losers because there's going. 49 00:02:48,000 --> 00:02:48,959 Speaker 4: To be windfalls. 50 00:02:48,919 --> 00:02:51,079 Speaker 3: They're going to be very significant for the others where 51 00:02:51,160 --> 00:02:52,359 Speaker 3: it's going to get monetized. 52 00:02:52,840 --> 00:02:55,680 Speaker 4: So you know, you know, I think we get Yeah, 53 00:02:55,720 --> 00:02:57,480 Speaker 4: everything dependent on the AI story. 54 00:02:58,120 --> 00:03:01,120 Speaker 3: I think the build out, the need to build this 55 00:03:01,200 --> 00:03:04,600 Speaker 3: out is that THESUS is intact, even maybe reinforced, and 56 00:03:04,639 --> 00:03:06,160 Speaker 3: that's an I perfrescat. 57 00:03:06,200 --> 00:03:08,560 Speaker 4: Our story is killing me. 58 00:03:09,040 --> 00:03:11,920 Speaker 2: Ticos micro's macro. You know, I got a shift to 59 00:03:11,960 --> 00:03:14,760 Speaker 2: a FED discussion Jean Beauvan with us, with all of 60 00:03:14,760 --> 00:03:19,120 Speaker 2: his great work and academics at Princeton. Does Kevin worsh 61 00:03:19,200 --> 00:03:24,400 Speaker 2: have any understanding Jean Beauvan of the micro dynamics of 62 00:03:24,600 --> 00:03:29,600 Speaker 2: Monetary policy study or is it all big concept stuff? 63 00:03:31,800 --> 00:03:33,120 Speaker 2: I mean, I I don't know. 64 00:03:33,160 --> 00:03:36,960 Speaker 3: I don't know that I have visibility into that specific question, 65 00:03:37,160 --> 00:03:41,040 Speaker 3: I think, But you know, I know I've known given 66 00:03:41,080 --> 00:03:44,000 Speaker 3: for for some years and I've followed like his comments 67 00:03:44,040 --> 00:03:46,119 Speaker 3: and so on. I guess one thing you could say 68 00:03:46,200 --> 00:03:49,480 Speaker 3: is that this is only somebody that has like a 69 00:03:49,600 --> 00:03:52,600 Speaker 3: macro view of my policy that is incurred in like 70 00:03:52,920 --> 00:03:56,440 Speaker 3: crisis experience, and I would say that as like a 71 00:03:56,440 --> 00:03:58,960 Speaker 3: good understanding of the global ramification of that. 72 00:03:59,160 --> 00:04:01,680 Speaker 4: So I guess that's uh, that's an important point. 73 00:04:01,920 --> 00:04:04,720 Speaker 3: And has also been very focused on the AI piece, 74 00:04:04,760 --> 00:04:07,440 Speaker 3: which I guess is uh is more of a micro 75 00:04:07,840 --> 00:04:11,600 Speaker 3: lench something. So so that suggests that like both are 76 00:04:11,960 --> 00:04:13,920 Speaker 3: at play here with Kevin And what's. 77 00:04:13,720 --> 00:04:16,320 Speaker 2: Really interesting here we had another guest in earlier is 78 00:04:16,360 --> 00:04:20,520 Speaker 2: talking about the productivity boom is not only AI, but 79 00:04:20,720 --> 00:04:25,680 Speaker 2: is efficiency learned off the pandemic. Describe how you see 80 00:04:25,839 --> 00:04:27,920 Speaker 2: America's burgeoning productivity. 81 00:04:29,600 --> 00:04:32,359 Speaker 3: Well, I would say that the productivity we've seen in 82 00:04:32,400 --> 00:04:34,720 Speaker 3: the data so far, to my mind, our mind, has 83 00:04:34,960 --> 00:04:37,080 Speaker 3: not much to do with AI yet, So I think 84 00:04:37,080 --> 00:04:39,960 Speaker 3: that would be would be more sympathetic to uh, you 85 00:04:39,960 --> 00:04:43,440 Speaker 3: know what we've learned from the pandemic and uh and 86 00:04:43,480 --> 00:04:44,200 Speaker 3: that feeling true. 87 00:04:44,200 --> 00:04:45,640 Speaker 4: And also I think a big part of this is 88 00:04:45,839 --> 00:04:47,160 Speaker 4: just cyclical. 89 00:04:47,200 --> 00:04:51,159 Speaker 3: Uh, you know, where when when growth is accelerating, we 90 00:04:51,320 --> 00:04:54,080 Speaker 3: tend to be more productive before we hire more people 91 00:04:54,480 --> 00:04:57,040 Speaker 3: and there's also this kind of no fire, no higher 92 00:04:57,120 --> 00:05:01,040 Speaker 3: dynamic with the uncertainty that I think manifest itself in 93 00:05:01,040 --> 00:05:02,360 Speaker 3: increased measure productivity. 94 00:05:02,400 --> 00:05:04,360 Speaker 4: So first point is, I don't think we've seen the 95 00:05:04,400 --> 00:05:05,679 Speaker 4: II productivity yet. 96 00:05:06,240 --> 00:05:09,760 Speaker 3: I do think that this is the potential is real, right, 97 00:05:09,800 --> 00:05:12,320 Speaker 3: I mean, and I think it's going to take some 98 00:05:12,360 --> 00:05:13,000 Speaker 3: time to see it. 99 00:05:13,040 --> 00:05:15,039 Speaker 4: But like we for the we think for the first 100 00:05:15,080 --> 00:05:16,239 Speaker 4: time it's. 101 00:05:16,080 --> 00:05:20,160 Speaker 3: Conceivable that AI could be powerful enough to finally break 102 00:05:20,240 --> 00:05:22,800 Speaker 3: us out of a two percent road world, which we 103 00:05:22,880 --> 00:05:23,880 Speaker 3: haven't broke in. 104 00:05:23,839 --> 00:05:25,560 Speaker 4: The US for one hundred and fifty years. 105 00:05:25,600 --> 00:05:29,520 Speaker 3: All the ingenuity of humans over the last one hundred 106 00:05:29,520 --> 00:05:31,240 Speaker 3: and fifty years has just been enough to keep us 107 00:05:31,279 --> 00:05:34,279 Speaker 3: on a two percent road pad. I think it's conceivable 108 00:05:34,279 --> 00:05:36,120 Speaker 3: that AI for the first time could change that. 109 00:05:37,440 --> 00:05:38,400 Speaker 4: And the key thing. 110 00:05:38,279 --> 00:05:40,720 Speaker 3: Will be if it actually leads us to accelerate the 111 00:05:40,800 --> 00:05:41,560 Speaker 3: rate of innovation. 112 00:05:41,680 --> 00:05:44,400 Speaker 4: That's the key thing to track for us. But that 113 00:05:44,480 --> 00:05:45,919 Speaker 4: I don't think we've seen that yet. 114 00:05:46,480 --> 00:05:49,279 Speaker 5: Jehan, twenty twenty five was a year where emerging markets 115 00:05:49,360 --> 00:05:53,159 Speaker 5: really asserted itself as a performer. Here is that can 116 00:05:53,160 --> 00:05:54,360 Speaker 5: extend in twenty six. 117 00:05:56,160 --> 00:05:59,320 Speaker 3: We are we are positive for an emerging market for 118 00:05:59,320 --> 00:06:04,000 Speaker 3: twenty twenty ses. I think the backdrop macro backdrop continues 119 00:06:04,040 --> 00:06:08,039 Speaker 3: to be you know positive for EM in general. Do 120 00:06:08,120 --> 00:06:12,200 Speaker 3: we have you know, a weaker dollar environment that I 121 00:06:12,200 --> 00:06:15,640 Speaker 3: think we were not like subscribing to the idea that 122 00:06:15,680 --> 00:06:18,400 Speaker 3: there's an ongoing kind of trend downward than a dollar 123 00:06:18,400 --> 00:06:20,200 Speaker 3: in twenty twenty six, But I don't think it's trend 124 00:06:20,240 --> 00:06:23,280 Speaker 3: any either, So I think that's going to be conducive 125 00:06:23,360 --> 00:06:26,960 Speaker 3: constructive for EM. We have you know, a Paulsey landscape 126 00:06:27,000 --> 00:06:29,680 Speaker 3: in EM that has been you know, surprisingly strong the 127 00:06:29,760 --> 00:06:32,280 Speaker 3: last couple of years. I think that continues and for 128 00:06:32,400 --> 00:06:34,960 Speaker 3: us then it's about tracing those mega force and now 129 00:06:35,000 --> 00:06:37,560 Speaker 3: they play out in EM. So those that are exposed 130 00:06:37,560 --> 00:06:40,960 Speaker 3: to AI, I think are set to do well. You know, 131 00:06:41,040 --> 00:06:45,760 Speaker 3: Korea is obviously like the super story of twenty twenty five, 132 00:06:46,839 --> 00:06:49,120 Speaker 3: but I think that hass the room to continue. 133 00:06:49,360 --> 00:06:52,680 Speaker 2: What is the study at Black Rock? Joan Bovan of China? 134 00:06:52,960 --> 00:06:56,200 Speaker 2: Are they finally recovering? We're seeing it in retail a 135 00:06:56,240 --> 00:06:59,000 Speaker 2: little bit caring Gucci out today with a better tone, 136 00:06:59,000 --> 00:07:02,400 Speaker 2: but this Black see China doing better. 137 00:07:04,160 --> 00:07:07,479 Speaker 3: I think I think that the marginal the evolution is 138 00:07:07,520 --> 00:07:12,119 Speaker 3: towards a more positive you know, investment landscape. I think 139 00:07:12,240 --> 00:07:14,160 Speaker 3: the and there's a couple of things. I think the 140 00:07:14,200 --> 00:07:17,440 Speaker 3: AI story again, I mean, there's this more in AI 141 00:07:17,520 --> 00:07:19,240 Speaker 3: in life. But that's the key that's certainly the key 142 00:07:19,240 --> 00:07:21,239 Speaker 3: thing right now, and it's also true in in China. 143 00:07:21,280 --> 00:07:21,880 Speaker 4: That's a key thing. 144 00:07:21,920 --> 00:07:24,760 Speaker 3: I think we we have not paid enough attention in 145 00:07:24,800 --> 00:07:27,680 Speaker 3: twenty twenty five has been a big story and it 146 00:07:27,720 --> 00:07:31,240 Speaker 3: has really been pretty powerful. I think the other the 147 00:07:31,280 --> 00:07:34,040 Speaker 3: other key drivers or yes, there's a bit of a 148 00:07:34,120 --> 00:07:36,760 Speaker 3: of a brunnening of growth that could be part of it. 149 00:07:36,800 --> 00:07:40,560 Speaker 3: But I think also the authorities shifting their stands on 150 00:07:40,640 --> 00:07:43,840 Speaker 3: copper China and allowing maybe a bit more breeding room 151 00:07:44,560 --> 00:07:46,600 Speaker 3: I think and learning those lessons from the last few 152 00:07:46,640 --> 00:07:49,920 Speaker 3: years could also be constructive. So on a technical basis, 153 00:07:49,960 --> 00:07:53,320 Speaker 3: we see more opportunity in China than we would have 154 00:07:53,400 --> 00:07:54,800 Speaker 3: had seen a year ago. 155 00:07:55,040 --> 00:07:57,600 Speaker 2: Jean, thank you for the time, particularly those comments on 156 00:07:57,640 --> 00:08:03,800 Speaker 2: the federal reserve nomination process. You champavent at Blackrock. Stay 157 00:08:03,840 --> 00:08:07,720 Speaker 2: with us. More from Bloomberg Surveillance coming up after this. 158 00:08:14,960 --> 00:08:18,559 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live 159 00:08:18,600 --> 00:08:21,760 Speaker 1: weekday afternoons from seven to ten am. Eastern Listen on 160 00:08:21,840 --> 00:08:25,520 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 161 00:08:25,680 --> 00:08:27,120 Speaker 1: watch us live on YouTube. 162 00:08:27,400 --> 00:08:29,760 Speaker 2: True that we here with all the government shut down, 163 00:08:29,800 --> 00:08:33,760 Speaker 2: short shutdown, nice restart, but the economics forward through the 164 00:08:33,800 --> 00:08:37,200 Speaker 2: week is exhausting. To help us out, Francis Donald it 165 00:08:37,280 --> 00:08:39,840 Speaker 2: joins us right now, thrilled to have her with us 166 00:08:39,880 --> 00:08:43,800 Speaker 2: year this morning with RBC. I look, Francis at where 167 00:08:43,840 --> 00:08:46,719 Speaker 2: we are, and I got to get to Friday. Do 168 00:08:46,760 --> 00:08:51,200 Speaker 2: you have any guestimate or bestimate of where you'll be Friday? 169 00:08:51,320 --> 00:08:54,240 Speaker 2: It's a quarter of nine, quarter of nine. 170 00:08:54,280 --> 00:08:57,640 Speaker 6: Well, we will be still reviewing the CPI data, but 171 00:08:57,920 --> 00:09:01,520 Speaker 6: probably taking the entirety of the week together, which is 172 00:09:01,559 --> 00:09:04,680 Speaker 6: we've got retail sales, we've got a jobs number coming through, 173 00:09:04,760 --> 00:09:08,040 Speaker 6: we've got inflation, and yet behind the scenes, the problem 174 00:09:08,120 --> 00:09:10,800 Speaker 6: is a lot of our data is still distorted coming 175 00:09:10,800 --> 00:09:13,800 Speaker 6: off of the shutdown. We've got seasonality issues, which we 176 00:09:13,880 --> 00:09:16,320 Speaker 6: always do in the first quarter, and then we have 177 00:09:16,400 --> 00:09:18,880 Speaker 6: a lot of known unknowns like where is tariff policy 178 00:09:18,920 --> 00:09:20,880 Speaker 6: going to settle? We still don't know the answer to that, 179 00:09:21,320 --> 00:09:23,880 Speaker 6: and we're wrestling out with all of these data points. 180 00:09:24,040 --> 00:09:26,559 Speaker 6: What is a cyclical trend versus what is a structural 181 00:09:26,600 --> 00:09:27,920 Speaker 6: that's never been more important in. 182 00:09:27,960 --> 00:09:32,240 Speaker 2: Microre smart people in Atlanta have the Atlanta GDP now, 183 00:09:32,360 --> 00:09:36,520 Speaker 2: which is now it's coming down. Is that a vector 184 00:09:36,559 --> 00:09:39,200 Speaker 2: in place that are we going to get real GDP 185 00:09:39,440 --> 00:09:40,320 Speaker 2: under three percent? 186 00:09:40,640 --> 00:09:42,560 Speaker 6: We're probably going to get something for the fourth quarter 187 00:09:42,640 --> 00:09:45,280 Speaker 6: around three percent, maybe a little bit of upside about that. 188 00:09:45,440 --> 00:09:48,760 Speaker 6: But again, what is the composition of that growth. We're 189 00:09:48,800 --> 00:09:51,920 Speaker 6: seeing growth that is great for markets, but not great 190 00:09:52,160 --> 00:09:55,040 Speaker 6: great for the people. We're seeing growth that is really 191 00:09:55,080 --> 00:09:59,720 Speaker 6: biased towards capex Ai data centers. Now, that's not necessarily bad. 192 00:10:00,280 --> 00:10:03,040 Speaker 6: Different type of growth. It's not a tide that lifts 193 00:10:03,280 --> 00:10:05,200 Speaker 6: all ships, and it's not one that's going to create 194 00:10:05,240 --> 00:10:08,560 Speaker 6: a significant amount of job growth associated with it. It's 195 00:10:08,559 --> 00:10:11,840 Speaker 6: not growth that's going to save the affordability issues facing consumers. 196 00:10:11,960 --> 00:10:13,599 Speaker 6: In fact, it's not growth that's going to solve the 197 00:10:13,640 --> 00:10:16,160 Speaker 6: k shaped elements of this economy. So it's growth, and 198 00:10:16,200 --> 00:10:18,600 Speaker 6: that's good, and I'll never knock a great GDP number, 199 00:10:18,679 --> 00:10:20,760 Speaker 6: But what's happening under the surface is going to be 200 00:10:20,800 --> 00:10:23,800 Speaker 6: far more important for companies operating in the United States 201 00:10:23,840 --> 00:10:25,360 Speaker 6: and ultimately for markets too. 202 00:10:25,720 --> 00:10:27,880 Speaker 5: I like notes you say we're about to hit the 203 00:10:28,000 --> 00:10:31,120 Speaker 5: five year anniversary of inflation running above two percent. I 204 00:10:31,120 --> 00:10:34,680 Speaker 5: didn't think about it in that terms. The a IFED 205 00:10:34,760 --> 00:10:38,000 Speaker 5: can't be happy about that, But b who cares about 206 00:10:38,000 --> 00:10:40,160 Speaker 5: two percent? I mean, where did that number come from? 207 00:10:40,280 --> 00:10:43,120 Speaker 5: And should we really care? It feels like inflation. It's 208 00:10:43,200 --> 00:10:45,600 Speaker 5: higher than maybe we'd like it, But it's isn't it 209 00:10:45,640 --> 00:10:47,040 Speaker 5: just kind of where we are in this economy. 210 00:10:47,160 --> 00:10:48,600 Speaker 6: Well, I guess that's a great way to put it. 211 00:10:48,640 --> 00:10:50,199 Speaker 6: That's kind of where we are. Where does it come 212 00:10:50,200 --> 00:10:53,400 Speaker 6: from central bank research? Predominantly, I think originating out of 213 00:10:53,400 --> 00:10:55,840 Speaker 6: New Zealand. The two percent was a great place to be. 214 00:10:56,160 --> 00:10:58,160 Speaker 6: And I remember even a few years ago, folks would 215 00:10:58,200 --> 00:11:00,360 Speaker 6: say things like, oh, well, what if we end up 216 00:11:00,400 --> 00:11:02,400 Speaker 6: with three percent being the new two percent? This was 217 00:11:02,400 --> 00:11:05,079 Speaker 6: a really scary type of development. But when I think 218 00:11:05,080 --> 00:11:07,520 Speaker 6: about three percent, I think that while people got worried 219 00:11:07,559 --> 00:11:10,800 Speaker 6: about inflation surging like it did during the post pandemic period, 220 00:11:10,880 --> 00:11:13,840 Speaker 6: you know nine ten percent as being the real big problem, 221 00:11:13,920 --> 00:11:17,360 Speaker 6: But here we are actually sort of embedding higher inflation 222 00:11:17,440 --> 00:11:20,840 Speaker 6: expectations going forward, and the issue is based on our outlook, 223 00:11:20,840 --> 00:11:22,720 Speaker 6: we're going to stay in the high twos and around 224 00:11:22,800 --> 00:11:24,959 Speaker 6: three percent through the end of this year. So it 225 00:11:24,960 --> 00:11:26,679 Speaker 6: wouldn't surprise me if you have me back a year 226 00:11:26,720 --> 00:11:29,280 Speaker 6: from now that we're celebrating the six year anniversary of 227 00:11:29,320 --> 00:11:31,080 Speaker 6: inflation above the two percent target. 228 00:11:31,120 --> 00:11:32,319 Speaker 5: All right, let's go to the other side of the 229 00:11:32,600 --> 00:11:36,319 Speaker 5: FEDS mandate, the labor market. We'll get some labor data 230 00:11:36,559 --> 00:11:39,480 Speaker 5: this week as well, and the unemployment rate. I think 231 00:11:39,520 --> 00:11:43,200 Speaker 5: the forecast is for four point four percent. Again, that 232 00:11:43,240 --> 00:11:46,080 Speaker 5: feels kind of full employment ish, although you tell that 233 00:11:46,120 --> 00:11:48,440 Speaker 5: to a recent college grad and they probably wouldn't feel 234 00:11:48,480 --> 00:11:49,920 Speaker 5: that way. So how do you feel about the labor market? 235 00:11:50,000 --> 00:11:53,000 Speaker 6: Well, employment ish, I'd say that's downright full employment right there. 236 00:11:53,000 --> 00:11:55,840 Speaker 6: There's only two periods in history when we've had unemployment 237 00:11:55,920 --> 00:11:58,040 Speaker 6: rates that were this low. We actually have a four 238 00:11:58,080 --> 00:12:01,120 Speaker 6: to three in our forecast this week, but for three 239 00:12:01,160 --> 00:12:04,320 Speaker 6: four four we're sort of splitting hairs here. So what's happening, Well, 240 00:12:04,360 --> 00:12:07,240 Speaker 6: we are going to have far less job creation. You're 241 00:12:07,280 --> 00:12:09,640 Speaker 6: not going to see new jobs being posted, so non 242 00:12:09,640 --> 00:12:12,080 Speaker 6: farm payrolls those it going to continue to decline. We 243 00:12:12,120 --> 00:12:14,960 Speaker 6: have about sixty sixty five thousand this week coming through 244 00:12:15,280 --> 00:12:17,520 Speaker 6: could be lower, and it will trend lower through twenty 245 00:12:17,559 --> 00:12:20,440 Speaker 6: twenty six, but that unemployment rate is not going to 246 00:12:20,600 --> 00:12:23,840 Speaker 6: rise meaningfully. Why because there are not enough people who 247 00:12:23,880 --> 00:12:26,720 Speaker 6: need new jobs coming forward. We only need to create 248 00:12:26,760 --> 00:12:29,559 Speaker 6: about forty thousand jobs per month or less in order 249 00:12:29,600 --> 00:12:32,240 Speaker 6: to keep those who want jobs with jobs coming through 250 00:12:32,240 --> 00:12:33,480 Speaker 6: this year. That's going to take a lot of re 251 00:12:33,640 --> 00:12:35,520 Speaker 6: education for markets to really understand. 252 00:12:35,559 --> 00:12:37,840 Speaker 2: With the Royal Bank of Canada, Francis Donald with us 253 00:12:37,880 --> 00:12:40,520 Speaker 2: to get us start. It's joining Terry Reisman on deck 254 00:12:40,600 --> 00:12:43,720 Speaker 2: in the next hour, Ander Slimming from Morgan Stanley, Ian 255 00:12:43,760 --> 00:12:47,199 Speaker 2: Bremer in the nine o'clock with Jellebovan Blackrock. Just a 256 00:12:47,240 --> 00:12:53,120 Speaker 2: fabulous set of conversations today to launch into February and Marsh, 257 00:12:53,240 --> 00:12:55,520 Speaker 2: I'm going to digress here now for thirty seconds. I 258 00:12:55,520 --> 00:12:58,240 Speaker 2: think it's very important. One of the great moments for 259 00:12:58,320 --> 00:13:01,080 Speaker 2: your Canada was to see the back Nordiq's on the 260 00:13:01,120 --> 00:13:04,079 Speaker 2: ice with the Montreal Canadians eer of course at Colorado 261 00:13:04,160 --> 00:13:07,520 Speaker 2: Avalanche play. Really emotional, Actually, folks, to see these two 262 00:13:07,520 --> 00:13:10,319 Speaker 2: teams Pictures and Catchers right now? Do we need to 263 00:13:10,360 --> 00:13:14,200 Speaker 2: see Montreal expos next year at Pictures and Catchers. 264 00:13:14,400 --> 00:13:15,520 Speaker 7: Sure, let's go for it. 265 00:13:15,559 --> 00:13:16,920 Speaker 6: I have to tell you just over this weekend My 266 00:13:16,960 --> 00:13:19,640 Speaker 6: husband and I were having a conversation that everyone wanted gold, 267 00:13:19,679 --> 00:13:22,720 Speaker 6: everyone wants critical minerals. Everyone was running after silver, whereas 268 00:13:22,760 --> 00:13:26,000 Speaker 6: up in Quebec we're always running after nordiq a swage. 269 00:13:26,080 --> 00:13:28,600 Speaker 6: We just want Nordique cots butters, and if we could 270 00:13:28,600 --> 00:13:30,800 Speaker 6: monetize that, we could actually beat this market. 271 00:13:30,840 --> 00:13:32,880 Speaker 2: When you were a kid, did you see the expos? 272 00:13:32,880 --> 00:13:34,280 Speaker 2: Do you have any memor morse? 273 00:13:34,320 --> 00:13:36,640 Speaker 6: We saw the expos. We saw UPI who is the mascot? 274 00:13:36,640 --> 00:13:38,720 Speaker 6: It's still embedded in my montreal life. 275 00:13:38,720 --> 00:13:40,720 Speaker 2: It's like up there, it's like it's. 276 00:13:40,559 --> 00:13:44,480 Speaker 6: Like hockey exposs in, skiing on the mountaint being cold. 277 00:13:44,559 --> 00:13:46,760 Speaker 2: Yeah, that kind of track care with the economics, finance 278 00:13:46,840 --> 00:13:50,559 Speaker 2: investment with Francis Donald. I look at the makeup here 279 00:13:50,600 --> 00:13:52,680 Speaker 2: and the number one thing I get from our listeners 280 00:13:52,679 --> 00:13:55,800 Speaker 2: and viewers, you guys are idiots. The unemployment rate isn't 281 00:13:55,840 --> 00:13:58,320 Speaker 2: four percent. We had somebody a couple of days ago 282 00:13:58,400 --> 00:14:02,720 Speaker 2: say the unemployment rate calculated around hiring a dearth of 283 00:14:02,840 --> 00:14:07,360 Speaker 2: hiring is eight percent ish. What does our unemployment rate 284 00:14:07,720 --> 00:14:08,920 Speaker 2: feel like right now? 285 00:14:09,040 --> 00:14:11,040 Speaker 6: Well, it depends who you are. I mean, Paul, you 286 00:14:11,200 --> 00:14:14,120 Speaker 6: highlighted young folks. Right now, we've seen a huge surge 287 00:14:14,120 --> 00:14:16,360 Speaker 6: of what we call youth unemployment, those under the age 288 00:14:16,360 --> 00:14:18,720 Speaker 6: of twenty five. That's not just an American phenomenon, by 289 00:14:18,720 --> 00:14:22,000 Speaker 6: the way, that's happening globally. Maybe some AI issues in there, 290 00:14:22,160 --> 00:14:25,880 Speaker 6: maybe some hesitancy around how much will tariffs actually burn us? 291 00:14:26,040 --> 00:14:28,400 Speaker 6: Should we be bringing on new labor here. But we 292 00:14:28,480 --> 00:14:30,560 Speaker 6: have another theory as well, which is we talk a 293 00:14:30,560 --> 00:14:33,640 Speaker 6: lot about this no hire, no fire environment, which is 294 00:14:33,640 --> 00:14:36,960 Speaker 6: so atypical, but there is a shadow hiring market that's 295 00:14:37,000 --> 00:14:39,920 Speaker 6: happening in the background, which is that if you retire, 296 00:14:40,360 --> 00:14:43,320 Speaker 6: and we know there's mass retirements about two million folks 297 00:14:43,360 --> 00:14:46,440 Speaker 6: in America are retiring every single year right now. That's 298 00:14:46,480 --> 00:14:50,520 Speaker 6: sixty thousand folks more per month than before two years 299 00:14:50,520 --> 00:14:52,360 Speaker 6: ago at delta sixty thousand. 300 00:14:52,600 --> 00:14:55,080 Speaker 7: And you bring in a young person to replace that rule. 301 00:14:54,960 --> 00:14:57,920 Speaker 6: Will not count as new job creation, It will not 302 00:14:58,040 --> 00:15:00,960 Speaker 6: come up in non farm payrolls, will actually just be 303 00:15:01,000 --> 00:15:02,280 Speaker 6: a replacement higher. 304 00:15:02,480 --> 00:15:04,280 Speaker 7: So we know that there's hiring happening. 305 00:15:04,320 --> 00:15:06,200 Speaker 6: That's a little bit more in the shadows and where 306 00:15:06,240 --> 00:15:08,480 Speaker 6: we see and Tom, I'll tell you again, like if 307 00:15:08,520 --> 00:15:11,400 Speaker 6: you are in trade or manufacturing right now, your unemployment 308 00:15:11,440 --> 00:15:14,040 Speaker 6: rate is higher if you're in healthcare, the job market 309 00:15:14,080 --> 00:15:18,480 Speaker 6: is extraordinarily tight. So my friend and colleague Amy Wi Silverman, 310 00:15:18,520 --> 00:15:21,120 Speaker 6: I think here yesterday, friend of your show, she has 311 00:15:21,200 --> 00:15:24,600 Speaker 6: this metaphor of a duck that is calm on the water. 312 00:15:24,440 --> 00:15:25,920 Speaker 7: With the feet paddly. 313 00:15:27,520 --> 00:15:29,600 Speaker 6: This today, I'm going to reduce it because it's a 314 00:15:29,640 --> 00:15:31,960 Speaker 6: brilliant way that she describes it. It's also how the 315 00:15:32,000 --> 00:15:35,600 Speaker 6: economy is operating with that unemployment rate stable on the surface, 316 00:15:35,800 --> 00:15:39,280 Speaker 6: but extraordinary churn and transition happening underneath the surface. So 317 00:15:39,320 --> 00:15:41,920 Speaker 6: it makes sense that Americans feel like they're not well 318 00:15:41,960 --> 00:15:43,280 Speaker 6: represented in the number. 319 00:15:43,240 --> 00:15:45,240 Speaker 7: A because the number is not telling us the whole story. 320 00:15:45,280 --> 00:15:47,760 Speaker 7: But also because there's this huge fragmentation. 321 00:15:47,360 --> 00:15:48,920 Speaker 8: Underneath retail sales. 322 00:15:48,960 --> 00:15:51,080 Speaker 5: We're going to get a thirty this morning. How's the 323 00:15:51,120 --> 00:15:51,960 Speaker 5: consumer doing it there? 324 00:15:51,960 --> 00:15:55,480 Speaker 6: Do you think the consumer is muddling through? They've got 325 00:15:55,600 --> 00:15:59,520 Speaker 6: real wage growth around one percent. That's enough they have 326 00:16:00,400 --> 00:16:03,440 Speaker 6: going forward, so you'll be okay on retail sales. But again, 327 00:16:03,760 --> 00:16:08,400 Speaker 6: incredible fragmentation underneath the surface. High income consumers holding up 328 00:16:08,440 --> 00:16:11,320 Speaker 6: a lot of the rest, but not entirely. And I 329 00:16:11,320 --> 00:16:13,360 Speaker 6: think this is the challenge, is that we're looking for 330 00:16:13,480 --> 00:16:15,920 Speaker 6: a lot of cyclicality in that consumer that's going to 331 00:16:16,000 --> 00:16:18,600 Speaker 6: be reduced because if you want a job in America, 332 00:16:18,760 --> 00:16:21,520 Speaker 6: you probably have one on average. Again, we talked about 333 00:16:21,560 --> 00:16:24,360 Speaker 6: some other areas. So for a very long time, economists 334 00:16:24,400 --> 00:16:26,760 Speaker 6: would say the best way to measure the growth of 335 00:16:26,840 --> 00:16:30,560 Speaker 6: the US economy is to say, if a consumer is employed, 336 00:16:30,760 --> 00:16:32,040 Speaker 6: then all is right with the world. 337 00:16:32,040 --> 00:16:33,560 Speaker 7: The consumer is two thirds. 338 00:16:34,080 --> 00:16:36,000 Speaker 6: But that is no longer going to be the way 339 00:16:36,000 --> 00:16:38,520 Speaker 6: that we measure the strength of the American economy, or 340 00:16:38,560 --> 00:16:40,400 Speaker 6: the way we measure the strength of the consumer. It's 341 00:16:40,440 --> 00:16:42,120 Speaker 6: going to be what type of job do they have, 342 00:16:42,600 --> 00:16:44,680 Speaker 6: is it enough to offset the cost of living? Again, 343 00:16:44,760 --> 00:16:47,720 Speaker 6: five year anniversary of inflation above two percent? And what 344 00:16:47,880 --> 00:16:50,360 Speaker 6: sectors are actually seeing some of that strength moving forward? 345 00:16:50,400 --> 00:16:52,360 Speaker 6: So I'm looking for more information on that today. 346 00:16:53,000 --> 00:16:56,000 Speaker 5: From the Canadian perspective, where are we on tariffs here? 347 00:16:56,400 --> 00:16:59,400 Speaker 5: Because I don't think we've heard a lot about them recently. 348 00:16:59,520 --> 00:17:01,160 Speaker 5: I mean we had down on the Greenland thing a 349 00:17:01,200 --> 00:17:04,919 Speaker 5: while ago. But from your perspective, the Canadian perspective, what 350 00:17:05,000 --> 00:17:05,880 Speaker 5: is the tariff situation? 351 00:17:06,080 --> 00:17:09,679 Speaker 6: Well, it depends what country you're speaking from. And actually 352 00:17:09,800 --> 00:17:12,760 Speaker 6: trade policy is still very much in flux, right. We 353 00:17:12,800 --> 00:17:15,280 Speaker 6: have the IEPAS Supreme Court decision that may come through. 354 00:17:15,640 --> 00:17:19,000 Speaker 6: We have USMCA, Mexico, Canada and the United States are 355 00:17:19,080 --> 00:17:22,960 Speaker 6: up for review of this very important trade document. And 356 00:17:22,960 --> 00:17:25,280 Speaker 6: of course every day we see new information about trade 357 00:17:25,280 --> 00:17:27,920 Speaker 6: deals that the US is embarking on. So our view 358 00:17:27,960 --> 00:17:31,600 Speaker 6: is that actually American companies are not sure where tariffs 359 00:17:31,640 --> 00:17:34,480 Speaker 6: will land, will they get reduced, and that's really implicating 360 00:17:34,720 --> 00:17:36,359 Speaker 6: or slowing some decision making. 361 00:17:36,480 --> 00:17:39,359 Speaker 2: You've been brilliant on this and the answer is we 362 00:17:39,400 --> 00:17:42,880 Speaker 2: are a two to three percent blended tariffs. We did 363 00:17:43,000 --> 00:17:46,640 Speaker 2: a jaw boned moonshot out of the rose Garden up 364 00:17:46,640 --> 00:17:50,800 Speaker 2: to some ginormous William McKinley gilded age number, and there's 365 00:17:50,800 --> 00:17:53,040 Speaker 2: a beautiful chart in the FT. I think Toby Nangoli 366 00:17:53,119 --> 00:17:57,440 Speaker 2: had it coming back down and we're at tennish right now. 367 00:17:57,480 --> 00:18:00,000 Speaker 2: For you, what would be the number to come back 368 00:18:00,119 --> 00:18:02,920 Speaker 2: to where you'd say we'll survive. Do we need to 369 00:18:02,960 --> 00:18:04,359 Speaker 2: get back to two to three percent? 370 00:18:04,640 --> 00:18:06,600 Speaker 6: Well, I think the issue with tariffs is we always 371 00:18:06,600 --> 00:18:08,840 Speaker 6: think about them in absolute as if it's the only 372 00:18:08,880 --> 00:18:11,240 Speaker 6: shock happening to the US economy, and so I hear 373 00:18:11,280 --> 00:18:14,240 Speaker 6: all the time, well, look, tariffs didn't impact the US 374 00:18:14,280 --> 00:18:17,199 Speaker 6: inflation is you know, high twos, about three percent. The 375 00:18:17,280 --> 00:18:20,879 Speaker 6: unemployment rate is fairly well contained. Where was the big 376 00:18:21,200 --> 00:18:23,359 Speaker 6: you know hoop law that economists. 377 00:18:22,840 --> 00:18:25,479 Speaker 7: Warm towards well Number one. I still think it's early. 378 00:18:25,600 --> 00:18:28,520 Speaker 6: So companies, we believe, held onto market share over the holidays, 379 00:18:28,520 --> 00:18:31,760 Speaker 6: and you're going to actually see tariffs rise into CPI 380 00:18:31,840 --> 00:18:34,240 Speaker 6: data into the second quarter of this year. So it's 381 00:18:34,240 --> 00:18:36,720 Speaker 6: too early to say we didn't see it. But secondly, 382 00:18:36,840 --> 00:18:39,120 Speaker 6: we have seen this impact. We've seen it in rise 383 00:18:39,160 --> 00:18:42,040 Speaker 6: and goods. We've seen it in layoffs in manufacturing and 384 00:18:42,119 --> 00:18:45,080 Speaker 6: trade exposed sectors. And I think the better way to 385 00:18:45,119 --> 00:18:47,480 Speaker 6: think about this is if we hadn't had tariffs come through, 386 00:18:47,640 --> 00:18:50,679 Speaker 6: you would probably see higher growth, you would see lower unemployment, 387 00:18:50,680 --> 00:18:52,840 Speaker 6: and you would see less inflation. So you have to 388 00:18:52,840 --> 00:18:55,280 Speaker 6: compare it to what would the world look like without tariffs? 389 00:18:55,480 --> 00:18:57,760 Speaker 6: Not why didn't the economy break as a result. 390 00:18:58,040 --> 00:19:00,639 Speaker 5: So given all that background, what's are fed going to 391 00:19:00,680 --> 00:19:02,560 Speaker 5: do over the next two three four five months? 392 00:19:02,600 --> 00:19:04,800 Speaker 6: You think two three four five months, well, we think 393 00:19:04,800 --> 00:19:06,840 Speaker 6: that they're going to stay on hold just because they 394 00:19:06,880 --> 00:19:09,960 Speaker 6: won't have enough data to justify cuts. 395 00:19:10,000 --> 00:19:12,600 Speaker 7: I mean of the year, we do have. 396 00:19:12,560 --> 00:19:14,960 Speaker 6: A whole call through the end of twenty twenty six. 397 00:19:15,280 --> 00:19:18,520 Speaker 6: Now here's the challenge. It's going to depend on some 398 00:19:18,600 --> 00:19:21,200 Speaker 6: of the biases within the committee and how reactionary they're 399 00:19:21,240 --> 00:19:23,560 Speaker 6: going to be. Because the unemployment rate is going to 400 00:19:23,600 --> 00:19:25,920 Speaker 6: take up a couple beeps here, we could go from 401 00:19:26,000 --> 00:19:28,359 Speaker 6: four to three to four five. Do they feel the 402 00:19:28,400 --> 00:19:31,359 Speaker 6: need to react to that while inflation is still high? 403 00:19:31,640 --> 00:19:34,000 Speaker 6: But the window to do this is probably not going 404 00:19:34,040 --> 00:19:36,359 Speaker 6: to appear until later in this year, because again you 405 00:19:36,400 --> 00:19:39,160 Speaker 6: are going to see inflation stay really high and goods 406 00:19:39,160 --> 00:19:42,480 Speaker 6: inflation rise into the second quarter. But I've been around 407 00:19:42,480 --> 00:19:44,879 Speaker 6: a few feds now, Tom, you and I together have 408 00:19:44,920 --> 00:19:47,120 Speaker 6: seen through a few of them, and there is enough 409 00:19:47,200 --> 00:19:50,080 Speaker 6: variation in the data, there are enough subcomponents, there are 410 00:19:50,200 --> 00:19:54,160 Speaker 6: enough core cpis taking out XYZ that if this FED 411 00:19:54,200 --> 00:19:56,600 Speaker 6: wants to cut and bring rates closer to their estimate 412 00:19:56,600 --> 00:19:58,879 Speaker 6: of neutral, they could find a number for it. But 413 00:19:58,960 --> 00:20:01,920 Speaker 6: our call right now is they won't have enough sufficient data. 414 00:20:02,040 --> 00:20:04,000 Speaker 2: I'm not read in on this, and I assume you 415 00:20:04,080 --> 00:20:07,560 Speaker 2: are because your Francis Donald, who knows all there is 416 00:20:07,600 --> 00:20:11,320 Speaker 2: a bridge to Michigan. There is named after the Fabrican 417 00:20:11,440 --> 00:20:15,760 Speaker 2: Foundation of Detroit. Gordion how I never saw him play. 418 00:20:16,000 --> 00:20:18,080 Speaker 2: I saw Kim Neely, who I was told was the 419 00:20:18,119 --> 00:20:23,440 Speaker 2: closest approximation. The gordianau Bridge has become a political pawn. 420 00:20:23,560 --> 00:20:25,159 Speaker 7: It has what would you know? 421 00:20:25,359 --> 00:20:27,720 Speaker 2: This is a terrible position for you. But how should 422 00:20:27,760 --> 00:20:32,360 Speaker 2: Canada and how should mister Carnie react to what President 423 00:20:32,359 --> 00:20:35,960 Speaker 2: Trump says about that bridge and that magical name. 424 00:20:36,160 --> 00:20:37,800 Speaker 6: Well, I don't think they need any advice for me. 425 00:20:37,840 --> 00:20:40,400 Speaker 6: They've been managing the trade relationship for over a year. 426 00:20:40,520 --> 00:20:45,080 Speaker 6: But the challenges that Canadians and many trading partners across 427 00:20:45,080 --> 00:20:47,760 Speaker 6: the world wake up to new true socials all of 428 00:20:47,800 --> 00:20:50,800 Speaker 6: the time. And what we're seeing here is probably a 429 00:20:50,880 --> 00:20:55,919 Speaker 6: prelude to the USMCA mandatory review. Now, this review of 430 00:20:56,080 --> 00:20:58,560 Speaker 6: USMCA would have been in place no matter who was 431 00:20:58,600 --> 00:21:02,320 Speaker 6: President put in. It's supposed to expire in twenty thirty six, 432 00:21:02,560 --> 00:21:04,720 Speaker 6: and this is a conversation about whether or not to 433 00:21:04,960 --> 00:21:07,600 Speaker 6: extend it. But if you look through to the Americans 434 00:21:07,680 --> 00:21:09,879 Speaker 6: right now, what they're asking for from Canada is not 435 00:21:10,080 --> 00:21:14,520 Speaker 6: largely deal breakers. Things around darry for example, perhaps digital 436 00:21:14,560 --> 00:21:17,640 Speaker 6: services taxes. None of that's happening here is probably going 437 00:21:17,680 --> 00:21:19,960 Speaker 6: to railroad. The Canadian economy. But it's going to take 438 00:21:20,000 --> 00:21:22,359 Speaker 6: up an enormous amount of headlines, and if you're a 439 00:21:22,400 --> 00:21:25,640 Speaker 6: Canadian or American company doing business with each other, it's 440 00:21:25,640 --> 00:21:27,680 Speaker 6: probably going to weigh on your ability to make decisions. 441 00:21:27,720 --> 00:21:29,879 Speaker 2: I saw a photo of the Canadian hockey team in 442 00:21:29,920 --> 00:21:33,240 Speaker 2: front of the DUMO in Milan. Are you kidding me? 443 00:21:33,560 --> 00:21:38,080 Speaker 2: With the total aggregate payroll there is the GDP of California. 444 00:21:38,200 --> 00:21:39,920 Speaker 2: I mean, I mean Canada US. 445 00:21:40,000 --> 00:21:43,120 Speaker 6: You gotta go with Canada, right, Well, of course I'll 446 00:21:43,119 --> 00:21:45,119 Speaker 6: always go with Canada. Are you speaking to the heated 447 00:21:45,200 --> 00:21:48,400 Speaker 6: rivalry version of the Canadian economy a Canadian hockey team 448 00:21:48,480 --> 00:21:49,320 Speaker 6: or the real life one. 449 00:21:49,400 --> 00:21:51,760 Speaker 2: I don't know. I'm looking at Sidney Crosby and Bradmere 450 00:21:51,840 --> 00:21:54,240 Speaker 2: Shawan and you know in Milan, and I'm like, this 451 00:21:54,280 --> 00:21:55,560 Speaker 2: is going to be a hell of a game. 452 00:21:55,640 --> 00:21:56,720 Speaker 7: It's going to be a hell of a game. 453 00:21:56,800 --> 00:22:00,000 Speaker 2: Yeah, Fransis Downald, Thank you so much. Really nice brief there, folks. 454 00:22:01,880 --> 00:22:06,080 Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this. 455 00:22:13,320 --> 00:22:16,880 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live 456 00:22:16,960 --> 00:22:20,119 Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on 457 00:22:20,200 --> 00:22:23,600 Speaker 1: Apple karplay and Android otto with the Bloomberg Business app 458 00:22:23,760 --> 00:22:25,639 Speaker 1: or watch us live on YouTube. 459 00:22:25,960 --> 00:22:29,080 Speaker 2: I was channeling Terry Weisman as he walked into the 460 00:22:29,119 --> 00:22:32,480 Speaker 2: studio because I was looking at the Japan forty year 461 00:22:32,840 --> 00:22:35,159 Speaker 2: Where are you going to be in November? Where are 462 00:22:35,200 --> 00:22:37,760 Speaker 2: you going to be in December? Looking back to February, 463 00:22:38,280 --> 00:22:41,119 Speaker 2: and saying I should have, would have could For Terry 464 00:22:41,119 --> 00:22:45,080 Speaker 2: Weisman at Macquarie, his expertise on global foreign exchange, it 465 00:22:45,240 --> 00:22:48,439 Speaker 2: is Japan, okay, currency's there. I guess you say we're 466 00:22:48,480 --> 00:22:50,800 Speaker 2: going to see us stronger yain, but I see it 467 00:22:50,840 --> 00:22:54,399 Speaker 2: in yields. The wonderful Stanley Fisher taught me look at 468 00:22:54,440 --> 00:22:57,800 Speaker 2: the percent change of the yield the forty year generic. 469 00:22:58,000 --> 00:23:03,040 Speaker 2: The yield is in twelve percent from the gloom of 470 00:23:03,160 --> 00:23:07,240 Speaker 2: just weeks ago. Higher prices, lower yield. What does it signal? 471 00:23:08,160 --> 00:23:10,200 Speaker 9: Well, you know, interestingly enough. 472 00:23:10,680 --> 00:23:15,440 Speaker 10: When Sinai Takeichi's took over as head of the LDP 473 00:23:15,800 --> 00:23:19,359 Speaker 10: in Japan back in October, you couldn't say that she 474 00:23:19,400 --> 00:23:21,119 Speaker 10: had a popular mandate, and there was a lot of 475 00:23:21,160 --> 00:23:23,600 Speaker 10: uncertainty about whether or not she was going to drive 476 00:23:23,720 --> 00:23:27,119 Speaker 10: growth higher in Japan. Because she lacked that popular mandate. 477 00:23:27,440 --> 00:23:29,640 Speaker 10: She was right to call this snap election because now 478 00:23:29,760 --> 00:23:31,439 Speaker 10: not only is she the leader of the party, she 479 00:23:31,520 --> 00:23:34,600 Speaker 10: also has a popular mandate, and I think that's incredibly 480 00:23:34,680 --> 00:23:37,399 Speaker 10: important with regard to her ability to push through the 481 00:23:37,440 --> 00:23:40,600 Speaker 10: reforms that could improve growth. Now you might think that 482 00:23:40,680 --> 00:23:43,560 Speaker 10: improving growth should be associated with higher yields. I think 483 00:23:43,600 --> 00:23:46,199 Speaker 10: the market is realizing the higher growth in Japan may 484 00:23:46,200 --> 00:23:49,440 Speaker 10: be exactly what Japan needs to bring down yields, because 485 00:23:49,480 --> 00:23:52,159 Speaker 10: higher growth is what's needed ultimately to bring down that 486 00:23:52,240 --> 00:23:55,400 Speaker 10: debt to GDP ratio that everyone has been concerned about 487 00:23:55,440 --> 00:23:59,400 Speaker 10: in Japan for several years now. So it can also 488 00:23:59,440 --> 00:24:02,120 Speaker 10: be disinflation as well, and we know that higher bond 489 00:24:02,200 --> 00:24:05,160 Speaker 10: yields are associated with expectations of high inflation. She's able 490 00:24:05,200 --> 00:24:08,680 Speaker 10: to drive growth, bring real GDP higher, and bring inflation 491 00:24:08,800 --> 00:24:11,880 Speaker 10: down potentially or stabilize it in Japan, which is very 492 00:24:11,880 --> 00:24:15,480 Speaker 10: different than the policy approach under the new capitalism of 493 00:24:16,359 --> 00:24:20,160 Speaker 10: Primarysiacax Sheeta before her. You should expect eels to come down. 494 00:24:20,160 --> 00:24:22,439 Speaker 10: I think the market is finally realizing that, Look, the 495 00:24:22,440 --> 00:24:25,200 Speaker 10: stock market there is up as well. Dollar yen fell 496 00:24:25,440 --> 00:24:28,200 Speaker 10: upon the announcement of the LP's victories. I think Japan 497 00:24:28,280 --> 00:24:29,280 Speaker 10: is heading in the right direction. 498 00:24:29,920 --> 00:24:32,400 Speaker 5: How will Japan do it? How can Japan fuel growth? 499 00:24:32,400 --> 00:24:35,800 Speaker 5: It's been forty years since we've talked. 500 00:24:35,680 --> 00:24:36,560 Speaker 9: About growth in Japan. 501 00:24:36,600 --> 00:24:37,959 Speaker 5: How do they change that narrative? 502 00:24:38,000 --> 00:24:38,800 Speaker 9: What's the policy? 503 00:24:38,840 --> 00:24:42,520 Speaker 10: Do you think Japan has been stuck in a demographic nightmare? 504 00:24:42,640 --> 00:24:44,720 Speaker 10: So one of the things that has to happen, at 505 00:24:44,720 --> 00:24:47,320 Speaker 10: the very least is to stop spend And I hate 506 00:24:47,359 --> 00:24:49,080 Speaker 10: to say this because it might sound cruel, but to 507 00:24:49,160 --> 00:24:52,199 Speaker 10: really try to stop spending so much money on the 508 00:24:52,240 --> 00:24:55,399 Speaker 10: aging population and start to focus on the youth and 509 00:24:55,440 --> 00:24:57,240 Speaker 10: the young people in Japan who are the engine of 510 00:24:57,280 --> 00:25:00,520 Speaker 10: productivity and innovation. Doing that would be a would start. 511 00:25:00,640 --> 00:25:03,480 Speaker 10: I don't think would start would be stopping this budgetary 512 00:25:03,680 --> 00:25:06,959 Speaker 10: morass of continuing to subsidize a lot of these zombie 513 00:25:07,000 --> 00:25:10,200 Speaker 10: companies in Japan, both directly and indirectly through the subseason 514 00:25:10,640 --> 00:25:11,240 Speaker 10: in the budget. 515 00:25:11,440 --> 00:25:12,920 Speaker 9: I think that will spur innovation. 516 00:25:13,320 --> 00:25:16,440 Speaker 10: I think Japan we think of it as an advanced 517 00:25:16,480 --> 00:25:19,199 Speaker 10: manufacturing economy, but to a large extent, we all know 518 00:25:19,320 --> 00:25:22,200 Speaker 10: that it has lagged with regard to technology adoption innovation 519 00:25:22,640 --> 00:25:25,000 Speaker 10: other countries in the West, including its neighbor China and 520 00:25:25,040 --> 00:25:25,480 Speaker 10: the US. 521 00:25:25,760 --> 00:25:29,680 Speaker 9: I think that's the key. It's interesting business school buddy. 522 00:25:29,680 --> 00:25:32,320 Speaker 5: In mind, the CEO of a Japanese company just sold 523 00:25:32,320 --> 00:25:36,199 Speaker 5: the KKR. I don't think i'd ever seen that, and 524 00:25:36,520 --> 00:25:38,680 Speaker 5: I can't remember how long. I mean, a private equity 525 00:25:38,720 --> 00:25:44,879 Speaker 5: company coming in to Japan an investing capital and on 526 00:25:44,920 --> 00:25:48,080 Speaker 5: the other side, a selling a Japanese company to a 527 00:25:48,160 --> 00:25:50,920 Speaker 5: US private equity company. Maybe that's something like you're talking about. Yeah, 528 00:25:50,920 --> 00:25:52,960 Speaker 5: well maybe, but look, I think Japan has. If what 529 00:25:52,960 --> 00:25:54,639 Speaker 5: you're trying to suggest is that Japan has a lot 530 00:25:54,680 --> 00:25:57,359 Speaker 5: of hidden it or discovered gems in its economy, I 531 00:25:57,359 --> 00:26:01,040 Speaker 5: would agree with that. It's just that innovation and technology 532 00:26:01,040 --> 00:26:02,400 Speaker 5: adoption have been somewhat suppressed. 533 00:26:02,440 --> 00:26:04,760 Speaker 10: But think about it. It's a manufacturing economy. It's an 534 00:26:04,760 --> 00:26:08,240 Speaker 10: industrial economy. It's exactly what's needed in this day where 535 00:26:08,320 --> 00:26:11,520 Speaker 10: defense is becoming increasingly important in that region. It's also 536 00:26:11,560 --> 00:26:14,840 Speaker 10: an economy that has an integrated supply chain. By the way, 537 00:26:14,960 --> 00:26:17,840 Speaker 10: it doesn't really at least for the respect to manufacturing. 538 00:26:17,840 --> 00:26:20,080 Speaker 10: It doesn't really have to worry about getting parts and 539 00:26:20,119 --> 00:26:22,080 Speaker 10: sourcing parts from the rest of the world. It has 540 00:26:22,119 --> 00:26:25,000 Speaker 10: the capacity for that, and it has great infrastructure in 541 00:26:25,080 --> 00:26:29,119 Speaker 10: support of the industrial manufacturing complex. As well, so all 542 00:26:29,160 --> 00:26:32,159 Speaker 10: those things are exactly what you need if you're going 543 00:26:32,200 --> 00:26:33,720 Speaker 10: to restart the economy. 544 00:26:33,800 --> 00:26:35,640 Speaker 9: What they just don't have is the incentive. 545 00:26:35,320 --> 00:26:38,480 Speaker 2: Structure tervicemen with this requiry of Australia, and of course 546 00:26:38,480 --> 00:26:42,439 Speaker 2: they're huge reach into the Western Atlantic and over the 547 00:26:42,480 --> 00:26:46,600 Speaker 2: continent as well as we really consider here the Pacific Rim. 548 00:26:46,720 --> 00:26:50,080 Speaker 2: I think a damien sassa and all that it comes 549 00:26:50,119 --> 00:26:52,960 Speaker 2: down to a boom Now is something as simple as 550 00:26:53,080 --> 00:26:56,679 Speaker 2: luxury like carrying out today with Gucci, say in China 551 00:26:56,720 --> 00:27:00,399 Speaker 2: as a pulse? Is the arch Macquarie call out of 552 00:27:00,480 --> 00:27:03,800 Speaker 2: Sydney and Melbourne that this is a time for the 553 00:27:03,840 --> 00:27:08,720 Speaker 2: Pacific Rim. I've got the Japanese stock market in dollars 554 00:27:08,760 --> 00:27:12,280 Speaker 2: since the pandemic, up eleven point two percent per year. 555 00:27:12,600 --> 00:27:14,280 Speaker 2: I don't think most Americans know that. 556 00:27:14,480 --> 00:27:16,680 Speaker 10: Yeah, look Tom, no one thinks that China's going to 557 00:27:16,720 --> 00:27:18,560 Speaker 10: collapse this year or next. I think we're on the 558 00:27:18,640 --> 00:27:21,320 Speaker 10: look looking at a steady five percent growth rate in China. 559 00:27:21,640 --> 00:27:23,560 Speaker 10: I don't know if I say, Panda, I'm in China. 560 00:27:24,040 --> 00:27:26,680 Speaker 9: That's fine. I think I think that's expected. 561 00:27:26,720 --> 00:27:28,679 Speaker 10: If they reach that target, no one's gonna get excited, 562 00:27:28,680 --> 00:27:30,520 Speaker 10: But no one's going to panic either. But I think 563 00:27:30,560 --> 00:27:33,320 Speaker 10: the real story in East Asia right now is Taiwan 564 00:27:33,600 --> 00:27:36,520 Speaker 10: and Japan. Taiwan because it's the beneficiary of all of 565 00:27:36,560 --> 00:27:38,639 Speaker 10: the hardware spending that's coming out of the US, out 566 00:27:38,680 --> 00:27:42,160 Speaker 10: of the Max seven's and the hyperscalers and the data 567 00:27:42,160 --> 00:27:44,760 Speaker 10: center build out. Japan because they're potentially on the verge 568 00:27:44,760 --> 00:27:47,359 Speaker 10: of a supply side revolution. If you're going to focus 569 00:27:47,359 --> 00:27:49,400 Speaker 10: on East Asia and where the stories are and where 570 00:27:49,440 --> 00:27:51,920 Speaker 10: the innovation is and where the inflection points are, those 571 00:27:51,920 --> 00:27:53,960 Speaker 10: are the two places I would not focus too much 572 00:27:53,960 --> 00:27:55,000 Speaker 10: on China these days. 573 00:27:55,280 --> 00:27:57,919 Speaker 2: All right, Given all that background, what do we do 574 00:27:58,000 --> 00:27:58,600 Speaker 2: with the end here? 575 00:27:58,640 --> 00:28:01,760 Speaker 5: I'm looking at the end from weakening from April ish, 576 00:28:01,880 --> 00:28:03,679 Speaker 5: you know, one forty one to here we are at 577 00:28:03,680 --> 00:28:06,440 Speaker 5: one fifty five. I mean, what do you do with 578 00:28:06,440 --> 00:28:07,320 Speaker 5: the Japanese yen here? 579 00:28:07,880 --> 00:28:10,000 Speaker 10: I think you buy it, okay, I think you take 580 00:28:10,000 --> 00:28:12,840 Speaker 10: a view that dollar yen has probably peaked, the dollars 581 00:28:12,880 --> 00:28:14,919 Speaker 10: gotten as strong as it possibly can. Against the end, 582 00:28:15,280 --> 00:28:17,119 Speaker 10: that we're going to see a resumption of growth, that 583 00:28:17,160 --> 00:28:19,960 Speaker 10: the boj will not succumb to demands to keep interest 584 00:28:20,000 --> 00:28:24,240 Speaker 10: rates slow, but we'll you know, gradually raise interest rates 585 00:28:24,440 --> 00:28:26,600 Speaker 10: that as soon as growth picks up in Japan, people 586 00:28:26,640 --> 00:28:29,200 Speaker 10: will become more enamored of Japanese companies. You'll see an 587 00:28:29,200 --> 00:28:33,520 Speaker 10: inbound flow of capital into Japan. What you mentioned about 588 00:28:33,560 --> 00:28:35,800 Speaker 10: your friend's company being sold to Kekar could be endemic 589 00:28:35,840 --> 00:28:38,320 Speaker 10: of a wave that's going to happen over the next 590 00:28:38,320 --> 00:28:40,200 Speaker 10: few years that's going to be strong for the end 591 00:28:40,240 --> 00:28:42,920 Speaker 10: I believe, and I want to state this with all 592 00:28:42,960 --> 00:28:46,280 Speaker 10: all firmness, is that a currency will do well when 593 00:28:46,320 --> 00:28:48,560 Speaker 10: the growth of the country does well, or the relative 594 00:28:48,560 --> 00:28:50,440 Speaker 10: growth of the as well, or way in this inflecting 595 00:28:50,520 --> 00:28:52,840 Speaker 10: upward in terms of growth. I see that happening in 596 00:28:52,880 --> 00:28:53,680 Speaker 10: Japan right now. 597 00:28:53,880 --> 00:28:57,040 Speaker 2: Taiwan stuck index, Paul, I've never looked at this Bloomberg folks. 598 00:28:57,040 --> 00:28:59,680 Speaker 2: And not only do you see these obscure indexes, but 599 00:28:59,760 --> 00:29:04,160 Speaker 2: you translated into whatever currency you want, the Vietnamese don 600 00:29:04,360 --> 00:29:09,760 Speaker 2: or the US dollar in dollars Taiwanese. Since pandemic twenty 601 00:29:09,800 --> 00:29:13,040 Speaker 2: point eight percent per year, is it too late to 602 00:29:13,120 --> 00:29:14,720 Speaker 2: climb on board the Pacific brand? 603 00:29:15,080 --> 00:29:15,840 Speaker 9: I don't think so. 604 00:29:15,880 --> 00:29:18,360 Speaker 10: I think that to the extent that that foreign investors 605 00:29:18,400 --> 00:29:20,680 Speaker 10: have wanted to grab a piece of the text story, 606 00:29:20,880 --> 00:29:23,200 Speaker 10: they've grabbed it in the US. But they've overlooked is 607 00:29:23,200 --> 00:29:25,920 Speaker 10: that all of these US companies are dependent on fab 608 00:29:26,480 --> 00:29:30,600 Speaker 10: fabrication of chips in Asia, on companies that test chips, 609 00:29:31,200 --> 00:29:33,160 Speaker 10: for example, right there's plenty of those in Taiwan, and 610 00:29:33,160 --> 00:29:35,200 Speaker 10: there's plenty of those in Japan as well. 611 00:29:35,640 --> 00:29:37,600 Speaker 9: So I don't think it's too late. 612 00:29:37,640 --> 00:29:40,360 Speaker 10: If anything, there's been an overhang over Taiwan for the 613 00:29:40,480 --> 00:29:43,360 Speaker 10: last few years on the premise that the Chinese might 614 00:29:43,360 --> 00:29:45,480 Speaker 10: invade at some point, and you don't want to, certainly 615 00:29:45,520 --> 00:29:48,880 Speaker 10: be invested in a country in which that's facing a 616 00:29:48,960 --> 00:29:53,040 Speaker 10: Chinese invasion. But if you abstract from that and you believe, 617 00:29:53,080 --> 00:29:55,760 Speaker 10: as I do, that that China's not going to do 618 00:29:55,800 --> 00:29:59,000 Speaker 10: anything quote unquote stupid here, Taiwan's a great story to 619 00:29:59,000 --> 00:29:59,840 Speaker 10: be investing. 620 00:29:59,480 --> 00:29:59,880 Speaker 9: In right now. 621 00:30:00,000 --> 00:30:04,840 Speaker 2: This is way too much optimism pictures and catchers here. Yeah, 622 00:30:04,840 --> 00:30:07,040 Speaker 2: you know, I can't, I got it. I'm worried about 623 00:30:07,160 --> 00:30:07,400 Speaker 2: you know. 624 00:30:07,600 --> 00:30:10,160 Speaker 5: Most optimistic day of the year, pictures, pictures opening day, 625 00:30:10,200 --> 00:30:10,800 Speaker 5: that kind of thing. 626 00:30:10,840 --> 00:30:14,000 Speaker 2: Doctor Weisman comes in and kills the Pacific Room. Terry Weisman, 627 00:30:14,040 --> 00:30:18,120 Speaker 2: thank you so much, my pleasure stay with us. More 628 00:30:18,200 --> 00:30:21,200 Speaker 2: from Bloomberg Surveillance coming up after. 629 00:30:20,960 --> 00:30:31,680 Speaker 1: This you're listening to the Bloomberg Surveillance Podcast. Catch us 630 00:30:31,720 --> 00:30:35,040 Speaker 1: live weekday afternoons from seven to ten am Eastern Listen 631 00:30:35,080 --> 00:30:38,640 Speaker 1: on Apple Karplay and Android Otto with the Bloomberg Business app, 632 00:30:38,840 --> 00:30:40,600 Speaker 1: or watch us live on YouTube. 633 00:30:41,080 --> 00:30:43,360 Speaker 2: So if I was to do a panel, let's say 634 00:30:43,360 --> 00:30:47,000 Speaker 2: some fancy place like Davos. Yeah, right now. They would say, 635 00:30:47,040 --> 00:30:49,320 Speaker 2: mister Keene, who would you like to have in your panel? 636 00:30:49,440 --> 00:30:52,880 Speaker 2: And I would say Ezra Pisade of Cornell cell and 637 00:30:53,040 --> 00:30:57,800 Speaker 2: Ian Bremer of Tulane, and Stanford Gremmer and Persad would 638 00:30:57,840 --> 00:31:03,480 Speaker 2: be lights out. The Doom Loop is Ezra Prasad's new 639 00:31:03,520 --> 00:31:08,080 Speaker 2: book with really interesting discussions of stability, and Ian Bremer 640 00:31:08,120 --> 00:31:11,520 Speaker 2: owns the high ground on this with every nation for itself, 641 00:31:12,200 --> 00:31:16,120 Speaker 2: the j curve, and of course US versus them. Doctor 642 00:31:16,160 --> 00:31:20,239 Speaker 2: Bremmer joins us from Eurasia Group. I look at the 643 00:31:20,280 --> 00:31:23,400 Speaker 2: Doom Loop from prisad Ian and the heart of the 644 00:31:23,440 --> 00:31:28,640 Speaker 2: matter is we are in some form of stability moving 645 00:31:28,800 --> 00:31:33,520 Speaker 2: to instability. Is that how you see it? There's instability 646 00:31:33,680 --> 00:31:34,200 Speaker 2: out there. 647 00:31:35,640 --> 00:31:40,280 Speaker 8: Yeah. I like his book a lot. He's more of 648 00:31:40,320 --> 00:31:41,160 Speaker 8: an economist. 649 00:31:41,480 --> 00:31:46,520 Speaker 11: I'm a political scientist, so I'm focusing on the geopolitics specifically, 650 00:31:47,240 --> 00:31:50,920 Speaker 11: and I think it's cyclical, So I see this as 651 00:31:50,920 --> 00:31:56,320 Speaker 11: a bust cycle because the balance of power is no 652 00:31:56,440 --> 00:32:01,360 Speaker 11: longer aligned with the institutions, the architecture, or the policies 653 00:32:01,440 --> 00:32:02,280 Speaker 11: or the values. 654 00:32:02,880 --> 00:32:06,120 Speaker 8: And that's particularly playing out with the. 655 00:32:06,040 --> 00:32:10,360 Speaker 12: Americans, the most powerful country, stepping back from their own 656 00:32:10,520 --> 00:32:13,400 Speaker 12: historic leadership. So I mean, the good news is that 657 00:32:13,400 --> 00:32:17,520 Speaker 12: that's very unlikely to get you the so called Throughcinity's trap, 658 00:32:18,040 --> 00:32:22,280 Speaker 12: a World War III. Historically, usually when you have a 659 00:32:22,320 --> 00:32:27,000 Speaker 12: move to instability in geopolitics, it's because the major power 660 00:32:27,040 --> 00:32:30,080 Speaker 12: is in decline and trying to hold on to its 661 00:32:30,080 --> 00:32:34,240 Speaker 12: old system. The rising power wants to create a new one. 662 00:32:34,240 --> 00:32:36,840 Speaker 12: That's not what's happening here. The United States is still 663 00:32:36,840 --> 00:32:41,080 Speaker 12: the most powerful country. It's it's just unilaterally saying it 664 00:32:41,120 --> 00:32:44,920 Speaker 12: doesn't want to be in charge of collective security or 665 00:32:44,960 --> 00:32:48,440 Speaker 12: free trade or promotion of democracy of rule of law. 666 00:32:48,720 --> 00:32:51,440 Speaker 12: So it's causing a lot of instability, but it's not 667 00:32:51,480 --> 00:32:52,760 Speaker 12: causing global conflict. 668 00:32:53,320 --> 00:32:59,200 Speaker 5: Ian in your notes, you suggest that these countries historically 669 00:32:59,480 --> 00:33:02,360 Speaker 5: allies and maybe ifposed of the United States, they are 670 00:33:02,400 --> 00:33:05,520 Speaker 5: not decoupling from the US, but they're de risking. 671 00:33:05,640 --> 00:33:06,440 Speaker 9: How are they doing. 672 00:33:06,320 --> 00:33:10,200 Speaker 8: That, they're primarily doing it economically. 673 00:33:11,080 --> 00:33:14,680 Speaker 12: And the reason it's mostly economic is because the global 674 00:33:15,280 --> 00:33:22,000 Speaker 12: economy today is increasingly multipolar, while the global security environment 675 00:33:22,120 --> 00:33:24,160 Speaker 12: is still dominated by the United States. 676 00:33:24,160 --> 00:33:27,560 Speaker 8: So the reality is that even if you don't trust. 677 00:33:27,760 --> 00:33:31,080 Speaker 12: Or rely on the United States as a security ally, 678 00:33:31,160 --> 00:33:34,040 Speaker 12: you don't have many good options and it will take 679 00:33:34,080 --> 00:33:35,160 Speaker 12: you a very long time. 680 00:33:35,240 --> 00:33:37,960 Speaker 8: Even for the Europeans who see this as an existential need. 681 00:33:39,040 --> 00:33:40,840 Speaker 12: Yes they're spending a lot of money on Ukraine, but 682 00:33:40,880 --> 00:33:44,240 Speaker 12: they're buying American weapons. Yes they're stepping up their own security, 683 00:33:44,280 --> 00:33:47,160 Speaker 12: but they know, as Mark Ruta, the Secretary General of 684 00:33:47,240 --> 00:33:49,640 Speaker 12: NATO said in the last few days, how essential the 685 00:33:49,680 --> 00:33:52,720 Speaker 12: Americans still are for the foreseeable future. Where when you 686 00:33:52,760 --> 00:33:56,400 Speaker 12: think of the global economy, there are options. I mean, 687 00:33:56,520 --> 00:34:00,440 Speaker 12: even Canada, which is so incredibly dependent on the United States, 688 00:34:00,960 --> 00:34:05,719 Speaker 12: has the ability to diversify more effectively with the Europeans, 689 00:34:05,760 --> 00:34:07,600 Speaker 12: with the Chinese, with others. 690 00:34:07,600 --> 00:34:09,920 Speaker 8: And that's particularly true India, for example. 691 00:34:10,440 --> 00:34:15,880 Speaker 12: The United States pushes India hard despite the relationship that 692 00:34:15,920 --> 00:34:18,880 Speaker 12: Trump and Mody have, and Modi takes his time in 693 00:34:18,960 --> 00:34:21,279 Speaker 12: doing a deal with the Americans and instead steps up 694 00:34:21,280 --> 00:34:24,920 Speaker 12: as relations with the EU and with the Australians and 695 00:34:24,960 --> 00:34:26,759 Speaker 12: stabilizes with China and the rest. 696 00:34:26,760 --> 00:34:27,319 Speaker 2: So that. 697 00:34:29,000 --> 00:34:33,880 Speaker 12: Effort that we are seeing to hedge is mostly happening 698 00:34:34,320 --> 00:34:40,239 Speaker 12: in diversifying away from US trade, from US capital, and 699 00:34:40,520 --> 00:34:43,160 Speaker 12: you know, those things, once they happen, they. 700 00:34:43,040 --> 00:34:45,520 Speaker 8: Do have much more long term implications. 701 00:34:46,640 --> 00:34:50,319 Speaker 5: Does this America First agenda of this second Trump administration 702 00:34:50,400 --> 00:34:53,880 Speaker 5: to what degree do you think it will empower China 703 00:34:53,960 --> 00:34:55,320 Speaker 5: empower Russia. 704 00:34:56,880 --> 00:34:59,160 Speaker 12: I don't think it's empowering Russia at all. I do 705 00:34:59,239 --> 00:35:03,160 Speaker 12: think it is empowered in China. Russia's dug its own grave. 706 00:35:03,360 --> 00:35:07,000 Speaker 12: In fact, they've dug hundreds of thousands of them over. 707 00:35:06,800 --> 00:35:10,319 Speaker 8: The last four years of the war in Ukraine. They 708 00:35:10,400 --> 00:35:12,120 Speaker 8: are weaker as a consequence. 709 00:35:12,160 --> 00:35:16,160 Speaker 12: Their economy is weaker, their security environment is weaker, their 710 00:35:16,160 --> 00:35:20,920 Speaker 12: diplomacy is weaker. They're basically becoming a second rate state 711 00:35:22,760 --> 00:35:26,719 Speaker 12: that has to follow the lead of China. And that's 712 00:35:26,800 --> 00:35:31,640 Speaker 12: not where Putin wants to be. Clearly where China is 713 00:35:32,000 --> 00:35:36,680 Speaker 12: actually in so many ways taking advantage of the United 714 00:35:36,680 --> 00:35:38,680 Speaker 12: States being seen as unreliable. 715 00:35:38,960 --> 00:35:42,120 Speaker 8: In part that is directly reaching. 716 00:35:41,760 --> 00:35:46,279 Speaker 12: Out to countries to improve their bilateral relations, and in 717 00:35:46,320 --> 00:35:50,400 Speaker 12: part it's stepping up China's role in these old institutions 718 00:35:50,680 --> 00:35:53,279 Speaker 12: that the Americans don't value much anymore. So you will 719 00:35:53,320 --> 00:35:56,319 Speaker 12: have noticed the Americans pulled out of the World Health Organization. 720 00:35:56,760 --> 00:35:59,600 Speaker 8: They convinced Argentina to join them. Nobody else did. 721 00:36:00,160 --> 00:36:03,000 Speaker 12: China immediately stepped up how much money they were giving 722 00:36:03,000 --> 00:36:05,040 Speaker 12: to the WHO to five hundred million dollars. 723 00:36:05,080 --> 00:36:07,520 Speaker 13: Why would they do that because if America is out, 724 00:36:07,560 --> 00:36:10,640 Speaker 13: they get to be number one in influence. When Trump 725 00:36:11,200 --> 00:36:14,560 Speaker 13: announced the Board of Peace, not just in terms of 726 00:36:14,719 --> 00:36:21,239 Speaker 13: Gaza coordination, but as potentially a replacement to many of 727 00:36:21,280 --> 00:36:27,080 Speaker 13: the of the operating principles that the United Nations has. 728 00:36:27,120 --> 00:36:29,839 Speaker 8: The Chinese immediately said, we don't want to join that. 729 00:36:30,280 --> 00:36:32,719 Speaker 2: In the same thing in the time we got left Ian, 730 00:36:32,760 --> 00:36:34,759 Speaker 2: I think the question I'm getting us all the time, 731 00:36:34,800 --> 00:36:38,080 Speaker 2: and I'm not informed like you as simple as I can. 732 00:36:38,440 --> 00:36:43,400 Speaker 2: What do you perceive post Trump? Do we return to 733 00:36:43,480 --> 00:36:46,080 Speaker 2: what Paul and I knew years ago? Do we go 734 00:36:46,200 --> 00:36:49,160 Speaker 2: to some form of the mended new What do you 735 00:36:49,320 --> 00:36:53,480 Speaker 2: perceive in say twenty twenty eight, two thousand and thirty. 736 00:36:54,440 --> 00:37:03,000 Speaker 8: Well, if Trump is followed by a much more predictable 737 00:37:03,040 --> 00:37:06,719 Speaker 8: and reliable leader in the eyes of allies, that I. 738 00:37:06,640 --> 00:37:11,399 Speaker 12: Think you will be able to normalize those relations from 739 00:37:11,600 --> 00:37:15,120 Speaker 12: a very different base. In other words, permanent damage will 740 00:37:15,160 --> 00:37:18,440 Speaker 12: have been done, diversification efforts will be in place. 741 00:37:18,520 --> 00:37:21,000 Speaker 8: The Americans won't be leading the world the way they used. 742 00:37:20,760 --> 00:37:25,279 Speaker 12: To, but you won't see the continued trajectory towards chaos. If, 743 00:37:25,360 --> 00:37:28,200 Speaker 12: on the other hand, Trump is replaced by a leader 744 00:37:28,239 --> 00:37:32,320 Speaker 12: that is seen as not only more unilateralists, but also 745 00:37:32,560 --> 00:37:36,240 Speaker 12: just as unpredictable and just as willing to use American 746 00:37:36,320 --> 00:37:40,120 Speaker 12: power against allies and adversaries alike, then of course that 747 00:37:40,200 --> 00:37:42,120 Speaker 12: trajectory will continue to deteriorate. 748 00:37:42,320 --> 00:37:44,640 Speaker 2: We don't care and the only reason you're on today 749 00:37:44,680 --> 00:37:47,439 Speaker 2: is pictures and catchers with Red Sox down at Fort 750 00:37:47,480 --> 00:37:50,719 Speaker 2: Myers Jet Blue Park. You were behind home played. I 751 00:37:50,760 --> 00:37:53,560 Speaker 2: saw for the playoffs last year. What an improvement on 752 00:37:53,600 --> 00:37:56,239 Speaker 2: the Red Sox, doctor Bremer. Can they do it again 753 00:37:56,320 --> 00:37:57,280 Speaker 2: and improve further? 754 00:37:58,480 --> 00:38:00,399 Speaker 12: Well, they can't do worse than the paid Sure it's 755 00:38:00,400 --> 00:38:03,320 Speaker 12: did this Sunday one of the worst games I've ever seen. 756 00:38:04,600 --> 00:38:07,200 Speaker 12: And but I you know, you gotta be hopeful for 757 00:38:07,320 --> 00:38:09,120 Speaker 12: my Red Sox. I've got to be one of the 758 00:38:09,120 --> 00:38:11,640 Speaker 12: only Red Sox out there that's also capable of rooting 759 00:38:11,640 --> 00:38:13,319 Speaker 12: for the Yankees when I see them in New York. 760 00:38:13,360 --> 00:38:14,920 Speaker 8: It's a weird it's a weird position to be in. 761 00:38:15,000 --> 00:38:18,720 Speaker 2: It's a weird's there's a mental health issue there, probably, 762 00:38:18,800 --> 00:38:22,239 Speaker 2: Adam Bremer, thank you so much. Regards to Moose as well. 763 00:38:22,560 --> 00:38:27,400 Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, 764 00:38:27,520 --> 00:38:31,800 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 765 00:38:31,920 --> 00:38:35,400 Speaker 1: seven to ten am Eastern on Bloomberg dot com, the 766 00:38:35,480 --> 00:38:39,520 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 767 00:38:39,560 --> 00:38:42,920 Speaker 1: can also watch us live every weekday on YouTube and 768 00:38:43,120 --> 00:38:44,840 Speaker 1: always on the Bloomberg terminal