WEBVTT - Surveillance: U.S. Relations With Maduro 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.240 --> 0:00:13.080 with Jonathan Ferrell and Lisa Brownwitz Jay Leye. We bring 0:00:13.119 --> 0:00:17.159 you insight from the best and economics, finance, investment, and 0:00:17.280 --> 0:00:23.360 international relations. Find Bloomberg Surveillance on Apple, Podcast, SoundCloud, Bloomberg 0:00:23.360 --> 0:00:29.040 dot Com, and of course on the Bloomberg Terminal. We 0:00:29.120 --> 0:00:33.360 now have a Bloomberg exclusive with Venezuela's President Nicholas Maduro UH, 0:00:33.400 --> 0:00:36.879 speaking with Mr Shatsker in Caracas. The focus is on 0:00:37.000 --> 0:00:40.000 normalizing relations with the US, but this does fit into 0:00:40.040 --> 0:00:42.040 the broader theme that we've been talking about all week 0:00:42.320 --> 0:00:45.720 of the Great American reset of international relations as President 0:00:45.760 --> 0:00:49.199 Biden took a tour of Europe. The idea here is 0:00:49.400 --> 0:00:53.560 that Maduro would like to see relationships UH normalize with 0:00:53.600 --> 0:00:56.800 the United States, some of the harsh sanctions lifted, and 0:00:56.880 --> 0:01:03.400 take a listen to what Maduro had to say. We 0:01:03.480 --> 0:01:06.639 always have to remember, Eric, that we faced four years 0:01:06.640 --> 0:01:09.880 of the Trump administration, which were four years of direct 0:01:09.880 --> 0:01:14.600 aggression of cruel sanctions, very cruel and have damage to 0:01:14.640 --> 0:01:19.399 the Venezuelan economy and society. The politics that Donald Trump 0:01:19.400 --> 0:01:23.839 installed and left his legacy against Venezuela are extremist politics, 0:01:24.120 --> 0:01:29.440 irrational right that caused a complete rupture between the United 0:01:29.480 --> 0:01:35.800 States and Venezuela is the joy Biden. President Joe Biden 0:01:35.840 --> 0:01:39.400 has arrived making a proposal to the world. His first 0:01:39.400 --> 0:01:42.959 speech on January he said that we don't have to 0:01:43.000 --> 0:01:47.640 demonize anybody in politics. I would say to President Joe 0:01:47.680 --> 0:01:51.080 Biden to stop from the White House, from the Department 0:01:51.120 --> 0:01:55.760 of State, the demonization of Venezuela, the demonization of the 0:01:55.800 --> 0:02:01.360 Bolvarian Revolution, the demonization of President Nicolas Badu Row, and 0:02:01.440 --> 0:02:05.440 that hopefully we can find paths of reconciliation, of respect, 0:02:08.080 --> 0:02:11.480 paths of mutual benefit and pass that allow us to 0:02:11.560 --> 0:02:20.360 normalize relations between the United States and Venezuela. Have you 0:02:20.440 --> 0:02:26.720 seen any signals, wanna that suggests Joe Biden has a 0:02:26.760 --> 0:02:33.680 different posture, especially especially as it concerns the Venezuela question, 0:02:36.919 --> 0:02:43.160 do you want me to be sincere very? Sincere there 0:02:43.160 --> 0:02:47.840 hasn't been a single positive sign none. It's five months 0:02:47.880 --> 0:02:52.079 where Okay, they're settling into power. The only different thing, 0:02:52.800 --> 0:02:55.040 the only different thing that might be heard from some 0:02:55.160 --> 0:02:58.320 spokespeople of the White House and of the Department of State, 0:02:59.120 --> 0:03:02.480 is that they agree with a political dialogue between Venezuelans 0:03:03.080 --> 0:03:08.800 without intervention, to look for democratic political changes in the country. 0:03:09.639 --> 0:03:14.080 That's the only thing. They must abandoned the demonization that 0:03:14.120 --> 0:03:19.560 they make of Venezuela, of our revolution, democratic, constitutional, pacific, 0:03:19.760 --> 0:03:26.519 and of President Nicolas Maduro, to create real foundations, objective, credible, verifiable, 0:03:26.600 --> 0:03:30.639 of a process of negotiation, to regularize the relations between 0:03:30.639 --> 0:03:33.520 the two countries in terms of win win, which is 0:03:33.560 --> 0:03:36.400 what we aspire to since a long time ago. A 0:03:36.520 --> 0:03:41.960 win win is possible. In your opinion, absolutely, we've already 0:03:41.960 --> 0:03:44.720 shown that. Of course it's possible to win win. They 0:03:44.760 --> 0:03:47.640 know it. In the financial sector, the bondholders with whom 0:03:47.680 --> 0:03:50.680 we had an impeccable relationship, and they know it's possible 0:03:50.720 --> 0:03:53.760 to invest in Venezuela and win win as long as 0:03:53.800 --> 0:03:57.080 this whole persecution and the sanctions aren't there. The oil 0:03:57.160 --> 0:04:00.600 sector knows it. Who has invested in Venezuela uh and 0:04:00.640 --> 0:04:04.760 who still maintains investments in Venezuela that we can advance 0:04:04.920 --> 0:04:09.240 much more. The cultural sector knows it, the social sector, 0:04:09.960 --> 0:04:15.280 the political sectors know it. Bloombergs Eric Shatzker just returning 0:04:15.480 --> 0:04:17.920 from Caracas. He is here with us. I did not 0:04:18.080 --> 0:04:21.320 know that you could speak Spanish. Eric Uh, congratulations on 0:04:21.400 --> 0:04:24.240 the interview. I am curious before we get into the 0:04:24.279 --> 0:04:27.640 substance of what it was like in Caracas, given the 0:04:28.360 --> 0:04:31.200 COVID pandemic and how hard that region has been hit, 0:04:31.480 --> 0:04:34.600 and given the exodus of residents as a result of 0:04:34.640 --> 0:04:37.680 some of the financial crisis issues that this nation has 0:04:37.720 --> 0:04:41.600 been facing. Lisa, it shouldn't surprise anybody that Caracas and 0:04:41.680 --> 0:04:46.240 Venezuela as a country are a shadow of their former selves. 0:04:46.279 --> 0:04:49.640 Don't forget Venezuela with South America's richest country. At one 0:04:49.680 --> 0:04:52.160 point in the nine nineties, it used to produce three 0:04:52.200 --> 0:04:55.279 and a half million barrels a day of oil. Last 0:04:55.360 --> 0:04:57.919 year that was down to four d and ten thousand, 0:04:58.080 --> 0:05:02.039 the lowest in about a century. And of course that's 0:05:02.120 --> 0:05:05.080 visible on the streets of karakas. The country doesn't have 0:05:05.640 --> 0:05:09.560 any money. First of all, you could argue persuasively that 0:05:09.600 --> 0:05:13.440 it was mismanaged by the socialist nationalist government of Hugo 0:05:13.520 --> 0:05:17.520 Chavs and subsequently Nicolas Maduro. But there's also these U 0:05:17.560 --> 0:05:21.040 S sanctions in force. They don't allow Venezuela to sell 0:05:21.120 --> 0:05:24.599 any oil. They don't allow Venezuela access to debt capital markets. 0:05:25.040 --> 0:05:29.159 The country has no money, it's in default, it's bankrupt, 0:05:29.160 --> 0:05:31.600 the infrastructure is crumbling. All of this is visible to 0:05:31.640 --> 0:05:34.559 the naked eye, but I will point out that there 0:05:34.880 --> 0:05:39.800 is call them green shoots. Venezuela has relaxed some of 0:05:39.839 --> 0:05:43.920 its economic restrictions and it is fascinating, candidly fascinating. I 0:05:43.920 --> 0:05:47.680 don't want to downplay the poverty, which is extreme, but 0:05:47.760 --> 0:05:51.159 to see these flickers of entrepreneurialism in a country that 0:05:51.200 --> 0:05:55.680 has been forced to loosen these strictures, uh to try 0:05:55.760 --> 0:05:58.960 and find some way out of its desperate economic situation. 0:05:59.200 --> 0:06:02.159 What eric is the path forward, what is the realistic 0:06:02.240 --> 0:06:05.120 in your conversations with him, a path forward to a 0:06:05.240 --> 0:06:08.440 loosening of sanctions, getting that oil back for the country. 0:06:10.120 --> 0:06:13.560 Let's not forget that the Trump administration was pursuing a 0:06:14.040 --> 0:06:17.800 policy of regime change. It was trying to drive Madudo 0:06:17.920 --> 0:06:20.359 out of office, and as far as the US government 0:06:20.360 --> 0:06:23.640 was concerned, there were good reasons to do that. Um 0:06:23.800 --> 0:06:29.680 drug trafficking, rigged elections, corruption, all kinds of accusations and 0:06:29.760 --> 0:06:33.920 allegations for which there's much evidence against the Madudo regime. 0:06:34.520 --> 0:06:38.599 The Biden administration has taken a different approach. Tony blankin 0:06:38.800 --> 0:06:43.360 the Secretary of State has talked about free and fair elections. 0:06:43.400 --> 0:06:47.440 That's the path forward. That's what the negotiations are moving toward. 0:06:48.520 --> 0:06:51.760 The United States. What remains to be seen clearly Madudo 0:06:51.920 --> 0:06:54.560 is extending something of an olive branch. He wants a deal, 0:06:54.640 --> 0:06:58.000 he wants talks. He wants the United States to sponsor, 0:06:58.560 --> 0:07:02.040 along with the Norwegians, UH, some kind of a dialogue 0:07:02.040 --> 0:07:05.919 with the opposition that moves the country forward such that 0:07:06.000 --> 0:07:09.279 these free and fair elections take place. People can, I guess, 0:07:09.320 --> 0:07:12.720 confidence can return to Venezuela, and ultimately the government feels 0:07:12.760 --> 0:07:16.120 as though the situation is stable enough and fair enough 0:07:16.520 --> 0:07:18.720 that it is willing to relieve at least some of 0:07:18.760 --> 0:07:22.240 these sanctions. And if that happens, I'm not in the 0:07:22.280 --> 0:07:25.560 business of making predictions that if Venezuela is allowed to 0:07:25.600 --> 0:07:29.400 start selling oil again on international markets, and if investors 0:07:29.440 --> 0:07:31.600 are allowed to bring money to the country and pump 0:07:31.600 --> 0:07:36.280 it into sectors like petrochemicals, it might be quite amazing 0:07:36.720 --> 0:07:39.280 the kind of growth we would see in the Venezuela economy, 0:07:39.320 --> 0:07:43.040 because it has over the past eight years shrunk by 0:07:43.600 --> 0:07:47.560 it's hard to believe. It's been shocking. Eric Schatska, thank 0:07:47.600 --> 0:07:50.640 you so much for going down there and doing this 0:07:50.800 --> 0:07:53.760 and joining us today. Are on the heels of your trip. 0:08:00.640 --> 0:08:04.440 The great reflation turns into the great unwind. Jay Bryson, 0:08:04.480 --> 0:08:08.360 Wells Fargo chief economist has been tracking the data. Unclear 0:08:08.360 --> 0:08:11.920 what the data actually says. Jay Bryson, based on the data, 0:08:12.160 --> 0:08:16.120 do we have any indication that, yes, this economic recovery 0:08:16.200 --> 0:08:18.640 is starting to stall out or give hints of having 0:08:18.720 --> 0:08:23.240 already reached its peak and poised for only disappointment going forward. Well, 0:08:23.280 --> 0:08:26.280 I don't know, Lisa, if I would say disappointment going forward, 0:08:26.320 --> 0:08:30.200 I mean, are we at peak growth right now? Yes? Probably. 0:08:30.280 --> 0:08:32.480 You know, in the second quarter you're looking at a 0:08:32.520 --> 0:08:36.440 growth raith that's probably going to be annually that's clearly 0:08:36.440 --> 0:08:39.920 not sustainable. And if you slow down in the second 0:08:39.920 --> 0:08:42.080 half of the year to what we think will be 0:08:42.320 --> 0:08:46.760 six seven maybe eight percent less is a very very 0:08:46.800 --> 0:08:50.199 strong growth rate. So again, peak growth right now? You 0:08:50.280 --> 0:08:54.680 can't all right, Well, there's a question here about whether 0:08:54.720 --> 0:08:58.240 we can infer anything from the labor market data that 0:08:58.280 --> 0:09:00.800 we've been getting. The idea that we got a disappointment 0:09:00.840 --> 0:09:03.400 in the initial jobless claims. We've got disappointments on the 0:09:03.440 --> 0:09:06.680 monthly jobs reports that we've gotten out of the federal government. 0:09:07.040 --> 0:09:09.160 Are we gleaning anything from that or is it still 0:09:09.200 --> 0:09:13.280 too early to do anything with that information? You know, 0:09:13.320 --> 0:09:15.200 at least I think it still isn't very a little 0:09:15.240 --> 0:09:18.840 bit too early to really make hard decisions about what's 0:09:18.880 --> 0:09:21.400 coming out of the labor market right now. I mean, 0:09:21.440 --> 0:09:24.840 it's still being affected by concerns about COVID if you 0:09:24.880 --> 0:09:27.880 look at surveys when people say why aren't you working 0:09:27.960 --> 0:09:31.040 right now? Concerns about going back to the workplace or 0:09:31.200 --> 0:09:34.800 up there. You know, there's still these extended unemployment benefits 0:09:34.840 --> 0:09:37.800 at least in some states, um that may be keeping 0:09:37.840 --> 0:09:40.400 some people along the sidelines. So I think we really 0:09:40.520 --> 0:09:43.840 need to give it, unfortunately, you know, another few months 0:09:44.120 --> 0:09:46.679 to see when to smoke clears, to see how we're 0:09:46.720 --> 0:09:49.959 doing in the flaw if people are actually coming back 0:09:50.000 --> 0:09:52.800 to the labor market at that point. So at this point, 0:09:52.880 --> 0:09:54.600 there's still I think a lot of noise, a lot 0:09:54.640 --> 0:09:57.160 of things going on in the labor market that are 0:09:57.280 --> 0:10:00.920 that are keeping a little bit made depressed. Are you 0:10:00.960 --> 0:10:04.800 at all concerned about a price wage spiral? J I 0:10:04.840 --> 0:10:09.480 know it's something that economists fear normally, but as Lisa said, 0:10:09.480 --> 0:10:14.080 we've gone through a real paradigm shift. So Matt used 0:10:14.080 --> 0:10:18.080 the word spiral. Now I'm not really concerned about spiral, 0:10:18.120 --> 0:10:19.920 but it's like, so, you know what I think wages 0:10:19.960 --> 0:10:22.360 price spirals. I think what we saw back in the 0:10:22.440 --> 0:10:26.080 nineteenth seven and back then what you had was a 0:10:26.160 --> 0:10:29.079 fair amount of people had wages that were in dept 0:10:29.200 --> 0:10:33.400 to inflation. So you had the OPEC shocks that pushed 0:10:33.480 --> 0:10:36.839 up prices, then that fed into wages automatically fed back 0:10:36.880 --> 0:10:40.120 into prices again in spiraled up. You don't have that 0:10:40.200 --> 0:10:43.360 slight sort of thing today in terms of that, I mean, 0:10:43.360 --> 0:10:45.640 I think what's it would be interesting or what we're 0:10:45.760 --> 0:10:49.040 keeping a close eyele on is inflation expectations. If they 0:10:49.120 --> 0:10:52.000 really start to become a moored here, people really do 0:10:52.200 --> 0:10:55.400 start to expect firing and hired inflation going forward, then 0:10:55.440 --> 0:10:58.160 that does become a little bit of concern. And I 0:10:58.160 --> 0:10:59.800 think the data is mixed there. When you look at 0:10:59.800 --> 0:11:03.480 more good indicators of inflation expectations since the FED media, 0:11:03.520 --> 0:11:07.000 they've come down significantly. Um, you know, now the you know, 0:11:07.040 --> 0:11:10.480 the personal expectations like what you capture in the University 0:11:10.480 --> 0:11:13.000 of Michigan. We'll see how that all plays out. But 0:11:13.120 --> 0:11:15.120 for me, that's the big key is what happens to 0:11:17.480 --> 0:11:21.400 you know, j from UH in your career, from Johns 0:11:21.440 --> 0:11:26.000 Hopkins to Georgetown to the University of Alabama, You've been 0:11:26.120 --> 0:11:31.000 the entire time inside this kind of Reaganomics bubble. Right. 0:11:31.080 --> 0:11:34.960 We've had this supply side economics narrative for the last 0:11:35.000 --> 0:11:38.160 forty years, and that seems to have changed with this 0:11:38.360 --> 0:11:41.880 pandemic and with this um well, I guess the last 0:11:41.880 --> 0:11:45.120 administration was was a big spender as well, but all 0:11:45.160 --> 0:11:49.960 of a sudden, modern monetary theory seems to have won 0:11:50.040 --> 0:11:54.240 the day. How difficult does that make your job? Well, 0:11:54.400 --> 0:11:56.800 you know, you guys have been using the word paradigm chef, 0:11:56.960 --> 0:12:00.520 you know, and so it's it's clearly is that where 0:12:00.559 --> 0:12:02.400 are we right now in terms of what's what's the 0:12:02.480 --> 0:12:05.760 closest um of analog that you could look at, you know, 0:12:05.800 --> 0:12:09.720 I think it would be the ninth the guns and 0:12:09.760 --> 0:12:12.880 butter Um, And we did get some inflation out of that. Now, 0:12:12.920 --> 0:12:15.920 it was really the the opec shots um of the 0:12:15.960 --> 0:12:19.120 seventies that really got inflations and starting to higher so 0:12:19.160 --> 0:12:21.320 that's kind of where we are right now. And what 0:12:21.360 --> 0:12:24.880 I would say though, is it's a political decision going forward. 0:12:24.960 --> 0:12:27.440 You know, are we going to get all this infrastructure spending. 0:12:27.640 --> 0:12:30.520 Are we going to get this American Family's plan tasked 0:12:30.640 --> 0:12:33.480 or not? That still remains to be seen. We still 0:12:33.520 --> 0:12:36.600 have a very very split congress um, and even with 0:12:36.720 --> 0:12:41.839 among the fifty senators Democratic senators, there's not unity there either. 0:12:42.320 --> 0:12:45.640 So it does make our job the politics right now, 0:12:45.760 --> 0:12:49.000 I think it is complicates what we're trying to figure 0:12:49.000 --> 0:12:52.680 out going forward. How are you thinking within this big 0:12:52.720 --> 0:12:56.080 paradigm shift that we talk about, the models that we 0:12:56.120 --> 0:12:59.680 traditionally look at a Phillips curve, let's say it, the 0:12:59.679 --> 0:13:03.840 way that we're measuring inflation, the basket of which we're measuring, 0:13:04.200 --> 0:13:08.320 are those tools still intact well in terms of the 0:13:08.400 --> 0:13:10.360 you know, the Phillips curve, I think that has been 0:13:10.520 --> 0:13:13.240 was put to rest pretty much during the last expansion. 0:13:13.559 --> 0:13:16.080 You know, we got down to an unemployment rate that 0:13:16.120 --> 0:13:19.080 was at three and a half percent. Productional Phillips curves 0:13:19.080 --> 0:13:21.120 would have told you you would have had a lot 0:13:21.160 --> 0:13:23.720 more wage inflation than we did it. So that's kind 0:13:23.720 --> 0:13:28.000 of about the out the window right now. So, yes, 0:13:28.080 --> 0:13:31.120 we are in kind of uncharted territory right now, not 0:13:31.200 --> 0:13:34.240 only with what's going on with the pandemic, but as 0:13:34.280 --> 0:13:37.439 well as as way the the economy is responding to them. 0:13:37.679 --> 0:13:40.160 So when we think about the future, when we're looking 0:13:40.160 --> 0:13:43.560 at our forecast, when there's always a confidence interval around that, 0:13:43.880 --> 0:13:47.640 Unfortunately that confidence interval right now is wider than what 0:13:47.960 --> 0:13:51.520 voice historically has been. What about the level of divergence 0:13:51.520 --> 0:13:53.439 and thinking on a global basis, A lot of the 0:13:53.480 --> 0:13:57.040 guests yesterday we're hinting that the FED has now diverged 0:13:57.080 --> 0:14:00.400 from other global central banks and thinking about where we are, 0:14:00.400 --> 0:14:03.760 how further ahead we are are you see the divergence 0:14:03.960 --> 0:14:09.360 of the US versus other central banks. It's clearly up 0:14:09.440 --> 0:14:12.520 until say Wednesday, there wasn't a doubled. It seemed like 0:14:12.600 --> 0:14:16.360 other major central banks were leaning a little bit more 0:14:16.400 --> 0:14:20.360 towards starting to remove some policy accommodation, you know, defend 0:14:20.480 --> 0:14:23.000 wasn't there yet. Now. I think what they hinted with 0:14:23.080 --> 0:14:26.680 the dot plot on Wednesday was maybe we're getting a 0:14:26.720 --> 0:14:28.880 little bit closer to that than than what we thought. 0:14:28.960 --> 0:14:30.960 So I would say the FED at this point is 0:14:31.000 --> 0:14:35.680 still lagging a little bit behind some of its international counterparts. Um. 0:14:35.680 --> 0:14:39.120 But clearly there's been a reaction function ship that seems 0:14:39.200 --> 0:14:44.320 like they have, uh, what they've elevated is a maximum 0:14:44.360 --> 0:14:48.040 employment at the expense of inflation. But now that it 0:14:48.080 --> 0:14:50.160 may be starting to change a little bit as well, 0:14:50.280 --> 0:14:51.800 So the FED is starting to catch up to some 0:14:51.880 --> 0:14:54.760 of those major central banks. We're speaking with Jay Bryson 0:14:54.800 --> 0:14:57.880 and Wells Fargo chief economists and Jay every day on 0:14:57.920 --> 0:15:00.360 Thursday at four thirty pm, I take a look at 0:15:00.360 --> 0:15:02.960 the FED balance sheet. It's when they release the latest outstandings. 0:15:03.320 --> 0:15:06.920 And yesterday the balance sheet increased by the most going 0:15:06.960 --> 0:15:09.840 back three months, and it rose to the highest level 0:15:09.880 --> 0:15:12.520 ever of more than eight trillion dollars, crossing that line 0:15:12.560 --> 0:15:15.240 for the first time. They are talking about tapering perhaps, 0:15:15.680 --> 0:15:18.320 and people are talking about tapering, but they're doing anything. 0:15:18.480 --> 0:15:21.960 But I mean, honestly, how much support is this giving 0:15:22.000 --> 0:15:25.040 to the economy at this point and how much support 0:15:25.120 --> 0:15:28.240 is this given to bond yields where people getting increasingly 0:15:28.280 --> 0:15:30.560 sanguine that they will stay as low as they are 0:15:32.160 --> 0:15:35.200 so right, I mean, the FED is taking down roughly 0:15:35.280 --> 0:15:39.000 half of the treasury supply UM right now. I don't 0:15:39.040 --> 0:15:42.040 have a point estimate for how much that's worth on 0:15:42.160 --> 0:15:44.920 the ten year yield. But you know it's clearly bringing 0:15:44.960 --> 0:15:48.000 that that yield down. If the Fed tomorrow says we're 0:15:48.040 --> 0:15:50.680 going to start the paper, what do you think happens 0:15:50.720 --> 0:15:53.320 to the tenure yield? Is home a snap fire, and 0:15:53.400 --> 0:15:55.560 I think they are very concerned about that. They look 0:15:55.600 --> 0:15:58.600 back at the paper tantrum back in two thousand thirteen 0:15:58.640 --> 0:16:02.240 when the yield on the tenure stepped up fifty basis 0:16:02.320 --> 0:16:04.640 points over you know a number of leads, and I 0:16:04.640 --> 0:16:06.680 don't think they want to go back to that. Yeah, 0:16:06.840 --> 0:16:10.480 and so we do expect that, you know, later this summer, 0:16:10.560 --> 0:16:13.360 maybe early fall, the Fed will start to hit about 0:16:13.480 --> 0:16:15.640 the tapering. And when they start to really do that, 0:16:15.920 --> 0:16:18.240 we will see yield start to move up. I wouldn't 0:16:18.240 --> 0:16:21.120 expect them to start to really dial back their case 0:16:21.200 --> 0:16:24.560 of purchases and late this year and probably more likely 0:16:24.640 --> 0:16:28.240 early next year. Jay Brayson, it Wells Fargo chief Economist, 0:16:28.400 --> 0:16:36.440 Thank you so much. A lot of folks really have 0:16:36.520 --> 0:16:39.280 to assess what happened on Wednesday and what could happen 0:16:39.640 --> 0:16:42.040 going forward. Of Course, all the big head honchos over 0:16:42.080 --> 0:16:43.800 at black Rock when they want to get a sense 0:16:44.040 --> 0:16:46.000 of what's happening in the market. Of course, they turned 0:16:46.360 --> 0:16:49.880 to Way Lee, chief Global Chief Investment Strategists over at 0:16:49.880 --> 0:16:52.240 the black Rock Investment Institute, and I'm pleased to say 0:16:52.600 --> 0:16:54.840 Way joins us right now to talk a little bit 0:16:54.840 --> 0:16:58.080 more here. Way about this shift in tone that we 0:16:58.160 --> 0:17:00.160 got out of the fit and I'm wondering if this 0:17:00.360 --> 0:17:05.400 requires a meaningful shift in tone out of the markets. Well, 0:17:05.440 --> 0:17:10.199 we actolutely see what the FED announced this week in 0:17:10.320 --> 0:17:15.600 line with its new policy framework service bring forward the 0:17:15.680 --> 0:17:20.520 lead too, as well as adjusting inflation expectations higher, especially 0:17:20.640 --> 0:17:23.240 for this year. We also see this adding to the 0:17:23.320 --> 0:17:27.360 credibility of of its framework because everything that's happened so far, 0:17:27.480 --> 0:17:30.520 what they have put out is still in line with 0:17:30.720 --> 0:17:33.639 what we call the new nominal theme, which is that 0:17:33.960 --> 0:17:37.639 the rate path will be a lot slower in this 0:17:37.840 --> 0:17:40.800 cycle in comparison with previous cycles. So if you think 0:17:40.840 --> 0:17:43.520 about back in twenty fifteen, or we're looking at FED 0:17:43.640 --> 0:17:48.040 right high co PC was just above one and now 0:17:48.040 --> 0:17:51.159 we're talking about a lot higher levels and at the 0:17:51.240 --> 0:17:57.080 same time leadoff not in not until twenty twenty three 0:17:57.119 --> 0:18:00.600 by Feds on estimate. So we still see their new 0:18:00.680 --> 0:18:05.640 policy framework very much intact, and that under cleans our 0:18:06.480 --> 0:18:10.080 pro risk view. So just to underscore what you may 0:18:10.160 --> 0:18:12.600 be saying here, is it just that you have not 0:18:12.760 --> 0:18:15.960 changed anything about your investment thesis post the FED meeting 0:18:15.960 --> 0:18:19.760 that a lot of people thought was a pivotal shift. Well, 0:18:19.800 --> 0:18:22.960 I would say that there are specific kind of views around, 0:18:22.960 --> 0:18:25.480 for example, where the dollar could go from here on, 0:18:26.200 --> 0:18:28.359 at least in the near term, and that has beat 0:18:28.400 --> 0:18:31.440 across the immersion market sentiment, which we are reviewing very 0:18:31.520 --> 0:18:35.639 very closely and more broadly that the view around curve 0:18:36.160 --> 0:18:41.600 steepening after this this week's annasmal have seen reversal of that. 0:18:41.760 --> 0:18:44.960 So so so there are under the surface and nuances 0:18:45.040 --> 0:18:48.760 that we're working through, but the overall stay invested in 0:18:48.840 --> 0:18:53.119 market pro risk that is intact because we still see 0:18:53.280 --> 0:18:56.000 even though it came as a bit of a hawkish surprise, 0:18:56.400 --> 0:18:59.679 the the the changes and the announcement in line with 0:19:00.080 --> 0:19:03.600 the new policy framework of that effect in battle. How 0:19:03.600 --> 0:19:07.040 are you thinking though about the rotation sort of back 0:19:07.160 --> 0:19:10.159 into growth out of value. How much of that was 0:19:10.200 --> 0:19:13.520 maybe just some recent under performance that we have seen, 0:19:13.960 --> 0:19:16.600 how much of that is more fundamental that long term 0:19:16.640 --> 0:19:20.240 growth expectations might be lower than some of our early 0:19:20.320 --> 0:19:24.960 lofty projections. I would say yes, very interesting indeed, that 0:19:25.000 --> 0:19:27.680 we're seeing a bit of our rotation back into the 0:19:28.040 --> 0:19:31.840 growth fee names that came a bit more under pressure 0:19:32.119 --> 0:19:35.120 earlier on in the year in our review, for example, 0:19:35.200 --> 0:19:38.760 the typical growth fee names tech. There is always a 0:19:38.760 --> 0:19:41.919 place for technology in portfolio, especially when you look at 0:19:41.920 --> 0:19:44.400 it from a longer term perspective. If you think about 0:19:44.440 --> 0:19:47.399 some of the structural challenges that we've got to tackle, 0:19:47.720 --> 0:19:52.159 aging demographics, the global grain transition, technology will play a 0:19:52.160 --> 0:19:55.280 big growth there. Earnings a goose and they have continued 0:19:55.280 --> 0:19:58.440 to deliver, and we actually have been talking about kind 0:19:58.440 --> 0:20:02.680 of earlier year on the performance as interesting entry point 0:20:02.720 --> 0:20:05.520 to view that position to the longer term case for growth. 0:20:05.600 --> 0:20:10.000 The title names and especially Technology Review stays intact. But 0:20:10.119 --> 0:20:12.919 in the Newton we still see there being more to 0:20:13.040 --> 0:20:16.320 go in this restart narrative. If you think about kind 0:20:16.320 --> 0:20:19.600 of the restarted that started earlier this year in the US, 0:20:19.640 --> 0:20:23.520 now broadening out to Europe and then also broadening out 0:20:23.520 --> 0:20:26.399 of Japan, I do see that there being more to 0:20:26.520 --> 0:20:29.199 go for the sickly control to go a bit longer. Well, 0:20:29.240 --> 0:20:30.960 let's talk a little bit more about some of the 0:20:30.960 --> 0:20:34.000 growth prospects in Europe. Right now, we are getting headlines 0:20:34.320 --> 0:20:37.399 from the Italian Prime Minister Mario dragging Uh saying the 0:20:37.440 --> 0:20:41.359 economic forecast there will be revised up significantly. He's also 0:20:41.400 --> 0:20:44.760 talking up the need and his desire here for additional 0:20:44.800 --> 0:20:48.199 economic stimulus here kind of on the same note that 0:20:48.240 --> 0:20:50.960 we've heard from drag for quite some time. But we've 0:20:50.960 --> 0:20:53.840 seen better data starting to come out of Italy and 0:20:53.920 --> 0:20:56.480 some of the other European nations here that I think 0:20:56.560 --> 0:21:00.720 would be encouraging. Way indeed, for we have seen so 0:21:00.840 --> 0:21:05.000 far is that the momentum of restarts, the botton is 0:21:05.000 --> 0:21:09.160 getting passed on from the US to the laggers, previous 0:21:09.280 --> 0:21:13.600 laggas including Europe and in our review Japan. And that's 0:21:13.720 --> 0:21:17.600 very much under king our preference to potentially broaden out 0:21:17.640 --> 0:21:21.600 our previously very kind of strong conviction in US apputies 0:21:21.640 --> 0:21:24.880 and consider some of the laggers, including Japan and including 0:21:25.119 --> 0:21:27.680 Europe that that you just you just spoke to. One 0:21:27.680 --> 0:21:30.480 thing I would say, though, is that the restart is 0:21:30.640 --> 0:21:34.280 very different from a typical recovery. So as we see 0:21:34.320 --> 0:21:37.720 these very strong incoming growth numbers, we have to take 0:21:37.760 --> 0:21:39.240 it with a pinch of salt as well. In this 0:21:39.640 --> 0:21:44.680 we cannot extrapolate this momentum indefinitely, so we're cautioned against 0:21:44.720 --> 0:21:48.480 extrapolating the very strong momentum that we're seen right now. 0:21:48.600 --> 0:21:51.840 But we do see that we start brosening out, benefiting 0:21:51.880 --> 0:21:55.280 secico assets such as Europe and Japan. For the matter, 0:21:55.400 --> 0:21:57.520 wait before we let you go just twenty seconds here, 0:21:57.600 --> 0:21:59.600 do you think that the dollar will continue to strengthen 0:22:00.040 --> 0:22:03.400 after five straight days the greatest strengthening streak going back 0:22:03.440 --> 0:22:09.119 to well, we actually see dollar kind of range found. 0:22:09.240 --> 0:22:12.960 The recent kind of strengthening trend came off the back 0:22:13.000 --> 0:22:16.320 of a period of weakening, right, so this is earlier 0:22:16.359 --> 0:22:18.920 at the beginning of the year because of the US exceptionalism. 0:22:18.920 --> 0:22:21.280 We see dollar strengthening, and then we see that coming back, 0:22:21.359 --> 0:22:23.359 and now it's rebounding that a little bit. We see 0:22:23.359 --> 0:22:27.720 it range found, not breaking out of the current range 0:22:27.760 --> 0:22:30.800 and not particularly hurting really sentiment, but in a near 0:22:30.840 --> 0:22:33.320 top giving post strong. It's rebounded, but we definitely keep 0:22:33.320 --> 0:22:35.840 a close eye on res market because of that. Really 0:22:36.000 --> 0:22:43.240 of black rock, thank you so much for that. Right now, 0:22:43.280 --> 0:22:45.320 we are so lucky to have Congressman Shawn cast In, 0:22:45.640 --> 0:22:49.120 a Democrat from Illinois joining us on the drum beat 0:22:49.160 --> 0:22:52.640 to infrastructure, the drum bread to cleaner energy. Congressman, I'd 0:22:52.640 --> 0:22:54.399 love to start with this idea that there seems to 0:22:54.400 --> 0:22:57.199 be more of a consensus forming and some sort of 0:22:57.320 --> 0:23:02.000 bipartisan infrastructure bill. What's your sense of the shift that's 0:23:02.000 --> 0:23:05.880 allowed a greater consensus and perhaps more optimism around something 0:23:05.960 --> 0:23:10.320 getting done. Um, you know, I hope you're right. We 0:23:10.480 --> 0:23:15.280 desperately need to upgrade our infrastructure. The I don't think 0:23:15.280 --> 0:23:17.680 it's surprising every member of Congress would like to see 0:23:17.680 --> 0:23:20.919 infrastructure projects to their district. I think the challenge that 0:23:20.960 --> 0:23:22.520 we have in this moment is to make sure that 0:23:22.560 --> 0:23:25.439 we do not forget about the critical importance of climate 0:23:25.480 --> 0:23:28.560 infrastructure in this piece, because as long as the red state, 0:23:28.600 --> 0:23:32.640 blue state, red district blue district divide tracks so closely 0:23:32.680 --> 0:23:35.240 to where people live and where land is, that means 0:23:35.280 --> 0:23:37.760 that this huge win win of clean energy, that is 0:23:37.800 --> 0:23:41.520 a wealth transfer from energy producers energy consumers, has a 0:23:41.600 --> 0:23:43.720 partisan tinge, and we just have to make sure not 0:23:43.800 --> 0:23:46.439 to let that quest for by partisanship get in the 0:23:46.440 --> 0:23:47.919 way of doing what we have to do both for 0:23:47.960 --> 0:23:51.000 the environment and for our wallets. Yeah. Well, the partisan tinge, 0:23:51.000 --> 0:23:53.240 of course, has been a huge roadblock of for a 0:23:53.280 --> 0:23:56.880 lot of efforts out there to address some of these issues. Congressman, 0:23:57.320 --> 0:24:00.280