WEBVTT - IMF's Adrian on Tackling the Uneven Global Recovery 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:23.759 at Bloomberg dot com, slash podcast. The International Monetary Fund 0:00:23.800 --> 0:00:27.320 and World Bank they're holding their spring meetings virtually. Uh, 0:00:27.440 --> 0:00:29.760 let's get a sense of what might be on the agenda. 0:00:29.800 --> 0:00:32.800 We welcome to Bias Adrian. He's a financial counselor and 0:00:32.840 --> 0:00:36.760 director of the International Monetary and Capital Markets Department for 0:00:36.880 --> 0:00:39.760 the i m F. Tobias, give us a sense what 0:00:40.080 --> 0:00:44.360 is on the agenda at the IMF this week. Um, 0:00:44.400 --> 0:00:48.440 you know, as we start to emerge from this pandemic. Yes, 0:00:48.520 --> 0:00:52.479 thanks so much for this important question. So what we 0:00:52.479 --> 0:00:55.480 are seeing is that there's a recovery that is taking 0:00:55.560 --> 0:01:01.360 place globally, but it isn't a synchronous recovery. UM. So 0:01:01.720 --> 0:01:04.440 we have all followed the fiscal package in the US, 0:01:04.520 --> 0:01:09.399 and of course that has shifted expectations about the about 0:01:09.400 --> 0:01:14.000 the recovery in the US forward. But the recovery is 0:01:14.040 --> 0:01:17.319 not as fast and as strong elsewhere in the world. 0:01:17.480 --> 0:01:22.319 So uh, this is why a synchronous is the word 0:01:22.360 --> 0:01:25.679 of the day. And when we look out two years 0:01:25.800 --> 0:01:30.360 into the future, what we see is that the most 0:01:30.360 --> 0:01:34.480 advanced economies in the world have the lowest output gaps, 0:01:35.160 --> 0:01:39.200 while emerging markets and low income countries have larger output 0:01:39.280 --> 0:01:44.880 gaps relative to the pre pandemic expectations of where these 0:01:44.920 --> 0:01:50.520 economies would be. So basically, uh, the more advanced you are, 0:01:51.120 --> 0:01:55.240 the more uh the expectation is that the recovery will 0:01:55.280 --> 0:01:59.680 take place, will get to healing. So what can be 0:01:59.680 --> 0:02:01.240 done out of what can the I m F and 0:02:01.240 --> 0:02:07.240 World Bank recommend or or even do in terms of action? Yeah, absolutely, 0:02:07.320 --> 0:02:11.079 So of course we are doing three things. So number one, 0:02:12.080 --> 0:02:17.079 we are lending two countries that our need. So last 0:02:17.160 --> 0:02:21.800 year we did rapid financing was about a hundred countries 0:02:21.880 --> 0:02:24.960 around the world. We have never covered so many countries 0:02:25.200 --> 0:02:29.040 in terms of help with the rapid financing. Secondly, we 0:02:29.200 --> 0:02:34.000 also have programs where we basically, uh, you know, lend 0:02:34.080 --> 0:02:39.120 money and help economies to get back on track. And 0:02:39.160 --> 0:02:42.600 then lastly we give policy advice. So this is what 0:02:42.680 --> 0:02:46.640 it's called our surveillance, and we give very granular policy 0:02:46.680 --> 0:02:52.080 advice to our entire membership of one ninety countries. Tobias. 0:02:52.240 --> 0:02:55.480 What impact, if any at all, Kennedy, I, m F 0:02:55.520 --> 0:02:59.840 and the World Bank have on um countries ability to 0:03:00.080 --> 0:03:03.440 get inoculation, to get vaccines into the market here from 0:03:03.720 --> 0:03:07.000 the States. Uh, you know, we're just you know, shocked 0:03:07.000 --> 0:03:11.000 and at the delays that we're seeing. Uh in Western Europe? 0:03:11.240 --> 0:03:15.800 Is there anything that can be done from your perspective, Yeah, 0:03:15.840 --> 0:03:19.040 that's a that's an excellent question. Of course, this crisis 0:03:19.080 --> 0:03:22.400 will only be over once the pandemic is in check, 0:03:22.560 --> 0:03:27.119 and this is where the vaccines are so important. Uh. 0:03:27.160 --> 0:03:31.119 And yes, the rollout in the US has been has 0:03:31.200 --> 0:03:35.440 been very effective and very fast, and you know, we're 0:03:35.480 --> 0:03:39.880 getting to numbers that are that are getting reassuring, but 0:03:39.960 --> 0:03:44.280 the rollout is much slower in Europe. We do expect 0:03:44.280 --> 0:03:47.000 that this is going to accelerate, but it is somewhat 0:03:47.040 --> 0:03:51.240 disappointing how long it has taken so far. But Pabe, 0:03:51.240 --> 0:03:53.520 it is important too to keep in mind is that 0:03:53.840 --> 0:03:56.400 in between Europe and the US, we have less than 0:03:56.440 --> 0:03:59.400 a billion people in the world. Out there are seven 0:03:59.440 --> 0:04:02.920 billion doll in total and Uh, you know, really, the 0:04:03.080 --> 0:04:07.080 end of this pandemic is going to happen once the 0:04:07.120 --> 0:04:11.280 pandemic is conquered everywhere. And uh, the US and Europe 0:04:11.400 --> 0:04:15.000 is only a very small share in terms of total numbers. 0:04:15.520 --> 0:04:19.040 And you know, as long as COVID is alive, there 0:04:19.080 --> 0:04:23.159 will be mutations, and mutations can be threats to everybody. 0:04:23.680 --> 0:04:28.120 It's still kind of shocking that the famously efficient Germans 0:04:28.240 --> 0:04:31.600 still haven't managed to get it off the ground. They 0:04:31.640 --> 0:04:34.120 don't even seem to have any kind of plan as 0:04:34.160 --> 0:04:37.320 to how they're going to vaccinate their people. I saw 0:04:37.360 --> 0:04:40.600 today that the US has now fully vaccinated almost as 0:04:40.640 --> 0:04:45.600 many people as there are adults in Germany. And this 0:04:45.680 --> 0:04:48.520 isn't you know, unique to Germany. The French also are 0:04:48.640 --> 0:04:53.680 failing miserably at this effort. Why is such an advanced 0:04:53.720 --> 0:04:57.560 economy doing so poorly when it comes to getting shots 0:04:57.600 --> 0:05:02.600 and putting them in arms. Yeah, that's the next question. 0:05:02.800 --> 0:05:05.800 And let me let me uh step back for a 0:05:05.839 --> 0:05:09.760 moment and just point out that, you know, the FISA vaccine, 0:05:09.800 --> 0:05:12.960 which is one of the predominant vaccines around the world. 0:05:13.080 --> 0:05:16.200 It's produced in both the US and Germany, and of 0:05:16.240 --> 0:05:19.840 course it was developed by by German scientists here, and 0:05:19.920 --> 0:05:23.040 so I happened to be in Germany just now I'm 0:05:23.160 --> 0:05:31.680 German originally, I'm also about it and absolutely absolutely and 0:05:31.720 --> 0:05:35.680 it is indeed, uh Morris some and I think there 0:05:35.720 --> 0:05:38.760 are two things that come together. So number one, the 0:05:38.880 --> 0:05:41.680 US is just very good, even the US government is 0:05:41.800 --> 0:05:45.479 very good as writing contracts and making sure that their 0:05:45.520 --> 0:05:51.000 population is getting the vaccines. First, and uh, the European politicians, 0:05:51.720 --> 0:05:55.920 including the Germans, but also more broadly, you know, the 0:05:55.920 --> 0:05:58.680 the c as well, has have not been quite as 0:05:58.680 --> 0:06:01.640 aggressive in terms of the way in which the contracts 0:06:01.640 --> 0:06:04.919 were structured. And secondly, I mean the US did not 0:06:05.040 --> 0:06:09.599 allow any shipment outside of the US until the vaccinations 0:06:09.720 --> 0:06:13.919 are are sufficient in the US, whereas in Europe, including 0:06:13.920 --> 0:06:18.080 in Germany, actually shipments have gone to poorer countries. And 0:06:18.440 --> 0:06:20.400 you know that is of course a good thing for 0:06:20.440 --> 0:06:22.640 the rest of the world, but it is to the 0:06:22.680 --> 0:06:26.120 detriment of the German population. So you know, there's some 0:06:26.200 --> 0:06:31.320 balance here that needs to be struck very interest that 0:06:31.400 --> 0:06:34.520 is fascinating. So I mean it is I guess in 0:06:34.560 --> 0:06:38.520 holding with the kind of multilateral approach that Chancellor Miracle 0:06:39.279 --> 0:06:43.120 has embraced. Um, it's just frustrating, I guess for the 0:06:43.120 --> 0:06:45.520 people of Germany. But if it's helpful for the world, 0:06:46.560 --> 0:06:48.720 that's that's got to be good news in the end, 0:06:48.720 --> 0:06:50.960 and I guess we can take it a little bit. Um. Tobias, 0:06:51.000 --> 0:06:52.960 thanks so much for joining us and answering my kind 0:06:53.000 --> 0:06:56.839 of left field questions there. Tobias Adrian is the director 0:06:56.880 --> 0:06:59.480 of I m F Capital Markets. He is not responsible 0:06:59.520 --> 0:07:02.400 for the back seeing rollout in Germany or the U 0:07:02.520 --> 0:07:04.520 i m F meetings kick off. We'll be following them 0:07:04.600 --> 0:07:09.320 very closely. Matt. Back in the day, I worked at 0:07:09.360 --> 0:07:12.440 Credit Swiss First Boston, did a stint there, um boy, 0:07:12.480 --> 0:07:15.040 and in the media space we killed it. We made 0:07:15.120 --> 0:07:18.320 tons of money. We had great equity platform, great high yield, 0:07:18.920 --> 0:07:21.480 some of the best bankers on the street, and we 0:07:21.560 --> 0:07:23.720 made lots of money. It was a great place to work. 0:07:23.760 --> 0:07:26.960 But at year end, there was always something that would 0:07:27.000 --> 0:07:29.840 muddy up the bonus works. It was a bad trade here, 0:07:30.720 --> 0:07:34.440 a bad private investment there. Uh. It seemed like there's 0:07:34.440 --> 0:07:37.000 always something that is still the case. Credit Swiss today 0:07:37.200 --> 0:07:40.640 taking a four point seven billion dollar hit. Let's break 0:07:40.640 --> 0:07:44.000 it down with a couple of experts. Nalie Basket, Wall 0:07:44.000 --> 0:07:47.640 Street reporter for Bloomberg News and Alison Williams Uh senior 0:07:47.680 --> 0:07:51.280 banks analyst for Bloomberg Intelligence who's covered the sector four decades. 0:07:51.800 --> 0:07:54.480 Um Ernali, want to start with you. What's the latest here? 0:07:54.480 --> 0:07:57.040 We've got some management changes, We've got a big hit 0:07:57.120 --> 0:07:59.680 to the earnings. What's the latest? Yeah, you have a 0:08:00.040 --> 0:08:03.160 eight of management changes, really more than a half dozen 0:08:03.320 --> 0:08:07.080 out the door, Paul. That's a staggering amount of change 0:08:07.120 --> 0:08:09.400 at one time for one of the largest banks in 0:08:09.440 --> 0:08:11.720 the world. You have the chief risk officer out, you 0:08:11.800 --> 0:08:14.560 have the head of investment banking out um and a 0:08:14.640 --> 0:08:17.960 new guard taking shape at a time where they still 0:08:18.000 --> 0:08:20.640 have some clean up work to do. So what do 0:08:20.680 --> 0:08:24.760 we know about the new guard, Allison? So I think 0:08:24.920 --> 0:08:27.360 that you know, the new guard is sort of I 0:08:27.400 --> 0:08:30.280 think an interim policeholder at the moment. I think the 0:08:30.280 --> 0:08:32.720 most important thing was that management, when they came out 0:08:32.880 --> 0:08:36.000 and announced to this big loss, had to at least 0:08:36.000 --> 0:08:38.840 show that they were starting the process to make change. 0:08:39.120 --> 0:08:42.719 So the management changes are part part of it. Um. 0:08:43.080 --> 0:08:46.280 It's it's probably not surprising that that the business had 0:08:46.480 --> 0:08:50.520 um as well as the chief of risk. UM are 0:08:50.520 --> 0:08:55.079 those that are departing the firm. Given given the circumstances um. 0:08:55.120 --> 0:09:00.439 But I do think, especially given all the numerous issues there, 0:09:00.600 --> 0:09:03.720 there needs to be sort of a deeper postmortem, not 0:09:03.840 --> 0:09:07.560 just on this situation, but there still situation, and then 0:09:07.600 --> 0:09:11.360 sort of broadly what are the risks, um and controls 0:09:11.360 --> 0:09:13.360 that are in place? After we were just talking about 0:09:13.360 --> 0:09:16.600 a post mortem. I feel like last year and bringing 0:09:16.640 --> 0:09:20.000 in a new CEO to make changes, so has he 0:09:20.360 --> 0:09:24.160 avoided the acts somehow stionally investors are trying to give 0:09:24.240 --> 0:09:26.600 him a grace period, it looks like to to make 0:09:26.600 --> 0:09:29.040 the changes, to give him time to make the changes 0:09:29.040 --> 0:09:31.600 of the bank needs. Here's the thing to Allison's point, 0:09:31.640 --> 0:09:34.160 a lot of these people are interim, right. You have 0:09:34.280 --> 0:09:36.880 a man who's taking over as chief risk officer in 0:09:36.880 --> 0:09:41.160 the interim who was previously the chief risk officer. That 0:09:41.360 --> 0:09:43.199 the other person you have taking over the investment bank 0:09:43.240 --> 0:09:46.160 who is particularly interesting as Christian Meisner, who is a 0:09:46.200 --> 0:09:49.240 former executive at Bank of America. He's new to the bank. 0:09:49.679 --> 0:09:52.199 And you know, Credit Suite was actually doing our right 0:09:52.320 --> 0:09:55.640 in investment banking until all of this had happened. This 0:09:55.760 --> 0:09:59.680 archago scandal happened in the prime brokerage division and the 0:09:59.720 --> 0:10:03.199 Green still issue happened in the asset management division largely 0:10:03.280 --> 0:10:05.760 where we saw the saw the head of asset management 0:10:05.800 --> 0:10:09.600 really um, you know take accountability for this too, right, 0:10:09.720 --> 0:10:13.720 So you're seeing many divisions of this bank face issues 0:10:14.040 --> 0:10:16.959 in regard to risk management, and you know the investors 0:10:16.960 --> 0:10:21.160 now are paying for it. Allison, you've covered this stock, 0:10:21.240 --> 0:10:24.599 this company for decades currently at Bloomberg Intelligence, but before that, 0:10:24.640 --> 0:10:29.160 when you're an analyst at Morgan Stanley Investment Management, you've seen, uh, 0:10:29.280 --> 0:10:33.120 this company's performance versus piers. What is it about Credit 0:10:33.160 --> 0:10:37.320 Swiss where they always seemed to find themselves in trouble 0:10:37.559 --> 0:10:41.520 one way or another. Well, there there are I mean 0:10:41.559 --> 0:10:44.880 there is something different in terms of credit suites and 0:10:44.960 --> 0:10:49.760 their mix. So they do generally excel in products such 0:10:49.800 --> 0:10:53.920 as leverage, finance, UM and and things that you know 0:10:53.960 --> 0:10:57.360 a year ago when we saw a big marks that 0:10:57.440 --> 0:11:00.400 credit suite versus some others, that to me is something 0:11:00.440 --> 0:11:04.160 you would expect given its mix because um in in 0:11:04.480 --> 0:11:07.880 you know, a quarter like March of when spreads are 0:11:07.920 --> 0:11:10.480 blowing out. Um. You know, that's the nature of the 0:11:10.520 --> 0:11:13.120 business that will be profitable over time but can be 0:11:13.240 --> 0:11:18.880 more volatile in you know, sitting sitting here today UM 0:11:19.080 --> 0:11:22.600 with a much more significant loss UM, which which I 0:11:22.600 --> 0:11:25.080 think has different meaning. I think this does go more 0:11:25.160 --> 0:11:28.120 towards UM, you know, the d n A of the 0:11:28.160 --> 0:11:31.240 bank and and that's and that's what will be interesting 0:11:31.280 --> 0:11:33.760 to address. And I'm sure that the bank is already 0:11:34.360 --> 0:11:37.800 working with regulators with regard to this issue. Obviously, legal 0:11:37.920 --> 0:11:40.080 risk are going to be something to linger. But I 0:11:40.120 --> 0:11:42.679 think what's going to be important is is working with 0:11:42.720 --> 0:11:47.960 the regulators UM to get the processes in place. And 0:11:48.520 --> 0:11:51.000 you know, there could be some some sort of trailing 0:11:51.040 --> 0:11:54.960 impacts I think with regard to UM capital and making 0:11:55.000 --> 0:11:59.040 sure that they shored up UM financially. I mean, the 0:11:59.080 --> 0:12:01.559 good news is that they had the money to withstand 0:12:01.600 --> 0:12:06.559 this hit UM, but what are the operational safeguards and 0:12:06.559 --> 0:12:10.040 then what are the financial safeguards going forward? Sonale, are 0:12:10.040 --> 0:12:13.000 you hearing from prime brokerage is that they are going 0:12:13.040 --> 0:12:16.080 through their books looking for other potential wangs. Well, you 0:12:16.080 --> 0:12:19.480 know what's funny about this also, you're you're worried about 0:12:19.600 --> 0:12:21.520 other clients. Of course, I mean, who's taking on a 0:12:21.520 --> 0:12:23.400 lot of risks? Do we need to clamp down on them? 0:12:23.440 --> 0:12:26.080 But the other thing about it is credit suite it was, 0:12:26.400 --> 0:12:30.440 you know, not in the top top tier of prime brokerage. Generally, 0:12:30.440 --> 0:12:33.320 when these kinds of things happen, clients look around, everyone 0:12:33.360 --> 0:12:35.679 looks around and says, okay, do we flocked to safety? 0:12:35.760 --> 0:12:37.800 And so at the end of the day, do Morgan 0:12:37.920 --> 0:12:41.360 Stanley and Goldman Sachs come out even stronger from this? 0:12:41.559 --> 0:12:44.760 Do they gain more clients? Uh? That's that's the big 0:12:44.840 --> 0:12:48.920 question moving forward. What type of reputational hit is credit 0:12:48.920 --> 0:12:51.880 sweet is going to take among clients for these losses. 0:12:51.920 --> 0:12:54.360 And then also there's a financial reason for clients to 0:12:54.520 --> 0:12:57.959 keep an eye out. They are their outlook is negative 0:12:58.280 --> 0:13:00.920 for Fitch and S and P. If they are downgraded, 0:13:01.559 --> 0:13:05.960 it makes counterparty risk that much more of an issue, right, 0:13:06.000 --> 0:13:09.760 So that's something to watch for moving forward. All right, Hinale, 0:13:09.760 --> 0:13:12.280 thanks very much for joining U. Shonalie Bastik. There are 0:13:12.400 --> 0:13:15.920 Wall Street reporter for Bloomberg Television Alison Williams, r B 0:13:16.120 --> 0:13:22.280 I Bloomberg Intelligence Banks Analysts. Get over down to Marvin Lowe, 0:13:22.640 --> 0:13:27.439 senior global macro strategist at State Street to talk about Well. 0:13:27.559 --> 0:13:31.160 First off, Marvin, the U S economy has really caught 0:13:31.200 --> 0:13:34.440 my eye lately. Um. The jobs number was amazing. We 0:13:34.480 --> 0:13:37.880 had the best I s M number manufacturing number in 0:13:37.920 --> 0:13:41.120 March since three and then we just got the best 0:13:41.120 --> 0:13:45.880 services p M I number of all time. Um, how 0:13:45.960 --> 0:13:48.600 much growth do you expect out of the US and 0:13:48.720 --> 0:13:53.280 how much inflation? Yeah? I mean, UM, you know, we're 0:13:53.280 --> 0:13:56.280 finally getting to a point where UM prospects are certainly brightening. 0:13:56.440 --> 0:14:00.640 And UM, you know, we're we're we're we're getting to 0:14:00.640 --> 0:14:03.640 a point where the reopenings are starting to really accelerate. UM. 0:14:04.360 --> 0:14:06.160 I think I think the numbers, I think the numbers 0:14:06.200 --> 0:14:09.800 that are expected are are are reasonable given UM everything 0:14:09.840 --> 0:14:11.760 that we know, so six and a half percent GDP 0:14:12.559 --> 0:14:15.840 for the year and an inflation rate that UM will 0:14:15.880 --> 0:14:18.800 certainly spike in the short term, but start to come 0:14:18.840 --> 0:14:21.440 back once those space effects get lower. UM. And I 0:14:21.440 --> 0:14:23.920 think the challenge for all of us looking at the 0:14:23.960 --> 0:14:26.960 markets and various asset classes is trying to determine what's 0:14:27.000 --> 0:14:29.600 priced in. And a lot has been priced in, I 0:14:29.600 --> 0:14:32.000 mean a lot of good news UM since the beginning 0:14:32.040 --> 0:14:33.920 of the year, and it's and it's coming to fruition, 0:14:33.960 --> 0:14:36.720 which is which is you know, really encouraging. Yeah, Marvin, 0:14:36.760 --> 0:14:38.240 That's kind of where I wanted to go I mean, 0:14:38.280 --> 0:14:41.400 I think the bull case is very well known on 0:14:41.640 --> 0:14:45.160 the street. With the accommodative, fed with the fiscal stimulus, 0:14:45.160 --> 0:14:47.760 with the reopening trade and all of those issues, and 0:14:48.120 --> 0:14:51.760 obviously the vaccination, the metrics are trending very positively here. 0:14:52.360 --> 0:14:55.080 How do you get a sense of what is in 0:14:55.160 --> 0:14:57.200 fact priced in? Do you look at evaluation? Do you 0:14:57.240 --> 0:14:59.600 look at a pe ratio for the SMP? How do 0:14:59.680 --> 0:15:01.360 you that or what do you look at to get 0:15:01.360 --> 0:15:03.080 a sense of kind of where we are in terms 0:15:03.120 --> 0:15:06.200 of evaluation? Yeah, I I look at the world from 0:15:06.200 --> 0:15:09.120 a from a cross asset class perspective. UM. You know 0:15:09.160 --> 0:15:11.360 what happens in the rates market and what happens in 0:15:11.440 --> 0:15:15.280 the currency markets, UM matter I think to how you 0:15:15.320 --> 0:15:19.000 approach risk assets. UM. And you know, since last Friday, 0:15:19.040 --> 0:15:22.880 since the near million jobs posts, since some the record 0:15:22.960 --> 0:15:24.800 p M I s that that that that you were 0:15:24.960 --> 0:15:28.040 UM that you were referencing, we've had very little movement 0:15:28.280 --> 0:15:33.400 on those other markets. Certainly, equities are supportive by the accommodative, 0:15:33.400 --> 0:15:35.720 fed by the fiscal stimus by the fact that, um, 0:15:35.760 --> 0:15:39.960 we we're talking about more fiscal spending. But um, the 0:15:40.160 --> 0:15:43.760 stability in those other markets I think points to a 0:15:43.760 --> 0:15:46.840 lot of the good news already in there. UM and 0:15:47.400 --> 0:15:51.120 with still negative UM real guild in other words, of 0:15:51.160 --> 0:15:55.400 repressive UM interest rate environment, equities wind up being one 0:15:55.440 --> 0:15:58.240 of those asset classes that can that can continue to 0:15:58.360 --> 0:16:02.520 benefit from this kind of broader supportive environment. So when 0:16:02.560 --> 0:16:06.280 does that turn around? UM, you know what we have 0:16:06.400 --> 0:16:09.320 to get Marvin, Yeah, I think I think interesting. I 0:16:09.320 --> 0:16:11.440 think interest rates are are are going to be the key. 0:16:11.520 --> 0:16:14.560 You know, once once UM you wind up with a 0:16:14.680 --> 0:16:17.480 rates market that is not repressive, once you get UM 0:16:17.520 --> 0:16:20.840 really yield closer to neutral rather than the minus sixty 0:16:20.880 --> 0:16:24.280 basis points that we're in, it's it's a legitimate substitute 0:16:24.360 --> 0:16:28.040 for UM UH for other risk assets at that point. UM. 0:16:28.080 --> 0:16:30.920 I look at it from from from that perspective, multiple 0:16:30.960 --> 0:16:34.720 expansion can certainly continue to occur and and and you know, 0:16:35.000 --> 0:16:37.520 I would make that part of my thought process as 0:16:37.560 --> 0:16:39.680 I look at risk assets over the course of the 0:16:39.760 --> 0:16:43.000 next few quarters. Marvin, You know, a lot of folks 0:16:43.040 --> 0:16:46.760 are are are looking for yield, They're looking for return, 0:16:46.880 --> 0:16:49.480 They're willing to take maybe more risk as as we 0:16:49.640 --> 0:16:52.160 come out on the other side of this pandemic, and 0:16:52.720 --> 0:16:56.560 certainly willing to take more risk what's that. Certainly Bill 0:16:56.600 --> 0:17:00.160 Wang was willing to he was a constant at a 0:17:00.240 --> 0:17:03.520 risk at that Bill market. Just wondering what your thoughts 0:17:03.520 --> 0:17:08.520 are on emerging markets for returns? Yeah, UM, you know, 0:17:08.640 --> 0:17:11.840 I do. I do think that, UM, we have to 0:17:11.880 --> 0:17:14.600 parcel the emerging markets into those that might benefit from 0:17:14.680 --> 0:17:18.159 reflation versus those that are, you know, potentially looking at 0:17:18.240 --> 0:17:22.720 higher inflation. UM, the backdrop, the backdrop is still is 0:17:22.760 --> 0:17:25.520 still positive kind of given UM again that reach for 0:17:25.600 --> 0:17:29.399 yield and UM the positive risk environment that you're talking about. 0:17:29.480 --> 0:17:32.720 But UM, each one of those emerging markets are unique, 0:17:32.720 --> 0:17:35.080 and I think you have to ultimately analyze the ones 0:17:35.160 --> 0:17:38.800 that might benefit more in a reflationary environment, where we 0:17:38.880 --> 0:17:42.920 start layering in infrastructure discussions as part of UM, as 0:17:42.960 --> 0:17:46.200 part of the summer to early fall action items that 0:17:46.240 --> 0:17:49.480 come out of Washington. In the dollar plays a huge 0:17:49.560 --> 0:17:53.199 role in e M investments, of course, and at the 0:17:53.200 --> 0:17:55.000 beginning of the year one thought the dollar was on 0:17:55.040 --> 0:17:57.879 its way down. It's turned out to have a fantastic 0:17:57.960 --> 0:18:01.119 quarter and it's doesn't look like it's gonna let up 0:18:01.160 --> 0:18:04.119 anytime soon. How does that, how does that play a 0:18:04.240 --> 0:18:07.560 role in what you look at globally. Yeah, yeah, absolutely 0:18:07.560 --> 0:18:10.160 so so, so the dollar winds up being the most UM, 0:18:10.320 --> 0:18:13.159 you know, one of the most important UM factors in 0:18:13.160 --> 0:18:17.280 in how well the emerging market discussion occurs. UM. We 0:18:17.400 --> 0:18:20.479 had an adjustment that occurred in the first quarter with 0:18:20.520 --> 0:18:23.720 regard to how US growth was going to UM really 0:18:23.760 --> 0:18:26.600 beat expectations, you know, whether it was fiscally driven UM 0:18:26.640 --> 0:18:29.760 as well as kind of the better vaccine UM news. 0:18:29.880 --> 0:18:32.440 If in fact a lot of that is priced in, 0:18:32.720 --> 0:18:35.160 we could start getting back to looking at the dollar 0:18:35.240 --> 0:18:37.720 as a more stable type of asset class, which I 0:18:37.720 --> 0:18:39.879 think the market, which I think is encouraging for the 0:18:39.920 --> 0:18:43.040 market at this point. UM. If if we've priced in 0:18:43.680 --> 0:18:45.640 UM as much as we can from a fad rate 0:18:45.720 --> 0:18:49.560 hight perspective UM, and we you know, need catalyst to 0:18:49.600 --> 0:18:51.920 get it a little bit further, we could start building 0:18:52.359 --> 0:18:57.359 other scenarios around e M eventually UM finding you know, 0:18:57.400 --> 0:18:59.879 finding some traction where where it's been a struggle for 0:19:00.040 --> 0:19:03.440 the for the past few months. Marvin, thirty seconds as 0:19:03.440 --> 0:19:05.280 you talk to your pms at State Street, what's the 0:19:05.280 --> 0:19:09.600 most exciting area that you're hearing from your fund managers? UM? 0:19:10.440 --> 0:19:12.360 You know, I I still I still from broad risk 0:19:12.480 --> 0:19:15.320 is is something that is something that's that's encouraging for folks. 0:19:15.320 --> 0:19:18.760 There is a lot more discussion about alternative investments. You know, certainly, 0:19:18.920 --> 0:19:23.439 certainly the the crypto spaces is interesting, um as a 0:19:23.600 --> 0:19:26.520 potential as a class to think about. But um it 0:19:26.600 --> 0:19:29.439 really is trying to continue along with this with this 0:19:29.520 --> 0:19:32.359 risk discussion that's been going on. Marvin low thank you 0:19:32.400 --> 0:19:34.879 so much for joining us. We was appreciate chatting with 0:19:34.920 --> 0:19:38.200 you and getting your perspective on global markets. Marvin Lowe, 0:19:38.560 --> 0:19:41.879 Senior at Global macro Strategists at State Street. They're located 0:19:41.920 --> 0:19:44.400 in Boston. They are one of the mega players matt 0:19:44.480 --> 0:19:45.840 up in Boston. You go up there and you see 0:19:45.840 --> 0:19:48.360 the big utual fund complexes as I did for many 0:19:48.440 --> 0:19:51.880 years as an annaly. State Street is an absolute anchor meeting. Uh. 0:19:51.960 --> 0:19:57.920 They have a certainly a global view. I'm super pumped 0:19:57.960 --> 0:20:01.000 for our next guest on us right now. He's senior 0:20:01.080 --> 0:20:05.240 vice president for Global Strategy and Innovation at the Berkeley 0:20:05.359 --> 0:20:09.280 College of Music. What does music have to do with innovation? 0:20:09.480 --> 0:20:12.280 You ask, Well, he's a co author of Two Beats Ahead, 0:20:12.280 --> 0:20:16.040 What Musical Minds teach Us about Innovation? His co author 0:20:16.400 --> 0:20:19.119 on that book, Michael Hendrix, I'm assuming no relation to 0:20:19.240 --> 0:20:24.240 the great guitarist Um Pano. Thanks so much for joining us. Interestingly, 0:20:24.280 --> 0:20:28.360 I was just reading about will I am Um from 0:20:28.359 --> 0:20:30.960 the Black from the Black Eyed Peas teaming up with 0:20:31.600 --> 0:20:36.919 Um Honeywell to bring out a supermask high tech you know, 0:20:37.359 --> 0:20:40.280 COVID mask essentially, and I thought, Wow, that's so cool, 0:20:40.320 --> 0:20:43.199 and how come no one else thought of that already? 0:20:44.000 --> 0:20:47.200 What what is your book, um telling us in terms 0:20:47.359 --> 0:20:53.000 of musicians and innovation? Thank you so much. That is 0:20:53.040 --> 0:20:56.960 a fascinating pairing, I think very illustrated. Well, the book 0:20:57.040 --> 0:21:00.800 is all about the mindset that musicians have that we 0:21:00.920 --> 0:21:04.040 believe are trans terrible and applicable in other other domains. 0:21:04.520 --> 0:21:08.919 The way that musicians collaborate, the way that they listen 0:21:09.000 --> 0:21:12.320 to the environment around them, the way that they create 0:21:12.400 --> 0:21:16.840 through experimentation or remixing, or even the way that they're 0:21:16.880 --> 0:21:19.840 able to go out there and connect with audiences. I 0:21:19.880 --> 0:21:23.040 believe these are all mindsets and skills that we can 0:21:23.080 --> 0:21:28.760 all learn from. All right, Panos, It's interesting here as 0:21:28.800 --> 0:21:33.880 we continue to deal with this pandemic of so many groups, 0:21:33.880 --> 0:21:36.359 so many people have seen their lives disrupted. Gives a 0:21:36.480 --> 0:21:41.560 sense of how the average professional musician, what has he 0:21:41.680 --> 0:21:43.320 or she had to do to kind of make it 0:21:43.359 --> 0:21:48.240 to this pandemic? What's it? What's been fascinating about musicians 0:21:48.280 --> 0:21:50.280 the music industry is, if you think about it, whether 0:21:50.320 --> 0:21:54.159 it's pandemics, or whether it's technological shifts, or whether it's 0:21:54.200 --> 0:21:59.080 societal shifts. Uh, the music industry and musicians in general 0:21:59.160 --> 0:22:03.080 have a history of going through massive disruption but somehow 0:22:03.200 --> 0:22:07.200 being the first to often embrace new technologies and new 0:22:07.240 --> 0:22:09.520 means of connecting with audiences. And this goes back to 0:22:09.640 --> 0:22:14.200 the earlier days of radio, television, cable TV, social media, 0:22:14.240 --> 0:22:16.360 Have Your A Member Musicians were the first to embrace 0:22:17.000 --> 0:22:21.600 social media, subsequently streaming and even the subscription models, and 0:22:21.680 --> 0:22:25.359 now with COVID, worth seeing musicians embrace all kinds of 0:22:25.400 --> 0:22:30.680 new platforms like clubhouse, TikTok, Twitch and really taking their 0:22:30.800 --> 0:22:33.320 art form in ways of connecting with audiences in a 0:22:33.359 --> 0:22:36.280 different in a different way. We see a level of 0:22:36.320 --> 0:22:41.680 resilience that I believe we can all learn from. And 0:22:41.840 --> 0:22:45.840 absolutely the music community has been devastated by COVID with 0:22:45.880 --> 0:22:49.119 respect to losing in some ways the last fashion of 0:22:49.119 --> 0:22:53.720 income that they had by performances um. But on the 0:22:53.760 --> 0:22:57.560 other hand, we're seeing this creativity, imagination and the desire 0:22:57.640 --> 0:23:00.439 to connect really siding their choices. I think we can 0:23:00.440 --> 0:23:03.240 blown lots from them. I'd say, my kid brother is 0:23:03.280 --> 0:23:07.040 a guitarist and a musician producer in in New York, 0:23:07.240 --> 0:23:13.000 and I've always been struck by his electrical engineering skills, right, 0:23:13.040 --> 0:23:15.520 same is true for for Hendricks and a number of 0:23:15.560 --> 0:23:19.760 other guitars. They have to understand the science of amplification 0:23:19.800 --> 0:23:21.720 and they play with it to to kind of blow 0:23:21.720 --> 0:23:24.359 our minds. But I've also been struck by you know, 0:23:24.480 --> 0:23:28.760 his whole crew. Um. The way that they've innovated to 0:23:28.840 --> 0:23:34.240 create new revenue streams has been astounding. And are we 0:23:34.280 --> 0:23:37.200