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Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane

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Speaker 1: jay Ley. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg's Christopher

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Speaker 1: Round dropping by the studio here in New York. Strategas

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Speaker 1: partner and head of Technical Strategy. Good morning, Chris, Good morning,

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Speaker 1: John Cannect Good news that trade truce extend to some

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Speaker 1: kind of lasting piece. I think we're gonna let the

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Speaker 1: markets be the judge of that. You know, we care

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Speaker 1: about price action, the market's interpretation of these events, and

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Speaker 1: I just think it's important to emphasize we're about eight

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Speaker 1: percent off the lows from last week. If you look

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Speaker 1: at his historical rallies and downtrends, up about fifteen is

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Speaker 1: your typical rally, so maybe we're halfway there. I think

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Speaker 1: that twenty fifty maybe level is going to be the

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Speaker 1: first real test for this market in terms of how

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Speaker 1: adorable this advance is. Now the question I have, and

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Speaker 1: I think what we're struggling with if a month from

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Speaker 1: now or two months from now, we've had some positive

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Speaker 1: resolution to the China news, yet the markets back on

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Speaker 1: the lows. What will the excuse be that time or

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Speaker 1: next time? And that's the tricky question. So how do

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Speaker 1: you characterize the price action of the last couple of days,

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Speaker 1: because for me, there's a big difference between pricing gout

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Speaker 1: nets recession risk and pricing in the O clear. Yeah,

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Speaker 1: And I think if you look at some of the internals,

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Speaker 1: there have certainly been some impressive days, uh, namely Friday,

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Speaker 1: the internals were the best we've seen since about seven

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Speaker 1: or eight years UM. But more importantly, I think our

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Speaker 1: big test is what are the leadership characteristics around this

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Speaker 1: move look like? Do we get the important groups like

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Speaker 1: industrials and semis involved? Uh, semi decent so far, industrials

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Speaker 1: not so much. So there is I think a jury

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Speaker 1: is still out type attitude in terms of how we

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Speaker 1: evaluate this move. And quite clearly China with the epicenter

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Speaker 1: of this. And I don't mean the trit tilkas, I

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Speaker 1: just made the general slow down in the economy. We

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Speaker 1: had Apple last week, Samsung O the night. It doesn't

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Speaker 1: look great right now for tech, does it? Not that specific?

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Speaker 1: I think tech sectary? Yeah, I think it depends where

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Speaker 1: you look. Um e M. Tech is so concentrated in

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Speaker 1: names like Samsung, Taiwan, Semi, Ali, Baba, ten Cent, those

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Speaker 1: have clearly been among the more weaker names, not just recently,

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Speaker 1: but for the better part of the last six or

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Speaker 1: twelve months. When you look domestically, small and MidCap software

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Speaker 1: has actually been quite good. So there's this dichotomy between

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Speaker 1: global tech and US centric domestic tech, and I think

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Speaker 1: it's important we highlight. Vet Bill wanted me to ask

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Speaker 1: you a question, my dog, everyone out there, including vet

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Speaker 1: Bill on Amazon, on Apple, etcetera, etcetera, what do you

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Speaker 1: do with these big trophy stocks of another time and place.

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Speaker 1: I think if we consider the big one is the

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Speaker 1: Facebook's the Amazon. I've got so much respect for you.

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Speaker 1: The question I have is these corrective phases, these draw downs,

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Speaker 1: are typically complete when the best stocks have gone down.

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Speaker 1: I've finally gone down. Microsoft has been the best of

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Speaker 1: the best of the best for the better part of

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Speaker 1: the last four or five years. Ultimately, that that one

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Speaker 1: need to get hit harder before this is all said

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Speaker 1: and done. I think that is the key. Beel Weather.

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Speaker 1: As we moved through the first couple of months, of

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Speaker 1: this year. Why did the hedge funds go down so badly?

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Speaker 1: Do they the hedge fund guys that got hammered, do

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Speaker 1: they talk to people like you, Is it your fault?

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Speaker 1: It's uh listen. I think at the end of the day,

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Speaker 1: the underperformance from the hedge fund community has been consistent

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Speaker 1: with the radical activist central bank policies we've seen over

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Speaker 1: the last So you're taking view I I do. I

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Speaker 1: think it's difficult for active managers to outperform. When you

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Speaker 1: go into some fancy pants two and twenty hedge fund

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Speaker 1: and you say, Apple's broken down, the setups terrible, blah

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Speaker 1: blah blah, Christopher own trend talk, what do they do?

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Speaker 1: Throw you out of the office. I think one of

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Speaker 1: the ironies about the hedge fund community, particularly UM, kind

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Speaker 1: of the legendary hedge fund investors that we know, they

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Speaker 1: are very very price sensitive, very very trend sensitive, very

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Speaker 1: technical sensitive. So they're very they use technical analysis and think.

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Speaker 1: What I've always found is our work, the reception of

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Speaker 1: it is often best in those places. If you look

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Speaker 1: at UM, some of the legendary hedge fund investors, they

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Speaker 1: are have been price watchers first before they shape the

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Speaker 1: fundamental view. What you just heard their folks, there's nothing

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Speaker 1: else you need to hear. In two thousand nineteen, if

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Speaker 1: you're part of Global Wall Street, there's all this media

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Speaker 1: talk about guys and cosmic vision and all that, and Chris,

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Speaker 1: they're following the same price charts. I learned from a

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Speaker 1: guy named Gene Pernia a million years ago. Everybody ends

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Speaker 1: up following the X and o's a point and figure

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Speaker 1: or the trend based stuff that you do. We think

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Speaker 1: a very simple price is simply a check on your

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Speaker 1: fundamental view. Price either confirms your view of the world

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Speaker 1: or it doesn't. And John is visceral. You do it

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Speaker 1: with pencil, and so what's your fundamental view right now?

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Speaker 1: Chris Well? I I don't care for the fundamental view.

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Speaker 1: I care for the market perception of other people's fundamental view.

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Speaker 1: And I think this is where the rubber meets the road.

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Speaker 1: We've seen a pretty good rally off the lows. What

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Speaker 1: I've been a little less convinced by as some of

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Speaker 1: the macro divergences that still exist. You'll curve rely hasn't steepen,

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Speaker 1: bond yields her up only modestly, Copper hasn't done much

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Speaker 1: to impress us. So I think there are still some

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Speaker 1: big question marks out there before we really embrace this.

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Speaker 1: I think when volatility is high, there's always this inclination

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Speaker 1: to explore the extremes. And the extremes that we were

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Speaker 1: exploring over the last couple of weeks was the prospect

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Speaker 1: of a recession. The base case for most economists is

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Speaker 1: just a return to trend growth. If I could push

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Speaker 1: back on one on one point, um volatility feels extreme

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Speaker 1: relative to me, be the last year or two. But

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Speaker 1: if you look at the spread of markets in two

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Speaker 1: thousand eighteen, the high versus the low, we were basically

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Speaker 1: at the hundred year average. There should emphasize it was

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Speaker 1: extreme relative to But I guess anything would be. So

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Speaker 1: I think we uh, you know, there's this term that

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Speaker 1: was used the new normal over the last ten plus years, right,

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Speaker 1: I think we have transitioned into the old normal, and

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Speaker 1: the old normal simply an environment where the range of

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Speaker 1: outcomes is probably wider. It's an environment where cyclical stocks

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Speaker 1: correct from time to time. I think people forget even

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Speaker 1: the nineteen nineties, the greatest bull market in tech. Ever,

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Speaker 1: semiconductors had eleven draw dounts over that ten year period

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Speaker 1: cyclical stocks correct, We need to remember that. Chrisphron writes

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Speaker 1: a catch I'll be doing this morning, Good morning and

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Speaker 1: Happy New Year. It's eustrokesis pots that technical strategy? When

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Speaker 1: do we stop saying Happy New Year? When is that stock?

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Speaker 1: What do they say next week? Friday? Next week? I

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Speaker 1: hate happy hate happy Friday. Just let's get I don't

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Speaker 1: like it. I like happy Monday when I get to

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Speaker 1: come in here in battle that happy Monday exists. We

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Speaker 1: welcome John Tucker for the first time in the studios

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Speaker 1: in two thousand tonight. Thanks for catching off. I was

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Speaker 1: I must tell you I took the tree down of

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Speaker 1: the decoration. So did you mineus still over? Yeah? Year,

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Speaker 1: My Mrs Keane said, you're taking the tree down today

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Speaker 1: because Vet Bill thinks it's a bush paying in the

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Speaker 1: corner of them. No, not yet, but we're ready to

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Speaker 1: the tree. A little little crisp become a bit of

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Speaker 1: a fire hazard. Yes, we would say that as well. John,

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Speaker 1: What are you looking at today? I'm the President's teacher,

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Speaker 1: and I thought Marty Schenker was absolutely brilliant on the

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Speaker 1: mixture of things that we're supposed to see in an

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Speaker 1: eight minute speech. I love what Mike Allen said an

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Speaker 1: ex EOS with Jonathan Swan today about the tension in

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Speaker 1: the White House about let's pick it up and go

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Speaker 1: after the holidays. Really interested coming later, I know we'll

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Speaker 1: get a lot of attention. Something I'm paying a lot

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Speaker 1: of attention to is just to slowdown in Europe, just

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Speaker 1: to get back to the market. Than in the German data.

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Speaker 1: Production was terrible, and there was this hope that in

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Speaker 1: the third quarter the slowdown in Germany and in Europe

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Speaker 1: was temporary. The spill over into four Q does not

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Speaker 1: look good. Industrial production was really soft. Euros An economic

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Speaker 1: sentiment is really not great. We've been sliding I think

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Speaker 1: for ten straight months. It doesn't look great on the continant,

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Speaker 1: right Christopher quickly or do you have a euro belief? Well?

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Speaker 1: I think what's interesting here is this is how bear

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Speaker 1: market has developed. It starts with price first, and then

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Speaker 1: the fundamental data begins to confirm. And a lot of

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Speaker 1: these European markets peaked in the first quarter of two

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Speaker 1: thousand and eighteen twelve months ago, and now the fundamental

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Speaker 1: data is confirming what I can't reconcile is why the

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Speaker 1: euro isn't weaker, And something we always care about is

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Speaker 1: price action, how it responds to news. What's it gonna

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Speaker 1: take to break euro down? The fact that that that

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Speaker 1: I guess we've seen it, Chris to to a greater extent.

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Speaker 1: And if you think about where we peaked, the start

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Speaker 1: we were in and around one I forgot all the

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Speaker 1: way down towards one ten. I think the market, to

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Speaker 1: your point, actually did a really really good job of

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Speaker 1: getting ahead of the slowdown in Europe. Price moved first,

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Speaker 1: and the fundamentals are sort of backing this up. And

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Speaker 1: relative to position in coming into nineteen, very short and

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Speaker 1: very pessimistic euro and urine denominating assets seemed to be

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Speaker 1: the story. Great to catch up with you, Chris. What

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Speaker 1: a joy yesterday to visit with Ian Bremer at his office.

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Speaker 1: Is your aged group down on Fifth Avenue, farther down

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Speaker 1: towards New York University and to look at the ten risks,

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Speaker 1: the top risks, I should say for two thousand nineteen

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Speaker 1: has put up a e age group. They've been remarkably

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Speaker 1: pressure over the years, really signaling John Germany and the

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Speaker 1: challenges for Angelo Merkel. They were way out front. Yeah,

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Speaker 1: on that a couple of years ago. This year, within

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Speaker 1: all the risk that they have front and center, no

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Speaker 1: surprises China. And what's great about Eurasia Group is they

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Speaker 1: have people that look at China and focus on certain angles.

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Speaker 1: Michael Herson joins US now really with a focus on

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Speaker 1: the economics of President g and China. Their basic equation.

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Speaker 1: Why will see puts I plus GEPH plus an X

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Speaker 1: is a lot different than the United States, isn't it?

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Speaker 1: Michael Oh, It definitely is. You just look at UM

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Speaker 1: what a large share investment is of China's economy. You know,

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Speaker 1: that's north of UM of g d P, and so

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Speaker 1: that's a huge amount to be investing every year in

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Speaker 1: real estate, in in increased manufacturing capacity, and this is

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Speaker 1: one of the challenges they face, especially as growth slows.

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Speaker 1: But within investment that they have there is how you

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Speaker 1: place it on the nation's balance sheet, and there's goodwill

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Speaker 1: and there's bad will. How much bad will do they

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Speaker 1: have booked on investment? Well, it's a it's a central question.

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Speaker 1: It's tough to answer because you know, the data is

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Speaker 1: not great UM. You know, I think that UM bad

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Speaker 1: debts are significant share on the on the balance sheet.

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Speaker 1: I don't think that they're at the level that represent

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Speaker 1: a flashing red light um but it's no question this

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Speaker 1: is a major challenge that China faces. It's a serious risk,

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Speaker 1: and it's one reason why growth is slowing in in

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Speaker 1: You know, it's because the leadership is aware of these

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Speaker 1: financial risks and they don't want to exacerbate them. So

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Speaker 1: the stimulus that China has announced and is implementing is

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Speaker 1: less than many people expected. But I think it's really

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Speaker 1: because those financial risks. Controlling those remain a priority for Fijiing. So, Michael,

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Speaker 1: and top of that is this try dispute with the

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Speaker 1: United States as well, and picking up on the risk

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Speaker 1: that you guys have pointed out the U. S. China relationship,

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Speaker 1: which you write a group calls the most important bilateral

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Speaker 1: relationship on the planet. I imagine most people listen to

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Speaker 1: this program would agree with that. Your team is essentially

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Speaker 1: saying something more fundamental is broken in the relationship between

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Speaker 1: Washington and Beijing. What has broken, Well, that's right, it's

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Speaker 1: it's the notion that we have entered in the last

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Speaker 1: four or five months, a new normal, a new era

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Speaker 1: in the U. S. China relationship. And it's a more tense,

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Speaker 1: more politicized relationship across all of the different areas in

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Speaker 1: which US and China um intersect. That's economics, technology, it's security,

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Speaker 1: and these are pressures that have been building for a

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Speaker 1: number of years. My view is that many of these

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Speaker 1: same tensions we would be seeing even under a Hillary

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Speaker 1: Clinton presidency. And that's partly because with China's rise, the U.

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Speaker 1: S And China are just competing against more fronts than

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Speaker 1: ever before. It. There's been a particular um driver here

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Speaker 1: with the Trump administration, which because it's less concerned about

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Speaker 1: working with China on global issues like climate change or

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Speaker 1: upholding the multilateral system, what we're left with is almost

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Speaker 1: pure competition. And the Trump administration has signaled in recent

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Speaker 1: months that even as the two sides work towards US

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Speaker 1: sees fire on tariffs, the US is determined to confront

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Speaker 1: China on many of these other fronts. And so we are, um,

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Speaker 1: you know, regardless of what happens with tariffs, we are

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Speaker 1: headed for attention in a number of other areas. And

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Speaker 1: these have real risks for for businesses and for the

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Speaker 1: global economy. But Michael, you've said something quite important. This

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Speaker 1: goes beyond the electoral cycle, that goes beyond the Trump administration,

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Speaker 1: which raises the real question as to whether this can

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Speaker 1: be put back together again. Can it? I don't think so.

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Speaker 1: I think we can have you know, the level of

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Speaker 1: tension will modulate. Let's just say with the new you Um,

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Speaker 1: if there is a new president in and if that's

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Speaker 1: someone who is more concerned with pivoting back to issues

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Speaker 1: like climate change, there will be more areas of of

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Speaker 1: necessary cooperation with China. But in terms of the competition

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Speaker 1: that's now at the center of the relationship, I don't

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Speaker 1: think there's there's any going back. It's just a matter

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Speaker 1: of how well the two countries can manage these and

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Speaker 1: avoid competitions spilling out in ways that that are not

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Speaker 1: helpful for either countries. Some people conclude that the Chinese

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Speaker 1: have actually gotten away with it for a long time

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Speaker 1: without really strong confrontation from Washington. What are the positives

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Speaker 1: that we can take out of the president's confrontation with

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Speaker 1: the Chinese? What are the positives in all of this.

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Speaker 1: I think many people, myself included UM view it as

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Speaker 1: necessary that the US shifted uh its approach with China,

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Speaker 1: and you know, I think that conversation had started even

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Speaker 1: before the Trump administration came into office, and in the

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Speaker 1: run up to the presidential election. I think the broad

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Speaker 1: policy community in the US had already said, look, it's

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Speaker 1: time for a change. So I think that there are

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Speaker 1: positives to the US being willing to to really call

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Speaker 1: out China for um activities that in which the US

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Speaker 1: previously pulled its punches, but there are risks to doing so.

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Speaker 1: It has to be managed properly, because what we don't

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Speaker 1: want to do is have China absorbed the narrative that

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Speaker 1: the US is simply out to contain China and that

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Speaker 1: there's no space for China to expand in the global system.

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Speaker 1: That's that's something that we cannot control. I think it's

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Speaker 1: an unrealistical and it fuels a narrative in China that's

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Speaker 1: that's not productive in terms of what we're going to do.

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Speaker 1: So that's that's one of the rest that's the linkage

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Speaker 1: of the elites. I get that, that's the linkage of

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Speaker 1: Beijing and maybe Shanghai and Hong Kong. How is all

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Speaker 1: of this discussion discussion connected to the people of China.

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Speaker 1: Is there a normal linkage to the people of China,

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Speaker 1: or is it an elite discussion and then completely removed

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Speaker 1: as President gis domestic realities. Well, it's a great point.

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Speaker 1: I think if you look at the people in both countries,

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Speaker 1: there's not necessarily a lot of animosity. Generally speaking, Americans

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Speaker 1: and Chinese have positive views towards towards each other. But

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Speaker 1: the risk here is that, um, depending on how the

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Speaker 1: two countries manage this relationship, the the everyday people are well,

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Speaker 1: certainly they're already impacted by the trade war, but even

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Speaker 1: with some of these broader foreign policy tensions. I mean

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Speaker 1: you look in the US at efforts to combat Chinese

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Speaker 1: stuft of intellectual property. Well, that's now coming out in

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Speaker 1: the form of visa restrictions for Chinese students, um and

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Speaker 1: in similar measures, And that's the kind of thing that

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Speaker 1: hurts people to people exchanges. If it's not done right,

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Speaker 1: it hurts the ability of the US to attract top

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Speaker 1: talent for innovation. So I'm not saying it's wrong to

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Speaker 1: look at these issues, but um, again, this is where

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Speaker 1: there needs to be a carefully developed strategy in a

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Speaker 1: sense of proportion for the US, or we risk really

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Speaker 1: shooting ourselves in the foot. Do we have a carefully

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Speaker 1: developed strategy right now? I would not. I would not

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Speaker 1: say it's it's carefully developed. I mean, certainly there are

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Speaker 1: different I think the issues that there are many strategies

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Speaker 1: within the administration. There are different voices and people who

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Speaker 1: come at this from from different issues. But what we

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Speaker 1: have not seen is a cohesive effort to really keep

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Speaker 1: these in line and coordinate across different different areas. One

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Speaker 1: final question, do you, as a grizzled pro suggest that

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Speaker 1: President Trump's unique Trump lateral strategy can be amended and

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Speaker 1: modified by other members of his administration. I think I

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Speaker 1: think that's quite difficult. I don't. I don't think we

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Speaker 1: should have high expectations there. I think we need to

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Speaker 1: expect the unexpected and to be prepared for enterprises. A

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Speaker 1: lack of a lack of coordination. I think that's just

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Speaker 1: the reality of this administration. Michael Herson, thank you so much.

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Speaker 1: Not enough time, really quite good with your Raisier group

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Speaker 1: and looking at China and the economics more the economic

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Speaker 1: til of China, kind of bringing Mark Chandler place. Chandler

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Speaker 1: grew up with this. I mean, Mark, you did a

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Speaker 1: great book on the social astronomy of America as well.

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Speaker 1: Give us your serious story quickly, Mark Chandler, end of

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Speaker 1: an era. Uh, Internet changes everything. Amazon is a monopoly.

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Speaker 1: How's that? In a twitter? Stu's good? That is? It's

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Speaker 1: what is Sambai? I don't know. If he can'try on

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Speaker 1: getting him to talk about it, he might get in trouble.

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Speaker 1: He's had to talk about foreign exchange. Why don't you

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Speaker 1: start us off on foreign exchange? The weakness we've seen

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Speaker 1: in the last couple of days, Mark, do you see

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Speaker 1: that as some kind of inflection point for the US?

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Speaker 1: Don't laugh? Three year of strength. I don't know. I

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Speaker 1: think it's a bit early to say this. I mean,

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Speaker 1: I think that what happened is, you know, the US

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Speaker 1: are trying to raise more than a hundred and fifty

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Speaker 1: billion dollars this week selling bills and bonds, and with

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Speaker 1: the dropping yields and a strong dollar, something's got to give.

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Speaker 1: And so I think that what we're seeing as a

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Speaker 1: dollar weakening, heels rising a little bit, but we're still

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Speaker 1: stuck in the strange. You know, last week we did

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Speaker 1: the whole range in the euro once thirteen to one

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Speaker 1: fifteen dollar again was a big move. But with that

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Speaker 1: flash crash, but other currencies like the Canadian dollar the odsie,

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Speaker 1: which were hit by that flash crash as well, had

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Speaker 1: completely rebounded. Mark, let's talk about the unique difficulties of

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Speaker 1: was really interesting because we had this big consensus view

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Speaker 1: that the dollar was going to strength and then at

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Speaker 1: weakenen was the total opposite of that. Teteen just feels

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Speaker 1: so much more nuanced. What is uniquely different about the

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Speaker 1: effects market this year, Mark, Well, I suppose that if you,

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Speaker 1: like most people would probably say that the most the

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Speaker 1: unique thing this year is that the major central banks

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Speaker 1: net net are shrinking their balance sheets. So this is

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Speaker 1: the fact that even the US is shrinking its balance sheet,

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Speaker 1: which is last year was offset by the b o

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Speaker 1: J and the ECB. Now the ECB has done buying

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Speaker 1: and the b o J has has pulled back the

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Speaker 1: extent that it's buying. And so I think that a

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Speaker 1: lot of people are concerned that maybe since O nine

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Speaker 1: or ten that the que has fluffed up asset prices,

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Speaker 1: and now that que an aggregate is being unwound or

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Speaker 1: at least at least stalling, uh, that now it's seeing

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Speaker 1: like the asset prices filtered through. So I think that's

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Speaker 1: one thing. The other thing I think is the driver

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Speaker 1: is the divergence and renewed divergence that happened today. German

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Speaker 1: factory orders slumped, and this is after the German economy

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Speaker 1: contracted in Q three. It's possible that they contracted into

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Speaker 1: four as well. And the the Japanese, which contracted in

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Speaker 1: Q three are having a very say, lukewarm type of recovery.

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Speaker 1: And the US despite the slowdown, remember we're slowing down

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Speaker 1: from four point two percent in Q two. It feels horrible,

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Speaker 1: but all we're doing is going to trend, which is

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Speaker 1: about half that case. Oh, we're going to trend. But

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Speaker 1: what's the opportunity out there? I mean, John and I

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Speaker 1: have talked about this. Is it a year where I

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Speaker 1: can make big figures? Fort forget about a year. Is

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Speaker 1: it a quarter where I can make big figures in

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Speaker 1: a foreign exchange traders? It's just going to be range bounding,

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Speaker 1: a mess in a jumble March Sandler, Yeah, I hear you, Tom.

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Speaker 1: I think that it will be a mess in a

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Speaker 1: jungle here in Q one because we have a lot

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Speaker 1: of things coming to an end at the end of

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Speaker 1: Q one, early Q two and by this, I mean

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Speaker 1: the U S trade talks with China. We've got like

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Speaker 1: an early March deadline. April, the US exemptions to the

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Speaker 1: Iranian embargo come to an end, and then in May

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Speaker 1: we have the European parliamentary election. So I think I'm here.

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Speaker 1: In the first quarter, we get a little bit more

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Speaker 1: dollar weakness, but then we come back within this range

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Speaker 1: and we stay there until we get a clearer picture

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Speaker 1: on the trajectory of trade and US policies. So Mark,

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Speaker 1: A lot of people keep bringing up the European parliamentary elections.

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Speaker 1: What is important about the parliamentary elections not just for

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Speaker 1: the politics, but for the market. Yeah, So I think

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Speaker 1: that the rights, rights and potant for the markets is

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Speaker 1: that this is it's not just the European parliamentary elections,

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Speaker 1: but with the European parliamentary elections will allow happen is

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Speaker 1: for a new European Commission, and this will set the

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Speaker 1: general trust of European policy going forward. And I'm talking

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Speaker 1: about integration. You know, many people still think even though

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Speaker 1: many people are bullish to Euro this year, many people,

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Speaker 1: I think, underlying a cyclical bounce in the Euro are

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Speaker 1: are concerned about this the ongoing through the ever never

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Speaker 1: ending story of monetary union without fiscal union. And I

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Speaker 1: think that what's interesting I think this year is that Germany,

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Speaker 1: it could be Germany's turned the head of the Central

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Speaker 1: Bank dragging Eastern ends in October. You've had a Dutch.

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Speaker 1: Excuse me, you've had a Dutch, You've had a French. Uh.

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Speaker 1: It's a German's turn, it would seem like after the

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Speaker 1: Italian turn. And yet Merkel seems to be playing their

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Speaker 1: cards close to invest not really supporting Videman, seeming to

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Speaker 1: realize that Germany's ability to protect itself, its own interests

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Speaker 1: and to further the vision of Europe is not going

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Speaker 1: to be done at the ECB but at the European

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Speaker 1: Commission level, and Europe in the middle of this huge

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Speaker 1: transition that affects the whole range of offices, and so

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Speaker 1: I think the European Parliamentary elections and justice uh sort

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Speaker 1: of a catch all phrase for this big transition that's

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Speaker 1: taking place in European leadership. The idea though that we

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Speaker 1: would have a change of leadership at the ECB that

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Speaker 1: went towards the Bundesbank President Jen's Viteman, I think was

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Speaker 1: something people thought would happen maybe twelve months ago. Most people,

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Speaker 1: Mark have come around to the idea that it will

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Speaker 1: not be the head of the Bundesbank running the e

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Speaker 1: c B, that that just will not be tolerated from

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Speaker 1: many individuals across Europe. I don't know about tolerated. I

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Speaker 1: think that maybe ye, they wouldn't be supported then, Mark,

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Speaker 1: let's use that word. Yeah, yeah, no, I I think

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Speaker 1: that uh, if Germany really wanted to do that, I

429
00:24:07,240 --> 00:24:10,359
Speaker 1: think they could force their will on getting the Buddhasping

430
00:24:10,440 --> 00:24:13,119
Speaker 1: president to be the next ECB president. But here's the

431
00:24:13,160 --> 00:24:15,879
Speaker 1: problem with that is that there is a woman who's

432
00:24:15,880 --> 00:24:17,920
Speaker 1: from Germany who's on the board. She's the only woman

433
00:24:17,960 --> 00:24:21,000
Speaker 1: on the executive board. And if Bidman becomes the the

434
00:24:21,119 --> 00:24:23,040
Speaker 1: e c D treadment, he would have to step down.

435
00:24:23,640 --> 00:24:26,040
Speaker 1: And so it's a big picture sense. I think that

436
00:24:26,280 --> 00:24:30,240
Speaker 1: the future Germany is UH, their interests are not going

437
00:24:30,320 --> 00:24:32,359
Speaker 1: to be in the e c D, which is UH

438
00:24:32,800 --> 00:24:37,040
Speaker 1: normalizing monetary policy ostensibly. Okay, how do how do I

439
00:24:37,119 --> 00:24:39,800
Speaker 1: make money at this? If not lose money? I mean

440
00:24:39,920 --> 00:24:45,280
Speaker 1: what europair is most attractive to Mark Chandler right now?

441
00:24:45,400 --> 00:24:47,720
Speaker 1: I think that euro sterling is very attractive because I

442
00:24:47,800 --> 00:24:50,200
Speaker 1: think that was still partly because of the abjective story.

443
00:24:50,760 --> 00:24:53,040
Speaker 1: But I'm looking at the euro though to still I mean,

444
00:24:53,600 --> 00:24:55,160
Speaker 1: at the end of the day, the euro is still

445
00:24:55,320 --> 00:24:57,520
Speaker 1: a I mean I think that was gonna happen. Is

446
00:24:57,560 --> 00:25:00,359
Speaker 1: they're going to have an ECB easing move here in

447
00:25:00,400 --> 00:25:01,720
Speaker 1: the first half of the year where they give a

448
00:25:01,800 --> 00:25:05,480
Speaker 1: new long term what we'd call it targeted long term

449
00:25:05,680 --> 00:25:08,800
Speaker 1: reach financing operation to t out hero and I think

450
00:25:08,840 --> 00:25:11,280
Speaker 1: that will weaken the Euro in the second quarter. So

451
00:25:11,359 --> 00:25:13,880
Speaker 1: I look to to to your point time, I'd say

452
00:25:14,000 --> 00:25:15,920
Speaker 1: take advantage of a rally in the euro above the

453
00:25:16,000 --> 00:25:18,800
Speaker 1: recent range, which is above one fifteen, to sell it

454
00:25:19,640 --> 00:25:21,879
Speaker 1: for the move down when the e C d es

455
00:25:21,960 --> 00:25:24,840
Speaker 1: ist policy. Hey Mark, great to catch up with you. Yeah,

456
00:25:24,920 --> 00:25:29,760
Speaker 1: fascinating global for ex chief market strategists have no idea

457
00:25:29,800 --> 00:25:33,119
Speaker 1: how they picked the next DRUGGI, you know, like the

458
00:25:33,240 --> 00:25:36,560
Speaker 1: complexities of it, Yes, national League, the ship. Yeah, yeah,

459
00:25:36,600 --> 00:25:38,680
Speaker 1: it's really interest and people take it like you wonder

460
00:25:38,720 --> 00:25:42,040
Speaker 1: if they go to a second or third distant nations

461
00:25:42,480 --> 00:25:44,639
Speaker 1: in and around the same time that the big spots

462
00:25:44,640 --> 00:25:47,000
Speaker 1: of the European Commission open up, which is why Chancellor

463
00:25:47,040 --> 00:25:49,680
Speaker 1: Mirchael has got awry on that, and perhaps not the

464
00:25:49,720 --> 00:26:05,760
Speaker 1: European Central Bank, you know the movie The Big Short

465
00:26:06,280 --> 00:26:08,960
Speaker 1: and any other movies maybe on the history of Wall Street,

466
00:26:09,080 --> 00:26:13,679
Speaker 1: some of them swarmy and light entertainment. The real issue,

467
00:26:13,920 --> 00:26:17,280
Speaker 1: PIM Fox is the issue of courage, going back to

468
00:26:17,359 --> 00:26:21,480
Speaker 1: the seventies on the West Coast, far far away from

469
00:26:21,560 --> 00:26:26,640
Speaker 1: old stagy companies like the JP Morgan cop That's three,

470
00:26:26,800 --> 00:26:32,280
Speaker 1: Hambreton Quist, PIM, you're a pro, you know it, Apple, Computer, Genentech, Adobe.

471
00:26:32,960 --> 00:26:35,280
Speaker 1: When they were done with that, they did okay with

472
00:26:35,520 --> 00:26:39,280
Speaker 1: Netscape MP three in a small company that sold books

473
00:26:39,480 --> 00:26:42,720
Speaker 1: up in Seattle. They were of course taken out. William

474
00:26:42,760 --> 00:26:46,320
Speaker 1: Hambrech deserved every penny of it from the JP Morgan

475
00:26:46,359 --> 00:26:50,159
Speaker 1: company and George Quist together George Quist as well. And

476
00:26:50,400 --> 00:26:52,600
Speaker 1: all of that comes down to the detrius of a

477
00:26:52,680 --> 00:26:56,720
Speaker 1: little small healthcare con fab that PIM has gotten a

478
00:26:57,240 --> 00:26:59,840
Speaker 1: little bit bigger. Yeah, it has gotten a little bit bigger.

479
00:26:59,880 --> 00:27:03,440
Speaker 1: This of the JP Morgan Healthcare Conference. It began yesterday

480
00:27:03,600 --> 00:27:07,919
Speaker 1: in San Francisco, and our own Taylor Riggs is there. Taylor,

481
00:27:08,000 --> 00:27:11,680
Speaker 1: thank you very much for being with us. Um. You know,

482
00:27:11,720 --> 00:27:13,480
Speaker 1: I don't even know where you really want to start.

483
00:27:13,520 --> 00:27:15,840
Speaker 1: I mean, we could talk about SAGE and and their

484
00:27:15,920 --> 00:27:20,919
Speaker 1: postpartum depression information. But I'm wondering whether the government shutdown.

485
00:27:21,400 --> 00:27:23,760
Speaker 1: Is it all a topic at the conference because there

486
00:27:23,760 --> 00:27:25,520
Speaker 1: are a couple of deals that need to get done

487
00:27:25,960 --> 00:27:30,320
Speaker 1: and with the government shutdown that can complicate things. Yeah,

488
00:27:30,400 --> 00:27:32,640
Speaker 1: you know, we're not hearing too much about the shutdowns him.

489
00:27:32,720 --> 00:27:35,919
Speaker 1: It's really more about drug pricing and a c A repeal,

490
00:27:36,440 --> 00:27:38,840
Speaker 1: and that's something they think that analysts and investors are

491
00:27:38,840 --> 00:27:41,760
Speaker 1: really concerned about. Which drug pricing you're getting. I think

492
00:27:41,920 --> 00:27:44,280
Speaker 1: what is really fueling a lot of these M and

493
00:27:44,320 --> 00:27:46,760
Speaker 1: A deal because people are a little bit concerned about

494
00:27:46,800 --> 00:27:50,359
Speaker 1: the Trump administration coming out and tweeting about drug pricing

495
00:27:50,440 --> 00:27:53,520
Speaker 1: pressures and some of these rising healthcare costs. A c

496
00:27:53,680 --> 00:27:57,240
Speaker 1: A repeals. Interesting, you're actually not I asked CEO yesterday.

497
00:27:57,359 --> 00:27:58,960
Speaker 1: Kind of laughed at me and he used to know,

498
00:27:59,080 --> 00:28:02,000
Speaker 1: that's actually legal that we're not really concerned, of course

499
00:28:02,000 --> 00:28:05,560
Speaker 1: through some contingency plans in place, but really not something

500
00:28:05,640 --> 00:28:08,600
Speaker 1: that we're really preparing for. So definitely, I think for

501
00:28:08,680 --> 00:28:11,640
Speaker 1: the first time in a few years, you're having government

502
00:28:11,800 --> 00:28:16,160
Speaker 1: and politics really start to play a role. Started deriving

503
00:28:16,280 --> 00:28:18,280
Speaker 1: some of the conversations that we're hearing at least in

504
00:28:18,440 --> 00:28:22,480
Speaker 1: hallways from from what I'm gathering. One of the participants

505
00:28:23,200 --> 00:28:25,639
Speaker 1: was the chief executive of wealth Care Health Plans. This

506
00:28:25,800 --> 00:28:29,720
Speaker 1: is Ken Burdock, and in a session yesterday, I believe

507
00:28:29,880 --> 00:28:34,000
Speaker 1: he was talking about how they're focused on expanding what

508
00:28:34,160 --> 00:28:38,000
Speaker 1: they describe as managed Medicaid, right they say they want

509
00:28:38,040 --> 00:28:41,280
Speaker 1: to expand obviously in Florida and other states, but he

510
00:28:41,400 --> 00:28:45,000
Speaker 1: said that the costs of healthcare just getting so prohibitive,

511
00:28:45,360 --> 00:28:48,479
Speaker 1: and he believes that managed medicaid is the solution as

512
00:28:48,520 --> 00:28:53,320
Speaker 1: opposed to cutting people off of those roles. Yeah. Well,

513
00:28:53,480 --> 00:28:56,520
Speaker 1: we spoke with the CEO yesterday who was running one

514
00:28:56,600 --> 00:29:01,360
Speaker 1: of the top exchanges, and he's looking at a North

515
00:29:01,440 --> 00:29:04,920
Speaker 1: Carolina bid. He's looking at for other state exchanges. The

516
00:29:05,200 --> 00:29:08,720
Speaker 1: team than one of the few profitable companies actually that

517
00:29:08,800 --> 00:29:12,000
Speaker 1: are able to be profitable on a c A. And

518
00:29:12,160 --> 00:29:16,680
Speaker 1: that's an interesting um conversation when we talk about medicaid

519
00:29:16,680 --> 00:29:19,440
Speaker 1: and medicare, of course, because it's just generally rising costs.

520
00:29:20,200 --> 00:29:22,600
Speaker 1: I haven't heard yet him. I can't wait to hear

521
00:29:22,640 --> 00:29:25,800
Speaker 1: what the companies started to say about Gavin Newsom. He's

522
00:29:25,840 --> 00:29:28,680
Speaker 1: the new California governor that took over yesterday. He wants

523
00:29:28,720 --> 00:29:31,960
Speaker 1: to do a single payer plan with medicaid and medical

524
00:29:32,240 --> 00:29:35,640
Speaker 1: over out here in California. I've in her conversation about

525
00:29:35,680 --> 00:29:38,240
Speaker 1: that yet, but he's firmly going up against the Trump

526
00:29:38,280 --> 00:29:41,840
Speaker 1: administration and taking them on head on. Taylor, there's a culture,

527
00:29:41,880 --> 00:29:45,400
Speaker 1: there's a fabric of San Francisco. It's something you know well.

528
00:29:45,680 --> 00:29:48,080
Speaker 1: And part of that is the enthusiasm of the initial

529
00:29:48,200 --> 00:29:53,480
Speaker 1: public offering to the thousands of people at this ginormous conference.

530
00:29:54,080 --> 00:29:56,760
Speaker 1: Is that all old news? Is the days of I

531
00:29:56,960 --> 00:30:00,240
Speaker 1: p O and red herrings and road shows? Is that

532
00:30:00,360 --> 00:30:03,520
Speaker 1: all gone because everybody's going to do private transactions with

533
00:30:03,640 --> 00:30:07,520
Speaker 1: a huge pools of capital that are out there. Yeah,

534
00:30:08,080 --> 00:30:10,440
Speaker 1: we're getting definitely. When we talk about M and A,

535
00:30:10,600 --> 00:30:14,720
Speaker 1: I asked as CEO yesterday ten XS Genomex and they're

536
00:30:14,760 --> 00:30:18,520
Speaker 1: more of a dna UM company, and I asked him

537
00:30:18,560 --> 00:30:20,840
Speaker 1: what is an access strategy? Of course, I PO is

538
00:30:20,840 --> 00:30:24,560
Speaker 1: always what you want as a CEO, and they're really

539
00:30:24,640 --> 00:30:26,560
Speaker 1: not thinking about that. I mean when we talk to

540
00:30:26,600 --> 00:30:32,800
Speaker 1: other CEOs of biotechnology companies like Stage Therapeutics UM, they're

541
00:30:32,880 --> 00:30:37,080
Speaker 1: looking perhaps to be bought out by bigger companies. You

542
00:30:37,200 --> 00:30:40,200
Speaker 1: get a lot of these big pharming companies that are

543
00:30:40,240 --> 00:30:42,760
Speaker 1: a little bit more concerned about expenses, don't have the

544
00:30:42,840 --> 00:30:45,840
Speaker 1: capabilities for R and D. You see a smaller biotech

545
00:30:45,920 --> 00:30:48,240
Speaker 1: company like a Stage Therapeutics maybe not well is that

546
00:30:48,480 --> 00:30:51,360
Speaker 1: is that done to interrupt? But this is important? Is

547
00:30:51,440 --> 00:30:54,840
Speaker 1: that going on in San Francisco at this conference, after Celgene,

548
00:30:54,880 --> 00:30:58,160
Speaker 1: after what we saw Eli Lily yesterday? Is is there

549
00:30:58,560 --> 00:31:01,240
Speaker 1: everybody frothed up about cancer stocks and we got to

550
00:31:01,280 --> 00:31:06,280
Speaker 1: buy bye by huge conversations. Huge conversations because you have

551
00:31:06,440 --> 00:31:09,880
Speaker 1: the pressure from drug pricing and generics and the pipeline

552
00:31:09,920 --> 00:31:13,480
Speaker 1: that these biotech companies have. And we heard from Glastow

553
00:31:13,520 --> 00:31:16,880
Speaker 1: Smith Klein and one of the reasons that they've done

554
00:31:16,920 --> 00:31:18,760
Speaker 1: it to sorrow deal is there was a pipeline of

555
00:31:18,840 --> 00:31:21,640
Speaker 1: drugs that had already been approved. But now they don't

556
00:31:21,680 --> 00:31:23,360
Speaker 1: have to go and reinvest in their own R and

557
00:31:23,440 --> 00:31:27,120
Speaker 1: D to bring drugs online. So there's huge conversations about

558
00:31:27,240 --> 00:31:29,320
Speaker 1: M and A. And it's interesting when we talk about

559
00:31:29,320 --> 00:31:31,720
Speaker 1: some of these big big you know, you think of

560
00:31:31,800 --> 00:31:35,680
Speaker 1: the big bms Celgian seventy two billion dollars versus some

561
00:31:35,760 --> 00:31:39,080
Speaker 1: of these smaller Bolton acquisitions. More and more we're hearing

562
00:31:39,680 --> 00:31:41,840
Speaker 1: it actually might be some of these more smaller Bolton

563
00:31:41,920 --> 00:31:47,480
Speaker 1: acquisitions like Delock deal for eight billions right where you

564
00:31:47,560 --> 00:31:49,560
Speaker 1: sort of coming and bring these on. And we spoke

565
00:31:49,640 --> 00:31:52,640
Speaker 1: with Lisa Guild, the senior equity analysts over it at

566
00:31:52,720 --> 00:31:55,720
Speaker 1: JP Morgan of course, um and she really said it

567
00:31:55,720 --> 00:31:58,400
Speaker 1: will be sort of these specialty add on that will

568
00:31:58,440 --> 00:32:02,360
Speaker 1: be driving emanated he quickly here, I mean you know

569
00:32:02,480 --> 00:32:04,240
Speaker 1: the Cliff House. I mean you've you know too, the

570
00:32:04,280 --> 00:32:06,880
Speaker 1: Cliff House like four and somebody two times? Is it

571
00:32:07,000 --> 00:32:09,560
Speaker 1: like CFOs going off the cliff? Are they lemmings going

572
00:32:09,600 --> 00:32:13,920
Speaker 1: off the cliff after a drink at the cliff House? No? There,

573
00:32:14,040 --> 00:32:17,240
Speaker 1: happy fun here, I will really it's sixty in the

574
00:32:17,360 --> 00:32:21,080
Speaker 1: morning and uh, we haven't seen Jamie Diamond yet roaming

575
00:32:21,120 --> 00:32:24,600
Speaker 1: the halls, but we're seeing a lot of CEOs start

576
00:32:24,680 --> 00:32:27,440
Speaker 1: to show up. I think the consumer top of mine.

577
00:32:27,480 --> 00:32:30,960
Speaker 1: With rising healthcare costs, you're the consumer. Really the theme

578
00:32:31,000 --> 00:32:33,240
Speaker 1: of the conference with the CVS at New Deal. We'll

579
00:32:33,240 --> 00:32:36,080
Speaker 1: be speaking with the CBS CEO and talking about how

580
00:32:36,200 --> 00:32:39,120
Speaker 1: to make the consumer as they're more engaged, they take

581
00:32:39,200 --> 00:32:42,160
Speaker 1: better care of themselves. M and A of course, is

582
00:32:42,200 --> 00:32:45,040
Speaker 1: a key driver. I think generics. That's why you're seeing

583
00:32:45,240 --> 00:32:46,720
Speaker 1: some of these M and A deals with some of

584
00:32:46,760 --> 00:32:50,120
Speaker 1: whose biotech companies who have drugs already in the pipeline

585
00:32:50,160 --> 00:32:54,400
Speaker 1: and big R and D budgets, because that's thread of

586
00:32:54,520 --> 00:33:00,360
Speaker 1: generics is something that CEOs are contending with. Taylor, the

587
00:33:00,400 --> 00:33:03,800
Speaker 1: Cliff House, I highly I haven't been there, Taylor before.

588
00:33:04,200 --> 00:33:08,080
Speaker 1: I highly these all right. Therefore, you know they're bat

589
00:33:08,240 --> 00:33:12,040
Speaker 1: over four undred and fifty companies, presenting over nine thousand

590
00:33:12,200 --> 00:33:14,880
Speaker 1: attendees and shaping work in health. Taylor Rigs, thank you

591
00:33:15,000 --> 00:33:20,520
Speaker 1: so much. Enjoy the Cliffhouse sunset as well. What a

592
00:33:20,640 --> 00:33:24,640
Speaker 1: tough life, you know, San Francisco not so bad. It's

593
00:33:24,760 --> 00:33:26,880
Speaker 1: it's it's it's like different than the Mark I mean,

594
00:33:27,080 --> 00:33:30,000
Speaker 1: you know the Mark Hoppins. Yeah, well that's at the top.

595
00:33:30,280 --> 00:33:32,440
Speaker 1: That's at the top. That's like all the memories at

596
00:33:32,480 --> 00:33:43,240
Speaker 1: World War two and well, you know as well. Thanks

597
00:33:43,320 --> 00:33:47,520
Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen

598
00:33:47,800 --> 00:33:53,120
Speaker 1: to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform

599
00:33:53,200 --> 00:33:57,480
Speaker 1: you prefer. I'm on Twitter at Tom Keane Before the podcast,

600
00:33:57,560 --> 00:34:01,040
Speaker 1: you can always catch us worldwide. I'm Bloomberg Radio