WEBVTT - Surveillance: Optimistic On China's Eco Growth, Fisher Says 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Ley. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.960 Bloomberg dot Com, and of course on the Bloomberg So 0:00:28.000 --> 0:00:30.760 the President on the record sank he's open to an 0:00:30.800 --> 0:00:33.080 interim deal. Please to say that Cashy Fisher is with 0:00:33.159 --> 0:00:36.080 us Bernstein head of Wealth and Investment Strategy for the 0:00:36.159 --> 0:00:38.200 next four hours, with us for the next six minutes. 0:00:38.200 --> 0:00:39.880 So let's make the most of it. Cathy, great to 0:00:39.920 --> 0:00:42.240 have you with us. Things aren't as bad as they seem, 0:00:42.280 --> 0:00:44.919 at least certainly not so compared to three weeks ago. 0:00:45.920 --> 0:00:48.120 That's right, um, Although I don't want to read too 0:00:48.200 --> 0:00:51.440 much into the back and forth on things like interim 0:00:51.479 --> 0:00:54.280 trade deals. Yes, it's good news, but we all know 0:00:54.320 --> 0:00:57.160 it can change tomorrow. Right. I think that's what the 0:00:57.200 --> 0:00:59.680 market has recognized. We're going to have ups and downs 0:01:00.040 --> 0:01:03.240 the trade talks, and as I was saying before, I 0:01:03.280 --> 0:01:06.920 think a much more realistic recognition that lower interest rates 0:01:06.920 --> 0:01:09.880 are not a panacea. We are trying to figure out 0:01:09.959 --> 0:01:12.520 how to deal in a world where global trade has 0:01:12.560 --> 0:01:17.400 been unmoored by these tariff issues, and countries are doing 0:01:17.440 --> 0:01:21.080 what they can to offset it, but interest rates alone 0:01:21.080 --> 0:01:23.600 cannot do it, which is why the topic of fiscal 0:01:23.680 --> 0:01:27.080 stimulus is back on the table, because countries are going 0:01:27.120 --> 0:01:28.840 to try to do what they can at their own 0:01:28.920 --> 0:01:32.040 levels to adjust to a very different environment than we've seen. 0:01:32.200 --> 0:01:34.000 Many people have come on this program and said, these 0:01:34.040 --> 0:01:36.319 tariffs aren't going anywhere regardless of who is in the 0:01:36.319 --> 0:01:37.920 White House, and I think we've got a real flavor 0:01:37.959 --> 0:01:40.959 of that last night yesterday evening. It was about one 0:01:41.000 --> 0:01:43.520 hour and about thirty minutes into the debates with the 0:01:43.560 --> 0:01:48.920 Democratic presidential candidates, the moderator asked the candidates essentially one 0:01:48.960 --> 0:01:51.280 simple question, and your first day in office, would you 0:01:51.440 --> 0:01:54.600 unwind remove the tariffs. I didn't hear a single candidate 0:01:54.600 --> 0:01:57.000 come out firmly and say they would do that. Caine. Remember, 0:01:57.040 --> 0:01:59.720 the Democrats have always been the party that was anti 0:02:00.120 --> 0:02:03.840 global trade, so of course the Democrats cannot protest what's 0:02:03.840 --> 0:02:07.280 going on with tariffs. Absolutely, so we do have to 0:02:07.360 --> 0:02:09.800 expect that this is a new reality that's going with 0:02:09.880 --> 0:02:13.040 us for quite some time, and the rishes between the 0:02:13.160 --> 0:02:16.839 US and and China are quite existential very much how 0:02:16.880 --> 0:02:20.560 you operate your economy. They're not just buying soybeans. So 0:02:20.600 --> 0:02:21.800 these things are going to be with us for a 0:02:21.800 --> 0:02:24.160 long time. When you work every day in wealth management, 0:02:24.520 --> 0:02:27.200 what do you rationalize as economic growth? I mean, if 0:02:27.240 --> 0:02:31.399 it's tariff induced, and by definition tariffs will reduce economic growth. 0:02:31.480 --> 0:02:34.640 Let's go with that core idea. What is the Canthy 0:02:34.720 --> 0:02:38.400 Fisher run rate of the American economy for investment? Is 0:02:38.440 --> 0:02:42.600 it sub three percent? Is its subs It's a very 0:02:42.600 --> 0:02:44.799 good question. It is certainly closer to two than three. 0:02:45.480 --> 0:02:50.400 And we we cannot ignore the bigger trends, which are demographics, 0:02:50.840 --> 0:02:54.679 which our technology, these are These are positives and negatives. 0:02:54.720 --> 0:02:57.440 But we are clearly in a slower growth environment and 0:02:57.760 --> 0:03:01.280 the deterioration and growth because of ter in recent quarters 0:03:01.360 --> 0:03:03.640 has been quite Let me dovetail the four percent. Now 0:03:03.639 --> 0:03:05.560 we're Joyce Chanin of JP Morgan with a four and 0:03:05.560 --> 0:03:08.880 a half percent out there for Chinese economic growth. And 0:03:08.919 --> 0:03:11.399 the other four percent was the bombshell in the cover 0:03:11.440 --> 0:03:14.520 of the Times yesterday or the day before the Times 0:03:14.520 --> 0:03:19.200 of London of an actual annuity of four point one 0:03:19.320 --> 0:03:24.120 percent on a life annuity that's in your Wheelhouse. I mean, 0:03:24.160 --> 0:03:27.480 these are all lower numbers than any of our listeners 0:03:28.080 --> 0:03:30.880 comprehend what I mean. It's back up saying we're a 0:03:30.919 --> 0:03:33.480 little more optimistic on China. We think so something in 0:03:33.480 --> 0:03:35.920 the closest six is still possible in China that still 0:03:35.960 --> 0:03:40.640 matters a great deal. But um Japan, Germany, these numbers 0:03:40.640 --> 0:03:44.600 are are notably weak, and we have to accept that 0:03:44.640 --> 0:03:47.640 this is that we will have lower growth going forward 0:03:47.680 --> 0:03:50.040 for quite some time. Populism is part of it. There's 0:03:50.080 --> 0:03:53.200 a lot of big trends that are going to change 0:03:53.200 --> 0:03:57.000 the dynamics we've been accustomed to. But remember, companies adjust, 0:03:57.320 --> 0:03:59.640 and that's what I say all the time. Companies figure 0:03:59.680 --> 0:04:02.360 out how to deal in a different environment, whether it's tariffs, 0:04:02.400 --> 0:04:06.440 whether it's technology, whether it's changing changing consumer behaviors. And 0:04:06.520 --> 0:04:09.720 that's what we're trying to decipher. Final question on policy, 0:04:09.840 --> 0:04:12.400 and we're going to get a fiscal response in Europe. 0:04:12.520 --> 0:04:16.760 You know, the tolerance for deficit spending is much greater 0:04:16.839 --> 0:04:21.360 than it's been ever And while Germany in particular will 0:04:21.360 --> 0:04:23.599 be the last one to want to do that, I 0:04:23.600 --> 0:04:26.680 think there's more tolerance now than we've seen before for 0:04:26.760 --> 0:04:31.240 any kind of fiscal stimulus that could indeed cause greater deficits. 0:04:31.920 --> 0:04:34.640 It's it's a very broad based trend in every part 0:04:34.680 --> 0:04:36.880 of the globe. Cathy, thank you so much. With a 0:04:36.960 --> 0:04:54.719 lot of break thanks helping on today. We've had a 0:04:54.720 --> 0:04:57.000 lot of news flow, and particularly on Europe. So we 0:04:57.040 --> 0:05:00.480 are advantaged with Meredith Sumter of e Ray your group 0:05:00.560 --> 0:05:03.599 to go right to China, right to trade, and we 0:05:03.680 --> 0:05:06.680 can do this with their definitive knowledge of domestic China 0:05:06.760 --> 0:05:10.800 and particularly how language is perceived. What will be the 0:05:10.880 --> 0:05:15.360 domestic language Bear Sumter of the idea they're gonna let 0:05:15.360 --> 0:05:19.080 soybeans and much needed pork into China. How does that 0:05:19.160 --> 0:05:23.560 play in the Chinese press? Great question, Tom, Well, certainly 0:05:23.640 --> 0:05:28.520 Si Jumping will position this as providing relief to China's 0:05:28.640 --> 0:05:32.880 domestic market more so than any sort of concession that 0:05:32.920 --> 0:05:37.320 he's looking to to provide to President Trump. He's got, 0:05:37.600 --> 0:05:39.919 as you know, you know, he's got a very important 0:05:40.400 --> 0:05:43.279 political anniversary coming up on October one. This is a 0:05:43.320 --> 0:05:46.080 sevenoth anniversary of the founding the People's Republic of China. 0:05:46.400 --> 0:05:50.119 So everything is gonna be very carefully stage managed. Uh 0:05:50.120 --> 0:05:53.359 And for that reason, actually more so than it was 0:05:54.000 --> 0:05:59.560 strategically a move to to get back to talks Beijing. 0:05:59.640 --> 0:06:04.640 Let to know that moving forth with a hike in 0:06:04.640 --> 0:06:09.480 in tariff rates on October one would be politically unpalatable 0:06:09.520 --> 0:06:12.360 to present She on such an anniversary. And that provided 0:06:12.400 --> 0:06:16.240 that first opening, that uh, that got us to where 0:06:16.240 --> 0:06:19.680 we are now, with Chinese negotiators working on the negotiators 0:06:19.680 --> 0:06:25.280 coming over mid this month, followed by cabinet level negotiators 0:06:25.320 --> 0:06:28.800 meeting in October. Meredith to understand whether the softening of 0:06:28.920 --> 0:06:31.800 stances is sustainable. We need a better understanding of what 0:06:31.880 --> 0:06:34.400 underpins it and if it all comes down to October 0:06:34.480 --> 0:06:37.360 first in a national celebration, I don't see that it's 0:06:37.400 --> 0:06:40.200 sounding too sustainable, because once you get beyond that, we 0:06:40.320 --> 0:06:42.440 back to square one. What are your thoughts about what 0:06:42.560 --> 0:06:49.400 underpends it beyond on October first celebration. Certainly we're moving 0:06:49.440 --> 0:06:52.000 towards a mini deal. This is not going to be 0:06:52.320 --> 0:06:57.119 a structural improvement to the ballad of relationship. More so, 0:06:57.920 --> 0:07:00.440 it's going to be both sides. Trump and She both 0:07:00.440 --> 0:07:03.119 have in sentenced to avoid an escalation and to seek 0:07:03.160 --> 0:07:06.320 economic relief when it's politically feasible to do so, but 0:07:06.480 --> 0:07:09.880 neither side is desperate enough to make the political concessions 0:07:09.880 --> 0:07:13.400 necessary to reach a comprehensive agreement. And I think despite 0:07:13.400 --> 0:07:15.720 the slight lift that we've seen this morning in markets, 0:07:16.160 --> 0:07:19.160 slight optimism, you know, I think underlying this there is 0:07:19.240 --> 0:07:22.760 a broader realization among investors that even if you do 0:07:22.800 --> 0:07:25.600 get some kind of deal or many deals what we're 0:07:25.640 --> 0:07:28.560 calling it, UH this autumn, this is not going to 0:07:28.720 --> 0:07:32.320 result in a structural realignment of the of the two 0:07:32.440 --> 0:07:35.760 largest economies. The President went on the record yesterday evening 0:07:35.760 --> 0:07:39.360 gets said that he would be open to an interim deal. Meredith, 0:07:39.440 --> 0:07:42.720 What would that include and what would it exclude? This 0:07:42.800 --> 0:07:45.000 is a great question because what you hear from the 0:07:45.080 --> 0:07:47.680 Chinese side and versus what you hear from the Washington side, 0:07:47.680 --> 0:07:52.239 there's some slight, slight differences there, UH, In that President 0:07:52.280 --> 0:07:55.640 Trump yesterday had mentioned i P as possibly being part 0:07:55.640 --> 0:07:58.280 of a mini deal. In order for Beijing to agree 0:07:58.320 --> 0:08:02.239 to any kind of significant P concessions, they would expect 0:08:02.240 --> 0:08:06.000 that President Trump would not just delay onward tariff escalation, 0:08:06.160 --> 0:08:10.200 but actually roll back some existing tariffs, which is something 0:08:10.240 --> 0:08:13.280 that we judge at this stage President Trump is not 0:08:13.400 --> 0:08:16.920 interested in moving forth with But you know, again, the 0:08:16.920 --> 0:08:20.720 the uptick and agg purchases in exchange for a delay 0:08:20.760 --> 0:08:23.120 of on word teriff escalation and maybe some a few 0:08:23.160 --> 0:08:28.160 licenses given to Huawei. UH. That's pretty much what we expect, Meredith. 0:08:28.160 --> 0:08:30.960 We learned last night that the Democrats and Republicans, or 0:08:30.960 --> 0:08:33.199 at least the Democrats and President Trump, I should say, 0:08:33.200 --> 0:08:37.240 are on the same page against China, doubtful of any 0:08:37.280 --> 0:08:42.240 trade fairness and reciprocity UH. As well for the Communist 0:08:42.280 --> 0:08:45.440 Party in China that Mr G has to attend to 0:08:45.559 --> 0:08:49.440 for the seventieth anniversary. Is the Communist Party all on 0:08:49.480 --> 0:08:52.600 the same page? I mean, does he have sort of 0:08:52.600 --> 0:08:59.000 a national uniform mistrust as does the president? Well, there 0:08:59.040 --> 0:09:04.559 are she domestically has his detractors. There are many within 0:09:04.640 --> 0:09:07.839 policy circles in China that that believe that she has 0:09:07.960 --> 0:09:12.000 made some very big mistakes, such as being too assertive, 0:09:12.880 --> 0:09:16.720 being too confident coming out, and being too aggressive UH 0:09:16.720 --> 0:09:20.080 in it's it's it's aims for global leadership, but also 0:09:20.120 --> 0:09:23.439 its plans for for made in China UH and moving 0:09:23.480 --> 0:09:26.720 aggressively in ways that not just put the US gave 0:09:26.760 --> 0:09:31.360 the US pause, but also other major trading UH partners pause. 0:09:31.679 --> 0:09:34.120 So there's some criticism there. But this is what Trump's 0:09:34.160 --> 0:09:37.920 that criticism is that when you have an outside power 0:09:38.679 --> 0:09:41.920 that is looking to, in Beijing's views, gang up on 0:09:42.040 --> 0:09:45.920 China and forced China to to make moves that she, 0:09:46.120 --> 0:09:49.920 jumping is saying, is going to undermine that country's ability 0:09:49.960 --> 0:09:53.160 to transform its economy in a way that is suitable 0:09:53.200 --> 0:09:57.000 only to China being ganged up on by an outside 0:09:57.040 --> 0:10:00.520 imperial power. You can see where this is going. Um 0:10:00.559 --> 0:10:03.199 so he is. We do see that she is using 0:10:03.200 --> 0:10:06.320 that nationalist card, that nationalist sentiment in a way to 0:10:06.440 --> 0:10:09.880 shore up more domestic support for his pathway moving forward. 0:10:10.600 --> 0:10:12.520 Let's talk about what may or may not happen at 0:10:12.520 --> 0:10:14.640 the back end of next year in the White House. 0:10:14.800 --> 0:10:17.960 It was really interesting watching the Democratic presidential debates last night, 0:10:18.400 --> 0:10:20.160 and the views of the Democrats, I have to say, 0:10:20.200 --> 0:10:22.720 didn't seem too different from the view of the President 0:10:22.760 --> 0:10:24.520 when it comes to China and the objective of leveling 0:10:24.559 --> 0:10:27.360 the playing field. There was a great Washington Post piece recently, 0:10:27.760 --> 0:10:31.319 a great article in public opinion towards trade, and Democratic 0:10:31.400 --> 0:10:35.160 voters are moving towards increasingly a favorable view of trade. Now, 0:10:35.200 --> 0:10:37.240 some people might just say that the partisan shift. The 0:10:37.320 --> 0:10:39.840 article admits to that might be just a shallow view. 0:10:40.080 --> 0:10:42.560 Yet not a single candidate is willing to weaponize it. 0:10:42.840 --> 0:10:49.040 Why not? This is something also that we need to 0:10:49.040 --> 0:10:51.000 watch us more closely, because if you look at the 0:10:51.040 --> 0:10:54.280 Democratic Party and what the Canada's all said last night, 0:10:54.640 --> 0:10:57.280 not a single one of them came out and said 0:10:57.280 --> 0:10:59.720 that they would roll back the protectionist measures that President 0:10:59.760 --> 0:11:01.720 Trump has put in place. They all agreed we need 0:11:01.760 --> 0:11:05.400 to do more to negotiate with China and more to 0:11:05.520 --> 0:11:08.840 realign the two economies. I think it's still too early 0:11:08.960 --> 0:11:13.040 to say that the Democrats or Democratic voters are moving 0:11:13.480 --> 0:11:17.000 toward free trade, but rather what they're saying is they're 0:11:17.000 --> 0:11:20.000 recognizing that President Trump's trade agenda has really not come 0:11:20.080 --> 0:11:24.080 up with any concrete winds that is impacting them positively, 0:11:24.880 --> 0:11:29.280 and patience is beginning to run out. One European question, Uh, Meredith, 0:11:29.320 --> 0:11:31.679 and then we'll let you go, Midge Raman, on all 0:11:31.679 --> 0:11:35.199 we've observed in the last twenty four hours. You're you're great, midman. 0:11:35.280 --> 0:11:37.760 What do you think? What do you think on on 0:11:37.920 --> 0:11:44.680 Brexit Europe? You know, the fiscal fiscal policy to the rescue. Yeah, 0:11:44.800 --> 0:11:47.240 so you know, really that the relevant upshot from a 0:11:47.320 --> 0:11:51.079 politics perspective with the ECB easing is that the environment 0:11:51.160 --> 0:11:54.160 caused by such easy money means that markets are going 0:11:54.200 --> 0:11:57.120 to be in a more forgiving mood for political risk 0:11:57.760 --> 0:11:59.679 and you know, talking to Midge, when it comes down 0:11:59.720 --> 0:12:02.719 to is that investors need to remain focused on the 0:12:02.800 --> 0:12:06.800 stability or fragility of individual countries in case that risk 0:12:06.840 --> 0:12:10.400 appetite reverses quickly. Okay, mere something, thank you so much. 0:12:10.400 --> 0:12:27.800 Thank you, just hugely valuable there and China. Do you 0:12:27.800 --> 0:12:29.679 want to bring in Simon? I would love to love 0:12:29.679 --> 0:12:34.240 to get his reaction quite clearly, not his name, Simon 0:12:34.280 --> 0:12:36.480 friendship chan Will Gordon, the chief of karmis over there 0:12:36.520 --> 0:12:38.120 joining the sound of London. Sim In your view on 0:12:38.160 --> 0:12:40.240 the data that just dropped a minute or so ago, 0:12:40.720 --> 0:12:43.920 I think you're right to focus on the inflationary aspect 0:12:43.920 --> 0:12:46.560 of that. It's um I think markets had a bit 0:12:46.559 --> 0:12:48.760 of a shocked and they stay with the core CPI 0:12:48.880 --> 0:12:51.640 print and the at least on the three months annualized 0:12:51.720 --> 0:12:55.360 breaking north of three percent, so that caused some anxiety. 0:12:55.920 --> 0:12:59.319 I think this would reassure people that at least in 0:12:59.400 --> 0:13:02.600 the net that feels like a healthcare related blip per 0:13:02.679 --> 0:13:07.080 seasonal blip rather than a significant push forward on on 0:13:07.160 --> 0:13:10.480 import cost inflation. But it's look at all is playing 0:13:10.480 --> 0:13:13.040 into the fact that J. Powell has and the rest 0:13:13.040 --> 0:13:16.000 of them have plenty to absorb. Next week in terms 0:13:16.000 --> 0:13:21.439 of trying to tack a path between quite conflicting inflationary data, 0:13:21.800 --> 0:13:24.160 we can it's in manufacturing, but ongoing resilience as we 0:13:24.200 --> 0:13:27.120 see in the headline retail sales in the US consumption, 0:13:27.440 --> 0:13:30.719 and just keep adjusting the federal funds right low assignment. 0:13:30.880 --> 0:13:33.199 They call it a mid cycle adjustment. Typically what we've 0:13:33.240 --> 0:13:36.040 seen at recent history at least, does that suggest over 0:13:36.080 --> 0:13:38.760 the last couple of decades that's about seventy five basis 0:13:38.840 --> 0:13:42.080 points of cuts from the federal reserve? Something is that 0:13:42.080 --> 0:13:44.840 how you characterize frame things for clients right now, that 0:13:44.840 --> 0:13:46.600 that's what we're going to get. That is a mid 0:13:46.640 --> 0:13:50.880 cycle adjustment, just three cuts. What I'm saying to clients 0:13:51.040 --> 0:13:54.439 is that this is not a FED whether it likes 0:13:54.480 --> 0:13:57.360 it or not, that is entirely data dependent. They may 0:13:57.480 --> 0:14:00.760 like to continue to use that terminology. It's beloved of 0:14:00.840 --> 0:14:04.480 many central bankers, but it's it's politically influenced, whether it's 0:14:04.520 --> 0:14:08.040 politically compromised as a separate point, but it's certainly politically influenced, 0:14:08.280 --> 0:14:11.440 and I think at the moment there is there is 0:14:11.440 --> 0:14:13.880 more inflation in the US economy than the President likes 0:14:13.960 --> 0:14:18.600 to believe. And therefore the delicate path I need to 0:14:18.600 --> 0:14:20.720 be set out is it will just be a mixed 0:14:20.960 --> 0:14:24.680 cycle adjustment of the type we saw perhaps last in 0:14:25.840 --> 0:14:29.280 where you try and provide some support to underlying demand 0:14:29.360 --> 0:14:33.280 given some sectoral weakness, or will it be something more 0:14:33.360 --> 0:14:36.640 perverse and ulter the answer that lies in the White 0:14:36.680 --> 0:14:38.640 House rather than the Federal Reserve. John I want to 0:14:38.640 --> 0:14:40.400 point out in the tenure, because we're so used to 0:14:40.480 --> 0:14:43.960 quoting yielded on a price basis, the tenure US is 0:14:44.000 --> 0:14:48.480 now down three point that's not quite two years of 0:14:48.520 --> 0:14:51.400 Cooper and forty basis points on a ten year. In 0:14:51.480 --> 0:14:56.680 ten days, we've had a big move. It's a huge move. 0:14:57.000 --> 0:14:59.440 It's a huge move in the context of positioning, and 0:14:59.480 --> 0:15:02.200 I think that's key here, is that what you're seeing 0:15:02.240 --> 0:15:06.320 in terms of the kind of our performance of value 0:15:06.400 --> 0:15:09.960 versus momentum or inequities, which has been triggered by a 0:15:10.000 --> 0:15:13.200 re assessment on the bond market, means that positioning was 0:15:13.320 --> 0:15:16.480 very much skewed towards I mean I lost count the 0:15:16.600 --> 0:15:19.760 number of analyst notes that came out of talking about 0:15:19.800 --> 0:15:23.560 potential zero percent tenure treasury. They they came out in 0:15:23.600 --> 0:15:26.680 a flurry, didn't they. Your positioning set up for that, 0:15:26.960 --> 0:15:29.320 and then you recognize that it is not that simple. 0:15:29.640 --> 0:15:31.560 Then you have to do somewhat of a handbrake turn, 0:15:31.600 --> 0:15:33.320 and I think that is what we're now seeing in 0:15:33.440 --> 0:15:36.840 terms of the price action on the ten year rather 0:15:36.840 --> 0:15:39.160 than just looking at the yields. Simons very quickly here, 0:15:39.200 --> 0:15:43.960 I've got one European question. How did madamal guards Jab 0:15:44.080 --> 0:15:47.640 change yesterday? I mean, what does she do November one, 0:15:47.800 --> 0:15:52.080 in November two, in November three of what we observed yesterday? 0:15:52.480 --> 0:15:55.840 I mean, great question. I think the regional banker, the 0:15:56.000 --> 0:15:59.440 governor's national banks have have alluded to this point during 0:15:59.440 --> 0:16:02.680 the last twenty for hours. Madame Legarde has been given 0:16:02.800 --> 0:16:06.920 a state dependent set of policies from Mario Jargy, that 0:16:07.040 --> 0:16:09.840 is his legacy, and it moved away from time dependent 0:16:09.920 --> 0:16:13.520 forward guidance. Will she try and pull back from that 0:16:13.640 --> 0:16:15.880 and say that things will change or will she hold 0:16:16.040 --> 0:16:17.720 that that is the key element that she has to 0:16:17.720 --> 0:16:19.760 get across in the first couple of weeks well said 0:16:19.840 --> 0:16:22.960 in John I literally wrote down in the heat of 0:16:22.960 --> 0:16:26.040 the press conference when he said time dependent has done. 0:16:26.080 --> 0:16:29.080 I can't remember the exact language, but really important concept 0:16:29.120 --> 0:16:33.240 there same in French or Gordon the American economy, John, 0:16:33.280 --> 0:16:34.560 what do you think of the data? I mean yells 0:16:34.640 --> 0:16:36.440 higher and look put it together with the data this 0:16:36.440 --> 0:16:38.760 week inflation came in a little bit hotter as well. 0:16:39.120 --> 0:16:41.480 It looks like the tone is improved around the trade story. 0:16:41.480 --> 0:16:59.760 I'm not sure how the mood music will adapting. Giles 0:16:59.760 --> 0:17:03.000 turn joins us to talk a little. We works, Giles 0:17:03.040 --> 0:17:06.280 covers a technology in Europe. Joins us on the phone 0:17:06.280 --> 0:17:09.240 from London. Giles, thanks so much for being with us. 0:17:09.640 --> 0:17:11.679 You know again, as Tom was suggesting, a lot of 0:17:11.680 --> 0:17:13.520 these high profile I p O s this year have 0:17:13.720 --> 0:17:18.040 really underperformed and underwhelmed. What is the thinking going here 0:17:18.160 --> 0:17:21.359 for WE Works? This is this is not without a 0:17:21.400 --> 0:17:23.640 lot of hair on it. Just to start with, now, 0:17:23.680 --> 0:17:25.760 we work thinking a lot different from any other I PO. 0:17:25.880 --> 0:17:27.200 Just that this company seems to be a lot of 0:17:27.200 --> 0:17:29.160 different from any other company. And you've got to remember 0:17:29.200 --> 0:17:31.600 that we work has to IPO. That's the feeling from 0:17:31.600 --> 0:17:34.840 inside the company. It needs cash when the IPOs, it 0:17:34.920 --> 0:17:37.200 needs to raise about three billions, and if it does 0:17:37.240 --> 0:17:39.560 that then it gets the further six billion from credit 0:17:39.600 --> 0:17:41.679 lines from the bank and needs all this stuff to 0:17:41.760 --> 0:17:44.600 keep growing at the pace is going. If it doesn't IPO, 0:17:44.800 --> 0:17:47.800 then it needs to find capital from the big dove 0:17:47.960 --> 0:17:50.720 dove chill. What you just said with fifteen dollars a 0:17:50.760 --> 0:17:54.359 share are chief financial course, Aponent Bass says, that's the 0:17:54.440 --> 0:17:57.320 chip chat right now, what you just said about three 0:17:57.359 --> 0:18:00.240 billion in cash. Does that equate to anything in the 0:18:00.320 --> 0:18:05.240 vicinity of fifteen dollars this year plus or minus seven cents. Well, 0:18:05.320 --> 0:18:10.760 I've done, I'm done the math. It needs to be honest, 0:18:10.840 --> 0:18:12.680 but it looks it needs to It needs to get 0:18:12.680 --> 0:18:16.560 evaluation of above about really like that's kind of the cap. 0:18:16.560 --> 0:18:20.560 Fifteen billion is two low basin investor in all types 0:18:20.560 --> 0:18:22.159 of the bankers trying to push this IPA want to 0:18:22.200 --> 0:18:26.480 invest it. Paul Sweeney thirty Churchill Place, five Merchants Square 0:18:26.560 --> 0:18:32.040 to Minster Court, the Monument, n Hackney Road, twelve Bore Gate, 0:18:32.200 --> 0:18:36.840 seventy seven Levenhall Street, Short Ditch near some Tide Place, 0:18:37.240 --> 0:18:41.560 thirteen Mirrored Street, the Stage fifty two Bedford Row one, 0:18:41.600 --> 0:18:45.360 twenty more Gate, forty one, Black Friars ten fen Church one. 0:18:46.040 --> 0:18:48.800 I can't even get there. They gotta we work at 0:18:48.800 --> 0:18:52.080 Buckingham Palace. They're everywhere in the big market. So, Charles, 0:18:52.119 --> 0:18:53.840 you know, one of the what has been some of 0:18:53.880 --> 0:18:56.919 the pushback that you've heard in the marketplace as related 0:18:57.000 --> 0:18:59.360 to we work and kind of walking down the valuation 0:18:59.560 --> 0:19:03.080 and what have you been hearing. Well, there's two kind 0:19:03.080 --> 0:19:06.400 of two threats to this. The first obviously evaluation. I mean, 0:19:06.800 --> 0:19:09.960 you can forgive a lot of government problems with tech companies. 0:19:10.000 --> 0:19:11.800 It seems you've certainly seen it in the past. A 0:19:11.880 --> 0:19:14.080 lot of people are making money. The problem is that 0:19:14.160 --> 0:19:16.760 evaluation is too low. People are losing money. But no 0:19:16.880 --> 0:19:19.440 one really everyone will talk to talk about governance. We've 0:19:19.440 --> 0:19:21.840 seen today there's plenty of change in the government structure, 0:19:21.880 --> 0:19:24.359 and investors obviously will make a big deal about this. 0:19:24.720 --> 0:19:26.560 But when it really comes down to if it was 0:19:26.600 --> 0:19:29.120 going to list the forty seven billion evaluation, no one's 0:19:29.160 --> 0:19:31.560 going to be talking about governance issues. The fact is 0:19:31.600 --> 0:19:33.880 it's still hovering around fifteen and will wait and see 0:19:33.920 --> 0:19:36.680 what happens today if it gets up to twenty full 0:19:36.680 --> 0:19:39.719 disclosure number one poultry right next to where Gail Turners 0:19:39.800 --> 0:19:44.600 coming from Queen Victoria's Street as well, Giles, do the 0:19:44.680 --> 0:19:48.280 commercial landlords of London, in New York and the other cities, 0:19:49.080 --> 0:19:53.040 is we worked their friend? Well, I don't know. It's 0:19:53.040 --> 0:19:54.720 hard to say at the moment. It's certainly their friend 0:19:54.720 --> 0:19:58.159 at the beginning because it's taken up a lot of 0:19:58.560 --> 0:20:01.280 demand for for rental based The problem is we workers 0:20:01.320 --> 0:20:04.440 managed to sign very long leases, which obviously looks good 0:20:04.440 --> 0:20:08.879 in the short term, but obviously is trying to um 0:20:09.080 --> 0:20:11.240 not pay much rent to begin with and signing very 0:20:11.240 --> 0:20:13.399 profitable deal for we work for her three years or 0:20:13.400 --> 0:20:15.399 it doesn't have to pay much that's rent. There's this 0:20:15.520 --> 0:20:18.040 huge rent cliff coming. You know when that comes, if 0:20:18.040 --> 0:20:20.000 we work can't pay his bills, then it's gonna be 0:20:20.000 --> 0:20:21.760 no one's trends. I just noticed in New York is 0:20:21.760 --> 0:20:26.280 that we work in my living room exactly running out 0:20:26.320 --> 0:20:28.800 the space. So, Giles, you kind of bring up a 0:20:28.800 --> 0:20:31.479 big fundamental issue for the real estate folks, which is 0:20:32.000 --> 0:20:34.440 you know, going out and leasing long as we worked 0:20:34.560 --> 0:20:37.159 as long term and then you know leasing out the 0:20:37.200 --> 0:20:40.080 space to its tennis on a short term basis. That's 0:20:40.080 --> 0:20:43.119 not the way good real estate works, is it. No, 0:20:43.320 --> 0:20:45.480 But that's the argument that we were making. Is not 0:20:45.560 --> 0:20:48.399 going to be like every other company. The idea is 0:20:48.440 --> 0:20:52.040 that the attitude of people's work environment is changing. People 0:20:52.080 --> 0:20:54.400 don't want to do job, you know, jobs to life anymore. 0:20:54.400 --> 0:20:56.159 People are happy to work. The startups have to have 0:20:56.240 --> 0:20:59.920 high turnover. That the argument is pushing very quickly. Gil. 0:21:00.119 --> 0:21:02.320 What happens Monday? I mean they get to the weekend, 0:21:02.640 --> 0:21:05.040 everybody regroups. Are you waiting to hear in London or 0:21:05.040 --> 0:21:08.600 New York from soft Bank or what's the next next? Yeah? 0:21:08.640 --> 0:21:10.280 I mean if that'd be the key thing. I mean 0:21:10.320 --> 0:21:12.480 what soft Bank thinks about this being one with may 0:21:12.480 --> 0:21:15.040 Shihold is just going to be key. Um. Well, if 0:21:15.040 --> 0:21:17.080 it's happy with this, then fine, I can spect to 0:21:17.119 --> 0:21:19.520 my get away twenty. But if it's not, then they'll 0:21:19.560 --> 0:21:21.560 be more arguments to come over the weekend. I bet 0:21:22.040 --> 0:21:24.639 Gail's turner brilliant update, thank you, thank you out of 0:21:24.680 --> 0:21:27.720 London as well, and we forget that the wee company 0:21:27.760 --> 0:21:46.680 is uh truly international. This is a good Friday conversation, 0:21:47.200 --> 0:21:50.680 which is after we saw yesterday Qui infinity, Paul. It's 0:21:50.720 --> 0:21:53.800 open to debate how far out that goes. Let's talk 0:21:53.840 --> 0:21:58.000 about financial repression Infinity Brain Railings with Wells Fargo, Institute 0:21:58.640 --> 0:22:01.320 of St. Louis and Brian thrilled to have you with 0:22:01.359 --> 0:22:03.000 us here in the New York studios. And I want 0:22:03.000 --> 0:22:04.600 to go back to a Bill Gross phrase, which is 0:22:04.640 --> 0:22:07.840 financial repression, which can be either the negative real rates 0:22:07.880 --> 0:22:10.639 we have are the very low nominal real rates that 0:22:10.760 --> 0:22:14.600 investors face in the United States? Does it go on forever? 0:22:14.920 --> 0:22:19.440 Do we do we have to invest assuming forever this 0:22:19.520 --> 0:22:23.080 low rate environment? Well, for the time being, it certainly 0:22:23.119 --> 0:22:26.960 appears that way. I think what you saw out of 0:22:26.960 --> 0:22:29.160 the e c B and you're seeing from the other 0:22:29.320 --> 0:22:35.280 central banks is this strong desire to see fiscal policy 0:22:35.880 --> 0:22:39.600 try to pull us out of UH. But who's gonna 0:22:39.600 --> 0:22:42.200 help the savor? I mean it, Wells Fargo, with all 0:22:42.240 --> 0:22:45.159 of your sprawl, the saver is flat under back, not 0:22:45.280 --> 0:22:48.880 like in Europe. I get that. That's terrible. What does 0:22:48.880 --> 0:22:52.000 a savor do on a September weekend when they have 0:22:52.119 --> 0:22:56.440