WEBVTT - Market Bullishness and Near-Term Dollar Concern 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.960 --> 0:00:15.560 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:15.600 --> 0:00:18.960 with Paul Sweeney. Join us each day for insight from 0:00:18.960 --> 0:00:23.160 the best in economics, finance, investment, and international relations. You 0:00:23.160 --> 0:00:26.520 can also watch the show live on YouTube. Visit the 0:00:26.520 --> 0:00:31.280 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:31.280 --> 0:00:34.320 mornings from seven to ten am Eastern from our global 0:00:34.360 --> 0:00:39.000 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:39.360 --> 0:00:42.920 or anywhere else you listen and always I'm Bloomberg Radio, 0:00:43.080 --> 0:00:47.000 the Bloomberg Terminal and the Bloomberg Business app got her. 0:00:47.040 --> 0:00:47.880 Montgomery Connick. 0:00:47.960 --> 0:00:48.559 She called me up. 0:00:48.640 --> 0:00:50.440 She said, you know, I want to be on, and 0:00:50.440 --> 0:00:52.960 they said send me your note and I'm like, yeah, 0:00:53.000 --> 0:00:56.240 you know whatever. Ts Lombard and they do brilliant work. 0:00:56.280 --> 0:00:59.080 She's director of macro Strategy there and they're in the 0:00:59.080 --> 0:01:00.480 middle of her research note. 0:01:00.520 --> 0:01:02.720 I don't know how many pages it is, fifteen sixteen 0:01:02.760 --> 0:01:07.680 page is the absolute single best chart of the months, Skyler. 0:01:07.800 --> 0:01:12.040 Montgomery Knic joins us right now, macro Strategy ts lomberd Skyler, 0:01:12.480 --> 0:01:16.360 you got a scattered dot chart which compares a GDP 0:01:16.560 --> 0:01:21.560 of different nations and their economics Surprise Index, And basically 0:01:21.640 --> 0:01:26.000 it underscores how the US exceptionalism is all alone with 0:01:26.160 --> 0:01:30.440 massive GDP, but even Sterling, where the election being called 0:01:30.520 --> 0:01:31.759 is coming on as well. 0:01:32.280 --> 0:01:34.160 What does that chart look like in a year? 0:01:34.400 --> 0:01:38.360 What does a scattered ot chart of our expectations versus 0:01:38.520 --> 0:01:41.560 actual GDP look like in twelve months? 0:01:42.720 --> 0:01:45.000 Yeah, I mean it's really interesting, right because that chart 0:01:45.040 --> 0:01:46.959 tells you two things. It tells you that the US 0:01:47.040 --> 0:01:50.320 is outperforming on an absolute basis, and I expect in 0:01:50.360 --> 0:01:52.880 a year's time that you still have that outperformance because 0:01:52.880 --> 0:01:55.240 if you think about what the two global growth engines 0:01:55.240 --> 0:01:58.920 of the world are, the US and China. China stimulating, 0:01:59.000 --> 0:02:01.320 but it's not the kind of stimulus that you did before, 0:02:01.560 --> 0:02:03.480 and it's not the kind of stimulus that's going to 0:02:03.480 --> 0:02:05.480 be able to make countries like Europe and the UK 0:02:05.600 --> 0:02:08.280 compete with the US. So in a year's time, I 0:02:08.280 --> 0:02:10.320 think you still have US exceptionalism. But right now the 0:02:10.320 --> 0:02:13.560 story is very interesting because you're having convergence because of 0:02:13.560 --> 0:02:17.360 growth surprises, because we've had these massive upside surprises in 0:02:17.480 --> 0:02:21.720 US growth consensus that's chased that upside surprise, right, So 0:02:21.760 --> 0:02:23.360 we're now getting downside surprises. 0:02:23.560 --> 0:02:26.040 Well, we're getting downside surprises, so they say, but I'm 0:02:26.080 --> 0:02:29.400 looking at Atlanta GDP now, or look at domestic final 0:02:29.480 --> 0:02:32.320 sales and these are actually pretty good numbers. When does 0:02:32.360 --> 0:02:33.079 the party end? 0:02:34.240 --> 0:02:37.280 Well, this is what's really interesting is we're getting downside surprises, 0:02:37.440 --> 0:02:40.440 but we actually care where the surprises are coming from 0:02:40.480 --> 0:02:43.200 as well. So if you look at Bloomberg's Economic Surprise 0:02:43.280 --> 0:02:45.760 and dex it very handily gives you all of the components, 0:02:45.960 --> 0:02:48.640 and what surprising to the downside is sentiment. And I 0:02:48.639 --> 0:02:51.760 think that's largely related to the level of inflation as 0:02:51.760 --> 0:02:54.360 well as being a pretty politically charged year, and so 0:02:54.680 --> 0:02:57.600 I'm not as worried about the growth outlook. If it's sentiment, 0:02:57.800 --> 0:03:00.000 that's the reason where surprising to the downside. 0:03:00.240 --> 0:03:02.320 Skyler, I'd love to hear your thoughts here on king dollar. 0:03:02.360 --> 0:03:04.680 I mean, you mentioned back at mid month that the 0:03:04.760 --> 0:03:07.040 dollar was vulnerable over the short term. These still feel 0:03:07.080 --> 0:03:09.040 that way. I mean, how quickly do those views on 0:03:09.080 --> 0:03:11.239 the dollar change and where are we headed from here? 0:03:12.280 --> 0:03:12.560 Yeah? 0:03:12.600 --> 0:03:15.000 Sure, So, I mean for the dollar, you know, in 0:03:15.040 --> 0:03:17.880 the short term, I'm still a bit cautious. We're seeing 0:03:17.919 --> 0:03:20.720 more growth conversions with global growth kind of catching up 0:03:20.760 --> 0:03:23.960 to US growth. At the same time, the FED has 0:03:24.080 --> 0:03:27.440 had an asymmetric reaction function, where because we know they 0:03:27.440 --> 0:03:29.800 don't want to hike, the market is looking for a 0:03:29.800 --> 0:03:32.440 reason to be dubbish at the same time positioning you know, 0:03:32.440 --> 0:03:34.240 it's come off of it, but it's still stretched along 0:03:34.280 --> 0:03:37.360 the dollar. However, I am more positive in the medium term. 0:03:37.720 --> 0:03:39.720 You know, growth is converging, but as I said, US 0:03:39.760 --> 0:03:42.600 growth is still outperforming on an absolute basis. And the 0:03:42.680 --> 0:03:46.240 key point is that we still need to price policy diversions. Yes, 0:03:46.280 --> 0:03:48.520 the market is looking for the ECB to cut before 0:03:48.560 --> 0:03:51.160 the FED, but over the next year and over the 0:03:51.200 --> 0:03:54.800 next five years, policy pricing is pretty identical. So I 0:03:54.800 --> 0:03:56.920 think you need to price in more dubbishness in Europe 0:03:56.960 --> 0:03:59.240 and especially the UK, and that should be supportive for 0:03:59.280 --> 0:03:59.600 the dollar. 0:04:00.080 --> 0:04:01.680 Do you think euro dollar heads from here? I mean, 0:04:01.720 --> 0:04:02.680 do you have a target there? 0:04:03.600 --> 0:04:03.800 Yeah? 0:04:03.840 --> 0:04:05.480 Sure, I mean I think one oh five is kind 0:04:05.480 --> 0:04:07.960 of the next point you're looking for. On the downside, 0:04:08.520 --> 0:04:10.560 you know, people are talking about parody because you get 0:04:10.560 --> 0:04:13.560 these massive policy divergence. I don't think we're quite there 0:04:13.600 --> 0:04:16.760 because the divergence is limited by the fact that you know, 0:04:16.800 --> 0:04:19.080 the FED does want to cut at some point, and so. 0:04:19.480 --> 0:04:21.719 You're talking about yield differentials here, right, and I believe 0:04:21.760 --> 0:04:24.320 you're absolutely right spot on that they have been a huge, 0:04:24.360 --> 0:04:26.400 huge driver of currency movement. We can see that just 0:04:26.440 --> 0:04:28.640 the high carry currencies versus the low carrier you know. 0:04:28.720 --> 0:04:30.240 But you know, talk to me a little bit about 0:04:30.240 --> 0:04:32.760 dollar yen here. Something's going on there. Tom's talking about 0:04:32.760 --> 0:04:35.640 it all week long. Bojing. 0:04:35.680 --> 0:04:37.200 You're going to be over the barbecue. 0:04:37.839 --> 0:04:39.920 You know, Skyler's going to be, you know, gaming out 0:04:39.960 --> 0:04:43.360 the British election, and you're going to have a massive 0:04:43.400 --> 0:04:44.920 intervention the third time here. 0:04:45.000 --> 0:04:48.640 Euro yen right now, Damien one's seventy point. 0:04:48.360 --> 0:04:50.960 Four to seven of Skyler. I don't want time to 0:04:51.040 --> 0:04:53.440 quote euro yen anymore. He's going to start quoting, quoting 0:04:53.480 --> 0:04:55.279 peso yen for us. Talk to us a little bit 0:04:55.320 --> 0:04:57.400 about the yen here. Is it's still a funding currency 0:04:57.480 --> 0:04:59.400 and what other funding currency sort of stand out to 0:04:59.400 --> 0:05:00.000 you in this environment. 0:05:00.720 --> 0:05:03.479 I mean, it's absolutely still a funding currency for carry 0:05:03.520 --> 0:05:05.599 trades to work, well, you need three things. You need 0:05:05.760 --> 0:05:08.400 an interest rate differential with you have with the end. 0:05:08.800 --> 0:05:11.360 You need low volatility because you don't want to lose 0:05:11.400 --> 0:05:13.720 your shirt if you're only gaining five percent in income, 0:05:14.000 --> 0:05:16.880 and you need positive resentment. And so it's certainly being 0:05:16.960 --> 0:05:19.279 used as a funding currency. And what you see over 0:05:19.320 --> 0:05:22.320 and over again is that unilateral intervention does not work. 0:05:22.640 --> 0:05:25.560 So while they may be intervening, it's just kind of 0:05:25.560 --> 0:05:28.480 stopping the bleeding rather than creating a reversal. For reversal, 0:05:28.520 --> 0:05:28.880 you need that. 0:05:29.240 --> 0:05:31.680 So to both of you, Damien Pickett, this is important folks. 0:05:31.680 --> 0:05:34.240 Pick it up here within the trilemma. If you're going 0:05:34.279 --> 0:05:38.080 to have a unilateral intervention which never works. I agree 0:05:38.080 --> 0:05:40.960 with Skyler on that, Damien. What works And the only 0:05:41.040 --> 0:05:43.919 thing that works is interest rates the central banks to 0:05:43.960 --> 0:05:46.560 allow ten and thirty years to blow up much higher 0:05:46.600 --> 0:05:47.440 than one percent. 0:05:47.520 --> 0:05:49.839 When I look at my FX models, Tom, and it's 0:05:49.839 --> 0:05:52.320 certainly real yield differentials that have driven done the heavy 0:05:52.360 --> 0:05:53.960 lifting at least over the better part of the last 0:05:53.960 --> 0:05:56.240 one t three year period in terms of currencies. But Skyler, 0:05:56.320 --> 0:05:57.840 you know, take me through that. You know, what are 0:05:57.839 --> 0:05:59.839 you looking at here? You know, as we push into 0:05:59.880 --> 0:06:02.040 the summer slow down, I mean, what's going to drive 0:06:02.080 --> 0:06:03.680 currency currency performance? 0:06:04.560 --> 0:06:06.279 Well, this is the thing. I think it's gonna be 0:06:06.320 --> 0:06:09.240 a summer slow down, it's gonna be low volatility continued. 0:06:09.279 --> 0:06:11.719 We're having the push out of the cuts from the FED, 0:06:11.960 --> 0:06:14.279 and so that means it's a continued carry environment, and 0:06:14.320 --> 0:06:15.840 so carry can be quite positive. 0:06:15.839 --> 0:06:20.120 Still, I look Skylar at the summation of all this, 0:06:20.200 --> 0:06:23.960 and I slip in one more question here the election 0:06:24.400 --> 0:06:28.680 suddenly in your United Kingdom? Is it really called just 0:06:28.760 --> 0:06:31.599 because everyone thinks this as good as it gets for 0:06:31.680 --> 0:06:32.760 the British economy. 0:06:33.880 --> 0:06:36.040 I mean, I'm not sure. I have a huge commentary 0:06:36.080 --> 0:06:39.080 on why it was called. I think from a market's perspective, 0:06:39.120 --> 0:06:40.920 it doesn't really matter. And I see two reasons for 0:06:41.000 --> 0:06:43.960 why it doesn't matter. The first is that labor has 0:06:44.000 --> 0:06:46.240 been in the lead by a significant margin for a 0:06:46.320 --> 0:06:48.599 very long time. Markets are good at pricing risk, and 0:06:48.640 --> 0:06:50.440 so if there was anything to price, it would be 0:06:50.440 --> 0:06:53.599 priced already. And the second is there's such limited fiscal 0:06:53.600 --> 0:06:56.039 space in the UK. We've all kind of been scarred 0:06:56.040 --> 0:06:59.040 by what happened with Liz Trust and neither party really 0:06:59.080 --> 0:07:01.839 wants to play with that fiscal space, and so there's 0:07:01.839 --> 0:07:03.120 not a lot of change that can be made that 0:07:03.160 --> 0:07:05.640 can affect the economy and in turn rocket that's. 0:07:05.520 --> 0:07:08.600 Great that you really steered around that for your general counsel, 0:07:08.640 --> 0:07:12.119 Skylar Montgomery coning there on Liz Truss as the chief 0:07:12.120 --> 0:07:26.240 political correspondent for Ts Lombard. Right now, where the markets open, 0:07:26.880 --> 0:07:29.840 the Dow up seventy three points, I guess I should 0:07:29.960 --> 0:07:32.160 quote gold. That would be a good way to start with. 0:07:32.240 --> 0:07:36.320 Exel Mark twenty three two, three hundred and sixty nine. 0:07:36.720 --> 0:07:40.160 Exel Mark there were gold bugs and silver rights, William 0:07:40.240 --> 0:07:45.440 McKinley and William Jennings Bryan, and then in the seventies 0:07:45.480 --> 0:07:49.920 when I had wider lapels, there were gold bugs. Where 0:07:49.920 --> 0:07:52.560 are the gold bugs now? Is it just about central 0:07:52.600 --> 0:07:57.520 banking buying or is there a retail enthusiasm for gold? 0:07:59.000 --> 0:08:01.440 He a good morning. I thought the golf talk was 0:08:01.480 --> 0:08:04.360 the interview of the day. But let's let's talk gold here. 0:08:04.920 --> 0:08:10.840 The until just recently it appeared that the US retail 0:08:10.880 --> 0:08:14.120 investor was absent, at least on the exchange s head 0:08:14.160 --> 0:08:16.960 of products. I've been buying physical gold, but not so 0:08:17.080 --> 0:08:21.760 much on the ats. Mostly the Chinese retelled bias, and 0:08:21.800 --> 0:08:23.880 obviously the Chinese Central Bank as well and the like 0:08:23.960 --> 0:08:28.120 had been buying of late. That might have changed, I see, 0:08:28.280 --> 0:08:31.720 might because a week or so doesn't make a trend yet. 0:08:32.760 --> 0:08:35.800 But yes, much of the gold rally has happened without 0:08:35.920 --> 0:08:38.000 broad retail participation in the US. 0:08:38.400 --> 0:08:39.679 What does that signal to you? 0:08:41.440 --> 0:08:44.199 That's a excellent question. I mean, if you are a 0:08:45.240 --> 0:08:47.320 gold bug, then it means there's a lot of upside 0:08:47.320 --> 0:08:51.040 potential when those folks finally come in. If you are 0:08:51.200 --> 0:08:55.040 on the barrier side, you can say, well, it's been Lukewalm, 0:08:55.080 --> 0:08:57.240 it's only the Chinese I've been buying. At some point 0:08:57.240 --> 0:08:59.680 the Chinese Central Bank will stop buying. And by the way, 0:09:00.480 --> 0:09:02.480 the FED is going to be more hawkish and so forth. 0:09:02.760 --> 0:09:05.560 So with any of these things, gold is this one 0:09:05.640 --> 0:09:08.840 asset that you're always glad you had, but never quite 0:09:09.000 --> 0:09:11.480 know why you want to have it for tomorrow. And 0:09:12.400 --> 0:09:15.839 so people put different spins on these stories. Is I 0:09:15.880 --> 0:09:18.400 think your way. I've been a gold invest of for 0:09:18.520 --> 0:09:22.679 many years and thuty ups and downs, and it's it's 0:09:22.720 --> 0:09:25.360 about the psychology of gold investing is a completely different. 0:09:25.400 --> 0:09:27.280 So I look at gold back twenty years. You can 0:09:27.320 --> 0:09:29.360 do this on the Bloomberg folks. I'm doing this semi 0:09:29.440 --> 0:09:32.840 log or percentage change matters. You know, there was a 0:09:32.920 --> 0:09:36.040 quiet two to gold from twenty twelve ash on over 0:09:36.200 --> 0:09:39.760 actually went down some, but it's amazing on a large shirt. 0:09:39.840 --> 0:09:42.640 Damien Sasaur gold with his leg up to twenty three 0:09:42.720 --> 0:09:47.360 forty six back twenty years is a legitimate trend and 0:09:47.559 --> 0:09:49.640 really isn't extended. 0:09:49.800 --> 0:09:50.600 I didn't know that. 0:09:50.720 --> 0:09:53.280 Well for me, it's really what does drive gold and axel. 0:09:53.360 --> 0:09:55.520 My question for you is, I've always been taught that 0:09:55.600 --> 0:09:58.280 really yields are probably the best driver of the price 0:09:58.320 --> 0:10:00.600 of gold. But you know, is it in he supplying 0:10:00.640 --> 0:10:02.480 the man at this point? I mean, is it really 0:10:02.600 --> 0:10:05.560 central bank buying this asymmetric sort of return profile for 0:10:05.640 --> 0:10:07.760 gold that hey, you know now that these central banks 0:10:07.800 --> 0:10:09.600 own it, they're not going to be selling it, and 0:10:09.720 --> 0:10:11.920 you know the price only has up to go from here. 0:10:12.000 --> 0:10:13.000 Is that kind of what I'm hearing? 0:10:14.480 --> 0:10:17.800 Well, it's always supplying the man with with any asset, 0:10:18.520 --> 0:10:21.440 and yes, the real yield is what we have been 0:10:21.480 --> 0:10:23.640 quote unquote taught. But the one thing about gold is 0:10:24.320 --> 0:10:28.200 correlations aren't stable. Whenever you think do you find a correlation, 0:10:28.520 --> 0:10:31.120 it starts to break down. Take a correlation to equities. 0:10:31.600 --> 0:10:33.440 Correlation to equity is in the long run is zero, 0:10:33.679 --> 0:10:36.560 But it doesn't mean it's never correlated. It sometimes goes 0:10:36.600 --> 0:10:39.920 with the s opinion, sometimes against the always just enough 0:10:39.920 --> 0:10:43.520 to frustrate people. But indeed it has the coupled, so 0:10:43.720 --> 0:10:45.720 to speak, from real yields. And most of what we 0:10:45.760 --> 0:10:48.120 look at is longer term. It's like a seven or 0:10:48.200 --> 0:10:52.200 ten year but those have broken down as well. Now 0:10:52.320 --> 0:10:56.000 keep in mind that there are plenty of reasons to 0:10:56.040 --> 0:11:00.400 be a gold bug. I mean, it's a and you 0:11:00.559 --> 0:11:05.880 just mentioned some sad geopolitics. I happen to think that 0:11:06.600 --> 0:11:10.520 what we see in in in gaza ors in Ukraine 0:11:10.559 --> 0:11:13.600 are just symptoms of a new era. And and similarly, 0:11:13.600 --> 0:11:17.360 of course the Chinese, they know that the dollar has 0:11:17.400 --> 0:11:19.800 been used more as a financial weapon. So all these things, 0:11:20.400 --> 0:11:22.320 if you want to be the glass of full guy, 0:11:22.679 --> 0:11:24.240 that is it. But at the same time, right in 0:11:24.280 --> 0:11:27.720 a short run, anything can happen. Gold a fantastic run. 0:11:27.840 --> 0:11:30.360 Well, Axel, tell to us about the broader precious metals complex. 0:11:30.400 --> 0:11:34.239 I mean, are there opportunities for silver here, for platinum, palladium. 0:11:35.800 --> 0:11:39.400 Well, the silver folks have finally a day to celebrate. 0:11:39.440 --> 0:11:44.440 I mean that's the silver for long, long period lags. 0:11:44.480 --> 0:11:47.800 The price of gold and silver seems to have broken 0:11:47.800 --> 0:11:50.480 out from that a little bit. I'm a simpleton. I 0:11:50.559 --> 0:11:53.800 focus on gold because it doesn't I call it the 0:11:53.880 --> 0:11:58.240 purest indicator of the mania of policymakers at the FED 0:11:58.320 --> 0:12:00.599 and other central banks around the world. The moment you 0:12:00.679 --> 0:12:04.520 go to other medals, it's industrial dynamics that play a 0:12:04.640 --> 0:12:08.319 much bigger role. And it may be in part that 0:12:08.480 --> 0:12:12.240 the manufacturing pmis around the world are picking up, suggesting 0:12:12.280 --> 0:12:14.960 that on the manufacturing side we are not entering a recession. 0:12:15.000 --> 0:12:17.520 And that's why Silva's been doing things better, because the 0:12:17.720 --> 0:12:19.480 Silva doesn't do so well in a recession usually. 0:12:19.600 --> 0:12:21.880 In the time we got left with you, you've done 0:12:21.880 --> 0:12:24.839 a lot of work on dollar, and of course the 0:12:24.960 --> 0:12:30.280 shock here has been strong strong dollar reaffirm the case 0:12:30.559 --> 0:12:32.280 that the dollar could fall apart. 0:12:34.160 --> 0:12:36.320 Well, we're talking on a Friday, so I might as 0:12:36.360 --> 0:12:41.760 well speculate. I just mentioned the manufacturing pmis. The rest 0:12:41.800 --> 0:12:44.559 of the world is more manufacturing heavy than the US. 0:12:45.280 --> 0:12:47.520 They are strong, so the rest of the world, maybe 0:12:47.600 --> 0:12:50.280 the central banks won't be easing quite as much, will 0:12:50.280 --> 0:12:53.079 be more hawkish. We don't see that that speculation. In 0:12:53.160 --> 0:12:55.880 the US. We are more services driven, the low end 0:12:55.920 --> 0:12:59.520 consumers weakening the interest rate hikes are taking a bite 0:13:00.040 --> 0:13:02.840 very slowly, so they're not biting really at the high 0:13:02.880 --> 0:13:05.480 end consumer in front of because of the equity rally, 0:13:06.040 --> 0:13:08.840 and so maybe the US is going to be more dabbagh, 0:13:08.880 --> 0:13:11.600 especially with COLS bias. And on the day like today, 0:13:11.640 --> 0:13:14.000 that story makes sense, but I think that's just speculation. 0:13:14.120 --> 0:13:16.840 No one's listening. Twelve months from now, where's gold? Excelle 0:13:16.920 --> 0:13:18.600 got to run Where's golden? Twelve months? 0:13:20.160 --> 0:13:22.559 Well, we have a new administration and last time that 0:13:22.960 --> 0:13:25.040 Trump was elected to to get elected again, and you 0:13:25.120 --> 0:13:28.720 talked about the gold bugs earlier, all the problems were solved, 0:13:28.880 --> 0:13:31.040 and then suddenly there was no interest in gold anymore 0:13:31.120 --> 0:13:34.400 until late in the administration. And obviously it's it's usually 0:13:34.600 --> 0:13:36.880 not just who was in office, but beyond the line 0:13:37.040 --> 0:13:40.240 drive US. But the storyline may well change early next year. 0:13:40.440 --> 0:13:43.199 Excel Mark, thank you so much on gold. These is 0:13:43.320 --> 0:13:50.160 merk investments. Right now, Louis Costa joins US. He's global 0:13:50.160 --> 0:13:53.440 ahead of the it's City Group in a really important 0:13:53.440 --> 0:13:56.520 position for City Group with all of their foreign reach. 0:13:56.679 --> 0:13:58.800 In that Louise, I want to go to something you've 0:13:58.880 --> 0:14:01.920 brought up as a run Niss moment that I've now. 0:14:01.840 --> 0:14:05.280 Heard you're the third person, and I'll say eight days 0:14:06.120 --> 0:14:10.400 that I have said, finally, Turkey, why is it now 0:14:10.679 --> 0:14:15.080 finally after the massive tobaccle, the depreciation of Turkish leer, 0:14:15.120 --> 0:14:19.800 or the chaos within their two tier domestic strategy, why 0:14:19.920 --> 0:14:21.440 now finally Turkey? 0:14:22.360 --> 0:14:26.960 A hi, thanks for having media, you know, finally because finally, uh, 0:14:27.720 --> 0:14:33.760 they are trying really hard to converge to more orthodox 0:14:33.840 --> 0:14:36.520 economic policy. And we know that that was the past, 0:14:36.840 --> 0:14:39.480 that was the issue in the past, and but now 0:14:40.280 --> 0:14:43.880 you know, after meeting so many policy makers from the 0:14:43.960 --> 0:14:47.720 central Bank and even the wooding coming out of the government, 0:14:47.840 --> 0:14:52.400 it feels like there's intention. They've been pursuing it for 0:14:52.840 --> 0:14:54.920 at least a quarter or so, and this is the 0:14:54.960 --> 0:14:58.200 starting basically to show in the effects in the in 0:14:58.280 --> 0:15:00.640 the micro nobles genermy speak global. 0:15:00.360 --> 0:15:03.560 Wall streetcause the name so many people know moments Simsek 0:15:04.120 --> 0:15:06.480 And in the time that I spent an instant bull 0:15:06.960 --> 0:15:08.880 I really got to know him quite well. Is this 0:15:09.000 --> 0:15:11.760 a moment sim Sack? I mean, ex Merrill Lynch now 0:15:11.840 --> 0:15:14.600 working with eerdo one in Turkey? Is this a sim 0:15:14.720 --> 0:15:17.080 Sck revolution we're seeing in Turkey? 0:15:18.440 --> 0:15:22.040 I wouldn't say you know shimshak revolution, but is we 0:15:22.200 --> 0:15:26.400 have a very capable person at the helm of the 0:15:26.440 --> 0:15:31.120 economic policy now and he's absolutely determined, right so if 0:15:31.200 --> 0:15:36.280 politics allows, he will continue basically to develop this orthodox 0:15:36.360 --> 0:15:41.680 economic agenda which means spider monetary conditions, which means some 0:15:41.920 --> 0:15:44.920 degree of deceleration and economy. But all we know, if 0:15:44.960 --> 0:15:47.600 you put this all together, it's very positive for the 0:15:47.680 --> 0:15:49.480 Takeshlidra hence Hola Longa the leader. 0:15:49.760 --> 0:15:51.640 So Louis, I mean, this is incredible. I mean, this 0:15:51.760 --> 0:15:53.320 is first of all great to speak with you again. 0:15:53.400 --> 0:15:55.480 I mean I open the show this morning talking about 0:15:55.520 --> 0:15:58.280 the concept of idiosyncratic carry and how emerging markets can 0:15:58.480 --> 0:16:01.400 kind of fill that gap. I know you mentioned Turkey here, 0:16:01.440 --> 0:16:03.440 but talk to me about some of these other local 0:16:03.600 --> 0:16:07.080 emerging markets like, for example, Egypt, Nigeria, I'm hearing about, 0:16:07.160 --> 0:16:09.760 Dome Rep. I'm hearing about Uraguay. I mean, are those 0:16:09.960 --> 0:16:12.880 viable markets for institutions to carry in the short end. 0:16:13.680 --> 0:16:16.240 They are viable. They are vibal of course, I mean 0:16:16.320 --> 0:16:19.800 different strokes for different folks, but they are you know, 0:16:20.000 --> 0:16:22.960 depending on the jurisdiction, depending on the markets this place, 0:16:23.280 --> 0:16:27.240 they tend to be more in liquid, so not every client, 0:16:27.480 --> 0:16:30.320 not every global investor, will have the appetites to being 0:16:30.360 --> 0:16:33.920 in liquid markets like this. But you mentioned something very important, 0:16:33.960 --> 0:16:36.360 which is the search for carry. We are in this 0:16:36.560 --> 0:16:41.720 environment where global financial volatility is at almost as cyclical 0:16:41.840 --> 0:16:44.680 notes right, so, and in an environment where we are 0:16:44.680 --> 0:16:47.800 still seeing some degree of deceleration coming from the developer markets, 0:16:47.960 --> 0:16:51.040 although the US is definitely hotter than what we expected 0:16:51.080 --> 0:16:53.160 it to be by now. But if you put this 0:16:53.280 --> 0:16:56.040 all together, all we know it feels like a market 0:16:56.080 --> 0:16:59.440 where you're going to be looking for carry opportunities front 0:16:59.560 --> 0:17:02.560 end of the a high yield carry or high ut 0:17:02.680 --> 0:17:06.720 biles and from tier now after so much correction in 0:17:06.840 --> 0:17:09.720 their economic policy Egypt you mentioned right, they let the 0:17:09.840 --> 0:17:13.080 currency goal, they high trades, So some of these juridictions 0:17:13.160 --> 0:17:16.520 are offering very interesting opportunities for investors now. 0:17:16.720 --> 0:17:18.360 And another high yoda that's getting a lot of play 0:17:18.400 --> 0:17:20.840 in recent weeks is of course South Africa. And we 0:17:20.880 --> 0:17:23.640 have an election coming up next week on Wednesday. Talk 0:17:23.680 --> 0:17:25.440 to us a little bit about as an investor, I 0:17:25.480 --> 0:17:28.000 mean the rand is rallied into this election. Talk to 0:17:28.080 --> 0:17:30.399 us a little bit about how you can invest in 0:17:30.480 --> 0:17:32.760 South Africa. Is it just the metals and mining play 0:17:32.800 --> 0:17:34.880 on the equity side, is it really a carry play 0:17:34.960 --> 0:17:37.640 on the fixed income side? I mean our sagb's back 0:17:37.720 --> 0:17:38.240 in vogue. 0:17:39.320 --> 0:17:41.480 Yeah, as I said, GB's back in vogue. That's right. 0:17:41.960 --> 0:17:44.359 We love the bonds. We love the bonds now and 0:17:44.720 --> 0:17:47.520 we have an overweight in the bonds. We have an 0:17:47.560 --> 0:17:50.720 overweight in the currency as well. And you mentioned this 0:17:50.960 --> 0:17:54.720 commodity rarely we had recently over the past three months, 0:17:54.760 --> 0:17:57.359 I mean in terms of trade for South Africa, they 0:17:57.400 --> 0:18:00.200 have reached a new highs. So we continue to it 0:18:00.359 --> 0:18:02.840 is and that future is true, the currency that futures 0:18:02.880 --> 0:18:05.080 for the markets. Ahead of the elections, there was a 0:18:05.200 --> 0:18:08.080 lot of investment premium price in when you know that 0:18:08.200 --> 0:18:12.080 this political premium is finally receding. So we continue to 0:18:12.240 --> 0:18:14.640 like South African bones now. We believe that that's where 0:18:14.800 --> 0:18:17.040 most of the premium is located on the bones. 0:18:17.200 --> 0:18:18.800 To both you and let me go to you Damien 0:18:18.920 --> 0:18:22.560 for mere mortals. Listen to this Babbel and em can 0:18:22.640 --> 0:18:28.200 they acquire what is easily acquireable in et F the 0:18:28.480 --> 0:18:30.440 captures so called carry. 0:18:30.280 --> 0:18:32.000 You know, I don't know of one, Luis, do you 0:18:32.080 --> 0:18:34.320 know of any you know a vehicle for a retail 0:18:34.359 --> 0:18:36.960 investor here in the US to really kind of isolate 0:18:37.119 --> 0:18:39.360 the carry trade and really invest in it. I don't 0:18:39.400 --> 0:18:40.040 know of any. 0:18:40.560 --> 0:18:41.240 Well that many. 0:18:41.280 --> 0:18:44.840 I'm not going to recommend that ETF now it's they're 0:18:44.920 --> 0:18:47.399 not paying for that, but it's up that there is, 0:18:47.720 --> 0:18:50.000 that there are many ETFs are there right, so that 0:18:50.200 --> 0:18:52.800 the options are available and they are plenty. 0:18:52.960 --> 0:18:54.480 I want to get you in trouble with your general 0:18:54.560 --> 0:18:57.320 counsel here, Lewis you know, I know you're doing an 0:18:57.320 --> 0:18:59.840 em thing. Let's look at the emerging market Japan. The 0:19:00.160 --> 0:19:04.520 fact is on a Friday, I'm looking at one seventy 0:19:04.880 --> 0:19:08.720 euro yen just a two day exponential moving average. I'm 0:19:08.800 --> 0:19:11.280 well through the intervention levels of. 0:19:11.359 --> 0:19:13.520 What or two weeks ago, three weeks ago? 0:19:13.600 --> 0:19:16.960 As well off of the City Group desk. Do you 0:19:17.080 --> 0:19:22.040 look for Japan intervention action into our Sunday evening their 0:19:22.119 --> 0:19:22.840 Monday morning. 0:19:23.680 --> 0:19:26.120 It's very tough to pinpoint the timing and the last 0:19:26.200 --> 0:19:28.919 times the markets tried to pinpoint the exact timing they 0:19:28.960 --> 0:19:32.320 were wrong, right, or the boj was actually a law 0:19:32.400 --> 0:19:37.640 more sensible and careful and not necessarily impacting the markets much. 0:19:37.720 --> 0:19:39.760 We know that there was there was a lot of 0:19:39.840 --> 0:19:42.919 selling of dollars in the past when they felt uncomfortable 0:19:42.960 --> 0:19:47.280 with certain levels. But most importantly, this frenzy on the 0:19:47.480 --> 0:19:52.640 end continues to impose investors towards carry baskets right over, 0:19:52.880 --> 0:19:56.280 we know, using the yen as one important funding currency. 0:19:56.400 --> 0:19:59.720 So if that continues, that continues basically to support the 0:20:00.000 --> 0:20:01.159 ivery basket trade out there. 0:20:01.520 --> 0:20:14.200 Louis, thank you so much, Louis costin sitting Girl. Today's 0:20:14.280 --> 0:20:17.000 front page is a daily look of the front pages 0:20:17.320 --> 0:20:18.920 pumped for Memorial Day. 0:20:19.800 --> 0:20:21.480 Lisa my tech I am. 0:20:21.720 --> 0:20:24.400