1 00:00:09,880 --> 00:00:12,960 Speaker 1: Welcome to the Bloomberg Surveillance podcast and I'm Tom Keane. 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Daily we bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,640 --> 00:00:27,680 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg. William 5 00:00:27,760 --> 00:00:30,880 Speaker 1: Dudley is the former New York Fact President, now Princeton 6 00:00:30,960 --> 00:00:34,000 Speaker 1: Holding Court. As a senior research scholar, but far more 7 00:00:34,080 --> 00:00:37,920 Speaker 1: than that, he developed Goldman Sachs Economics Prejon Hasseas with 8 00:00:38,080 --> 00:00:40,920 Speaker 1: Ed mcelvey and knew that it was about theory, it 9 00:00:41,000 --> 00:00:44,519 Speaker 1: was about the guestimates, but it was also the granularity 10 00:00:44,560 --> 00:00:48,479 Speaker 1: of the data. Bill Dudley joins us this morning. Dr Dudley, 11 00:00:48,520 --> 00:00:50,280 Speaker 1: I want to go right to the Dudley. It feels 12 00:00:50,280 --> 00:00:52,960 Speaker 1: like Ed mcelvy call here. I want to talk about 13 00:00:53,000 --> 00:00:57,240 Speaker 1: the Dudley Beige Book about how you use data, like 14 00:00:57,320 --> 00:01:01,120 Speaker 1: Mike McKee just reported, But you have to look at 15 00:01:01,120 --> 00:01:03,760 Speaker 1: the data in the context of what's going on elsewhere. 16 00:01:03,840 --> 00:01:06,280 Speaker 1: So you know, the fact that the retail cells were 17 00:01:06,280 --> 00:01:09,840 Speaker 1: a little weaker in October reinforces the idea that is, 18 00:01:09,880 --> 00:01:13,880 Speaker 1: the pandemic gets worse and there's more shutdowns and restrictions 19 00:01:13,880 --> 00:01:16,319 Speaker 1: at the November data, which we haven't gotten yet, will 20 00:01:16,360 --> 00:01:18,840 Speaker 1: be even softer. So you know, we have a value 21 00:01:18,880 --> 00:01:20,720 Speaker 1: that we have to go through over the next six 22 00:01:20,760 --> 00:01:24,399 Speaker 1: to nine months before the vaccines arrive and we can 23 00:01:24,440 --> 00:01:27,000 Speaker 1: get people vaccinated. And I think it's gonna be a 24 00:01:27,000 --> 00:01:30,320 Speaker 1: difficult validy to go through because the pandemic is getting 25 00:01:30,360 --> 00:01:34,360 Speaker 1: worse and there's no fiscal stimulus package that seems to 26 00:01:34,400 --> 00:01:38,080 Speaker 1: be about to arrive in a timely way. This is 27 00:01:38,120 --> 00:01:40,440 Speaker 1: so so important, folks, and why it's so good to 28 00:01:40,480 --> 00:01:42,840 Speaker 1: have William Dudley with us right now that the only 29 00:01:42,840 --> 00:01:44,960 Speaker 1: one I can think of Bill Dudley is Lawrence Meyer. 30 00:01:45,040 --> 00:01:47,559 Speaker 1: In terms of looking at the granularity of the data 31 00:01:47,840 --> 00:01:50,840 Speaker 1: week to week, as you did years ago at goldben Sex, 32 00:01:51,160 --> 00:01:55,320 Speaker 1: what data are you looking for forward to frame out 33 00:01:55,400 --> 00:01:59,040 Speaker 1: the next two quarters. I think I'm gonna be focused 34 00:01:59,040 --> 00:02:02,440 Speaker 1: mostly on the course of the pandemic itself and the 35 00:02:02,480 --> 00:02:04,880 Speaker 1: reaction of state and local governments in terms of the 36 00:02:04,920 --> 00:02:07,640 Speaker 1: restrictions that they put in place and how much people 37 00:02:07,720 --> 00:02:10,840 Speaker 1: actually social distance, you know, to extent that the pandemic 38 00:02:10,880 --> 00:02:13,880 Speaker 1: worsens and we have more restrictions, that's gonna exert downward 39 00:02:13,880 --> 00:02:16,519 Speaker 1: pressure on the economic good data. I think it's also 40 00:02:16,520 --> 00:02:18,519 Speaker 1: important to recognize that when we get data like what 41 00:02:18,680 --> 00:02:20,560 Speaker 1: we got today in retail self, we're really looking in 42 00:02:20,600 --> 00:02:22,359 Speaker 1: the rear view mirror. I mean the data is at 43 00:02:22,400 --> 00:02:24,800 Speaker 1: over data first half of October data. We're in a 44 00:02:24,880 --> 00:02:27,119 Speaker 1: much worse place today than we were in the first half. 45 00:02:28,880 --> 00:02:31,640 Speaker 1: This bility point out is about momentum. Momentum is fighting 46 00:02:31,720 --> 00:02:33,960 Speaker 1: the data, as you anticipate, is sets to worsen from 47 00:02:34,000 --> 00:02:36,560 Speaker 1: here because of the restrictions. Let's talk about where this 48 00:02:36,680 --> 00:02:40,480 Speaker 1: leaves policymakers, specifically monasty policymakers at the moment. You wrote 49 00:02:40,760 --> 00:02:42,920 Speaker 1: an upad pace full blom Bug opinion in the last 50 00:02:42,960 --> 00:02:45,079 Speaker 1: month which said quite clearly that you think many of 51 00:02:45,120 --> 00:02:47,959 Speaker 1: the shatis for you that they have run out of ammunition. 52 00:02:48,440 --> 00:02:51,480 Speaker 1: So Bill, where does it leave them right now? Well, 53 00:02:51,520 --> 00:02:54,120 Speaker 1: they can do more, I mean, they haven't completely run 54 00:02:54,160 --> 00:02:56,079 Speaker 1: out of ammunition in the sense that they could increase 55 00:02:56,120 --> 00:02:58,960 Speaker 1: their asset purchases, or they could extend the duration of 56 00:02:59,000 --> 00:03:01,520 Speaker 1: the asset purchases that they make. But it just wouldn't 57 00:03:01,520 --> 00:03:04,440 Speaker 1: have that much consequence because the FED is actually succeeded 58 00:03:04,440 --> 00:03:07,079 Speaker 1: in what it what turns what it wanted to accomplish. 59 00:03:07,400 --> 00:03:10,240 Speaker 1: It's made interest rates very low, and it's made financial 60 00:03:10,240 --> 00:03:14,480 Speaker 1: conditions very accommodative. FED did more, would it help a 61 00:03:14,520 --> 00:03:16,720 Speaker 1: little bit, But the end of the days, this is 62 00:03:16,720 --> 00:03:20,120 Speaker 1: really about fiscal stimulus and providing support to incomes to 63 00:03:20,120 --> 00:03:22,639 Speaker 1: help people get through the valley that we face in 64 00:03:22,680 --> 00:03:26,440 Speaker 1: the months ahead. Come balanced Bill as a former policy 65 00:03:26,480 --> 00:03:28,839 Speaker 1: make at the FED. When you look at things right now, 66 00:03:28,960 --> 00:03:32,120 Speaker 1: we have market participants come on this program all day, 67 00:03:32,120 --> 00:03:35,320 Speaker 1: every day, five days a week talking about risk or 68 00:03:35,400 --> 00:03:38,040 Speaker 1: lack thereof in the credit market. Because it affects presence 69 00:03:38,160 --> 00:03:41,040 Speaker 1: in it, it's not a good thing at a time 70 00:03:41,120 --> 00:03:45,120 Speaker 1: like this. Well, I think the FEDS backstops are pretty 71 00:03:45,120 --> 00:03:48,040 Speaker 1: important because it basically reassures people that there is a 72 00:03:48,080 --> 00:03:50,840 Speaker 1: buyer of last resort, and so that encourages other people 73 00:03:50,920 --> 00:03:54,920 Speaker 1: to be engaging in financial markets. The FEDS, you know, 74 00:03:54,920 --> 00:03:58,720 Speaker 1: the liquidity facilities of the FEDS has provided Actually haven't 75 00:03:58,760 --> 00:04:03,000 Speaker 1: had that great out of takedown. Uh. What's happened is 76 00:04:03,040 --> 00:04:05,160 Speaker 1: that they've served as effective backstops, and I think it's 77 00:04:05,560 --> 00:04:07,800 Speaker 1: very very appropriate. Another issue that's going to get some 78 00:04:07,840 --> 00:04:10,840 Speaker 1: attention is whether the FED is gonna extend the date 79 00:04:10,920 --> 00:04:14,640 Speaker 1: of when these liquidity facilities laughs. Right now, they're scheduled 80 00:04:14,720 --> 00:04:17,320 Speaker 1: to end at the end of December, and I think 81 00:04:17,320 --> 00:04:20,240 Speaker 1: it's very likely that they'll extend them, probably you know, 82 00:04:20,520 --> 00:04:23,039 Speaker 1: through at least into end of March, and maybe through 83 00:04:23,080 --> 00:04:26,360 Speaker 1: the first half of two thousand one. Still a lot 84 00:04:26,400 --> 00:04:29,159 Speaker 1: of people agree that the FED stepped in and provided 85 00:04:29,160 --> 00:04:31,280 Speaker 1: a backstop to a lot of companies in a good way. 86 00:04:31,600 --> 00:04:35,880 Speaker 1: But there's some concern that the FED is dramatically exacerbating inequalities, 87 00:04:35,920 --> 00:04:38,920 Speaker 1: not just in terms of households, but among companies as well, 88 00:04:38,960 --> 00:04:41,320 Speaker 1: because right now we're seeing the pain really being felt 89 00:04:41,480 --> 00:04:44,000 Speaker 1: at smaller companies that don't even register with their bankruptcies, 90 00:04:44,040 --> 00:04:46,240 Speaker 1: since they simply just close up shop and they don't 91 00:04:46,240 --> 00:04:49,599 Speaker 1: have access to borrowing money in credit markets in the 92 00:04:49,640 --> 00:04:51,279 Speaker 1: same kind of way. Do you think that the FED 93 00:04:51,600 --> 00:04:55,240 Speaker 1: has almost whitewashed some of the pain with their policies 94 00:04:55,520 --> 00:04:58,640 Speaker 1: looking at broader markets that have this enthusiasm, and that 95 00:04:58,720 --> 00:05:02,920 Speaker 1: this is somehow at this point potentially even harmful. Well, 96 00:05:02,920 --> 00:05:04,599 Speaker 1: I don't think it's harmful. I mean in the sense 97 00:05:04,600 --> 00:05:07,320 Speaker 1: that it's much better to have financial markets operating than 98 00:05:07,360 --> 00:05:09,960 Speaker 1: not operating. I think the problem for the FED is 99 00:05:10,000 --> 00:05:13,040 Speaker 1: that Monterrey policy is a blue instrument which can't really 100 00:05:13,080 --> 00:05:15,560 Speaker 1: do much about the fact that the impact of the 101 00:05:15,600 --> 00:05:19,239 Speaker 1: pandemic follows very unequally on household and on different types 102 00:05:19,240 --> 00:05:21,840 Speaker 1: of businesses. You know, the FED introduced the main Street 103 00:05:21,920 --> 00:05:24,159 Speaker 1: lending program to try to get to a set of 104 00:05:24,200 --> 00:05:27,520 Speaker 1: businesses that can access the capital markets very easily, and 105 00:05:27,560 --> 00:05:29,839 Speaker 1: it just hasn't worked very well because there's lots of 106 00:05:29,920 --> 00:05:33,200 Speaker 1: terms and conditions and so there's been very little take up. Uh. Yeah, 107 00:05:33,200 --> 00:05:35,320 Speaker 1: I think it's much better for the FED to generate 108 00:05:35,360 --> 00:05:39,240 Speaker 1: as strong as strong economy as they can and recognizing 109 00:05:39,279 --> 00:05:42,200 Speaker 1: that there may be on equal burdens. But then that's 110 00:05:42,240 --> 00:05:44,840 Speaker 1: for Congress and administration to come forward with the fiscal 111 00:05:44,880 --> 00:05:49,600 Speaker 1: pactes that supports those that are most disadvantaged by what's happened. Meanwhile, 112 00:05:49,920 --> 00:05:53,120 Speaker 1: next month, the FED is expected by some, including JP Morgan, 113 00:05:53,279 --> 00:05:56,039 Speaker 1: to extend the duration of their asset purchases. Do you 114 00:05:56,080 --> 00:05:58,040 Speaker 1: think that, based on where we are, based on what 115 00:05:58,120 --> 00:06:00,599 Speaker 1: markets are doing, that they should go through that and 116 00:06:00,640 --> 00:06:03,840 Speaker 1: that they should make that decision next month, even if 117 00:06:03,920 --> 00:06:07,120 Speaker 1: market conditions are similar to where they are today. Well, 118 00:06:07,120 --> 00:06:09,479 Speaker 1: I don't think there's a tremendous rush that they have 119 00:06:09,560 --> 00:06:11,640 Speaker 1: to do in December. If they waited, I don't think 120 00:06:11,640 --> 00:06:14,520 Speaker 1: there'll be a great consequence with tenure Treasury note you'll 121 00:06:14,600 --> 00:06:17,840 Speaker 1: blow one percent. But it sort of makes sense right 122 00:06:17,880 --> 00:06:22,120 Speaker 1: if you're buying UH. Treasury is an agency mortgage backed securities. Now, 123 00:06:22,240 --> 00:06:24,719 Speaker 1: not so much to support market function, but to keep 124 00:06:24,760 --> 00:06:28,120 Speaker 1: long term rates low. Then why not concent figure purchases 125 00:06:28,120 --> 00:06:31,680 Speaker 1: in the long end of the market. Dr Dudley, I 126 00:06:31,760 --> 00:06:34,760 Speaker 1: must ask you about Governor to be it's a very 127 00:06:34,800 --> 00:06:38,440 Speaker 1: close vote right now. Judy Shelton, I want you to 128 00:06:38,640 --> 00:06:42,960 Speaker 1: explain to our audience what her theory is grounded in 129 00:06:43,040 --> 00:06:48,400 Speaker 1: traditional economics. If it's not classical or neo classical, if 130 00:06:48,400 --> 00:06:53,800 Speaker 1: it's not kinesiean, what is shelton theory as you perceive it? Well, 131 00:06:53,839 --> 00:06:55,719 Speaker 1: I don't think I understand her theory. That's to be 132 00:06:55,800 --> 00:06:59,719 Speaker 1: very blunt about it. Look, I think it's unfortunate that 133 00:07:00,120 --> 00:07:03,279 Speaker 1: that the Congress is Republican conference is pushing forward to 134 00:07:03,400 --> 00:07:06,720 Speaker 1: confirm Shelton, UH and Waller. I think it would make 135 00:07:06,720 --> 00:07:09,600 Speaker 1: more sense to leave those positions open so that Joe 136 00:07:09,640 --> 00:07:14,120 Speaker 1: Biden put his imprint on the Fed. End of the day, though, 137 00:07:14,160 --> 00:07:16,280 Speaker 1: if Shelton were to get confirmed. I don't think would 138 00:07:16,320 --> 00:07:18,760 Speaker 1: make a huge difference in terms out of the conserves 139 00:07:18,800 --> 00:07:21,960 Speaker 1: policy bill. I must ask you, and this is so important, 140 00:07:22,000 --> 00:07:25,200 Speaker 1: if you don't understand your theory, do you perceive that 141 00:07:25,240 --> 00:07:30,040 Speaker 1: she's coming from some convolution of Austrian economics and a 142 00:07:30,120 --> 00:07:36,280 Speaker 1: traditional historical German economics, literally from another time and place. Well, 143 00:07:36,360 --> 00:07:38,880 Speaker 1: she's been inconsistent over time. Right, on one hand, she 144 00:07:38,920 --> 00:07:41,360 Speaker 1: has spouses sort of goal standard hard money. On the 145 00:07:41,360 --> 00:07:43,680 Speaker 1: other hand, she now wants to you know, interest rates 146 00:07:43,720 --> 00:07:47,280 Speaker 1: extraordinarily low even before we entered the pandemic. So she 147 00:07:47,360 --> 00:07:51,040 Speaker 1: seems to bend with the political winds. And you really 148 00:07:51,200 --> 00:07:53,360 Speaker 1: want the Fed to not bend with the political winds. 149 00:07:53,400 --> 00:07:57,880 Speaker 1: You want them to be independent of the political pressures. Well, 150 00:07:57,880 --> 00:07:59,840 Speaker 1: but let's talk about process and just wrap things up 151 00:07:59,880 --> 00:08:02,240 Speaker 1: that I've lost kind of how many meetings you must 152 00:08:02,240 --> 00:08:04,360 Speaker 1: have been to at the Federal Reserve if there was 153 00:08:04,400 --> 00:08:07,560 Speaker 1: someone with a more unorthodox approach to monety policy and 154 00:08:07,600 --> 00:08:11,000 Speaker 1: policy setting. How loud could that voice possibly be if 155 00:08:11,040 --> 00:08:14,280 Speaker 1: she was confirmed? Not very loud. I mean, the way 156 00:08:14,320 --> 00:08:16,640 Speaker 1: the Federals are works, it's a it's a consensus, it's 157 00:08:16,640 --> 00:08:21,280 Speaker 1: a committee. The chairman sets the agenda. If you're you know, 158 00:08:21,400 --> 00:08:22,960 Speaker 1: by your you know, if you have views that are 159 00:08:23,000 --> 00:08:25,559 Speaker 1: not shared by others on the committee, you can dissent, 160 00:08:25,640 --> 00:08:27,760 Speaker 1: but you're not gonna have any meaningful impact on policy. 161 00:08:27,760 --> 00:08:29,800 Speaker 1: I think, you know, if Shelton is confirmed, I mean, 162 00:08:29,840 --> 00:08:32,720 Speaker 1: the main implication of it just that Biden wouldn't have 163 00:08:33,120 --> 00:08:35,720 Speaker 1: a chance to appoint governors to the FED, and that 164 00:08:35,800 --> 00:08:40,240 Speaker 1: might slow down his ability to put people in place 165 00:08:40,320 --> 00:08:43,000 Speaker 1: that that that that he thinks there are more consistent 166 00:08:43,000 --> 00:08:45,400 Speaker 1: with his policy views. Not so much on Montrey policy, 167 00:08:45,640 --> 00:08:50,040 Speaker 1: but in terms of financial regulation and bank regulation bill. 168 00:08:50,080 --> 00:08:52,040 Speaker 1: Great to catch up. We appreciate how open you've been, 169 00:08:52,160 --> 00:08:54,560 Speaker 1: and asked him. Minutes built outly their former New York 170 00:08:54,559 --> 00:09:02,480 Speaker 1: FED president now Princeton and bloom Bug opinion columnists joining 171 00:09:02,559 --> 00:09:06,840 Speaker 1: us now Madama Alliance is Global Investors. US investment strategist 172 00:09:06,880 --> 00:09:11,440 Speaker 1: Mona Kitchen Salk said this morning, understandable the last week 173 00:09:11,520 --> 00:09:15,840 Speaker 1: or so in this market, but unsustainable Do you share that? Uh? 174 00:09:15,880 --> 00:09:19,280 Speaker 1: You know, I actually think that the rotation part of 175 00:09:19,320 --> 00:09:23,120 Speaker 1: this equity move is somewhat sustainable. So you know, we 176 00:09:23,120 --> 00:09:25,000 Speaker 1: we see, of course, in the next few months we 177 00:09:25,040 --> 00:09:27,720 Speaker 1: may get some volatility. We're still not through the toughest 178 00:09:27,760 --> 00:09:31,959 Speaker 1: part of this virus and this pandemic um. But beyond that, 179 00:09:32,080 --> 00:09:33,960 Speaker 1: you know, I think the incremental news we got this 180 00:09:34,000 --> 00:09:37,440 Speaker 1: week in last week was not only vaccines, but vaccines 181 00:09:37,480 --> 00:09:43,000 Speaker 1: that were over effective or effective. You know, even the scientists, 182 00:09:43,360 --> 00:09:47,040 Speaker 1: in their their wildest hopes were not expecting two vaccines 183 00:09:47,040 --> 00:09:49,760 Speaker 1: that would produced that. So in our mind, that's incremental 184 00:09:49,800 --> 00:09:53,000 Speaker 1: news that could get us through this pandemic in the 185 00:09:53,040 --> 00:09:55,560 Speaker 1: next twelve month period. And so for us, when you 186 00:09:55,600 --> 00:09:59,640 Speaker 1: think about one where growth may start to accelerate because 187 00:09:59,679 --> 00:10:01,640 Speaker 1: you have have a true reopening, not only in the 188 00:10:01,760 --> 00:10:05,800 Speaker 1: US but globally, rates will probably remain low at least 189 00:10:05,800 --> 00:10:10,760 Speaker 1: through and you have the potential for fiscal stimulus and 190 00:10:10,840 --> 00:10:13,080 Speaker 1: maybe some fiscal spending. You know, that's not a bad 191 00:10:13,120 --> 00:10:17,120 Speaker 1: backdrop for risk assets broadly. So overall, we will continue 192 00:10:17,160 --> 00:10:19,640 Speaker 1: to feel that if you have some periods of alatility, 193 00:10:19,840 --> 00:10:22,280 Speaker 1: use that tactically, if you haven't already layered in some 194 00:10:22,360 --> 00:10:26,080 Speaker 1: cyprocality some non US assets. Start to think about that 195 00:10:26,600 --> 00:10:29,160 Speaker 1: Mona Walmart is breaking out to a new high. Our 196 00:10:29,160 --> 00:10:31,400 Speaker 1: corporation is going to adjust to all this. I mean, 197 00:10:31,400 --> 00:10:34,480 Speaker 1: the bears are there. John's mentioning the gloom of a Bramo. 198 00:10:34,559 --> 00:10:36,600 Speaker 1: It's the gloom of Sockin and the rest of them 199 00:10:36,840 --> 00:10:40,000 Speaker 1: as well, Mona, Just as simple as I can. Are 200 00:10:40,040 --> 00:10:46,080 Speaker 1: we underestimating the ability of corporations to adapt to this pandemic. 201 00:10:47,120 --> 00:10:51,120 Speaker 1: You know, clearly this pandemic has accelerated some key trends. 202 00:10:51,120 --> 00:10:53,719 Speaker 1: So we've seen brick and mortar to online retail, and 203 00:10:53,760 --> 00:10:57,880 Speaker 1: Walmart's a clear beneficiary that they've accelerated their online programs 204 00:10:58,320 --> 00:11:01,240 Speaker 1: um but also things like know a work from more 205 00:11:01,280 --> 00:11:04,720 Speaker 1: work from home employee base that's been accelerated through this. 206 00:11:05,040 --> 00:11:07,600 Speaker 1: We think that's here to stay to some extent. Supports 207 00:11:07,600 --> 00:11:11,760 Speaker 1: cloud computing, supports cybersecurity, going from you know, medical visits 208 00:11:11,760 --> 00:11:14,199 Speaker 1: in person to tell medicine, you know, another trend that's 209 00:11:14,200 --> 00:11:16,800 Speaker 1: probably here to stay. So there's several trends that we 210 00:11:16,880 --> 00:11:19,880 Speaker 1: are seeing that the corporations probably had been thinking about 211 00:11:20,120 --> 00:11:22,400 Speaker 1: but now really have to get on the ball. These 212 00:11:22,440 --> 00:11:26,360 Speaker 1: trends have been accelerated through this pandemic and are likely 213 00:11:26,480 --> 00:11:29,280 Speaker 1: here to stay to some extent, and so that's why 214 00:11:29,280 --> 00:11:31,600 Speaker 1: we still think a balance is important. You know, some 215 00:11:31,679 --> 00:11:34,880 Speaker 1: of these quote unquote stay at home stocks are actually 216 00:11:35,080 --> 00:11:38,040 Speaker 1: you know, they have three five ten years secular growth 217 00:11:38,080 --> 00:11:40,480 Speaker 1: trends behind them, and so it's important to have that 218 00:11:40,559 --> 00:11:42,520 Speaker 1: part of the exposure as well. But you know, we 219 00:11:42,520 --> 00:11:45,280 Speaker 1: could see a few months at least of really strong 220 00:11:45,320 --> 00:11:48,320 Speaker 1: outperformance from the cyclical part of the market as well. 221 00:11:48,679 --> 00:11:51,280 Speaker 1: Not one of the hardest aspects of this moment is 222 00:11:51,320 --> 00:11:53,880 Speaker 1: there's a near term, as John was talking about, that's 223 00:11:53,880 --> 00:11:56,080 Speaker 1: looking darker and darker, and frankly darker than a lot 224 00:11:56,120 --> 00:11:58,640 Speaker 1: of people had expected with respect to the pandemics trends. 225 00:11:58,880 --> 00:12:00,720 Speaker 1: And then you have the longer term or the even 226 00:12:00,760 --> 00:12:03,720 Speaker 1: the intermediate term, which looks better than expected given the 227 00:12:03,720 --> 00:12:06,800 Speaker 1: efficacy of some of these vaccines. You said in periods 228 00:12:06,840 --> 00:12:10,320 Speaker 1: of volatility to take advantage and go long into the 229 00:12:10,480 --> 00:12:13,560 Speaker 1: trades that you're talking about. What counts is volatility? What's 230 00:12:13,600 --> 00:12:16,480 Speaker 1: the entry point that you're looking for. Yeah, it's a 231 00:12:16,520 --> 00:12:19,640 Speaker 1: great question because in some cases, and certainly since the 232 00:12:19,640 --> 00:12:22,480 Speaker 1: start of this quarter, we haven't gotten many pullbacks in 233 00:12:22,520 --> 00:12:25,000 Speaker 1: fact s andps up seven and a half or eight 234 00:12:25,000 --> 00:12:28,840 Speaker 1: percent since septembert and some of the cyclical sectors are 235 00:12:28,920 --> 00:12:33,280 Speaker 1: up thirteen fourteen, so we haven't quite seen a dip 236 00:12:33,400 --> 00:12:36,040 Speaker 1: to buy quite yet. We do think over the next 237 00:12:36,360 --> 00:12:38,040 Speaker 1: two month period three year, and you're not going to 238 00:12:38,120 --> 00:12:41,360 Speaker 1: get a continuation of this straight upward movement. There will 239 00:12:41,400 --> 00:12:43,960 Speaker 1: be pullbocks. Keep in mind, in any given year, three 240 00:12:43,960 --> 00:12:46,440 Speaker 1: to five pullbocks in a five to ten percent basis 241 00:12:46,520 --> 00:12:49,439 Speaker 1: or five ten percent range are normal and are probably 242 00:12:49,520 --> 00:12:52,880 Speaker 1: healthy if we go through another period like that, certainly 243 00:12:52,920 --> 00:12:55,880 Speaker 1: ahead of one. I think it's important to start thinking 244 00:12:55,920 --> 00:12:58,839 Speaker 1: about how you want to position as these vaccines get 245 00:12:58,920 --> 00:13:01,640 Speaker 1: rolled out, as hopefully we start to see this change 246 00:13:01,640 --> 00:13:04,880 Speaker 1: and shift uh two in consumer behavior, perhaps a little 247 00:13:04,880 --> 00:13:09,080 Speaker 1: bit back to pre pandemic activity levels. And so we 248 00:13:09,160 --> 00:13:12,520 Speaker 1: do think we'll we'll get a period of consolidation that 249 00:13:12,559 --> 00:13:15,480 Speaker 1: can be used to position yourself accordingly. So it's important 250 00:13:15,480 --> 00:13:18,880 Speaker 1: to watch for that. No to what extent do you 251 00:13:18,960 --> 00:13:21,439 Speaker 1: think that people were conditioned by the price action of 252 00:13:21,520 --> 00:13:24,439 Speaker 1: the spring and condition to look through what's playing out 253 00:13:24,440 --> 00:13:26,280 Speaker 1: in America right now? And I wonder what you think 254 00:13:26,280 --> 00:13:29,280 Speaker 1: the fall out of that actually is. Yeah, it's a 255 00:13:29,280 --> 00:13:32,439 Speaker 1: great question, because clearly when the Fed stepped in in March, 256 00:13:32,600 --> 00:13:35,240 Speaker 1: and they stepped in a big way, uh not only 257 00:13:35,320 --> 00:13:37,800 Speaker 1: bring rates back down to a little round, adding kwee, 258 00:13:37,960 --> 00:13:41,319 Speaker 1: adding these credit facility programs that really supported the functioning 259 00:13:41,400 --> 00:13:44,720 Speaker 1: of credit an equity markets. Um, they really did put 260 00:13:44,720 --> 00:13:47,079 Speaker 1: a bit of a backstop into this market, and so 261 00:13:47,640 --> 00:13:51,560 Speaker 1: um it does feel like markets are conditioned to buy 262 00:13:51,600 --> 00:13:54,400 Speaker 1: that dip. Um. What we'd say is it's important to 263 00:13:54,440 --> 00:13:56,800 Speaker 1: stay a little bit active and how you buy these 264 00:13:56,840 --> 00:13:59,680 Speaker 1: dips and how you position yourself in the marketplace. If 265 00:13:59,679 --> 00:14:03,280 Speaker 1: you to have performance that's in line with you know, 266 00:14:03,320 --> 00:14:05,839 Speaker 1: the broader indusseries. You do need to think about your 267 00:14:05,840 --> 00:14:08,880 Speaker 1: waiting in certain sectors, in certain regions, etcetera. And so 268 00:14:09,440 --> 00:14:11,200 Speaker 1: there is a bit of conditioning, but we think it 269 00:14:11,200 --> 00:14:13,400 Speaker 1: could be more than just buying the overall market. It's 270 00:14:13,400 --> 00:14:15,959 Speaker 1: how you position as you move forward. But as long 271 00:14:16,000 --> 00:14:17,800 Speaker 1: as the FETE is there, as long as global central 272 00:14:17,840 --> 00:14:20,880 Speaker 1: banks are in play, um, we think there is a 273 00:14:20,880 --> 00:14:23,280 Speaker 1: bit of a backstop in the market. And that's some 274 00:14:23,360 --> 00:14:26,200 Speaker 1: extent helpful, but longer term we'll see what consequences are 275 00:14:26,720 --> 00:14:28,800 Speaker 1: might great to catch up the fete is that with 276 00:14:28,920 --> 00:14:32,280 Speaker 1: all without Judy shouts and made jan from invest this, 277 00:14:32,400 --> 00:14:39,280 Speaker 1: thank you. Let's get started here right now and Amazon 278 00:14:39,360 --> 00:14:43,000 Speaker 1: tom four to where this so d a Davidson, He writes, brilliant, brilliant, No, yeah, 279 00:14:43,000 --> 00:14:45,240 Speaker 1: he's a bowl on Amazon. But this, of course, on 280 00:14:45,280 --> 00:14:47,960 Speaker 1: this big announcement today, Tom, I get the type two 281 00:14:48,000 --> 00:14:51,520 Speaker 1: that this is about hurting right aid, hurting CVS, taking 282 00:14:51,560 --> 00:14:55,320 Speaker 1: market share away, etcetera. What's in it for Mr Bezos? 283 00:14:57,000 --> 00:15:00,200 Speaker 1: So those are the implications for the competition. This is 284 00:15:00,240 --> 00:15:04,480 Speaker 1: a large trillion dollar global opportunity for Amazon. So Amazon 285 00:15:04,560 --> 00:15:08,440 Speaker 1: needs these large global trillion dollar opportunities to sustain their 286 00:15:08,480 --> 00:15:11,480 Speaker 1: growth and their multiple So my question for Amazon is 287 00:15:11,520 --> 00:15:13,400 Speaker 1: what took you so long? But I think this is 288 00:15:13,440 --> 00:15:15,840 Speaker 1: a great move by Amazon. Okay, so it's there, and 289 00:15:16,000 --> 00:15:18,800 Speaker 1: you know, I look at I look at Amazon right now. 290 00:15:18,880 --> 00:15:21,240 Speaker 1: Does this move the needle on their revenues? I mean, 291 00:15:21,640 --> 00:15:27,120 Speaker 1: is it just is it a five year project? Excellent question, Tom. Collectively, 292 00:15:27,200 --> 00:15:31,360 Speaker 1: I would say Amazon's healthcare efforts are needle movers. So 293 00:15:31,440 --> 00:15:33,920 Speaker 1: you think about how they've kind of been forced into healthcare, 294 00:15:34,560 --> 00:15:38,040 Speaker 1: testing their employees for COVID, opening these mini clinics for 295 00:15:38,080 --> 00:15:43,080 Speaker 1: their employees families, and now they're advancing their pharmacy efforts. 296 00:15:43,120 --> 00:15:44,840 Speaker 1: They had pill pack, now they're going to open an 297 00:15:44,840 --> 00:15:49,160 Speaker 1: online pharmacy. I think collectively their efforts and healthcare are 298 00:15:49,240 --> 00:15:53,560 Speaker 1: needle movers. Well, let's more through things just quickly. The 299 00:15:53,560 --> 00:15:55,840 Speaker 1: acquisition of pill back, how does it fit into all 300 00:15:55,880 --> 00:15:57,160 Speaker 1: of this? And do you think they can do this 301 00:15:57,240 --> 00:16:02,280 Speaker 1: from where they are now organically complimentary to the extent 302 00:16:02,320 --> 00:16:04,600 Speaker 1: you think of pill pack is making it easier for 303 00:16:04,760 --> 00:16:09,040 Speaker 1: consumers to follow their prescriptions. I still believe that over 304 00:16:09,080 --> 00:16:12,080 Speaker 1: time they're going to have physical pharmacies that will complement 305 00:16:12,120 --> 00:16:15,120 Speaker 1: their online ones. I really thought acquired Whole Foods in 306 00:16:16,080 --> 00:16:18,920 Speaker 1: they would devote a portion of that box to a pharmacy. 307 00:16:19,320 --> 00:16:21,520 Speaker 1: So I still think this is only the beginning, but 308 00:16:21,600 --> 00:16:24,640 Speaker 1: an important move for Amazon given the large social addressable 309 00:16:24,720 --> 00:16:29,200 Speaker 1: market TOM. Their Whole Foods acquisition and rollout hasn't necessarily 310 00:16:29,280 --> 00:16:32,960 Speaker 1: been incredibly profitable. We don't necessarily know. They don't break 311 00:16:33,000 --> 00:16:35,960 Speaker 1: out all of the data, but they're fries into physical 312 00:16:36,480 --> 00:16:39,400 Speaker 1: grocery stores in the past have not been as successful. 313 00:16:39,840 --> 00:16:42,640 Speaker 1: Why is this time different? Why are we seeing the 314 00:16:42,960 --> 00:16:48,200 Speaker 1: shares of CBS and Walgreen's plummet on this news so 315 00:16:48,600 --> 00:16:52,560 Speaker 1: excellent points. Historically Basis has said your sales is my opportunity. 316 00:16:52,920 --> 00:16:56,440 Speaker 1: I feel like historically Walmart said your gross profits my opportunity, 317 00:16:56,840 --> 00:16:59,520 Speaker 1: and Walmart went hard in the generic drugs. If you remember, 318 00:17:00,080 --> 00:17:03,360 Speaker 1: so there is a lot of profitability opportunity for Amazon, 319 00:17:03,920 --> 00:17:07,800 Speaker 1: especially in generics. Um Grocery, though, is not a high 320 00:17:07,840 --> 00:17:11,280 Speaker 1: margin category. So I would say that expectations the whole 321 00:17:11,280 --> 00:17:15,720 Speaker 1: foods generating materially higher margins were overly optimistic. In the 322 00:17:15,760 --> 00:17:18,639 Speaker 1: case for pharmacy is different, though, Tom there is a 323 00:17:18,680 --> 00:17:22,920 Speaker 1: broader question, especially as Democrats have more power heading into 324 00:17:23,720 --> 00:17:26,720 Speaker 1: one with Joe Biden taking the role of president. There's 325 00:17:26,760 --> 00:17:30,000 Speaker 1: a question of how much more antitrust concerned. This raises 326 00:17:30,040 --> 00:17:32,960 Speaker 1: about Amazon, the fact that they're plowing into every aspect 327 00:17:33,280 --> 00:17:36,680 Speaker 1: of people's lives. Does this matter if it's done organically. 328 00:17:36,920 --> 00:17:39,479 Speaker 1: Does this put pressure to possibly break them up or 329 00:17:39,480 --> 00:17:43,440 Speaker 1: restrain them in some capacity? So I think that it's 330 00:17:43,480 --> 00:17:47,680 Speaker 1: bipartisans support to restrain the impact of Amazon, Apple, Facebook, 331 00:17:47,680 --> 00:17:50,040 Speaker 1: and Google. But I think both parties are trying to 332 00:17:50,040 --> 00:17:52,359 Speaker 1: figure out how to do that. It's my understanding at 333 00:17:52,359 --> 00:17:56,160 Speaker 1: one point was this warrant proposed legislation to limit acquisitions 334 00:17:56,160 --> 00:17:58,520 Speaker 1: over a billion. So you'll see a lot of smaller 335 00:17:58,520 --> 00:18:01,440 Speaker 1: acquisitions if that happens, and to your point, more companies 336 00:18:01,480 --> 00:18:04,720 Speaker 1: building it organically. From an anti competitive standpoint, that it's 337 00:18:04,720 --> 00:18:06,720 Speaker 1: hard for me to imagine that they could prove this 338 00:18:06,880 --> 00:18:09,439 Speaker 1: is bad for the consumer and at this raises costs 339 00:18:09,440 --> 00:18:12,399 Speaker 1: and pharmacy. You know, I'm looking at the margins on 340 00:18:12,600 --> 00:18:14,920 Speaker 1: right aid and come on, it's like a grocery store 341 00:18:14,960 --> 00:18:18,159 Speaker 1: margin as well. Tom, give us the percentage margin we 342 00:18:18,200 --> 00:18:20,600 Speaker 1: should see their forget about the cloud for now? What 343 00:18:20,680 --> 00:18:23,240 Speaker 1: do they make on all the cardboard boxes? On margin? 344 00:18:23,600 --> 00:18:25,920 Speaker 1: What are they going to make on pharmacy? As related 345 00:18:25,920 --> 00:18:28,800 Speaker 1: to that and related to the razor thin margins at 346 00:18:28,800 --> 00:18:32,639 Speaker 1: Whole Foods yep. So collectively, I think of Amazon is 347 00:18:32,640 --> 00:18:36,200 Speaker 1: having the potential for adjusted EVA DON margin long term. 348 00:18:36,480 --> 00:18:40,040 Speaker 1: If I put most profitable least profitable, it'd be advertising first, 349 00:18:40,160 --> 00:18:43,880 Speaker 1: then cloud, then pharmacy, then third party retail, and then 350 00:18:43,920 --> 00:18:47,439 Speaker 1: dot dot dot here, but come on, give me a number, stop, Tom, 351 00:18:47,480 --> 00:18:51,119 Speaker 1: give me a number. Here, I get the IBATA. What's 352 00:18:51,160 --> 00:18:56,320 Speaker 1: the cardboard box margin? And what's pharmacy gonna bring? Sure, 353 00:18:56,400 --> 00:18:59,000 Speaker 1: pharmacy I think confidently will bring more than a ten 354 00:18:59,040 --> 00:19:01,600 Speaker 1: percent in just e but margin and the first party 355 00:19:01,640 --> 00:19:04,239 Speaker 1: retail margin is flat. So I'm great to catch up. 356 00:19:04,280 --> 00:19:06,480 Speaker 1: I appreciate your time today, said some found of that 357 00:19:06,720 --> 00:19:15,880 Speaker 1: day to have its Incenia Research analysts were this right now? 358 00:19:16,000 --> 00:19:18,320 Speaker 1: This is it, folks, is such a blur here. I 359 00:19:18,359 --> 00:19:20,080 Speaker 1: really don't know what the schedule is. We've got such 360 00:19:20,119 --> 00:19:22,320 Speaker 1: a great team that just throws it at me. And 361 00:19:22,359 --> 00:19:24,760 Speaker 1: this is a joy. Ian Bremer joins with your Ragia 362 00:19:24,760 --> 00:19:29,199 Speaker 1: group G zero Media. He's been asconce sequestered away working 363 00:19:29,200 --> 00:19:31,360 Speaker 1: on a new book. How many times have you any 364 00:19:31,359 --> 00:19:34,280 Speaker 1: of you changed your book in the last six weeks given? 365 00:19:35,560 --> 00:19:37,600 Speaker 1: Not at all, my friend, not at all. I mean, 366 00:19:37,600 --> 00:19:39,520 Speaker 1: you know, when you're doing a book. If I can't 367 00:19:39,520 --> 00:19:42,200 Speaker 1: stand up, you're not doing a book. So so many 368 00:19:42,240 --> 00:19:44,320 Speaker 1: things to talk about. Let us start with the bigger 369 00:19:44,320 --> 00:19:48,199 Speaker 1: and the broader. Freezcaria talks about a post American world. 370 00:19:48,440 --> 00:19:52,720 Speaker 1: What does the post Trump world look like? Um, well, 371 00:19:52,760 --> 00:19:55,440 Speaker 1: there's it's gonna be a honeymoon. There's no question that 372 00:19:55,640 --> 00:19:58,800 Speaker 1: most leaders, not all, but most leaders around the world 373 00:19:58,800 --> 00:20:01,120 Speaker 1: are going to be very happy. You see the back 374 00:20:01,160 --> 00:20:05,600 Speaker 1: of Trump, and so the big summits that happen will 375 00:20:05,640 --> 00:20:10,440 Speaker 1: appear much more consensus oriented. They'll be a honeymoon. They'll 376 00:20:10,480 --> 00:20:14,119 Speaker 1: want to give Biden some small winds to show that 377 00:20:14,200 --> 00:20:17,000 Speaker 1: the United States is back. But you and I both 378 00:20:17,040 --> 00:20:21,160 Speaker 1: know that the reasons that we have so much uncertainty 379 00:20:21,160 --> 00:20:24,600 Speaker 1: in the global order, have comparatively little to do with Trump. 380 00:20:24,680 --> 00:20:28,000 Speaker 1: Their structural they are, you know, a United States that 381 00:20:28,200 --> 00:20:31,880 Speaker 1: is less in leading from the front. You remember leading 382 00:20:31,880 --> 00:20:35,719 Speaker 1: from behind that started with Obama Biden. Um. You have Europe, 383 00:20:35,720 --> 00:20:39,400 Speaker 1: which is more divided post Brexit. Um. You have Russia 384 00:20:39,480 --> 00:20:42,720 Speaker 1: which is in decline and undermining the United States and 385 00:20:42,800 --> 00:20:44,679 Speaker 1: our friends. And then you have China, which is not 386 00:20:44,760 --> 00:20:48,880 Speaker 1: aligning towards the US in political and economic systems at all. 387 00:20:49,119 --> 00:20:53,240 Speaker 1: None of those things change one bit with a Biden administration. Okay, 388 00:20:53,280 --> 00:20:57,040 Speaker 1: but the tone changes. And I think all of our listeners, 389 00:20:57,200 --> 00:21:00,920 Speaker 1: you know, worldwide and whatever their politics is, is they 390 00:21:01,000 --> 00:21:04,360 Speaker 1: overweight they underweight tone? Dr Bremer, You've been doing this 391 00:21:04,440 --> 00:21:09,520 Speaker 1: for a while. Tone, We've learned matters. What's the proper 392 00:21:09,600 --> 00:21:13,919 Speaker 1: tone in the first weeks of a Biden administration? Is 393 00:21:13,960 --> 00:21:20,800 Speaker 1: they rebuild state that we care about values, that democracy matters, 394 00:21:20,960 --> 00:21:23,760 Speaker 1: human rights? Does he does he get on an airplane? 395 00:21:23,800 --> 00:21:26,000 Speaker 1: I mean, is the big surprise here is Joe Biden 396 00:21:26,080 --> 00:21:30,280 Speaker 1: is going to do a international tour as president? No? No, 397 00:21:30,359 --> 00:21:34,879 Speaker 1: I don't think so, because he's entering governance with a 398 00:21:35,080 --> 00:21:40,560 Speaker 1: very dysfunctional transition in the midst of an incredibly challenging 399 00:21:40,640 --> 00:21:44,680 Speaker 1: coronavirus at home, and he needs to respond to that 400 00:21:44,880 --> 00:21:47,280 Speaker 1: at home. I mean, there's no question that there will 401 00:21:47,320 --> 00:21:50,840 Speaker 1: be a lot of wins just by undoing stuff that 402 00:21:50,880 --> 00:21:54,840 Speaker 1: Trump has done. So he rejoins Paris Climate Accord seventy 403 00:21:54,920 --> 00:21:58,480 Speaker 1: six days after the US left. He tries to get 404 00:21:58,560 --> 00:22:01,680 Speaker 1: the United States back in the Intermediate nucle Year Forces 405 00:22:01,720 --> 00:22:04,760 Speaker 1: agreement with the Russians. Um. I mean, you know that 406 00:22:04,800 --> 00:22:06,840 Speaker 1: you've got a whole bunch of stuff like that. I mean, 407 00:22:06,840 --> 00:22:10,080 Speaker 1: even the World Health Organization and announcing that the US 408 00:22:10,240 --> 00:22:14,920 Speaker 1: will participate in KOVACS for vaccine development and distribution. It's 409 00:22:14,960 --> 00:22:17,320 Speaker 1: not a game changer. But if you want to talk 410 00:22:17,359 --> 00:22:20,080 Speaker 1: about tone, all of those are things that show that 411 00:22:20,119 --> 00:22:24,000 Speaker 1: the United States doesn't want to surprise its allies, wants 412 00:22:24,040 --> 00:22:27,080 Speaker 1: to be constructive and working with other countries around the world. 413 00:22:27,800 --> 00:22:29,840 Speaker 1: So and we we just finished up a you know, 414 00:22:30,040 --> 00:22:33,520 Speaker 1: very contentious election. Now we have a transition that is 415 00:22:33,560 --> 00:22:39,200 Speaker 1: not transitioning. Um. How aur adversaries around the world viewing 416 00:22:39,600 --> 00:22:42,840 Speaker 1: the US right now as we try to transition from 417 00:22:42,880 --> 00:22:47,840 Speaker 1: one administration, one government to the next. I think governments 418 00:22:47,880 --> 00:22:52,440 Speaker 1: are transitioning pretty capably. Again. I mean, so you look 419 00:22:52,480 --> 00:22:54,320 Speaker 1: at a country. There are countries that really are very 420 00:22:54,400 --> 00:22:58,639 Speaker 1: upset that Trump has gone. You look at Brazil and 421 00:22:58,760 --> 00:23:03,000 Speaker 1: uh and given both scenarios, views on climate and the Amazon, 422 00:23:03,200 --> 00:23:05,520 Speaker 1: and the fact that Biden will be a polar opposite, 423 00:23:05,760 --> 00:23:08,439 Speaker 1: this is a real problem for him. There's likely to 424 00:23:08,480 --> 00:23:11,879 Speaker 1: be difficulties with trade, agriculture, you name it on the 425 00:23:11,920 --> 00:23:14,280 Speaker 1: back of that. And yet it's not going to affect 426 00:23:15,080 --> 00:23:18,160 Speaker 1: his popularity at home or his likelihood of being reelected 427 00:23:18,240 --> 00:23:21,280 Speaker 1: one bit. And I think that's the real point. It's 428 00:23:21,359 --> 00:23:24,000 Speaker 1: it's yes, you, you you want to prepare to have 429 00:23:24,040 --> 00:23:27,320 Speaker 1: a better relationship with Biden For most of the countries 430 00:23:27,359 --> 00:23:30,719 Speaker 1: around the world, but overwhelmingly, the United States is not 431 00:23:30,920 --> 00:23:33,560 Speaker 1: driving outcomes for a lot of these conflicts. It's a 432 00:23:33,640 --> 00:23:39,639 Speaker 1: much more multilateral and a much more g zero global environment. 433 00:23:39,800 --> 00:23:41,800 Speaker 1: And I think that what we're seeing is a lot 434 00:23:41,800 --> 00:23:44,359 Speaker 1: of hedging. I mean, I had this debate yesterday with 435 00:23:44,400 --> 00:23:47,200 Speaker 1: Neil Ferguson and he was saying, we're in a cold war, 436 00:23:47,800 --> 00:23:50,320 Speaker 1: and the strong one of the strongest reasons why we're 437 00:23:50,359 --> 00:23:52,920 Speaker 1: not in a cold war is because most other countries 438 00:23:52,920 --> 00:23:55,040 Speaker 1: in the world outside of the United States and China 439 00:23:55,400 --> 00:23:59,960 Speaker 1: have no interest whatsoever in picking sides like that. They're 440 00:24:00,119 --> 00:24:03,359 Speaker 1: all hedging and that that that's an important thing to 441 00:24:03,440 --> 00:24:06,960 Speaker 1: keep in mind when you think about the post US transition, 442 00:24:08,960 --> 00:24:12,639 Speaker 1: will the world will are allies and the world leaders 443 00:24:12,680 --> 00:24:17,760 Speaker 1: in general embrace the US under the Biden administration after 444 00:24:17,880 --> 00:24:20,520 Speaker 1: the last four years where it really was President trump 445 00:24:20,520 --> 00:24:24,280 Speaker 1: strategy of America first, and we really burned a lot 446 00:24:24,280 --> 00:24:30,040 Speaker 1: of bridges. Well, I mean, how many bridges did we burn? Right? 447 00:24:30,080 --> 00:24:33,000 Speaker 1: I mean we we We definitely jumped on the bridges 448 00:24:33,040 --> 00:24:36,359 Speaker 1: a lot and showed petulance. You look at NATO, No, 449 00:24:36,480 --> 00:24:39,400 Speaker 1: I mean the actual NATO policy. NATO was pretty much 450 00:24:39,400 --> 00:24:41,840 Speaker 1: as strong today as it was four years ago. The US. 451 00:24:42,160 --> 00:24:44,760 Speaker 1: Trump pushed for countries to spend more money. The US 452 00:24:44,800 --> 00:24:48,160 Speaker 1: spent more on defense. You've got forward deployments in Poland, 453 00:24:48,200 --> 00:24:51,600 Speaker 1: you've got rotating deployments in the Baltic State. Nothing happening 454 00:24:51,720 --> 00:24:55,000 Speaker 1: i m F United Nations. The US paid paid its dues, 455 00:24:55,560 --> 00:24:57,080 Speaker 1: and the i m F has had a pretty good 456 00:24:57,200 --> 00:25:00,240 Speaker 1: year because so much money has been required for trees 457 00:25:00,320 --> 00:25:03,040 Speaker 1: that are in tough shape on the back of coronavirus. 458 00:25:03,240 --> 00:25:06,160 Speaker 1: Trump didn't kill that. So look there are a lot 459 00:25:06,200 --> 00:25:10,399 Speaker 1: of leaders around the world that find that Trump. A 460 00:25:10,480 --> 00:25:13,960 Speaker 1: meeting with Trump was an exercise in walking on eggshells. 461 00:25:14,040 --> 00:25:15,880 Speaker 1: But you never knew what bomb he was gonna throw. 462 00:25:16,000 --> 00:25:18,239 Speaker 1: Was he gonna say he's gonna pull out troops, or 463 00:25:18,440 --> 00:25:20,639 Speaker 1: was he gonna whack you with tariffs? Or tell the 464 00:25:20,720 --> 00:25:23,200 Speaker 1: Japanese suddenly, Hey, I just called the North Korean leader. 465 00:25:23,240 --> 00:25:24,960 Speaker 1: What do you think about that? I mean, you know, 466 00:25:24,960 --> 00:25:28,480 Speaker 1: they didn't like that. So again, I think that they 467 00:25:28,480 --> 00:25:32,680 Speaker 1: will try to give Biden some early wins. They won't 468 00:25:32,720 --> 00:25:35,200 Speaker 1: be big, but they'll show that we're so much happier 469 00:25:35,240 --> 00:25:38,560 Speaker 1: with this guy. The real issue is that the United 470 00:25:38,640 --> 00:25:42,480 Speaker 1: States is not providing the kind of leadership on trade, 471 00:25:42,880 --> 00:25:46,960 Speaker 1: on global security, and certainly on the promotion of democracy 472 00:25:47,000 --> 00:25:49,120 Speaker 1: that many other Leews would like it to. And that's 473 00:25:49,320 --> 00:25:53,320 Speaker 1: much deeper than Trump or Biden Obama. That's been going 474 00:25:53,359 --> 00:25:56,639 Speaker 1: on for a long time with US. We continue Dr Bremer, 475 00:25:56,680 --> 00:25:58,480 Speaker 1: of course, as Eurisia Group, and I can tell you 476 00:25:58,560 --> 00:26:02,760 Speaker 1: I've already had some inquiries. Yes, we are planning. We're 477 00:26:02,760 --> 00:26:06,800 Speaker 1: in intense negotiations multilateral negotiations with the Eurasia Group to 478 00:26:06,880 --> 00:26:10,120 Speaker 1: do their wonderful and important kick off to the beginning 479 00:26:10,560 --> 00:26:15,040 Speaker 1: of the year. Always important themes and scary pression from 480 00:26:15,080 --> 00:26:20,119 Speaker 1: the Eurasia Group UH Team UH and your thoughts on 481 00:26:20,600 --> 00:26:25,480 Speaker 1: a not t PP but a China PP trade agreement. 482 00:26:25,520 --> 00:26:28,000 Speaker 1: There was a great map out in the zeitgeist of 483 00:26:28,160 --> 00:26:31,120 Speaker 1: China in the Pacific RIM, even down to New Zealand, 484 00:26:32,040 --> 00:26:34,119 Speaker 1: and then there was like what t p P was 485 00:26:34,160 --> 00:26:37,439 Speaker 1: gonna be, and it's like not that. And there's this 486 00:26:37,520 --> 00:26:40,720 Speaker 1: big gray spot called the United States of America not 487 00:26:40,920 --> 00:26:45,400 Speaker 1: participating in any of us define the vacuum by our 488 00:26:45,520 --> 00:26:50,480 Speaker 1: absence in multilateral trade agreements in the Pacific. Yeah, I 489 00:26:50,560 --> 00:26:55,560 Speaker 1: mean it's kind of like one more Beltan Road. I mean, 490 00:26:55,720 --> 00:26:58,199 Speaker 1: you and I have talked about that for years. The 491 00:26:58,359 --> 00:27:02,480 Speaker 1: Chinese are out there building of infrastructure the United States, 492 00:27:02,840 --> 00:27:05,560 Speaker 1: the companies are, but the government is not, and that 493 00:27:05,640 --> 00:27:09,840 Speaker 1: aligns these countries more with China. UM. The Chinese drive 494 00:27:10,160 --> 00:27:14,080 Speaker 1: a big multilateral trade agreement. It's not a massive shift 495 00:27:14,119 --> 00:27:17,360 Speaker 1: in terms of tariff production. It's not a high standard 496 00:27:17,359 --> 00:27:21,160 Speaker 1: agreement like the Trans Pacific Partnership would have been UM, 497 00:27:21,240 --> 00:27:24,120 Speaker 1: and it's certainly not exclusive. It doesn't stop these countries 498 00:27:24,160 --> 00:27:27,159 Speaker 1: from trading with the United States, just as when the 499 00:27:27,240 --> 00:27:29,720 Speaker 1: Chinese build a port through Belton Road, it doesn't stop 500 00:27:29,760 --> 00:27:32,760 Speaker 1: the United States companies from using that port. It drives 501 00:27:32,800 --> 00:27:35,960 Speaker 1: more wealth. We like that a world with a China 502 00:27:36,119 --> 00:27:40,240 Speaker 1: driven our Step deal is a world of higher economic growth. 503 00:27:40,280 --> 00:27:42,960 Speaker 1: It's better than a world without it. But you and 504 00:27:43,000 --> 00:27:46,679 Speaker 1: I would both much rather if the United States was 505 00:27:46,720 --> 00:27:50,200 Speaker 1: doing more of the driving and we're not interested. Let's 506 00:27:50,240 --> 00:27:55,000 Speaker 1: remember that the Trans Pacific Partnership was initially tried under 507 00:27:55,000 --> 00:27:59,320 Speaker 1: Obama Biden. They failed, and then Trump killed it. And 508 00:27:59,400 --> 00:28:01,280 Speaker 1: now Biden is going to be president and he's not 509 00:28:01,320 --> 00:28:04,520 Speaker 1: going to raise it again because the Democratic Party wasn't supported, 510 00:28:04,640 --> 00:28:08,800 Speaker 1: not the Democratic Party. So the fact that China now 511 00:28:09,000 --> 00:28:11,880 Speaker 1: is the leading trade partner in the world with over 512 00:28:12,000 --> 00:28:15,760 Speaker 1: one hundred thirty countries, the fact that China is about 513 00:28:15,760 --> 00:28:19,040 Speaker 1: two thirds the size of the economy of the US, 514 00:28:19,040 --> 00:28:22,560 Speaker 1: and its peak, the Soviet Union was less than I mean, 515 00:28:22,600 --> 00:28:26,760 Speaker 1: it's a much more robust economic competitor. And unlike the 516 00:28:26,840 --> 00:28:31,440 Speaker 1: United States, the Chinese government is actually driving strategy. Um. 517 00:28:31,480 --> 00:28:33,840 Speaker 1: I mean, we've got a lot of corporations the drive strategy, 518 00:28:33,880 --> 00:28:36,160 Speaker 1: but our government, you know, we have elections that last 519 00:28:36,240 --> 00:28:38,920 Speaker 1: for two years every four and the US is right 520 00:28:38,960 --> 00:28:42,280 Speaker 1: now the most politically divided country by far among the 521 00:28:42,320 --> 00:28:45,200 Speaker 1: advanced potential democracies. It makes it harder for us to 522 00:28:45,240 --> 00:28:47,880 Speaker 1: get this stuff done around a time ten seconds. And 523 00:28:47,880 --> 00:28:51,400 Speaker 1: when do we see your next book? Uh? Probably late 524 00:28:51,480 --> 00:28:56,520 Speaker 1: sprint have what two? Yeah? You know, I know we're 525 00:28:56,520 --> 00:29:01,400 Speaker 1: getting their masses there. Thank you so much, appreciate it. 526 00:29:01,480 --> 00:29:04,120 Speaker 1: They are beautiful. Books are almost like folks chapters like 527 00:29:04,160 --> 00:29:08,320 Speaker 1: Patrick O'Brien. They're like chapters of books across the span, 528 00:29:09,000 --> 00:29:13,600 Speaker 1: like a two chapter. Looking forward to that from Dr Bremer. 529 00:29:14,680 --> 00:29:18,880 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 530 00:29:18,920 --> 00:29:24,240 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 531 00:29:24,280 --> 00:29:28,520 Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before 532 00:29:28,560 --> 00:29:32,400 Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg 533 00:29:32,480 --> 00:29:32,800 Speaker 1: Radio