Speaker 1: Welcome to the Bloomberg Surveillance podcast and I'm Tom Keane.
Speaker 1: Daily we bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg. William
Speaker 1: Dudley is the former New York Fact President, now Princeton
Speaker 1: Holding Court. As a senior research scholar, but far more
Speaker 1: than that, he developed Goldman Sachs Economics Prejon Hasseas with
Speaker 1: Ed mcelvey and knew that it was about theory, it
Speaker 1: was about the guestimates, but it was also the granularity
Speaker 1: of the data. Bill Dudley joins us this morning. Dr Dudley,
Speaker 1: I want to go right to the Dudley. It feels
Speaker 1: like Ed mcelvy call here. I want to talk about
Speaker 1: the Dudley Beige Book about how you use data, like
Speaker 1: Mike McKee just reported, But you have to look at
Speaker 1: the data in the context of what's going on elsewhere.
Speaker 1: So you know, the fact that the retail cells were
Speaker 1: a little weaker in October reinforces the idea that is,
Speaker 1: the pandemic gets worse and there's more shutdowns and restrictions
Speaker 1: at the November data, which we haven't gotten yet, will
Speaker 1: be even softer. So you know, we have a value
Speaker 1: that we have to go through over the next six
Speaker 1: to nine months before the vaccines arrive and we can
Speaker 1: get people vaccinated. And I think it's gonna be a
Speaker 1: difficult validy to go through because the pandemic is getting
Speaker 1: worse and there's no fiscal stimulus package that seems to
Speaker 1: be about to arrive in a timely way. This is
Speaker 1: so so important, folks, and why it's so good to
Speaker 1: have William Dudley with us right now that the only
Speaker 1: one I can think of Bill Dudley is Lawrence Meyer.
Speaker 1: In terms of looking at the granularity of the data
Speaker 1: week to week, as you did years ago at goldben Sex,
Speaker 1: what data are you looking for forward to frame out
Speaker 1: the next two quarters. I think I'm gonna be focused
Speaker 1: mostly on the course of the pandemic itself and the
Speaker 1: reaction of state and local governments in terms of the
Speaker 1: restrictions that they put in place and how much people
Speaker 1: actually social distance, you know, to extent that the pandemic
Speaker 1: worsens and we have more restrictions, that's gonna exert downward
Speaker 1: pressure on the economic good data. I think it's also
Speaker 1: important to recognize that when we get data like what
Speaker 1: we got today in retail self, we're really looking in
Speaker 1: the rear view mirror. I mean the data is at
Speaker 1: over data first half of October data. We're in a
Speaker 1: much worse place today than we were in the first half.
Speaker 1: This bility point out is about momentum. Momentum is fighting
Speaker 1: the data, as you anticipate, is sets to worsen from
Speaker 1: here because of the restrictions. Let's talk about where this
Speaker 1: leaves policymakers, specifically monasty policymakers at the moment. You wrote
Speaker 1: an upad pace full blom Bug opinion in the last
Speaker 1: month which said quite clearly that you think many of
Speaker 1: the shatis for you that they have run out of ammunition.
Speaker 1: So Bill, where does it leave them right now? Well,
Speaker 1: they can do more, I mean, they haven't completely run
Speaker 1: out of ammunition in the sense that they could increase
Speaker 1: their asset purchases, or they could extend the duration of
Speaker 1: the asset purchases that they make. But it just wouldn't
Speaker 1: have that much consequence because the FED is actually succeeded
Speaker 1: in what it what turns what it wanted to accomplish.
Speaker 1: It's made interest rates very low, and it's made financial
Speaker 1: conditions very accommodative. FED did more, would it help a
Speaker 1: little bit, But the end of the days, this is
Speaker 1: really about fiscal stimulus and providing support to incomes to
Speaker 1: help people get through the valley that we face in
Speaker 1: the months ahead. Come balanced Bill as a former policy
Speaker 1: make at the FED. When you look at things right now,
Speaker 1: we have market participants come on this program all day,
Speaker 1: every day, five days a week talking about risk or
Speaker 1: lack thereof in the credit market. Because it affects presence
Speaker 1: in it, it's not a good thing at a time
Speaker 1: like this. Well, I think the FEDS backstops are pretty
Speaker 1: important because it basically reassures people that there is a
Speaker 1: buyer of last resort, and so that encourages other people
Speaker 1: to be engaging in financial markets. The FEDS, you know,
Speaker 1: the liquidity facilities of the FEDS has provided Actually haven't
Speaker 1: had that great out of takedown. Uh. What's happened is
Speaker 1: that they've served as effective backstops, and I think it's
Speaker 1: very very appropriate. Another issue that's going to get some
Speaker 1: attention is whether the FED is gonna extend the date
Speaker 1: of when these liquidity facilities laughs. Right now, they're scheduled
Speaker 1: to end at the end of December, and I think
Speaker 1: it's very likely that they'll extend them, probably you know,
Speaker 1: through at least into end of March, and maybe through
Speaker 1: the first half of two thousand one. Still a lot
Speaker 1: of people agree that the FED stepped in and provided
Speaker 1: a backstop to a lot of companies in a good way.
Speaker 1: But there's some concern that the FED is dramatically exacerbating inequalities,
Speaker 1: not just in terms of households, but among companies as well,
Speaker 1: because right now we're seeing the pain really being felt
Speaker 1: at smaller companies that don't even register with their bankruptcies,
Speaker 1: since they simply just close up shop and they don't
Speaker 1: have access to borrowing money in credit markets in the
Speaker 1: same kind of way. Do you think that the FED
Speaker 1: has almost whitewashed some of the pain with their policies
Speaker 1: looking at broader markets that have this enthusiasm, and that
Speaker 1: this is somehow at this point potentially even harmful. Well,
Speaker 1: I don't think it's harmful. I mean in the sense
Speaker 1: that it's much better to have financial markets operating than
Speaker 1: not operating. I think the problem for the FED is
Speaker 1: that Monterrey policy is a blue instrument which can't really
Speaker 1: do much about the fact that the impact of the
Speaker 1: pandemic follows very unequally on household and on different types
Speaker 1: of businesses. You know, the FED introduced the main Street
Speaker 1: lending program to try to get to a set of
Speaker 1: businesses that can access the capital markets very easily, and
Speaker 1: it just hasn't worked very well because there's lots of
Speaker 1: terms and conditions and so there's been very little take up. Uh. Yeah,
Speaker 1: I think it's much better for the FED to generate
Speaker 1: as strong as strong economy as they can and recognizing
Speaker 1: that there may be on equal burdens. But then that's
Speaker 1: for Congress and administration to come forward with the fiscal
Speaker 1: pactes that supports those that are most disadvantaged by what's happened. Meanwhile,
Speaker 1: next month, the FED is expected by some, including JP Morgan,
Speaker 1: to extend the duration of their asset purchases. Do you
Speaker 1: think that, based on where we are, based on what
Speaker 1: markets are doing, that they should go through that and
Speaker 1: that they should make that decision next month, even if
Speaker 1: market conditions are similar to where they are today. Well,
Speaker 1: I don't think there's a tremendous rush that they have
Speaker 1: to do in December. If they waited, I don't think
Speaker 1: there'll be a great consequence with tenure Treasury note you'll
Speaker 1: blow one percent. But it sort of makes sense right
Speaker 1: if you're buying UH. Treasury is an agency mortgage backed securities. Now,
Speaker 1: not so much to support market function, but to keep
Speaker 1: long term rates low. Then why not concent figure purchases
Speaker 1: in the long end of the market. Dr Dudley, I
Speaker 1: must ask you about Governor to be it's a very
Speaker 1: close vote right now. Judy Shelton, I want you to
Speaker 1: explain to our audience what her theory is grounded in
Speaker 1: traditional economics. If it's not classical or neo classical, if
Speaker 1: it's not kinesiean, what is shelton theory as you perceive it? Well,
Speaker 1: I don't think I understand her theory. That's to be
Speaker 1: very blunt about it. Look, I think it's unfortunate that
Speaker 1: that the Congress is Republican conference is pushing forward to
Speaker 1: confirm Shelton, UH and Waller. I think it would make
Speaker 1: more sense to leave those positions open so that Joe
Speaker 1: Biden put his imprint on the Fed. End of the day, though,
Speaker 1: if Shelton were to get confirmed. I don't think would
Speaker 1: make a huge difference in terms out of the conserves
Speaker 1: policy bill. I must ask you, and this is so important,
Speaker 1: if you don't understand your theory, do you perceive that
Speaker 1: she's coming from some convolution of Austrian economics and a
Speaker 1: traditional historical German economics, literally from another time and place. Well,
Speaker 1: she's been inconsistent over time. Right, on one hand, she
Speaker 1: has spouses sort of goal standard hard money. On the
Speaker 1: other hand, she now wants to you know, interest rates
Speaker 1: extraordinarily low even before we entered the pandemic. So she
Speaker 1: seems to bend with the political winds. And you really
Speaker 1: want the Fed to not bend with the political winds.
Speaker 1: You want them to be independent of the political pressures. Well,
Speaker 1: but let's talk about process and just wrap things up
Speaker 1: that I've lost kind of how many meetings you must
Speaker 1: have been to at the Federal Reserve if there was
Speaker 1: someone with a more unorthodox approach to monety policy and
Speaker 1: policy setting. How loud could that voice possibly be if
Speaker 1: she was confirmed? Not very loud. I mean, the way
Speaker 1: the Federals are works, it's a it's a consensus, it's
Speaker 1: a committee. The chairman sets the agenda. If you're you know,
Speaker 1: by your you know, if you have views that are
Speaker 1: not shared by others on the committee, you can dissent,
Speaker 1: but you're not gonna have any meaningful impact on policy.
Speaker 1: I think, you know, if Shelton is confirmed, I mean,
Speaker 1: the main implication of it just that Biden wouldn't have
Speaker 1: a chance to appoint governors to the FED, and that
Speaker 1: might slow down his ability to put people in place
Speaker 1: that that that that he thinks there are more consistent
Speaker 1: with his policy views. Not so much on Montrey policy,
Speaker 1: but in terms of financial regulation and bank regulation bill.
Speaker 1: Great to catch up. We appreciate how open you've been,
Speaker 1: and asked him. Minutes built outly their former New York
Speaker 1: FED president now Princeton and bloom Bug opinion columnists joining
Speaker 1: us now Madama Alliance is Global Investors. US investment strategist
Speaker 1: Mona Kitchen Salk said this morning, understandable the last week
Speaker 1: or so in this market, but unsustainable Do you share that? Uh?
Speaker 1: You know, I actually think that the rotation part of
Speaker 1: this equity move is somewhat sustainable. So you know, we
Speaker 1: we see, of course, in the next few months we
Speaker 1: may get some volatility. We're still not through the toughest
Speaker 1: part of this virus and this pandemic um. But beyond that,
Speaker 1: you know, I think the incremental news we got this
Speaker 1: week in last week was not only vaccines, but vaccines
Speaker 1: that were over effective or effective. You know, even the scientists,
Speaker 1: in their their wildest hopes were not expecting two vaccines
Speaker 1: that would produced that. So in our mind, that's incremental
Speaker 1: news that could get us through this pandemic in the
Speaker 1: next twelve month period. And so for us, when you
Speaker 1: think about one where growth may start to accelerate because
Speaker 1: you have have a true reopening, not only in the
Speaker 1: US but globally, rates will probably remain low at least
Speaker 1: through and you have the potential for fiscal stimulus and
Speaker 1: maybe some fiscal spending. You know, that's not a bad
Speaker 1: backdrop for risk assets broadly. So overall, we will continue
Speaker 1: to feel that if you have some periods of alatility,
Speaker 1: use that tactically, if you haven't already layered in some
Speaker 1: cyprocality some non US assets. Start to think about that
Speaker 1: Mona Walmart is breaking out to a new high. Our
Speaker 1: corporation is going to adjust to all this. I mean,
Speaker 1: the bears are there. John's mentioning the gloom of a Bramo.
Speaker 1: It's the gloom of Sockin and the rest of them
Speaker 1: as well, Mona, Just as simple as I can. Are
Speaker 1: we underestimating the ability of corporations to adapt to this pandemic.
Speaker 1: You know, clearly this pandemic has accelerated some key trends.
Speaker 1: So we've seen brick and mortar to online retail, and
Speaker 1: Walmart's a clear beneficiary that they've accelerated their online programs
Speaker 1: um but also things like know a work from more
Speaker 1: work from home employee base that's been accelerated through this.
Speaker 1: We think that's here to stay to some extent. Supports
Speaker 1: cloud computing, supports cybersecurity, going from you know, medical visits
Speaker 1: in person to tell medicine, you know, another trend that's
Speaker 1: probably here to stay. So there's several trends that we
Speaker 1: are seeing that the corporations probably had been thinking about
Speaker 1: but now really have to get on the ball. These
Speaker 1: trends have been accelerated through this pandemic and are likely
Speaker 1: here to stay to some extent, and so that's why
Speaker 1: we still think a balance is important. You know, some
Speaker 1: of these quote unquote stay at home stocks are actually
Speaker 1: you know, they have three five ten years secular growth
Speaker 1: trends behind them, and so it's important to have that
Speaker 1: part of the exposure as well. But you know, we
Speaker 1: could see a few months at least of really strong
Speaker 1: outperformance from the cyclical part of the market as well.
Speaker 1: Not one of the hardest aspects of this moment is
Speaker 1: there's a near term, as John was talking about, that's
Speaker 1: looking darker and darker, and frankly darker than a lot
Speaker 1: of people had expected with respect to the pandemics trends.
Speaker 1: And then you have the longer term or the even
Speaker 1: the intermediate term, which looks better than expected given the
Speaker 1: efficacy of some of these vaccines. You said in periods
Speaker 1: of volatility to take advantage and go long into the
Speaker 1: trades that you're talking about. What counts is volatility? What's
Speaker 1: the entry point that you're looking for. Yeah, it's a
Speaker 1: great question because in some cases, and certainly since the
Speaker 1: start of this quarter, we haven't gotten many pullbacks in
Speaker 1: fact s andps up seven and a half or eight
Speaker 1: percent since septembert and some of the cyclical sectors are
Speaker 1: up thirteen fourteen, so we haven't quite seen a dip
Speaker 1: to buy quite yet. We do think over the next
Speaker 1: two month period three year, and you're not going to
Speaker 1: get a continuation of this straight upward movement. There will
Speaker 1: be pullbocks. Keep in mind, in any given year, three
Speaker 1: to five pullbocks in a five to ten percent basis
Speaker 1: or five ten percent range are normal and are probably
Speaker 1: healthy if we go through another period like that, certainly
Speaker 1: ahead of one. I think it's important to start thinking
Speaker 1: about how you want to position as these vaccines get
Speaker 1: rolled out, as hopefully we start to see this change
Speaker 1: and shift uh two in consumer behavior, perhaps a little
Speaker 1: bit back to pre pandemic activity levels. And so we
Speaker 1: do think we'll we'll get a period of consolidation that
Speaker 1: can be used to position yourself accordingly. So it's important
Speaker 1: to watch for that. No to what extent do you
Speaker 1: think that people were conditioned by the price action of
Speaker 1: the spring and condition to look through what's playing out
Speaker 1: in America right now? And I wonder what you think
Speaker 1: the fall out of that actually is. Yeah, it's a
Speaker 1: great question, because clearly when the Fed stepped in in March,
Speaker 1: and they stepped in a big way, uh not only
Speaker 1: bring rates back down to a little round, adding kwee,
Speaker 1: adding these credit facility programs that really supported the functioning
Speaker 1: of credit an equity markets. Um, they really did put
Speaker 1: a bit of a backstop into this market, and so
Speaker 1: um it does feel like markets are conditioned to buy
Speaker 1: that dip. Um. What we'd say is it's important to
Speaker 1: stay a little bit active and how you buy these
Speaker 1: dips and how you position yourself in the marketplace. If
Speaker 1: you to have performance that's in line with you know,
Speaker 1: the broader indusseries. You do need to think about your
Speaker 1: waiting in certain sectors, in certain regions, etcetera. And so
Speaker 1: there is a bit of conditioning, but we think it
Speaker 1: could be more than just buying the overall market. It's
Speaker 1: how you position as you move forward. But as long
Speaker 1: as the FETE is there, as long as global central
Speaker 1: banks are in play, um, we think there is a
Speaker 1: bit of a backstop in the market. And that's some
Speaker 1: extent helpful, but longer term we'll see what consequences are
Speaker 1: might great to catch up the fete is that with
Speaker 1: all without Judy shouts and made jan from invest this,
Speaker 1: thank you. Let's get started here right now and Amazon
Speaker 1: tom four to where this so d a Davidson, He writes, brilliant, brilliant, No, yeah,
Speaker 1: he's a bowl on Amazon. But this, of course, on
Speaker 1: this big announcement today, Tom, I get the type two
Speaker 1: that this is about hurting right aid, hurting CVS, taking
Speaker 1: market share away, etcetera. What's in it for Mr Bezos?
Speaker 1: So those are the implications for the competition. This is
Speaker 1: a large trillion dollar global opportunity for Amazon. So Amazon
Speaker 1: needs these large global trillion dollar opportunities to sustain their
Speaker 1: growth and their multiple So my question for Amazon is
Speaker 1: what took you so long? But I think this is
Speaker 1: a great move by Amazon. Okay, so it's there, and
Speaker 1: you know, I look at I look at Amazon right now.
Speaker 1: Does this move the needle on their revenues? I mean,
Speaker 1: is it just is it a five year project? Excellent question, Tom. Collectively,
Speaker 1: I would say Amazon's healthcare efforts are needle movers. So
Speaker 1: you think about how they've kind of been forced into healthcare,
Speaker 1: testing their employees for COVID, opening these mini clinics for
Speaker 1: their employees families, and now they're advancing their pharmacy efforts.
Speaker 1: They had pill pack, now they're going to open an
Speaker 1: online pharmacy. I think collectively their efforts and healthcare are
Speaker 1: needle movers. Well, let's more through things just quickly. The
Speaker 1: acquisition of pill back, how does it fit into all
Speaker 1: of this? And do you think they can do this
Speaker 1: from where they are now organically complimentary to the extent
Speaker 1: you think of pill pack is making it easier for
Speaker 1: consumers to follow their prescriptions. I still believe that over
Speaker 1: time they're going to have physical pharmacies that will complement
Speaker 1: their online ones. I really thought acquired Whole Foods in
Speaker 1: they would devote a portion of that box to a pharmacy.
Speaker 1: So I still think this is only the beginning, but
Speaker 1: an important move for Amazon given the large social addressable
Speaker 1: market TOM. Their Whole Foods acquisition and rollout hasn't necessarily
Speaker 1: been incredibly profitable. We don't necessarily know. They don't break
Speaker 1: out all of the data, but they're fries into physical
Speaker 1: grocery stores in the past have not been as successful.
Speaker 1: Why is this time different? Why are we seeing the
Speaker 1: shares of CBS and Walgreen's plummet on this news so
Speaker 1: excellent points. Historically Basis has said your sales is my opportunity.
Speaker 1: I feel like historically Walmart said your gross profits my opportunity,
Speaker 1: and Walmart went hard in the generic drugs. If you remember,
Speaker 1: so there is a lot of profitability opportunity for Amazon,
Speaker 1: especially in generics. Um Grocery, though, is not a high
Speaker 1: margin category. So I would say that expectations the whole
Speaker 1: foods generating materially higher margins were overly optimistic. In the
Speaker 1: case for pharmacy is different, though, Tom there is a
Speaker 1: broader question, especially as Democrats have more power heading into
Speaker 1: one with Joe Biden taking the role of president. There's
Speaker 1: a question of how much more antitrust concerned. This raises
Speaker 1: about Amazon, the fact that they're plowing into every aspect
Speaker 1: of people's lives. Does this matter if it's done organically.
Speaker 1: Does this put pressure to possibly break them up or
Speaker 1: restrain them in some capacity? So I think that it's
Speaker 1: bipartisans support to restrain the impact of Amazon, Apple, Facebook,
Speaker 1: and Google. But I think both parties are trying to
Speaker 1: figure out how to do that. It's my understanding at
Speaker 1: one point was this warrant proposed legislation to limit acquisitions
Speaker 1: over a billion. So you'll see a lot of smaller
Speaker 1: acquisitions if that happens, and to your point, more companies
Speaker 1: building it organically. From an anti competitive standpoint, that it's
Speaker 1: hard for me to imagine that they could prove this
Speaker 1: is bad for the consumer and at this raises costs
Speaker 1: and pharmacy. You know, I'm looking at the margins on
Speaker 1: right aid and come on, it's like a grocery store
Speaker 1: margin as well. Tom, give us the percentage margin we
Speaker 1: should see their forget about the cloud for now? What
Speaker 1: do they make on all the cardboard boxes? On margin?
Speaker 1: What are they going to make on pharmacy? As related
Speaker 1: to that and related to the razor thin margins at
Speaker 1: Whole Foods yep. So collectively, I think of Amazon is
Speaker 1: having the potential for adjusted EVA DON margin long term.
Speaker 1: If I put most profitable least profitable, it'd be advertising first,
Speaker 1: then cloud, then pharmacy, then third party retail, and then
Speaker 1: dot dot dot here, but come on, give me a number, stop, Tom,
Speaker 1: give me a number. Here, I get the IBATA. What's
Speaker 1: the cardboard box margin? And what's pharmacy gonna bring? Sure,
Speaker 1: pharmacy I think confidently will bring more than a ten
Speaker 1: percent in just e but margin and the first party
Speaker 1: retail margin is flat. So I'm great to catch up.
Speaker 1: I appreciate your time today, said some found of that
Speaker 1: day to have its Incenia Research analysts were this right now?
Speaker 1: This is it, folks, is such a blur here. I
Speaker 1: really don't know what the schedule is. We've got such
Speaker 1: a great team that just throws it at me. And
Speaker 1: this is a joy. Ian Bremer joins with your Ragia
Speaker 1: group G zero Media. He's been asconce sequestered away working
Speaker 1: on a new book. How many times have you any
Speaker 1: of you changed your book in the last six weeks given?
Speaker 1: Not at all, my friend, not at all. I mean,
Speaker 1: you know, when you're doing a book. If I can't
Speaker 1: stand up, you're not doing a book. So so many
Speaker 1: things to talk about. Let us start with the bigger
Speaker 1: and the broader. Freezcaria talks about a post American world.
Speaker 1: What does the post Trump world look like? Um, well,
Speaker 1: there's it's gonna be a honeymoon. There's no question that
Speaker 1: most leaders, not all, but most leaders around the world
Speaker 1: are going to be very happy. You see the back
Speaker 1: of Trump, and so the big summits that happen will
Speaker 1: appear much more consensus oriented. They'll be a honeymoon. They'll
Speaker 1: want to give Biden some small winds to show that
Speaker 1: the United States is back. But you and I both
Speaker 1: know that the reasons that we have so much uncertainty
Speaker 1: in the global order, have comparatively little to do with Trump.
Speaker 1: Their structural they are, you know, a United States that
Speaker 1: is less in leading from the front. You remember leading
Speaker 1: from behind that started with Obama Biden. Um. You have Europe,
Speaker 1: which is more divided post Brexit. Um. You have Russia
Speaker 1: which is in decline and undermining the United States and
Speaker 1: our friends. And then you have China, which is not
Speaker 1: aligning towards the US in political and economic systems at all.
Speaker 1: None of those things change one bit with a Biden administration. Okay,
Speaker 1: but the tone changes. And I think all of our listeners,
Speaker 1: you know, worldwide and whatever their politics is, is they
Speaker 1: overweight they underweight tone? Dr Bremer, You've been doing this
Speaker 1: for a while. Tone, We've learned matters. What's the proper
Speaker 1: tone in the first weeks of a Biden administration? Is
Speaker 1: they rebuild state that we care about values, that democracy matters,
Speaker 1: human rights? Does he does he get on an airplane?
Speaker 1: I mean, is the big surprise here is Joe Biden
Speaker 1: is going to do a international tour as president? No? No,
Speaker 1: I don't think so, because he's entering governance with a
Speaker 1: very dysfunctional transition in the midst of an incredibly challenging
Speaker 1: coronavirus at home, and he needs to respond to that
Speaker 1: at home. I mean, there's no question that there will
Speaker 1: be a lot of wins just by undoing stuff that
Speaker 1: Trump has done. So he rejoins Paris Climate Accord seventy
Speaker 1: six days after the US left. He tries to get
Speaker 1: the United States back in the Intermediate nucle Year Forces
Speaker 1: agreement with the Russians. Um. I mean, you know that
Speaker 1: you've got a whole bunch of stuff like that. I mean,
Speaker 1: even the World Health Organization and announcing that the US
Speaker 1: will participate in KOVACS for vaccine development and distribution. It's
Speaker 1: not a game changer. But if you want to talk
Speaker 1: about tone, all of those are things that show that
Speaker 1: the United States doesn't want to surprise its allies, wants
Speaker 1: to be constructive and working with other countries around the world.
Speaker 1: So and we we just finished up a you know,
Speaker 1: very contentious election. Now we have a transition that is
Speaker 1: not transitioning. Um. How aur adversaries around the world viewing
Speaker 1: the US right now as we try to transition from
Speaker 1: one administration, one government to the next. I think governments
Speaker 1: are transitioning pretty capably. Again. I mean, so you look
Speaker 1: at a country. There are countries that really are very
Speaker 1: upset that Trump has gone. You look at Brazil and
Speaker 1: uh and given both scenarios, views on climate and the Amazon,
Speaker 1: and the fact that Biden will be a polar opposite,
Speaker 1: this is a real problem for him. There's likely to
Speaker 1: be difficulties with trade, agriculture, you name it on the
Speaker 1: back of that. And yet it's not going to affect
Speaker 1: his popularity at home or his likelihood of being reelected
Speaker 1: one bit. And I think that's the real point. It's
Speaker 1: it's yes, you, you you want to prepare to have
Speaker 1: a better relationship with Biden For most of the countries
Speaker 1: around the world, but overwhelmingly, the United States is not
Speaker 1: driving outcomes for a lot of these conflicts. It's a
Speaker 1: much more multilateral and a much more g zero global environment.
Speaker 1: And I think that what we're seeing is a lot
Speaker 1: of hedging. I mean, I had this debate yesterday with
Speaker 1: Neil Ferguson and he was saying, we're in a cold war,
Speaker 1: and the strong one of the strongest reasons why we're
Speaker 1: not in a cold war is because most other countries
Speaker 1: in the world outside of the United States and China
Speaker 1: have no interest whatsoever in picking sides like that. They're
Speaker 1: all hedging and that that that's an important thing to
Speaker 1: keep in mind when you think about the post US transition,
Speaker 1: will the world will are allies and the world leaders
Speaker 1: in general embrace the US under the Biden administration after
Speaker 1: the last four years where it really was President trump
Speaker 1: strategy of America first, and we really burned a lot
Speaker 1: of bridges. Well, I mean, how many bridges did we burn? Right?
Speaker 1: I mean we we We definitely jumped on the bridges
Speaker 1: a lot and showed petulance. You look at NATO, No,
Speaker 1: I mean the actual NATO policy. NATO was pretty much
Speaker 1: as strong today as it was four years ago. The US.
Speaker 1: Trump pushed for countries to spend more money. The US
Speaker 1: spent more on defense. You've got forward deployments in Poland,
Speaker 1: you've got rotating deployments in the Baltic State. Nothing happening
Speaker 1: i m F United Nations. The US paid paid its dues,
Speaker 1: and the i m F has had a pretty good
Speaker 1: year because so much money has been required for trees
Speaker 1: that are in tough shape on the back of coronavirus.
Speaker 1: Trump didn't kill that. So look there are a lot
Speaker 1: of leaders around the world that find that Trump. A
Speaker 1: meeting with Trump was an exercise in walking on eggshells.
Speaker 1: But you never knew what bomb he was gonna throw.
Speaker 1: Was he gonna say he's gonna pull out troops, or
Speaker 1: was he gonna whack you with tariffs? Or tell the
Speaker 1: Japanese suddenly, Hey, I just called the North Korean leader.
Speaker 1: What do you think about that? I mean, you know,
Speaker 1: they didn't like that. So again, I think that they
Speaker 1: will try to give Biden some early wins. They won't
Speaker 1: be big, but they'll show that we're so much happier
Speaker 1: with this guy. The real issue is that the United
Speaker 1: States is not providing the kind of leadership on trade,
Speaker 1: on global security, and certainly on the promotion of democracy
Speaker 1: that many other Leews would like it to. And that's
Speaker 1: much deeper than Trump or Biden Obama. That's been going
Speaker 1: on for a long time with US. We continue Dr Bremer,
Speaker 1: of course, as Eurisia Group, and I can tell you
Speaker 1: I've already had some inquiries. Yes, we are planning. We're
Speaker 1: in intense negotiations multilateral negotiations with the Eurasia Group to
Speaker 1: do their wonderful and important kick off to the beginning
Speaker 1: of the year. Always important themes and scary pression from
Speaker 1: the Eurasia Group UH Team UH and your thoughts on
Speaker 1: a not t PP but a China PP trade agreement.
Speaker 1: There was a great map out in the zeitgeist of
Speaker 1: China in the Pacific RIM, even down to New Zealand,
Speaker 1: and then there was like what t p P was
Speaker 1: gonna be, and it's like not that. And there's this
Speaker 1: big gray spot called the United States of America not
Speaker 1: participating in any of us define the vacuum by our
Speaker 1: absence in multilateral trade agreements in the Pacific. Yeah, I
Speaker 1: mean it's kind of like one more Beltan Road. I mean,
Speaker 1: you and I have talked about that for years. The
Speaker 1: Chinese are out there building of infrastructure the United States,
Speaker 1: the companies are, but the government is not, and that
Speaker 1: aligns these countries more with China. UM. The Chinese drive
Speaker 1: a big multilateral trade agreement. It's not a massive shift
Speaker 1: in terms of tariff production. It's not a high standard
Speaker 1: agreement like the Trans Pacific Partnership would have been UM,
Speaker 1: and it's certainly not exclusive. It doesn't stop these countries
Speaker 1: from trading with the United States, just as when the
Speaker 1: Chinese build a port through Belton Road, it doesn't stop
Speaker 1: the United States companies from using that port. It drives
Speaker 1: more wealth. We like that a world with a China
Speaker 1: driven our Step deal is a world of higher economic growth.
Speaker 1: It's better than a world without it. But you and
Speaker 1: I would both much rather if the United States was
Speaker 1: doing more of the driving and we're not interested. Let's
Speaker 1: remember that the Trans Pacific Partnership was initially tried under
Speaker 1: Obama Biden. They failed, and then Trump killed it. And
Speaker 1: now Biden is going to be president and he's not
Speaker 1: going to raise it again because the Democratic Party wasn't supported,
Speaker 1: not the Democratic Party. So the fact that China now
Speaker 1: is the leading trade partner in the world with over
Speaker 1: one hundred thirty countries, the fact that China is about
Speaker 1: two thirds the size of the economy of the US,
Speaker 1: and its peak, the Soviet Union was less than I mean,
Speaker 1: it's a much more robust economic competitor. And unlike the
Speaker 1: United States, the Chinese government is actually driving strategy. Um.
Speaker 1: I mean, we've got a lot of corporations the drive strategy,
Speaker 1: but our government, you know, we have elections that last
Speaker 1: for two years every four and the US is right
Speaker 1: now the most politically divided country by far among the
Speaker 1: advanced potential democracies. It makes it harder for us to
Speaker 1: get this stuff done around a time ten seconds. And
Speaker 1: when do we see your next book? Uh? Probably late
Speaker 1: sprint have what two? Yeah? You know, I know we're
Speaker 1: getting their masses there. Thank you so much, appreciate it.
Speaker 1: They are beautiful. Books are almost like folks chapters like
Speaker 1: Patrick O'Brien. They're like chapters of books across the span,
Speaker 1: like a two chapter. Looking forward to that from Dr Bremer.
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast
Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before
Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg
Speaker 1: Radio