1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg Penel podcast. I'm Paul swing you. 2 00:00:05,360 --> 00:00:07,680 Speaker 1: Along with my co host Lisa Brahma Wicks. Each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money. Whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor. Find a Bloomberg penl podcast on Apple 6 00:00:15,520 --> 00:00:17,960 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:22,000 Speaker 1: at Bloomberg dot com. Right now, we gotta turn to 8 00:00:22,079 --> 00:00:24,320 Speaker 1: what's happening in the United Kingdom, given the fact that 9 00:00:24,360 --> 00:00:27,240 Speaker 1: Boris Johnson is officially playing a game of chicken with 10 00:00:27,280 --> 00:00:29,560 Speaker 1: his opponents, saying, if you won't back me, let's hold 11 00:00:29,560 --> 00:00:33,600 Speaker 1: another election and see what happens. Regardless, October thirty one comes, 12 00:00:33,680 --> 00:00:36,479 Speaker 1: we are leaving the European Union, joining us now. Terese Raphael, 13 00:00:36,600 --> 00:00:40,920 Speaker 1: Bloomberg opinion editor covering European politics and economics. She joins 14 00:00:41,000 --> 00:00:44,519 Speaker 1: us from our London bureau. So Terse, why did Boris 15 00:00:44,640 --> 00:00:48,560 Speaker 1: Johnson take this gamble to basically UH pose an ultimatum 16 00:00:48,720 --> 00:00:52,840 Speaker 1: to his even in party opponents. I think the answer 17 00:00:52,880 --> 00:00:56,680 Speaker 1: to that is very simple. Boris Johnson made a categorical 18 00:00:56,760 --> 00:01:01,240 Speaker 1: promise to conservatives, to brexiters UH and to leave voters 19 00:01:01,560 --> 00:01:04,399 Speaker 1: to leave the European Union on October thirty one, do 20 00:01:04,600 --> 00:01:09,080 Speaker 1: or die, deal or no deal. His prime ministership absolutely 21 00:01:09,160 --> 00:01:11,440 Speaker 1: rests on him being able to deliver on that promise. 22 00:01:11,680 --> 00:01:16,160 Speaker 1: He therefore cannot oblige those in Parliament who want him 23 00:01:16,160 --> 00:01:19,480 Speaker 1: to seek an extension. So if the negotiations that he 24 00:01:19,560 --> 00:01:23,880 Speaker 1: says are uh proceeding, although the European Union doesn't seem 25 00:01:23,920 --> 00:01:26,960 Speaker 1: to be very aware that their negotiations going on, um, 26 00:01:26,959 --> 00:01:29,480 Speaker 1: but if those don't produce an outcome, he has to 27 00:01:29,520 --> 00:01:33,400 Speaker 1: be prepared to deliver on on on his promise. So um, 28 00:01:33,480 --> 00:01:39,640 Speaker 1: he has now faced with a opposition and Tory rebel 29 00:01:39,760 --> 00:01:43,399 Speaker 1: movement to try to force him to ask for an extension. 30 00:01:43,400 --> 00:01:46,319 Speaker 1: And rather than see that play out or get into 31 00:01:46,319 --> 00:01:49,360 Speaker 1: the messy business of, you know, say, asking the Queen 32 00:01:49,440 --> 00:01:52,920 Speaker 1: not to approve the legislation, which would uh you know, 33 00:01:52,960 --> 00:01:56,200 Speaker 1: throw Britain into an even greater constitutional crisis, it's assumed 34 00:01:56,200 --> 00:01:59,080 Speaker 1: that he's going to try to trigger an early election, 35 00:01:59,280 --> 00:02:02,200 Speaker 1: but it's not automatic since he needs Parliament's approval for it. 36 00:02:02,320 --> 00:02:04,360 Speaker 1: All right, So try's give us kind of a sense 37 00:02:04,400 --> 00:02:06,800 Speaker 1: of next steps. How did how would this unfold? How 38 00:02:06,840 --> 00:02:11,359 Speaker 1: does you know a British snap election to actually take place. Right, 39 00:02:11,400 --> 00:02:13,520 Speaker 1: so the next sort of forty eight seventy two hours 40 00:02:13,520 --> 00:02:17,400 Speaker 1: are pretty critical. There'll be a vote uh tonight on 41 00:02:17,720 --> 00:02:20,440 Speaker 1: the bill that to try to force the government to 42 00:02:20,480 --> 00:02:25,120 Speaker 1: ask for an Article fifty extension. UM. If that goes through, 43 00:02:25,160 --> 00:02:28,160 Speaker 1: we would expect Boris Johnson to try to trigger a 44 00:02:28,280 --> 00:02:31,959 Speaker 1: October fourteenth election. Now, then the question becomes what is 45 00:02:31,960 --> 00:02:35,959 Speaker 1: the Labor Party's response. They the Labor leader Jeremy Corbyn 46 00:02:36,040 --> 00:02:39,400 Speaker 1: is indicated he doesn't want an election on Johnson's timetable, 47 00:02:39,480 --> 00:02:42,880 Speaker 1: he may seek to uh to put some kind of 48 00:02:42,960 --> 00:02:45,360 Speaker 1: condition on it. Uh. So there's going to be a 49 00:02:45,400 --> 00:02:50,560 Speaker 1: lot of machinations using parliamentary procedures, and we won't know 50 00:02:50,800 --> 00:02:53,320 Speaker 1: yet whether there'll be a snap election. I mean, not 51 00:02:53,400 --> 00:02:55,720 Speaker 1: everyone agrees with us, but if there is a snap 52 00:02:55,760 --> 00:02:59,720 Speaker 1: election before October thirty one, it may lower the probability 53 00:02:59,760 --> 00:03:02,120 Speaker 1: of an o'deal exit because if we assume that there's 54 00:03:02,160 --> 00:03:04,560 Speaker 1: sort of a fifty fifty chance of Boris coming back 55 00:03:04,600 --> 00:03:09,640 Speaker 1: with a majority or a say, remain leaning coalition taking over, 56 00:03:10,040 --> 00:03:13,400 Speaker 1: then you know, you start to see other options, uh, 57 00:03:14,360 --> 00:03:16,680 Speaker 1: alternatives to no deal. And I think that's sort of 58 00:03:16,960 --> 00:03:19,919 Speaker 1: you know why Sterling kind of perked up um after 59 00:03:19,960 --> 00:03:23,320 Speaker 1: the initial decline on the news of an early election. 60 00:03:23,440 --> 00:03:27,720 Speaker 1: Theres I want to figure out what the popular feeling 61 00:03:27,960 --> 00:03:30,680 Speaker 1: is in the United Kingdom if there were to be 62 00:03:30,840 --> 00:03:35,440 Speaker 1: a snap election. Is the prevailing sentiment that Boris Johnson 63 00:03:35,600 --> 00:03:39,280 Speaker 1: would win. It really depends on the grounds on which 64 00:03:39,320 --> 00:03:42,000 Speaker 1: that election is fought. So Theresa May was twenty four 65 00:03:42,080 --> 00:03:44,240 Speaker 1: points ahead in the polls in twenty seventeen which he 66 00:03:44,280 --> 00:03:47,280 Speaker 1: fought an election. Turned out that election was fought on 67 00:03:47,560 --> 00:03:50,560 Speaker 1: turf that the Labor Party said on domestic policies, and 68 00:03:50,640 --> 00:03:53,800 Speaker 1: she squandered her parliamentary majority. Now, Boris Johnson does not 69 00:03:53,920 --> 00:03:56,080 Speaker 1: want this election to be about Europe. He wants it 70 00:03:56,160 --> 00:03:58,840 Speaker 1: to be about Jeremy Corbin, and he wants it to 71 00:03:58,920 --> 00:04:02,600 Speaker 1: be about the fear that many voters have of corbin Omics, 72 00:04:02,640 --> 00:04:08,160 Speaker 1: of a socialist UH candidate in office. So he will 73 00:04:08,160 --> 00:04:11,320 Speaker 1: try to UH talk about all the spending that his 74 00:04:11,400 --> 00:04:14,600 Speaker 1: government will do, not a typical conservative government. They've opened 75 00:04:14,600 --> 00:04:16,920 Speaker 1: that they want to open. The spendings biggest. He'll make 76 00:04:16,960 --> 00:04:20,159 Speaker 1: it about a Corbin prime ministership, and he'll of course 77 00:04:20,200 --> 00:04:24,160 Speaker 1: promise to deliver Brexit if he succeeds on that, and crucially, 78 00:04:24,200 --> 00:04:27,000 Speaker 1: if the Brexit Party do not field candidates in the 79 00:04:27,080 --> 00:04:30,559 Speaker 1: same constituencies, that would cannibalize off the Conservative Party vote 80 00:04:30,720 --> 00:04:34,039 Speaker 1: that he's got, you know, a pretty good chance according 81 00:04:34,040 --> 00:04:36,640 Speaker 1: to what polls are telling us right now. What we 82 00:04:36,720 --> 00:04:40,359 Speaker 1: don't know is whether the remain leading parties, the Labor Party, 83 00:04:40,400 --> 00:04:43,800 Speaker 1: the Liberal Democrats, the Greens, will strike some kind of 84 00:04:43,880 --> 00:04:48,560 Speaker 1: a tactical arrangement that will allow them to um, you know, 85 00:04:48,640 --> 00:04:52,160 Speaker 1: to maximize Ah, the sort of remain vote in elections 86 00:04:52,240 --> 00:04:55,360 Speaker 1: is very unpredictable. We have four parties that are all 87 00:04:55,400 --> 00:04:58,400 Speaker 1: polling fairly well. It since you us wondering if you know, 88 00:04:58,880 --> 00:05:01,640 Speaker 1: if it weren't bar, if it weren't Corbin, who else 89 00:05:01,680 --> 00:05:04,720 Speaker 1: could the other side put up to perhaps be more 90 00:05:04,720 --> 00:05:07,760 Speaker 1: of a remain candidate. Well, if you're talking about a 91 00:05:07,839 --> 00:05:10,880 Speaker 1: sort of national unity candidate, which has been the subject 92 00:05:10,880 --> 00:05:14,919 Speaker 1: of a lot of discussion here around the question of 93 00:05:14,920 --> 00:05:18,120 Speaker 1: a no confidence vote, because then the those voting no 94 00:05:18,240 --> 00:05:21,320 Speaker 1: confidence in the government would need to put forward an alternative. Um. 95 00:05:21,520 --> 00:05:24,039 Speaker 1: You know that that whole that whole discussion was sort 96 00:05:24,040 --> 00:05:26,560 Speaker 1: of dead on arrival because Corbin is the opposition leader. 97 00:05:26,560 --> 00:05:30,000 Speaker 1: Absolutely refuses to countenance another candidate. So I think you know, 98 00:05:30,040 --> 00:05:32,760 Speaker 1: we're looking at Joe Swinton, the Liberal Democratic leader, who's 99 00:05:32,800 --> 00:05:35,560 Speaker 1: who's quite popular. Her party has been revived off the 100 00:05:35,680 --> 00:05:39,960 Speaker 1: back of its very strongly pro remain stance, and so 101 00:05:40,000 --> 00:05:42,359 Speaker 1: she will be expected her party will be expected to 102 00:05:42,400 --> 00:05:44,279 Speaker 1: do well in an election. But there's you know, the 103 00:05:44,360 --> 00:05:47,520 Speaker 1: Corbin is the main opposition leader right now, and that's 104 00:05:47,560 --> 00:05:49,800 Speaker 1: been a big blessing for Boris Johnson. Yes, it has, 105 00:05:49,920 --> 00:05:52,760 Speaker 1: tore As Raphael, thank you so much. Tres Rphael, Bloomberg 106 00:05:52,760 --> 00:05:56,760 Speaker 1: Opinion editor covering European politics and economics, joining us from 107 00:05:56,800 --> 00:05:58,560 Speaker 1: the London Brewer. You can read more on this and 108 00:05:58,600 --> 00:06:02,440 Speaker 1: other stories from Bloomberg Opini at Bloomberg dot com, slash 109 00:06:02,440 --> 00:06:05,760 Speaker 1: Opinion and on the terminal by typing O p I 110 00:06:06,120 --> 00:06:20,200 Speaker 1: n Go. Tom String Fellow President, Chief Investment Officer Frost 111 00:06:20,279 --> 00:06:23,440 Speaker 1: Investment Advisors, based in San Antonio, Texas, but joining us 112 00:06:23,480 --> 00:06:25,920 Speaker 1: here today in our Bloomberg Interactive Broker studio. Tom, thanks 113 00:06:26,000 --> 00:06:29,040 Speaker 1: so much for making a trip to our studio again. 114 00:06:29,680 --> 00:06:33,360 Speaker 1: So much volatility in the marketplace, driven in large part 115 00:06:33,440 --> 00:06:36,240 Speaker 1: by the ebbs and flows of trade talks. How do 116 00:06:36,320 --> 00:06:39,320 Speaker 1: you position your portfolio. How do you think about kind 117 00:06:39,320 --> 00:06:41,440 Speaker 1: of your investment process given some of the folatility that 118 00:06:41,480 --> 00:06:44,120 Speaker 1: we have been seeing. It's a great question. It's something 119 00:06:44,160 --> 00:06:46,359 Speaker 1: that our clients are asking on a continual basis, and 120 00:06:46,360 --> 00:06:49,440 Speaker 1: we're certainly hearing it in the the media these days. 121 00:06:49,480 --> 00:06:52,880 Speaker 1: It's so difficult to, you know, trade in an environment 122 00:06:52,920 --> 00:06:55,719 Speaker 1: like this because the news, as you said, ebbs and flows, 123 00:06:55,760 --> 00:06:58,760 Speaker 1: in the volatility ebbs and flows. So when we look 124 00:06:58,800 --> 00:07:01,479 Speaker 1: at how the markets have done year to date, we're 125 00:07:01,480 --> 00:07:05,279 Speaker 1: still positive across the board, across every major benchmark in 126 00:07:05,400 --> 00:07:10,080 Speaker 1: throughoutmost sectors. So we're really cautious on making any extreme 127 00:07:10,240 --> 00:07:13,880 Speaker 1: moves in this market. But we're always constantly looking for, 128 00:07:14,080 --> 00:07:16,680 Speaker 1: you know, what is where are the growth opportunities and 129 00:07:16,720 --> 00:07:20,680 Speaker 1: companies where are's more limited volatility. We want to see 130 00:07:20,680 --> 00:07:23,720 Speaker 1: earning this visibility, although that's harder and harder to find, 131 00:07:24,280 --> 00:07:26,440 Speaker 1: and to the extent you can find companies that are 132 00:07:26,440 --> 00:07:29,360 Speaker 1: actually providing some kind of dividend stream, I think that 133 00:07:29,520 --> 00:07:34,920 Speaker 1: just adds to the underlying strength sustainability of the companies. So, Tom, 134 00:07:35,000 --> 00:07:40,080 Speaker 1: what you're talking about more defensive companies, companies that pay dividends, 135 00:07:40,240 --> 00:07:43,520 Speaker 1: uh companies that are more immune to business cycles are 136 00:07:43,560 --> 00:07:45,800 Speaker 1: ones that have been favored by a lot of other investors, 137 00:07:45,920 --> 00:07:49,080 Speaker 1: leading some to say they're getting two pretty high valuations 138 00:07:49,120 --> 00:07:51,040 Speaker 1: at this point. What do you say to people who say, 139 00:07:51,080 --> 00:07:53,400 Speaker 1: you know, I just worry those those companies are too expensive. 140 00:07:53,840 --> 00:07:57,160 Speaker 1: And again that's giving another fair point, and because valuations 141 00:07:57,520 --> 00:08:00,239 Speaker 1: have certainly come off drough levels, but I wouldn't say 142 00:08:00,280 --> 00:08:02,720 Speaker 1: that across the board, a lot of these good quality 143 00:08:02,760 --> 00:08:06,400 Speaker 1: companies are trading at excessive premiums. Uh. If I look 144 00:08:06,440 --> 00:08:08,880 Speaker 1: at you know, over prior periods, you know, we've come 145 00:08:08,880 --> 00:08:13,800 Speaker 1: into a market environment where I'd say multiples are sustainable, 146 00:08:14,200 --> 00:08:18,600 Speaker 1: markets are rational, multiples are rational. We don't see anything 147 00:08:18,680 --> 00:08:21,640 Speaker 1: that is. Those that are trading excessive premiums, those are 148 00:08:21,680 --> 00:08:24,360 Speaker 1: ones we do want to shy away from. So if 149 00:08:24,400 --> 00:08:26,960 Speaker 1: you depend upon how you look at the equity markets SMP, 150 00:08:27,240 --> 00:08:29,360 Speaker 1: you know, you get glass half full, glass half empty. 151 00:08:29,360 --> 00:08:31,440 Speaker 1: Whether it's a year to date, you know, good solid 152 00:08:31,480 --> 00:08:33,520 Speaker 1: dot double digits, but on a trilling twelve month basis 153 00:08:33,600 --> 00:08:36,280 Speaker 1: kind of flatished down a little bit. What sector has 154 00:08:36,600 --> 00:08:39,280 Speaker 1: given that kind of odd performance? What sectors are you 155 00:08:39,280 --> 00:08:42,720 Speaker 1: guys still looking at? Its still maybe offer some opportunities. Well, 156 00:08:43,280 --> 00:08:46,040 Speaker 1: some of the groups in technology are still positive. You know, again, 157 00:08:46,080 --> 00:08:49,199 Speaker 1: if we look at software manufacturers, you know, there's a 158 00:08:49,280 --> 00:08:53,080 Speaker 1: number of good sectors that are interesting sectors. Uh. In 159 00:08:53,200 --> 00:08:57,000 Speaker 1: the retail consumer discretionary. You know, we've seen some interesting 160 00:08:57,080 --> 00:09:00,120 Speaker 1: data on Amazon here recently. You know that ten to 161 00:09:00,160 --> 00:09:02,719 Speaker 1: be one of the go toos for a lot of investors. 162 00:09:03,080 --> 00:09:06,319 Speaker 1: The question is how long, how sustainable is it over 163 00:09:06,320 --> 00:09:08,680 Speaker 1: the next several years. I just know that the number 164 00:09:08,720 --> 00:09:11,800 Speaker 1: of Amazon boxes I get at my house increases daily, 165 00:09:11,880 --> 00:09:16,080 Speaker 1: So that tells me something. Uh, the sectors that I 166 00:09:16,120 --> 00:09:18,280 Speaker 1: think tend to be a little more over bought and 167 00:09:18,559 --> 00:09:20,600 Speaker 1: yet to be really cautious of o those that are 168 00:09:20,600 --> 00:09:23,360 Speaker 1: more brought bond proxies. You know that falls into the 169 00:09:23,480 --> 00:09:26,880 Speaker 1: you know, the utilities, real estate. There's still good opportunities, 170 00:09:26,920 --> 00:09:30,800 Speaker 1: but there should be some warning signs there. So I 171 00:09:30,840 --> 00:09:34,080 Speaker 1: guess we're talking a lot about US equities. Do you 172 00:09:34,120 --> 00:09:37,239 Speaker 1: think that US equities will continue to be the outperformer 173 00:09:37,240 --> 00:09:40,840 Speaker 1: globally near term? I do you know, Europe has you know, 174 00:09:40,920 --> 00:09:44,520 Speaker 1: some great evaluations. These stays for a lot of obvious reasons. 175 00:09:44,600 --> 00:09:46,600 Speaker 1: And you know, the one thing that you don't want 176 00:09:46,640 --> 00:09:48,800 Speaker 1: to do is walk away from the European markets or 177 00:09:48,800 --> 00:09:51,800 Speaker 1: the international markets. Just look at a long term period 178 00:09:51,960 --> 00:09:54,520 Speaker 1: and there are several years where those sectors of the 179 00:09:54,559 --> 00:09:57,600 Speaker 1: market are some of the top performers, and they occur 180 00:09:57,720 --> 00:10:00,400 Speaker 1: in almost a heartbeat, So you need to stay with 181 00:10:00,440 --> 00:10:02,520 Speaker 1: a foothold in them. But I don't think it's a 182 00:10:02,559 --> 00:10:05,400 Speaker 1: focus of all your investimble dollars. Here in the US. 183 00:10:05,840 --> 00:10:10,160 Speaker 1: We have visible growth here, we have uncertainty geopolitical there. 184 00:10:10,880 --> 00:10:14,479 Speaker 1: So we got some I s M data that disappointing 185 00:10:14,480 --> 00:10:18,440 Speaker 1: manufacturing data out today, again arguably putting more pressure on 186 00:10:18,480 --> 00:10:21,480 Speaker 1: the consumer to continue to carry uh this economy. And 187 00:10:21,520 --> 00:10:23,880 Speaker 1: again we'll have the jobs report out on Friday. Kind 188 00:10:23,880 --> 00:10:25,720 Speaker 1: of what is your view of the consumer right here 189 00:10:25,800 --> 00:10:28,800 Speaker 1: and should we be concerned? And great point. You know, 190 00:10:28,840 --> 00:10:31,400 Speaker 1: if you looked at Friday, the data from the regional 191 00:10:31,559 --> 00:10:35,400 Speaker 1: of FED offices was was positive today just went counter 192 00:10:35,520 --> 00:10:37,800 Speaker 1: the I s M turning negative. You know that is 193 00:10:37,880 --> 00:10:40,040 Speaker 1: probably one of those factors that the Fed's got to 194 00:10:40,080 --> 00:10:42,720 Speaker 1: look at him as they're looking at rate cuts. And 195 00:10:42,800 --> 00:10:45,680 Speaker 1: with that in mind, the consumer hasn't really seemed to care. 196 00:10:46,040 --> 00:10:49,360 Speaker 1: You know, I'm I'm just amazed at how resilient the 197 00:10:49,360 --> 00:10:52,360 Speaker 1: confidence surveys are if we can only turn that confidence 198 00:10:52,360 --> 00:10:55,400 Speaker 1: into actual purchasing power, you know, that may take care 199 00:10:55,400 --> 00:10:57,120 Speaker 1: of a lot of the ills we have right now. 200 00:10:57,160 --> 00:11:00,480 Speaker 1: But you know, we've we've seen a bifurcation of the 201 00:11:01,240 --> 00:11:04,480 Speaker 1: you know, University of Michigan and the consumer confidence. You know, 202 00:11:04,520 --> 00:11:08,560 Speaker 1: they've they've kind of uh just separated diverted from one 203 00:11:08,600 --> 00:11:11,640 Speaker 1: another here recently. But overall, i'd say the consumer is 204 00:11:11,679 --> 00:11:15,800 Speaker 1: still looking at a positive six months twelve months ahead. 205 00:11:15,960 --> 00:11:19,600 Speaker 1: We've not seen it in the the business sector, though, 206 00:11:19,880 --> 00:11:24,199 Speaker 1: what are your clients ask you right now? Asset allocation 207 00:11:24,360 --> 00:11:27,319 Speaker 1: is probably one of the key questions these days, because 208 00:11:27,360 --> 00:11:31,160 Speaker 1: we've tried to, uh, you know, learn with our clients 209 00:11:31,200 --> 00:11:34,480 Speaker 1: that you know, picking a particular stock isn't going to 210 00:11:34,559 --> 00:11:37,600 Speaker 1: necessarily be the key to their success. It's staying invested 211 00:11:37,640 --> 00:11:40,320 Speaker 1: in the question though, is what are the target investments? 212 00:11:40,320 --> 00:11:44,079 Speaker 1: And that proverbial how much bonds first as cash? And 213 00:11:44,200 --> 00:11:47,760 Speaker 1: you know, we'll just say cash would always be that 214 00:11:47,760 --> 00:11:51,959 Speaker 1: that safety net for investors. Well, fixed income has gotten 215 00:11:52,000 --> 00:11:55,760 Speaker 1: a little more risky these days as yields have continued 216 00:11:55,840 --> 00:11:58,920 Speaker 1: to uh to plunge, as dollars are moving into it. 217 00:11:59,200 --> 00:12:02,600 Speaker 1: I find that so unique in this market the the 218 00:12:02,800 --> 00:12:06,440 Speaker 1: risk trade is becoming a more risk on trade as 219 00:12:06,480 --> 00:12:10,480 Speaker 1: investors moving into bonds. We are talking about staying into 220 00:12:10,520 --> 00:12:15,360 Speaker 1: shorter maturities intermediate to lower duration fixed income. Don't take 221 00:12:15,440 --> 00:12:19,240 Speaker 1: chances on longer term That speculative. But staying invested in 222 00:12:19,320 --> 00:12:22,800 Speaker 1: the right sectors in the equity markets, that's key, and 223 00:12:23,360 --> 00:12:26,679 Speaker 1: having good quality is key. Anything we need to just 224 00:12:26,720 --> 00:12:30,400 Speaker 1: stay away from here for ten plus years into this cycle. Well, 225 00:12:30,480 --> 00:12:33,960 Speaker 1: as have read many times, markets don't die of old age, 226 00:12:34,320 --> 00:12:38,200 Speaker 1: but they die because of an overly aggressive FED heightening 227 00:12:38,679 --> 00:12:45,000 Speaker 1: or a sector bubble, or that unexplained unforeseen risk. We 228 00:12:45,080 --> 00:12:48,360 Speaker 1: have an accommodating central bank globally, we have no real 229 00:12:48,440 --> 00:12:51,720 Speaker 1: sectors that I would consider bubble territory. What we don't 230 00:12:51,760 --> 00:12:55,000 Speaker 1: know is whether or not trade or the UK, or 231 00:12:55,280 --> 00:12:59,520 Speaker 1: geopolitical with Russia China becomes that unknown. We know about it, 232 00:12:59,520 --> 00:13:01,840 Speaker 1: so I'm not so convinced that those are the unknowns 233 00:13:01,840 --> 00:13:04,599 Speaker 1: that worries today. Tom Stringfellow, thank you so much for 234 00:13:04,640 --> 00:13:07,520 Speaker 1: being with Thank you. Tom Stringfellows, President and Chief Investment 235 00:13:07,559 --> 00:13:10,760 Speaker 1: Officer at Frost Investment Advisors, usually based in San Antonio, 236 00:13:20,600 --> 00:13:23,480 Speaker 1: joining us now Jason Shanker, President of Prestige Economics and 237 00:13:23,520 --> 00:13:26,679 Speaker 1: a Bloomberg Opinion columnist Jason, I want to get started 238 00:13:26,920 --> 00:13:29,520 Speaker 1: with why, right, I mean, is this a really a 239 00:13:29,600 --> 00:13:32,920 Speaker 1: function of people looking around and saying it's unlikely the 240 00:13:32,960 --> 00:13:35,320 Speaker 1: US and China will come to any kind of trade agreement, 241 00:13:35,440 --> 00:13:38,000 Speaker 1: or is this people looking around saying the global economy 242 00:13:38,040 --> 00:13:42,000 Speaker 1: is slowing period the end? Yeah, I think it's both. 243 00:13:42,480 --> 00:13:44,160 Speaker 1: If you look at what's going on with the p 244 00:13:44,320 --> 00:13:47,440 Speaker 1: m I data, Uh, not only did we have the 245 00:13:47,559 --> 00:13:52,040 Speaker 1: U S s M Manufacturing Index contract for the first 246 00:13:52,080 --> 00:13:55,240 Speaker 1: time in a few years, but we've also had uh, 247 00:13:55,480 --> 00:14:01,240 Speaker 1: the combined Eurozone manufacturing m I out of China and 248 00:14:01,440 --> 00:14:03,400 Speaker 1: the U S I s M. We combine those and 249 00:14:03,440 --> 00:14:05,800 Speaker 1: look at all three together, and they're at the lowest 250 00:14:05,880 --> 00:14:10,559 Speaker 1: levels right now since December of during European sovereign detet 251 00:14:10,640 --> 00:14:14,120 Speaker 1: crisis and then after and this is the third consecutive 252 00:14:14,160 --> 00:14:16,040 Speaker 1: months that the some of those three p m I 253 00:14:16,120 --> 00:14:18,800 Speaker 1: s is below a break even of one fifty. In 254 00:14:18,800 --> 00:14:23,400 Speaker 1: other words, of global manufacturing has been contracting for three 255 00:14:23,440 --> 00:14:27,160 Speaker 1: consecutive months. So, Jason, as you just summarized that, you know, 256 00:14:27,400 --> 00:14:30,160 Speaker 1: the oil markets really being driven in large part by 257 00:14:30,200 --> 00:14:33,640 Speaker 1: the slowing demand across the globe. Give us a sense 258 00:14:33,680 --> 00:14:37,520 Speaker 1: of what the supply situation looks right now. Well, you know, 259 00:14:37,600 --> 00:14:42,640 Speaker 1: supplies fairly robust. We have the situation with shale barrels 260 00:14:42,640 --> 00:14:44,960 Speaker 1: that can be brought relatively quickly to market. You know, 261 00:14:45,000 --> 00:14:47,000 Speaker 1: we've seen OPAC and I think I'll know we've done 262 00:14:47,080 --> 00:14:48,920 Speaker 1: radio hits when I've gone to OPEC meetings. I'll be 263 00:14:48,960 --> 00:14:51,920 Speaker 1: at the one this December. You know, they've worked with 264 00:14:52,000 --> 00:14:54,920 Speaker 1: non OPAQUE members to try to curtel production, but the 265 00:14:55,040 --> 00:14:57,840 Speaker 1: US has been going into this year, the risk was 266 00:14:57,880 --> 00:14:59,960 Speaker 1: that we see between you know, one and a half 267 00:15:00,000 --> 00:15:02,160 Speaker 1: from two million barrels of showe oil per day added 268 00:15:02,160 --> 00:15:05,600 Speaker 1: to the market. And China is the biggest net marginal 269 00:15:05,680 --> 00:15:10,200 Speaker 1: consumer of oil and they've been contracting and manufacturing terms 270 00:15:10,240 --> 00:15:13,440 Speaker 1: in five and the last nine months. So you know, 271 00:15:13,680 --> 00:15:18,200 Speaker 1: there's the supply situation isn't particularly tight and the demand 272 00:15:18,320 --> 00:15:20,680 Speaker 1: side is not great. And if the U s summer 273 00:15:20,800 --> 00:15:23,880 Speaker 1: driving season is over, which also you know here we 274 00:15:23,920 --> 00:15:26,240 Speaker 1: are coming back from Labor Day weekend. The driving season 275 00:15:26,640 --> 00:15:28,880 Speaker 1: ended on the night mix in the third week of July. 276 00:15:29,120 --> 00:15:31,960 Speaker 1: But now it's also physically over, and that means that 277 00:15:32,200 --> 00:15:35,360 Speaker 1: there was more downside risk oil prices after the driving 278 00:15:35,360 --> 00:15:38,240 Speaker 1: season ends, because there's this seasonal drop off in what's 279 00:15:38,240 --> 00:15:42,240 Speaker 1: called shoulder demand. Jason, I've read a number of stories 280 00:15:42,440 --> 00:15:47,760 Speaker 1: overnight talking about how Hurricane Dorian would affect somehow the 281 00:15:47,840 --> 00:15:51,800 Speaker 1: demand side of the equation, lowering it in certain regions, 282 00:15:51,840 --> 00:15:55,960 Speaker 1: certainly in Florida, Etcetera's people hunker down to weather the storm. 283 00:15:56,040 --> 00:15:58,560 Speaker 1: How much credence is there in that kind of I 284 00:15:58,600 --> 00:16:03,640 Speaker 1: guess explanation of today's route. I don't think that's a 285 00:16:03,680 --> 00:16:05,880 Speaker 1: big chunk of that. I mean, the summer driving season 286 00:16:06,000 --> 00:16:07,920 Speaker 1: is over. You know, if this is fourth of July weekend, 287 00:16:08,000 --> 00:16:11,000 Speaker 1: we might be having a very different conversation. But you know, 288 00:16:11,040 --> 00:16:14,320 Speaker 1: we're past labor day. I don't think that's a really 289 00:16:14,360 --> 00:16:16,600 Speaker 1: big part of it, because I you know, the summer 290 00:16:16,640 --> 00:16:19,960 Speaker 1: driving seasons over. And furthermore, as I mentioned it, and 291 00:16:20,000 --> 00:16:22,840 Speaker 1: it ended on the NIMAX on the twenty two, they 292 00:16:22,840 --> 00:16:25,880 Speaker 1: think of July when the contract rolled to September. Right, 293 00:16:25,880 --> 00:16:29,160 Speaker 1: we're training October crew. If the prompt month, refiners are 294 00:16:29,160 --> 00:16:32,640 Speaker 1: not as incentivized to hedge at this time. Uh, and 295 00:16:32,720 --> 00:16:34,760 Speaker 1: so there's just not as big a bid in the 296 00:16:34,840 --> 00:16:38,760 Speaker 1: market because the downside risk is already greater because demand 297 00:16:38,880 --> 00:16:42,160 Speaker 1: is off. So Jason, what's the latest, uh, you know 298 00:16:42,280 --> 00:16:47,840 Speaker 1: policy or posturing coming out of OPEC these days. Well, 299 00:16:47,880 --> 00:16:50,520 Speaker 1: you know, I think they're trying to hold together the 300 00:16:51,560 --> 00:16:55,200 Speaker 1: coalition they have with NANOPEC members and convey the fact 301 00:16:55,240 --> 00:16:58,720 Speaker 1: that you know, they're they're keeping a tight rain on 302 00:16:59,400 --> 00:17:02,320 Speaker 1: production to prevent it from getting out of control because 303 00:17:02,600 --> 00:17:08,040 Speaker 1: when prices really collapsed between what happened was and people 304 00:17:08,040 --> 00:17:10,400 Speaker 1: talk a lot about shale, but the truth is there 305 00:17:10,480 --> 00:17:13,920 Speaker 1: was a Traineese manufacturing recession going on at that exact 306 00:17:13,960 --> 00:17:17,720 Speaker 1: same thing period and that's what drove down not just oil, 307 00:17:17,840 --> 00:17:22,600 Speaker 1: but rubber, nickelton, led, zinc, iron ore, copper, you name it. 308 00:17:22,800 --> 00:17:25,760 Speaker 1: All the medals and industrial commodities took hits. And if 309 00:17:25,760 --> 00:17:28,199 Speaker 1: you look right now, oil isn't just at risk to 310 00:17:28,200 --> 00:17:31,040 Speaker 1: the downside, but you know, we've seen aluminum, copper, and 311 00:17:31,119 --> 00:17:33,479 Speaker 1: almost all industrial medals except for nickel and iron ore. 312 00:17:33,520 --> 00:17:35,080 Speaker 1: And there are a couple of exception reasons for that. 313 00:17:35,359 --> 00:17:37,879 Speaker 1: Ones in Indonesian expert band On nickel and iron ore 314 00:17:37,920 --> 00:17:41,200 Speaker 1: had some supply disruption issues earlier in the year. Um 315 00:17:41,280 --> 00:17:43,760 Speaker 1: that that's going to continue to wait forward. But aside 316 00:17:43,760 --> 00:17:47,119 Speaker 1: from those exceptions, most industrial medals have been absolutely whacked 317 00:17:47,240 --> 00:17:51,280 Speaker 1: this year. And that isn't the function of the hurricane. 318 00:17:51,280 --> 00:17:53,400 Speaker 1: And that's the reason that oil prices are under pressure. 319 00:17:53,640 --> 00:17:56,639 Speaker 1: It's because the global economy is slowing down quite quickly, 320 00:17:57,119 --> 00:17:59,720 Speaker 1: just quickly. Here. I'm looking right now at crew traded 321 00:17:59,760 --> 00:18:03,080 Speaker 1: on the IMAX treating at fifty three and sixteen cents. 322 00:18:03,119 --> 00:18:07,040 Speaker 1: Where do you think we're going by your end? Well, 323 00:18:07,080 --> 00:18:08,960 Speaker 1: you know, I think there's there's gonna be some more 324 00:18:09,000 --> 00:18:11,440 Speaker 1: downside risk from where we are now for w T I. 325 00:18:11,640 --> 00:18:13,639 Speaker 1: You know, if we lose another five bucks, wouldn't you 326 00:18:13,640 --> 00:18:18,200 Speaker 1: surprise me? Um? It's going to depend on what happens 327 00:18:18,200 --> 00:18:20,400 Speaker 1: with the messaging from OPEC in the late in the year. 328 00:18:20,480 --> 00:18:24,280 Speaker 1: But there there's more downside risk. There's easily I wouldn't 329 00:18:24,280 --> 00:18:27,679 Speaker 1: be surprised to see a price in dollar range in 330 00:18:27,680 --> 00:18:29,879 Speaker 1: that time window. Is there anything OPEC could do in 331 00:18:29,880 --> 00:18:36,320 Speaker 1: the short term? Do you think to impact supplies? You know, honestly, 332 00:18:36,640 --> 00:18:39,240 Speaker 1: there's a saying in the commodities world, commodities are bought 333 00:18:39,320 --> 00:18:43,320 Speaker 1: and not sold. And if the buying slows up, and 334 00:18:43,359 --> 00:18:46,040 Speaker 1: if we see things go back, if trying to remains 335 00:18:46,080 --> 00:18:49,720 Speaker 1: under the furniture. As we expect the global economy remains 336 00:18:49,760 --> 00:18:52,840 Speaker 1: under pressure, those kinds of things could uh, you know, 337 00:18:52,960 --> 00:18:55,800 Speaker 1: continue to land prices. That's really outside of OPEC control. 338 00:18:55,840 --> 00:18:58,399 Speaker 1: All they can do is try to keep inventories from 339 00:18:58,440 --> 00:19:02,639 Speaker 1: ballooning so that the the downward bearish price pressure doesn't 340 00:19:02,640 --> 00:19:05,360 Speaker 1: hang over the next few years the way it did 341 00:19:05,400 --> 00:19:09,200 Speaker 1: after Jason Schanker, thanks so much for joining us. Jason 342 00:19:09,200 --> 00:19:11,800 Speaker 1: as the president of Prestige Economics, also the chairman the 343 00:19:11,800 --> 00:19:16,880 Speaker 1: Futurist Institute and a Bloomberg Opinion contributor based in Austin, Texas. 344 00:19:26,040 --> 00:19:28,800 Speaker 1: Joining us here in our Bloomberg Interactive Broker Studios is 345 00:19:28,880 --> 00:19:32,720 Speaker 1: Leland Miller, chief executive Officer of the China Beige Book International. 346 00:19:33,280 --> 00:19:38,119 Speaker 1: So what actually is going on between the US and China. 347 00:19:38,920 --> 00:19:41,760 Speaker 1: We had one of the busiest months you can ever imagine, 348 00:19:42,400 --> 00:19:45,320 Speaker 1: and I think the next month is going to be 349 00:19:45,359 --> 00:19:48,640 Speaker 1: clawing back some of the damage done over the last 350 00:19:48,680 --> 00:19:51,280 Speaker 1: four weeks. So if you look back to what happened 351 00:19:51,280 --> 00:19:53,840 Speaker 1: in the beginning of August, we had the President Trump 352 00:19:53,920 --> 00:19:58,240 Speaker 1: extend tariffs, if not shooting the gun, then loading, locking 353 00:19:58,240 --> 00:20:01,399 Speaker 1: and loading the gun for all hundred fifty billion worth 354 00:20:01,440 --> 00:20:04,640 Speaker 1: of tarriffs on on all five billion of Chinese imports 355 00:20:05,080 --> 00:20:08,680 Speaker 1: by December. And since then there's been a bit of 356 00:20:08,760 --> 00:20:12,159 Speaker 1: damage control because they realized that, well, one, you're not 357 00:20:12,200 --> 00:20:14,640 Speaker 1: gonna have as much leverage if you shoot all those tariffs. 358 00:20:14,840 --> 00:20:16,520 Speaker 1: And the second thing is the markets didn't like that 359 00:20:16,640 --> 00:20:18,680 Speaker 1: very much. And and and so you've seen a very 360 00:20:18,720 --> 00:20:21,399 Speaker 1: negative market reaction, and the White House is trying to 361 00:20:21,400 --> 00:20:22,639 Speaker 1: come to terms with how do you how do you 362 00:20:22,680 --> 00:20:26,280 Speaker 1: wage the war on China using tariffs at the same 363 00:20:26,320 --> 00:20:28,920 Speaker 1: time as you manage expectations on a trade war and 364 00:20:28,920 --> 00:20:33,040 Speaker 1: and and and hope that you are also encouraging businesses 365 00:20:33,080 --> 00:20:35,320 Speaker 1: to invest and to produce. And of course you're seeing 366 00:20:35,359 --> 00:20:36,720 Speaker 1: some of that in the I s M surveys. And 367 00:20:36,800 --> 00:20:40,199 Speaker 1: so right now the White House is trying to some 368 00:20:40,280 --> 00:20:43,119 Speaker 1: degree walk back some of the some of the some 369 00:20:43,160 --> 00:20:45,479 Speaker 1: of the damage done, and they're trying to figure out 370 00:20:45,520 --> 00:20:47,879 Speaker 1: how to how to make September more productive month. Lean 371 00:20:47,920 --> 00:20:51,920 Speaker 1: and what is your sense of the likelihood that President 372 00:20:51,920 --> 00:20:53,680 Speaker 1: Trump has just had enough of this trade thing. He's 373 00:20:53,720 --> 00:20:55,119 Speaker 1: just going to kick the can down the road and 374 00:20:55,359 --> 00:20:57,919 Speaker 1: wait till after the election. He kind of suggests it's 375 00:20:57,960 --> 00:21:01,120 Speaker 1: a little bit of that in this tweets this more ing. Yeah, 376 00:21:01,160 --> 00:21:03,000 Speaker 1: I think that that that's that was likely, but I 377 00:21:03,000 --> 00:21:04,840 Speaker 1: think it's even more likely that the Chinese are done 378 00:21:04,840 --> 00:21:08,560 Speaker 1: with this. So the weird dynamic that has been sort 379 00:21:08,560 --> 00:21:11,399 Speaker 1: of coming together since June, when there was still the 380 00:21:11,440 --> 00:21:15,679 Speaker 1: possibility of a trade deal before before election, is that 381 00:21:16,040 --> 00:21:19,440 Speaker 1: you've seen both sides come to this de facto stalemate 382 00:21:19,720 --> 00:21:21,800 Speaker 1: and there's lots of ups and downs. I mean, we 383 00:21:21,840 --> 00:21:24,600 Speaker 1: saw with August just how big the ups and downs 384 00:21:24,600 --> 00:21:28,159 Speaker 1: could be. But neither side really wants to get to 385 00:21:28,160 --> 00:21:31,440 Speaker 1: the end of this. There's an incentive to state connected 386 00:21:31,760 --> 00:21:34,400 Speaker 1: through negotiations and to make sure markets aren't falling off 387 00:21:34,400 --> 00:21:37,199 Speaker 1: a cliff because they think that the trade wars has 388 00:21:37,240 --> 00:21:39,760 Speaker 1: gone past the point of no return. At the same time, 389 00:21:39,800 --> 00:21:42,360 Speaker 1: nobody wants to give up ground, nobody wants to make 390 00:21:42,359 --> 00:21:46,160 Speaker 1: any any real um concessions, and it looks like both 391 00:21:46,160 --> 00:21:48,520 Speaker 1: sides no longer have any faith whatsoever in each other. 392 00:21:50,200 --> 00:21:52,560 Speaker 1: One thing that markets seem to be betting on is 393 00:21:52,600 --> 00:21:55,560 Speaker 1: that there's a Trump put that if markets sell off enough, 394 00:21:55,960 --> 00:22:01,200 Speaker 1: President Trump will make nice with China. At what point 395 00:22:01,600 --> 00:22:05,000 Speaker 1: can President Trump no longer make nice with China even 396 00:22:05,000 --> 00:22:07,399 Speaker 1: if he wants to He's pretty close to that point. 397 00:22:07,600 --> 00:22:09,520 Speaker 1: That's why the what happened in August I think was 398 00:22:09,560 --> 00:22:12,760 Speaker 1: an inflection point for this entire trade war. Before that, 399 00:22:12,840 --> 00:22:16,639 Speaker 1: you had the possibility that the Chinese things going to 400 00:22:16,640 --> 00:22:19,040 Speaker 1: have the indirection. You could have more tariffs, you could 401 00:22:19,040 --> 00:22:21,280 Speaker 1: have the same level of tariffs which were a lot 402 00:22:21,359 --> 00:22:23,800 Speaker 1: but not an overwhelming amount, or you really could have 403 00:22:23,840 --> 00:22:26,879 Speaker 1: some sort of deal, small, one, big one, whatever it 404 00:22:26,960 --> 00:22:28,840 Speaker 1: might be, and pull the tariffs off. And I think 405 00:22:28,840 --> 00:22:31,280 Speaker 1: markets were attuned to that. You're at the point now 406 00:22:31,320 --> 00:22:34,760 Speaker 1: where you're almost all in, and it's not that you 407 00:22:34,800 --> 00:22:37,360 Speaker 1: don't have the possibility of a deal, but the Chinese 408 00:22:37,400 --> 00:22:40,879 Speaker 1: are very much disincentivized from having any type of deal 409 00:22:40,960 --> 00:22:44,000 Speaker 1: unless they get everything they want at this point, uh, 410 00:22:44,040 --> 00:22:47,840 Speaker 1: and those would be politically toxic concessions for the president 411 00:22:47,880 --> 00:22:50,080 Speaker 1: to then make. So you're getting very close to the 412 00:22:50,119 --> 00:22:52,439 Speaker 1: point where both sides are locking in for the for 413 00:22:52,480 --> 00:22:56,280 Speaker 1: the duration. So when these full tariffs on the full 414 00:22:57,320 --> 00:23:01,280 Speaker 1: billion go into effect, well, let's have a big effect 415 00:23:01,359 --> 00:23:05,200 Speaker 1: on our economy their economy. Who's more going to feel 416 00:23:05,240 --> 00:23:06,920 Speaker 1: it more? Do you think it will be more? That? 417 00:23:07,240 --> 00:23:09,840 Speaker 1: First of all, it's not necessarily so that they're going 418 00:23:09,880 --> 00:23:11,480 Speaker 1: to go into effect. I mean, you're I think that 419 00:23:11,680 --> 00:23:14,080 Speaker 1: between now. Here's my guests between now and the end 420 00:23:14,119 --> 00:23:17,200 Speaker 1: of the year to see tariffs that are announced punted 421 00:23:17,920 --> 00:23:20,920 Speaker 1: at least once, probably twice. So I wouldn't be surprised 422 00:23:20,920 --> 00:23:24,399 Speaker 1: to see the October tariffs punted soon as part of 423 00:23:24,400 --> 00:23:26,520 Speaker 1: a China concession to China to get them to come 424 00:23:26,560 --> 00:23:29,040 Speaker 1: to a trade meeting. And I wouldn't at all be 425 00:23:29,080 --> 00:23:31,800 Speaker 1: surprised if the December tariffs are ultimately punted in return 426 00:23:31,880 --> 00:23:34,480 Speaker 1: for something or other. So I think that's not that's 427 00:23:34,480 --> 00:23:37,560 Speaker 1: not set in stone yet. But overall, China is China. 428 00:23:37,640 --> 00:23:39,840 Speaker 1: This will hurt China much more. This is an overwhelming 429 00:23:39,840 --> 00:23:41,479 Speaker 1: amount of tariffs. It will hurt them more, but they 430 00:23:41,480 --> 00:23:43,719 Speaker 1: also have more staying power over the long run. From 431 00:23:43,760 --> 00:23:49,320 Speaker 1: a game theory perspective, would China double down and not 432 00:23:49,440 --> 00:23:53,560 Speaker 1: give any concessions whatsoever in order to basically tank markets 433 00:23:54,080 --> 00:23:58,600 Speaker 1: and you know, influence the elections. Yeah, so this is 434 00:23:58,640 --> 00:24:00,600 Speaker 1: this is where the game theory gets really fun, because 435 00:24:00,960 --> 00:24:04,760 Speaker 1: that was conspiratorial. No, it's not conspiratorial because I think that, 436 00:24:04,880 --> 00:24:09,080 Speaker 1: I mean, I'm wondering that is how China potentially is thinking. No, No, 437 00:24:09,200 --> 00:24:11,679 Speaker 1: it's a weapon in their arsenal. I think what they 438 00:24:11,720 --> 00:24:14,199 Speaker 1: would like to do at this point is try to 439 00:24:14,960 --> 00:24:17,720 Speaker 1: step in where possible to make sure things don't get worse. 440 00:24:18,440 --> 00:24:21,440 Speaker 1: But keep one foot in the door no matter how 441 00:24:21,520 --> 00:24:24,480 Speaker 1: bad things get, so long as a handful of red 442 00:24:24,520 --> 00:24:27,240 Speaker 1: lines aren't crossed, like you don't have a true death 443 00:24:27,240 --> 00:24:30,560 Speaker 1: sentence for Huawei, etcetera. Uh, and and keep their foot 444 00:24:30,560 --> 00:24:32,760 Speaker 1: in the door. Because while they don't want to be 445 00:24:32,760 --> 00:24:35,560 Speaker 1: barraged with all these tariffs that are hitting now and 446 00:24:35,600 --> 00:24:37,480 Speaker 1: we'll be hitting in the future, there's a lot of 447 00:24:37,520 --> 00:24:40,160 Speaker 1: other things that the US administration could do to make 448 00:24:40,200 --> 00:24:43,119 Speaker 1: life miserable for China. You could see more attention is 449 00:24:43,200 --> 00:24:45,920 Speaker 1: Shinjong and Hong Kong sanctions. There, you could see South 450 00:24:46,000 --> 00:24:50,000 Speaker 1: China Sea rise in importance. You could see greater coordination 451 00:24:50,040 --> 00:24:53,560 Speaker 1: with Taiwan, whether it's diplomatic visits or another arm sail uh. 452 00:24:53,600 --> 00:24:56,240 Speaker 1: You could of course see all out barraged by Congress 453 00:24:56,240 --> 00:24:58,600 Speaker 1: on the Chinese tech companies. Both sides are itching to 454 00:24:58,640 --> 00:25:01,000 Speaker 1: do that. So China's and is weird place where they 455 00:25:01,040 --> 00:25:02,840 Speaker 1: don't want to do anything, but they also don't want 456 00:25:02,880 --> 00:25:05,600 Speaker 1: to completely remove themselves from the board because then things 457 00:25:05,640 --> 00:25:08,280 Speaker 1: will get worse. So this is where you get the stalement. 458 00:25:08,880 --> 00:25:10,879 Speaker 1: Where does how does Hong Kong fit into this? This 459 00:25:10,960 --> 00:25:13,359 Speaker 1: does not see anything going away for the Chinese. Well, 460 00:25:13,400 --> 00:25:15,679 Speaker 1: it's a horrible headache for she, it's a it's obviously 461 00:25:15,720 --> 00:25:18,160 Speaker 1: a tragedy for for for the people of Hong Kong 462 00:25:18,680 --> 00:25:21,479 Speaker 1: and the world. I mean, Hong Kong is being changed 463 00:25:21,560 --> 00:25:24,280 Speaker 1: in front of our eyes for forever. Uh. This is 464 00:25:24,280 --> 00:25:25,679 Speaker 1: not going to go back the other way. And I 465 00:25:25,720 --> 00:25:28,280 Speaker 1: think that the timing of this is uncertain, but there's 466 00:25:28,320 --> 00:25:31,760 Speaker 1: there's really no way for there to be any other 467 00:25:31,840 --> 00:25:36,200 Speaker 1: resolution than one that involves force. Um. The Chinese side, now, 468 00:25:36,240 --> 00:25:38,560 Speaker 1: that doesn't mean they're gonna have the images that they 469 00:25:38,560 --> 00:25:42,600 Speaker 1: had in a Channaman like crackdown that Hong Kong doesn't 470 00:25:42,600 --> 00:25:45,320 Speaker 1: look that way, and the Chinese are much more experience now. 471 00:25:45,359 --> 00:25:48,080 Speaker 1: So you'll see riot police step in, maybe they're in 472 00:25:48,080 --> 00:25:51,320 Speaker 1: Hong Kong policeman's uniform or not. Uh and and and 473 00:25:51,520 --> 00:25:54,840 Speaker 1: ultimately they will step in and restore order. Um. So 474 00:25:54,880 --> 00:25:57,359 Speaker 1: it will be a very different type of tragedy than 475 00:25:57,400 --> 00:25:59,920 Speaker 1: what we saw in the past. But it's it's sad. Nonetheless, 476 00:26:00,040 --> 00:26:01,879 Speaker 1: I don't see how it can be avoided. Just to 477 00:26:01,920 --> 00:26:05,320 Speaker 1: sort of tie everything together, I want to just get 478 00:26:05,320 --> 00:26:07,960 Speaker 1: a gut check on the Chinese economy, since this is 479 00:26:08,000 --> 00:26:10,720 Speaker 1: what you track so well, where are we in terms 480 00:26:10,720 --> 00:26:12,760 Speaker 1: of how much the growth is slowing there? Yeah, we 481 00:26:12,880 --> 00:26:15,520 Speaker 1: just got some some new flashed out a few days ago. 482 00:26:15,840 --> 00:26:19,320 Speaker 1: Uh and um, you know we're we don't report all 483 00:26:19,359 --> 00:26:22,359 Speaker 1: of this publicly, but we can't say that it doesn't 484 00:26:22,359 --> 00:26:24,119 Speaker 1: look good. And you know we have we have not 485 00:26:24,280 --> 00:26:28,040 Speaker 1: been on the pessimist train for in fact, we were 486 00:26:28,040 --> 00:26:30,280 Speaker 1: some of the people who were loudest and saying, look 487 00:26:30,320 --> 00:26:32,760 Speaker 1: this this narrative that the economy has falling apart, it's nonsense. 488 00:26:33,080 --> 00:26:36,040 Speaker 1: There's a lot more policy support underneath the service, particularly 489 00:26:36,040 --> 00:26:39,320 Speaker 1: in Q two, that has kept the economy from falling apart. Well. 490 00:26:39,400 --> 00:26:41,600 Speaker 1: Q three is feeling some serious strains and and and 491 00:26:41,640 --> 00:26:43,840 Speaker 1: manufacturers in particular are. So this is gonna be something 492 00:26:43,840 --> 00:26:46,800 Speaker 1: to watch next month. Next month when we announced our 493 00:26:46,800 --> 00:26:49,040 Speaker 1: full third quarter set of data, and we'll have you 494 00:26:49,080 --> 00:26:51,240 Speaker 1: back to discuss it. Clearly, there's no one better to 495 00:26:51,280 --> 00:26:54,679 Speaker 1: talk China and China economics, UH and China trade than 496 00:26:54,760 --> 00:26:58,040 Speaker 1: Leland Miller, CEO of the China Bag Book International. Joining 497 00:26:58,119 --> 00:27:00,960 Speaker 1: us live here in our Bloomberg Interactive of Brokers Studio. 498 00:27:01,600 --> 00:27:03,840 Speaker 1: Thanks for listening to the Bloomberg P and L podcast. 499 00:27:04,000 --> 00:27:06,639 Speaker 1: You can subscribe and listen to interviews at Apple Podcasts 500 00:27:06,680 --> 00:27:09,680 Speaker 1: or whatever podcast platform you prefer. I'm Paul Sweeney. I'm 501 00:27:09,680 --> 00:27:12,399 Speaker 1: on Twitter at pt Sweeney. I'm Lisa Abram Woyds. I'm 502 00:27:12,400 --> 00:27:15,280 Speaker 1: on Twitter at Lisa Abram Woyds. One Before the podcast, 503 00:27:15,320 --> 00:27:17,919 Speaker 1: you can always catch us worldwide on'm Bloomberg Radio