1
00:00:00,080 --> 00:00:12,960
Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene

2
00:00:13,480 --> 00:00:17,560
Speaker 1: Jay Lee. We bring you insight from the best in economics, finance, investment,

3
00:00:18,000 --> 00:00:23,520
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

4
00:00:23,600 --> 00:00:27,680
Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg. Two

5
00:00:27,760 --> 00:00:30,880
Speaker 1: days away from a Federal Reserve decision, and a big,

6
00:00:30,920 --> 00:00:34,159
Speaker 1: big question needs to be asked our global policymakers facing

7
00:00:34,400 --> 00:00:36,320
Speaker 1: an inflection point? Do you want to us here in

8
00:00:36,360 --> 00:00:39,360
Speaker 1: New York? Danny blanche Flat Dartmouth professor, former Bank of

9
00:00:39,400 --> 00:00:43,680
Speaker 1: England Monitary Policy Committee member and author of Not Working?

10
00:00:44,080 --> 00:00:48,040
Speaker 1: Where have all the good jobs gone? Good morning to you, Danny,

11
00:00:48,200 --> 00:00:50,960
Speaker 1: looking forward, looking forward to talking about your book. In

12
00:00:51,000 --> 00:00:53,280
Speaker 1: just a moment, we have to reflect on the fact

13
00:00:53,320 --> 00:00:56,040
Speaker 1: that at the Bank of England you worked through one

14
00:00:56,040 --> 00:00:59,120
Speaker 1: of those inflection points two thousand and six through two

15
00:00:59,160 --> 00:01:01,560
Speaker 1: thousand and nine, one of the most important inflection points

16
00:01:01,560 --> 00:01:06,039
Speaker 1: of recent economic history. Walk us through that moment and

17
00:01:06,200 --> 00:01:09,760
Speaker 1: what we can learn from that moment today. One of thing,

18
00:01:09,840 --> 00:01:11,800
Speaker 1: the signs were there for quite a long time that

19
00:01:12,959 --> 00:01:18,160
Speaker 1: a huge downturn was coming, and people missed the sign um.

20
00:01:18,400 --> 00:01:22,640
Speaker 1: The reality is looking back, acting sooner rather than later

21
00:01:22,800 --> 00:01:25,360
Speaker 1: would have been the sensible thing to do. Probably if

22
00:01:25,360 --> 00:01:29,200
Speaker 1: you think today, a central bank acting, let's say by

23
00:01:29,240 --> 00:01:31,959
Speaker 1: the FED, deciding right now we'll get ahead of the

24
00:01:32,000 --> 00:01:35,080
Speaker 1: game would be sensible. Hard to see what the risks

25
00:01:35,080 --> 00:01:37,280
Speaker 1: are if you do that. So if it was me

26
00:01:37,480 --> 00:01:39,880
Speaker 1: a this June meeting, looking at what the market thinks

27
00:01:39,959 --> 00:01:41,880
Speaker 1: is coming, I would vote for a fifty basis point

28
00:01:41,880 --> 00:01:45,119
Speaker 1: cut right now, on the basis that if the economy improves, fine,

29
00:01:45,600 --> 00:01:47,640
Speaker 1: that we can always reverse it. But I think the

30
00:01:47,680 --> 00:01:51,360
Speaker 1: great concern we have is that we had all the

31
00:01:51,360 --> 00:01:54,400
Speaker 1: economics is terrible at the turning point. We missed the

32
00:01:54,480 --> 00:01:57,040
Speaker 1: turning point. And it certainly feels to me, and I've

33
00:01:57,080 --> 00:01:59,120
Speaker 1: been saying with you on this show for a really

34
00:01:59,120 --> 00:02:02,360
Speaker 1: long time those FED rate rises were in error, and

35
00:02:02,400 --> 00:02:04,760
Speaker 1: I think we're seeing a slow incoming. Well, let's talk

36
00:02:04,800 --> 00:02:07,400
Speaker 1: about that turning point. We've had growth scares before. In

37
00:02:07,400 --> 00:02:12,280
Speaker 1: the last ten years, was another one. It feels like

38
00:02:12,360 --> 00:02:14,920
Speaker 1: we're working our way through another one right now. Danny,

39
00:02:14,960 --> 00:02:17,480
Speaker 1: Why is this any more sinister than the growth scares

40
00:02:17,520 --> 00:02:21,880
Speaker 1: we've had before? Um? Well, I think in many in

41
00:02:21,919 --> 00:02:24,840
Speaker 1: many of these countries, we've still seen people struggling. So

42
00:02:24,880 --> 00:02:28,680
Speaker 1: after a ten year recovery, lots of people are still

43
00:02:28,760 --> 00:02:32,760
Speaker 1: hurting in the UK, especially six percent real wage drop

44
00:02:32,840 --> 00:02:35,200
Speaker 1: compared to two thousand and eight. And I think if

45
00:02:35,200 --> 00:02:38,079
Speaker 1: we look back, financial crises take a really long time

46
00:02:38,120 --> 00:02:41,800
Speaker 1: to recover from. And I think what we're probably seeing

47
00:02:41,800 --> 00:02:44,320
Speaker 1: now is a slowing driven from China, from Germany, from

48
00:02:44,360 --> 00:02:48,079
Speaker 1: Austria and Italy. Significant slow incoming. I think the only

49
00:02:48,200 --> 00:02:51,079
Speaker 1: question is how how much slowing there is? I think

50
00:02:51,080 --> 00:02:53,519
Speaker 1: slowings in the air. But but the question is what's

51
00:02:53,520 --> 00:02:55,560
Speaker 1: the body? And you put yourself on the FMC Right now,

52
00:02:55,560 --> 00:02:59,080
Speaker 1: they're looking at the economic data. The trailing data is okay,

53
00:02:59,240 --> 00:03:02,480
Speaker 1: the forward looking indicators are a little bit more shaky.

54
00:03:02,600 --> 00:03:04,400
Speaker 1: How do you communicate the idea that we need a

55
00:03:04,440 --> 00:03:08,359
Speaker 1: fifty basis point card when the training data is still okay. Well,

56
00:03:08,360 --> 00:03:10,919
Speaker 1: the market certainly is pricing that in pricing in three

57
00:03:10,919 --> 00:03:14,040
Speaker 1: cuts by Christmas, and I think that they've been right.

58
00:03:14,160 --> 00:03:15,960
Speaker 1: I mean, if you look back at that turning point

59
00:03:16,000 --> 00:03:19,320
Speaker 1: in two thousand and eight, um, the actual data didn't

60
00:03:19,360 --> 00:03:21,160
Speaker 1: tell you so. In the UK is a good example.

61
00:03:21,520 --> 00:03:24,120
Speaker 1: UK went into recession in April two thousand and eight,

62
00:03:24,480 --> 00:03:26,720
Speaker 1: and to really get a sense of that you would

63
00:03:26,760 --> 00:03:30,079
Speaker 1: not have known but until July oh nine that that's

64
00:03:30,080 --> 00:03:32,440
Speaker 1: where you were. So at turning points, it's hard to

65
00:03:32,480 --> 00:03:34,520
Speaker 1: see them. You want to get ahead of that game,

66
00:03:34,560 --> 00:03:36,920
Speaker 1: when we clearly did not. So it looks to me

67
00:03:37,080 --> 00:03:39,400
Speaker 1: that this slowing is coming and what you're going to

68
00:03:39,400 --> 00:03:40,920
Speaker 1: be in a situation you do not want to be

69
00:03:40,960 --> 00:03:42,640
Speaker 1: in as you were before. I mean, we were in

70
00:03:42,640 --> 00:03:44,400
Speaker 1: a situation at the Bank of England where we cut

71
00:03:44,440 --> 00:03:47,640
Speaker 1: by fifty a hundred and fifty a hundred fifty in

72
00:03:47,720 --> 00:03:51,160
Speaker 1: successive months and it looks like blind panic. So essentially

73
00:03:51,200 --> 00:03:52,520
Speaker 1: you need to get ahead of the game. And my

74
00:03:52,640 --> 00:03:55,360
Speaker 1: view is that the FED shouldn't have raised rates at all.

75
00:03:55,720 --> 00:03:58,080
Speaker 1: But you know, now we're in that position. But slowing

76
00:03:58,080 --> 00:04:00,600
Speaker 1: appears to be Look at China, look at the data

77
00:04:00,640 --> 00:04:02,440
Speaker 1: that you're seeing. And I was talking to Tom this morning.

78
00:04:02,480 --> 00:04:05,480
Speaker 1: I look at various industries like this cast transperret index,

79
00:04:05,920 --> 00:04:09,520
Speaker 1: good indication that transportation is in decline. There's three and

80
00:04:09,520 --> 00:04:12,080
Speaker 1: a half percent dropping April. That's the kind of indicator

81
00:04:12,120 --> 00:04:14,400
Speaker 1: we had in O eight. So the forward looking indicators

82
00:04:14,400 --> 00:04:17,279
Speaker 1: are not good. The lesson to learn is get ahead

83
00:04:17,320 --> 00:04:19,720
Speaker 1: of the game and what's the consequence if you if

84
00:04:19,720 --> 00:04:22,039
Speaker 1: you cut rate and things are better, okay, down the

85
00:04:22,080 --> 00:04:23,800
Speaker 1: road will raise them. It hard of me to see

86
00:04:23,839 --> 00:04:27,400
Speaker 1: any downside risk of doing that. The depression was a

87
00:04:27,400 --> 00:04:30,120
Speaker 1: series of three or four events, depending on which your story.

88
00:04:30,160 --> 00:04:32,599
Speaker 1: And let's say, Ben Bernac, you that you read and

89
00:04:32,640 --> 00:04:34,600
Speaker 1: I don't think this ten or twelve years has been

90
00:04:34,640 --> 00:04:37,880
Speaker 1: any different. We had a slowness, we cleared the market,

91
00:04:38,600 --> 00:04:41,599
Speaker 1: we had a Trumpian stimulus. If we were with a

92
00:04:41,600 --> 00:04:44,640
Speaker 1: massive deficit. What what we've got now? And then there's

93
00:04:44,640 --> 00:04:50,279
Speaker 1: the now what what's your guidance to Democratic candidates and

94
00:04:50,320 --> 00:04:52,599
Speaker 1: whoever is going to run for the Democratic Party in

95
00:04:54,160 --> 00:04:58,200
Speaker 1: to affect a better labor economy? What's the to do

96
00:04:58,440 --> 00:05:01,200
Speaker 1: for them? Well? That to do is the is to

97
00:05:01,279 --> 00:05:04,760
Speaker 1: care about jobs and start to deliver in some sense,

98
00:05:04,800 --> 00:05:07,080
Speaker 1: start to deliver on the promises that Trump made to

99
00:05:07,120 --> 00:05:09,480
Speaker 1: the folks who voted for him and have really seen

100
00:05:09,520 --> 00:05:12,719
Speaker 1: no improvement. And so this is the big deal coming down. Okay,

101
00:05:12,760 --> 00:05:15,960
Speaker 1: But we've delivered unit group can we we've delivered unit

102
00:05:16,040 --> 00:05:20,320
Speaker 1: growth in jobs? Well we have two, etcetera. Right, but

103
00:05:20,400 --> 00:05:23,000
Speaker 1: the employment rate is still two and a half percentage

104
00:05:23,000 --> 00:05:25,159
Speaker 1: points below where it was in O eight and there's

105
00:05:25,200 --> 00:05:27,600
Speaker 1: lots of people that are hurting. We're seeing, I mean,

106
00:05:27,640 --> 00:05:31,560
Speaker 1: we've seen what is the social incentive to get those

107
00:05:31,560 --> 00:05:35,960
Speaker 1: people employed, to get better quality, full time jobs. The

108
00:05:36,080 --> 00:05:39,359
Speaker 1: social incentive is that we've I mean the big dealing

109
00:05:39,360 --> 00:05:41,719
Speaker 1: and I've got a new paper show Americans are in pain.

110
00:05:42,279 --> 00:05:44,880
Speaker 1: I mean, that's the big tells me this daily. Well

111
00:05:44,920 --> 00:05:48,040
Speaker 1: they are. I mean if the astonishing piece of data

112
00:05:48,120 --> 00:05:50,320
Speaker 1: I saw is that one in four visits to a

113
00:05:50,360 --> 00:05:53,919
Speaker 1: doctor in America people report being in chronic pain. Um.

114
00:05:54,160 --> 00:05:58,800
Speaker 1: And fantastic work on this downy Yeah, I mean we

115
00:05:58,400 --> 00:06:00,800
Speaker 1: we've been to work on it as well. Yeah. Um.

116
00:06:00,839 --> 00:06:02,839
Speaker 1: And we find if you just take it. We have

117
00:06:02,920 --> 00:06:06,679
Speaker 1: surveys across countries holding everything you can think of. Americans

118
00:06:06,720 --> 00:06:08,720
Speaker 1: are twice as likely to say that they're in pain

119
00:06:09,080 --> 00:06:11,560
Speaker 1: that shouldn't that shouldn't be happening. At the at the

120
00:06:11,680 --> 00:06:13,920
Speaker 1: end of a recovery, you just think, well, presumed, if

121
00:06:13,960 --> 00:06:16,159
Speaker 1: we start to slow, this is all going to get worse.

122
00:06:16,520 --> 00:06:22,600
Speaker 1: So the opioid deaths, the suicide, the h drinking too

123
00:06:22,640 --> 00:06:25,359
Speaker 1: much and live having an effect on liver poisoning, and

124
00:06:25,680 --> 00:06:28,320
Speaker 1: so this these social concerts are really big. And I

125
00:06:28,360 --> 00:06:30,280
Speaker 1: think Tom the big story in the book, I talk

126
00:06:30,320 --> 00:06:33,479
Speaker 1: a lot about relative things matter and when we what

127
00:06:33,560 --> 00:06:35,560
Speaker 1: we see if one if the elites are doing well

128
00:06:35,920 --> 00:06:39,160
Speaker 1: and the others are not, that matters. Let's talk about

129
00:06:39,160 --> 00:06:41,920
Speaker 1: the book not working, where if all the good jobs gone.

130
00:06:42,279 --> 00:06:44,840
Speaker 1: I've had the benefit and the privilege of enjoying watching

131
00:06:44,880 --> 00:06:47,040
Speaker 1: this come together with you the last couple of years.

132
00:06:47,560 --> 00:06:50,360
Speaker 1: And I remember the title of the book was actually

133
00:06:50,360 --> 00:06:53,239
Speaker 1: going to be It's the labor market Stupid. I remember

134
00:06:53,279 --> 00:06:55,520
Speaker 1: when you were first putting this together. So just in

135
00:06:55,560 --> 00:06:58,320
Speaker 1: a couple of minutes, just briefly help us understand what

136
00:06:58,440 --> 00:07:00,240
Speaker 1: you explore in the book and what we should learned

137
00:07:00,279 --> 00:07:05,599
Speaker 1: from it. So it's about two things, especially about policymakers

138
00:07:05,600 --> 00:07:10,200
Speaker 1: and policymakers errors and then the consequences, and particularly to

139
00:07:10,240 --> 00:07:13,720
Speaker 1: think about two thousand and eight was a fundamental change

140
00:07:14,200 --> 00:07:16,960
Speaker 1: in economics, certainly in the economics of the labor market,

141
00:07:17,280 --> 00:07:19,400
Speaker 1: and my old book, the wage code, which worked really

142
00:07:19,440 --> 00:07:21,480
Speaker 1: well up to two thousand and eight, didn't work after that.

143
00:07:21,560 --> 00:07:23,200
Speaker 1: So we have to try and think what the heck

144
00:07:23,280 --> 00:07:25,440
Speaker 1: is going on. And the big story we have to

145
00:07:25,440 --> 00:07:28,160
Speaker 1: think about is why are wages? Why are wages so weak?

146
00:07:28,360 --> 00:07:30,920
Speaker 1: And why are people hurting, And the answer is because

147
00:07:31,520 --> 00:07:34,440
Speaker 1: we enough everything changed in two thousand and eight. We

148
00:07:34,480 --> 00:07:38,040
Speaker 1: haven't delivered good jobs to enough people. The people at

149
00:07:38,040 --> 00:07:40,760
Speaker 1: the top me, I've done fine, but I worry about

150
00:07:40,880 --> 00:07:45,040
Speaker 1: people in Ohio and in Michigan and the places that

151
00:07:45,040 --> 00:07:46,640
Speaker 1: that went for t and the same in the UK.

152
00:07:46,760 --> 00:07:48,600
Speaker 1: The phenomenon is to say, what are you going to

153
00:07:48,680 --> 00:07:52,080
Speaker 1: do about people whose full time jobs have gone? Danny?

154
00:07:52,080 --> 00:07:54,679
Speaker 1: Great to catch up with you, Danny Blanche Flower, DAMA professor,

155
00:07:54,720 --> 00:07:57,440
Speaker 1: former Bank giving the Monetary Policy Committee member and author

156
00:07:57,480 --> 00:07:59,680
Speaker 1: of Not Working whereof all the good jobs gone? Cold?

157
00:07:59,680 --> 00:08:04,560
Speaker 1: Gret Chelations on another fantastic book, Danny, Thank you, David Venture,

158
00:08:04,680 --> 00:08:23,040
Speaker 1: thank you so much? Was going? Will these guys get

159
00:08:23,080 --> 00:08:26,840
Speaker 1: to something now? She joins us from t D Securities

160
00:08:26,880 --> 00:08:29,800
Speaker 1: manage director and global head of rate strategy. Is the

161
00:08:29,880 --> 00:08:33,240
Speaker 1: race market pricing in too much? Preer you think it is?

162
00:08:33,280 --> 00:08:36,760
Speaker 1: Walk us through it? Hi, John, Ali, John, Thanks for

163
00:08:36,800 --> 00:08:40,040
Speaker 1: having me So. I think the rate market is pricing

164
00:08:40,160 --> 00:08:44,600
Speaker 1: in a much worse economic outlook than we know right now. Frankly,

165
00:08:44,920 --> 00:08:47,440
Speaker 1: and I don't think Powell this week is going to

166
00:08:47,640 --> 00:08:49,760
Speaker 1: pre commit to a rate guard. I think he's going

167
00:08:49,800 --> 00:08:51,600
Speaker 1: to say what they've been saying for the last few

168
00:08:51,600 --> 00:08:54,160
Speaker 1: weeks and months that they will do what it takes

169
00:08:54,200 --> 00:08:57,040
Speaker 1: to sustain the expansion the race market, saying that that

170
00:08:57,120 --> 00:09:01,480
Speaker 1: expansion is essentially under threat, either from the tariffs or

171
00:09:01,600 --> 00:09:03,920
Speaker 1: from this global growth slow down. I think we just

172
00:09:04,000 --> 00:09:06,319
Speaker 1: don't know enough, so, you know, I think the market

173
00:09:06,400 --> 00:09:08,760
Speaker 1: might be a little disappointed, but I don't think too much,

174
00:09:08,840 --> 00:09:11,319
Speaker 1: because you know, if all the feed stays is we'll

175
00:09:11,360 --> 00:09:13,280
Speaker 1: do what it takes, I think then it's all going

176
00:09:13,320 --> 00:09:16,199
Speaker 1: to come down to what happens right after the G twenty.

177
00:09:16,280 --> 00:09:18,480
Speaker 1: Do we get the additional tariffs which our views that

178
00:09:18,559 --> 00:09:21,240
Speaker 1: you want, and how is the economy holding up? And

179
00:09:21,240 --> 00:09:23,280
Speaker 1: if the economy is still holding up, okey, I think

180
00:09:23,600 --> 00:09:26,680
Speaker 1: we should keep some cuts being priced in. I think

181
00:09:26,679 --> 00:09:29,920
Speaker 1: pricing in three eases for this year is a little

182
00:09:29,960 --> 00:09:33,280
Speaker 1: pessimistic or pretty pessimistic, but I think it's it's only

183
00:09:33,520 --> 00:09:37,040
Speaker 1: incoming data, incoming trade negotiations. I think that's ultimately what

184
00:09:37,120 --> 00:09:39,760
Speaker 1: it priced the market out. So that's your assessment of

185
00:09:39,760 --> 00:09:42,080
Speaker 1: things right now. Walkers through how you think this is

186
00:09:42,080 --> 00:09:44,960
Speaker 1: going to be formalized in the statement on Wednesday and

187
00:09:45,040 --> 00:09:49,280
Speaker 1: in the Summary of Economic Projections from the Fed as well. Sure, yes,

188
00:09:49,320 --> 00:09:51,560
Speaker 1: so I think you know, they have to walk this

189
00:09:51,600 --> 00:09:53,920
Speaker 1: pretty fine line of saying we'll do what it takes.

190
00:09:53,920 --> 00:09:56,440
Speaker 1: But they've got a bunch of places where it needs

191
00:09:56,480 --> 00:09:58,319
Speaker 1: to show up. So on the statement, I think we'll

192
00:09:58,320 --> 00:10:00,080
Speaker 1: get some mark to market changes. I think they have

193
00:10:00,160 --> 00:10:03,520
Speaker 1: to downgrade a little bit on the payroll front, but

194
00:10:03,559 --> 00:10:06,640
Speaker 1: then household spending is looking pretty strong. I think what

195
00:10:06,760 --> 00:10:08,400
Speaker 1: the first thing I'll be looking for in the statement

196
00:10:08,440 --> 00:10:11,040
Speaker 1: is did they drop the word patients? What does that mean?

197
00:10:11,160 --> 00:10:14,160
Speaker 1: What is this came up this weekend? Actually? What does

198
00:10:14,240 --> 00:10:18,040
Speaker 1: patients mean? Yeah? And you know that meaning has actually

199
00:10:18,120 --> 00:10:20,000
Speaker 1: changed over the course of the last six months. So

200
00:10:20,000 --> 00:10:21,719
Speaker 1: when it was first put in place, it was a

201
00:10:21,800 --> 00:10:25,320
Speaker 1: very devilish signal because the FED went from predicting or

202
00:10:25,360 --> 00:10:29,720
Speaker 1: forecasting heights saying actually, path of least resistance is on hold.

203
00:10:29,920 --> 00:10:32,000
Speaker 1: I think they need to take that out because now

204
00:10:32,120 --> 00:10:35,040
Speaker 1: saying paths of least resistance is staying on hold, this

205
00:10:35,160 --> 00:10:37,800
Speaker 1: hawky is now they need to say, so our views.

206
00:10:37,840 --> 00:10:40,760
Speaker 1: They take it out and they say we monitor and

207
00:10:40,800 --> 00:10:44,640
Speaker 1: we're going to evaluate whether further adjustments are needed. So

208
00:10:44,840 --> 00:10:47,679
Speaker 1: keep the optionality, but don't go as far as to

209
00:10:47,720 --> 00:10:50,000
Speaker 1: say and I think what will be very dovish is

210
00:10:50,040 --> 00:10:52,880
Speaker 1: if they put in balance of risks tilted to the downside.

211
00:10:53,200 --> 00:10:55,160
Speaker 1: I don't see that yet and I think there's a

212
00:10:55,200 --> 00:10:57,800
Speaker 1: lot of uncertainty. But if we do put that in there,

213
00:10:58,120 --> 00:11:00,880
Speaker 1: that means the last few data this is making the

214
00:11:00,880 --> 00:11:04,679
Speaker 1: fat nervous, that momentum is faltering. Let's go to this

215
00:11:04,760 --> 00:11:08,880
Speaker 1: wonderful phrase, Prier you just said, which is optionality or

216
00:11:09,000 --> 00:11:12,040
Speaker 1: they have a choice set to make. Are all of

217
00:11:12,040 --> 00:11:19,480
Speaker 1: the banks losing their optionality because disinflation indicators are limiting

218
00:11:19,600 --> 00:11:24,160
Speaker 1: what they can do in the future. Now that's fair.

219
00:11:24,280 --> 00:11:26,559
Speaker 1: I think the banks that some of them that have

220
00:11:27,120 --> 00:11:30,599
Speaker 1: you know, taken the step around calling for all diseases.

221
00:11:31,000 --> 00:11:33,760
Speaker 1: I think it's it's worth thinking about the changing the

222
00:11:33,840 --> 00:11:36,720
Speaker 1: out their outlook or is it a reaction function question.

223
00:11:37,200 --> 00:11:39,520
Speaker 1: I don't think the FED reaction function has changed all

224
00:11:39,600 --> 00:11:42,840
Speaker 1: that much. I think it's all about outlook. So my

225
00:11:43,000 --> 00:11:46,720
Speaker 1: views of the the outlook is still uncertain. It's possible

226
00:11:46,720 --> 00:11:50,920
Speaker 1: to people have a more negative outlook. This reaction function,

227
00:11:51,040 --> 00:11:54,000
Speaker 1: John is really important. When you see five year five

228
00:11:54,080 --> 00:11:57,040
Speaker 1: years in Europe go three and a half standard deviations

229
00:11:57,360 --> 00:11:59,439
Speaker 1: as they have. The reaction function is always important. The

230
00:11:59,480 --> 00:12:01,840
Speaker 1: confusion and the FAT is that hardly anyone is understood

231
00:12:01,920 --> 00:12:04,400
Speaker 1: what the reaction function of the FAT actually is. Last

232
00:12:04,440 --> 00:12:10,280
Speaker 1: year inflation is below target, they hide through it. Tom. Yeah, well,

233
00:12:10,320 --> 00:12:12,760
Speaker 1: but you know, just a month ago we had Chepaw

234
00:12:12,840 --> 00:12:16,080
Speaker 1: saying that they think that the weakness and inflation is transitory,

235
00:12:16,120 --> 00:12:19,080
Speaker 1: so they're going to give it some time. And we've

236
00:12:19,080 --> 00:12:22,280
Speaker 1: all already seen some signs of the PC momentum has

237
00:12:22,320 --> 00:12:24,719
Speaker 1: turned in in in inflation, so some of that, you know,

238
00:12:24,760 --> 00:12:28,120
Speaker 1: portfolio management fees for example, that has started to move higher.

239
00:12:28,480 --> 00:12:31,840
Speaker 1: So if they're buying time again optionality to Tom's point,

240
00:12:32,640 --> 00:12:35,520
Speaker 1: by your end, if inflation has not moved higher, I

241
00:12:35,520 --> 00:12:37,800
Speaker 1: think then they can say, look, we thoughways transitory, it's

242
00:12:37,840 --> 00:12:41,000
Speaker 1: not maybe we need to ease right now. They're giving

243
00:12:41,040 --> 00:12:44,480
Speaker 1: themselves time to figure out if this weakness is transitory

244
00:12:44,559 --> 00:12:47,240
Speaker 1: or not. But clearly the market I think is looking

245
00:12:47,280 --> 00:12:50,079
Speaker 1: at and you brought up European and break evens. I

246
00:12:50,080 --> 00:12:52,640
Speaker 1: think they've fallen the most because the city is sort

247
00:12:52,679 --> 00:12:56,000
Speaker 1: of out of animation. Okay, Miriam Webster, John, can't we

248
00:12:56,040 --> 00:12:59,760
Speaker 1: just say temporary instead of what the hell is true? Insitory?

249
00:13:00,559 --> 00:13:03,480
Speaker 1: Same thing, I guess, but in economics. You know, you

250
00:13:03,559 --> 00:13:06,480
Speaker 1: use a little bit of jargon here, and you know

251
00:13:06,679 --> 00:13:09,240
Speaker 1: I don't see any difference from the So so the

252
00:13:09,280 --> 00:13:11,319
Speaker 1: line of the statement is in the second paragraph, will

253
00:13:11,320 --> 00:13:13,319
Speaker 1: all be watching it? It currently says the committee will

254
00:13:13,360 --> 00:13:16,040
Speaker 1: be patient as it determines what future adjustments to the

255
00:13:16,080 --> 00:13:18,439
Speaker 1: target range for the Fed Funds rate may be appropriate.

256
00:13:18,840 --> 00:13:22,240
Speaker 1: Patient implying will wait If patients is that this Wednesday,

257
00:13:22,280 --> 00:13:24,080
Speaker 1: I think there's going to be some real disappointment because

258
00:13:24,080 --> 00:13:26,440
Speaker 1: the market is not looking for the Fed to wait around.

259
00:13:26,440 --> 00:13:29,200
Speaker 1: So that's the statement. Prior let's talk about the summary

260
00:13:29,240 --> 00:13:31,840
Speaker 1: of economic projections at the moment. As you imply in

261
00:13:32,040 --> 00:13:35,439
Speaker 1: rates right now in the food Fed Fed Funds futures market,

262
00:13:35,559 --> 00:13:38,480
Speaker 1: essentially what we have is several rate cuts being priced

263
00:13:38,520 --> 00:13:40,560
Speaker 1: the Federal Reserve and the median dot in the SEP

264
00:13:41,280 --> 00:13:44,040
Speaker 1: is one single hike. How do we reconcile those two

265
00:13:44,080 --> 00:13:47,960
Speaker 1: things this Wednesday? If we do at all? To what degree? Right? So?

266
00:13:48,040 --> 00:13:50,840
Speaker 1: I think the doctor is going to look hawkish because

267
00:13:51,200 --> 00:13:53,880
Speaker 1: you know, you can have two or three Fed officials

268
00:13:53,880 --> 00:13:56,400
Speaker 1: looking for cuts this year. For the medium to move

269
00:13:56,480 --> 00:13:59,719
Speaker 1: to a cut, we need eight people to move to cuts.

270
00:14:00,320 --> 00:14:02,439
Speaker 1: That's a pretty high bar. But I think what we

271
00:14:02,520 --> 00:14:04,679
Speaker 1: hear from Powell is look at the media and look

272
00:14:04,679 --> 00:14:07,360
Speaker 1: at the entire dot plot and take it with a

273
00:14:07,400 --> 00:14:09,760
Speaker 1: bit of a grain of salt or a fistful of salt,

274
00:14:09,880 --> 00:14:13,319
Speaker 1: because the uncertainty bands are much higher, and what the

275
00:14:13,360 --> 00:14:15,839
Speaker 1: dot plot is giving you is your modal outlook or

276
00:14:15,880 --> 00:14:18,679
Speaker 1: the baseline outlook. But we just don't know. There's a

277
00:14:18,679 --> 00:14:20,800
Speaker 1: lot of uncertainty. So I think what I'll be looking

278
00:14:20,840 --> 00:14:22,880
Speaker 1: at is more than the media. I mean, the media

279
00:14:23,160 --> 00:14:25,560
Speaker 1: is important, and I think we will have we will

280
00:14:25,600 --> 00:14:29,080
Speaker 1: take the medium down from so next year I think

281
00:14:29,080 --> 00:14:31,360
Speaker 1: there won't be any high expenciled in. But look at

282
00:14:31,400 --> 00:14:34,680
Speaker 1: the distribution. How many people are penciling and cuts this year,

283
00:14:34,760 --> 00:14:39,440
Speaker 1: cuts next year? What happens to the longest side? Are

284
00:14:39,440 --> 00:14:43,120
Speaker 1: the dot plots and the same? Are they the same

285
00:14:43,160 --> 00:14:46,840
Speaker 1: as the various PhD and researchers at the FED or

286
00:14:46,840 --> 00:14:53,000
Speaker 1: can the dots be separate from the FED belief Well,

287
00:14:53,040 --> 00:14:56,400
Speaker 1: I think the FED should act based on modal outlook

288
00:14:56,400 --> 00:14:58,640
Speaker 1: plus the risks. I think the dots are only giving

289
00:14:58,680 --> 00:15:01,200
Speaker 1: you the modal outlook, so that's where the PHS come

290
00:15:01,280 --> 00:15:04,560
Speaker 1: in with their moral outlook. But I think we fed

291
00:15:04,680 --> 00:15:07,000
Speaker 1: will have a view on risks, and if risks are

292
00:15:07,080 --> 00:15:10,840
Speaker 1: clearly uh you know, skewed to the downside, they can

293
00:15:10,920 --> 00:15:13,320
Speaker 1: be more division than the dot Lort implies. And we've

294
00:15:13,320 --> 00:15:16,120
Speaker 1: seen the dot plot being wrong many times. But it's

295
00:15:16,120 --> 00:15:19,280
Speaker 1: still as much as effectories to de emphasize it. It's

296
00:15:19,440 --> 00:15:21,680
Speaker 1: you're putting numbers. We're going to look at the numbers.

297
00:15:21,680 --> 00:15:23,480
Speaker 1: We're gonna look at the market, so the market would

298
00:15:23,760 --> 00:15:27,240
Speaker 1: will absolutely focus on it. Wonderful preamsa, thank you so much.

299
00:15:27,240 --> 00:15:30,960
Speaker 1: TV security is really really smart. Just to set us

300
00:15:30,960 --> 00:15:48,560
Speaker 1: all it's better than good. They have Stephen Engel joined us.

301
00:15:48,640 --> 00:15:51,680
Speaker 1: He has been truly one of the lead reporters in

302
00:15:51,760 --> 00:15:55,240
Speaker 1: Western media across all of the Pacific ram and has

303
00:15:55,280 --> 00:15:58,600
Speaker 1: spent the last number of hours in days on the

304
00:15:58,640 --> 00:16:02,280
Speaker 1: streets of Hong Kong and joins us right now, Stephen Angel.

305
00:16:02,400 --> 00:16:05,160
Speaker 1: What is lost in translation are the images of millions

306
00:16:05,200 --> 00:16:08,800
Speaker 1: of people protesting. What is it like on the streets? Well,

307
00:16:08,840 --> 00:16:11,520
Speaker 1: I am here now in front of the Legislatives building

308
00:16:11,600 --> 00:16:15,880
Speaker 1: and the protesters are remaining. Okay, it's not two million

309
00:16:16,160 --> 00:16:20,080
Speaker 1: as estimated by organizers yesterday on a Sunday, when families,

310
00:16:20,320 --> 00:16:23,680
Speaker 1: grandmothers and mothers and daughters walked hand in hand through

311
00:16:23,720 --> 00:16:27,160
Speaker 1: the streets. Of course in those spectacles, those photos that

312
00:16:27,240 --> 00:16:30,240
Speaker 1: we've seen around the world. But there's the die hard

313
00:16:30,280 --> 00:16:33,920
Speaker 1: protesters here singing songs just a few feet away from

314
00:16:33,920 --> 00:16:36,400
Speaker 1: me right now as the sun is set, and they

315
00:16:36,440 --> 00:16:39,880
Speaker 1: are not going away. They are also camped around the

316
00:16:39,960 --> 00:16:43,800
Speaker 1: office of the embattled Chief Executive, Carrie Lamb. They want

317
00:16:43,840 --> 00:16:48,800
Speaker 1: her to resign. They want the controversial extradition bill withdrawn,

318
00:16:48,920 --> 00:16:52,920
Speaker 1: not just suspended. They want their comrades who are in

319
00:16:53,040 --> 00:16:57,280
Speaker 1: jail here on charges of rioting on Wednesday, they want

320
00:16:57,280 --> 00:17:00,680
Speaker 1: them released. And at very least what they want is

321
00:17:00,720 --> 00:17:04,240
Speaker 1: an apology from Carry Lamb in person, not just a

322
00:17:04,280 --> 00:17:06,560
Speaker 1: written statement they got last night. And they want her

323
00:17:06,600 --> 00:17:09,080
Speaker 1: to come out and meet and talk and engage in

324
00:17:09,200 --> 00:17:13,359
Speaker 1: dialogue with these protesters who are steadfast in their belief

325
00:17:13,440 --> 00:17:16,600
Speaker 1: that they are right side of history. And uh, they

326
00:17:16,640 --> 00:17:19,480
Speaker 1: are quite a jubilant bunch as well, Stephen. A remarkable

327
00:17:19,560 --> 00:17:23,000
Speaker 1: calming down from Carry Lamb, the Chief Executive, just walks

328
00:17:23,000 --> 00:17:25,119
Speaker 1: through the language she used and just how much pressure

329
00:17:25,160 --> 00:17:27,600
Speaker 1: she is under at the moment, and whether you could

330
00:17:27,640 --> 00:17:31,520
Speaker 1: see her actually stepping down. Yeah, that's the million dollar question,

331
00:17:31,640 --> 00:17:34,440
Speaker 1: right now. I mean, most people I've spoken to say

332
00:17:34,480 --> 00:17:38,000
Speaker 1: it's if she doesn't step down, it's very unlikely that

333
00:17:38,040 --> 00:17:41,000
Speaker 1: she will last UH for a second term, which would

334
00:17:41,040 --> 00:17:44,359
Speaker 1: be in two So it's it's potentially, you know, we

335
00:17:44,400 --> 00:17:46,080
Speaker 1: could have the potential of her being a bit of

336
00:17:46,080 --> 00:17:48,239
Speaker 1: a Lamb duck for the next couple of years here

337
00:17:48,240 --> 00:17:52,320
Speaker 1: in Hong Kong. But stepping down, we're hearing that could

338
00:17:52,359 --> 00:17:55,240
Speaker 1: come tomorrow, it might not. We simply don't know. We

339
00:17:55,320 --> 00:17:58,320
Speaker 1: haven't really heard from Carry Lamb today. Steven Angel, thank

340
00:17:58,320 --> 00:18:01,040
Speaker 1: you so much for your reportings, even angle with Bloomberg

341
00:18:01,040 --> 00:18:16,040
Speaker 1: News in Hong Kong. We've had a huge response to

342
00:18:16,080 --> 00:18:19,080
Speaker 1: Meredith Sumter, not only with the Eurasia Group, but also

343
00:18:19,119 --> 00:18:22,760
Speaker 1: with their ability to review the Chinese media. Meredith, what

344
00:18:22,840 --> 00:18:26,359
Speaker 1: are the Chinese saying in Chinese that we're not seeing

345
00:18:26,359 --> 00:18:30,400
Speaker 1: in the Western media? Thanks Tom. Well. Certainly, what's been

346
00:18:30,480 --> 00:18:34,560
Speaker 1: notable over the last twenty four hours is the slight shift,

347
00:18:34,920 --> 00:18:38,600
Speaker 1: whether intended or not, by perhaps the most important Communist

348
00:18:38,640 --> 00:18:43,639
Speaker 1: party mouthpiece UH state media on the mainland, the People's Daily,

349
00:18:44,080 --> 00:18:47,720
Speaker 1: Whereas for the past several days Chinese state media have

350
00:18:47,920 --> 00:18:51,320
Speaker 1: been expressing support for both the Hong Kong government and

351
00:18:51,440 --> 00:18:55,879
Speaker 1: the embattled Chief Executive Carrie Lamb amidst the calls for

352
00:18:55,920 --> 00:18:59,199
Speaker 1: her to resign. The People's Daily came out backing the

353
00:18:59,240 --> 00:19:04,520
Speaker 1: Hong Kong Ment, but they failed to mention carry lamb motive.

354
00:19:04,560 --> 00:19:06,679
Speaker 1: How difficult would it be for Carrie Lamb to hold on?

355
00:19:08,960 --> 00:19:11,720
Speaker 1: You know, she is She's a she's a tough cookie.

356
00:19:11,800 --> 00:19:14,160
Speaker 1: I would expect that we're going to see her fight

357
00:19:14,240 --> 00:19:17,520
Speaker 1: to hold on to her job. And in fact, my

358
00:19:17,600 --> 00:19:21,920
Speaker 1: expectation is that you will see her government formally withdraw

359
00:19:22,920 --> 00:19:27,480
Speaker 1: the the extradition bill, as well as perhaps the forced

360
00:19:27,480 --> 00:19:32,359
Speaker 1: stepping down of some Hong Kong officials before she herself

361
00:19:32,920 --> 00:19:36,280
Speaker 1: would allow herself to come under pressure to step down.

362
00:19:36,560 --> 00:19:40,720
Speaker 1: But what's really interesting here UH is looking at how

363
00:19:40,760 --> 00:19:45,440
Speaker 1: the mainland is trying to keep up with the fast

364
00:19:45,520 --> 00:19:49,360
Speaker 1: moving events in Hong Kong and clearly feeling as if

365
00:19:49,480 --> 00:19:54,480
Speaker 1: Beijing has misread UH the the collective will of the

366
00:19:54,560 --> 00:19:58,959
Speaker 1: Hong Kong people. So underneath the traditional collective leadership model,

367
00:19:59,359 --> 00:20:01,679
Speaker 1: we would expect that Beijing would move quickly to reduce

368
00:20:01,760 --> 00:20:06,160
Speaker 1: pensions and confident that it could achieve its goals perhaps

369
00:20:06,200 --> 00:20:08,800
Speaker 1: over the medium term with a slower praised approach through

370
00:20:08,840 --> 00:20:11,800
Speaker 1: commercial and infrastructure ties. But this is the kind of

371
00:20:11,840 --> 00:20:14,280
Speaker 1: Shi Jim King. And if you've looked at when he's

372
00:20:14,320 --> 00:20:17,240
Speaker 1: been challenged in the past, whether it's been the anti

373
00:20:17,240 --> 00:20:22,800
Speaker 1: corruption campaign he's waged or pressure from Shinjung, he has

374
00:20:22,920 --> 00:20:26,320
Speaker 1: doubled down when he's been pushed up against the wall.

375
00:20:27,080 --> 00:20:29,520
Speaker 1: So the key here is who is going to win

376
00:20:29,640 --> 00:20:32,560
Speaker 1: over in Beijing as Carry Lamb tries to hold on

377
00:20:32,600 --> 00:20:36,040
Speaker 1: to her job. And to a comment in Hong Kong Meredith,

378
00:20:36,400 --> 00:20:39,480
Speaker 1: the path here from Tung Xi Wa to Donald saying

379
00:20:39,840 --> 00:20:41,760
Speaker 1: I knew quite well when I was in Hong Kong

380
00:20:41,800 --> 00:20:45,240
Speaker 1: a lot years ago, to Mr Luang to Carry Lamb.

381
00:20:45,760 --> 00:20:49,480
Speaker 1: Who would replace Carrie Lamb? Would it be someone more

382
00:20:49,600 --> 00:20:53,919
Speaker 1: stridently Beijing oriented or do we be someone like Donald

383
00:20:54,040 --> 00:20:58,760
Speaker 1: Saying who had a great affinity for Western capitalism. So

384
00:20:59,200 --> 00:21:02,000
Speaker 1: this is this is an a critical question, especially because

385
00:21:02,080 --> 00:21:06,480
Speaker 1: Carrie Lamb has no obvious political air. She's just two

386
00:21:06,560 --> 00:21:09,040
Speaker 1: years into her five year term, and this is far

387
00:21:09,080 --> 00:21:12,720
Speaker 1: too early or Beijing or anyone to to really try

388
00:21:12,760 --> 00:21:15,000
Speaker 1: to see who they're going to to groom to take

389
00:21:15,040 --> 00:21:18,840
Speaker 1: her place. If we see this kind of pressure, this

390
00:21:18,960 --> 00:21:22,520
Speaker 1: kind of pushback from the Hong Kong people. I would

391
00:21:22,560 --> 00:21:25,320
Speaker 1: expect that we're going to to see a follow on

392
00:21:25,480 --> 00:21:28,439
Speaker 1: leader who is still going to be fairly closely aligned

393
00:21:28,480 --> 00:21:31,879
Speaker 1: to Beijing, but someone who is more palatable to the

394
00:21:32,040 --> 00:21:34,960
Speaker 1: to the Hong Kong people, someone whom would be able

395
00:21:35,000 --> 00:21:38,160
Speaker 1: to inspire more a modicum of trust that they're going

396
00:21:38,200 --> 00:21:41,960
Speaker 1: to take the Hong Kong people's views into serious consideration

397
00:21:42,640 --> 00:21:45,600
Speaker 1: UH in terms of policy or onward legislation. The people

398
00:21:45,600 --> 00:21:47,600
Speaker 1: of Hong Kong are clearly very very worried about the

399
00:21:47,640 --> 00:21:50,560
Speaker 1: status quote and the status quote being unwound. I'm wondering

400
00:21:50,600 --> 00:21:53,800
Speaker 1: motive whether the Chinese government right now see value in

401
00:21:53,800 --> 00:21:58,639
Speaker 1: the status quo see value and the status quote. I

402
00:21:58,680 --> 00:22:00,920
Speaker 1: mean in terms of the terms, in terms of the

403
00:22:01,560 --> 00:22:04,359
Speaker 1: two systems one country within Hong Kong and the current

404
00:22:04,400 --> 00:22:06,840
Speaker 1: set up, the current framework, the current government that white

405
00:22:06,880 --> 00:22:12,560
Speaker 1: things process in that place. So from from Beijing's respective

406
00:22:12,560 --> 00:22:16,280
Speaker 1: and again this is this is Shijun Ping's UH China Um.

407
00:22:16,920 --> 00:22:20,040
Speaker 1: There is value in the one country, two systems from

408
00:22:20,080 --> 00:22:24,600
Speaker 1: a commercial and investment standpoint, But as Beijing works to

409
00:22:24,800 --> 00:22:30,000
Speaker 1: accelerate its own internal reforms to be more market oriented

410
00:22:30,000 --> 00:22:33,960
Speaker 1: while still having the Communist party firmly in control. That

411
00:22:34,080 --> 00:22:36,639
Speaker 1: line is likely to get blurred so long as the

412
00:22:36,720 --> 00:22:40,399
Speaker 1: Hong Kong people allow it to get blurred. And that's

413
00:22:40,480 --> 00:22:44,800
Speaker 1: why we're seeing this surprise from Beijing. Uh that you know,

414
00:22:45,000 --> 00:22:48,800
Speaker 1: Sen Chijumping has come to power. Uh, this growing encroachment

415
00:22:48,960 --> 00:22:53,560
Speaker 1: of Chinese, Chinese influence over Hong Kong system. But what's

416
00:22:53,600 --> 00:22:57,960
Speaker 1: critical here is if Hong Kong's legal autonomy begins to

417
00:22:58,000 --> 00:23:01,960
Speaker 1: be chipped away. Even if Ajing thinks that it's it's

418
00:23:02,000 --> 00:23:06,320
Speaker 1: commercial economy remains intact, it's the foreign business community and

419
00:23:06,359 --> 00:23:08,960
Speaker 1: the concern to the foreign business community which may prove

420
00:23:09,040 --> 00:23:13,840
Speaker 1: Beijing wrong. Meredith. One final question quickly here, are we

421
00:23:13,920 --> 00:23:18,320
Speaker 1: going to see hundreds of thousands slash millions of protesters

422
00:23:18,359 --> 00:23:24,439
Speaker 1: into the G twenty meeting in Japan or or in

423
00:23:24,560 --> 00:23:28,879
Speaker 1: China Hong Kong. Yeah, that that's a great question. My

424
00:23:28,960 --> 00:23:31,520
Speaker 1: sense is that that the protesters in Hong Kong are

425
00:23:31,600 --> 00:23:35,880
Speaker 1: more so focused on Carrie Lamb, on their governments, and

426
00:23:36,000 --> 00:23:38,760
Speaker 1: on some critical dates coming out. Of course, July one

427
00:23:38,880 --> 00:23:41,439
Speaker 1: is the anniversary of the city's handover from British to Chinese.

428
00:23:41,720 --> 00:23:45,480
Speaker 1: That the traditional protest date, and July eleven, that's the

429
00:23:45,600 --> 00:23:47,960
Speaker 1: end of the current legislative session, so they're more so

430
00:23:48,080 --> 00:23:50,359
Speaker 1: going to be focused on that than they are on

431
00:23:50,400 --> 00:23:55,159
Speaker 1: the the geopolitical realities of the Gwyn meeting. Said Donald

432
00:23:55,160 --> 00:23:58,720
Speaker 1: Trump is reportedly going to raise Hong Kong with Ji

433
00:23:58,800 --> 00:24:01,200
Speaker 1: Jin Ping, and of course we have our US cent

434
00:24:01,280 --> 00:24:05,760
Speaker 1: President Mike Pence, who may also raise Hong Kong in

435
00:24:05,800 --> 00:24:08,879
Speaker 1: an upcoming Chinese speech. Meredith, thank you so much, Meredith

436
00:24:10,800 --> 00:24:27,760
Speaker 1: with a just terrific perspective. Elisa Martinizi joining us now

437
00:24:27,840 --> 00:24:29,879
Speaker 1: from Bloomberg Opinion. A last, It always great to get

438
00:24:29,920 --> 00:24:32,280
Speaker 1: you with us on this program. So finally a little

439
00:24:32,320 --> 00:24:36,200
Speaker 1: bit of urgency, How does it materialize in the coming month? Well,

440
00:24:36,280 --> 00:24:38,440
Speaker 1: you those are yours. I'm not sure I see that

441
00:24:38,560 --> 00:24:42,840
Speaker 1: much urgency a couple of months since they abandoned merger talks.

442
00:24:42,920 --> 00:24:45,640
Speaker 1: I think actually that's part of all the investors expected

443
00:24:45,640 --> 00:24:48,000
Speaker 1: by Ben is when they walked away from these discussions

444
00:24:48,040 --> 00:24:51,080
Speaker 1: with Commerce Bank, for the bank to present its own,

445
00:24:51,320 --> 00:24:53,160
Speaker 1: its vision of what it could do on its own.

446
00:24:53,280 --> 00:24:55,680
Speaker 1: And and this has been lacking since we've had a

447
00:24:55,760 --> 00:25:00,400
Speaker 1: you know, feed of information in the papers, but so far,

448
00:25:00,560 --> 00:25:03,760
Speaker 1: no one's really excited about what they're hearing. It would appear. Eliza,

449
00:25:03,840 --> 00:25:07,440
Speaker 1: I remember my first meeting with you in Zurich when

450
00:25:07,440 --> 00:25:11,639
Speaker 1: you completely owned the knowledge of Italian banking. Now you

451
00:25:11,720 --> 00:25:13,800
Speaker 1: own the knowledge of all of you you banking. You're

452
00:25:13,880 --> 00:25:18,480
Speaker 1: right definitively for Boomberg opinion. What are they waiting for?

453
00:25:18,720 --> 00:25:22,640
Speaker 1: Do they have like consultants or do they have regulators

454
00:25:22,680 --> 00:25:27,000
Speaker 1: saying go slow? I mean, what what is the vailue

455
00:25:27,200 --> 00:25:31,119
Speaker 1: to Mr saving a waiting four weeks or eight weeks

456
00:25:31,119 --> 00:25:34,040
Speaker 1: to affect a plan? Well, I think what you've had is,

457
00:25:34,160 --> 00:25:36,359
Speaker 1: you know, a combination of factors. I mean, he was,

458
00:25:36,720 --> 00:25:39,880
Speaker 1: you know, he was midway through his own UM strategic

459
00:25:40,440 --> 00:25:43,200
Speaker 1: overhaul pretty much when he was kind of forced into

460
00:25:43,240 --> 00:25:45,760
Speaker 1: a Roman comments bank, you know, to engage in these

461
00:25:45,800 --> 00:25:47,919
Speaker 1: most of discussions, which he himself said it was it

462
00:25:48,000 --> 00:25:50,679
Speaker 1: was too early to engage with anybody UM because they

463
00:25:50,720 --> 00:25:52,600
Speaker 1: still have to do a lot of you know, a

464
00:25:52,600 --> 00:25:55,040
Speaker 1: lot of the O their own restructuring fast. So that

465
00:25:55,119 --> 00:25:57,959
Speaker 1: must have been a distraction. But you've also had UM

466
00:25:58,000 --> 00:26:02,880
Speaker 1: you know, according to various passports, you know, some UM

467
00:26:02,920 --> 00:26:06,639
Speaker 1: different messages from from the board perhaps being somewhat resistant

468
00:26:07,200 --> 00:26:10,680
Speaker 1: to scaling back in in the investment bank, particularly coming

469
00:26:10,720 --> 00:26:13,879
Speaker 1: from the Chairman Paul arc Lightner, and that appears to

470
00:26:13,920 --> 00:26:17,439
Speaker 1: have complicated UM and certainly taken up more time perhaps

471
00:26:17,440 --> 00:26:19,159
Speaker 1: than it should have. As you say, why is it

472
00:26:19,200 --> 00:26:22,199
Speaker 1: taking so long? It's not as entirely clear. There was

473
00:26:22,200 --> 00:26:24,359
Speaker 1: a belief in some parts that finally maybe we get

474
00:26:24,359 --> 00:26:26,320
Speaker 1: a great hike from the ECB and it would bail

475
00:26:26,359 --> 00:26:28,840
Speaker 1: out some of the business models at Deutsche Bank. Is

476
00:26:28,840 --> 00:26:30,760
Speaker 1: that where some of this urgency comes from, Elisa, that

477
00:26:30,800 --> 00:26:33,320
Speaker 1: this current environment is going to remain with us for

478
00:26:33,320 --> 00:26:36,960
Speaker 1: a long long time and they need to adjust to it. Absolutely.

479
00:26:37,040 --> 00:26:39,520
Speaker 1: But I think that has been clear, you know, quite

480
00:26:39,600 --> 00:26:41,359
Speaker 1: for some time. And now, of course you getting to

481
00:26:41,400 --> 00:26:45,560
Speaker 1: the point where conditions are deteriorating potentially quite rapidly. You've

482
00:26:45,600 --> 00:26:48,760
Speaker 1: had a warning UM last week that Germany might be

483
00:26:48,840 --> 00:26:51,600
Speaker 1: on on the brink of a recession. So the more

484
00:26:51,680 --> 00:26:54,080
Speaker 1: they wait, the longer and the more difficult it's going

485
00:26:54,119 --> 00:26:56,679
Speaker 1: to be, and the more drastic the measures will have

486
00:26:56,760 --> 00:26:59,359
Speaker 1: to be. So yeah, time is really not on you know,

487
00:26:59,400 --> 00:27:01,879
Speaker 1: not not the it right now. Lisa Mantone, great to

488
00:27:01,880 --> 00:27:03,520
Speaker 1: get you with us on the program from bloom Back

489
00:27:03,520 --> 00:27:06,840
Speaker 1: Opinion on Deutsche Bank. Thanks for listening to the Bloomberg

490
00:27:06,880 --> 00:27:12,840
Speaker 1: surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,

491
00:27:13,200 --> 00:27:17,400
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at

492
00:27:17,480 --> 00:27:21,720
Speaker 1: Tom Keane before the podcast. You can always catch us worldwide.

493
00:27:22,160 --> 00:27:23,280
Speaker 1: I'm Bloomberg Radio