1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,560 Speaker 1: Along with my co host Lisa Abramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg P and L 6 00:00:20,840 --> 00:00:33,520 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Gasoline 7 00:00:33,520 --> 00:00:37,160 Speaker 1: stations in Brazil are out of gas. Fresh food supplies 8 00:00:37,200 --> 00:00:41,240 Speaker 1: in Brazilian supermarkets have dwindle, flights have been canceled. Many 9 00:00:41,280 --> 00:00:46,360 Speaker 1: schools and universities have suspended classes, all because of a 10 00:00:46,400 --> 00:00:50,639 Speaker 1: truckers strike. Paul McNamara is Investment director for Emerging Markets 11 00:00:50,680 --> 00:00:54,240 Speaker 1: for g A m UK Limited, helping to manage more 12 00:00:54,280 --> 00:00:57,560 Speaker 1: than eleven billion dollars in developing world assets, and he 13 00:00:57,680 --> 00:01:02,440 Speaker 1: joins us from London. Paul, explain what's going on in Brazil. Well, 14 00:01:02,480 --> 00:01:04,560 Speaker 1: what we've seen is a combination of the high oil 15 00:01:04,600 --> 00:01:08,560 Speaker 1: prices that we've seen everywhere UM, plus a weakening in 16 00:01:08,720 --> 00:01:11,759 Speaker 1: the Brazilian rail um. You know, there's a bunch of 17 00:01:11,800 --> 00:01:14,840 Speaker 1: things gone on lower. They've had big interest rate cuts there. 18 00:01:15,360 --> 00:01:18,560 Speaker 1: It's one of the most popular emerging currencies, so there's 19 00:01:18,600 --> 00:01:21,720 Speaker 1: emerging currencies have sold off, but that combination means that 20 00:01:21,760 --> 00:01:24,320 Speaker 1: the price of oil in rail has really shot up. 21 00:01:24,880 --> 00:01:28,440 Speaker 1: And um, and you know it's not just Brazil. About 22 00:01:28,480 --> 00:01:30,240 Speaker 1: sort of four or five years ago. We actually a 23 00:01:30,240 --> 00:01:32,800 Speaker 1: bit longer, we saw something similar in the UK when 24 00:01:32,840 --> 00:01:36,039 Speaker 1: tax raises on fuel. Truckers are the people in the 25 00:01:36,040 --> 00:01:38,880 Speaker 1: modern world with a lot of power, and the government 26 00:01:38,880 --> 00:01:41,760 Speaker 1: has to respond to that. Okay, So, Paul, thank you 27 00:01:41,800 --> 00:01:44,040 Speaker 1: so much for being with us. I'm struck by the 28 00:01:44,080 --> 00:01:48,240 Speaker 1: idea that we've had so off in emerging markets. More broadly, 29 00:01:48,280 --> 00:01:52,320 Speaker 1: people were talking about Turkey and Argentina's idiosyncratic issues. Brazil 30 00:01:52,360 --> 00:01:55,600 Speaker 1: was supposed to be a recovery story after just emerging 31 00:01:55,640 --> 00:01:59,440 Speaker 1: from the worst financial crisis on record. Uh and here 32 00:01:59,480 --> 00:02:04,440 Speaker 1: we are seeing something that will crimp growth, potentially eliminating 33 00:02:04,440 --> 00:02:08,799 Speaker 1: two point six billion dollars from their economy this year. 34 00:02:09,280 --> 00:02:12,920 Speaker 1: So as an investor, how does this change your perspective 35 00:02:13,040 --> 00:02:16,960 Speaker 1: on Brazil? I mean, I think it's a demonstration of 36 00:02:17,000 --> 00:02:19,560 Speaker 1: something that we already knew that Brazil was vulnerable on 37 00:02:20,400 --> 00:02:23,600 Speaker 1: because I mean, the government has has effectively surrendered to 38 00:02:23,919 --> 00:02:28,240 Speaker 1: the to the truckers by agreeing to absorb any further 39 00:02:28,880 --> 00:02:31,840 Speaker 1: rises in the price of oil, that they'll they'll create 40 00:02:31,919 --> 00:02:35,200 Speaker 1: subsidies as the price of oil goes up. Now, of 41 00:02:35,240 --> 00:02:37,880 Speaker 1: all the emerging markets, Brazil is in one of the 42 00:02:37,960 --> 00:02:41,960 Speaker 1: weakest positions to do so, although they've had some success 43 00:02:41,960 --> 00:02:44,800 Speaker 1: in tightening fiscal policy because they pay much higher interest 44 00:02:44,880 --> 00:02:47,840 Speaker 1: rates than anyone else. It's the one country where where 45 00:02:47,840 --> 00:02:51,520 Speaker 1: the fiscal rather than the private sector is a bit 46 00:02:51,520 --> 00:02:53,880 Speaker 1: of a problem. And I think, you know, that's why 47 00:02:53,960 --> 00:02:57,560 Speaker 1: Brazil has been particularly badly hit. And also I think 48 00:02:57,600 --> 00:03:00,120 Speaker 1: if you if you look at Petrobras, which is the 49 00:03:00,600 --> 00:03:02,800 Speaker 1: company which is going to be bearing the brunt of this. 50 00:03:03,280 --> 00:03:04,840 Speaker 1: I mean, their their share I mean I'm not an 51 00:03:04,880 --> 00:03:08,320 Speaker 1: equity investor, but their share are off about fifteen percent 52 00:03:08,440 --> 00:03:12,160 Speaker 1: or so in a week now. Michelle Tamara the president 53 00:03:12,280 --> 00:03:15,600 Speaker 1: of Brazil. He's got a lame duck government and there's 54 00:03:15,600 --> 00:03:19,800 Speaker 1: a presidential election in October. Does this mean that you 55 00:03:19,919 --> 00:03:22,799 Speaker 1: wait until the results of the election before making an 56 00:03:22,800 --> 00:03:27,920 Speaker 1: investment decision. I think it's you know, it increases the risk. 57 00:03:28,000 --> 00:03:30,400 Speaker 1: I mean, what's different about Brazil this time around is 58 00:03:30,440 --> 00:03:34,200 Speaker 1: that historically it's been the highest yielding emerging market. If 59 00:03:34,240 --> 00:03:36,680 Speaker 1: you kind of go back to two thousand and thirteen, 60 00:03:36,720 --> 00:03:39,360 Speaker 1: they were in the middle of a hiking cycle kind 61 00:03:39,360 --> 00:03:42,800 Speaker 1: of rates peaked in low double digits. Now we've got 62 00:03:42,960 --> 00:03:47,320 Speaker 1: a headline celebrate around below seven percent, which is, you know, 63 00:03:47,320 --> 00:03:50,520 Speaker 1: which is historically very low by Brazilian standards, and it 64 00:03:50,560 --> 00:03:53,240 Speaker 1: does mean that the price of waiting has never been lower. 65 00:03:53,640 --> 00:03:55,520 Speaker 1: So I think you know that the you know that, 66 00:03:55,560 --> 00:03:57,400 Speaker 1: whereas historically, you know, if you do, if you just 67 00:03:57,440 --> 00:04:00,440 Speaker 1: sat still in Brazil marked time, you made a decent profits. 68 00:04:00,720 --> 00:04:03,040 Speaker 1: I think the calculus is against Brazil and people are 69 00:04:03,080 --> 00:04:05,880 Speaker 1: going to be less willing to hold low yielding Brazilian 70 00:04:05,880 --> 00:04:08,680 Speaker 1: assets than they were high yielding assets in the past. So, Paul, 71 00:04:08,680 --> 00:04:11,080 Speaker 1: how are you currently thinking about Brazil? Are you buying more? 72 00:04:13,120 --> 00:04:16,040 Speaker 1: We're holding onto what's a what's a pretty substantial and 73 00:04:16,120 --> 00:04:19,640 Speaker 1: to be honest, slightly expensive overweight we've held for some time. 74 00:04:20,360 --> 00:04:22,200 Speaker 1: I mean, two things stand out for us in Brazil 75 00:04:22,240 --> 00:04:24,839 Speaker 1: at the moment. One is that this government has actually 76 00:04:24,920 --> 00:04:27,880 Speaker 1: may you know, combined with an economic recovery, has made 77 00:04:27,880 --> 00:04:30,080 Speaker 1: a dent in their fiscal problems. They have about half 78 00:04:30,160 --> 00:04:33,279 Speaker 1: the primary deficit from three percent of GDP to just 79 00:04:33,400 --> 00:04:35,719 Speaker 1: over one and a half percent. And at the same 80 00:04:35,720 --> 00:04:37,960 Speaker 1: time they're running trade surplus is bigger than they did 81 00:04:38,000 --> 00:04:40,560 Speaker 1: in the peak of the commodity bubble, of around five 82 00:04:40,600 --> 00:04:42,799 Speaker 1: and a half billion dollars a month. So that combination 83 00:04:42,839 --> 00:04:46,160 Speaker 1: of decent activity numbers and a very strong external balance 84 00:04:46,560 --> 00:04:49,320 Speaker 1: is something that we think should be supportive. The trouble 85 00:04:49,440 --> 00:04:51,320 Speaker 1: is that when the U. S. Dollar is strong against 86 00:04:51,360 --> 00:04:53,599 Speaker 1: the developed markets, it tends to be very strong against 87 00:04:53,640 --> 00:04:57,159 Speaker 1: em and that's when we're caught. At the moment, Brazil 88 00:04:57,240 --> 00:04:59,839 Speaker 1: is no place to try and fight a stronger dollar story. So, 89 00:05:00,279 --> 00:05:03,080 Speaker 1: putting aside the currency issue, which nobody can seem to 90 00:05:03,120 --> 00:05:06,080 Speaker 1: have much confidence in right now, if you talk to 91 00:05:06,120 --> 00:05:07,880 Speaker 1: people that have a view on the dollar, and then 92 00:05:07,960 --> 00:05:11,400 Speaker 1: quietly they'll say, but I have no idea. Um, I'm wondering, though. 93 00:05:11,480 --> 00:05:14,720 Speaker 1: You talked about the export balance and how Brazil is 94 00:05:14,760 --> 00:05:17,720 Speaker 1: such a big commodity exporter, and I'm wondering, given the 95 00:05:17,760 --> 00:05:21,880 Speaker 1: fact that this trucker strikes so directly affects that industry, 96 00:05:21,920 --> 00:05:26,760 Speaker 1: specifically with the soybean exports, how does that change or 97 00:05:26,839 --> 00:05:31,080 Speaker 1: alter your view on your positive outlook on Brazil. I mean, 98 00:05:31,120 --> 00:05:34,200 Speaker 1: I think you know this is this is that long 99 00:05:34,279 --> 00:05:37,119 Speaker 1: standing an issue you know. I mean e M isn't 100 00:05:37,120 --> 00:05:40,000 Speaker 1: that different different from d M in that investors can 101 00:05:40,040 --> 00:05:43,480 Speaker 1: bear in mind one or factors bit national disasters or strikes. 102 00:05:43,880 --> 00:05:46,599 Speaker 1: So you know, if we see slightly wobbly activity data, 103 00:05:46,680 --> 00:05:49,000 Speaker 1: if we see slightly if he trade data for a 104 00:05:49,040 --> 00:05:50,840 Speaker 1: month or two, I think I don't think that's going 105 00:05:50,880 --> 00:05:53,560 Speaker 1: to be that that's going to be a problem. You know, 106 00:05:53,600 --> 00:05:56,279 Speaker 1: it's the structural situation that investors are looking at. Yeah, 107 00:05:56,279 --> 00:05:57,520 Speaker 1: I mean, I think we're probably going to get some 108 00:05:57,600 --> 00:06:02,320 Speaker 1: ropey numbers, but that's not our our biggest concern. What 109 00:06:02,400 --> 00:06:05,919 Speaker 1: about the reform of the pension system in in Brazil? 110 00:06:06,080 --> 00:06:09,120 Speaker 1: Isn't that the sort of the key issue? It is 111 00:06:09,160 --> 00:06:11,919 Speaker 1: absolutely a key issue, and you know it's one that 112 00:06:12,000 --> 00:06:16,680 Speaker 1: investors remain generally quite bullishly biased on that. You know, 113 00:06:16,720 --> 00:06:21,440 Speaker 1: although President Temor himself isn't particularly popular, the balance in 114 00:06:21,480 --> 00:06:26,240 Speaker 1: Congress is broadly space broadly speaking centrist. And you know, 115 00:06:26,320 --> 00:06:29,520 Speaker 1: if we get a pension reform that's that's correctly put 116 00:06:29,560 --> 00:06:33,359 Speaker 1: together or you know, in some way politically palapable. I 117 00:06:33,400 --> 00:06:36,960 Speaker 1: think the consensus is still that that should pass. Um 118 00:06:37,000 --> 00:06:39,760 Speaker 1: if we get closer to actually getting that through, that's 119 00:06:39,839 --> 00:06:42,800 Speaker 1: that's clearly going to be a positive because Brazil stands out, 120 00:06:42,839 --> 00:06:45,159 Speaker 1: as I said, as the one emerging market where the 121 00:06:45,200 --> 00:06:47,839 Speaker 1: government balance sheet, you know, rather than in Turkey where 122 00:06:47,839 --> 00:06:51,400 Speaker 1: it's the banks which are the problem. But they absolutely 123 00:06:51,400 --> 00:06:53,440 Speaker 1: You're absolutely right, they do need to fix that, that 124 00:06:53,520 --> 00:06:56,719 Speaker 1: pension reform. Paul McNamara, thank you so much for joining us. 125 00:06:56,760 --> 00:06:59,400 Speaker 1: So wonderful to have you. As always. Paul McNamara is 126 00:06:59,440 --> 00:07:02,720 Speaker 1: investment or actor for emerging markets at GAM UK Limited 127 00:07:02,720 --> 00:07:06,719 Speaker 1: with about eleven billion dollars in developing world assets. Joining 128 00:07:06,800 --> 00:07:25,200 Speaker 1: us from London. We've been talking a lot about Italy today, 129 00:07:25,200 --> 00:07:29,160 Speaker 1: in particular how markets are in turmoil in Italy as 130 00:07:29,160 --> 00:07:34,200 Speaker 1: a result of the populist movement and increasing euroskeptic sentiment 131 00:07:34,280 --> 00:07:37,880 Speaker 1: that is sweeping the government. But how is this affecting businesses. 132 00:07:38,280 --> 00:07:41,080 Speaker 1: Let's bring in it Fernando napolitan No. He's President and 133 00:07:41,120 --> 00:07:45,600 Speaker 1: chief executive officer of the Italian Business and Investment Initiative 134 00:07:45,920 --> 00:07:48,600 Speaker 1: based in New York, although he is in Rome right now. Fernando, 135 00:07:48,680 --> 00:07:51,120 Speaker 1: thank you so much for being with us. So what 136 00:07:51,320 --> 00:07:54,480 Speaker 1: is the word from chief executives who you speak with 137 00:07:54,680 --> 00:07:58,360 Speaker 1: in Italy about what's going on with the political sphere 138 00:07:58,400 --> 00:08:01,760 Speaker 1: right now. Well, as you know, it's been quite a 139 00:08:01,800 --> 00:08:05,520 Speaker 1: particularly new situation even for Italy that is used to 140 00:08:05,680 --> 00:08:10,000 Speaker 1: along negotiations, So there is uh, let's say that there 141 00:08:10,040 --> 00:08:12,840 Speaker 1: are two views. The first is that the President of 142 00:08:12,920 --> 00:08:17,320 Speaker 1: Republic acted in the supreme interest making sure that there 143 00:08:17,400 --> 00:08:21,080 Speaker 1: is order at least in the processes of forming a government, 144 00:08:21,520 --> 00:08:23,880 Speaker 1: and I think it's given a very clear message that 145 00:08:23,960 --> 00:08:27,080 Speaker 1: Italy is strong and solid within the Euro and will 146 00:08:27,120 --> 00:08:30,920 Speaker 1: be respecting the European agreements starting from serving to that 147 00:08:31,080 --> 00:08:34,560 Speaker 1: and of course the member of the euro currency. The 148 00:08:34,640 --> 00:08:39,520 Speaker 1: second is, of course there is a general moral azarre 149 00:08:39,880 --> 00:08:43,040 Speaker 1: by the population in Italy, and I think this is 150 00:08:43,040 --> 00:08:45,400 Speaker 1: also the result of the quantity vision. There is this 151 00:08:46,360 --> 00:08:51,400 Speaker 1: general unfunded perception that there's there's gonna be somebody who's 152 00:08:51,400 --> 00:08:53,920 Speaker 1: going to footing the bill ultimately, and it's going to 153 00:08:54,000 --> 00:08:56,640 Speaker 1: be the central Bank, and I think this is what 154 00:08:56,760 --> 00:09:00,360 Speaker 1: has been fueling the discussions, especially over the last three weeks, 155 00:09:00,480 --> 00:09:05,000 Speaker 1: that have created anxiety in the market, and also the 156 00:09:05,320 --> 00:09:08,120 Speaker 1: difference between the Italian bonds and the German bonds that 157 00:09:08,720 --> 00:09:12,560 Speaker 1: have skyrocket as we're speaking. And so this is something 158 00:09:12,640 --> 00:09:17,280 Speaker 1: that I am expecting CEOs to take the lead and 159 00:09:17,280 --> 00:09:21,760 Speaker 1: in addressing UH these issues more broadly, especially visa v 160 00:09:21,960 --> 00:09:24,520 Speaker 1: the investors and the dead holders that as you know 161 00:09:25,480 --> 00:09:29,880 Speaker 1: about of the Italian dad or two point seven trillion euros, 162 00:09:29,960 --> 00:09:34,600 Speaker 1: it's owned by foreigners. Fernando Napolitano, do you believe that 163 00:09:34,640 --> 00:09:40,160 Speaker 1: whoever becomes the prime minister or indeed populates the Italian 164 00:09:40,200 --> 00:09:43,120 Speaker 1: government or to brush up on their German language skills, 165 00:09:45,720 --> 00:09:49,280 Speaker 1: you know, And there's always been UH, you know, hateen 166 00:09:49,360 --> 00:09:53,679 Speaker 1: lo of in UH, in the relationship with with the Germany, 167 00:09:53,920 --> 00:09:58,319 Speaker 1: and of course on the emotion that have been comments 168 00:09:58,400 --> 00:10:01,400 Speaker 1: that I would not subscribe. But angel A Miracle, I 169 00:10:01,480 --> 00:10:05,320 Speaker 1: think I made a very clear statement visit the Italy 170 00:10:05,400 --> 00:10:09,400 Speaker 1: and the respect that Italy Italy deserves. The new prime 171 00:10:09,440 --> 00:10:13,439 Speaker 1: minister or appointed prime Minister A Carlo Corelli, I think 172 00:10:13,640 --> 00:10:17,839 Speaker 1: is a huge job again, you know, in the next 173 00:10:17,880 --> 00:10:21,120 Speaker 1: couple of weeks, making sure that he explains and communicates 174 00:10:21,240 --> 00:10:24,760 Speaker 1: well to the Italian people. What is the status so 175 00:10:24,840 --> 00:10:29,360 Speaker 1: that UH September's election. This is pretty much the Framewords 176 00:10:29,400 --> 00:10:32,840 Speaker 1: agrees upon. We will have a cognizing electorate that will 177 00:10:32,920 --> 00:10:36,840 Speaker 1: go to the ballots, understanding that it is not a 178 00:10:36,880 --> 00:10:40,480 Speaker 1: lot of a leeway considering the fact again that we 179 00:10:40,520 --> 00:10:43,840 Speaker 1: have a hundred percent of the GDP in terms of 180 00:10:43,920 --> 00:10:48,000 Speaker 1: depth and and and any comparison with Japan is not 181 00:10:48,160 --> 00:10:53,480 Speaker 1: founded because Japan it's all internally owned, so that there 182 00:10:53,600 --> 00:10:56,200 Speaker 1: is uh, there is a bit of relationship going going 183 00:10:56,200 --> 00:10:59,440 Speaker 1: with Germany. But we are confident and we're sure, especially 184 00:10:59,480 --> 00:11:02,520 Speaker 1: the business imunity, that the number one partner of Germany 185 00:11:02,559 --> 00:11:07,040 Speaker 1: in Europe cannot be a defaulting and we're expecting a 186 00:11:07,040 --> 00:11:09,880 Speaker 1: lot of help coming from Germany. So Fernando, let's just 187 00:11:09,920 --> 00:11:11,839 Speaker 1: take a step back here, because at the heart of 188 00:11:11,880 --> 00:11:14,079 Speaker 1: a lot of the turmoil that we're seeing in Italian 189 00:11:14,120 --> 00:11:18,000 Speaker 1: markets right now is this fear that the movement to 190 00:11:18,080 --> 00:11:21,000 Speaker 1: break away from the shared currency is going to is 191 00:11:21,040 --> 00:11:25,559 Speaker 1: going to gain steam. I'm wondering, from a business community standpoint, 192 00:11:25,760 --> 00:11:29,680 Speaker 1: do you hear companies executives saying, you know what, if 193 00:11:29,720 --> 00:11:32,440 Speaker 1: we had the lira back, if we could not have 194 00:11:32,520 --> 00:11:35,360 Speaker 1: to be part of the shared currency, our businesses would 195 00:11:35,360 --> 00:11:38,320 Speaker 1: be much stronger, our currency would be weaker, we would 196 00:11:38,320 --> 00:11:43,040 Speaker 1: have better export power. Do you hear that? No? I 197 00:11:43,120 --> 00:11:48,760 Speaker 1: don't I think that any business leader initialy, especially those 198 00:11:48,840 --> 00:11:53,360 Speaker 1: that are that are fuelling the Italian export are really 199 00:11:53,880 --> 00:11:58,600 Speaker 1: into the Euro and they are appreciating having a stable currency. Yes, 200 00:11:58,679 --> 00:12:01,080 Speaker 1: there are the fluctuation is a bit of dollars that 201 00:12:01,160 --> 00:12:04,000 Speaker 1: at times may hamper our export, but as you know, 202 00:12:04,880 --> 00:12:08,280 Speaker 1: every year we are increasing our export, which is now 203 00:12:08,400 --> 00:12:12,680 Speaker 1: about five hundred billion a year, and so everybody, especially 204 00:12:12,720 --> 00:12:17,079 Speaker 1: in the medium sector, is not regretting a delta UH. 205 00:12:17,120 --> 00:12:19,319 Speaker 1: As you want to do a step back, let's really 206 00:12:19,440 --> 00:12:23,439 Speaker 1: understand that if we were not joining the the first 207 00:12:23,520 --> 00:12:26,760 Speaker 1: year of the Group of the Euro currency UH, but 208 00:12:26,960 --> 00:12:31,400 Speaker 1: seventeen years ago Italy would that most likely defaulted. If 209 00:12:31,520 --> 00:12:34,240 Speaker 1: that it would have you know, a serious like what 210 00:12:34,360 --> 00:12:38,160 Speaker 1: happened in Argentina at the time. So the business community 211 00:12:38,200 --> 00:12:40,480 Speaker 1: is solidate in the back. And by the way, it's 212 00:12:40,600 --> 00:12:45,160 Speaker 1: the same business community that largely has supported the one 213 00:12:45,200 --> 00:12:48,000 Speaker 1: of the two political parties, the North League, because as 214 00:12:48,040 --> 00:12:51,120 Speaker 1: you know, the the electoral split is that the Five 215 00:12:51,200 --> 00:12:57,680 Speaker 1: Star Movement UH, the new UH political parties primarily um 216 00:12:57,960 --> 00:13:00,719 Speaker 1: from the south the voters, while the North League is 217 00:13:00,720 --> 00:13:04,559 Speaker 1: primarily from the north, where you know, the strong economic 218 00:13:04,640 --> 00:13:07,880 Speaker 1: engines of Italy are. So I am not convinced that 219 00:13:08,320 --> 00:13:13,520 Speaker 1: the business community would support any movement outside the Euro 220 00:13:13,679 --> 00:13:17,320 Speaker 1: whose cost would be enormous. But most importantly, there is 221 00:13:17,360 --> 00:13:23,720 Speaker 1: no process for quitting the euro Is this availed confrontation 222 00:13:23,840 --> 00:13:28,520 Speaker 1: between the private sector and the public sector in Italy? No, 223 00:13:29,040 --> 00:13:32,720 Speaker 1: I think that the the there there are. There are 224 00:13:32,720 --> 00:13:35,640 Speaker 1: a number of things, of course which are not working uh. 225 00:13:35,640 --> 00:13:38,960 Speaker 1: And number one is the unemployment rate. Number two, we 226 00:13:39,000 --> 00:13:42,760 Speaker 1: have had a huge flood of immigrants with whose process 227 00:13:43,640 --> 00:13:47,760 Speaker 1: has not been managing, manage been vented carefully. So there 228 00:13:47,840 --> 00:13:51,240 Speaker 1: is a lot of anxiety, especially in the young people. UH, 229 00:13:51,280 --> 00:13:54,840 Speaker 1: and the and the and the business community of course 230 00:13:55,080 --> 00:13:58,960 Speaker 1: is concerned. But in a way we are going through 231 00:13:59,000 --> 00:14:01,520 Speaker 1: a kind of recall, very not as healthy as we 232 00:14:01,559 --> 00:14:05,880 Speaker 1: would that like. But I think the the the the 233 00:14:05,880 --> 00:14:10,640 Speaker 1: future government and the future election unfortunately will be uh. 234 00:14:11,000 --> 00:14:13,920 Speaker 1: Are we in Europe or out of the Europe? And 235 00:14:14,000 --> 00:14:15,720 Speaker 1: so this is I think it's going to be the 236 00:14:15,800 --> 00:14:19,960 Speaker 1: major team where the business community needs really to step 237 00:14:20,080 --> 00:14:22,040 Speaker 1: up in a way that has never done in the 238 00:14:22,160 --> 00:14:25,160 Speaker 1: history of Italy. So they need to speak up and 239 00:14:25,400 --> 00:14:27,480 Speaker 1: h I think that's what's going to happen in the 240 00:14:27,480 --> 00:14:30,720 Speaker 1: next sixth late weeks. Thank you very much for Noto 241 00:14:30,800 --> 00:14:33,720 Speaker 1: Napolitano as the president and the chief executive of the 242 00:14:33,760 --> 00:14:39,120 Speaker 1: Italian Business and Investment Initiative speaking about current events in 243 00:14:39,280 --> 00:14:56,600 Speaker 1: Italy him. There is a story in Bloomberg Business Week 244 00:14:56,920 --> 00:15:00,640 Speaker 1: this week by Peter Coy talking about how how there 245 00:15:00,640 --> 00:15:04,720 Speaker 1: seems to be a much lower birth rate among US 246 00:15:04,760 --> 00:15:09,360 Speaker 1: millennials and the question is why. And my question was 247 00:15:09,400 --> 00:15:11,400 Speaker 1: how much does this have to do with the availability 248 00:15:11,440 --> 00:15:15,240 Speaker 1: of childcare and how how cheaper expensive it is. And 249 00:15:15,440 --> 00:15:17,880 Speaker 1: to weigh in on that is Betsy Stevenson who joins 250 00:15:17,920 --> 00:15:20,640 Speaker 1: us now. She's Associate Professor of Public Policy at the 251 00:15:20,680 --> 00:15:24,320 Speaker 1: Ford School of the University of Michigan, joining us from 252 00:15:24,360 --> 00:15:27,000 Speaker 1: an Arbor, Michigan. She's also the former chief economist at 253 00:15:27,040 --> 00:15:31,000 Speaker 1: the U S Department of Labor UH from and eleven. 254 00:15:31,040 --> 00:15:34,400 Speaker 1: Thank you so much for joining us. Betsy, my pleasure. 255 00:15:34,400 --> 00:15:36,480 Speaker 1: It's great to speak with you. So I wanted just 256 00:15:36,520 --> 00:15:38,960 Speaker 1: to start with this idea that the birth rate has 257 00:15:39,000 --> 00:15:42,880 Speaker 1: been falling among younger people, and I'm wondering, do you 258 00:15:43,000 --> 00:15:47,200 Speaker 1: think that childcare has anything to do with that? So 259 00:15:47,440 --> 00:15:49,840 Speaker 1: I do think that childcare has something to do with it, 260 00:15:49,960 --> 00:15:54,200 Speaker 1: but I think it's actually um kind of a trifecta 261 00:15:54,840 --> 00:15:58,040 Speaker 1: of not just the high cost of childcare but a 262 00:15:58,200 --> 00:16:02,640 Speaker 1: lack of paid leave, paid family leave to you, you know, 263 00:16:02,640 --> 00:16:04,400 Speaker 1: thinking about it. You go to have a child, you 264 00:16:04,400 --> 00:16:05,880 Speaker 1: don't know that you're gonna be able to take any 265 00:16:05,880 --> 00:16:07,800 Speaker 1: time off of work. If you do take time off, 266 00:16:07,840 --> 00:16:10,280 Speaker 1: you may have to take it unpaid, and then you 267 00:16:10,400 --> 00:16:15,960 Speaker 1: face enormous costs putting those children into childcare if you're 268 00:16:15,960 --> 00:16:18,680 Speaker 1: going to go back to work, and then you often 269 00:16:18,720 --> 00:16:23,360 Speaker 1: face discrimination in the workplace. And research shows that women 270 00:16:23,640 --> 00:16:27,040 Speaker 1: can face a really steep wage penalty when they have children. 271 00:16:27,400 --> 00:16:30,600 Speaker 1: So you put those three things together and you see 272 00:16:30,640 --> 00:16:32,920 Speaker 1: a lot of young women who are saying, wait, this 273 00:16:33,000 --> 00:16:36,920 Speaker 1: is really really expensive, um, and I'm just not sure 274 00:16:37,200 --> 00:16:40,040 Speaker 1: I can do it, or I need to wait longer 275 00:16:40,080 --> 00:16:42,560 Speaker 1: to do it. So we are seeing the age of 276 00:16:42,640 --> 00:16:46,360 Speaker 1: first birth really getting pushed up quite rapidly. And I 277 00:16:46,400 --> 00:16:48,960 Speaker 1: think part of what women are doing is delaying, and 278 00:16:48,960 --> 00:16:51,520 Speaker 1: they're delaying so that they can save up for to 279 00:16:51,640 --> 00:16:54,880 Speaker 1: pay that, you know, these these high costs of child care. 280 00:16:55,360 --> 00:16:58,480 Speaker 1: And because research shows that every year you delay having 281 00:16:58,640 --> 00:17:03,680 Speaker 1: a child, the motherhood wage penalty that you face is lower. 282 00:17:03,920 --> 00:17:06,240 Speaker 1: So they know that if they can just you know, wait, 283 00:17:06,440 --> 00:17:09,040 Speaker 1: their careers will turn out better and they'll be able 284 00:17:09,080 --> 00:17:12,400 Speaker 1: to save up for childcare unfortunately for a lot of women. Though, 285 00:17:13,160 --> 00:17:14,800 Speaker 1: Now wouldn't you wait and wait and wait to have 286 00:17:14,840 --> 00:17:18,359 Speaker 1: a kid, You can often run out of time. So, Betsy, 287 00:17:18,400 --> 00:17:22,000 Speaker 1: I'm just wondering, compared to other nations, where does the 288 00:17:22,119 --> 00:17:25,439 Speaker 1: United States rank in terms of things such as paid 289 00:17:25,520 --> 00:17:31,080 Speaker 1: maternity leave or indeed even paid childcare. So, uh, in 290 00:17:31,200 --> 00:17:34,720 Speaker 1: terms of paid maternity leave, this one's easy because the 291 00:17:34,800 --> 00:17:38,919 Speaker 1: United States is alone. UM. I think Papua New Guinea 292 00:17:39,000 --> 00:17:42,320 Speaker 1: also uh no longer it doesn't have paid maternity leave. 293 00:17:42,359 --> 00:17:44,639 Speaker 1: But aside from those two countries, the United States and 294 00:17:44,680 --> 00:17:48,560 Speaker 1: Papua New Guinea, everybody else has paid maternity leave UM. 295 00:17:48,640 --> 00:17:52,959 Speaker 1: And the research shows that that does increase fertility. So 296 00:17:53,000 --> 00:17:57,960 Speaker 1: Australia has one of the more recent paid maternity leave policies. 297 00:17:57,960 --> 00:18:02,040 Speaker 1: In two thousand eleven they introduced eighteen weeks of paid 298 00:18:02,119 --> 00:18:05,600 Speaker 1: leave and then some additional unpaid leaves and there's some 299 00:18:05,680 --> 00:18:07,960 Speaker 1: new research coming out that shows that women have more 300 00:18:08,000 --> 00:18:12,600 Speaker 1: children as a result, so it did boost fertility rates. UM. 301 00:18:12,640 --> 00:18:16,520 Speaker 1: In terms of childcare, you know, other countries do support 302 00:18:17,000 --> 00:18:21,800 Speaker 1: childcare more. You know, the United States UM is mostly 303 00:18:21,840 --> 00:18:25,800 Speaker 1: a system of private childcare, was very little government funding. 304 00:18:27,000 --> 00:18:29,400 Speaker 1: So that's you know. One thing that I'm struck by 305 00:18:29,520 --> 00:18:32,320 Speaker 1: is what would you say to people who said, look, 306 00:18:32,440 --> 00:18:34,399 Speaker 1: you know, if people don't want to have have babies, and fine, 307 00:18:34,480 --> 00:18:37,159 Speaker 1: don't have babies if they can't afford them, that's their issue. 308 00:18:37,760 --> 00:18:39,920 Speaker 1: It's a lifestyle choice. If they want to make it work, 309 00:18:39,920 --> 00:18:42,320 Speaker 1: they make it work. If they don't, they don't. Um, 310 00:18:42,320 --> 00:18:45,040 Speaker 1: it's their choice. If they're not doing it, fine, What 311 00:18:45,119 --> 00:18:46,560 Speaker 1: do you say to people who say that, I mean, 312 00:18:46,640 --> 00:18:51,000 Speaker 1: why do why should we care? From a public policy perspective, Well, 313 00:18:51,000 --> 00:18:53,640 Speaker 1: I think from a public policy perspective, as a nation, 314 00:18:53,680 --> 00:18:56,400 Speaker 1: we're supposed to be forward looking um and not just 315 00:18:56,720 --> 00:19:00,320 Speaker 1: you know, partying like there's no tomorrow. So that means 316 00:19:00,359 --> 00:19:03,480 Speaker 1: that we need to be thinking about the next generation 317 00:19:03,880 --> 00:19:06,520 Speaker 1: as well as thinking about what you know, the current 318 00:19:06,560 --> 00:19:11,440 Speaker 1: generation would like. And the issue with early childhood education 319 00:19:11,560 --> 00:19:14,880 Speaker 1: and child care is if you make those investments, they 320 00:19:14,880 --> 00:19:19,200 Speaker 1: can pay huge dividends in the future. So UM research 321 00:19:19,240 --> 00:19:23,600 Speaker 1: shows that children who've got uh good early childhood education 322 00:19:24,080 --> 00:19:27,200 Speaker 1: go on to earn higher wages as adults and to 323 00:19:27,280 --> 00:19:31,040 Speaker 1: pay more in taxes. So if we want to continue 324 00:19:31,080 --> 00:19:36,080 Speaker 1: to have you know, uh, you know, a strong society 325 00:19:36,200 --> 00:19:39,679 Speaker 1: with people who are productive and a lot of economic growth. 326 00:19:39,960 --> 00:19:42,280 Speaker 1: But we need to support the next generation who's going 327 00:19:42,320 --> 00:19:45,080 Speaker 1: to go on to be those workers that are productive 328 00:19:45,400 --> 00:19:51,120 Speaker 1: and uh contributing to economic growth and paying taxes. Uh so. 329 00:19:51,680 --> 00:19:53,960 Speaker 1: And the thing that makes it so difficult for parents 330 00:19:54,760 --> 00:19:58,000 Speaker 1: is you have your kids early in life. It's you know, 331 00:19:58,400 --> 00:20:00,400 Speaker 1: we spend a lot of time worrying about how parents 332 00:20:00,440 --> 00:20:03,640 Speaker 1: are going to pay for college, but parents have eighteen 333 00:20:03,720 --> 00:20:07,600 Speaker 1: years to save for their kids college. When your child 334 00:20:07,680 --> 00:20:10,680 Speaker 1: is born, you face college tuition in that first year. 335 00:20:11,000 --> 00:20:14,920 Speaker 1: In twenty eight states, the cost of center based care 336 00:20:15,080 --> 00:20:17,119 Speaker 1: for a child in the first year of life is 337 00:20:17,160 --> 00:20:21,080 Speaker 1: more than in state public tuition in those states. So 338 00:20:21,160 --> 00:20:23,600 Speaker 1: you could have sent your kid to college for less 339 00:20:24,200 --> 00:20:28,720 Speaker 1: than putting them in child care. And yet people can 340 00:20:28,800 --> 00:20:31,119 Speaker 1: have their children when they're just getting their start in life. 341 00:20:31,160 --> 00:20:35,560 Speaker 1: They haven't saved up to pay college tuition. In fact, 342 00:20:35,640 --> 00:20:37,600 Speaker 1: some of them are still paying their own student loans. 343 00:20:37,600 --> 00:20:40,520 Speaker 1: They're paying for their own college tuition. So if we 344 00:20:40,560 --> 00:20:43,119 Speaker 1: want to invest in children that were investing in the 345 00:20:43,200 --> 00:20:46,879 Speaker 1: next generation, we need to help parents out with these 346 00:20:46,960 --> 00:20:50,440 Speaker 1: expenses because parents often can't do it, and certainly the 347 00:20:50,520 --> 00:20:52,440 Speaker 1: kids can't do it. You know, a six month old 348 00:20:52,440 --> 00:20:54,240 Speaker 1: can't go to a bank and say, can I have 349 00:20:54,280 --> 00:20:56,040 Speaker 1: a loan? This is going to make me a more 350 00:20:56,040 --> 00:20:59,080 Speaker 1: productive citizen and I'm going to be, you know, a 351 00:20:59,119 --> 00:21:01,280 Speaker 1: better member of this it in twenty five years if 352 00:21:01,280 --> 00:21:04,600 Speaker 1: you just pay for my early childhood education. Now, we 353 00:21:05,200 --> 00:21:07,360 Speaker 1: that that's not the way the system works, and so 354 00:21:07,440 --> 00:21:10,159 Speaker 1: it's one of the reasons why we really need the 355 00:21:10,200 --> 00:21:13,880 Speaker 1: government to step in and support investments in early childhood education. 356 00:21:14,520 --> 00:21:18,359 Speaker 1: By some estimates, the in the United States, couples spend 357 00:21:18,400 --> 00:21:21,639 Speaker 1: more than more than a quarter of their income on 358 00:21:21,880 --> 00:21:24,320 Speaker 1: childcare costs, and that if you happen to be a 359 00:21:24,359 --> 00:21:28,160 Speaker 1: single parent, that number is about fifty of your income 360 00:21:28,560 --> 00:21:31,479 Speaker 1: for childcare costs. Is that out of line when compared 361 00:21:31,520 --> 00:21:35,880 Speaker 1: to other countries? That is out of line with compared 362 00:21:35,920 --> 00:21:41,440 Speaker 1: to other countries. And you know, the the the United 363 00:21:41,480 --> 00:21:47,400 Speaker 1: States spends less on UM safety net programs and other 364 00:21:47,440 --> 00:21:49,919 Speaker 1: countries by a lot. We spend a much smaller share 365 00:21:49,920 --> 00:21:54,359 Speaker 1: of gdp UM on social programs than other countries do. 366 00:21:54,840 --> 00:21:57,639 Speaker 1: But and the money we do spend in the United 367 00:21:57,680 --> 00:22:01,199 Speaker 1: States is way more tilted towards the elderly than in 368 00:22:01,359 --> 00:22:07,520 Speaker 1: other countries. UM. So it's you know, in UH UM 369 00:22:07,560 --> 00:22:13,119 Speaker 1: in the United States spent five the federal government spent 370 00:22:13,480 --> 00:22:17,679 Speaker 1: five thousand dollars per child um. In comparison, the federal 371 00:22:17,720 --> 00:22:21,520 Speaker 1: government spent thirty five thousand dollars per person over the 372 00:22:21,520 --> 00:22:24,680 Speaker 1: age of sixty. So we have a system that's really 373 00:22:24,720 --> 00:22:28,399 Speaker 1: tilted towards the elderly. And that's because we've passed a 374 00:22:28,440 --> 00:22:30,840 Speaker 1: bunch of policies that are really beneficial to the elderly, 375 00:22:30,880 --> 00:22:34,600 Speaker 1: like Social Security and Medicare. I haven't passed policies that 376 00:22:34,720 --> 00:22:37,800 Speaker 1: support kids. We gotta leave, gotta run, Thank you very much, 377 00:22:37,880 --> 00:22:42,160 Speaker 1: Betsy Stevenson, Associate Professor Public Policy, the Ford School, University 378 00:22:42,160 --> 00:22:59,439 Speaker 1: of Michigan. Pam Me raised a good point earlier when 379 00:22:59,480 --> 00:23:02,639 Speaker 1: you said you would think that banks would have learned 380 00:23:02,720 --> 00:23:05,639 Speaker 1: after paying ten billion dollars and penalties and after a 381 00:23:05,680 --> 00:23:09,080 Speaker 1: trader was sent to prison. Evidently not. And joining us 382 00:23:09,119 --> 00:23:12,560 Speaker 1: to detail what is going on currently in the foreign 383 00:23:12,560 --> 00:23:16,000 Speaker 1: exchange market is Lennon Nuian. She has FX reporter for 384 00:23:16,160 --> 00:23:19,000 Speaker 1: Blue Broke News, and she wrote a story today detailing 385 00:23:19,160 --> 00:23:24,879 Speaker 1: ongoing abuses frankly in the five point one trillion dollar 386 00:23:25,040 --> 00:23:29,359 Speaker 1: a day f X market. Can you explain, Lenan, well, Lisa, 387 00:23:29,880 --> 00:23:32,280 Speaker 1: what participants are worried about in this market is that 388 00:23:32,320 --> 00:23:35,639 Speaker 1: there are a few lingering practices that are still you know, 389 00:23:36,080 --> 00:23:38,919 Speaker 1: as far as regulators are concerned, kind of okay. And 390 00:23:39,000 --> 00:23:42,119 Speaker 1: sou Anie Mack from Vanguard who's the head currency trader, 391 00:23:42,200 --> 00:23:45,560 Speaker 1: they're warned of some abuses that potentially could happen as 392 00:23:45,560 --> 00:23:48,240 Speaker 1: a result of these practices, like last look, where dealers 393 00:23:48,280 --> 00:23:50,720 Speaker 1: can kind of reneg on a price and front running 394 00:23:52,080 --> 00:23:56,840 Speaker 1: g front running. Um, that doesn't sound uh really good, 395 00:23:56,920 --> 00:23:59,040 Speaker 1: does it? I mean that that that's getting in front 396 00:23:59,040 --> 00:24:02,600 Speaker 1: of your own to in order to profit. Yes, So 397 00:24:02,720 --> 00:24:04,639 Speaker 1: if you have knowledge in for an exchange of a 398 00:24:04,720 --> 00:24:07,840 Speaker 1: customer trade in advance, you can kind of get ahead 399 00:24:07,840 --> 00:24:11,280 Speaker 1: of it, which is not okay in other markets like equities. Um. 400 00:24:11,320 --> 00:24:13,760 Speaker 1: Andy mac from Vanguard comes from the equities markets. So 401 00:24:14,040 --> 00:24:15,800 Speaker 1: for a lot of people in other markets, this sounds 402 00:24:16,280 --> 00:24:19,840 Speaker 1: very bizarre, But in foreign exchanges is actually okay. It's 403 00:24:19,880 --> 00:24:23,160 Speaker 1: still under the FX Code of Conduct and the guidelines, 404 00:24:23,160 --> 00:24:26,120 Speaker 1: it's still okay under certain circumstances. Let's take a step back, 405 00:24:26,200 --> 00:24:29,960 Speaker 1: because from my understanding, a majority of the five point 406 00:24:30,040 --> 00:24:33,760 Speaker 1: one trillion dollar a day of FX trading happens now 407 00:24:34,040 --> 00:24:38,080 Speaker 1: over electronic systems. And there is a much more sort 408 00:24:38,119 --> 00:24:42,760 Speaker 1: of algorithmic presence. What's the human component here? And you know, 409 00:24:42,840 --> 00:24:46,000 Speaker 1: just can you give us a sense of why some 410 00:24:46,119 --> 00:24:49,800 Speaker 1: traders still have so much power in setting prices? Well, 411 00:24:49,840 --> 00:24:53,240 Speaker 1: first of all, the human component and the electronic components 412 00:24:53,280 --> 00:24:56,399 Speaker 1: still uh, you know, the difference of speed. But the 413 00:24:56,440 --> 00:24:59,160 Speaker 1: practices are still okay whether you're talking about a human 414 00:24:59,200 --> 00:25:02,639 Speaker 1: being or computer or an electronic trade. So everything just 415 00:25:02,680 --> 00:25:06,080 Speaker 1: happens quicker in these computerized markets. Um. But in terms 416 00:25:06,080 --> 00:25:08,440 Speaker 1: of the power that you talk about, Lisa, it's more 417 00:25:08,480 --> 00:25:11,760 Speaker 1: of the fact that this market still condones these practices 418 00:25:11,800 --> 00:25:15,240 Speaker 1: as being legitimate and okay. Under the guidelines that regulators 419 00:25:15,240 --> 00:25:18,679 Speaker 1: and industry participants have set, it's still all right to 420 00:25:19,280 --> 00:25:22,520 Speaker 1: pre hedge an order, so they call it, which many people, 421 00:25:22,600 --> 00:25:25,119 Speaker 1: including Van Guards say is purely front running. What is 422 00:25:25,160 --> 00:25:28,280 Speaker 1: that pre hedge? Can you just describe it? It basically 423 00:25:28,320 --> 00:25:31,439 Speaker 1: means that if you have advanced knowledge of a client order, 424 00:25:31,480 --> 00:25:33,320 Speaker 1: you can kind of get ahead of it, so either 425 00:25:33,359 --> 00:25:36,040 Speaker 1: buy or sell. But the tricky thing there is that 426 00:25:36,080 --> 00:25:37,760 Speaker 1: if you buy or sell and you tell them you're 427 00:25:37,760 --> 00:25:39,680 Speaker 1: going to do it, you can potentially move the market 428 00:25:39,720 --> 00:25:43,520 Speaker 1: against your clients. So that's pre hedging, and in some 429 00:25:43,800 --> 00:25:46,720 Speaker 1: circumstances it's fine in foreign exchange. Okay, I just want 430 00:25:46,720 --> 00:25:52,040 Speaker 1: to understand here, because there's one thing that that volume 431 00:25:52,320 --> 00:25:54,760 Speaker 1: can help determine price, right. In other words, if you 432 00:25:54,800 --> 00:25:56,560 Speaker 1: have a lot of buyers or a lot of sellers, 433 00:25:56,600 --> 00:25:59,640 Speaker 1: that can help move the price of a particular currency 434 00:26:00,280 --> 00:26:04,520 Speaker 1: versus another currency. Um. But this is just an exchange, right, 435 00:26:04,560 --> 00:26:07,919 Speaker 1: I mean it's not as if anybody in between is 436 00:26:08,000 --> 00:26:12,520 Speaker 1: actually committing their own capital to invest, right. I mean, 437 00:26:12,560 --> 00:26:16,439 Speaker 1: this is about an exchange of money, not an investment 438 00:26:16,440 --> 00:26:18,440 Speaker 1: of money. It's not an investment of money. It is 439 00:26:18,440 --> 00:26:21,160 Speaker 1: an exchange of money. So that's one reason why this 440 00:26:21,200 --> 00:26:24,040 Speaker 1: is so Thorny's because you're basically, as a by side 441 00:26:24,040 --> 00:26:27,040 Speaker 1: customer exchanging money with a bank or another participant in 442 00:26:27,080 --> 00:26:29,960 Speaker 1: the market. And so that that's kind of the crux 443 00:26:30,000 --> 00:26:32,119 Speaker 1: of why this market isn't regulated to want to just 444 00:26:32,160 --> 00:26:34,520 Speaker 1: go to a feast a fee base structure. I mean, 445 00:26:34,560 --> 00:26:36,440 Speaker 1: you know whether I mean, that's certainly what a lot 446 00:26:36,440 --> 00:26:39,239 Speaker 1: of the equity world has moved towards. That's true, and 447 00:26:39,320 --> 00:26:42,080 Speaker 1: that potentially is happening in foreign exchange, But the market 448 00:26:42,119 --> 00:26:44,320 Speaker 1: has been so used to not having the fee structure 449 00:26:44,359 --> 00:26:46,480 Speaker 1: for a long time that people just trade on the spread. 450 00:26:46,600 --> 00:26:49,120 Speaker 1: They just look at a very narrow spread. So well, 451 00:26:49,200 --> 00:26:52,040 Speaker 1: let's get a sense though, just also taking a step 452 00:26:52,080 --> 00:26:55,199 Speaker 1: back when you were talking about first look, I just 453 00:26:55,240 --> 00:26:58,840 Speaker 1: want to get a sense how frequently is the exchange 454 00:26:58,960 --> 00:27:01,680 Speaker 1: rate set? Who sets it? You know, I mean, is 455 00:27:01,720 --> 00:27:03,959 Speaker 1: there is just to sort of talk about, you know, 456 00:27:04,119 --> 00:27:08,240 Speaker 1: how that whole dynamic plays out? Well, that dynamic again, 457 00:27:08,359 --> 00:27:10,960 Speaker 1: because this market is so large, because it's over the counter, 458 00:27:11,080 --> 00:27:14,119 Speaker 1: it's basically just a direct exchange between say him and I, 459 00:27:14,200 --> 00:27:16,600 Speaker 1: We just we can decide what we want to exchange 460 00:27:16,640 --> 00:27:20,080 Speaker 1: euros for dollars for exactly, and so that happens across 461 00:27:20,160 --> 00:27:23,000 Speaker 1: this huge financial mark. This is the biggest world's biggest 462 00:27:23,000 --> 00:27:25,640 Speaker 1: financial market, and that happens all the time, and there's 463 00:27:25,640 --> 00:27:28,119 Speaker 1: no oversight over it because it's just you and I 464 00:27:28,160 --> 00:27:31,639 Speaker 1: exchange money. So, um, that's why it's so tricky, Lisa, 465 00:27:31,760 --> 00:27:35,360 Speaker 1: because there isn't this kind of overarching regulator in one 466 00:27:35,440 --> 00:27:39,119 Speaker 1: region managing what the exchange rate is. It's happening, you know, 467 00:27:39,160 --> 00:27:42,120 Speaker 1: bilaterally all the time. What's it going to take more 468 00:27:42,200 --> 00:27:45,320 Speaker 1: lawsuits and more people going to jail? If they want 469 00:27:45,359 --> 00:27:48,600 Speaker 1: to reform themselves before something bad happens. I think one 470 00:27:48,680 --> 00:27:51,359 Speaker 1: person going to prison has already had an impact. This 471 00:27:51,440 --> 00:27:53,200 Speaker 1: is the story. Is not to say that there hasn't 472 00:27:53,240 --> 00:27:55,760 Speaker 1: been a change across the industry. People are super careful 473 00:27:55,800 --> 00:27:58,840 Speaker 1: about what they say. They're very very cautious about conflicts 474 00:27:58,880 --> 00:28:01,240 Speaker 1: of interests, and they really watch their backs. Um, there's 475 00:28:01,280 --> 00:28:03,080 Speaker 1: a lot of surveillance now as well in the foreign 476 00:28:03,080 --> 00:28:05,600 Speaker 1: exchange market. So it's not to say that nothing has changed, 477 00:28:05,640 --> 00:28:08,119 Speaker 1: but there are a few red flag areas that some 478 00:28:08,240 --> 00:28:10,440 Speaker 1: investors are very worried about. Which is last look in 479 00:28:10,520 --> 00:28:13,840 Speaker 1: front running. Right, So that that admonition that you hear 480 00:28:13,880 --> 00:28:16,119 Speaker 1: on a lot of recorded lines, you know this is 481 00:28:16,160 --> 00:28:20,120 Speaker 1: being recorded for customer service purposes is something that may 482 00:28:20,119 --> 00:28:22,359 Speaker 1: be heard more and more on the world of the 483 00:28:22,400 --> 00:28:25,240 Speaker 1: telephones or on the systems of for X traders. Yeah, 484 00:28:25,280 --> 00:28:27,679 Speaker 1: for X traders know their phones are being recorded, and 485 00:28:27,680 --> 00:28:29,840 Speaker 1: they're much more careful with what they say. All right, 486 00:28:29,880 --> 00:28:32,280 Speaker 1: Thanks very much for the story and for enlightening us 487 00:28:32,359 --> 00:28:35,600 Speaker 1: much appreciated Land and new in our FX reporter for 488 00:28:35,640 --> 00:28:38,360 Speaker 1: Bloomberg News. I encourage you to read the story at 489 00:28:38,480 --> 00:28:46,160 Speaker 1: Bloomberg dot com. Thanks for listening to the Bloomberg P 490 00:28:46,280 --> 00:28:49,240 Speaker 1: and L podcast. You can subscribe and listen to interviews 491 00:28:49,280 --> 00:28:53,360 Speaker 1: at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. 492 00:28:53,760 --> 00:28:57,320 Speaker 1: I'm Pim Fox. I'm on Twitter at pim Fox. I'm 493 00:28:57,360 --> 00:29:00,640 Speaker 1: on Twitter at Lisa Abramo. It's one before the podcast. 494 00:29:00,680 --> 00:29:03,280 Speaker 1: You can always catch us worldwide on Bloomberg Radio