WEBVTT - Surveillance: Recovery Risk With Reinharts 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily 0:00:13.960 --> 0:00:17.560 we bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.640 Bloomberg dot Com, and of course on the Bloomberg. This 0:00:27.680 --> 0:00:30.400 is a joy. We've always prided ourselves and bringing you 0:00:30.440 --> 0:00:34.000 the best in economics, and in the summer when everybody 0:00:34.000 --> 0:00:37.440 thinks and writes, the best in economics can be one, two, three, 0:00:37.560 --> 0:00:42.600 four or five essays, books are articles. This year was easy. 0:00:43.159 --> 0:00:46.960 Carmen Reinhardt and Vincent Reinhardt wrote a Tour to Force 0:00:47.040 --> 0:00:50.720 for Foreign Affairs magazine and made world headlines in the 0:00:50.760 --> 0:00:55.520 economics community with the pandemic depression. We are thrilled at 0:00:55.560 --> 0:00:58.080 the World Bank Chief Economists could join us this morning, 0:00:58.320 --> 0:01:00.600 and Mr Reinhardt, of course, with Stay and A Schmellon 0:01:00.680 --> 0:01:03.560 in their asset management is chief Economists to the two 0:01:03.640 --> 0:01:08.520 of you, congratulations, I'm putting together this essay. How did 0:01:08.520 --> 0:01:11.800 you piece it together? Carmen? Did you say, Vincent, we 0:01:11.880 --> 0:01:14.119 got to write this the world's coming down to an end? 0:01:14.480 --> 0:01:17.240 Or Vince Vincent, did you tell Carmen we gotta do 0:01:17.319 --> 0:01:24.200 this Carmen, you start, how did you generate this important essay? Well, Tom, 0:01:24.240 --> 0:01:26.800 you know, Vincent and I have been writing together for 0:01:26.840 --> 0:01:31.280 a long time. So you know, back in two thousand 0:01:31.280 --> 0:01:35.280 and ten we wrote for the Kansas City fac for 0:01:35.360 --> 0:01:41.800 the for the Jackson Hole Conference, what the next ten 0:01:41.880 --> 0:01:46.560 years after the global financial crisis, uh looked like? And 0:01:46.680 --> 0:01:50.760 it was taking stock of the aftermath of major shocks, 0:01:51.440 --> 0:01:57.200 you know. Uh, so this certainly classifies as a major shock. 0:01:58.120 --> 0:02:04.960 And these kinds of events lead lasting consequences. They and 0:02:05.040 --> 0:02:11.280 so that's basically the theme where we we came together. 0:02:11.639 --> 0:02:13.840 Let us drive the story forward. And folks, again, I 0:02:13.880 --> 0:02:16.160 can't say enough about a full read of this article 0:02:16.200 --> 0:02:20.880 in Foreign Affairs, Vincent Ronhard, how do we escape this depression? 0:02:21.560 --> 0:02:24.799 And if we have a global or a United States depression, 0:02:25.320 --> 0:02:30.560 is stimulus in large stimulus the only answer. So the 0:02:30.600 --> 0:02:32.680 sad thing is this really is the third time we 0:02:32.760 --> 0:02:35.040 wrote this article for two thousand and eight for the 0:02:35.080 --> 0:02:40.040 European crisis and and one more time for this pandemic depression. 0:02:40.680 --> 0:02:43.720 What do you need? You have to follow Larry Summer's 0:02:43.720 --> 0:02:50.520 advice targeted temporary and timely fiscal stimulus. Uh, they did it. 0:02:50.560 --> 0:02:53.680 Back in March with the Cares Act. They can do 0:02:53.720 --> 0:02:57.560 it again. Comma, can you built on something for us 0:02:57.560 --> 0:03:00.760 confusing a mechanical bounce with the account rate? Is that 0:03:00.800 --> 0:03:05.760 what we've been doing over the last few months. Yes, Um, Look, 0:03:06.840 --> 0:03:11.480 a very simple basic definition of recovery and minimum minimorum 0:03:11.680 --> 0:03:14.760 is you at least have the same level of income, 0:03:15.600 --> 0:03:21.240 same level of GDP that you had before the crisis started. Uh. 0:03:21.280 --> 0:03:25.600 That took UH quite a number of years, five years 0:03:25.600 --> 0:03:29.840 in the US from the last UH the global financial crisis, 0:03:29.880 --> 0:03:33.280 and even longer for Europe. So yeah, before that we 0:03:33.400 --> 0:03:36.200 see a snap back. We see growth rates come back 0:03:36.320 --> 0:03:41.160 simply because the declines were so sharp in the in 0:03:41.240 --> 0:03:45.839 the earlier in the year. But that is rebound. Recovery 0:03:45.920 --> 0:03:48.040 is when you're at least as well off as you 0:03:48.120 --> 0:03:52.440 were before, and that will take some years. So in 0:03:52.520 --> 0:03:54.800 your mind, common do you think this is a political boss, 0:03:54.840 --> 0:03:57.920 a political decision to make the code to say, look 0:03:57.920 --> 0:04:00.880 at the recovery, confuse it with a mechanic co bounds 0:04:00.920 --> 0:04:03.240 and say we don't need more fiscal stimulus, or do 0:04:03.240 --> 0:04:06.000 you just think it's a failure of the understanding of 0:04:06.040 --> 0:04:08.840 economics that we can see the mikecause Vincent's points out, 0:04:09.960 --> 0:04:13.000 you know, there is no simple answer, has elements of both. 0:04:13.040 --> 0:04:17.720 But we've seen it in history, uh, you know often enough, 0:04:17.839 --> 0:04:23.560 the premature declaration of victory. It has always been a 0:04:23.680 --> 0:04:28.159 recurring theme that that you know, the first signs of recovery, 0:04:28.240 --> 0:04:32.440 the green shoots means that's it. And and you know, 0:04:32.680 --> 0:04:39.200 I think that this time, uh, we really didn't learn 0:04:39.320 --> 0:04:42.880 much from the over optimism of two thousand and eight 0:04:42.880 --> 0:04:47.040 two thousand nine, where growth forecasts had to be marked 0:04:47.080 --> 0:04:51.960 down repeatedly. So, Vincent, can you build on that with 0:04:52.000 --> 0:04:54.719 the idea that we're heading into a winter where we 0:04:54.760 --> 0:04:59.280 have a virus that is actually expanding, worsening, spreading, even 0:04:59.320 --> 0:05:02.680 though people are getting more concerned about the debt about 0:05:02.720 --> 0:05:06.160 adding to it with more fiscal support. Do you think, Vincent, 0:05:06.200 --> 0:05:09.120 we are headed toward a double dip recession that will 0:05:09.160 --> 0:05:12.400 hamper growth in a longer term way with scarring economically 0:05:12.640 --> 0:05:16.400 that currently is not being modeled for. So the rebound 0:05:16.440 --> 0:05:21.280 has enough strength right now. There is waning fiscal impetus, 0:05:21.360 --> 0:05:26.880 but their most importantly, there's considerable monetary accommodation. Households have 0:05:26.960 --> 0:05:29.640 a lot of savings, so they have the wherewithal to spend. 0:05:30.240 --> 0:05:33.720 It isn't as much a risk of a double dip. 0:05:34.360 --> 0:05:37.520 It's a risk that we extend the rebound, that it 0:05:37.560 --> 0:05:41.760 takes even longer to get to recovery. And the longer 0:05:41.800 --> 0:05:45.719 it takes to recover the level of activity, the more 0:05:45.760 --> 0:05:51.520 likely unfortunate things happen. Balance sheets get strained, there are 0:05:51.560 --> 0:05:55.760 even more business failures, people lose more and more skills 0:05:55.760 --> 0:05:59.720 and exit the labor market. So I'm more worried about 0:05:59.760 --> 0:06:04.080 the permanent scarring associated with taking too long to get 0:06:04.160 --> 0:06:08.800 to recovery, because usually you can bed on market economies. 0:06:09.279 --> 0:06:11.880 So what does that mean, Carmen in terms of emerging 0:06:11.960 --> 0:06:15.479 markets insolvencies, the idea of this emerging markets crisis that 0:06:15.560 --> 0:06:18.039 a lot of people have been talking about, including yourself. 0:06:18.320 --> 0:06:20.679 Do you think that if we do get this period 0:06:20.720 --> 0:06:22.960 of scarring as Vincent is talking about, that you do 0:06:23.080 --> 0:06:26.320 get that wave of insolvencies in the developing world that 0:06:26.520 --> 0:06:32.000 so far we haven't seen. Well before we say we 0:06:32.120 --> 0:06:38.080 haven't seen the pick up an activity UH, even before 0:06:38.160 --> 0:06:41.880 the pandemic, we had a lot of frailties UH in 0:06:41.920 --> 0:06:46.120 the low income economies and in several emerging markets. With 0:06:46.240 --> 0:06:52.240 this Argentina, Lebanon, Venezuela, Ecuador, now Zombia. This is a 0:06:52.279 --> 0:06:56.640 longer list than what we had in years UH, And 0:06:56.720 --> 0:07:01.600 of course not everything happens simultaneously, but I think the 0:07:01.720 --> 0:07:08.880 stage is set for you know UH number. As I said, 0:07:09.120 --> 0:07:12.360 especially vulnerable are some of the lower income countries, but 0:07:12.520 --> 0:07:19.920 not limited to UH, a very protracted period of UH 0:07:20.040 --> 0:07:25.360 financial fragility, both in the financial bankings in the banking side, 0:07:25.880 --> 0:07:30.840 and the possibility if in the worst cases outright UH 0:07:31.080 --> 0:07:34.120 sovereign dead crisis and they don't need to be with 0:07:34.200 --> 0:07:38.080 the drama of a default, but they would be UH 0:07:38.360 --> 0:07:43.840 still requiring restructuring, still requiring coming to the IMF programs 0:07:43.880 --> 0:07:47.320 and so on. Can Carmen Ryn art Vincent Rayner with 0:07:47.400 --> 0:07:50.880 us here this morning on their important article to the 0:07:50.920 --> 0:07:53.640 pandemic Depression in Foreign Affairs A summer It was, without 0:07:53.760 --> 0:07:56.640 question my essay of the summer, Carmen Ryn, not a 0:07:56.720 --> 0:07:59.480 question for you, and it's delicate. As World Bank Chief 0:07:59.480 --> 0:08:04.440 Economy is do we completely misjudge the percent of g 0:08:04.640 --> 0:08:10.400 d P of stimulus aid income replacement that will be required? 0:08:10.880 --> 0:08:15.720 Are we as sort of institutions and elites completely misjudging 0:08:15.760 --> 0:08:18.280 the two to three percent of g d P is 0:08:18.360 --> 0:08:20.960 not going to get it done, and the statistic is 0:08:21.040 --> 0:08:26.840 much more towards five to six of g d P. Tom. Uh, 0:08:27.040 --> 0:08:32.360 it's not entirely in misjudgment. It's also a reality of capacity. 0:08:32.400 --> 0:08:36.800 I mean, um, you know the do you if you're 0:08:36.880 --> 0:08:42.600 if you're speaking about the emerging world, Uh, the private 0:08:42.640 --> 0:08:47.800 capital flows half significantly retrenched, I wouldn't say right up. 0:08:47.840 --> 0:08:51.160 And so it's really the multilaterals. It's the I m F, 0:08:51.240 --> 0:08:55.959 it's a World bank, it's the development banks. The firepower 0:08:56.040 --> 0:09:02.680 there is very limited. The it's not the Federal Reserve. Uh, 0:09:02.800 --> 0:09:06.480 it's not the you know b O J or the ECB. 0:09:06.679 --> 0:09:11.320 These institutions have constraints and how much they can deliver. 0:09:11.840 --> 0:09:17.320 So it's not entirely about misjudging misjudging this seriousness of 0:09:17.360 --> 0:09:21.520 what is needed, but also you know, having the capacity 0:09:21.600 --> 0:09:25.080 to for over well over a hundred countries to deliver 0:09:25.160 --> 0:09:30.040 that kind of of of shot in the arm comment. 0:09:30.080 --> 0:09:32.880 Just quickly. We caught up with David Rosenberg around about 0:09:32.920 --> 0:09:35.719 forty minutes ago and he wanted your view on how 0:09:35.840 --> 0:09:41.040 higher debt loads can constrain demand constrained potential GDP coming. 0:09:41.080 --> 0:09:42.720 You can can you speak to that for us, given 0:09:42.720 --> 0:09:44.840 how much debt we've just added to the global economy 0:09:45.120 --> 0:09:47.200 in the last nine months, if you started doing work 0:09:47.200 --> 0:09:51.320 on that, well, look, I've been doing a lot of 0:09:51.360 --> 0:09:54.360 work also on the issue on the what I think 0:09:54.480 --> 0:09:57.680 is for the advanced economies, the more immediate issues, which 0:09:57.720 --> 0:10:01.320 I think have to do with private that uh and 0:10:01.480 --> 0:10:05.320 financial fragility. This is what I alluded to, a big 0:10:05.520 --> 0:10:08.640 shot of a big shot in the army, big source 0:10:08.679 --> 0:10:14.480 of stimulus. UH. This time has also been forbearance uh, 0:10:14.520 --> 0:10:19.440 you know, delaying payments uh for households and firms. When 0:10:19.480 --> 0:10:24.800 those programs expire, uh, do those debts continue to be repaid? 0:10:24.840 --> 0:10:27.560 So the more for the advanced economies, as opposed to 0:10:27.600 --> 0:10:30.000 some of the lower income countries and in some of 0:10:30.000 --> 0:10:34.200 the emerging markets, the more immediate immediate issue is the 0:10:34.280 --> 0:10:40.280 private debt UH. And that is already I think, especially 0:10:40.400 --> 0:10:44.560 for for the corporate sector, the small and medium businesses, 0:10:45.559 --> 0:10:49.800 already a source of concern. Vincent royn at the final 0:10:49.880 --> 0:10:52.400 question to you to really look forward, maybe out of 0:10:52.400 --> 0:10:57.280 a pandemic depression. Who knows what what is your market forecast, 0:10:57.360 --> 0:11:01.439 your economic forecast, Rather call for Q one and Q 0:11:01.720 --> 0:11:06.080 two of next year. Advise the Biden administration this morning. 0:11:08.080 --> 0:11:12.840 So we keep slowing from where we have been. Obviously, 0:11:12.920 --> 0:11:17.800 you don't repeat at we have in the first quarter 0:11:17.840 --> 0:11:20.160 a bit of a soft patch, just two percent growth 0:11:20.200 --> 0:11:24.560 because of the absence of fiscal stimulus, and then on 0:11:24.600 --> 0:11:29.520 the assumption Washington d C gets something together, then closer 0:11:29.559 --> 0:11:33.160 to five in the middle part of the year. What 0:11:33.320 --> 0:11:36.840 I really hope we get is something like the CARES 0:11:36.920 --> 0:11:43.000 Act of Targeted and Temporary and Timely uh impetus, rather 0:11:43.120 --> 0:11:47.600 than the American Recovery and Reinvestment Act of two thousand 0:11:47.600 --> 0:11:50.440 and nine, which was timely for sure, but it had 0:11:50.480 --> 0:11:52.960 a very long spend out rate. Now is not the 0:11:53.000 --> 0:11:56.280 time to do infrastructure we needed over the longer haul. 0:11:56.559 --> 0:11:58.360 But right now we've got to get income into the 0:11:58.360 --> 0:12:02.160 hands of people. Guys, we've gotta leave it that common 0:12:02.200 --> 0:12:04.240 fantastic a here from your common Ryan Hart, that World 0:12:04.280 --> 0:12:07.120 Bank chief economist, and Vince thank you, sir, Vincent Ryan 0:12:07.160 --> 0:12:10.160 Hart of Standish Melon Asset Management, Thank you very much. 0:12:20.880 --> 0:12:23.280 The perfect gentleman to speak to right now on is 0:12:23.360 --> 0:12:26.560 truly our global Wall Street brief of the day. Alan 0:12:26.640 --> 0:12:31.600 Ruskin with Deutsche Bank, decades of experience of synthesizing together 0:12:32.240 --> 0:12:35.800 all of these trends alan to John's point, you lead 0:12:35.880 --> 0:12:39.680 with the idea that forward a major pair will be 0:12:39.840 --> 0:12:43.240 dollar and membi looking for stronger you want, and the 0:12:43.360 --> 0:12:47.840 idea that the Chinese you want will replace the Japanese yen. 0:12:48.360 --> 0:12:51.840 How does that happen? How does it you want take over? 0:12:52.080 --> 0:12:56.440 Is a dominant pair? Um Tom, Look, I think the 0:12:56.840 --> 0:13:01.480 Chinese economy is a substantially larger in Japan's already, and 0:13:01.520 --> 0:13:04.199 it's only that gap is only going to get wider 0:13:04.200 --> 0:13:08.920 over time. So it's real economy influence is certainly increasing. 0:13:09.320 --> 0:13:12.440 And obviously at the same time, the authorities in China 0:13:12.520 --> 0:13:17.360 are encouraging internationalization. They're encouraging uh the c N wise 0:13:17.720 --> 0:13:22.240 reserve status to increase over time, so the pool factor 0:13:22.320 --> 0:13:25.160 in terms of official flows is going to increase as well. 0:13:25.559 --> 0:13:28.600 The combination of the real economy side, and you know, 0:13:28.640 --> 0:13:30.400 the encouragement that you know, I think we're going to 0:13:30.480 --> 0:13:33.520 see from the authorities on an ongoing basis is just 0:13:33.559 --> 0:13:38.559 gonna help the Chinese currency and it's poor effect, you know, 0:13:38.679 --> 0:13:42.160 against other currencies in the region. Ellen Ruskin, there's a 0:13:42.240 --> 0:13:46.240 parlor game to when strong euro hurts Germany, strong euro 0:13:46.400 --> 0:13:51.520 hurts Finland, or strong yen hurts Tokyo. At what level 0:13:51.600 --> 0:13:56.440 the stronger and memby hurt Beijing? Are we near there? Look, 0:13:56.480 --> 0:13:58.480 I think there's going to be a lot of sensitivities 0:13:58.520 --> 0:14:02.800 in terms of a very modest appreciation in the UN. 0:14:03.040 --> 0:14:06.400 But I think we forget I think you know memory 0:14:06.440 --> 0:14:10.800 certainly right, the tenure average is roughly around six fifty 0:14:10.840 --> 0:14:13.880 on on dollar China, So I think we shouldn't get 0:14:13.920 --> 0:14:16.920 too caught up with what's happened over the last six 0:14:16.960 --> 0:14:20.400 months or so. Given the appreciation, we're actually back in 0:14:20.440 --> 0:14:23.160 the zone that's actually you know, very well traveled, So 0:14:24.000 --> 0:14:27.120 we shouldn't be at points of extreme sensitivity. But you know, 0:14:27.160 --> 0:14:30.200 if we saw dollar China go to say six twenty 0:14:30.320 --> 0:14:33.920 five or those to the levels, I think there would 0:14:33.960 --> 0:14:37.600 be more concern on the part of the Chinese authorities 0:14:38.720 --> 0:14:40.520 and an important to look at the currency pairs our 0:14:40.560 --> 0:14:45.360 swear Euro China, China, Japanese Yen. And what we've seen 0:14:45.520 --> 0:14:48.720 is that Chinese strength against the Euro and a more 0:14:48.760 --> 0:14:50.920 pronounced way as well. Do you think that makes it 0:14:51.040 --> 0:14:53.920 for the ECB at least makes them less sensitive to 0:14:53.960 --> 0:14:56.480 what's happening on euro dollar as we approach one nineteen 0:14:56.520 --> 0:15:00.480 and maybe go through one twenty. Yeah, I think for 0:15:00.640 --> 0:15:05.680 everybody if they look at their own currencies and they say, okay, well, 0:15:05.800 --> 0:15:08.800 yes we are stronger against the dollar, that in fact 0:15:09.440 --> 0:15:12.520 most other currencies are also stronger against the dollar. So 0:15:12.680 --> 0:15:15.360 net net is not much change, as you say between 0:15:15.640 --> 0:15:19.000 you know, call it the euro and other crosses. Then 0:15:19.360 --> 0:15:22.920 you get reduced sensitivity from the currency side, and people 0:15:22.960 --> 0:15:26.880 recognize that this is a dollar story. This is not 0:15:27.240 --> 0:15:32.000 a China un story or euro dollars story. Um. Up 0:15:32.080 --> 0:15:34.200 until now it's been a mix, I would say, of 0:15:34.280 --> 0:15:37.680 a dollar story and a Chinese un story. Very little 0:15:37.720 --> 0:15:39.680 in the way of really being a euro stories has 0:15:39.720 --> 0:15:42.560 been stuck in the mud. So there's a question. Well, 0:15:42.600 --> 0:15:44.840 and we typically ask a question just quickly, let me 0:15:44.880 --> 0:15:47.360 weigh in, Allen. We typically ask the question whether we 0:15:47.400 --> 0:15:49.760 would need a weaker dollar and whether the world needs 0:15:49.760 --> 0:15:51.280 a weaker dollar. Do you think the world needs a 0:15:51.280 --> 0:15:57.400 stronger Chinese currency? Um? You know, the imbalances have tended 0:15:57.440 --> 0:16:00.160 to grow over time. In the particular crisis, the own 0:16:00.200 --> 0:16:05.080 account to surface in China is substantial in an absolute basis, 0:16:05.160 --> 0:16:08.400 less as a percentage of Chinese GDP, So I think 0:16:08.480 --> 0:16:12.160 there are potential distortions on that side. Um I would say, 0:16:12.440 --> 0:16:14.440 you know, let the market do its thing. I think 0:16:14.440 --> 0:16:17.280 that's the most important thing, and then the imbalances will 0:16:17.360 --> 0:16:21.240 not build in a substantial way. So I was trying 0:16:21.280 --> 0:16:23.720 to jump in because honestly, I was just so compelled 0:16:23.760 --> 0:16:25.760 by this argument here that there used to be this 0:16:25.840 --> 0:16:29.040 world order where everyone was trying to depreciate their currency, 0:16:29.040 --> 0:16:31.480 and all of a sudden there is less emphasis on 0:16:31.520 --> 0:16:34.840 that because there is a question recovering getting money into 0:16:34.880 --> 0:16:38.560 your economy is better. At what point does strength in 0:16:38.640 --> 0:16:41.400 currency matter? Again from a trade perspective of And I 0:16:41.400 --> 0:16:44.000 wonder about this with the u N given the fact 0:16:44.240 --> 0:16:46.720 the Chinese officials have been willing to step in, and 0:16:46.760 --> 0:16:49.320 given the fact that internationally this has been such a 0:16:49.360 --> 0:16:53.520 big driver of flows into the nation. Well, I think 0:16:53.680 --> 0:16:56.240 you know what's interesting, if you look at currencies generally 0:16:56.480 --> 0:17:00.520 on a medium term basis, the evaluation and that you're 0:17:00.560 --> 0:17:03.480 seeing are not that extreme. So you know, the dollars 0:17:03.480 --> 0:17:07.920 within about five percent of fair value, give or take 0:17:08.040 --> 0:17:11.679 depending on different metrics, and you know that's that's not 0:17:11.800 --> 0:17:14.959 extreme by any matter of you know, any any measure, 0:17:15.720 --> 0:17:18.080 and the same can be said for most of the 0:17:18.160 --> 0:17:20.840 other currencies as well. So you know, I would say 0:17:20.920 --> 0:17:25.240 the un euro, yes, you know, the dollar looks on 0:17:25.240 --> 0:17:27.399 the rich side. Yes, the euro looks a little a 0:17:27.440 --> 0:17:31.359 little cheap. Yes, the Chinese yuan looks a lot on 0:17:31.359 --> 0:17:33.520 the expensive side as well. But in terms of the 0:17:33.560 --> 0:17:38.280 actual absolutes um, these are not huge overshoots and undershoots, 0:17:38.280 --> 0:17:41.159 And I think for that reason, it's actually going to 0:17:41.200 --> 0:17:44.600 be relatively comfortable to rain for the authorities to deal 0:17:44.640 --> 0:17:46.480 with at this point in time. It could get a 0:17:46.560 --> 0:17:48.680 lot messier than this. I've you know, certainly seen it 0:17:49.240 --> 0:17:54.640 much worse shape in the early ninety nineties or mid eighties. Uh, 0:17:54.760 --> 0:17:58.040 you know, these are relatively benign circumstances for the authorities 0:17:58.080 --> 0:18:00.080 to deal with. On the flip side, Alan, if you 0:18:00.119 --> 0:18:02.480 take a look at derivative positioning, you could see that 0:18:02.520 --> 0:18:04.840 the short position on the dollar is increasing, and sort 0:18:04.880 --> 0:18:08.560 of the conviction, the complacency and markets around this consensus 0:18:08.600 --> 0:18:11.960 call seems to be growing. Do you see a potential 0:18:12.040 --> 0:18:14.919 for a short squeeze or some sort of information to 0:18:14.960 --> 0:18:17.840 come out, perhaps about the vaccine being delayed that could 0:18:17.840 --> 0:18:21.120 potentially lead to reversal here and strength in the dollar, 0:18:21.200 --> 0:18:24.800 they could upbend a lot of these trades. Um. You know, 0:18:24.960 --> 0:18:27.199 the positioning I think is also quite modest in the 0:18:27.200 --> 0:18:29.800 grand scheme of things. And you highlight you know, the 0:18:29.920 --> 0:18:33.080 vaccine story, which I think is you know, certain is 0:18:33.080 --> 0:18:35.439 going to be critical for the real economy for the 0:18:35.480 --> 0:18:38.399 next year or two, ye know, crucial for markets, and 0:18:38.400 --> 0:18:40.639 it's probably the dominant theme I think, you know, on 0:18:40.680 --> 0:18:43.960 an ongoing basis. Some think it's maybe already priced in, 0:18:44.080 --> 0:18:46.320 but I think that's way too early. And I think, 0:18:46.440 --> 0:18:48.560 you know, if you saw the reversal in those sort 0:18:48.600 --> 0:18:50.760 of trades in the absolutely I mean, I think, you know, 0:18:50.800 --> 0:18:53.520 you you could get some sort of short squeeze um 0:18:53.560 --> 0:18:56.480 that's always possible into urine into December. But I would 0:18:56.520 --> 0:18:58.679 tend to emphasize the trend trade. I would say, the 0:18:58.760 --> 0:19:01.520 vaccine trade is you know, long re cicklic calls in 0:19:01.600 --> 0:19:05.160 G ten Canada, stocky KNOCKI, etcetera. I think it's still 0:19:05.240 --> 0:19:08.320 long e m. It plays to the long Asia trade, 0:19:08.359 --> 0:19:11.000 et cetera. So I think it's still on a medium 0:19:11.080 --> 0:19:14.760 term basis, is still playing towards the short stylar trade 0:19:14.880 --> 0:19:18.120 rather than you know, focusing too much on the squeezed potential. 0:19:19.680 --> 0:19:23.000 Stocky KNOCKI just classic effects. Linco there and thank you, 0:19:23.119 --> 0:19:27.520 and I'm Ruskin by Chief International Strategists, Sweden, Norway. Just 0:19:27.560 --> 0:19:31.920 in case anyone's Guy Johnson's favorite currency pair, actually Guy 0:19:32.000 --> 0:19:44.040 Johnson's favorite currency pair stocky KNOCKI, John, Lisa and I 0:19:44.240 --> 0:19:47.840 and all of team's surveillance feel very strongly pondentories out 0:19:47.920 --> 0:19:51.639 and experts are very in. Deborah Fuller is not only 0:19:51.680 --> 0:19:56.480 at the prestigious University of Washington School of Microbiology, but 0:19:56.720 --> 0:20:00.080 also it is definitive in labs in the processing in 0:20:00.119 --> 0:20:03.359 the development of vaccines, and we're honored that Dr Fuller 0:20:03.400 --> 0:20:06.280 could join us this morning. Dr Fuller, We've got a 0:20:06.280 --> 0:20:09.200 lot of questions about vaccines and all that I want 0:20:09.240 --> 0:20:13.000 to go to my childhood, which was the dreaded booster shot. 0:20:14.000 --> 0:20:16.960 Is a booster shot now the same as it was 0:20:17.000 --> 0:20:20.440 in nineteen sixty or is a booster shot now so 0:20:20.560 --> 0:20:24.320 efficacious and the technology so much better, it's not a 0:20:24.359 --> 0:20:29.840 big deal. A booster shot in in vaccines, particularly the 0:20:29.880 --> 0:20:33.000 covid nanetinge vaccines that we're we're seeing right now, is 0:20:33.040 --> 0:20:37.240 absolutely essential to UH to increase UH and bring the 0:20:37.280 --> 0:20:40.800 immunity UH in individuals that get a vaccine up to 0:20:40.920 --> 0:20:45.720 higher enough levels to protect against the infections. So booster 0:20:45.760 --> 0:20:49.400 sauce can feel dredged in the sense that you might 0:20:49.520 --> 0:20:53.679 experience UH increased reactive unicity in other ways, a bit 0:20:53.720 --> 0:20:56.960 more soreness in your arm, But that tells you that 0:20:57.080 --> 0:20:59.800 it's working. That's what When you get that soreness and 0:21:00.000 --> 0:21:03.399 sort of feeling kind of almost like you're you're getting 0:21:03.440 --> 0:21:07.119 an infection, uh, initially, that tells you that your immune 0:21:07.160 --> 0:21:10.240 system is mountine a really good response to the vaccine, 0:21:10.359 --> 0:21:13.879 and that you will likely be protected against an infection. 0:21:14.080 --> 0:21:16.400 So Tom Kine is talking about booster shots and light 0:21:16.480 --> 0:21:19.120 I assume of the Astrosonica news that came out this 0:21:19.200 --> 0:21:22.360 morning really confusing, more confusing than we got at Adviser 0:21:22.400 --> 0:21:25.880 of Moderna in terms of efficacy, oh, with some statistics 0:21:25.880 --> 0:21:29.680 saying se efficacy, others saying when you have a half 0:21:29.720 --> 0:21:33.000 dose initially followed, but a full dose of this vaccine 0:21:33.359 --> 0:21:36.840 dr fuller. How complicated is the rollout effort when you 0:21:36.880 --> 0:21:39.239 do have to have two rounds of a shot in 0:21:39.320 --> 0:21:41.200 order to get it make it effective? I mean in 0:21:41.320 --> 0:21:44.359 terms of tracking in terms of distribution and frankly in 0:21:44.440 --> 0:21:48.040 terms of how long it takes to get immunity. That's 0:21:48.040 --> 0:21:51.840 a really important question. I an ideal pandemic vaccine movie 0:21:51.920 --> 0:21:54.640 the one that works in a single dose, and that's 0:21:54.680 --> 0:21:57.920 just simply because if people have to receive a second dose, 0:21:58.119 --> 0:22:01.880 often compliance and back for the second dose can go down, 0:22:02.000 --> 0:22:05.840 especially if they experienced some reaction unity with the with 0:22:05.960 --> 0:22:09.840 the first dose. So uh, many of these companies were 0:22:09.880 --> 0:22:13.159 looking at the immuno genacy after the first dose, but 0:22:13.240 --> 0:22:15.560 the levels of the immune responses are just not high 0:22:15.680 --> 0:22:19.560 enough to be confident that it's going to provide the 0:22:19.640 --> 0:22:22.520 level of efficacy that's needed. On the other hand, after 0:22:22.560 --> 0:22:26.879 the second dose plus efficacy that's as good as the 0:22:26.960 --> 0:22:29.199 vaccine is really going to get. And that's really what 0:22:29.240 --> 0:22:31.840 we're going to need ultimately to shut down this pandemic. 0:22:32.840 --> 0:22:35.879 A doctor, that's science, let's talk about the logistics. How 0:22:35.920 --> 0:22:39.120 many vaccines, vaccinations do you think we could roll out 0:22:39.160 --> 0:22:45.159 in America over the next three months? Well, Mudian Advisor. 0:22:45.560 --> 0:22:48.000 As a results of the air A promising data now, 0:22:48.119 --> 0:22:52.479 astra Zeneta will likely be applying for emergencies authorization in 0:22:52.560 --> 0:22:56.879 early December UM. They should have enough safety data by 0:22:56.920 --> 0:23:00.400 then to be able to make the application. Of course, 0:23:00.400 --> 0:23:03.400 will only be the vaccines initially will only be available 0:23:04.080 --> 0:23:07.280 in a limited number, limited numbers that would be for 0:23:07.480 --> 0:23:11.480 highers groups, that would be for your first responders and 0:23:11.560 --> 0:23:14.520 medical personnelity. The majority of us really won't be seen 0:23:14.560 --> 0:23:18.680 these vaccines until up spring. Uh. And some of the 0:23:19.240 --> 0:23:22.159 challenges between then and now will be being able to 0:23:22.320 --> 0:23:25.760 produce sufficient numbers of doses. Billions and billions is what 0:23:25.800 --> 0:23:28.520 we're going to need, because we estimate at least fifty 0:23:28.520 --> 0:23:31.480 to sixty percent of the population ultimately need to be 0:23:31.600 --> 0:23:34.560 vaccinated to to shut down the pandemic. And and so 0:23:34.640 --> 0:23:37.040 that really raised an important point is that we really 0:23:37.040 --> 0:23:40.240 need multiple vaccines, not just one. It's not only one 0:23:40.280 --> 0:23:43.520 silver world being able to shut this down. The fact 0:23:43.520 --> 0:23:46.520 that we're seeing all these vaccines look really at about 0:23:46.560 --> 0:23:50.800 nine efficacy is super promising. Dr Fuller George Saravellis over 0:23:50.800 --> 0:23:53.480 at Deutsche Bank today has a Deutsche Bank chart out 0:23:53.640 --> 0:23:59.000 unheard immunity and it's lovely smooth curves of expectations. Do 0:23:59.040 --> 0:24:03.080 you trust the A and the forecasting of HERD immunity 0:24:03.520 --> 0:24:05.359 or are we actually making it up as we go 0:24:07.520 --> 0:24:11.200 that math is really elegant stuff and it is really 0:24:11.240 --> 0:24:16.840 based on some important measurements. Uh So, yeah, we can 0:24:16.840 --> 0:24:19.199 trust the math. What we what we don't know. Some 0:24:19.240 --> 0:24:20.760 of the things that we don't know. What we into 0:24:20.800 --> 0:24:24.159 this math is the changes in the infection rates that 0:24:24.160 --> 0:24:27.400 could occur between now and then. So the predictions are 0:24:27.720 --> 0:24:30.680 based on, you know, what we know now and as 0:24:30.760 --> 0:24:33.360 we have seen, we've seen a huge surge in cases 0:24:33.440 --> 0:24:37.359 as the weather cooled and that actually exceeded, uh the 0:24:38.080 --> 0:24:41.240 number of cases that was initially predicted at this kind 0:24:41.280 --> 0:24:45.040 for you know, for you know, reasons that for example, 0:24:45.119 --> 0:24:48.240 pandemic fatigue and stuff that really can't be predicted. So, 0:24:48.720 --> 0:24:52.280 uh so what the math is precise, it's based on 0:24:52.320 --> 0:24:56.880 what we know, not what we don't know. Appreciate your time, 0:24:56.920 --> 0:25:00.000 your thoughts and honestly full of that of the University 0:25:00.080 --> 0:25:13.679 Washington skulled of Medicine. This is a joy. David Rosenberg 0:25:13.880 --> 0:25:16.359 for years helped court at Mary Lynch and own the 0:25:16.440 --> 0:25:21.480 high ground on parsing price change. He was absolutely brilliant 0:25:21.520 --> 0:25:24.320 and hugely read. Moving on to all sorts of good 0:25:24.320 --> 0:25:27.240 work in his Canada and now Rosenberg a Research are 0:25:27.320 --> 0:25:32.040 chief economist strategist in Montreal, Canadian fan David Rosenberg. I 0:25:32.080 --> 0:25:36.600 want you to filter disinflation into what yield does. Is 0:25:36.640 --> 0:25:39.960 it just about a demand for paper price up forcing 0:25:40.040 --> 0:25:44.480