WEBVTT - Trump, Trade Wars and the Basis Trade 

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Meron

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<v Speaker 1>Talks Money Weekly round Up, our debrief on the biggest

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<v Speaker 1>stories in markets and economics. I'm Maren Sum's Web editor

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<v Speaker 1>at Large for Bloomberg UK Wealth.

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<v Speaker 2>I'm jointed Staffake or my Stolle newsletter On senior reporter

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<v Speaker 2>at Bloomberg.

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<v Speaker 1>Right, John, and I would like you to know that

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<v Speaker 1>this is not a bonus podcast. It is not an

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<v Speaker 1>emergency podcast. It's just our normal Merin Talks Money Weekly Roundup.

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<v Speaker 1>Right John, We are not panicked in anyway whatsoever.

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<v Speaker 2>We are entirely calm.

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<v Speaker 1>However, we are also going to keep this short and

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<v Speaker 1>snappy because our producer would like to get it out

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<v Speaker 1>before Donald Trump wakes up, so it's valid for at

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<v Speaker 1>least half an hour.

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<v Speaker 2>Also, Fair's decision. It's not a bonus sort on emergency podcast,

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<v Speaker 2>but it is a rapid podcast.

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<v Speaker 1>Not panicked, just rushing a little, right, So we should,

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<v Speaker 1>I suppose set the scene because obviously there is only

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<v Speaker 1>one big story now that we're panicked. But there is

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<v Speaker 1>only one big story, which is the coming and going

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<v Speaker 1>and coming and going of the tariff. So we're eight

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<v Speaker 1>days on now from Liberation Day. How many trading days since? Then? Seven?

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<v Speaker 1>We hang on, We're on the eighth trading day, up down, up, down,

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<v Speaker 1>up down, odd things happening all over the plaze markets

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<v Speaker 1>going down, down, down, down down. Then suddenly, yesterday six

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<v Speaker 1>eighteen pm UK time, we find out that there is

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<v Speaker 1>going to be a ninety day pause for most people,

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<v Speaker 1>not for everybody. Obviously the ten percent stays and China

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<v Speaker 1>gets one hundred and twenty five percent of tariffs. Now,

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<v Speaker 1>this was amazing. Everything changed instantly. When the US market

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<v Speaker 1>closed last night, the now's up but twelve percent. The

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<v Speaker 1>SMP five hundred was up nine and a half percent.

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<v Speaker 1>So that means that while they're both still down year

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<v Speaker 1>to date, to look at them over a year and

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<v Speaker 1>you wouldn't know that anything has happened. The NASDAK is

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<v Speaker 1>now Bysibor closed last night up over six percent over

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<v Speaker 1>twelve months, and the SMP was also up over twelve months.

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<v Speaker 1>So if you were the kind of person who only

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<v Speaker 1>looked at your portfolio once a year, and you chose

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<v Speaker 1>last night to look at it, you would think that

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<v Speaker 1>absolutely nothing had happened at all. Event you've probably be

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<v Speaker 1>pretty pleased that you've got six percent over a year,

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<v Speaker 1>given how expensive the US market was, right.

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<v Speaker 2>It really is a good lesson in if you are

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<v Speaker 2>on a long term investor and you are comfortable with

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<v Speaker 2>your investment plan and you've thought it through, then looking

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<v Speaker 2>at your portfolio relatively really is a sensible decision in

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<v Speaker 2>terms of being able to sleep well at night in

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<v Speaker 2>order the rest to I appreciate that would have been

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<v Speaker 2>difficult if you pay any attention to the news at all.

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<v Speaker 2>A lot of the time, it really is was just

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<v Speaker 2>parking everything and staying calm. And that's the reason to

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<v Speaker 2>make sure you've got your financial affairs and financial goals

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<v Speaker 2>and or the whale markets are not doing things like this.

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<v Speaker 1>God is so sensible. If I didn't have this job,

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<v Speaker 1>I would have been trading manically for the last five

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<v Speaker 1>days anyway. By mid morning today, and I'm sticking with

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<v Speaker 1>mid morning because who knows what's going to happen. This afternoon,

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<v Speaker 1>the footsoo was back up as well, five percent up,

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<v Speaker 1>so back to the kind of evens on the year

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<v Speaker 1>out of about two percent over twelve months. But also,

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<v Speaker 1>and here's John, why you know, maybe you should trade

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<v Speaker 1>this stuff. By mid morning this morning, sixteen forty one

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<v Speaker 1>hundred stocks were up over ten percent. So if you

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<v Speaker 1>spent yesterday afternoon making a night's list of cheap UK

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<v Speaker 1>high yielding shares, you'd be really really happy today.

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<v Speaker 2>Oh yeah, I mean this is the other thing I'll

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<v Speaker 2>tell If you're buying individual stocks, then you should already

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<v Speaker 2>have a watch list and an idea of what place

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<v Speaker 2>would tempt you to buy these stocks. There's largest opportunities

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<v Speaker 2>for people who did mice to stay calm and who

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<v Speaker 2>had the kind of optionality of winning cash. And also

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<v Speaker 2>anyone who's held a better the portfolio in gold would

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<v Speaker 2>at least if it's something that'll look at on the

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<v Speaker 2>downdees that wasn't collapsing.

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<v Speaker 1>Actually, and that's lots very neatly into the we told

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<v Speaker 1>you so section of this podcast. We told you so,

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<v Speaker 1>We did tell you to always hold gold because it'll

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<v Speaker 1>help you out the tough times. Anyway, So onner, what's

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<v Speaker 1>going to happen next or what was kind of maybe

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<v Speaker 1>going to happen next? You can have the fainted idea,

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<v Speaker 1>But let's start with this question, John, is Trump winning?

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<v Speaker 1>Did he blink? Did he fold? Or is this what

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<v Speaker 1>he planned to do all along? I mean, you can

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<v Speaker 1>tell a lot about the biases of every financial and

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<v Speaker 1>political commentator out there by the way they've started their

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<v Speaker 1>columns and their articles on this today. But when I

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<v Speaker 1>look at it, I'm not sure I see anything particularly straightforward.

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<v Speaker 1>I mean, the plan was always as I understood it,

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<v Speaker 1>the idea was or worth to take action, mainly against China.

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<v Speaker 1>And here we are. There are still massive teriffs ainst China,

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<v Speaker 1>and everyone else still has a ten percent tariff. So

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<v Speaker 1>the problem remains, this is still a huge global upheaval.

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<v Speaker 1>It isn't over. It's not solved. These tariffs have to

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<v Speaker 1>be paid. The supply chains that everyone has had on

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<v Speaker 1>the go for the last couple of decades, and the

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<v Speaker 1>shift doors of free trading environment that we've had on

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<v Speaker 1>the go for the last eighty years, this is over.

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<v Speaker 1>So whether Trump is called a pause and why he

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<v Speaker 1>called that pause, the basic situation remains the same. We

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<v Speaker 1>are at a massive turning point in global economic and

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<v Speaker 1>political history, and those dislocations are going to change everything

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<v Speaker 1>around us, and we can't tell quite how. Am I

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<v Speaker 1>the mad one or is it the market.

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<v Speaker 2>Nor You're right, certainly I agree both you.

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<v Speaker 1>That means I'm right if we agree almost always together,

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<v Speaker 1>we're right.

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<v Speaker 2>Yeah, so yes, awfully yeah, because look, in terms of

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<v Speaker 2>the tariff's on China, but at the point where the

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<v Speaker 2>number actually doesn't matter, you've effectively declared a trade embargo.

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<v Speaker 2>And that's a really big deal. I mean, obviously, nel

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<v Speaker 2>Fi Ferguson came up with this term ki America for

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<v Speaker 2>what had been going on in the last ten twenty

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<v Speaker 2>years since the World Trade Organization that China was allowed

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<v Speaker 2>into it, which is the idea that Americans bought cheap

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<v Speaker 2>consumer goods from China and China invested in US treasuries.

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<v Speaker 2>And clearly that that's gone. That's definitely gone unless there's

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<v Speaker 2>some really an actual U turn. And as far as

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<v Speaker 2>all the capitulation stuff goes, it's kind of down to

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<v Speaker 2>your own bias. I can't see any Trump's mind, but

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<v Speaker 2>what you can see is that he started ten days

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<v Speaker 2>ago from what looked like an absolutely to most people,

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<v Speaker 2>crazily thought through a way of putting on tariffs and

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<v Speaker 2>then in a very aggressive position, and now he's retreated

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<v Speaker 2>to where people thought he was going to be, except

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<v Speaker 2>that actually I don't think anyone thought that. Behondred and

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<v Speaker 2>twenty five percent tariffs or in China, and so actually

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<v Speaker 2>he's further forward and his agenda then he would have

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<v Speaker 2>been if he'd just gone straight for this ten days ago.

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<v Speaker 1>Also, I mean, he did say that he wanted everyone

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<v Speaker 1>to negotiate, and you look at it now and it

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<v Speaker 1>does look like this big pile of chok and all

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<v Speaker 1>has actually done that. Everyone's got their flat ten percent

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<v Speaker 1>except famine Canada and Mexico and China, and pretty much

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<v Speaker 1>everyone is coming to the table to negotiate him. When

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<v Speaker 1>we're told that the fifty out of sixty odd countries

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<v Speaker 1>are having a go, there was an EU tweaked yesterday

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<v Speaker 1>saying how much they look forward to finding a way

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<v Speaker 1>to get to zero tariffs with the US. Everyone's coming

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<v Speaker 1>to the table. So maybe maybe we have the headline

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<v Speaker 1>say maybe he's kind of winning.

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<v Speaker 2>I wouldn't go so far as to say that yet,

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<v Speaker 2>just because I don't know who this is going to unfold,

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<v Speaker 2>and I don't nine to fall into the trap can

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<v Speaker 2>of beas and things and where my own sympathies lie

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<v Speaker 2>one way or the other part from anything else is

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<v Speaker 2>American politics. I don't really have sympathies one direction or

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<v Speaker 2>the other. But I do think this idea that Trump's

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<v Speaker 2>an idiot, that's a waste of your time. If that's

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<v Speaker 2>what your mentality is, then don't spend any more time

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<v Speaker 2>thinking about this because you're not going to learn anything.

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<v Speaker 2>The fact is the world has changed. China and America's

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<v Speaker 2>kind of trade relationship has been severed, and America is

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<v Speaker 2>now mix to impose a ten percent tax when every

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<v Speaker 2>import that comes into the country, which is another thing

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<v Speaker 2>that will be interesting to see how that unfolds. Now,

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<v Speaker 2>there is one argument that this is effectively back door

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<v Speaker 2>way of introducing that consumption tax in America. You can't

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<v Speaker 2>do a VAT because obviously, you know Americans don't like

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<v Speaker 2>taxes and fair play to them, So this is a

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<v Speaker 2>way to impose a ten percent vaight. The looks as

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<v Speaker 2>I was being paid for by exporters, and to whatever

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<v Speaker 2>extent it is paid for by the exporters, that's a

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<v Speaker 2>win for you as a country. But it is also

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<v Speaker 2>a summer at least is going to be passed on

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<v Speaker 2>to consumers. And I think that's it's really interesting we

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<v Speaker 2>look at it because it also shows that the administration

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<v Speaker 2>is aware that America has got a debt problem and

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<v Speaker 2>they are going to try to address it in some way.

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<v Speaker 2>Whether that walks or not is another matter. But the

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<v Speaker 2>point is all of these imbalances have been lead knocked

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<v Speaker 2>to in a moment like this.

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<v Speaker 1>That's the absolutely key point. We've been talking about this,

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<v Speaker 1>and I wrote about it a few weeks ago, effectively

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<v Speaker 1>saying he's a catalyst, not a course. Of course, everything

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<v Speaker 1>Trump does escalates, changes, shifts a direction to degree of

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<v Speaker 1>where we're going here. But the fact remains that we've

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<v Speaker 1>been gearing up for some kind of trade wall between

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<v Speaker 1>the US and China for a long time now, and

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<v Speaker 1>there's anger towards globalization, anger towards the inequalities or perceived

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<v Speaker 1>inequalities driven by globalization has been underway for some time,

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<v Speaker 1>and actually electorate after electorate after electorate has asked their

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<v Speaker 1>leaders to do something about this, and of course have

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<v Speaker 1>been roundly ignored. And I did right the other day

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<v Speaker 1>that the tariffs are Americas brexiting. And I suppose you

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<v Speaker 1>could say that we voted for Brexit, but our leaders

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<v Speaker 1>are too to know what we wanted, what the UK wanted.

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<v Speaker 1>With Donald Trump, they're kind of getting what they're asked for.

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<v Speaker 2>Up until two thousand and eight, they kind of anger

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<v Speaker 2>was papered over by rising house prices and kind of

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<v Speaker 2>abundant credit, et cetera. And then whenever the financial crisis

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<v Speaker 2>came along and everything blew up so sufficient people felt

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<v Speaker 2>they were losing out from the system as it was

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<v Speaker 2>to start getting angry about it. And it wasn't until

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<v Speaker 2>twenty sixteen that people basically get fed up of business

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<v Speaker 2>as usual, politicians promisingly changed things and not changing things.

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<v Speaker 2>And that's whenever we got boats Brexit and Trump elected

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<v Speaker 2>for the first time. Even there with voters taking quite

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<v Speaker 2>radical action, nothing has been done fast enough for their liking.

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<v Speaker 2>So this is a point where that's it. It's coming

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<v Speaker 2>apoy so that Trump's actually just standing up and seeing

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<v Speaker 2>the quiet part out loud as they see. And people

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<v Speaker 2>don't like it because it upset it's the kind of

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<v Speaker 2>establishment view and they're not used to someone speaking so

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<v Speaker 2>undiplomatically putting said any personal qualities that Trump has or

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<v Speaker 2>not hasn't. But the fact is some kind of big

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<v Speaker 2>change is what people have been asking for and know

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<v Speaker 2>they're going to get it, whether they'll EKO not like.

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<v Speaker 1>It or not. I suppose we're supposed to talk about markets.

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<v Speaker 1>So the key thing to talk about here is what

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<v Speaker 1>on earth is going on in markets. We've talked before

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<v Speaker 1>about the fall in US markets so far this year,

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<v Speaker 1>sure related to things that Donald Trump's administration have said

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<v Speaker 1>and done, but coming anyway, because if there's massive divergence

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<v Speaker 1>in valuations between US markets and other markets, which we

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<v Speaker 1>were told until readily recently was down to US exceptionalism,

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<v Speaker 1>US perfection, everything always going right, AI, etc. And whether

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<v Speaker 1>Trump or no, all those things would have begun to

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<v Speaker 1>crumble over this year. So this is as much about

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<v Speaker 1>that valuation problem than about anything else, and that valuation

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<v Speaker 1>differential remains, so regardless of what happens next, it still

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<v Speaker 1>makes sense to expect the US market to come off

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<v Speaker 1>over the next year, two years, five years, whatever it is,

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<v Speaker 1>until valuations return to some kind of norm because now

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<v Speaker 1>we know that the US is not perfect. Well I

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<v Speaker 1>think we knew it before, but apparently not everybody did.

0:12:30.840 --> 0:12:33.520
<v Speaker 1>We know that exceptionalism never lasts that long, and we

0:12:33.600 --> 0:12:36.359
<v Speaker 1>know that every time you hear anything like the word exceptionalism,

0:12:36.400 --> 0:12:38.360
<v Speaker 1>you should immediately get out of whatever market it is.

0:12:38.400 --> 0:12:40.319
<v Speaker 1>I mean, we were old enough to know that, right,

0:12:41.440 --> 0:12:44.760
<v Speaker 1>So the simplest thing to say about this is that

0:12:45.280 --> 0:12:48.800
<v Speaker 1>regardless of everything happening around US, US stock markets are

0:12:48.840 --> 0:12:52.000
<v Speaker 1>still expensive. Other stock market's still off of value. And

0:12:52.040 --> 0:12:54.680
<v Speaker 1>if you're moving into a difficult environment, why would you

0:12:54.760 --> 0:12:57.559
<v Speaker 1>not want to hold the markets that start at the

0:12:57.640 --> 0:13:00.000
<v Speaker 1>right price rather than the markets that started the wrong place.

0:13:00.720 --> 0:13:04.200
<v Speaker 2>Yeah, definitely, and I think that's going to be whatever

0:13:04.240 --> 0:13:08.000
<v Speaker 2>else happens. It's very obvious to the people who believed

0:13:08.040 --> 0:13:12.040
<v Speaker 2>in US exceptionalism that use exceptionalism is now over. So yeah,

0:13:12.080 --> 0:13:15.640
<v Speaker 2>I think it's you can expect capital to move out

0:13:15.679 --> 0:13:18.400
<v Speaker 2>of the US, or rather, in relative terms, you can

0:13:18.400 --> 0:13:20.160
<v Speaker 2>expect the rest of the world to catch up to

0:13:20.240 --> 0:13:25.480
<v Speaker 2>the US. There's another interesting question over whether this is

0:13:25.559 --> 0:13:29.760
<v Speaker 2>a time for having an element to home bias. We

0:13:29.840 --> 0:13:32.679
<v Speaker 2>haven't seen it overtly yet, but this is the sort

0:13:32.720 --> 0:13:36.640
<v Speaker 2>of environment in which capital controls are something that people

0:13:36.679 --> 0:13:40.840
<v Speaker 2>will be looking at, and that's just worth considering. I

0:13:40.920 --> 0:13:44.720
<v Speaker 2>don't know how extreme those controls might get, but well,

0:13:44.720 --> 0:13:48.079
<v Speaker 2>now in a world where if globalization is rolling back

0:13:48.200 --> 0:13:51.320
<v Speaker 2>or stalling or whatever, and more borders are going up

0:13:51.320 --> 0:13:54.400
<v Speaker 2>in more friction is going up, then you want stuff

0:13:54.600 --> 0:13:58.040
<v Speaker 2>to be nearer to you, and that includes your money.

0:13:58.080 --> 0:13:59.719
<v Speaker 2>To an extent. I mean, I'm not saying you don't

0:13:59.720 --> 0:14:01.760
<v Speaker 2>have a two percent money in the UK. But the

0:14:01.800 --> 0:14:04.240
<v Speaker 2>point is, whatever you live, if you may want, you

0:14:04.320 --> 0:14:08.360
<v Speaker 2>think about, actually, what are the implications of other countries

0:14:08.360 --> 0:14:11.040
<v Speaker 2>to say that, actually we're going to put a tax

0:14:11.240 --> 0:14:12.880
<v Speaker 2>or in their sort of tax on that, or your

0:14:12.920 --> 0:14:15.880
<v Speaker 2>own country says if you don't keep money in the UK,

0:14:16.000 --> 0:14:19.040
<v Speaker 2>for example, then it's going to be treated less favorably

0:14:19.080 --> 0:14:21.160
<v Speaker 2>than if it does well.

0:14:21.200 --> 0:14:24.160
<v Speaker 1>I mean, we know that we've talked about national capitalism

0:14:24.160 --> 0:14:26.960
<v Speaker 1>on this podcast a lot with Russell Nathan You've been

0:14:26.960 --> 0:14:29.320
<v Speaker 1>on several times, and this is a new era of

0:14:29.840 --> 0:14:33.720
<v Speaker 1>exactly that where and the tariff is just one symptom

0:14:33.760 --> 0:14:36.800
<v Speaker 1>of people wanting to retreat and protect their owner above

0:14:37.040 --> 0:14:38.960
<v Speaker 1>above others. And of course we've heard in the UK

0:14:39.320 --> 0:14:43.400
<v Speaker 1>endlessly about how our punchinesses are isorets, etcetera. Should be

0:14:43.520 --> 0:14:45.400
<v Speaker 1>brought back to the UK and used to help build

0:14:45.400 --> 0:14:48.280
<v Speaker 1>the rebuild the UK's infrastructure, and we're hearing that in

0:14:48.360 --> 0:14:51.080
<v Speaker 1>other countries around the world. So this is a shift

0:14:51.080 --> 0:14:53.800
<v Speaker 1>that combines nicely with the idea of some possibility of

0:14:53.880 --> 0:14:57.200
<v Speaker 1>capital control. There's just a very different environment, very unfamiliar

0:14:57.200 --> 0:15:00.320
<v Speaker 1>to everybody eighty years as man a trade war that

0:15:00.400 --> 0:15:03.000
<v Speaker 1>there hasn't been this kind of sense of national capitalism

0:15:03.040 --> 0:15:06.440
<v Speaker 1>for many decades either, So very very very hard to

0:15:06.440 --> 0:15:08.920
<v Speaker 1>see how things can unfold from here, because of course,

0:15:08.960 --> 0:15:11.800
<v Speaker 1>this kind of thing has never happened inside a global

0:15:11.800 --> 0:15:15.240
<v Speaker 1>economy that is not just so globalized but also so financialized.

0:15:15.600 --> 0:15:17.280
<v Speaker 1>Financialized is that a word? Yeah?

0:15:18.080 --> 0:15:21.640
<v Speaker 2>Yeahs long enough.

0:15:24.000 --> 0:15:26.120
<v Speaker 1>And that brings us back, of course to the bond market,

0:15:26.160 --> 0:15:29.440
<v Speaker 1>which is the thing that apparently made Trump blink or

0:15:29.440 --> 0:15:29.840
<v Speaker 1>not blink.

0:15:29.880 --> 0:15:35.720
<v Speaker 2>Who knows boind market moves where interest? But beyond that,

0:15:36.440 --> 0:15:38.920
<v Speaker 2>I meanly Norman seems to the way exactly what was

0:15:39.120 --> 0:15:41.800
<v Speaker 2>driving it all as a thing called the basis trade

0:15:42.040 --> 0:15:44.680
<v Speaker 2>in the US, which I'm not going to even try

0:15:44.760 --> 0:15:48.040
<v Speaker 2>to explain because I basically don't know what it is.

0:15:48.120 --> 0:15:49.080
<v Speaker 2>I will buy well, I.

0:15:49.080 --> 0:15:53.400
<v Speaker 1>Will tell you what are Our colleagues and competitors over

0:15:53.520 --> 0:15:56.360
<v Speaker 1>odd lots have explained this very well. So we will

0:15:56.400 --> 0:15:58.520
<v Speaker 1>put in our show notes a link to what they

0:15:58.520 --> 0:15:59.680
<v Speaker 1>have done, and you can go and see what the

0:15:59.680 --> 0:16:01.640
<v Speaker 1>basis trade is there, rather than John and I are

0:16:01.680 --> 0:16:03.240
<v Speaker 1>suffering through trying to explain it.

0:16:03.920 --> 0:16:06.400
<v Speaker 2>Yes, I mean, but you can startly see as America's

0:16:06.400 --> 0:16:09.360
<v Speaker 2>aldi basic leverage positions that blow up and then force

0:16:09.440 --> 0:16:11.520
<v Speaker 2>things to get sold when you don't want to sell them.

0:16:11.800 --> 0:16:15.320
<v Speaker 2>It's fair. I mean the puttly your boind yield went

0:16:15.360 --> 0:16:17.520
<v Speaker 2>back to where it started to day by the end

0:16:17.560 --> 0:16:21.000
<v Speaker 2>of the session. Yes, that they have once they're tile

0:16:21.000 --> 0:16:24.400
<v Speaker 2>of stuff could changed. Boind markets had a problem, but

0:16:24.440 --> 0:16:32.040
<v Speaker 2>I'm not sure of their actual disciplinary powers, especially all

0:16:32.040 --> 0:16:35.760
<v Speaker 2>over some somewhere the US will be interesting to see.

0:16:36.040 --> 0:16:37.880
<v Speaker 1>Yeah, I mean, it seems to me that the bond

0:16:37.920 --> 0:16:41.520
<v Speaker 1>market business is simply a reminder to us of something

0:16:41.560 --> 0:16:43.760
<v Speaker 1>that again we've talked about on this pod quite a lot.

0:16:43.920 --> 0:16:46.480
<v Speaker 1>I don't need to remember. When we had Edward Chancellor

0:16:46.640 --> 0:16:49.440
<v Speaker 1>on the main part as an interviewee. One of the

0:16:49.440 --> 0:16:52.040
<v Speaker 1>things he said was that you should always worry about

0:16:52.680 --> 0:16:55.320
<v Speaker 1>interest rates having been low for so long, and it

0:16:55.360 --> 0:16:58.800
<v Speaker 1>would take ages to see where the problems are and

0:16:58.960 --> 0:17:03.520
<v Speaker 1>the full consequences of the GFC and COVID, etc. Because

0:17:03.680 --> 0:17:06.560
<v Speaker 1>these very low interest rates get into all the cracks

0:17:06.680 --> 0:17:10.000
<v Speaker 1>and you never know where it's going to blow. And

0:17:10.160 --> 0:17:13.680
<v Speaker 1>the fragilities in the system from our very very long

0:17:13.760 --> 0:17:18.800
<v Speaker 1>low interest period remain remain, and there will be places

0:17:18.800 --> 0:17:21.120
<v Speaker 1>where it will blow and we won't know where and how.

0:17:21.400 --> 0:17:23.280
<v Speaker 1>And I think what's happened in the bondmarket over the

0:17:23.359 --> 0:17:26.040
<v Speaker 1>last few days is a reminder that there are these

0:17:26.080 --> 0:17:29.760
<v Speaker 1>fragilities built into the system that we can't identify until

0:17:29.800 --> 0:17:31.640
<v Speaker 1>they go horribly wrong. Yeah.

0:17:31.680 --> 0:17:33.560
<v Speaker 2>I think that's a really good way of putting that.

0:17:33.800 --> 0:17:37.560
<v Speaker 2>People that always told me they can reduce liquidity and

0:17:37.760 --> 0:17:42.520
<v Speaker 2>increased dependence on central banks generally, which has been a

0:17:42.640 --> 0:17:46.320
<v Speaker 2>big problem. We spent a long time suppressing a lot

0:17:46.320 --> 0:17:52.639
<v Speaker 2>of stuff, and that kind of needs to come somewhere eventually.

0:17:52.800 --> 0:17:55.920
<v Speaker 2>And it looks like that's the point of what I.

0:17:56.000 --> 0:17:58.520
<v Speaker 1>Know deep sigh or.

0:18:00.119 --> 0:18:04.040
<v Speaker 2>Well, I mean, on the opposite markets wise, it's basically

0:18:04.080 --> 0:18:08.080
<v Speaker 2>playing out as we'd expected it is. The rest of

0:18:08.080 --> 0:18:10.560
<v Speaker 2>the world catches up with the US after using which

0:18:10.600 --> 0:18:12.400
<v Speaker 2>the S and P. Five hundred is the only game

0:18:12.440 --> 0:18:15.320
<v Speaker 2>in town. You own about of gold, you're own some

0:18:15.400 --> 0:18:18.000
<v Speaker 2>catch to take advantage of the opportunities when they come about.

0:18:19.280 --> 0:18:22.399
<v Speaker 2>You can look at the point side of your portfolio.

0:18:22.400 --> 0:18:25.840
<v Speaker 2>You can look at that it's been basically what you

0:18:25.920 --> 0:18:29.080
<v Speaker 2>need in terms of income, just kind of tax tree,

0:18:29.320 --> 0:18:31.720
<v Speaker 2>how close to retirement you are et cetera, et cetera.

0:18:32.480 --> 0:18:36.800
<v Speaker 2>You should be basically comfortable as long as you've thought

0:18:36.920 --> 0:18:40.600
<v Speaker 2>things through and you're investing regularly.

0:18:40.280 --> 0:18:43.119
<v Speaker 1>And as long as you understand I think at this

0:18:43.240 --> 0:18:46.320
<v Speaker 1>point that you mustn't listen to markets. Yes, you never

0:18:46.320 --> 0:18:48.919
<v Speaker 1>always been told markets contain all the information. Markets are

0:18:48.960 --> 0:18:51.760
<v Speaker 1>very clever, markets are sending you messages. I'm not sure

0:18:51.760 --> 0:18:54.760
<v Speaker 1>that markets have been sending us very accurate messages over

0:18:54.800 --> 0:18:57.400
<v Speaker 1>the last week. So don't listen to market. Don't really

0:18:57.400 --> 0:19:00.680
<v Speaker 1>know any more than you do. And also, I suppose

0:19:00.720 --> 0:19:03.600
<v Speaker 1>we've talked again on this podcast. We've talked previously about

0:19:03.760 --> 0:19:07.280
<v Speaker 1>how terrible forecasts are and how almost everybody's forecasts are

0:19:07.359 --> 0:19:10.359
<v Speaker 1>almost always wrong. Forecasts are always wrong. They will be

0:19:10.400 --> 0:19:14.800
<v Speaker 1>even more wrong, even more wrong than usual, for the

0:19:14.840 --> 0:19:18.040
<v Speaker 1>next little while, because no one can begin to understand

0:19:18.040 --> 0:19:20.239
<v Speaker 1>what would happen. Even if things stopped right now and

0:19:20.280 --> 0:19:22.119
<v Speaker 1>stayed as they are, and we knew these were the

0:19:22.200 --> 0:19:24.080
<v Speaker 1>teriff rates and that was that and there was no

0:19:24.160 --> 0:19:27.080
<v Speaker 1>further change, it would be impossible to forecast what would

0:19:27.080 --> 0:19:29.560
<v Speaker 1>happen with all the moving parts. But given that we

0:19:29.640 --> 0:19:32.640
<v Speaker 1>know that everything is subject to more and more and

0:19:32.720 --> 0:19:35.520
<v Speaker 1>more change and constant uncertainty, which, of course the Trump's

0:19:35.600 --> 0:19:40.040
<v Speaker 1>usp this uncertainty that he creates around him. It's impossible

0:19:40.080 --> 0:19:44.000
<v Speaker 1>to forecast everything, so that's important. And the final thing

0:19:44.040 --> 0:19:45.919
<v Speaker 1>I want to say on this, the final thing is

0:19:45.920 --> 0:19:50.080
<v Speaker 1>that you are so close, John, so close to your headline,

0:19:50.640 --> 0:19:52.439
<v Speaker 1>the one that I know you're going to use at

0:19:52.480 --> 0:19:55.960
<v Speaker 1>some point say thank you to Trump for your low

0:19:56.080 --> 0:19:59.280
<v Speaker 1>mortgage rate name. Thank you to Trump.

0:19:59.359 --> 0:20:03.200
<v Speaker 2>You're so close, so close it.

0:20:04.440 --> 0:20:07.320
<v Speaker 1>As soon as UK rates come down, for whatever reason

0:20:07.400 --> 0:20:10.199
<v Speaker 1>they come down, I guarantee John's going to use their

0:20:10.320 --> 0:20:19.280
<v Speaker 1>headline definitely. Thanks for listening to this week's Merrin Talgs

0:20:19.320 --> 0:20:21.679
<v Speaker 1>Money Debrief. Not a bonus, not an emergency, just a

0:20:21.720 --> 0:20:24.080
<v Speaker 1>normal debrief. If you like our show, rate review, and

0:20:24.080 --> 0:20:26.879
<v Speaker 1>subscribe wherever you listen to podcasts. Also be sure to

0:20:26.880 --> 0:20:29.240
<v Speaker 1>follow me and John on ex or Twitter at marins

0:20:29.359 --> 0:20:32.800
<v Speaker 1>w and John Underscore Stepic. This episode was produced by

0:20:32.800 --> 0:20:35.720
<v Speaker 1>Moses and Questions and comments on this show and all

0:20:35.760 --> 0:20:38.840
<v Speaker 1>our shows are always welcome. Forecasts not so much. Our

0:20:38.880 --> 0:20:42.000
<v Speaker 1>show email is Merror Money at Bloomberg dot net