1
00:00:06,320 --> 00:00:13,040
Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene

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

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

4
00:00:23,600 --> 00:00:33,560
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg The

5
00:00:33,600 --> 00:00:36,040
Speaker 1: main event and then the G seven and leaders meeting

6
00:00:36,080 --> 00:00:38,080
Speaker 1: today and Saturday and what's shaping up to be the

7
00:00:38,080 --> 00:00:42,240
Speaker 1: most divisive gathering of leaders from major industrialized nations in years.

8
00:00:42,440 --> 00:00:44,680
Speaker 1: I'm really pleased to say that joining us from Canada

9
00:00:45,040 --> 00:00:48,760
Speaker 1: is Andrew barda Bloomberg's European government reporter, and you just

10
00:00:48,800 --> 00:00:51,600
Speaker 1: walked me through the issues on the table and why

11
00:00:51,680 --> 00:00:54,360
Speaker 1: this could be so contentious out the next twenty four hours.

12
00:00:55,400 --> 00:00:57,880
Speaker 1: Good morning. Look that there's really only one issue on

13
00:00:57,920 --> 00:01:03,720
Speaker 1: the table that that matters is um obviously the trade war,

14
00:01:03,800 --> 00:01:06,400
Speaker 1: though though their scheduled to talk about other things have

15
00:01:06,560 --> 00:01:10,000
Speaker 1: invited a few emerging markets here, they'll talk about terror,

16
00:01:10,040 --> 00:01:14,759
Speaker 1: they'll talk about cybercrime. It's really all about about trade.

17
00:01:14,760 --> 00:01:16,800
Speaker 1: And as you said, you know, the setting the table

18
00:01:17,319 --> 00:01:19,480
Speaker 1: and it's and it's not looking good. You had McCaw

19
00:01:19,600 --> 00:01:22,800
Speaker 1: come out and saying, um, you know, we have no

20
00:01:22,959 --> 00:01:25,800
Speaker 1: problem signing in agreement with only six countries if we

21
00:01:25,840 --> 00:01:28,240
Speaker 1: need to be, and we have, we have May saying

22
00:01:28,240 --> 00:01:31,840
Speaker 1: there would be a measured proportional response. Trump then comes

23
00:01:31,880 --> 00:01:34,959
Speaker 1: out and in a very personal attack on Trudeau, accuses

24
00:01:35,000 --> 00:01:38,800
Speaker 1: him of being so indignant um and and thirty seven

25
00:01:38,800 --> 00:01:42,880
Speaker 1: minutes ago, uh tweeted that um he was looking forward

26
00:01:42,880 --> 00:01:45,760
Speaker 1: to straightening out unfair trade deals with the seven countries

27
00:01:45,800 --> 00:01:48,360
Speaker 1: and if that doesn't happen, well, from his perspective, the

28
00:01:48,440 --> 00:01:50,840
Speaker 1: US will come out even stronger. So you know, he

29
00:01:50,840 --> 00:01:53,120
Speaker 1: would sort of expect before meeting like this to have

30
00:01:53,320 --> 00:01:57,720
Speaker 1: conciliatory comments, to have leaders, you know, lay the groundwork

31
00:01:57,800 --> 00:02:02,680
Speaker 1: for having a conversation, and we're seeing the opposite takes place.

32
00:02:02,720 --> 00:02:05,040
Speaker 1: And I think that that's what's being reflected in the

33
00:02:05,080 --> 00:02:09,520
Speaker 1: markets now, very aggressive tone from Trump and and leaders

34
00:02:09,560 --> 00:02:13,119
Speaker 1: who previously had tried, you know, appeasement and being kind

35
00:02:13,120 --> 00:02:15,679
Speaker 1: of Trump whisperer and trying to see if they could

36
00:02:15,680 --> 00:02:18,920
Speaker 1: get him on board, they're realizing that that hasn't hasn't worked.

37
00:02:19,000 --> 00:02:21,119
Speaker 1: So the gloves are coming off and now the other

38
00:02:21,160 --> 00:02:25,639
Speaker 1: g seven countries are retaliating and responding with their own language.

39
00:02:25,680 --> 00:02:27,839
Speaker 1: So as you say it will be the first meeting

40
00:02:27,919 --> 00:02:31,520
Speaker 1: in many years where we're probably see some fireworks, and

41
00:02:31,520 --> 00:02:34,280
Speaker 1: we'll be looking closely at the final communicate in the

42
00:02:34,320 --> 00:02:37,960
Speaker 1: body language leading up to that, the final I imagine

43
00:02:37,960 --> 00:02:40,160
Speaker 1: we're going to see fireworks. But as you know better

44
00:02:40,200 --> 00:02:43,680
Speaker 1: than anyone else, UM in our in our team at Bloomberg,

45
00:02:43,760 --> 00:02:47,000
Speaker 1: that noise and news are two very different things, um,

46
00:02:47,000 --> 00:02:48,840
Speaker 1: And over the last twenty four hours and imagine over

47
00:02:48,840 --> 00:02:50,480
Speaker 1: the next twenty four hours, we have heard a lot

48
00:02:50,480 --> 00:02:52,520
Speaker 1: of news, a lot of noise, a lot of bluster,

49
00:02:52,960 --> 00:02:54,799
Speaker 1: and I just wonder, will it be all about mood,

50
00:02:54,880 --> 00:02:57,120
Speaker 1: music and optics or we actually have some news to

51
00:02:57,160 --> 00:02:59,880
Speaker 1: deal with at the other side of the summit. I

52
00:03:00,320 --> 00:03:01,919
Speaker 1: think that I think the worry is not that we're

53
00:03:01,919 --> 00:03:03,360
Speaker 1: going to have news at the end of it, but

54
00:03:03,400 --> 00:03:05,400
Speaker 1: that we're not going to have news. And what I

55
00:03:05,400 --> 00:03:07,400
Speaker 1: mean by that is, you know, usually the G seven

56
00:03:07,880 --> 00:03:10,280
Speaker 1: all the countries by now will have will be like

57
00:03:11,200 --> 00:03:13,320
Speaker 1: on the draft of the final commun k, They'll be

58
00:03:13,320 --> 00:03:16,440
Speaker 1: talking about every period, every comma, every word, and and

59
00:03:16,480 --> 00:03:19,040
Speaker 1: having having this kind of consensus where you come out

60
00:03:19,080 --> 00:03:21,040
Speaker 1: of the summit and you have an agreement that you

61
00:03:21,080 --> 00:03:23,480
Speaker 1: communicate to the world, and you say we the G

62
00:03:23,560 --> 00:03:27,120
Speaker 1: seven united, you know, believe X y Z that that's

63
00:03:27,120 --> 00:03:29,919
Speaker 1: not happening. You know, we're we're seeing the opposite. We're

64
00:03:29,960 --> 00:03:31,800
Speaker 1: seeing you know, and maybe a lot of noise, but

65
00:03:31,840 --> 00:03:35,240
Speaker 1: we're not seeing them come come together. And and and

66
00:03:35,280 --> 00:03:37,760
Speaker 1: that's sort of important because what you're gonna have at

67
00:03:37,760 --> 00:03:39,720
Speaker 1: the end of this at the end of this agreement

68
00:03:39,800 --> 00:03:42,040
Speaker 1: is either going to be you know, a G six

69
00:03:42,080 --> 00:03:45,000
Speaker 1: plus one, which which may be about as good as

70
00:03:45,000 --> 00:03:46,680
Speaker 1: a guest, but it could even be worse than that.

71
00:03:46,760 --> 00:03:49,440
Speaker 1: It could be that there is zero statement and the

72
00:03:49,480 --> 00:03:51,920
Speaker 1: Trudeau has to come out and kind of recap and

73
00:03:51,920 --> 00:03:54,240
Speaker 1: and say, you know what he thinks happens. And then

74
00:03:54,280 --> 00:03:56,360
Speaker 1: you have all the different countries come out and put

75
00:03:56,400 --> 00:03:59,640
Speaker 1: their spin on it. And and from a market's point

76
00:03:59,640 --> 00:04:01,560
Speaker 1: of view, that that may be the worst the worst,

77
00:04:01,960 --> 00:04:04,520
Speaker 1: you know, the worst case no agreement. Everybody's pushing their

78
00:04:04,560 --> 00:04:07,200
Speaker 1: own thing, and we leave the G seven with with

79
00:04:07,240 --> 00:04:10,480
Speaker 1: nothing to stop this this global trade war from from

80
00:04:11,080 --> 00:04:13,680
Speaker 1: getting work. Okay, so it's tipped for tad. I get that.

81
00:04:13,840 --> 00:04:19,120
Speaker 1: The president. I mean, I'm gonna essentially call it transactional bluster.

82
00:04:20,160 --> 00:04:25,120
Speaker 1: Does Europe have a bluster? As they come to CHAUVROI, well,

83
00:04:25,800 --> 00:04:27,800
Speaker 1: you remember in the in the past, in the in

84
00:04:27,839 --> 00:04:30,719
Speaker 1: the in the past sanctions, Europe was very quick to

85
00:04:30,800 --> 00:04:33,960
Speaker 1: respond and they were very targeted spots, like they knew

86
00:04:34,000 --> 00:04:37,040
Speaker 1: exactly you know, who to hit, how to hit, how

87
00:04:37,040 --> 00:04:39,520
Speaker 1: to hurt the Republicans. And you've got the mid terms

88
00:04:39,520 --> 00:04:41,560
Speaker 1: coming up, and and you have to assume that all

89
00:04:41,640 --> 00:04:45,280
Speaker 1: the other get no. But are they gonna bluster? Andrew,

90
00:04:45,320 --> 00:04:47,760
Speaker 1: I don't sense that there'll be any bluster. They're just

91
00:04:47,800 --> 00:04:51,040
Speaker 1: gonna show up. They're gonna act diplomatic and then tip

92
00:04:51,080 --> 00:04:54,360
Speaker 1: for tad will click in. Right, Well, that's what we've

93
00:04:54,360 --> 00:04:56,840
Speaker 1: seen so far, and and and you're right, I mean,

94
00:04:57,160 --> 00:05:00,839
Speaker 1: the blusters there. But but Europe has that it's willing

95
00:05:00,880 --> 00:05:03,279
Speaker 1: to retaliate. It is willing to meet Trump head on

96
00:05:03,320 --> 00:05:06,120
Speaker 1: when it comes to the tariffs. And you know we've

97
00:05:06,200 --> 00:05:09,000
Speaker 1: seen that. And there's nothing that suggested that. John, help

98
00:05:09,040 --> 00:05:10,760
Speaker 1: me here. I think you're better at this, you and Andrew,

99
00:05:10,960 --> 00:05:13,680
Speaker 1: Andrew decades of work on this, and you as well.

100
00:05:13,720 --> 00:05:18,000
Speaker 1: I mean, Miracle is a physicist from East Germany who

101
00:05:18,040 --> 00:05:21,560
Speaker 1: grew up I believe under some serious duress, she's got

102
00:05:21,560 --> 00:05:24,039
Speaker 1: to be looking at this side show this carnival act

103
00:05:24,600 --> 00:05:26,680
Speaker 1: and going. You know, we're just gonna go up to Quebec.

104
00:05:26,680 --> 00:05:29,040
Speaker 1: We're gonna make decisions, and then we're gonna go back

105
00:05:29,080 --> 00:05:32,480
Speaker 1: and put an import tax on Budweiser. The Chuncellor Miracle

106
00:05:32,560 --> 00:05:37,279
Speaker 1: understands the importance of international diplomacy and integration. I get that, Andrew,

107
00:05:37,520 --> 00:05:39,560
Speaker 1: And I'm not trying to demean that. We all understand

108
00:05:39,560 --> 00:05:42,640
Speaker 1: how important the last several decades have been for global peace.

109
00:05:43,480 --> 00:05:46,159
Speaker 1: But in terms of the G seven agreement, has it

110
00:05:46,200 --> 00:05:48,880
Speaker 1: ever been worth the paper it's written on in recent years?

111
00:05:48,920 --> 00:05:50,920
Speaker 1: And we can follow in the G twenty communicate into

112
00:05:50,960 --> 00:05:53,920
Speaker 1: that question as well, Andrew, because after the last several years,

113
00:05:53,960 --> 00:05:55,680
Speaker 1: I see a lot of people agreeing on stuff on

114
00:05:55,760 --> 00:05:59,839
Speaker 1: paper and then going back home and doing very different things. Well, look,

115
00:05:59,839 --> 00:06:02,120
Speaker 1: I had this conversation yesterday with John Curtin from the

116
00:06:02,160 --> 00:06:04,760
Speaker 1: G seven Research Group, and and I mean, this is

117
00:06:04,800 --> 00:06:07,320
Speaker 1: all he does. He's been studying this for for decades now,

118
00:06:07,360 --> 00:06:09,080
Speaker 1: and he says, in the history of the G seven,

119
00:06:09,440 --> 00:06:12,240
Speaker 1: you've really only had one meeting where the world was

120
00:06:12,279 --> 00:06:15,039
Speaker 1: worse off because of the G seven. And you know

121
00:06:15,160 --> 00:06:18,159
Speaker 1: that that possibility is back on the table, which is

122
00:06:18,160 --> 00:06:19,840
Speaker 1: something that you have to worry about. I mean, you've

123
00:06:19,839 --> 00:06:21,880
Speaker 1: always had these statements, but you know that you can

124
00:06:21,960 --> 00:06:24,440
Speaker 1: argue what to what extent they've were the they've made

125
00:06:24,440 --> 00:06:26,080
Speaker 1: the world a better place, but there has been some

126
00:06:26,160 --> 00:06:28,760
Speaker 1: incremental progress and you have gotten people to kind of

127
00:06:28,800 --> 00:06:31,200
Speaker 1: agree to certain commitments and move in a certain direction.

128
00:06:31,480 --> 00:06:33,600
Speaker 1: But if you're not putting anybody on that track, then yeah,

129
00:06:33,640 --> 00:06:34,880
Speaker 1: you have to agree. You know what, what are we

130
00:06:34,920 --> 00:06:36,520
Speaker 1: going to get out of this? Andrew Barton, thank you

131
00:06:36,600 --> 00:06:38,720
Speaker 1: so much, brilliant and I just greatly appreciate it. From

132
00:06:38,760 --> 00:06:57,559
Speaker 1: Quebec and these important G seven meetings. Should we talk Brazil? Okay,

133
00:06:57,560 --> 00:06:59,200
Speaker 1: Gabriella Santos, do you want to guess from jam P

134
00:06:59,320 --> 00:07:02,960
Speaker 1: Morgan Asset Management clubal market strategy is very confused, wondering

135
00:07:02,960 --> 00:07:05,000
Speaker 1: what on earth is going on in this studio, Gabby,

136
00:07:05,080 --> 00:07:07,719
Speaker 1: Let's just talk about Brazil. Brazil are intervening in the

137
00:07:07,760 --> 00:07:10,600
Speaker 1: FX market without much success. At the moment, M e

138
00:07:10,720 --> 00:07:13,040
Speaker 1: M is under some significant stress. I would say, relative

139
00:07:13,080 --> 00:07:15,040
Speaker 1: to how it has been in the last year, why

140
00:07:15,040 --> 00:07:18,000
Speaker 1: aren't they hiking interest rates? So let's think about why

141
00:07:18,000 --> 00:07:20,600
Speaker 1: Brazil is under pressure right now? I would say two things.

142
00:07:20,680 --> 00:07:24,640
Speaker 1: The first is the broad uest dollar strength um really

143
00:07:24,680 --> 00:07:27,280
Speaker 1: since mid April, and Brazil seen as a bit vulnerable

144
00:07:27,320 --> 00:07:30,280
Speaker 1: to that given it's very large fiscal deficits. So that's

145
00:07:30,320 --> 00:07:34,440
Speaker 1: one thing. Central bank hiking actually exacerbates that problem. Uh.

146
00:07:34,600 --> 00:07:37,360
Speaker 1: The second reason Brazil's under pressure right now is because

147
00:07:37,360 --> 00:07:40,600
Speaker 1: the investment thesis is falling apart for this year, growth

148
00:07:40,640 --> 00:07:44,240
Speaker 1: has been slashed, growth expectations and there's more of a

149
00:07:44,280 --> 00:07:48,000
Speaker 1: probability of a shall we say, non business friendly candidate

150
00:07:48,000 --> 00:07:51,440
Speaker 1: win in October. Central bank hiking actually doesn't fix either

151
00:07:51,480 --> 00:07:54,360
Speaker 1: of those problems either, So they are pushing back against

152
00:07:54,400 --> 00:07:56,840
Speaker 1: this narrative that raising rates is going to fix any

153
00:07:56,880 --> 00:08:00,720
Speaker 1: of the problems, perhaps even exacerbate them. Let's remember that

154
00:08:00,760 --> 00:08:03,280
Speaker 1: inflation in Brazil is actually very very low at the moment.

155
00:08:03,480 --> 00:08:06,040
Speaker 1: So just to discuss em more broadly, there are calls

156
00:08:06,080 --> 00:08:09,239
Speaker 1: for help from emerging markets, from the Central Bank Governor

157
00:08:09,240 --> 00:08:12,080
Speaker 1: of Indonesia, the Central Bank Governor of the r BI,

158
00:08:12,200 --> 00:08:15,880
Speaker 1: and India Urgent Batel, essentially asking the FED to do something.

159
00:08:16,120 --> 00:08:18,280
Speaker 1: But they do something. Is interesting to me because it's

160
00:08:18,320 --> 00:08:21,200
Speaker 1: not slow down rate hikes, it's slowed down the pace

161
00:08:21,280 --> 00:08:25,320
Speaker 1: of balance sheet reduction. Why is balance sheet reduction so

162
00:08:25,360 --> 00:08:27,800
Speaker 1: important to em right now in a way that maybe

163
00:08:27,800 --> 00:08:30,400
Speaker 1: some people didn't anticipate. I'm not sure that that I

164
00:08:30,440 --> 00:08:33,800
Speaker 1: would agree that it is necessarily because for emerging markets

165
00:08:33,800 --> 00:08:37,080
Speaker 1: in the past, higher rates in the United States in

166
00:08:37,120 --> 00:08:40,640
Speaker 1: and of themselves have not been a problem. Because rates

167
00:08:40,640 --> 00:08:43,640
Speaker 1: are rising, balance sheet is coming down because the economy

168
00:08:43,720 --> 00:08:46,640
Speaker 1: is doing well. That's a good thing for emerging markets.

169
00:08:47,200 --> 00:08:49,840
Speaker 1: So honestly, the trouble we're here, we're having right now

170
00:08:49,960 --> 00:08:52,520
Speaker 1: is not interest rate in and of itself related. It's

171
00:08:52,640 --> 00:08:56,880
Speaker 1: dollar strength related, and that's much more a function of

172
00:08:57,000 --> 00:08:59,559
Speaker 1: some risk aversion that we've been seeing over the past

173
00:08:59,600 --> 00:09:01,520
Speaker 1: few months. So I'm not sure what the FED can

174
00:09:01,559 --> 00:09:04,960
Speaker 1: do here Necessarily, the data just has to come through

175
00:09:05,040 --> 00:09:07,880
Speaker 1: in terms of economies outside. It makes you wonder if

176
00:09:07,880 --> 00:09:10,240
Speaker 1: that's the case, then why are the central bank governors

177
00:09:10,280 --> 00:09:12,960
Speaker 1: of India, Indonesia and others as well asking for this

178
00:09:13,000 --> 00:09:15,079
Speaker 1: help If you're saying it's not as critical. I mean

179
00:09:15,120 --> 00:09:18,400
Speaker 1: the Urgi Baal, the governor of the RBI, essentially was

180
00:09:18,440 --> 00:09:21,800
Speaker 1: warning of a dollar liquidity crisis because of banishing production.

181
00:09:22,040 --> 00:09:24,880
Speaker 1: And I agree, John, you're correct to bring up India.

182
00:09:25,000 --> 00:09:28,080
Speaker 1: I thought that was a very important comments, you know,

183
00:09:28,679 --> 00:09:31,960
Speaker 1: given them mix, There's not been enough talk about India

184
00:09:32,160 --> 00:09:35,360
Speaker 1: and using the word crisis. It just seems it just

185
00:09:35,400 --> 00:09:38,240
Speaker 1: seems a lot to me. We've, like you said, had

186
00:09:38,240 --> 00:09:40,400
Speaker 1: a big move over the last month. It's been kind

187
00:09:40,400 --> 00:09:43,880
Speaker 1: of calm over the last year. Actually, sentiment around emerging

188
00:09:43,960 --> 00:09:46,559
Speaker 1: markets from investors on a by side, it's been incredibly good,

189
00:09:47,000 --> 00:09:49,160
Speaker 1: to be honest with you, from what our sentiment is

190
00:09:49,160 --> 00:09:51,680
Speaker 1: still good on emergency. So just walk me through why

191
00:09:51,720 --> 00:09:55,439
Speaker 1: these central bank governors are so worried right now. I'm

192
00:09:55,480 --> 00:09:59,679
Speaker 1: not particularly sure. I think perhaps it harkens memories right

193
00:09:59,679 --> 00:10:02,640
Speaker 1: of that tough period for emerging markets from two thousand

194
00:10:02,679 --> 00:10:06,600
Speaker 1: eleven up until But let's think about the fact that

195
00:10:06,640 --> 00:10:10,280
Speaker 1: we're not in that place anymore. Growth is improving, That's

196
00:10:10,280 --> 00:10:13,600
Speaker 1: what drives capital flows to emerging markets in the medium term.

197
00:10:13,720 --> 00:10:17,839
Speaker 1: Earnings are improving, vulnerabilities are better, commodity prices are higher,

198
00:10:17,840 --> 00:10:19,680
Speaker 1: and the list goes on and on. It's simply within

199
00:10:19,720 --> 00:10:25,319
Speaker 1: the JP Morgan world. Is it the same financial structures

200
00:10:25,400 --> 00:10:28,120
Speaker 1: of e M as it was crisis to crisis, back

201
00:10:28,160 --> 00:10:31,080
Speaker 1: to crisis, back to crisis back or truly is this

202
00:10:31,200 --> 00:10:34,280
Speaker 1: time different where it's a new e M which is

203
00:10:34,320 --> 00:10:38,320
Speaker 1: more resilient in liquidity and resilient solvency. Is that the

204
00:10:38,360 --> 00:10:43,280
Speaker 1: official line, that is our our view from our side, UM,

205
00:10:43,320 --> 00:10:46,360
Speaker 1: I would say there's a lot of focus on the

206
00:10:46,440 --> 00:10:49,440
Speaker 1: outliers here when it comes to countries which still have

207
00:10:49,600 --> 00:10:52,880
Speaker 1: very large current account deficits and thus are very exposed

208
00:10:52,880 --> 00:10:56,319
Speaker 1: to any sort of ebbs and flows in terms of liquidity.

209
00:10:56,360 --> 00:10:59,400
Speaker 1: That would be a Turkey, and in Argentina there are

210
00:10:59,520 --> 00:11:03,200
Speaker 1: some stream outliers in terms of US dollar Dad taking

211
00:11:03,240 --> 00:11:06,360
Speaker 1: up a large share of debt. That's an Argentina example

212
00:11:06,440 --> 00:11:09,880
Speaker 1: as well. But those are outliers. In terms of emerging

213
00:11:09,920 --> 00:11:13,720
Speaker 1: markets as a whole, it's a much much better, much

214
00:11:13,760 --> 00:11:18,840
Speaker 1: more resilient picture. Very good, Thank you, a real especial tribute.

215
00:11:18,840 --> 00:11:38,080
Speaker 1: More now is Stephen Major, Steve Major of HSBC. Steve

216
00:11:38,240 --> 00:11:41,680
Speaker 1: are rates high or on a relative basis do you

217
00:11:41,679 --> 00:11:46,720
Speaker 1: look at them? Is still low? Uh? US rates too

218
00:11:46,800 --> 00:11:49,280
Speaker 1: high in the forwards. I doubt the FED will get

219
00:11:49,320 --> 00:11:52,480
Speaker 1: anywhere near where they think they're going to go. Well,

220
00:11:53,160 --> 00:11:54,920
Speaker 1: if it doesn't happen in the next few months, I'll

221
00:11:54,960 --> 00:11:58,920
Speaker 1: be very surprised they will choke on the additional great hikes,

222
00:11:58,960 --> 00:12:02,600
Speaker 1: and I imagine and two more would be enough. UM

223
00:12:03,240 --> 00:12:05,760
Speaker 1: to two more gets us to two twenty five. That

224
00:12:05,880 --> 00:12:08,240
Speaker 1: the thing is that the idea that the FED could

225
00:12:08,320 --> 00:12:10,880
Speaker 1: just close their eyes and keep hiking all the weight

226
00:12:10,960 --> 00:12:15,079
Speaker 1: of three or three five without there being some massive event,

227
00:12:15,160 --> 00:12:19,360
Speaker 1: I think is naive. There's been many, many surprises in

228
00:12:19,400 --> 00:12:22,240
Speaker 1: the last month, and I think that we are seeing

229
00:12:22,559 --> 00:12:26,160
Speaker 1: a regime shift in the risky asset markets. Look at

230
00:12:26,200 --> 00:12:28,880
Speaker 1: all the incidents that keep popping up in e M.

231
00:12:29,520 --> 00:12:33,080
Speaker 1: It's not a coincidence that the common denominator is the

232
00:12:33,280 --> 00:12:37,360
Speaker 1: vicious tightening of financial conditions. Now, I can't believe that

233
00:12:37,360 --> 00:12:40,720
Speaker 1: people don't recognize this because they're looking at outdated financial

234
00:12:40,720 --> 00:12:44,880
Speaker 1: conditions indices, and really you've got to look at this

235
00:12:44,920 --> 00:12:47,640
Speaker 1: in a more holistic way. The FED is increasing rates,

236
00:12:47,679 --> 00:12:50,560
Speaker 1: they're shrinking the balance sheet, and the U. S. Treasury

237
00:12:50,679 --> 00:12:53,640
Speaker 1: is rejuvenating cash as an asset class. That is a

238
00:12:53,800 --> 00:12:56,559
Speaker 1: massive tightening um. The last time we had this kind

239
00:12:56,600 --> 00:13:00,360
Speaker 1: of tightening of financial conditions associated with low unemplo moment

240
00:13:00,679 --> 00:13:04,200
Speaker 1: and lucier fiscal policy. The last time this happened, England

241
00:13:04,200 --> 00:13:08,520
Speaker 1: won the World Cup. That's football. For Tom's benefit and

242
00:13:08,679 --> 00:13:12,880
Speaker 1: both football, Steve. Steve's in East London guy west Ham fan.

243
00:13:13,000 --> 00:13:15,760
Speaker 1: But West Town won the World Cup for England. Actually,

244
00:13:15,920 --> 00:13:19,320
Speaker 1: so so in nineteen sixties six England won the football

245
00:13:19,360 --> 00:13:22,480
Speaker 1: World Cup. And it's fifty years fifty two years ago.

246
00:13:22,880 --> 00:13:25,080
Speaker 1: So in nine six you will remember there was a

247
00:13:25,200 --> 00:13:28,640
Speaker 1: very strong tightening of credit conditions and what happened afterwards

248
00:13:28,679 --> 00:13:31,839
Speaker 1: wasn't very nice. And and from the UK perspective, we

249
00:13:31,880 --> 00:13:35,679
Speaker 1: had the nineteen sixty seventy evaluation of course. Um, but

250
00:13:36,120 --> 00:13:40,559
Speaker 1: you can read the St Louis Fed nineteen sixty six papers,

251
00:13:40,559 --> 00:13:43,000
Speaker 1: a paper about nine six written by the St Louis

252
00:13:43,040 --> 00:13:46,400
Speaker 1: Fair that talks in strong tightening of financial conditions. So

253
00:13:46,440 --> 00:13:48,200
Speaker 1: I think it's naive to look at say the I

254
00:13:48,360 --> 00:13:50,240
Speaker 1: O E R or the FED funds rate and say

255
00:13:50,280 --> 00:13:51,880
Speaker 1: they haven't Steve. That's what I was going to ask

256
00:13:51,920 --> 00:13:54,040
Speaker 1: you about actually, because you've mentioned a couple of things.

257
00:13:54,040 --> 00:13:56,520
Speaker 1: You've talked about regime change one and also this tining

258
00:13:56,520 --> 00:13:58,760
Speaker 1: of financial conditions. I think for some listeners they'll be

259
00:13:58,760 --> 00:14:01,439
Speaker 1: looking at financial conditions and thinking things are still easy.

260
00:14:01,720 --> 00:14:03,240
Speaker 1: So what are you looking at, Steve? What are the

261
00:14:03,280 --> 00:14:05,920
Speaker 1: indicated is that you think people should pay attention to well,

262
00:14:05,920 --> 00:14:09,000
Speaker 1: what could possibly be wrong about the idea that financial

263
00:14:09,040 --> 00:14:10,720
Speaker 1: conditions are lose. So if you look at this, if

264
00:14:10,720 --> 00:14:13,960
Speaker 1: you look at the FEDS indicries, and there's a Bloomberg

265
00:14:13,960 --> 00:14:17,280
Speaker 1: index as well asn't as a global index, bloom Bloomberg,

266
00:14:17,280 --> 00:14:20,960
Speaker 1: Bloomberg has one. I think it's got ten or eleven components. Again,

267
00:14:20,960 --> 00:14:23,280
Speaker 1: the Saint Louis fed, by the way, has a seventeen

268
00:14:23,360 --> 00:14:27,480
Speaker 1: component financial conditions index. These these are tighter than they

269
00:14:27,480 --> 00:14:30,240
Speaker 1: were in any time in the last twelve months, I think,

270
00:14:30,480 --> 00:14:32,760
Speaker 1: but in the context of the last ten years, they're

271
00:14:32,800 --> 00:14:36,400
Speaker 1: still loose. I suggest that they're picking up the wrong thing.

272
00:14:37,080 --> 00:14:40,280
Speaker 1: So so in these indicries you've got things like the SMP,

273
00:14:40,560 --> 00:14:42,640
Speaker 1: the VIX and the f O A S and this

274
00:14:42,720 --> 00:14:44,480
Speaker 1: kind of stuff. The thing to make to me is

275
00:14:44,520 --> 00:14:48,480
Speaker 1: that financial conditions for for Turkish corporates who are issuing

276
00:14:48,520 --> 00:14:51,320
Speaker 1: in dollars, they are tight. For Chinese real estate companies

277
00:14:51,320 --> 00:14:53,480
Speaker 1: who are coming to roll some bonds they issued a

278
00:14:53,520 --> 00:14:56,640
Speaker 1: few years ago, they're also tight. For the Italian sovereign

279
00:14:56,640 --> 00:14:59,040
Speaker 1: financial conditions are about to get very tight too. It

280
00:14:59,040 --> 00:15:01,640
Speaker 1: seems to me if you look around the world, you

281
00:15:01,680 --> 00:15:03,680
Speaker 1: go and ask a Japanese Bank, how it is the

282
00:15:03,720 --> 00:15:06,520
Speaker 1: borrow dollars in the open market. You know, there's a

283
00:15:06,560 --> 00:15:09,480
Speaker 1: lot of different institutions in different parts of the world

284
00:15:09,480 --> 00:15:11,800
Speaker 1: will tell you that the financial conditions are getting very tight.

285
00:15:12,080 --> 00:15:15,160
Speaker 1: And of course the FED looks at things globally. Sometimes

286
00:15:15,200 --> 00:15:17,720
Speaker 1: they have to be whacked on the head and it

287
00:15:17,800 --> 00:15:21,640
Speaker 1: might be that a strong dollar would do it for them.

288
00:15:21,720 --> 00:15:24,200
Speaker 1: That the facts are quite simple. In the last five

289
00:15:24,280 --> 00:15:28,000
Speaker 1: or six years, I think the FED has been distracted

290
00:15:28,040 --> 00:15:32,760
Speaker 1: from its expected tightening path by China twice, Greece at

291
00:15:32,800 --> 00:15:37,560
Speaker 1: least once, and even the UK around Brexit. So stuff happens.

292
00:15:37,920 --> 00:15:40,840
Speaker 1: They get distracted or or they get deflected off the

293
00:15:40,880 --> 00:15:43,120
Speaker 1: tightening path, and I think it's sort of happening. Do

294
00:15:43,280 --> 00:15:47,720
Speaker 1: you know, in in May, I read my colleague David

295
00:15:47,720 --> 00:15:51,480
Speaker 1: Bloom's piece about May. His team they put together a

296
00:15:51,480 --> 00:15:54,680
Speaker 1: descriptive piece about what happened last month. And do you

297
00:15:54,680 --> 00:15:59,840
Speaker 1: know in the month of May, you've got stories around Argentina, India, Brazil,

298
00:16:00,440 --> 00:16:06,040
Speaker 1: obviously Malaysia, most recently Italy and Turkey that I've forgotten

299
00:16:06,080 --> 00:16:08,680
Speaker 1: more than I can remember here. And then there's all

300
00:16:08,680 --> 00:16:12,800
Speaker 1: the big set piece global things like trade wars and

301
00:16:13,680 --> 00:16:17,880
Speaker 1: nuclear deals and Iran and North Korea, and there's so

302
00:16:17,960 --> 00:16:20,360
Speaker 1: much stuff going on. That was one of the most

303
00:16:20,480 --> 00:16:23,760
Speaker 1: volatile months we've had in modern times. Just because the

304
00:16:23,880 --> 00:16:26,320
Speaker 1: VIX doesn't show it doesn't mean to say it wasn't volatile.

305
00:16:26,400 --> 00:16:28,280
Speaker 1: It's a really good point, Steve. So it gets it

306
00:16:28,360 --> 00:16:30,840
Speaker 1: gets to an important question. You've talked about regime change,

307
00:16:30,880 --> 00:16:33,600
Speaker 1: in the regime shift, what's the new regime and what

308
00:16:33,760 --> 00:16:38,040
Speaker 1: is the market. Look, my my regime change comment isn't

309
00:16:38,080 --> 00:16:42,640
Speaker 1: just some assertion. It's based on how the term premium

310
00:16:42,720 --> 00:16:46,760
Speaker 1: has decoupled from the level of yields. Now, I wrote

311
00:16:46,800 --> 00:16:48,560
Speaker 1: a paper about this that was published at the beginning

312
00:16:48,560 --> 00:16:50,960
Speaker 1: of the week with the colleagues, and that this is

313
00:16:51,000 --> 00:16:54,080
Speaker 1: really important during the last fifteen years we've been in

314
00:16:54,120 --> 00:16:57,920
Speaker 1: a queue regime. It's fifteen years, not ten. Because when

315
00:16:58,120 --> 00:17:00,560
Speaker 1: Ben Bernanke wrote that paper, deeply should make sure it

316
00:17:00,600 --> 00:17:03,120
Speaker 1: doesn't happen here. In two thousand and two, the Green

317
00:17:03,240 --> 00:17:07,840
Speaker 1: Span fed actually were expected to implement some of Blankie's policies.

318
00:17:07,880 --> 00:17:10,439
Speaker 1: In two thousand and three. It didn't happen, but the

319
00:17:10,480 --> 00:17:12,399
Speaker 1: market built into the idea they were going to do it,

320
00:17:12,480 --> 00:17:15,000
Speaker 1: so by the rumor sell the fact. Ever since then

321
00:17:15,240 --> 00:17:20,040
Speaker 1: we've had We've got six occurrences of bullish flattening followed

322
00:17:20,040 --> 00:17:24,480
Speaker 1: by irish deepening. Suddenly it changed because the fad is hiking.

323
00:17:24,600 --> 00:17:27,320
Speaker 1: It all changed, right, so so this is scary. They're

324
00:17:27,359 --> 00:17:29,840
Speaker 1: going to flip the curve over. Steve, always great to

325
00:17:29,880 --> 00:17:34,040
Speaker 1: catch out with your very major, very thoughtful, always valuable.

326
00:17:34,119 --> 00:17:37,280
Speaker 1: Thank you very much, Managing Director, Global head of Global

327
00:17:37,320 --> 00:17:40,680
Speaker 1: Fixed Income Research over an HSBC and joining us out

328
00:17:40,720 --> 00:17:56,840
Speaker 1: of out of London. Right now we get clarity and

329
00:17:56,960 --> 00:17:59,400
Speaker 1: the economics of our time is this G seven melling

330
00:17:59,440 --> 00:18:03,480
Speaker 1: occurs that do that with Stephen Roschudo, Yes, Stephen, wonderfully

331
00:18:03,520 --> 00:18:05,199
Speaker 1: have you with us? We heard the president there and

332
00:18:05,920 --> 00:18:10,840
Speaker 1: any number of themes. How does trade fold into the

333
00:18:10,880 --> 00:18:14,679
Speaker 1: economic growth of the world economy? Well, I mean, you know,

334
00:18:14,920 --> 00:18:18,240
Speaker 1: you think it's a zero sum game, but in reality

335
00:18:18,560 --> 00:18:23,400
Speaker 1: it's not. Um. The reality is there are places which

336
00:18:23,400 --> 00:18:26,680
Speaker 1: are more efficient at producing products than there are places

337
00:18:26,680 --> 00:18:29,639
Speaker 1: that aren't efficient in producing products. And the whole concept

338
00:18:29,720 --> 00:18:33,160
Speaker 1: of free trade is to allow that to develop. And

339
00:18:33,240 --> 00:18:36,000
Speaker 1: I think the point that is trying to be driven

340
00:18:36,040 --> 00:18:39,200
Speaker 1: home in here is that it's not about free trade,

341
00:18:39,200 --> 00:18:42,800
Speaker 1: it's about fair trade. And there is this concept that

342
00:18:43,280 --> 00:18:46,680
Speaker 1: tariffs are erected in different places to protect different industries,

343
00:18:46,720 --> 00:18:49,520
Speaker 1: and this is a nationalist thing that every country does.

344
00:18:49,840 --> 00:18:52,000
Speaker 1: And I think for many many years, the United States,

345
00:18:52,040 --> 00:18:54,119
Speaker 1: because it was the largest, most powerful nation in the

346
00:18:54,160 --> 00:18:57,760
Speaker 1: world UM, and used a lot of our willingness to

347
00:18:57,960 --> 00:19:01,600
Speaker 1: trade with people as a tarret in order to get

348
00:19:01,640 --> 00:19:04,320
Speaker 1: them to do political things that we were wishing them

349
00:19:04,320 --> 00:19:06,960
Speaker 1: to do UH in supporting us. And now there's a

350
00:19:06,960 --> 00:19:09,439
Speaker 1: bit of a pushback given the change in the world

351
00:19:09,560 --> 00:19:11,919
Speaker 1: order that is brought about by the fact that China

352
00:19:12,160 --> 00:19:14,520
Speaker 1: is so powerful now. And I think it is a

353
00:19:14,600 --> 00:19:17,880
Speaker 1: recognition of that fundamental change. The president. I think there's

354
00:19:17,880 --> 00:19:20,800
Speaker 1: some value there. Stephen s the President. It was some

355
00:19:20,840 --> 00:19:24,919
Speaker 1: commisary you know, thinking about pardoning Muhammad Ali, but one

356
00:19:24,960 --> 00:19:26,760
Speaker 1: of them was to bring Russia back in from the

357
00:19:26,800 --> 00:19:29,600
Speaker 1: G seven to the G eight, which brings up that

358
00:19:29,720 --> 00:19:34,040
Speaker 1: I m f like debate of what to do with China.

359
00:19:34,440 --> 00:19:36,639
Speaker 1: Should we should we leg out here to a G

360
00:19:36,840 --> 00:19:40,720
Speaker 1: E to G nine, a G ten. I would almost

361
00:19:40,760 --> 00:19:42,520
Speaker 1: come up that you might as well just bring it

362
00:19:42,600 --> 00:19:45,879
Speaker 1: down to a much smaller group than that. UM. You know,

363
00:19:46,000 --> 00:19:49,600
Speaker 1: you should focus in on a really new G three UH,

364
00:19:49,640 --> 00:19:54,359
Speaker 1: and that could be something as narrow as the United States, Germany, UM,

365
00:19:54,560 --> 00:19:59,360
Speaker 1: and China, and those three are really the dominant issues here,

366
00:19:59,400 --> 00:20:02,520
Speaker 1: because the problem with Europe and Europe is not being

367
00:20:02,560 --> 00:20:04,920
Speaker 1: able to get itself moving. Is the fact that there

368
00:20:05,000 --> 00:20:07,920
Speaker 1: is an uncertain degree of unfair trade practice that goes

369
00:20:07,960 --> 00:20:11,639
Speaker 1: on within Europe UM and Germany does not contribute its

370
00:20:11,680 --> 00:20:14,680
Speaker 1: fair share back out to the rest of Europe UM

371
00:20:14,760 --> 00:20:17,040
Speaker 1: and that needs to be addressed. And the same thing

372
00:20:17,160 --> 00:20:19,720
Speaker 1: is true with China and other areas. So yeah, the

373
00:20:19,800 --> 00:20:21,800
Speaker 1: reality is those are the three things you've got to

374
00:20:21,840 --> 00:20:23,840
Speaker 1: focus on. Those are the three countries that have to

375
00:20:23,880 --> 00:20:26,240
Speaker 1: get together and decide how this is all going to

376
00:20:26,320 --> 00:20:28,280
Speaker 1: get done. The rest of it really just falls into

377
00:20:28,280 --> 00:20:30,960
Speaker 1: place around those three. Off the Bloomberg. I can figure

378
00:20:30,960 --> 00:20:33,640
Speaker 1: this out, folks. What's list of g seven countries? Because

379
00:20:33,680 --> 00:20:38,880
Speaker 1: Stephen Shood gives us a clinic, Canada, the host, France, Germany,

380
00:20:39,040 --> 00:20:44,120
Speaker 1: the United Kingdom, Japan, Mr Abbe with the President yesterday, Italy,

381
00:20:44,880 --> 00:20:46,800
Speaker 1: and then there's the United States as well. I mean,

382
00:20:46,840 --> 00:20:50,080
Speaker 1: it really is a dated organization, Steve, isn't it. Yes,

383
00:20:50,119 --> 00:20:52,040
Speaker 1: it is, and that's and that's part of the problem,

384
00:20:52,320 --> 00:20:53,960
Speaker 1: and that's one of the reasons why you have this

385
00:20:54,040 --> 00:20:55,840
Speaker 1: fractured behavior, and I think you also have to keep

386
00:20:55,880 --> 00:20:57,920
Speaker 1: them mind. At the same time that this G seven

387
00:20:57,960 --> 00:21:00,200
Speaker 1: discussion is going on, You've got the UK eat in

388
00:21:00,280 --> 00:21:04,159
Speaker 1: the EU, You've got potential problems within Europe with regard

389
00:21:04,200 --> 00:21:07,399
Speaker 1: to Italy and Spain um and this goes directly back

390
00:21:07,400 --> 00:21:10,000
Speaker 1: to the to the German situation. And you have a

391
00:21:10,080 --> 00:21:13,200
Speaker 1: very very aggressive China on the other side of the equation,

392
00:21:13,200 --> 00:21:16,520
Speaker 1: and that all the infighting going on really distracting from

393
00:21:16,520 --> 00:21:19,919
Speaker 1: the more important issue, which is China. And that's what

394
00:21:20,000 --> 00:21:22,679
Speaker 1: I think, you know, the value that comes out of this,

395
00:21:22,840 --> 00:21:26,240
Speaker 1: I hope will be a refocusing of the decision of

396
00:21:26,320 --> 00:21:28,560
Speaker 1: the discussions to where they need to take place. Good

397
00:21:28,560 --> 00:21:31,840
Speaker 1: morning in syrus Sex FM. I'll get it out serious

398
00:21:32,119 --> 00:21:35,480
Speaker 1: x m H one nineteen across the Great Midwest, Steve.

399
00:21:35,520 --> 00:21:38,480
Speaker 1: One of the constant themes of analysis this morning, whether

400
00:21:38,560 --> 00:21:41,320
Speaker 1: Greg Valier at Horizon or Mike Gallen over in Axios,

401
00:21:41,560 --> 00:21:47,920
Speaker 1: is Midwestern Republicans really upset with their president about these terroffts.

402
00:21:47,960 --> 00:21:52,240
Speaker 1: What is the tip for tet agriculture angle with Germany,

403
00:21:52,400 --> 00:21:55,280
Speaker 1: with France and England. I get it with China, but

404
00:21:55,400 --> 00:21:58,600
Speaker 1: is there an agriculture angle across the Atlantic. Well, I

405
00:21:58,600 --> 00:22:01,840
Speaker 1: don't think there is an agricult agenda off the Atlanta

406
00:22:01,880 --> 00:22:04,360
Speaker 1: across the Atlantic, but I think there is certainly with

407
00:22:04,440 --> 00:22:06,680
Speaker 1: regard to cant and I think there certainly is with

408
00:22:06,720 --> 00:22:09,199
Speaker 1: regard to Mexico that that that could be addressed and

409
00:22:09,200 --> 00:22:12,320
Speaker 1: how things come up through South America through Mexico. So

410
00:22:12,359 --> 00:22:14,000
Speaker 1: I mean, I think that's where you get back into

411
00:22:14,000 --> 00:22:16,320
Speaker 1: the napt To keep in mind he's attacking I'm not

412
00:22:16,359 --> 00:22:18,520
Speaker 1: trying to support Trump other than end I think the

413
00:22:18,600 --> 00:22:23,080
Speaker 1: America first concept is the right concept. Now, how you

414
00:22:23,160 --> 00:22:26,680
Speaker 1: go about executing it we can all argue with and discussed,

415
00:22:26,760 --> 00:22:29,840
Speaker 1: but the America first concept is a valid concept. He

416
00:22:29,920 --> 00:22:32,760
Speaker 1: may not be approaching it properly, but all these specific

417
00:22:32,760 --> 00:22:35,439
Speaker 1: trade deals that have been done have been done based

418
00:22:35,480 --> 00:22:37,480
Speaker 1: on an idea that the United States is the largest,

419
00:22:37,480 --> 00:22:39,720
Speaker 1: most powerful nation in the world, and we have to

420
00:22:39,800 --> 00:22:42,560
Speaker 1: use our strength to help pull up other places in

421
00:22:42,680 --> 00:22:45,159
Speaker 1: order to keep the world in a more stable, peaceful

422
00:22:45,240 --> 00:22:48,239
Speaker 1: environment that dynamic no longer expects. Well, it's one more

423
00:22:48,320 --> 00:22:50,960
Speaker 1: question in the wax philosophical here, as he's talking about

424
00:22:52,119 --> 00:22:55,560
Speaker 1: milk terroriffs on Canada, you know you're protecting your cows.

425
00:22:55,560 --> 00:22:58,119
Speaker 1: You're protecting the farmers. I get all that. All I

426
00:22:58,119 --> 00:23:02,080
Speaker 1: can remember Steve was reading about feta cheese in the

427
00:23:02,160 --> 00:23:07,160
Speaker 1: trade battle between Greece and Bulgaria. Over can the Bulgarians

428
00:23:07,200 --> 00:23:10,560
Speaker 1: say feta cheese? And this is like a serious EU debate.

429
00:23:10,960 --> 00:23:13,919
Speaker 1: So bring that over here to the trade that we

430
00:23:14,040 --> 00:23:18,040
Speaker 1: have today. I mean, consumers worldwide really don't care anymore,

431
00:23:18,080 --> 00:23:22,439
Speaker 1: do they. I mean, to the great extent, prices have

432
00:23:22,640 --> 00:23:26,280
Speaker 1: been stabilized and prices have been held back. Consumers are

433
00:23:26,359 --> 00:23:30,440
Speaker 1: much more interested in the job aspect, the wage aspect

434
00:23:30,480 --> 00:23:33,320
Speaker 1: that comes out of this at this particular juncture. And

435
00:23:33,359 --> 00:23:37,720
Speaker 1: the reality is given the imbalances and trade as simple mathematics,

436
00:23:37,840 --> 00:23:39,919
Speaker 1: if you reverse that trade deficit, how many jobs are

437
00:23:39,960 --> 00:23:43,240
Speaker 1: going to create? Now that's that simple, Steve, Thank you

438
00:23:43,280 --> 00:24:00,600
Speaker 1: so much. Stephen shot on missoo on duty there, Abby,

439
00:24:00,680 --> 00:24:03,119
Speaker 1: Joseph Cohen, if Goldman sachs, we do not care what

440
00:24:03,200 --> 00:24:05,959
Speaker 1: the stock market is going to do, Abby, very quickly

441
00:24:05,960 --> 00:24:09,600
Speaker 1: here the Washington Capitals finally done your thoughts on Mr

442
00:24:10,160 --> 00:24:14,959
Speaker 1: Kin lifting that Stanley cup. I was, of course delighted

443
00:24:15,119 --> 00:24:18,439
Speaker 1: to see Mrkin lift that Stanley cup. As a long

444
00:24:18,600 --> 00:24:21,919
Speaker 1: time Caps fan, But I have to say this was

445
00:24:22,000 --> 00:24:26,239
Speaker 1: going to be a Cinderella Stanley Cup final regardless of

446
00:24:26,240 --> 00:24:31,080
Speaker 1: which team won. I mean, the Vegas team was wonderful.

447
00:24:31,160 --> 00:24:35,280
Speaker 1: They had a fabulous season, really record breaking Mark Andre

448
00:24:35,480 --> 00:24:40,720
Speaker 1: Fleury also was simply outstanding in all these games. But

449
00:24:40,840 --> 00:24:44,919
Speaker 1: to seekin um lift that Stanley Cup was thrilling. But

450
00:24:44,960 --> 00:24:47,320
Speaker 1: I'll tell you what was more thrilling, and that was

451
00:24:47,400 --> 00:24:51,760
Speaker 1: the handshake line at Yes where the two teams greeted

452
00:24:51,800 --> 00:24:55,600
Speaker 1: each other, not just in a polite manner, but there

453
00:24:55,600 --> 00:25:00,000
Speaker 1: were warm hugs and sincere congratulations. Make America great again

454
00:25:00,000 --> 00:25:02,480
Speaker 1: as a zeitgeist right now, I'm as Cohen. The basic

455
00:25:02,560 --> 00:25:06,200
Speaker 1: idea here is the Washington capitals are as international as

456
00:25:06,240 --> 00:25:09,840
Speaker 1: you get. I'll Vetchan from Rushka, t j o'she from Everett,

457
00:25:10,560 --> 00:25:15,040
Speaker 1: Washington State, Bruce or Pick from UH from San Francisco,

458
00:25:15,160 --> 00:25:19,119
Speaker 1: and Ocurs Haltby from Saskatchewan. That's the spirit that's missing

459
00:25:19,160 --> 00:25:22,879
Speaker 1: in our trade debate, isn't it. Absolutely? And to quote

460
00:25:22,880 --> 00:25:27,360
Speaker 1: the line from Hamilton's Immigrants, they get the job done. Um.

461
00:25:27,359 --> 00:25:29,320
Speaker 1: And one of the things that's so great to see

462
00:25:29,359 --> 00:25:32,800
Speaker 1: about hockey and some of our other professional sports as well,

463
00:25:33,320 --> 00:25:36,879
Speaker 1: is the international flavor. But let's forget it's not just

464
00:25:37,040 --> 00:25:40,040
Speaker 1: that industry. There are so many others in the United

465
00:25:40,080 --> 00:25:44,120
Speaker 1: States where we have benefited immensely from our immigrant population.

466
00:25:44,600 --> 00:25:48,040
Speaker 1: Joseph Cohen thirty seconds your view of the equity markets

467
00:25:48,119 --> 00:25:51,359
Speaker 1: now twenty five thousand, Can you own equities at this point?

468
00:25:52,119 --> 00:25:57,720
Speaker 1: I think equities UM are at roughly fair value right now. UM.

469
00:25:57,880 --> 00:26:00,280
Speaker 1: We may have already seen the highs of of the

470
00:26:00,359 --> 00:26:03,960
Speaker 1: year off the SNP and and the Dow based upon

471
00:26:04,040 --> 00:26:06,760
Speaker 1: our analysis of earnings and cash flow. What I do

472
00:26:06,840 --> 00:26:10,560
Speaker 1: worry about is that when you're at fair value UM,

473
00:26:10,600 --> 00:26:13,399
Speaker 1: there can be mistakes, and there can be mistakes for

474
00:26:13,480 --> 00:26:18,840
Speaker 1: example in policy government policy. There can also be disappointing report.

475
00:26:19,280 --> 00:26:21,120
Speaker 1: So I think we need to be very careful. We're

476
00:26:21,160 --> 00:26:24,480
Speaker 1: now in a period where it's not just the rising tide.

477
00:26:24,800 --> 00:26:27,960
Speaker 1: You really have to select the ship properly. Joseph Cohen,

478
00:26:28,080 --> 00:26:30,520
Speaker 1: thank you so much on the equity markets and Hurt

479
00:26:30,600 --> 00:26:42,520
Speaker 1: Washington at Capitals. Thanks for listening to the Bloomberg Surveillance podcast.

480
00:26:42,880 --> 00:26:47,800
Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or

481
00:26:47,960 --> 00:26:52,639
Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom Keane.

482
00:26:53,200 --> 00:26:56,880
Speaker 1: Before the podcast. You can always catch us worldwide. I'm

483
00:26:56,920 --> 00:27:06,040
Speaker 1: Bloomberg Radio s