1 00:00:00,120 --> 00:00:02,920 Speaker 1: Brought you by Bank of America Mary Lynch. Investing in 2 00:00:03,000 --> 00:00:07,840 Speaker 1: local communities, economies and a sustainable future. That's the power 3 00:00:08,080 --> 00:00:12,360 Speaker 1: of global connections. Mary Lynch, Pierce Fenner, and Smith Incorporated 4 00:00:12,760 --> 00:00:27,400 Speaker 1: member s I p C. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:27,840 --> 00:00:31,520 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:31,560 --> 00:00:36,600 Speaker 1: insight from the best in economics, finance, investment, and international relations. 7 00:00:37,000 --> 00:00:41,600 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot Com, and 8 00:00:41,680 --> 00:00:49,360 Speaker 1: of course, on the Bloomberg. Rob Carnell joins us now 9 00:00:49,360 --> 00:00:52,879 Speaker 1: he's e's chief International Commist. Joinings year in Bloomberg's European 10 00:00:52,920 --> 00:00:55,880 Speaker 1: headquarters in London. And let's just take stock of where 11 00:00:55,920 --> 00:00:57,560 Speaker 1: things that stand right now. The swoon that we've seen 12 00:00:57,560 --> 00:01:00,440 Speaker 1: about the prospects for new economic policy coming from President 13 00:01:00,440 --> 00:01:03,240 Speaker 1: elect Donald Trump. Are we seeing the markets treat that 14 00:01:03,280 --> 00:01:06,000 Speaker 1: more soberly and now there were such wild enthusiasm after 15 00:01:06,040 --> 00:01:09,160 Speaker 1: the elections. Are we seeing some reevaluation or taking stock 16 00:01:09,200 --> 00:01:11,280 Speaker 1: of the fact that may not happen as people would 17 00:01:11,319 --> 00:01:12,759 Speaker 1: like it to happen, or may not happen as quickly, 18 00:01:13,120 --> 00:01:15,440 Speaker 1: but we certainly don't think it will happen quite as quickly, 19 00:01:15,560 --> 00:01:17,840 Speaker 1: or quite to the extent that I think people thought 20 00:01:17,880 --> 00:01:22,240 Speaker 1: in the immediate aftermath of the election result. However, we 21 00:01:22,280 --> 00:01:25,400 Speaker 1: will over the next couple of weeks get the president's budget, 22 00:01:25,440 --> 00:01:27,400 Speaker 1: you know, which is you know, kind of Christmas president 23 00:01:27,480 --> 00:01:29,760 Speaker 1: wish list, which will have everything in it. I mean, 24 00:01:29,880 --> 00:01:32,160 Speaker 1: you know how these were you ask for everything on 25 00:01:32,200 --> 00:01:34,480 Speaker 1: the assumption that you'll only get some of it. So 26 00:01:34,520 --> 00:01:36,560 Speaker 1: I think that could provide another boost. But I think 27 00:01:36,560 --> 00:01:38,160 Speaker 1: in the in the very short term, we have seen 28 00:01:38,160 --> 00:01:40,800 Speaker 1: a bit of a not so much a reevaluation. Just 29 00:01:41,160 --> 00:01:42,959 Speaker 1: we've gone a bit too far. Let's just take stock 30 00:01:43,000 --> 00:01:44,759 Speaker 1: a little bit and wait and see what happens. Now. 31 00:01:45,080 --> 00:01:46,760 Speaker 1: You mentioned that Christmas list, and I just think of 32 00:01:46,800 --> 00:01:48,840 Speaker 1: the fact that we haven't really had a traditional budget 33 00:01:48,840 --> 00:01:52,040 Speaker 1: process in Washington, dcver so long. Now that regular order 34 00:01:52,080 --> 00:01:53,680 Speaker 1: seems like a thing of the past. Do you expect 35 00:01:53,720 --> 00:01:56,200 Speaker 1: that we'll see a return to it? Will have Republicans 36 00:01:56,200 --> 00:01:58,400 Speaker 1: controlling both Houses of Congress and the White Houses, Well, 37 00:01:58,400 --> 00:02:01,080 Speaker 1: do you expect to return to was traditionally the process 38 00:02:01,080 --> 00:02:03,200 Speaker 1: in Washington regular order? Getting a budget from the White House, 39 00:02:03,200 --> 00:02:05,280 Speaker 1: getting a budget from Congress, Not having all of these 40 00:02:05,280 --> 00:02:07,840 Speaker 1: continuing resolutions and staff gaps. Yeah, I think that that 41 00:02:07,960 --> 00:02:10,120 Speaker 1: seems to be the most likely way of it. I mean, 42 00:02:10,120 --> 00:02:13,280 Speaker 1: I dare say that Donald Trump won't be totally delighted 43 00:02:13,280 --> 00:02:15,600 Speaker 1: with everything that Congress suggests he can have in the end, 44 00:02:15,639 --> 00:02:17,560 Speaker 1: but I think he's got room to be optimistic that 45 00:02:17,600 --> 00:02:20,200 Speaker 1: at least on the tax cutting front, they'll give him something. 46 00:02:20,240 --> 00:02:22,079 Speaker 1: Maybe not as much and not as quickly, and maybe 47 00:02:22,120 --> 00:02:25,480 Speaker 1: it'll be more staged, but there's certainly room for improvement 48 00:02:25,520 --> 00:02:26,960 Speaker 1: on taxes. And let's place it. What's not to like 49 00:02:27,000 --> 00:02:29,480 Speaker 1: about lower taxes? Everybody loves that. There is so much 50 00:02:29,520 --> 00:02:31,400 Speaker 1: uncertancy right now here in the UK, here in the US, 51 00:02:31,480 --> 00:02:34,040 Speaker 1: especially when it comes to trade policy. We were looking 52 00:02:34,040 --> 00:02:35,840 Speaker 1: at the remarks from Trees and made the Prime Minister 53 00:02:35,840 --> 00:02:37,760 Speaker 1: over the weekend looking for some guidance on what trade 54 00:02:37,760 --> 00:02:40,120 Speaker 1: policy in the in the UK might look like going forward. 55 00:02:40,320 --> 00:02:41,880 Speaker 1: We're certainly doing that in the U S as well. 56 00:02:41,919 --> 00:02:43,720 Speaker 1: You've seen the tweets is as we all have here. 57 00:02:44,160 --> 00:02:46,240 Speaker 1: Do we have a better sense of what Donald Trump's 58 00:02:46,280 --> 00:02:48,000 Speaker 1: trade policy is going to be going forward? What what 59 00:02:48,040 --> 00:02:50,600 Speaker 1: do you look to for for evidence of that? Yeah? Well, 60 00:02:50,639 --> 00:02:52,760 Speaker 1: I think we've been looking at this really long and 61 00:02:52,800 --> 00:02:54,840 Speaker 1: hard over the last couple of weeks to try and 62 00:02:54,840 --> 00:02:56,600 Speaker 1: get a sense of this. This is the really crucial 63 00:02:56,639 --> 00:02:58,960 Speaker 1: fact that the fiscal side is interesting and it's important, 64 00:02:59,240 --> 00:03:02,079 Speaker 1: and it does make it perence to domestic domestic growth, 65 00:03:02,320 --> 00:03:04,280 Speaker 1: But trades the really big one, that's the one he 66 00:03:04,280 --> 00:03:07,920 Speaker 1: can really mess up on um And with the appointments 67 00:03:07,960 --> 00:03:12,639 Speaker 1: of four very key trade members of his his cabinet 68 00:03:12,680 --> 00:03:16,080 Speaker 1: and his team, all of whom have been extremely outspoken 69 00:03:16,080 --> 00:03:20,680 Speaker 1: and negative about China and Chinese trade, that the rumors 70 00:03:20,720 --> 00:03:22,680 Speaker 1: that there is going to be a sort of blanket 71 00:03:23,240 --> 00:03:26,160 Speaker 1: import tariff going in that is beginning to make us 72 00:03:26,200 --> 00:03:27,680 Speaker 1: think or maybe it is going to be a tougher 73 00:03:27,720 --> 00:03:30,919 Speaker 1: trade Trump than we thought initially, and that could also 74 00:03:31,000 --> 00:03:33,360 Speaker 1: have an impact on market sentiment. I was talking with 75 00:03:33,400 --> 00:03:36,040 Speaker 1: that Michael from in the US Trade Representative yesterdays of 76 00:03:36,040 --> 00:03:37,880 Speaker 1: an exit interview with him as he prepares to leave 77 00:03:37,880 --> 00:03:39,400 Speaker 1: that office. He's had a tough go of it, trying 78 00:03:39,440 --> 00:03:41,600 Speaker 1: to push through the Trains Pacific partnership to to no avail, 79 00:03:41,640 --> 00:03:43,840 Speaker 1: maybe shaking his fist at the heavens as the ship 80 00:03:44,200 --> 00:03:46,920 Speaker 1: went down. And one thing we talked about was the 81 00:03:46,960 --> 00:03:49,560 Speaker 1: way that his office looks to be reconfigured at going forward. 82 00:03:49,600 --> 00:03:52,920 Speaker 1: You mentioned the role of commerce in the new term. 83 00:03:52,960 --> 00:03:55,360 Speaker 1: It seems like Wilbur Ross might take a larger role 84 00:03:55,400 --> 00:03:58,200 Speaker 1: in negotiating trade deals. There is this Trade Council chaired 85 00:03:58,200 --> 00:04:00,840 Speaker 1: by Peter Navarro. Is there a risk to that and 86 00:04:00,840 --> 00:04:02,800 Speaker 1: in not having it as centralized as it as it 87 00:04:02,840 --> 00:04:06,280 Speaker 1: has been the negotiation of four trade deals? The person 88 00:04:06,280 --> 00:04:08,760 Speaker 1: bringing about enforcement actions the w t O. Yeah, I'm 89 00:04:08,800 --> 00:04:12,800 Speaker 1: not sure. I think the era of big multilateral trade 90 00:04:12,840 --> 00:04:15,920 Speaker 1: deals really is pretty much over. I think a lot 91 00:04:15,960 --> 00:04:18,080 Speaker 1: of countries have realized that they can actually make much 92 00:04:18,120 --> 00:04:22,479 Speaker 1: quicker progress and much more more sort of substantial progress 93 00:04:22,560 --> 00:04:26,840 Speaker 1: on individual, smarter bilateral trade deals. I think there's gonna 94 00:04:26,839 --> 00:04:28,320 Speaker 1: be a lot more of that going on, and for 95 00:04:28,360 --> 00:04:31,440 Speaker 1: that you don't need such a centralized mechanism. You look 96 00:04:31,440 --> 00:04:33,719 Speaker 1: at the balance that you have to strike between free 97 00:04:33,760 --> 00:04:36,599 Speaker 1: trade and security, and that's certainly in acute focus here 98 00:04:37,320 --> 00:04:40,839 Speaker 1: in the UK and in Europe. When you're making that balance, 99 00:04:41,000 --> 00:04:43,240 Speaker 1: is security always going to win out? How do you? 100 00:04:43,279 --> 00:04:45,599 Speaker 1: How do you tew that line? And that's that's a 101 00:04:45,640 --> 00:04:47,640 Speaker 1: really tough one. I mean, I think security is often 102 00:04:47,680 --> 00:04:50,560 Speaker 1: an excuse that the policymakers will just fall back on 103 00:04:50,680 --> 00:04:52,760 Speaker 1: for anything they don't particularly like, or anything that they 104 00:04:52,800 --> 00:04:54,479 Speaker 1: don't think it's going to go down particularly well with 105 00:04:54,560 --> 00:04:56,960 Speaker 1: the with the general public. I mean, it has to 106 00:04:56,960 --> 00:04:58,680 Speaker 1: be a fact that you bear in mind, in particular 107 00:04:58,720 --> 00:05:01,919 Speaker 1: when you're talking about energy. It's of those crucial factors 108 00:05:01,960 --> 00:05:05,960 Speaker 1: that has to be taken into account. But I'm not sure. 109 00:05:06,000 --> 00:05:07,600 Speaker 1: I think it is a bit of a scapegoat at times, 110 00:05:07,600 --> 00:05:09,240 Speaker 1: so when they want to do what they want to do. 111 00:05:09,640 --> 00:05:11,880 Speaker 1: I know Tom wants to talk a bit about FED policy. 112 00:05:11,920 --> 00:05:15,279 Speaker 1: He was hearing on your knowledge of the Rob rob 113 00:05:15,360 --> 00:05:18,680 Speaker 1: Is is, I consider the major London acts on actual 114 00:05:18,760 --> 00:05:21,440 Speaker 1: FED policy, and you have a huge advantage of that 115 00:05:21,640 --> 00:05:25,240 Speaker 1: of being distant. There's something about we've learned that over 116 00:05:25,279 --> 00:05:28,720 Speaker 1: the years. It's something about an American economist in Minnesota 117 00:05:28,800 --> 00:05:32,520 Speaker 1: or North Carolina's Dennis Cartman is you have a big 118 00:05:32,560 --> 00:05:35,839 Speaker 1: advantage being in London too. To our American listeners. What 119 00:05:35,920 --> 00:05:39,880 Speaker 1: is the major distinction between the Washington Central Bank and 120 00:05:39,920 --> 00:05:44,839 Speaker 1: the London Central Bank. I would say that the FED 121 00:05:45,000 --> 00:05:47,640 Speaker 1: is is a much more political animal. I think the 122 00:05:47,640 --> 00:05:49,880 Speaker 1: Bank of England is is also political. But of all 123 00:05:49,880 --> 00:05:52,919 Speaker 1: the central banks, I think the all the independent central 124 00:05:52,960 --> 00:05:55,160 Speaker 1: banks I'd say the FED is possibly the least independent. 125 00:05:55,200 --> 00:05:58,080 Speaker 1: I think it's much more a tune that it's not 126 00:05:58,200 --> 00:06:01,800 Speaker 1: driven by it's not not forced by or cajoled by. 127 00:06:01,880 --> 00:06:04,880 Speaker 1: But I think it's certainly influenced far more by politics 128 00:06:04,960 --> 00:06:07,479 Speaker 1: than than the most of the other central banks around 129 00:06:07,480 --> 00:06:10,560 Speaker 1: the G seven. Which goes to Mr Trump in the 130 00:06:10,600 --> 00:06:14,200 Speaker 1: House Financial Services Committee, etcetera. Which will you watch? Will 131 00:06:14,200 --> 00:06:17,279 Speaker 1: you watch Executive Bridge or the Republicans on the Hill 132 00:06:18,040 --> 00:06:22,440 Speaker 1: to see a change in tone towards our central bank? Yeah, 133 00:06:22,560 --> 00:06:24,640 Speaker 1: I'm not I'm not sure what the answer to that 134 00:06:24,680 --> 00:06:26,520 Speaker 1: one is. I mean, I think that there's there's very 135 00:06:26,600 --> 00:06:29,719 Speaker 1: definitely a sense from Donald Trump that he would like 136 00:06:29,880 --> 00:06:33,080 Speaker 1: to have more control over the FED. Um. I mean, 137 00:06:33,160 --> 00:06:37,080 Speaker 1: there's been the talk about auditing the FED. I mean, 138 00:06:37,120 --> 00:06:39,400 Speaker 1: of course, the FED is already audited as a as 139 00:06:39,400 --> 00:06:42,479 Speaker 1: a financial institution, but it's it's monetary policy decisions have 140 00:06:42,560 --> 00:06:45,280 Speaker 1: not been audited. I'm interested to know how that's going 141 00:06:45,320 --> 00:06:47,040 Speaker 1: to go. I mean that that clearly makes the FED 142 00:06:47,080 --> 00:06:50,400 Speaker 1: a less and even less independent at central I love 143 00:06:50,440 --> 00:06:54,400 Speaker 1: this David being in London and talking about Richmond, Virginia. 144 00:06:55,040 --> 00:07:00,919 Speaker 1: Mr Whacker retires and there's a character to Albrons, Richmond fed. 145 00:07:01,080 --> 00:07:04,480 Speaker 1: It has a certain tone. Is there a Carnels shortlist? 146 00:07:05,040 --> 00:07:08,360 Speaker 1: Who will darken the door in Richmond? Marvin Goodfriends always 147 00:07:08,360 --> 00:07:10,880 Speaker 1: on the list at Carnegie Mellon that there isn't. I'm 148 00:07:10,920 --> 00:07:13,920 Speaker 1: I'm always fascinated whoever comes in. I mean, you go 149 00:07:14,000 --> 00:07:16,560 Speaker 1: through this this ritual process where where the new b 150 00:07:16,760 --> 00:07:19,080 Speaker 1: has to be evaluated, and they typically tow the line 151 00:07:19,360 --> 00:07:21,400 Speaker 1: and behaving very much a sort of neutral fashion at 152 00:07:21,440 --> 00:07:23,760 Speaker 1: least the first three meetings as they get their their 153 00:07:23,800 --> 00:07:26,040 Speaker 1: toe under the table and work out exactly where they 154 00:07:26,040 --> 00:07:28,679 Speaker 1: sit and how the process works. And then you start 155 00:07:28,720 --> 00:07:31,560 Speaker 1: to see the see them throw their their weight around, 156 00:07:31,760 --> 00:07:35,800 Speaker 1: and of course they are reflecting the the regional reality 157 00:07:35,880 --> 00:07:37,880 Speaker 1: of of where they're coming from. And so you know, 158 00:07:38,120 --> 00:07:40,800 Speaker 1: very different economist on all around the US. They're all 159 00:07:40,800 --> 00:07:44,400 Speaker 1: original folks. And you really wonder how our new president will, 160 00:07:44,760 --> 00:07:48,320 Speaker 1: how everyone will adapt and adjust to the demands of 161 00:07:48,320 --> 00:07:52,640 Speaker 1: a new executive branch. From London, David gurn Tim Keene 162 00:07:52,640 --> 00:07:56,040 Speaker 1: Bloomberg surveillance here in the United Kingdom, around the world, 163 00:07:56,080 --> 00:07:58,880 Speaker 1: across America. David, you do a data check and you 164 00:07:58,960 --> 00:08:01,760 Speaker 1: just migrate immediately LA to pay so and lear the 165 00:08:01,760 --> 00:08:05,680 Speaker 1: emerging market stories are really something on that depreciation seemingly 166 00:08:05,760 --> 00:08:07,880 Speaker 1: continuing there. You've talked about Jeff Lackard. Think he's a 167 00:08:07,920 --> 00:08:09,720 Speaker 1: guy who started out at the Richmond Fed, was an 168 00:08:09,760 --> 00:08:11,720 Speaker 1: economist in the research department at the Richmond Fed. That 169 00:08:11,720 --> 00:08:13,760 Speaker 1: will be something that'll be difficult to replace as well 170 00:08:13,800 --> 00:08:16,400 Speaker 1: as someone with that much institutional knowledge of the place. 171 00:08:16,480 --> 00:08:18,960 Speaker 1: But you're right looking at currencies this morning, Sterling as well. 172 00:08:19,000 --> 00:08:22,600 Speaker 1: I've been looking at that, seeing that weekend at eighteen 173 00:08:22,720 --> 00:08:25,600 Speaker 1: right now in Turkish earlier. With a new leg up, 174 00:08:25,600 --> 00:08:29,200 Speaker 1: it's going to go through the recent weakness that we've seen. 175 00:08:29,760 --> 00:08:31,880 Speaker 1: Uh this morning, Rob Carnell with us with the I 176 00:08:32,040 --> 00:08:34,680 Speaker 1: n G. As we look at the Central Bank of 177 00:08:34,800 --> 00:08:38,200 Speaker 1: the United States. We're talking in the break about Bullard, 178 00:08:38,200 --> 00:08:41,800 Speaker 1: a lot laquer retireant Richmond Bullard of St. Louis has 179 00:08:41,800 --> 00:08:44,240 Speaker 1: had a unique impact St. Louis known as a research 180 00:08:44,320 --> 00:08:47,240 Speaker 1: house with decades and of course they're great statistical and 181 00:08:47,360 --> 00:08:50,680 Speaker 1: chart base that they have, But the splash last year 182 00:08:51,200 --> 00:08:54,079 Speaker 1: was a short paper, a little paper. Even Bullard admitted 183 00:08:54,120 --> 00:08:57,200 Speaker 1: that about the X axis and that guys like you, 184 00:08:57,320 --> 00:08:59,240 Speaker 1: Rob will always look at the Y axis, the up 185 00:08:59,280 --> 00:09:01,760 Speaker 1: and down or whatever the chart is, and the time 186 00:09:01,800 --> 00:09:06,080 Speaker 1: function is usually ignored. Bullard says, don't ignore the chime 187 00:09:06,120 --> 00:09:10,160 Speaker 1: time function. And where we're heading is regime change. We 188 00:09:10,240 --> 00:09:14,199 Speaker 1: get somewhere, things change, the FED changes. Do you believe 189 00:09:14,240 --> 00:09:19,040 Speaker 1: that's feasible we ever implement Bullard regime change? I think 190 00:09:19,040 --> 00:09:20,640 Speaker 1: it's I think it is feasible. I think it's a 191 00:09:20,720 --> 00:09:23,120 Speaker 1: very accurate description of the world we live in. We 192 00:09:23,440 --> 00:09:26,959 Speaker 1: you know that the US and much of the developed world, Europe, 193 00:09:26,960 --> 00:09:30,599 Speaker 1: the UK has been in this low growth, low productivity 194 00:09:30,679 --> 00:09:33,760 Speaker 1: environment for a very long period now. I think Bullard's 195 00:09:33,800 --> 00:09:36,240 Speaker 1: point was was along the lines of it's difficult to 196 00:09:36,240 --> 00:09:39,280 Speaker 1: see how that's going to change anytime soon, but at 197 00:09:39,320 --> 00:09:41,040 Speaker 1: some point it actually will, and when it does, it 198 00:09:41,040 --> 00:09:44,079 Speaker 1: will happen in a fairly step like fashion. That's the 199 00:09:44,120 --> 00:09:46,560 Speaker 1: point of which the FED or whatever central bank is 200 00:09:46,559 --> 00:09:49,160 Speaker 1: involved will have to react very very rapidly or find 201 00:09:49,160 --> 00:09:52,000 Speaker 1: itself massively behind the curve, whether or not central banks 202 00:09:52,080 --> 00:09:54,280 Speaker 1: can do that in reality. As another question, I have 203 00:09:54,320 --> 00:09:57,520 Speaker 1: my doubts. How do you process what what FED presidents say, 204 00:09:57,520 --> 00:09:59,560 Speaker 1: what they think, what they're believing it at this point, 205 00:09:59,559 --> 00:10:01,360 Speaker 1: how are you are you reading? Every speech? Is very 206 00:10:01,360 --> 00:10:03,440 Speaker 1: particular present, you don't hear enough from that you'd like 207 00:10:03,520 --> 00:10:05,120 Speaker 1: to hear more from. Tom and I were talking a 208 00:10:05,120 --> 00:10:07,040 Speaker 1: few weeks back about how there can be a cacophony 209 00:10:07,080 --> 00:10:08,840 Speaker 1: here where you're just trying to figure out if there's 210 00:10:08,880 --> 00:10:11,559 Speaker 1: some consensus among all of these participants in the films 211 00:10:11,640 --> 00:10:13,560 Speaker 1: of a system, how do you how do you process all? 212 00:10:14,040 --> 00:10:16,680 Speaker 1: I do sometimes wonder whether it's it's worth the effort, 213 00:10:17,200 --> 00:10:19,400 Speaker 1: partly because you know, I always felt that the way 214 00:10:19,440 --> 00:10:23,480 Speaker 1: that the FED was structured, they're the insiders in effect, 215 00:10:23,600 --> 00:10:26,160 Speaker 1: rule the roost what they want to have with the governors, 216 00:10:26,200 --> 00:10:32,040 Speaker 1: the governors, the New York President, New York Fed Vice chair, etcetera. Um, 217 00:10:32,400 --> 00:10:36,280 Speaker 1: they basically set policy and if the regional FED president 218 00:10:36,400 --> 00:10:38,400 Speaker 1: come alongside, all well and good, because it makes it 219 00:10:38,440 --> 00:10:40,840 Speaker 1: look as if everybody is unanimous. But I'm not sure 220 00:10:40,880 --> 00:10:44,000 Speaker 1: that on their own, those those four rotating regional FED 221 00:10:45,000 --> 00:10:48,800 Speaker 1: members can never really change policy unless it had already 222 00:10:48,800 --> 00:10:52,720 Speaker 1: been agreed by by the insiders. And you know, typically 223 00:10:52,720 --> 00:10:55,840 Speaker 1: just just awaiting means that's very unlikely to happen. Interesting 224 00:10:55,840 --> 00:10:58,280 Speaker 1: for the debate, and often, I think in Bullard's case, 225 00:10:58,320 --> 00:11:00,439 Speaker 1: gives you a sense of where the debates going, but 226 00:11:00,520 --> 00:11:03,360 Speaker 1: doesn't necessarily give you any sense of exactly what's going 227 00:11:03,400 --> 00:11:05,800 Speaker 1: to happen next. Tom mentioned that the politics that the 228 00:11:05,800 --> 00:11:08,199 Speaker 1: Fired is having to deal with your looking ahead to 229 00:11:08,440 --> 00:11:11,240 Speaker 1: to this year and beyond. How are we going to 230 00:11:11,280 --> 00:11:13,679 Speaker 1: strike a balance here between what the FED wants to do, 231 00:11:13,720 --> 00:11:16,080 Speaker 1: what the FED is doing, what Congress wants the FED 232 00:11:16,120 --> 00:11:18,120 Speaker 1: to be doing, and the White House. I mean, it 233 00:11:18,120 --> 00:11:20,199 Speaker 1: seems like this is going to be particularly thorny field 234 00:11:20,240 --> 00:11:23,319 Speaker 1: for for all of these participants to have to navigate here. 235 00:11:24,040 --> 00:11:26,600 Speaker 1: How difficult is it going to be? Very difficult? In short? 236 00:11:26,640 --> 00:11:29,200 Speaker 1: I mean, I wouldn't want to be cheering the FED 237 00:11:29,320 --> 00:11:33,120 Speaker 1: right now. You're not going to please all the people 238 00:11:33,160 --> 00:11:35,280 Speaker 1: all the time. In fact, you're probably likely to upset 239 00:11:35,320 --> 00:11:37,560 Speaker 1: most of the people most of the time. With FED 240 00:11:37,600 --> 00:11:39,400 Speaker 1: policy this year, they are going to be at least 241 00:11:39,400 --> 00:11:42,480 Speaker 1: attempting to hike rates um. If they respond to the 242 00:11:42,360 --> 00:11:45,160 Speaker 1: to the macro data um, they're going to be seen 243 00:11:45,200 --> 00:11:47,680 Speaker 1: as taking the punch bowl away from the party, et cetera. 244 00:11:47,760 --> 00:11:50,080 Speaker 1: You know, the usual cliches. If they don't, they're going 245 00:11:50,080 --> 00:11:53,040 Speaker 1: to be criticized for being behind the curve. Um. You know, 246 00:11:53,080 --> 00:11:55,439 Speaker 1: they've they've been criticized in the past producing the stock 247 00:11:55,480 --> 00:11:59,400 Speaker 1: market supporting politicians. Does that change under under President elector 248 00:11:59,480 --> 00:12:02,360 Speaker 1: Trump wants he gets inaugurated, will he like them to 249 00:12:02,400 --> 00:12:05,080 Speaker 1: choose the stock market? It's a very difficult one. How 250 00:12:05,120 --> 00:12:08,080 Speaker 1: how can you how can you operate in those environments? Well, 251 00:12:08,080 --> 00:12:11,680 Speaker 1: that's the unexpected that maybe we'll begin to hear about today, 252 00:12:11,800 --> 00:12:14,040 Speaker 1: this press cars. When was the last press curds of 253 00:12:14,160 --> 00:12:17,679 Speaker 1: David Girl? Was it her fifty days ago? D sixty seven? 254 00:12:17,679 --> 00:12:20,600 Speaker 1: I believe seven? Yeah, I mean maybe it begins to 255 00:12:20,640 --> 00:12:25,160 Speaker 1: do with press conference. What's Rob Colonel's unexpected for Janet 256 00:12:25,200 --> 00:12:29,240 Speaker 1: Yellen and for our economics that underpins all that we 257 00:12:29,320 --> 00:12:32,040 Speaker 1: do well? Her unexpected? I think it's it's it's what 258 00:12:32,080 --> 00:12:33,960 Speaker 1: they deliver in the in the next couple of months. 259 00:12:33,960 --> 00:12:36,199 Speaker 1: I don't think anyone's really expecting them to move in March. 260 00:12:36,520 --> 00:12:39,160 Speaker 1: I'm struggling to think why they wouldn't. Can you mentioned earlier? 261 00:12:39,200 --> 00:12:42,720 Speaker 1: I believe in Bloomberg Television wage growth is just the mystery. 262 00:12:43,400 --> 00:12:45,600 Speaker 1: This is the one that's that's it's the dog that's 263 00:12:45,600 --> 00:12:48,600 Speaker 1: finally barking. We are now beginning to see wages growth 264 00:12:48,640 --> 00:12:51,319 Speaker 1: picking up and picking up in a reasonable fashion. What 265 00:12:51,600 --> 00:12:54,560 Speaker 1: happens if the core rate of inflation, we know the 266 00:12:54,559 --> 00:12:57,400 Speaker 1: headline headline rate of inflation is going to pay up 267 00:12:57,400 --> 00:13:00,360 Speaker 1: in the next two months and push us it into 268 00:13:00,360 --> 00:13:02,600 Speaker 1: the mid twos, into into sort of levels where you 269 00:13:02,600 --> 00:13:04,640 Speaker 1: wouldn't expect to see rates as low as they are. 270 00:13:04,880 --> 00:13:07,280 Speaker 1: If the wages continue to rise. If we start to 271 00:13:07,320 --> 00:13:09,720 Speaker 1: see the core eight moving with that, and wages of 272 00:13:09,760 --> 00:13:12,600 Speaker 1: course for a big factor in service sector inflation that's 273 00:13:12,640 --> 00:13:14,600 Speaker 1: likely to be pushing up, then it looks as if 274 00:13:14,600 --> 00:13:17,040 Speaker 1: the Fed's left it too late and they have to 275 00:13:17,080 --> 00:13:20,840 Speaker 1: then respond to that with with faster responses, more tightening 276 00:13:21,080 --> 00:13:24,000 Speaker 1: their three dops. We're not forecasting that ourselves, but that's 277 00:13:24,040 --> 00:13:26,760 Speaker 1: not looking totally out of the realms of possibility if 278 00:13:26,800 --> 00:13:29,240 Speaker 1: these things continue moving in that direction. For quickly, here 279 00:13:29,280 --> 00:13:31,280 Speaker 1: help me with Paulling. How are you regarding polling now 280 00:13:31,280 --> 00:13:33,120 Speaker 1: as we look ahead the political risk and in Europe 281 00:13:33,120 --> 00:13:35,160 Speaker 1: going forward to tell you what's going on in France 282 00:13:35,160 --> 00:13:36,920 Speaker 1: there with the Netherlands where you're gonna pay less attention 283 00:13:36,960 --> 00:13:40,400 Speaker 1: to it in light of what we've seen. Ah, the 284 00:13:40,520 --> 00:13:44,040 Speaker 1: politics in Europe's really really interesting right now. You've got 285 00:13:44,960 --> 00:13:48,120 Speaker 1: you've got an incredibly busy political calendar. The one that 286 00:13:48,160 --> 00:13:52,040 Speaker 1: everybody has really been focusing on, I think maybe inappropriately 287 00:13:52,040 --> 00:13:54,920 Speaker 1: has been France. I think that's actually much less of 288 00:13:54,960 --> 00:13:58,120 Speaker 1: an issue than anybody is made out. Thank you so 289 00:13:58,240 --> 00:14:09,080 Speaker 1: much in a studios here in London, brought you by 290 00:14:09,280 --> 00:14:13,040 Speaker 1: Bank of America Mary Lynch. Dedicated to bringing our clients 291 00:14:13,120 --> 00:14:17,280 Speaker 1: insights and solutions to meet the challenges of a transforming world. 292 00:14:17,760 --> 00:14:21,600 Speaker 1: That's the power of global connections, Mary Lynch, Pierce fennerin 293 00:14:21,680 --> 00:14:29,720 Speaker 1: Smith Incorporated, Member s I p C. What are bringing up, 294 00:14:29,720 --> 00:14:31,800 Speaker 1: Francisco Anzaga. She is a lead economist at the World 295 00:14:31,840 --> 00:14:33,640 Speaker 1: Bank based here in London. The World Bank out with 296 00:14:33,680 --> 00:14:37,280 Speaker 1: its latest Global Economic Prospects Report outlook for the new year. 297 00:14:37,360 --> 00:14:39,000 Speaker 1: Great to have you with us here in London and 298 00:14:39,000 --> 00:14:41,360 Speaker 1: Bluebrig's at European headquarters. And I just want to pick 299 00:14:41,440 --> 00:14:43,920 Speaker 1: up on a quotation from your boss from Jim Came, 300 00:14:43,960 --> 00:14:46,240 Speaker 1: the President of the World Bank, talking about the momentum 301 00:14:46,240 --> 00:14:48,960 Speaker 1: we're seeing right now speaking of the need to increase 302 00:14:49,000 --> 00:14:53,400 Speaker 1: investments in infrastructure and people looking ahead to two thousand seventeen. 303 00:14:53,840 --> 00:14:56,000 Speaker 1: What's going to catalyze that and who's going to be 304 00:14:56,040 --> 00:14:59,200 Speaker 1: doing that? Do you think? Yes? Thank you for having me, 305 00:14:59,240 --> 00:15:02,080 Speaker 1: Thank you for sload on the emerging markets is a 306 00:15:02,120 --> 00:15:05,080 Speaker 1: is a real challenge. Investment growth in emerging markets has 307 00:15:05,160 --> 00:15:08,440 Speaker 1: dropped from ten percent in two thousand ten to three 308 00:15:08,440 --> 00:15:11,040 Speaker 1: point four percent in two thousand and fifteen and probably 309 00:15:11,080 --> 00:15:14,520 Speaker 1: below based on partial data, and that that is something 310 00:15:14,560 --> 00:15:17,640 Speaker 1: that can undermine long term growth potential. For example, it 311 00:15:17,720 --> 00:15:22,400 Speaker 1: is highly correlated with productivity growth, and that undermines the 312 00:15:22,480 --> 00:15:26,280 Speaker 1: potential of future growth prospect, which in turn is required 313 00:15:26,400 --> 00:15:28,720 Speaker 1: to live people out of poverty. What can be done? 314 00:15:28,960 --> 00:15:31,480 Speaker 1: Any number of policies is available and really depends on 315 00:15:31,520 --> 00:15:36,640 Speaker 1: the countries. Some can implement public investment stimulus, which we 316 00:15:36,880 --> 00:15:41,480 Speaker 1: estimate does have at least over two years and benefits 317 00:15:41,480 --> 00:15:44,120 Speaker 1: for private investment as well. For example, a one percentage 318 00:15:44,120 --> 00:15:47,800 Speaker 1: point increase in public investment growth might lift private investment 319 00:15:47,800 --> 00:15:51,000 Speaker 1: by point three percentage points. Others don't have that option 320 00:15:51,120 --> 00:15:53,600 Speaker 1: because of lack of fiscal space. They might want to 321 00:15:53,680 --> 00:15:57,760 Speaker 1: reallocate expenditures towards higher yielding investment, or they might want 322 00:15:57,760 --> 00:16:00,720 Speaker 1: to increase tax spaces to raise the revenue it And 323 00:16:00,800 --> 00:16:03,400 Speaker 1: of course all of this works most when it's a 324 00:16:03,400 --> 00:16:06,440 Speaker 1: complemented with structure reforms to improve business climates. We're talking 325 00:16:06,440 --> 00:16:09,560 Speaker 1: awful lot about the the uncertainty that certainly overlaid the 326 00:16:09,640 --> 00:16:12,680 Speaker 1: US and the United Kingdom. You're focused on emerging markets. 327 00:16:13,200 --> 00:16:16,160 Speaker 1: There's the same sort of political uncertainty persists there as well. 328 00:16:16,200 --> 00:16:18,880 Speaker 1: It's the broad brush I suppose the same emerging markets. Yes, 329 00:16:18,880 --> 00:16:22,120 Speaker 1: two points on this one. Yes, Global policy uncertainty is 330 00:16:22,160 --> 00:16:24,640 Speaker 1: at a record high, and it is driven by all 331 00:16:24,640 --> 00:16:27,920 Speaker 1: the major most of the major economies, and it is 332 00:16:28,000 --> 00:16:33,160 Speaker 1: something that affects investment. We estimate, for example, if you 333 00:16:33,280 --> 00:16:35,000 Speaker 1: just look back in history, if you take the pier 334 00:16:35,040 --> 00:16:37,840 Speaker 1: in twenty ten to twelve to your area crisis, the 335 00:16:37,920 --> 00:16:40,560 Speaker 1: policy uncertainty in the in Europe at the time may 336 00:16:40,560 --> 00:16:43,520 Speaker 1: have reduced investment growth in the eco region Eastern Europe 337 00:16:43,880 --> 00:16:46,520 Speaker 1: by point six to one point three percentage points. That's 338 00:16:46,680 --> 00:16:50,120 Speaker 1: global uncertainty. In addition with that document in our report, 339 00:16:50,160 --> 00:16:54,880 Speaker 1: a clear increase in political risk across emerging markets, which 340 00:16:55,040 --> 00:16:58,760 Speaker 1: further than weighs on investment growth in them. In Washington, 341 00:16:58,880 --> 00:17:00,960 Speaker 1: there's that street between in the World Bank in the 342 00:17:01,000 --> 00:17:02,640 Speaker 1: I m F. I saw you once out on that 343 00:17:02,760 --> 00:17:05,480 Speaker 1: street breaking up a fist fight, and you know there's 344 00:17:05,480 --> 00:17:08,840 Speaker 1: this contention between the World Bank and the International Monetary Fund, 345 00:17:09,000 --> 00:17:11,639 Speaker 1: where you guys don't talk that much about foreign exchange, 346 00:17:11,680 --> 00:17:15,280 Speaker 1: about the dollar and dynamics. The fact is you're putting 347 00:17:15,320 --> 00:17:19,240 Speaker 1: out your wonderful report on something everyone's focusing on, which 348 00:17:19,240 --> 00:17:23,000 Speaker 1: is a dearth of investment amid the beginning of emerging 349 00:17:23,080 --> 00:17:29,280 Speaker 1: market foreign exchange adjustment, foreign exchange weekend rates go up, 350 00:17:29,880 --> 00:17:33,920 Speaker 1: growth goes down, is an investment the first order condition 351 00:17:34,040 --> 00:17:38,760 Speaker 1: affected by that growth coming down. That's our concern. So 352 00:17:38,840 --> 00:17:41,800 Speaker 1: we are interested in advanced economies like the US mainly 353 00:17:41,960 --> 00:17:45,600 Speaker 1: because of the impact on emerging markets. So I think 354 00:17:45,640 --> 00:17:48,680 Speaker 1: what you're referring to is that the potential for dollar appreciation. 355 00:17:48,720 --> 00:17:51,240 Speaker 1: And it's true that foreign currency borrowing has increased a 356 00:17:51,240 --> 00:17:56,160 Speaker 1: lot in emerging markets over since the crisis. However, the 357 00:17:56,200 --> 00:18:01,640 Speaker 1: bulk of borrowing by corporates in emerging markets modern remains 358 00:18:01,880 --> 00:18:05,720 Speaker 1: domestic currency and remains by domestic banks. So their main 359 00:18:05,840 --> 00:18:09,119 Speaker 1: vulnerability is to arise in global financing condition. The only 360 00:18:09,119 --> 00:18:10,880 Speaker 1: reason I'm gonna be nice to you is Dr Kim 361 00:18:10,880 --> 00:18:13,560 Speaker 1: once gave me a Dartmouth bow tag, so which was 362 00:18:13,600 --> 00:18:16,440 Speaker 1: which I still treasure. It was great, but but I 363 00:18:16,480 --> 00:18:18,400 Speaker 1: don't want to get you in trouble with Dr Kim. 364 00:18:18,440 --> 00:18:21,159 Speaker 1: You can't mention the dreaded T word, Mr Trump. I 365 00:18:21,200 --> 00:18:24,480 Speaker 1: get the idea that the World Bank can't talk about them, 366 00:18:24,520 --> 00:18:27,199 Speaker 1: but come on, it's a Trump reflation, call it the 367 00:18:27,320 --> 00:18:31,040 Speaker 1: U S reflation in that How does that impinge on 368 00:18:31,080 --> 00:18:33,800 Speaker 1: the body of your important report? The answer is it's 369 00:18:33,840 --> 00:18:38,240 Speaker 1: a huge deal, right, it's the US is a big 370 00:18:38,320 --> 00:18:41,399 Speaker 1: part of the global a quarter of global TODP, a 371 00:18:41,480 --> 00:18:44,560 Speaker 1: tenth of global trade. So what happens what in the US, 372 00:18:45,040 --> 00:18:47,400 Speaker 1: of course, does not stay in the US. It has 373 00:18:47,400 --> 00:18:53,479 Speaker 1: global implications. But that said, the new administration's policies there 374 00:18:53,520 --> 00:18:56,199 Speaker 1: have been there has been much discussion about them. We 375 00:18:56,400 --> 00:18:59,200 Speaker 1: simply do not have enough detailed to incorporate them into 376 00:18:59,200 --> 00:19:01,920 Speaker 1: our focusts. So when we say that we expect growth 377 00:19:01,960 --> 00:19:03,440 Speaker 1: in the US to rise from one point six to 378 00:19:03,520 --> 00:19:06,920 Speaker 1: two point two percent in t seventeen, it is excluding 379 00:19:07,040 --> 00:19:11,480 Speaker 1: all these policies that are currently being promoted. This is important, David, 380 00:19:11,520 --> 00:19:13,800 Speaker 1: because within the report there's more talk about the US 381 00:19:13,840 --> 00:19:16,520 Speaker 1: than I've ever seen. Absolutely, let me ask you about 382 00:19:16,600 --> 00:19:20,560 Speaker 1: China and you project a slowdown in growth there, Where 383 00:19:20,560 --> 00:19:22,479 Speaker 1: will we see growth? Where's the most growth going to come? 384 00:19:22,480 --> 00:19:24,959 Speaker 1: From is it in South Asia in the next year. 385 00:19:25,000 --> 00:19:26,639 Speaker 1: Where where do you see the bright spots in the 386 00:19:26,680 --> 00:19:31,600 Speaker 1: global economy right now? Clearly China is slowing gradually, just 387 00:19:31,800 --> 00:19:33,960 Speaker 1: as expected. We expect six and a half percent growth 388 00:19:34,000 --> 00:19:37,480 Speaker 1: in twenty seventeen, six point three in twenty eighteen and nineteen, 389 00:19:37,760 --> 00:19:41,679 Speaker 1: and the authorities are conducting a careful balancing act between 390 00:19:41,680 --> 00:19:48,400 Speaker 1: reducing vulnerabilities financial vulnerabilities and steering activity with the occasional stimulus. 391 00:19:49,000 --> 00:19:53,760 Speaker 1: Now surprisingly there are there. There's actually a whole group 392 00:19:53,840 --> 00:19:57,200 Speaker 1: of emerging markets that is doing that has done fairly 393 00:19:57,240 --> 00:19:59,520 Speaker 1: well since the crisis, and those are the commodity ex 394 00:19:59,760 --> 00:20:02,800 Speaker 1: in port US. It's only one third of emerging markets. 395 00:20:04,280 --> 00:20:07,240 Speaker 1: Emerging market which is just Poland is done really well. 396 00:20:07,440 --> 00:20:09,880 Speaker 1: Poland is one, but the others that have perhaps done 397 00:20:09,920 --> 00:20:12,840 Speaker 1: best are the ones in East Africa West Africa. It's 398 00:20:12,160 --> 00:20:15,520 Speaker 1: the Rwanda and the sending guys. And one of the 399 00:20:15,560 --> 00:20:18,560 Speaker 1: reasons they've done well is yes, they've benefited from law 400 00:20:18,680 --> 00:20:22,080 Speaker 1: and oil prices, but also they have implemented a lot 401 00:20:22,160 --> 00:20:24,800 Speaker 1: of public investment to support grows. The United Kingdom and 402 00:20:24,880 --> 00:20:27,600 Speaker 1: its way to becoming an emerging market under your definition, 403 00:20:28,119 --> 00:20:31,040 Speaker 1: we have revised our focus downwards for the UK to 404 00:20:31,160 --> 00:20:35,320 Speaker 1: one in seventeen, in line with the Treasury, but that 405 00:20:35,440 --> 00:20:37,760 Speaker 1: has you have to take into account that we publish 406 00:20:37,800 --> 00:20:42,679 Speaker 1: our last Focust long before the Brexit vote. The phrase 407 00:20:42,720 --> 00:20:45,479 Speaker 1: new normal is probably overused, but when you look at investment, 408 00:20:45,520 --> 00:20:47,520 Speaker 1: to circle back to investment, you see where it is now. 409 00:20:47,640 --> 00:20:49,080 Speaker 1: Is there a risk that we're at a level that 410 00:20:49,080 --> 00:20:50,520 Speaker 1: we're going to stay at that we're not going to 411 00:20:50,600 --> 00:20:53,359 Speaker 1: see as high investments we've seen? Those are certainly the 412 00:20:53,400 --> 00:20:57,760 Speaker 1: expectations of long term expectations of the consensus, and that 413 00:20:57,760 --> 00:20:59,960 Speaker 1: that is our concern that really the the investment growth 414 00:21:00,119 --> 00:21:02,480 Speaker 1: is not going to pick up absent a big policy 415 00:21:02,520 --> 00:21:04,960 Speaker 1: push that is a whole package of measures. No single 416 00:21:05,000 --> 00:21:08,359 Speaker 1: measure will really there's no said bullet, no single measure 417 00:21:08,359 --> 00:21:10,920 Speaker 1: we lift investment. I'm interested just in the particular difficulties 418 00:21:10,960 --> 00:21:14,119 Speaker 1: of putting together an outlook like this amid so much uncertainty. 419 00:21:14,160 --> 00:21:15,960 Speaker 1: You write about Europe and I'm asked about poland you 420 00:21:15,960 --> 00:21:18,480 Speaker 1: write about Europe, and there is the sense there that 421 00:21:18,560 --> 00:21:21,720 Speaker 1: things could change radically depending on what happens in certain elections, 422 00:21:21,720 --> 00:21:24,480 Speaker 1: what happens with the European Union, whether or not things 423 00:21:24,760 --> 00:21:27,480 Speaker 1: stay as cohesive as they as they have. How tricky 424 00:21:27,600 --> 00:21:29,480 Speaker 1: was it to assemble something like this? There's many hundreds 425 00:21:29,520 --> 00:21:32,399 Speaker 1: of page long report during this particular climate. Yeah, we 426 00:21:32,440 --> 00:21:35,640 Speaker 1: do try to measure risk and uncertainty in a fan chart. 427 00:21:36,040 --> 00:21:39,240 Speaker 1: So we do estimate that the uncertainty around our baseline 428 00:21:39,240 --> 00:21:42,760 Speaker 1: forecast has increased since the last time we published. But 429 00:21:43,000 --> 00:21:45,080 Speaker 1: the way we try to get at it is by 430 00:21:45,160 --> 00:21:48,399 Speaker 1: scenario analysis. For example, we do do a scenario. We 431 00:21:48,560 --> 00:21:51,240 Speaker 1: estimate a scenario of what would happen if the US 432 00:21:51,359 --> 00:21:55,120 Speaker 1: cut taxes the way it has been proposed. That would 433 00:21:55,119 --> 00:21:58,200 Speaker 1: be Mr Trump, that would be the new administration. Yes, 434 00:21:58,359 --> 00:22:03,840 Speaker 1: very good, as the new administrations suggest what would happen. 435 00:22:04,119 --> 00:22:07,080 Speaker 1: So we estimate, and we're using the defens own models, 436 00:22:07,080 --> 00:22:09,800 Speaker 1: So we estimate that that may raise growth in the 437 00:22:09,880 --> 00:22:14,400 Speaker 1: US two up to two seventeen and up to two 438 00:22:14,400 --> 00:22:18,400 Speaker 1: point nine and eighteen. But that's under many assumptions. First, 439 00:22:18,400 --> 00:22:22,560 Speaker 1: that this is actually implemented as proposed, both corporate and 440 00:22:22,600 --> 00:22:25,560 Speaker 1: income tax cuts, and that would be a large revenue 441 00:22:25,600 --> 00:22:29,320 Speaker 1: laws sizeable revenue laws. Second, that there are no offsetting 442 00:22:30,000 --> 00:22:34,159 Speaker 1: other expenditure for example extend pendision measures. Third, that the 443 00:22:34,280 --> 00:22:38,600 Speaker 1: US FED does not behave in any different way as 444 00:22:38,600 --> 00:22:41,480 Speaker 1: the model projects. For example, it raises interest rates faster 445 00:22:41,840 --> 00:22:45,800 Speaker 1: than expected. And fourth, it does not take into account 446 00:22:46,080 --> 00:22:49,560 Speaker 1: possible trade policies, and these trade policies would matter for 447 00:22:49,600 --> 00:22:53,080 Speaker 1: the way that US growth feeds into global growth. Within 448 00:22:53,160 --> 00:22:56,520 Speaker 1: the zeitgeist of the World Bank, very quickly here is 449 00:22:56,520 --> 00:22:59,960 Speaker 1: there just an understanding that the age of multilateralism is 450 00:23:00,160 --> 00:23:04,520 Speaker 1: over within the vast bureaucracy of Dr Kim's World Bank? 451 00:23:04,720 --> 00:23:08,240 Speaker 1: Is it? Is it adjusting to a bilateral World Bank. 452 00:23:09,320 --> 00:23:14,360 Speaker 1: So we certainly flag the risk of rising protectionism as 453 00:23:14,440 --> 00:23:17,119 Speaker 1: one of the keyst The first risk actually were mentioned 454 00:23:17,119 --> 00:23:20,399 Speaker 1: to global growth, but that goes beyond any individual country. 455 00:23:20,640 --> 00:23:24,000 Speaker 1: If you look at the G twenty countries, the number 456 00:23:24,080 --> 00:23:28,240 Speaker 1: of new trade restrictive measures in a record high. And 457 00:23:28,840 --> 00:23:32,480 Speaker 1: again yet another year more trade restrictive measures implemented and 458 00:23:32,600 --> 00:23:35,440 Speaker 1: liberalizing ones. That's all the time. This has been absolutely 459 00:23:35,480 --> 00:23:39,919 Speaker 1: fantastic for Francesca answer Gay, thank you so much. Is 460 00:23:39,960 --> 00:23:44,120 Speaker 1: with the World Bank, David Gern, Tom Keene in London worldwide, 461 00:23:44,680 --> 00:23:58,600 Speaker 1: this is Bloomberg. It is a good day, if any 462 00:23:58,640 --> 00:24:00,479 Speaker 1: day is a good day to speak to that gartment, 463 00:24:00,520 --> 00:24:03,760 Speaker 1: but it's a particularly good day today, Mr Gartman writes 464 00:24:03,800 --> 00:24:06,800 Speaker 1: a newsletter. He is one of the brave and foolish 465 00:24:06,840 --> 00:24:09,159 Speaker 1: who actually put his track record at the back of 466 00:24:09,200 --> 00:24:11,560 Speaker 1: the newsletter. Forced a gartment to be one of the 467 00:24:11,560 --> 00:24:16,639 Speaker 1: great Pinata's business news and undeserved, I might point out, 468 00:24:16,920 --> 00:24:21,480 Speaker 1: because we are all wrong it numerous and frequent moments. Dennis, 469 00:24:21,560 --> 00:24:23,960 Speaker 1: let me migrate to the politics first, what would be 470 00:24:23,960 --> 00:24:26,639 Speaker 1: your first question to Mr Trump this morning at the 471 00:24:26,640 --> 00:24:30,960 Speaker 1: press conference? Why are you so incredibly attuned or in 472 00:24:31,080 --> 00:24:34,560 Speaker 1: favor of some sort of trade protection? If you understand 473 00:24:34,600 --> 00:24:38,000 Speaker 1: the history of of the modern World War, tariffs and 474 00:24:38,040 --> 00:24:42,520 Speaker 1: trade protection always give way to weaker economic environ's domestically 475 00:24:42,520 --> 00:24:45,159 Speaker 1: and politically. Why are you pushing ahead with that? That 476 00:24:45,160 --> 00:24:48,120 Speaker 1: would be my very first question, Tom, Do you well said, 477 00:24:48,160 --> 00:24:50,800 Speaker 1: do you perceive that there are adults in the room 478 00:24:50,920 --> 00:24:55,639 Speaker 1: or at least budding within the administration that will amend 479 00:24:55,880 --> 00:24:59,439 Speaker 1: a just adapt the Trumpian message. No, I'm fearful that 480 00:24:59,480 --> 00:25:01,560 Speaker 1: there are no adults in the room. I have not 481 00:25:01,600 --> 00:25:04,640 Speaker 1: seen anybody yet other than the gentleman who have been 482 00:25:04,680 --> 00:25:08,639 Speaker 1: professing or promoting even greater trade protection. So I'm afraid 483 00:25:08,680 --> 00:25:10,280 Speaker 1: that there are no adults in the room. And that 484 00:25:10,400 --> 00:25:13,080 Speaker 1: is right, A truly a great fear on my part. Hopefully, 485 00:25:13,200 --> 00:25:18,120 Speaker 1: hopefully cooler minds will prevail, hopefully adults will show up. Um, 486 00:25:18,160 --> 00:25:20,320 Speaker 1: But right now I have not seen that, and that 487 00:25:20,440 --> 00:25:22,840 Speaker 1: is disconcerting to me. How do you read the tweets 488 00:25:22,840 --> 00:25:25,119 Speaker 1: about Ford and GM and Boeing and Lockheed. Do you 489 00:25:25,160 --> 00:25:28,960 Speaker 1: see these as as one office, as uh things under themselves, 490 00:25:29,000 --> 00:25:32,040 Speaker 1: not representative of some sort of larger industrial policy. What's 491 00:25:32,040 --> 00:25:34,800 Speaker 1: your read on his targeting of individual companies. I think 492 00:25:34,840 --> 00:25:37,399 Speaker 1: it's dangerous. I wish he wouldn't do that. In in 493 00:25:37,560 --> 00:25:40,639 Speaker 1: the first edition of the Gartment Letter this year, I 494 00:25:40,640 --> 00:25:43,440 Speaker 1: put out my surprises for the year, and my one 495 00:25:43,560 --> 00:25:46,679 Speaker 1: hope surprise was that the president would stop tweeting. For 496 00:25:46,720 --> 00:25:48,560 Speaker 1: a couple of days. It appeared that he had, But 497 00:25:48,600 --> 00:25:51,280 Speaker 1: now he seems to be tweeting even more aggressively than 498 00:25:51,280 --> 00:25:53,800 Speaker 1: he had in the past. I find this dangerous. Making 499 00:25:53,840 --> 00:25:56,920 Speaker 1: opinion by tweets is something that simply should not be 500 00:25:57,440 --> 00:25:59,640 Speaker 1: It shouldn't be done. That's like you get whips on 501 00:25:59,800 --> 00:26:03,040 Speaker 1: way Olderness. I had to say. I just had to 502 00:26:03,080 --> 00:26:05,320 Speaker 1: get that in there. Dennis. At least, at least you 503 00:26:05,320 --> 00:26:07,760 Speaker 1: haven't said anything about my beloved wolf Pack losing by 504 00:26:07,760 --> 00:26:13,359 Speaker 1: are almost two to one on a snowy night at 505 00:26:13,359 --> 00:26:15,720 Speaker 1: the Dando. It was a tough loss for you. We 506 00:26:15,720 --> 00:26:18,959 Speaker 1: didn't we didn't want to go there, Dennis Garment seriously, though, 507 00:26:19,000 --> 00:26:21,919 Speaker 1: this has to do with stability, and there's any ways 508 00:26:21,960 --> 00:26:24,160 Speaker 1: to go here. But I just put out a chart 509 00:26:24,200 --> 00:26:27,840 Speaker 1: on Twitter off the Bloomberg terminal folks of Turkish lira, 510 00:26:28,119 --> 00:26:31,720 Speaker 1: and as Dennis would say, it's an elegant chart. There 511 00:26:31,800 --> 00:26:36,000 Speaker 1: is a persistency here. Dennis, I am dismayed by people 512 00:26:36,000 --> 00:26:40,520 Speaker 1: who dismiss this oddities of Bloomberg chit chat. They're not. 513 00:26:40,560 --> 00:26:45,200 Speaker 1: They're really linked in in their own unknowable way into 514 00:26:45,240 --> 00:26:48,080 Speaker 1: all that we do. When you see Mexico and Turkey unraveled, well, 515 00:26:48,240 --> 00:26:50,600 Speaker 1: I think take a look also what's happened to bitcoin 516 00:26:50,680 --> 00:26:52,360 Speaker 1: in the past week and a half or two weeks. 517 00:26:52,400 --> 00:26:55,000 Speaker 1: I mean, it's just it's astonishing what it's taking place 518 00:26:55,320 --> 00:26:58,240 Speaker 1: in the foreign exchange market. Not enough people pay attention 519 00:26:58,240 --> 00:27:01,080 Speaker 1: to for exchange. Thankfully this audience does, but when you 520 00:27:01,119 --> 00:27:03,640 Speaker 1: get to the broad public, they pay very little attention 521 00:27:03,640 --> 00:27:05,480 Speaker 1: and and and they should be paying a great good 522 00:27:05,480 --> 00:27:08,120 Speaker 1: deal more. What happens in the in the lira is important. 523 00:27:08,200 --> 00:27:12,000 Speaker 1: What happens uh in in in the Mexican pay so 524 00:27:12,119 --> 00:27:14,919 Speaker 1: is important, what happens in bitcoin is important. What happens 525 00:27:14,920 --> 00:27:17,520 Speaker 1: in goal is important, and it's not paid attention to enough. 526 00:27:17,800 --> 00:27:19,960 Speaker 1: So what's going through Dennis Gartner's mind as you watch 527 00:27:20,040 --> 00:27:22,760 Speaker 1: the depreciation of the lear? We had the central bank 528 00:27:22,800 --> 00:27:25,240 Speaker 1: intervening yesterday trying to do something about it. Doesn't seem 529 00:27:25,320 --> 00:27:26,920 Speaker 1: like that worked out that well. What are you thinking 530 00:27:26,960 --> 00:27:29,119 Speaker 1: as you watch this depreciation? You know, it's not just 531 00:27:29,200 --> 00:27:31,640 Speaker 1: the central bank there that has that has failed. Take 532 00:27:31,680 --> 00:27:34,160 Speaker 1: a look at at probably the the one central bank 533 00:27:34,160 --> 00:27:35,840 Speaker 1: that people have had a great deal of confidence in, 534 00:27:35,880 --> 00:27:38,720 Speaker 1: the Swiss National Bank that has been trying to keep 535 00:27:38,720 --> 00:27:42,320 Speaker 1: its own currency down and can't do that. Normally, a 536 00:27:42,400 --> 00:27:44,320 Speaker 1: central bank, if they want to do anything, can always 537 00:27:44,400 --> 00:27:47,679 Speaker 1: keep their currency lower, and they can't. So what we 538 00:27:47,720 --> 00:27:50,080 Speaker 1: have learned from this is that central bank powers are 539 00:27:50,119 --> 00:27:52,159 Speaker 1: being diminished in the modern world. I think that's the 540 00:27:52,440 --> 00:27:55,560 Speaker 1: lesson to be taken away from here. You know. Uh, 541 00:27:55,640 --> 00:27:58,520 Speaker 1: we're talking to Bill Dunkelberg yesterday about his n f 542 00:27:58,560 --> 00:28:01,080 Speaker 1: IB Small Business Optimists Report is something that the President 543 00:28:01,080 --> 00:28:03,040 Speaker 1: elect clearly took an interest in. He tweeted it out 544 00:28:03,080 --> 00:28:06,840 Speaker 1: three times yesterday, flagging this is as a good sign 545 00:28:07,359 --> 00:28:10,159 Speaker 1: for the economy. What's your read of that data that 546 00:28:10,200 --> 00:28:11,840 Speaker 1: we got from the n f I B yesterday. Is 547 00:28:11,880 --> 00:28:14,239 Speaker 1: the message from that simply the economy. Economy is doing 548 00:28:14,280 --> 00:28:17,199 Speaker 1: pretty well here, don't screw it up. I think what 549 00:28:17,280 --> 00:28:20,000 Speaker 1: it tells us is in the flyover States, things are 550 00:28:20,040 --> 00:28:23,400 Speaker 1: doing actually quite a good deal better. The deplorables, as 551 00:28:23,520 --> 00:28:26,639 Speaker 1: Mrs Clinton would have called us, seemed to be doing okay. 552 00:28:26,640 --> 00:28:29,200 Speaker 1: There was a great deal of enthusiasm that has been 553 00:28:29,200 --> 00:28:32,280 Speaker 1: engendered by the the the arrival or the soon to 554 00:28:32,359 --> 00:28:34,480 Speaker 1: be arrival of the Trump administration. And I think that 555 00:28:34,520 --> 00:28:37,920 Speaker 1: the coasts have missed, have not understood what has really 556 00:28:37,920 --> 00:28:40,560 Speaker 1: taken place. I thought that was a very important bit 557 00:28:40,600 --> 00:28:43,440 Speaker 1: of economic data that came out yesterday showing the the 558 00:28:43,560 --> 00:28:46,160 Speaker 1: n FIB number up as dramatically as it was. That 559 00:28:46,240 --> 00:28:48,600 Speaker 1: was a very impressive rise in that in that index, 560 00:28:48,640 --> 00:28:51,200 Speaker 1: and I think it shows that that animal spirits, according 561 00:28:51,240 --> 00:28:53,600 Speaker 1: to Mr Kean's, are in fact rising out there. I 562 00:28:53,640 --> 00:28:55,440 Speaker 1: know he wants to talk about red wheat as well. 563 00:28:55,480 --> 00:28:59,360 Speaker 1: He was calling that out yesterday. Before we get that. 564 00:28:59,400 --> 00:29:01,080 Speaker 1: You brought up coin and I know that you haven't 565 00:29:01,080 --> 00:29:03,720 Speaker 1: been a big enthusiast for a bitcoin. What's it gonna 566 00:29:03,760 --> 00:29:07,240 Speaker 1: take for you to to get more interested in in cybercurrencies? 567 00:29:07,320 --> 00:29:08,960 Speaker 1: Or do you think this is really a flash in 568 00:29:09,000 --> 00:29:10,720 Speaker 1: the pan. I'll be at a you know, a year's 569 00:29:10,760 --> 00:29:13,600 Speaker 1: long flash in the pan. At sixty six years old, 570 00:29:13,640 --> 00:29:15,400 Speaker 1: I think I'm a bit too old to understand what 571 00:29:15,520 --> 00:29:18,760 Speaker 1: bitcoin really is, and and and and I simply won't 572 00:29:19,320 --> 00:29:21,040 Speaker 1: excuse me, I won't be able to put that a 573 00:29:21,080 --> 00:29:23,480 Speaker 1: great good deal of trust in it, especially with the 574 00:29:23,560 --> 00:29:26,480 Speaker 1: volatility that has been incumbent in that one currency. It's 575 00:29:26,840 --> 00:29:30,600 Speaker 1: it's astonishing you cannot move a currency in a in 576 00:29:30,640 --> 00:29:33,880 Speaker 1: a week and expect to see that become a usable 577 00:29:33,920 --> 00:29:36,200 Speaker 1: instrument for the purchase of goods and services. Is it 578 00:29:36,240 --> 00:29:39,600 Speaker 1: a currency, Dennis Gartment? Well, they call it that. What 579 00:29:39,720 --> 00:29:43,640 Speaker 1: is the terminology a cryptocurrency? It's your crypto, it's a 580 00:29:43,720 --> 00:29:46,800 Speaker 1: it's a thing. It's it's something to be traded right now. 581 00:29:46,840 --> 00:29:48,840 Speaker 1: And that's about all it is. Thank you. We would 582 00:29:48,880 --> 00:29:51,640 Speaker 1: do trading theory and Red Wheat here with Dennis Gartment, 583 00:29:52,280 --> 00:29:55,520 Speaker 1: but I want to stay in theme. Dennis, Dennis, there's 584 00:29:55,680 --> 00:30:00,240 Speaker 1: everyone agrees, massive and original uncertainty here, you just happen 585 00:30:00,280 --> 00:30:03,000 Speaker 1: to mention your age. I put out a photo of 586 00:30:03,520 --> 00:30:05,800 Speaker 1: my favorite photo of the president, which is him sitting 587 00:30:05,840 --> 00:30:08,600 Speaker 1: on the Rosa Parks bus, of the history of this 588 00:30:08,720 --> 00:30:12,040 Speaker 1: president and all that he stands for. I want you 589 00:30:12,080 --> 00:30:16,120 Speaker 1: to speak to our listeners who are overwhelmed by the 590 00:30:16,200 --> 00:30:20,040 Speaker 1: uncertainty of the times. How do you stay invested? How 591 00:30:20,080 --> 00:30:23,400 Speaker 1: do you have confidence in your little pot of money 592 00:30:23,680 --> 00:30:28,840 Speaker 1: given the uncertainty that we face. We always have faced uncertainty. 593 00:30:29,000 --> 00:30:32,400 Speaker 1: We're going to face uncertainty tomorrow. We will face uncertainty 594 00:30:32,440 --> 00:30:36,200 Speaker 1: next month, will face uncertainty next year. We've always faced it. 595 00:30:36,480 --> 00:30:39,840 Speaker 1: We've always done better. That's just been the trend. There 596 00:30:39,840 --> 00:30:43,160 Speaker 1: were some of my friends who were who were Clinton supporters, 597 00:30:43,160 --> 00:30:47,719 Speaker 1: were obviously greatly dismayed. The country will be fine no 598 00:30:47,760 --> 00:30:50,840 Speaker 1: matter who had become the president, the country will become 599 00:30:51,080 --> 00:30:54,320 Speaker 1: or will be fine. My wife was very despondent thinking 600 00:30:54,320 --> 00:30:56,080 Speaker 1: that Mrs Clinton was going to win, and I had 601 00:30:56,120 --> 00:31:00,640 Speaker 1: to tell her, sweetheart, Margaret, it's going to be okay. 602 00:31:00,880 --> 00:31:06,240 Speaker 1: Have a drink, You'll be fine. You okay with their girl? 603 00:31:06,840 --> 00:31:11,200 Speaker 1: Just you know, I'm getting your Garment's got a book 604 00:31:11,200 --> 00:31:15,840 Speaker 1: coming up. Have a drinking fine as a title. With that, Dennis, 605 00:31:15,880 --> 00:31:19,080 Speaker 1: let's switch to uh your trading. We'll do this internet section. 606 00:31:19,120 --> 00:31:22,240 Speaker 1: But to go out your Dennis, give me the why 607 00:31:22,240 --> 00:31:25,240 Speaker 1: of the look back of two thousand and sixteen? Why 608 00:31:25,400 --> 00:31:29,680 Speaker 1: was it so hard to take a prudent trading stance, 609 00:31:29,720 --> 00:31:32,719 Speaker 1: whether it was a three month trade or or a 610 00:31:32,800 --> 00:31:35,520 Speaker 1: nine month trade? Why was it so darn hard? You know? 611 00:31:36,320 --> 00:31:39,360 Speaker 1: Golly day, I wish I could understand that I got 612 00:31:39,400 --> 00:31:41,880 Speaker 1: stopped out of good trade so many times last year. 613 00:31:41,880 --> 00:31:45,440 Speaker 1: It was terribly disconcerting. To get the major trend right 614 00:31:45,480 --> 00:31:48,080 Speaker 1: and to be taken out on on on small interim 615 00:31:48,120 --> 00:31:54,560 Speaker 1: corrections is the most debilitating, disturbing, soul destroying circumstance that 616 00:31:54,600 --> 00:31:57,640 Speaker 1: one can go through. I wish I had the answer. 617 00:31:57,680 --> 00:31:59,840 Speaker 1: If I did, I wouldn't be talking to you to 618 00:32:00,120 --> 00:32:02,240 Speaker 1: I'd be out in I'd be in Monaco, or I'd 619 00:32:02,240 --> 00:32:05,720 Speaker 1: be down in uh In Bali enjoying myself. It would 620 00:32:05,720 --> 00:32:08,400 Speaker 1: be that that is the great that is the great 621 00:32:08,480 --> 00:32:12,040 Speaker 1: uncertainty that that investors and traders have to deal with. 622 00:32:12,240 --> 00:32:15,000 Speaker 1: TORTI in south of your Virginia. I know Clemson is 623 00:32:15,000 --> 00:32:17,440 Speaker 1: going to Disneyland. Wasn't that a good thing to see, 624 00:32:17,480 --> 00:32:19,560 Speaker 1: I mean just for the sport. Was that a good 625 00:32:19,600 --> 00:32:22,800 Speaker 1: thing to see Alabama defeated? Oh? Absolutely, it was wonderful 626 00:32:22,800 --> 00:32:26,400 Speaker 1: as as an Atlantic Coast conference devotee to see Clemson 627 00:32:26,480 --> 00:32:29,080 Speaker 1: a land Grant university. I might here we go, we 628 00:32:29,120 --> 00:32:32,040 Speaker 1: could agree, we could agree on that. Do you know 629 00:32:32,120 --> 00:32:35,240 Speaker 1: that the Gartment last year made so much money in 630 00:32:35,280 --> 00:32:38,320 Speaker 1: his speaking fezy about a forty eight foot Grant grand 631 00:32:38,320 --> 00:32:42,520 Speaker 1: Banks and he called the puppy land Graph Just people, 632 00:32:43,160 --> 00:32:46,000 Speaker 1: you're going, Dennis Gartment with us? My David, why don't 633 00:32:46,000 --> 00:32:47,880 Speaker 1: you uh jump in here with that? I know you 634 00:32:47,920 --> 00:32:49,960 Speaker 1: want to get into commodities. Let me stick with currencies 635 00:32:50,000 --> 00:32:52,480 Speaker 1: for one minute more. We're here in London. We were 636 00:32:52,520 --> 00:32:55,440 Speaker 1: wrapped with attention watching the Prime Minister Treason May speaking 637 00:32:55,440 --> 00:32:58,000 Speaker 1: to Sky News this weekend writing for The Telegraph about 638 00:32:58,040 --> 00:33:00,920 Speaker 1: the Brexit process. What have you learn, Dennis Gartment, about 639 00:33:00,960 --> 00:33:02,520 Speaker 1: where this is headed? What have you learned about the 640 00:33:02,560 --> 00:33:05,800 Speaker 1: contries of a UK EU trade policy and what that 641 00:33:05,840 --> 00:33:08,600 Speaker 1: means for Sterling. I think when all of this has 642 00:33:08,680 --> 00:33:11,400 Speaker 1: run its course, England will, in fact the UK will 643 00:33:11,400 --> 00:33:14,320 Speaker 1: in fact leave. There will be a British removal from 644 00:33:14,360 --> 00:33:17,600 Speaker 1: the continent, from the political circumstances. That's going to happen. 645 00:33:17,720 --> 00:33:20,760 Speaker 1: The voters have made it clear they will accommodate or 646 00:33:20,800 --> 00:33:23,520 Speaker 1: will be accommodated by Germany and France. There will be 647 00:33:23,560 --> 00:33:28,280 Speaker 1: some reconciliation. Cooler heads, adult minds will prevail and all 648 00:33:28,320 --> 00:33:31,320 Speaker 1: will this will all resolve itself. Will Will the pound 649 00:33:31,360 --> 00:33:34,800 Speaker 1: Sterling be under pressure until that resolution comes to to 650 00:33:34,800 --> 00:33:38,280 Speaker 1: to effect later sometime this year, Yes, probably Sterling shall be. 651 00:33:38,680 --> 00:33:41,320 Speaker 1: But in the end, as almost all of these events 652 00:33:41,920 --> 00:33:46,280 Speaker 1: avail themselves, there will be decency and good nature that 653 00:33:46,320 --> 00:33:48,280 Speaker 1: will finally come to the surface. That's That's the way 654 00:33:48,320 --> 00:33:51,720 Speaker 1: it always is resolved, the way it always is. Dennis 655 00:33:51,720 --> 00:33:56,479 Speaker 1: and commodities, is there just a presumed chronic deflation or 656 00:33:56,560 --> 00:34:01,280 Speaker 1: disinflation of price. I don't know much about red wheat. 657 00:34:02,200 --> 00:34:06,240 Speaker 1: It's a reddish grain major classification of the United States 658 00:34:06,400 --> 00:34:10,200 Speaker 1: hard red winter wheat as opposed to soft dread winter wheat. 659 00:34:10,280 --> 00:34:11,880 Speaker 1: And I have no idea if I can tell that 660 00:34:11,920 --> 00:34:16,840 Speaker 1: in my gluten free bread here in London, or yes, folks, 661 00:34:16,880 --> 00:34:19,800 Speaker 1: I did eat gluten free bread last night. Dennis helped 662 00:34:19,880 --> 00:34:22,840 Speaker 1: me here with the price erosion in the sauce and 663 00:34:22,920 --> 00:34:26,120 Speaker 1: particularly in wheat. Is it back to the pre China 664 00:34:26,440 --> 00:34:29,719 Speaker 1: disinflation for commodities, I think it's simply the fact that 665 00:34:29,760 --> 00:34:32,839 Speaker 1: we are so good at producing crops around the world, 666 00:34:32,920 --> 00:34:36,479 Speaker 1: whether it's whether it's wheat, whether it's soybeans, whether it's corn, 667 00:34:36,560 --> 00:34:39,360 Speaker 1: whether it's cotton. If you take a look at the 668 00:34:39,440 --> 00:34:42,600 Speaker 1: history of the last forty years, every time you look 669 00:34:42,640 --> 00:34:45,319 Speaker 1: at how much production per acre of any of the 670 00:34:45,360 --> 00:34:47,560 Speaker 1: major grains or any of the major commodities has been, 671 00:34:47,600 --> 00:34:52,719 Speaker 1: it's always been higher drought in, flood out. Yes, you 672 00:34:52,800 --> 00:34:55,560 Speaker 1: have problems that that can be that can occur because 673 00:34:55,560 --> 00:34:57,879 Speaker 1: of weather, but on balance, we're just simply better at 674 00:34:57,920 --> 00:35:01,320 Speaker 1: producing amounts of of commodities on the same amount of 675 00:35:01,360 --> 00:35:03,719 Speaker 1: acreage than we were forty years ago. In fact, in 676 00:35:03,760 --> 00:35:06,200 Speaker 1: the case of corn, were probably tripled what we can 677 00:35:06,280 --> 00:35:08,719 Speaker 1: do what a good farmer fifty years ago would grow. 678 00:35:09,000 --> 00:35:11,520 Speaker 1: We're probably producing triple that now and that's not going 679 00:35:11,560 --> 00:35:14,400 Speaker 1: to stop anytime soon thanks to the Penn States, the 680 00:35:14,440 --> 00:35:25,359 Speaker 1: Ohio States, Texas, Texas, A and M. Dennis. You want 681 00:35:25,360 --> 00:35:28,960 Speaker 1: to get back on scriptures hoping the the the China 682 00:35:29,040 --> 00:35:32,440 Speaker 1: commodity boom, then do you perceive that globally and domestically 683 00:35:32,440 --> 00:35:35,600 Speaker 1: as a one off, No, I do. I think that 684 00:35:35,640 --> 00:35:38,879 Speaker 1: the Chinese circumstances of the last ten years fifteen years, 685 00:35:38,920 --> 00:35:41,719 Speaker 1: as China has leaped from the fourteenth century into the 686 00:35:41,760 --> 00:35:45,680 Speaker 1: twenty second century, and they're not going to go back. Uh. 687 00:35:46,040 --> 00:35:50,000 Speaker 1: Chinese consumers are going to be demanding carpets and rugs, 688 00:35:50,040 --> 00:35:54,239 Speaker 1: and and brass plumbing fixtures, and and and wooden furniture 689 00:35:54,320 --> 00:35:57,320 Speaker 1: and and and better housing. There are still some of 690 00:35:57,640 --> 00:36:00,160 Speaker 1: what eight hundred million people in the Western province is 691 00:36:00,200 --> 00:36:02,239 Speaker 1: that have to move to the eastern provinces and shell 692 00:36:02,640 --> 00:36:04,799 Speaker 1: and that will have to be accommodated as we as 693 00:36:04,840 --> 00:36:07,440 Speaker 1: they As the world gets wealthier, and the world is 694 00:36:07,480 --> 00:36:10,120 Speaker 1: getting wealthier, that's going to continue. But what well, what 695 00:36:10,200 --> 00:36:12,680 Speaker 1: I think shall end up happening is that as demand 696 00:36:12,719 --> 00:36:15,919 Speaker 1: continues to grow, the ability to produce more will will 697 00:36:16,000 --> 00:36:18,520 Speaker 1: keep track with it, and in fact, if anything, will 698 00:36:18,560 --> 00:36:21,440 Speaker 1: outpace it. That's been the history of the last hundred 699 00:36:21,560 --> 00:36:24,279 Speaker 1: years and I don't see that changing anytime soon. Down 700 00:36:24,280 --> 00:36:25,839 Speaker 1: it's in a limited time we have left here. Let 701 00:36:25,840 --> 00:36:27,439 Speaker 1: me ask you about oil. I know you've been looking 702 00:36:27,440 --> 00:36:29,560 Speaker 1: at the correlation between w T I and brand at 703 00:36:29,560 --> 00:36:31,000 Speaker 1: this point. What does that tell you? What does that 704 00:36:31,000 --> 00:36:34,239 Speaker 1: correlation tell you about the energy market. Well, I think 705 00:36:34,280 --> 00:36:36,640 Speaker 1: what's most important is that is the relationship between front 706 00:36:36,680 --> 00:36:38,680 Speaker 1: month to back month w t I and front month 707 00:36:38,680 --> 00:36:41,759 Speaker 1: to back month Brent. We're continuing to watch the contango 708 00:36:41,840 --> 00:36:46,000 Speaker 1: the carrying charge widen, even as prices have risen. The 709 00:36:46,080 --> 00:36:48,719 Speaker 1: contango has widen, which tells you that crude, as I 710 00:36:48,800 --> 00:36:52,800 Speaker 1: like to say, is bidding for storage. Crude is fine, 711 00:36:53,200 --> 00:36:55,800 Speaker 1: is forcing itself, or the the abundance of crude, and 712 00:36:55,800 --> 00:36:58,680 Speaker 1: there is an abundance of crude is forcing back months 713 00:36:58,680 --> 00:37:00,600 Speaker 1: to be stronger than front months. It's telling you that 714 00:37:00,640 --> 00:37:05,239 Speaker 1: there's an oversupply. And when in a contangled market, it's 715 00:37:05,440 --> 00:37:08,799 Speaker 1: very difficult to be bullish of crude oil under any circumstance. 716 00:37:08,880 --> 00:37:11,839 Speaker 1: There's just simply more of it. We find more of it. 717 00:37:12,120 --> 00:37:14,799 Speaker 1: We're better at producing it, we're better at finding it. 718 00:37:15,200 --> 00:37:17,480 Speaker 1: And that's not gonna that's not gonna end anytime soon 719 00:37:17,520 --> 00:37:21,360 Speaker 1: either quickly. Donnis if you amended your gold stance given 720 00:37:21,400 --> 00:37:25,640 Speaker 1: the Trump reflation, Actually, if if anything, I have become 721 00:37:25,680 --> 00:37:28,680 Speaker 1: more amenable to owning golden not in dollar terms, because 722 00:37:28,680 --> 00:37:30,680 Speaker 1: I'm really quite bullish of the US dollar and a 723 00:37:30,840 --> 00:37:33,920 Speaker 1: in long golden dollar terms is an implied bet against 724 00:37:33,960 --> 00:37:36,240 Speaker 1: the dollar, and I'm not willing to make that. However, 725 00:37:36,239 --> 00:37:37,920 Speaker 1: if you take a look at what gold did last 726 00:37:38,000 --> 00:37:40,319 Speaker 1: year in terms of the euro uh and I think 727 00:37:40,320 --> 00:37:42,960 Speaker 1: this is an important statistic. The stock market, the S 728 00:37:43,000 --> 00:37:45,160 Speaker 1: and P was up what nine percent last year, but 729 00:37:45,480 --> 00:37:47,960 Speaker 1: golden in euro terms was up much more than that. 730 00:37:48,320 --> 00:37:50,720 Speaker 1: People don't understand that fact. I want to be bullish 731 00:37:50,719 --> 00:37:52,640 Speaker 1: of gold, but only in terms of currencies that I 732 00:37:52,719 --> 00:37:55,759 Speaker 1: think will continue to diminish in value, and I think 733 00:37:55,800 --> 00:37:59,399 Speaker 1: that's primarily the Euro first and the end second. Thank 734 00:37:59,440 --> 00:38:02,799 Speaker 1: you so much. The Gartman letter always interesting. I just 735 00:38:02,800 --> 00:38:06,000 Speaker 1: put out on Twitter the Wikipedia and land Grant schools. 736 00:38:06,520 --> 00:38:09,560 Speaker 1: I grew up in a house of land grant excellence. 737 00:38:09,640 --> 00:38:14,280 Speaker 1: Is Mr Gartman has a good one. Cornell, your Cornell. 738 00:38:14,320 --> 00:38:17,120 Speaker 1: They have like a split school. You got schools school, 739 00:38:17,160 --> 00:38:20,399 Speaker 1: you got the architect school, engineering school plenty, so each 740 00:38:20,440 --> 00:38:31,319 Speaker 1: of them with their own character. Thanks for listening to 741 00:38:31,360 --> 00:38:37,440 Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on iTunes, SoundCloud, 742 00:38:37,880 --> 00:38:42,120 Speaker 1: or whichever podcast platform you prefer. I'm out on Twitter 743 00:38:42,200 --> 00:38:46,000 Speaker 1: at Tom Keene. David Gura is at David Gura Before 744 00:38:46,040 --> 00:39:00,400 Speaker 1: the podcast you can always catch us worldwide. I'm Bloomberg Radio. Yeah. 745 00:39:02,880 --> 00:39:05,960 Speaker 1: Brought to you by Bank of America. Mary Lynch dedicated 746 00:39:06,280 --> 00:39:09,719 Speaker 1: to bringing our clients insights and solutions to meet the 747 00:39:09,800 --> 00:39:14,239 Speaker 1: challenges of a transforming world. That's the power of global connections. 748 00:39:14,600 --> 00:39:19,120 Speaker 1: Mary Lynch, Pierce, Fenner and Smith Incorporated, Member s I 749 00:39:19,280 --> 00:39:19,560 Speaker 1: p C