1 00:00:00,320 --> 00:00:04,160 Speaker 1: Who you put your trust in matters. Investors have put 2 00:00:04,200 --> 00:00:07,640 Speaker 1: their trust in independent registered investment advisors to the tune 3 00:00:07,640 --> 00:00:12,240 Speaker 1: of four trillion dollars. Why learn more and find your 4 00:00:12,240 --> 00:00:27,240 Speaker 1: independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:27,320 --> 00:00:31,320 Speaker 1: I'm Tom Keane, always with Michael McKee. Daily we bring 6 00:00:31,360 --> 00:00:35,280 Speaker 1: you insight from the best in economics, finance, investment, and 7 00:00:35,400 --> 00:00:41,519 Speaker 1: international relations. Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, 8 00:00:41,560 --> 00:00:47,400 Speaker 1: and of course on the Bloomberg I mean, it's time 9 00:00:47,440 --> 00:00:49,919 Speaker 1: to bring in Michael McKee and he'll be with us 10 00:00:49,920 --> 00:00:52,960 Speaker 1: over at our Africa summit today as well Bloomberg Surveillance 11 00:00:53,159 --> 00:00:56,440 Speaker 1: and George Gankovas joining us as well. Michael, you stayed 12 00:00:56,520 --> 00:00:59,280 Speaker 1: up riveted at eleven am. I'm still reading team coverage 13 00:00:59,320 --> 00:01:01,600 Speaker 1: in the New York pub was about Brand Jelina. You 14 00:01:01,600 --> 00:01:04,240 Speaker 1: didn't even look at Brand Jelena yesterday. You looked at 15 00:01:04,280 --> 00:01:09,319 Speaker 1: the bank in Japan. But I'm so boring what you learned. Well, 16 00:01:09,360 --> 00:01:12,560 Speaker 1: I'll tell you what you were just quoting friend as well. Preside, 17 00:01:12,560 --> 00:01:15,800 Speaker 1: I'm gonna quote Strouther Martin from Cool Hand, Luke. What 18 00:01:15,959 --> 00:01:19,280 Speaker 1: we have here is a failure to communicate, and that's 19 00:01:19,319 --> 00:01:21,319 Speaker 1: the problem for central banks. Take a look at what 20 00:01:21,400 --> 00:01:24,479 Speaker 1: the Bank of Japan has done over the years. They 21 00:01:24,560 --> 00:01:28,760 Speaker 1: keep promising, promising, promising, they're going to generate inflation. Well 22 00:01:28,840 --> 00:01:33,120 Speaker 1: there's inflation expectations in Japan. They're hovering right above zero. 23 00:01:33,160 --> 00:01:34,640 Speaker 1: You can see where they went down when they went 24 00:01:34,640 --> 00:01:37,880 Speaker 1: to negative interest rates. They're not getting there. No matter 25 00:01:37,920 --> 00:01:39,880 Speaker 1: what they do, they are not getting there. And that 26 00:01:40,040 --> 00:01:42,199 Speaker 1: is a real problem for the Japanese. The other problem 27 00:01:42,360 --> 00:01:44,360 Speaker 1: that they have this is a failure of tools. Is 28 00:01:44,400 --> 00:01:46,280 Speaker 1: it a failure to communicate? But if I tell you, look, 29 00:01:46,280 --> 00:01:48,880 Speaker 1: I want inflation at two and actually you never get 30 00:01:48,880 --> 00:01:51,040 Speaker 1: two percent, is it a failure to communicate or is 31 00:01:51,040 --> 00:01:52,920 Speaker 1: it that actually you just can't get there. Well, that's 32 00:01:52,960 --> 00:01:54,600 Speaker 1: the next point I was gonna make. Do the tools 33 00:01:54,720 --> 00:01:57,080 Speaker 1: even work. You take a look at what the Japanese 34 00:01:57,120 --> 00:02:01,000 Speaker 1: have done. They have gone to this extraordinary a monetary policy, 35 00:02:01,040 --> 00:02:05,080 Speaker 1: expanded the balance sheet, and done all kinds of negative 36 00:02:05,120 --> 00:02:08,320 Speaker 1: interest rates and other things, and they can't get bank 37 00:02:08,480 --> 00:02:11,160 Speaker 1: lending up. I mean, this program is designed to mitigate 38 00:02:11,200 --> 00:02:14,720 Speaker 1: the effects on banks of negative interest rates, so they 39 00:02:14,720 --> 00:02:16,680 Speaker 1: will lend more. But look at that lending channel there, 40 00:02:16,919 --> 00:02:22,320 Speaker 1: it's just flat. There is no demand, not attacking the 41 00:02:22,360 --> 00:02:25,160 Speaker 1: demand side, and that gets into the communication issue. We 42 00:02:25,240 --> 00:02:28,680 Speaker 1: demand an opinion of someone from Numura, the Great Japanese bank. 43 00:02:28,720 --> 00:02:31,400 Speaker 1: George Conkava's greed to stop by this morning. What was 44 00:02:31,400 --> 00:02:34,200 Speaker 1: the reaction in Tokyo of your bank to these announcements? 45 00:02:34,200 --> 00:02:36,200 Speaker 1: So actually quite quite interesting. You look at the market 46 00:02:36,200 --> 00:02:39,320 Speaker 1: reaction and how things have have worked out. Volatility has 47 00:02:39,360 --> 00:02:42,520 Speaker 1: been relatively low, and I'm seeing major kind of swings here. 48 00:02:42,520 --> 00:02:45,160 Speaker 1: So I think expectations going into it was there's a 49 00:02:45,160 --> 00:02:48,040 Speaker 1: lot of moving parts, as as Mike's described, and it's 50 00:02:48,040 --> 00:02:49,800 Speaker 1: gonna be hard to get get it right. But at 51 00:02:49,880 --> 00:02:53,280 Speaker 1: the same time, they really deliver the message that's gonna 52 00:02:53,280 --> 00:02:55,720 Speaker 1: be um, you know, terrible for the markets to digest 53 00:02:55,760 --> 00:02:59,120 Speaker 1: going forward, this idea that they're they're out of tools. 54 00:02:59,360 --> 00:03:02,720 Speaker 1: They still are relying upon some sort of enhancing conventional 55 00:03:02,800 --> 00:03:05,200 Speaker 1: type easing. They could have went to the helicopter money, 56 00:03:05,440 --> 00:03:07,959 Speaker 1: which is what everyone agreed. They didn't go to the helicopter. 57 00:03:08,000 --> 00:03:10,079 Speaker 1: But the distinction, George, that we learned in the last 58 00:03:10,120 --> 00:03:13,200 Speaker 1: half hour, and Mike you address this as well, the 59 00:03:13,280 --> 00:03:16,880 Speaker 1: idea that they've gone beyond negative rate policy and QWI 60 00:03:17,280 --> 00:03:19,880 Speaker 1: thank you are brutal Gallo or you and Cameron wants 61 00:03:19,880 --> 00:03:23,560 Speaker 1: saying no, Gallo is wrong. They're still utilizing a negative 62 00:03:23,639 --> 00:03:27,600 Speaker 1: rate policy within this new policy which side of defense. Yeh. Look, 63 00:03:27,600 --> 00:03:30,160 Speaker 1: I still think the fact that it's still as a 64 00:03:30,280 --> 00:03:33,320 Speaker 1: viable option means they can go to negative rates. So 65 00:03:33,400 --> 00:03:36,360 Speaker 1: they've chosen to to be more real targeting and forcing 66 00:03:36,360 --> 00:03:40,280 Speaker 1: them out there. Um And I think just because yet 67 00:03:40,320 --> 00:03:43,240 Speaker 1: that's happening doesn't mean we they're they're admitting it doesn't work. 68 00:03:43,520 --> 00:03:47,640 Speaker 1: They're just looking for uh, you know, actually taking away 69 00:03:47,640 --> 00:03:49,320 Speaker 1: some of this pressure that that's been happening for the 70 00:03:49,320 --> 00:03:53,040 Speaker 1: asymmetries of the QWE design. So, Mike, I mean I 71 00:03:53,040 --> 00:03:55,800 Speaker 1: wonder whether you know, I know, you say, George it's conventional, 72 00:03:55,800 --> 00:03:57,560 Speaker 1: but actually it's through the experiment. I mean, you could 73 00:03:57,600 --> 00:04:00,240 Speaker 1: argue that they're they're I mean these tweaks right, which 74 00:04:00,240 --> 00:04:02,400 Speaker 1: the markets may be a bit disappointed about. It is 75 00:04:02,480 --> 00:04:05,240 Speaker 1: a whole new way of doing things, and this is 76 00:04:05,640 --> 00:04:09,080 Speaker 1: as experimental as you get until you do helicopter money, yeah, 77 00:04:09,160 --> 00:04:12,080 Speaker 1: and which would be the ultimate experiment. But at this point, 78 00:04:12,240 --> 00:04:14,360 Speaker 1: the consensus of analysts seems to be that the bank 79 00:04:14,400 --> 00:04:18,000 Speaker 1: in Japan is recognizing that they don't have anything left 80 00:04:18,279 --> 00:04:20,880 Speaker 1: to change the game. What they can do is keep 81 00:04:20,920 --> 00:04:24,400 Speaker 1: policies in place, but they're waiting for the fiscal authorities 82 00:04:24,440 --> 00:04:26,839 Speaker 1: because monetary policy has sort of reached the limits of 83 00:04:26,839 --> 00:04:29,599 Speaker 1: its effectiveness. Let's look at the Euclidean space here. Let's 84 00:04:29,600 --> 00:04:31,440 Speaker 1: bring up this chart again. We're gonna show you a lot. 85 00:04:31,560 --> 00:04:34,680 Speaker 1: This is a Japanese yield curve. Georgia might jump in here. 86 00:04:34,720 --> 00:04:38,599 Speaker 1: The red circles word Angelina gave up on bread. No wait, 87 00:04:39,000 --> 00:04:43,040 Speaker 1: the red circles yield the tenuere yield is negative. Now 88 00:04:43,160 --> 00:04:46,560 Speaker 1: to either of you have any experience of a nation 89 00:04:47,200 --> 00:04:52,120 Speaker 1: pushing up a yield that far out the curve. So look, 90 00:04:52,279 --> 00:04:53,840 Speaker 1: think about this. This is a taking a page from 91 00:04:53,839 --> 00:04:59,120 Speaker 1: the nineteen thirties yield target yeld targeting um is. It 92 00:04:59,120 --> 00:05:00,960 Speaker 1: comes with the host of issues. I mean, at what 93 00:05:01,040 --> 00:05:04,880 Speaker 1: point do people actually, you know, give up actually having 94 00:05:04,880 --> 00:05:07,440 Speaker 1: activity in that certain that sector of the curve. But 95 00:05:07,520 --> 00:05:09,039 Speaker 1: I mean I think that now that they've drawn the 96 00:05:09,080 --> 00:05:11,680 Speaker 1: line in the sand at the zero line, it's gonna 97 00:05:11,720 --> 00:05:13,800 Speaker 1: be see, it's gonna interesting how they defend that that 98 00:05:13,960 --> 00:05:18,200 Speaker 1: zero bound. And well, I'll tell you what The reason 99 00:05:18,279 --> 00:05:20,200 Speaker 1: I woke up to look at the Bank of Japan 100 00:05:20,360 --> 00:05:23,679 Speaker 1: was I heard the enormous sound of Milton Friedman turning 101 00:05:23,680 --> 00:05:26,119 Speaker 1: over in his grave. Next year, the bank in Japan 102 00:05:26,120 --> 00:05:29,520 Speaker 1: will own about fifty percent of their sovereign bond market 103 00:05:30,200 --> 00:05:32,840 Speaker 1: and they are going to be controlling the yield curve. 104 00:05:32,920 --> 00:05:37,760 Speaker 1: The government is deciding what prices should be, not the markets, 105 00:05:37,760 --> 00:05:41,720 Speaker 1: and that's astounding. Again, what I would say to that though, 106 00:05:41,800 --> 00:05:44,720 Speaker 1: what we experience of the nineties, and again history does 107 00:05:44,720 --> 00:05:47,039 Speaker 1: not have to repeat itself. But when you know you 108 00:05:47,080 --> 00:05:49,440 Speaker 1: have a buyer at a certain level, then you don't 109 00:05:49,480 --> 00:05:51,719 Speaker 1: feel the urgency to actually have to sell to the 110 00:05:51,760 --> 00:05:53,560 Speaker 1: central bank. So in a way, by them making the 111 00:05:53,560 --> 00:05:56,960 Speaker 1: monetary base flexible, they don't have to supersize and continue 112 00:05:57,000 --> 00:05:58,839 Speaker 1: to buy bonds as much. People might actually hold the 113 00:05:58,839 --> 00:06:01,960 Speaker 1: bonds in and then my reduce this kind of you know, 114 00:06:02,240 --> 00:06:04,520 Speaker 1: you know, an intervention kind of mood and feeling in 115 00:06:04,560 --> 00:06:07,880 Speaker 1: the markets. Is it actually obvious then the longer term 116 00:06:07,920 --> 00:06:10,960 Speaker 1: bonds are the place to be because overall they just higher, 117 00:06:11,000 --> 00:06:13,200 Speaker 1: you know, aller higher yields, and so it seems like 118 00:06:13,200 --> 00:06:15,000 Speaker 1: a no brainer. Is it going to be over crowded? 119 00:06:15,800 --> 00:06:18,600 Speaker 1: Looks I think again the combination of this target and 120 00:06:18,720 --> 00:06:20,880 Speaker 1: not really focusing beyond the ten year sector to the 121 00:06:20,880 --> 00:06:23,560 Speaker 1: twenty and the third year sector in japanel offers some interests, 122 00:06:23,560 --> 00:06:26,240 Speaker 1: some yield interests for those locally. It does play a 123 00:06:26,360 --> 00:06:28,200 Speaker 1: role back to the US and what does two US 124 00:06:28,279 --> 00:06:30,640 Speaker 1: treasuries in US rates and European rates. Quite frankly, everything 125 00:06:30,680 --> 00:06:33,680 Speaker 1: is connected. So if you know, you get a situation 126 00:06:33,720 --> 00:06:36,640 Speaker 1: where the locals in Japan and continue to buy their 127 00:06:36,640 --> 00:06:39,039 Speaker 1: own paper without having to compete with the Bank of Japan, 128 00:06:39,480 --> 00:06:41,280 Speaker 1: then our yields can actually go up in a very 129 00:06:41,320 --> 00:06:43,599 Speaker 1: perverse way. This is critical going to get both your Georgie, 130 00:06:43,640 --> 00:06:45,760 Speaker 1: let's go to you first. This is absolutely critically your 131 00:06:45,800 --> 00:06:49,039 Speaker 1: comment that harkens back to thirties policy, which is a 132 00:06:49,160 --> 00:06:53,159 Speaker 1: very important statement within the debate over Phillips curve, modern 133 00:06:53,240 --> 00:06:57,520 Speaker 1: economics versus some form of neo Fisherian view out of 134 00:06:57,520 --> 00:07:00,440 Speaker 1: the twenties. In the thirties, will this I will see 135 00:07:00,520 --> 00:07:05,200 Speaker 1: last night affect real and most importantly animal spirit nominal 136 00:07:05,240 --> 00:07:09,240 Speaker 1: GDP and numerous Japan Ultimately they want to get real 137 00:07:09,320 --> 00:07:11,440 Speaker 1: rates low and this this will drive real rates if 138 00:07:11,480 --> 00:07:13,920 Speaker 1: nominals don't really go anywhere then real rates are gonna 139 00:07:13,920 --> 00:07:16,720 Speaker 1: stay low, and hopefully that creates capital formation and hopefully 140 00:07:17,200 --> 00:07:19,240 Speaker 1: that's the operative. Word goes back to the second chart 141 00:07:19,280 --> 00:07:21,840 Speaker 1: that I showed. There's no demand. The second chart. You 142 00:07:21,880 --> 00:07:24,840 Speaker 1: can make yields low. You can make money cheap, which 143 00:07:24,840 --> 00:07:26,600 Speaker 1: the Bank of Japan has been trying to do for years. 144 00:07:26,760 --> 00:07:29,760 Speaker 1: But unless people feel there's a return to their investment, 145 00:07:30,200 --> 00:07:32,600 Speaker 1: they're not going to spend, and right now they are 146 00:07:32,640 --> 00:07:35,120 Speaker 1: not adding to spending. Georgia, I'm going to be in 147 00:07:35,160 --> 00:07:37,000 Speaker 1: the time out chair probably for the rest of my life. 148 00:07:37,080 --> 00:07:38,960 Speaker 1: But I don't care, Tom Keen, because I don't want 149 00:07:38,960 --> 00:07:43,680 Speaker 1: to go back to what happened the nine George last night. 150 00:07:43,920 --> 00:07:47,440 Speaker 1: This isn't like globalization, right, everything is in play like 151 00:07:47,480 --> 00:07:50,120 Speaker 1: it's not a nice such good was. This is a 152 00:07:50,160 --> 00:07:52,600 Speaker 1: b o J. They also have a higher end because 153 00:07:52,600 --> 00:07:56,400 Speaker 1: their haven, and they're fighting devaluations across the world. It's 154 00:07:56,400 --> 00:07:59,760 Speaker 1: a different world than it was. Strongly agree that the 155 00:08:00,880 --> 00:08:03,240 Speaker 1: clows are different. The currency perspective in the flows and 156 00:08:03,280 --> 00:08:05,040 Speaker 1: the fact that we have a dollar reserve system still 157 00:08:05,080 --> 00:08:07,920 Speaker 1: in place makes it completely different from the nineteen thirties. 158 00:08:07,920 --> 00:08:10,560 Speaker 1: But the way that they are targeting yields hearkens back 159 00:08:10,600 --> 00:08:13,720 Speaker 1: to that time time period, and it will could could 160 00:08:13,800 --> 00:08:16,720 Speaker 1: come with the same sort of issues, maybe actually support 161 00:08:16,920 --> 00:08:20,480 Speaker 1: local markets better. So we've had a lot of flows 162 00:08:20,520 --> 00:08:23,640 Speaker 1: coming into US bond markets because of these foreign investors. 163 00:08:24,000 --> 00:08:26,880 Speaker 1: This might actually, you know, challenge that. One interesting point 164 00:08:26,920 --> 00:08:28,880 Speaker 1: that should be noted here is that this is a 165 00:08:28,880 --> 00:08:31,200 Speaker 1: shift from the Bank of Japan. They're not targeting a 166 00:08:31,240 --> 00:08:35,160 Speaker 1: weaker yen here. This is domestically lead, so you're not 167 00:08:35,200 --> 00:08:37,720 Speaker 1: going to see a dramatic fall in the end which 168 00:08:37,880 --> 00:08:39,880 Speaker 1: takes some of the pressure off the FED may have 169 00:08:39,960 --> 00:08:42,120 Speaker 1: more impact on Japan today than the Bank of Japan 170 00:08:42,320 --> 00:08:45,000 Speaker 1: has on the US. Very quickly here, I'm sorry this 171 00:08:45,120 --> 00:08:47,959 Speaker 1: charts as stronger yen. Bring it up here right now, 172 00:08:48,000 --> 00:08:50,280 Speaker 1: and that Pennant over on the right side, George can go, 173 00:08:50,640 --> 00:08:52,800 Speaker 1: what's the number of call on yen after what we 174 00:08:52,800 --> 00:08:55,440 Speaker 1: saw last night? Quickly, we still we still think that 175 00:08:55,480 --> 00:08:57,559 Speaker 1: you know, yen trade within arrange, it's gonna be hard 176 00:08:57,559 --> 00:08:59,920 Speaker 1: to really break a bove the one ten. This is 177 00:09:00,040 --> 00:09:13,920 Speaker 1: incredibly smart, great conversation. There's no better person to talk 178 00:09:13,960 --> 00:09:17,800 Speaker 1: to about the Bank of Japan, It's impacts around the world, 179 00:09:18,280 --> 00:09:21,960 Speaker 1: and the Federal Reserve meeting later today that Abby Joseph Cohne, 180 00:09:22,240 --> 00:09:27,120 Speaker 1: Golden SACS Global Markets Institute President. She joins us. Now, Abby, 181 00:09:27,200 --> 00:09:30,720 Speaker 1: thanks for joining us such an important day. I want 182 00:09:30,720 --> 00:09:33,839 Speaker 1: to start, I want to I want to start with 183 00:09:33,880 --> 00:09:38,120 Speaker 1: the Bank of Japan. To me, there are a couple 184 00:09:38,120 --> 00:09:41,559 Speaker 1: of big things going on here. One is that the 185 00:09:41,600 --> 00:09:44,400 Speaker 1: government of Japan is going to be controlling prices. They're 186 00:09:44,400 --> 00:09:47,600 Speaker 1: gonna run the yield curve, which is normally a function 187 00:09:47,640 --> 00:09:52,560 Speaker 1: of markets, which strikes me as an extraordinary distortion. Uh. 188 00:09:52,559 --> 00:09:55,800 Speaker 1: And too, they seem to have given up on policy 189 00:09:55,880 --> 00:09:59,160 Speaker 1: achieving its goals and rather seem to be mint trying 190 00:09:59,200 --> 00:10:02,520 Speaker 1: to mitigate the impact of policy while they wait for 191 00:10:02,520 --> 00:10:05,839 Speaker 1: the fiscal authorities to act. Um. I guess what Time 192 00:10:05,880 --> 00:10:10,920 Speaker 1: would say is discuss I will be delighted to discuss it. Um. 193 00:10:10,960 --> 00:10:14,560 Speaker 1: And you are raising, obviously some very important issues. But 194 00:10:14,679 --> 00:10:17,440 Speaker 1: let's keep in mind something that we often forget to 195 00:10:17,480 --> 00:10:21,320 Speaker 1: talk about, and that is the extremely flat and in 196 00:10:21,400 --> 00:10:25,320 Speaker 1: some places negative yield curve in Japan has been creating 197 00:10:25,559 --> 00:10:31,000 Speaker 1: enormous problems for insurance companies and also for pension funds. 198 00:10:31,160 --> 00:10:33,880 Speaker 1: And uh, the same thing would be happening here and 199 00:10:34,080 --> 00:10:37,320 Speaker 1: is happening here, but to a lesser degree. UH. You know, 200 00:10:37,440 --> 00:10:41,240 Speaker 1: keep in mind that long term investors like life insurers 201 00:10:41,480 --> 00:10:44,280 Speaker 1: UH and those big pension plans, and they are quite 202 00:10:44,360 --> 00:10:48,520 Speaker 1: large in Japan, the largest one being the government system UH, 203 00:10:48,600 --> 00:10:53,079 Speaker 1: the Japan postal system really suffering with these negative yields. 204 00:10:53,080 --> 00:10:55,920 Speaker 1: And what they're trying to do is show that they 205 00:10:55,960 --> 00:11:01,800 Speaker 1: will continue quantitative ease, but not the super long maturities, 206 00:11:01,960 --> 00:11:04,080 Speaker 1: and that's the way they're going to try to to 207 00:11:04,200 --> 00:11:06,760 Speaker 1: bend the yield curve. The other thing that I think 208 00:11:06,840 --> 00:11:10,400 Speaker 1: is important to recognize is that they didn't really step 209 00:11:10,440 --> 00:11:14,960 Speaker 1: away from some of their other stated goals, which is 210 00:11:15,040 --> 00:11:17,640 Speaker 1: to boost inflation, and that to me was a very 211 00:11:17,679 --> 00:11:21,400 Speaker 1: important part of their statement, saying that they still continue 212 00:11:21,440 --> 00:11:23,800 Speaker 1: to aim not just for the two percent, which was 213 00:11:23,840 --> 00:11:26,920 Speaker 1: the original goal, but they'd like to overshoot it. But 214 00:11:27,000 --> 00:11:30,559 Speaker 1: they've also given themselves more running room because they're spending 215 00:11:31,280 --> 00:11:33,720 Speaker 1: less focus, if you will, at least in that statement 216 00:11:34,040 --> 00:11:37,680 Speaker 1: on when they want to get to that two We 217 00:11:37,800 --> 00:11:40,000 Speaker 1: think that what they're aiming to do is to get 218 00:11:40,080 --> 00:11:45,079 Speaker 1: the longer yields into positive territory, maybe even that tenure 219 00:11:45,200 --> 00:11:49,520 Speaker 1: yield UH into positive territory. Know, just a few basis points, 220 00:11:49,679 --> 00:11:52,680 Speaker 1: but that's better than the negative rates that they've had 221 00:11:52,679 --> 00:11:56,160 Speaker 1: this far. Yeah. But here's the thing. We were quoting 222 00:11:56,200 --> 00:11:58,840 Speaker 1: Strouther Martin from cool Hand Luke. What we have here 223 00:11:59,040 --> 00:12:01,320 Speaker 1: is a failure to come indicate they want to get 224 00:12:01,360 --> 00:12:03,440 Speaker 1: inflation to two percent. Now they say, we're willing to 225 00:12:03,440 --> 00:12:06,280 Speaker 1: get it over two percent, but it's going the other direction. 226 00:12:07,480 --> 00:12:10,760 Speaker 1: Our sense is that that is because nobody wants to 227 00:12:10,920 --> 00:12:14,120 Speaker 1: feel that when they get to two percent, all of 228 00:12:14,200 --> 00:12:17,800 Speaker 1: a sudden, they'll reverse policy. So what they're basically saying 229 00:12:17,960 --> 00:12:21,040 Speaker 1: is our goal is to lift inflation, and we may 230 00:12:21,120 --> 00:12:24,880 Speaker 1: not adjust policy when we get to two percent. Keep 231 00:12:24,880 --> 00:12:27,680 Speaker 1: in mind that there are many factors other in central 232 00:12:27,720 --> 00:12:31,280 Speaker 1: bank policy that will drive inflation. And in this world, 233 00:12:31,360 --> 00:12:33,960 Speaker 1: for example, over the next year or two uh we 234 00:12:34,200 --> 00:12:39,080 Speaker 1: and many other firms and investors are expecting energy prices 235 00:12:39,080 --> 00:12:42,480 Speaker 1: to rise um and if in fact energy prices rise, 236 00:12:42,679 --> 00:12:46,280 Speaker 1: we will begin to see movements up in inflation, not 237 00:12:46,320 --> 00:12:49,040 Speaker 1: just in Japan, but also in the United States and 238 00:12:49,080 --> 00:12:52,240 Speaker 1: many other countries. Abby. There's an Abbey Joseph Cohen that 239 00:12:52,320 --> 00:12:54,760 Speaker 1: a lot of our audience doesn't know, and that is 240 00:12:54,800 --> 00:12:58,280 Speaker 1: the Matthew Abbey. I want to go there right now. 241 00:12:58,400 --> 00:13:02,840 Speaker 1: And the idea of any central bank using two time continuum. 242 00:13:02,960 --> 00:13:05,360 Speaker 1: One is going out the X axis on the yield 243 00:13:05,360 --> 00:13:08,360 Speaker 1: curve and trying to manipulate father out to go at 244 00:13:08,400 --> 00:13:11,600 Speaker 1: the margin to a seven year manipulation versus a five 245 00:13:11,679 --> 00:13:14,839 Speaker 1: year or to a ten year manipulation versus a seven 246 00:13:14,920 --> 00:13:18,840 Speaker 1: year And then the other is the chronic nature, the 247 00:13:18,960 --> 00:13:22,640 Speaker 1: time function of policy, the inertial force from the short 248 00:13:22,800 --> 00:13:26,840 Speaker 1: term impact to medium term and long term impact. How 249 00:13:26,920 --> 00:13:31,880 Speaker 1: discreete and separate are those two ideas of time to 250 00:13:32,000 --> 00:13:35,120 Speaker 1: riff a question, Tom, and let's complicate it even further 251 00:13:35,760 --> 00:13:40,000 Speaker 1: and recognize it. That's what we do here. Absolutely, fiscal 252 00:13:40,040 --> 00:13:44,080 Speaker 1: policy has a still longer time frame. And so when 253 00:13:44,160 --> 00:13:46,920 Speaker 1: we talk about the b o J perhaps wanting to 254 00:13:47,000 --> 00:13:50,800 Speaker 1: wait until the fiscal policy initiatives have some time to 255 00:13:51,280 --> 00:13:54,040 Speaker 1: have an impact, uh, they could be waiting, you know, 256 00:13:54,200 --> 00:13:57,960 Speaker 1: quite a while, because what we know of history is 257 00:13:58,000 --> 00:14:01,880 Speaker 1: that monetary policy is the wickest way to impact rates, 258 00:14:01,960 --> 00:14:04,920 Speaker 1: the quickest way to impact markets. And then let's add 259 00:14:04,960 --> 00:14:08,400 Speaker 1: a fourth complication, which is not so much time, but 260 00:14:08,520 --> 00:14:11,720 Speaker 1: the fact that we're now talking about international capital flows. 261 00:14:12,240 --> 00:14:14,680 Speaker 1: So much of what's been happening with regard to central 262 00:14:14,720 --> 00:14:17,600 Speaker 1: bank policy, not just for the b o J but 263 00:14:17,760 --> 00:14:20,480 Speaker 1: for the FED, E, c B and so on. Is 264 00:14:20,560 --> 00:14:24,480 Speaker 1: recognizing that you can change policy in one place and 265 00:14:24,560 --> 00:14:27,920 Speaker 1: it has a quote a ripple effect, sometimes with the 266 00:14:28,000 --> 00:14:31,720 Speaker 1: tidal wave effect in other places. And one thing to 267 00:14:31,800 --> 00:14:34,800 Speaker 1: keep in mind is that the b o J in 268 00:14:34,880 --> 00:14:38,960 Speaker 1: the face of the general belief that the FED is 269 00:14:39,000 --> 00:14:42,240 Speaker 1: probably not going to do very much today. We can 270 00:14:42,280 --> 00:14:46,080 Speaker 1: talk about that later. Um, maybe they didn't want to 271 00:14:46,200 --> 00:14:49,440 Speaker 1: do anything more aggressive than what they've done today. But 272 00:14:49,680 --> 00:14:52,200 Speaker 1: even mind this, this heel curve bending is a really 273 00:14:52,280 --> 00:14:56,080 Speaker 1: big deal. This is I got it at you. But 274 00:14:56,120 --> 00:14:59,000 Speaker 1: what's so important here to our global audience is are 275 00:14:59,040 --> 00:15:01,440 Speaker 1: they doing this with in a belief that harkens back 276 00:15:01,480 --> 00:15:05,360 Speaker 1: the Heilbronner and Bernstein of literally the fifties or at 277 00:15:05,480 --> 00:15:09,479 Speaker 1: least the eighties pre Plaza accord. Mike, we're at the Plaza. 278 00:15:09,560 --> 00:15:13,280 Speaker 1: That's the Plaza Accord. But but but Abby, are they 279 00:15:13,320 --> 00:15:18,600 Speaker 1: applying old economics for a modern global economy? I think 280 00:15:18,600 --> 00:15:23,200 Speaker 1: they're applying new economics, um in terms of trying to 281 00:15:23,320 --> 00:15:28,680 Speaker 1: use tools that perhaps would not have been conceived certainly 282 00:15:28,760 --> 00:15:31,520 Speaker 1: pre Plaza. You know what we're talking about, of course, 283 00:15:31,840 --> 00:15:35,800 Speaker 1: is this exchange rate movement where there's more flexible rates 284 00:15:35,800 --> 00:15:40,120 Speaker 1: and so on. At this point, Japan, yes, would like 285 00:15:40,360 --> 00:15:43,720 Speaker 1: a somewhat weaker en which is what they wanted at 286 00:15:43,720 --> 00:15:46,400 Speaker 1: the time of the Plaza Accord because that would help 287 00:15:46,480 --> 00:15:50,080 Speaker 1: their real productive side of the economy. From the Bloomberg 288 00:15:50,120 --> 00:15:54,440 Speaker 1: Philanthropies and U S Department of Commerce US Africa business 289 00:15:54,440 --> 00:15:57,040 Speaker 1: form the Plaza Hotel in New York, Michael McKain time 290 00:15:57,120 --> 00:16:01,800 Speaker 1: Kane's thrilled to start with Abby Joseph and of Golden Sex. Abby. 291 00:16:01,880 --> 00:16:04,600 Speaker 1: We're talking about the new economy and the new macro 292 00:16:04,760 --> 00:16:13,200 Speaker 1: economics and it is within a blindingly international floating currency market. 293 00:16:13,480 --> 00:16:17,120 Speaker 1: How does that filter over to your expertise in equities? 294 00:16:17,160 --> 00:16:21,480 Speaker 1: We see equities higher. Is it a bubble or is 295 00:16:21,520 --> 00:16:26,400 Speaker 1: it something else? Given our modern economics. Tom My view 296 00:16:26,520 --> 00:16:29,280 Speaker 1: is that this is not a bubble um and for 297 00:16:29,320 --> 00:16:32,920 Speaker 1: a variety of reasons. First of all, you're absolutely right 298 00:16:33,040 --> 00:16:36,360 Speaker 1: that we can no longer look at any market in 299 00:16:36,400 --> 00:16:41,000 Speaker 1: just a domestic setting, and so from a more global perspective, 300 00:16:41,080 --> 00:16:45,880 Speaker 1: we have to recognize that US companies are performing quite well, uh, 301 00:16:46,000 --> 00:16:49,440 Speaker 1: not just in domestic markets, but also doing well outside 302 00:16:49,480 --> 00:16:53,760 Speaker 1: the United States a number to our economy. While there 303 00:16:53,920 --> 00:16:57,680 Speaker 1: is disappointment that the second derivative, that is the rate 304 00:16:57,680 --> 00:17:00,320 Speaker 1: of change of improvement is not as it as it 305 00:17:00,400 --> 00:17:03,200 Speaker 1: might have been, say a year or so ago, it's 306 00:17:03,240 --> 00:17:07,760 Speaker 1: not bad um and our growth um uh is actually 307 00:17:07,800 --> 00:17:11,159 Speaker 1: better than in many other countries. Uh. Number three. We 308 00:17:11,200 --> 00:17:15,640 Speaker 1: are also now seeing real gains UM in our labor markets. 309 00:17:15,920 --> 00:17:19,480 Speaker 1: While the unemployment rate is kind of stuck at about 310 00:17:19,480 --> 00:17:22,760 Speaker 1: four point nine percent, under the surface, we are seeing 311 00:17:22,760 --> 00:17:26,679 Speaker 1: more jobs being created. We're seeing that wages arising. And 312 00:17:26,760 --> 00:17:30,000 Speaker 1: that very important report last week that said media and 313 00:17:30,160 --> 00:17:34,439 Speaker 1: family incomes are up and they rose very substantially in 314 00:17:34,520 --> 00:17:39,119 Speaker 1: two thousand and fifteen. That says something good about the 315 00:17:39,200 --> 00:17:43,399 Speaker 1: long term and sustainable nature of of US growth. And 316 00:17:43,560 --> 00:17:46,600 Speaker 1: when we take a look at valuation models to say, well, 317 00:17:47,080 --> 00:17:51,359 Speaker 1: how to various markets stack up, the most important conclusion 318 00:17:51,720 --> 00:17:56,359 Speaker 1: that we have discussed before on air is that sixth 319 00:17:56,359 --> 00:18:00,439 Speaker 1: income markets in many places are just overpriced. Uh uh. 320 00:18:00,520 --> 00:18:03,639 Speaker 1: Negative interest rates may prove to be something of a 321 00:18:03,760 --> 00:18:08,280 Speaker 1: folly for many countries. UH. And maybe the benefit that 322 00:18:08,320 --> 00:18:14,920 Speaker 1: some nations are seeing is really through the foreign trade mechanism. 323 00:18:14,960 --> 00:18:18,600 Speaker 1: Because the negative rates in some cases, particularly in Europe, 324 00:18:18,840 --> 00:18:25,040 Speaker 1: have led to declines in the currency, enhancing the competitive 325 00:18:25,160 --> 00:18:29,080 Speaker 1: nature in their export markets. So when we take a 326 00:18:29,080 --> 00:18:33,560 Speaker 1: look at US equities specific to your question, UM, you know, 327 00:18:33,760 --> 00:18:37,199 Speaker 1: US equities are you know, comfortably in the range that 328 00:18:37,280 --> 00:18:41,440 Speaker 1: we think is fair value for this year based upon 329 00:18:41,840 --> 00:18:44,720 Speaker 1: our outlook for earnings and so on. And if we're 330 00:18:44,760 --> 00:18:47,600 Speaker 1: correct that there is no recession on the horizon, we 331 00:18:47,640 --> 00:18:50,560 Speaker 1: would expect US stock prices to continue to move higher, 332 00:18:50,880 --> 00:18:54,159 Speaker 1: not in a straight line, but to drift up. Given 333 00:18:54,440 --> 00:18:58,320 Speaker 1: UH that, UM, it strikes me that you've just made 334 00:18:58,359 --> 00:19:02,240 Speaker 1: a case for Janet ye under raise rates today. UM. 335 00:19:02,440 --> 00:19:06,600 Speaker 1: There are UM a number of reasons why UM our 336 00:19:06,720 --> 00:19:10,440 Speaker 1: team and many other investors think that the Fed may 337 00:19:10,520 --> 00:19:14,040 Speaker 1: decide to hold its fire um uh today. And clearly 338 00:19:14,080 --> 00:19:17,600 Speaker 1: the markets are signaling that the probability for rate rise 339 00:19:17,920 --> 00:19:21,640 Speaker 1: today is not all that high, although it's not bad 340 00:19:22,040 --> 00:19:25,280 Speaker 1: um in terms of the probability when we get closer 341 00:19:25,320 --> 00:19:28,040 Speaker 1: to the end of the year. The reason that they 342 00:19:28,119 --> 00:19:32,440 Speaker 1: might hold back today, UM is that the most recent 343 00:19:32,840 --> 00:19:35,719 Speaker 1: economic data have not been as robust as they might like. 344 00:19:35,880 --> 00:19:39,320 Speaker 1: Number one. Number two. They're also focusing in on the 345 00:19:39,320 --> 00:19:42,760 Speaker 1: global environment. Years ago when I was an economist at 346 00:19:42,760 --> 00:19:47,359 Speaker 1: the FED in the research area UM tracking business conditions. 347 00:19:47,440 --> 00:19:50,600 Speaker 1: Fewer than ten percent of our staff focused in on 348 00:19:50,680 --> 00:19:54,880 Speaker 1: the non US economies. UM. I'm not sure what exactly 349 00:19:54,920 --> 00:19:57,280 Speaker 1: the new number is, but it's more like fifty fifty 350 00:19:57,359 --> 00:20:00,800 Speaker 1: maybe even more people looking at the international side. So 351 00:20:00,920 --> 00:20:03,280 Speaker 1: this is a SAID that makes its decisions based not 352 00:20:03,400 --> 00:20:07,040 Speaker 1: just in the US, but also the global environment. UM. 353 00:20:07,080 --> 00:20:09,879 Speaker 1: And the global environment a little more sluggish, as you know, 354 00:20:09,960 --> 00:20:14,399 Speaker 1: the o e c D recently lowering its global growth forecast, 355 00:20:14,760 --> 00:20:17,399 Speaker 1: but if we take a look towards December, we think 356 00:20:17,760 --> 00:20:21,080 Speaker 1: there's an increased probability of a ride. And what we'd 357 00:20:21,080 --> 00:20:24,720 Speaker 1: be looking for today UM, in terms of the said 358 00:20:24,880 --> 00:20:28,920 Speaker 1: statement UM is have they made an adjustment, for example, 359 00:20:29,440 --> 00:20:33,720 Speaker 1: downward in this year's GDP forecast UM, and we'd also 360 00:20:33,760 --> 00:20:38,960 Speaker 1: be looking to see it changes perhaps in the unemployment forecast, 361 00:20:39,200 --> 00:20:41,760 Speaker 1: not for this year but the next. Abby. Thank you 362 00:20:41,800 --> 00:20:43,480 Speaker 1: so much for getting a start in this hour. Every 363 00:20:43,560 --> 00:20:47,280 Speaker 1: Joseph Cohen with the plug. He said the o e 364 00:20:47,359 --> 00:20:48,840 Speaker 1: c D. The o e c D is Katherine Man 365 00:20:48,920 --> 00:20:51,280 Speaker 1: is going to talk about that report Abby just mentioned 366 00:20:51,320 --> 00:20:53,000 Speaker 1: on our show at the top of the hour. Yeah, 367 00:20:53,040 --> 00:20:55,480 Speaker 1: and with their markdown as well as should say from 368 00:20:55,480 --> 00:20:58,920 Speaker 1: a Plaza hotel, the U s Africa Business Forum, this 369 00:20:59,240 --> 00:21:05,439 Speaker 1: is Bloomberg. Who you put your trust in matters. Investors 370 00:21:05,440 --> 00:21:08,800 Speaker 1: have put their trust in independent registered investment advisors to 371 00:21:08,840 --> 00:21:13,239 Speaker 1: the tune of four trillion dollars. Why they see their 372 00:21:13,320 --> 00:21:17,199 Speaker 1: role is to serve, not sell. That's why Charles Schwab 373 00:21:17,280 --> 00:21:20,240 Speaker 1: is committed to the success of over seven thousand independent 374 00:21:20,240 --> 00:21:25,119 Speaker 1: financial advisors who passionately dedicate themselves to helping people achieve 375 00:21:25,119 --> 00:21:29,440 Speaker 1: their financial goals. Learn more and find your independent advisor 376 00:21:29,520 --> 00:21:37,720 Speaker 1: dot com. Bloomberg Philanthropies, the Department of Converse co hosting 377 00:21:37,760 --> 00:21:41,600 Speaker 1: the second U s Africa Business Forum, and someone who 378 00:21:41,680 --> 00:21:43,520 Speaker 1: is going to be right in the middle of it 379 00:21:43,560 --> 00:21:45,720 Speaker 1: all is Bob Diamond. You may remember him as the 380 00:21:45,760 --> 00:21:48,400 Speaker 1: former head of Barkley. Since he left Barkley's in two 381 00:21:48,400 --> 00:21:51,120 Speaker 1: thousand twelve, he's been the head of Atlas Mara, which 382 00:21:51,200 --> 00:21:53,560 Speaker 1: is a holding company that owns a number of banks 383 00:21:53,600 --> 00:21:58,440 Speaker 1: across the continent of Africa. The idea to take advantage 384 00:21:58,440 --> 00:22:01,400 Speaker 1: of the growth prospects of the continent it which unfortunately 385 00:22:02,520 --> 00:22:04,800 Speaker 1: I don't think I'm going to insult you by saying this, 386 00:22:05,400 --> 00:22:07,639 Speaker 1: have not proved out over the last few years that 387 00:22:07,880 --> 00:22:11,280 Speaker 1: Listen has suffered a little bit. But uh, I presume 388 00:22:11,400 --> 00:22:14,280 Speaker 1: you're looking at this as a longer term bet. And 389 00:22:14,359 --> 00:22:19,440 Speaker 1: so tell me what is going to drive growth in Africa? UH, 390 00:22:19,480 --> 00:22:23,680 Speaker 1: in a world where even the United States can't generate growth. Well, 391 00:22:23,720 --> 00:22:26,080 Speaker 1: the US is generating some growth, But you're right now 392 00:22:26,119 --> 00:22:30,439 Speaker 1: what we expected when uh Shishakar, the Mar Group and 393 00:22:30,800 --> 00:22:34,720 Speaker 1: our firm, Atlas Merchant Capital UM made a decision to 394 00:22:34,760 --> 00:22:37,600 Speaker 1: form Atlas Morrow two and a half years ago, all 395 00:22:37,640 --> 00:22:40,480 Speaker 1: of our investors knew. We knew that this was not 396 00:22:40,880 --> 00:22:43,520 Speaker 1: a one or two year investment. This was not a 397 00:22:43,560 --> 00:22:47,280 Speaker 1: passive investment. We're looking five to seven years down the road. 398 00:22:47,680 --> 00:22:50,960 Speaker 1: We're looking at an opportunity to acquire multiple banks in 399 00:22:51,040 --> 00:22:54,480 Speaker 1: ten to fifteen countries. Once we bought those banks, to 400 00:22:54,760 --> 00:22:57,280 Speaker 1: protect them, if I can use that phrase, fix them, 401 00:22:57,920 --> 00:23:01,520 Speaker 1: drive changes in the credit process, drive changes and how 402 00:23:01,560 --> 00:23:04,640 Speaker 1: to get lending too small businesses and two consumers. UH. 403 00:23:04,640 --> 00:23:06,680 Speaker 1: And only then would we be able to really grow 404 00:23:06,720 --> 00:23:10,640 Speaker 1: those banks and integrate them into one UH single sub 405 00:23:10,680 --> 00:23:14,720 Speaker 1: Saharan Africa institution. And that's what the ultimate goal is. UM. 406 00:23:14,920 --> 00:23:17,320 Speaker 1: I don't think we could have found more challenges in 407 00:23:17,359 --> 00:23:22,640 Speaker 1: the first two years with the YEA if we wanted 408 00:23:22,680 --> 00:23:26,080 Speaker 1: to set ourselves some challenges, but we're at the Plaza Hotel. 409 00:23:26,119 --> 00:23:28,560 Speaker 1: We can talk to Bob had to get trained at 410 00:23:28,600 --> 00:23:33,840 Speaker 1: Barclays for challenges before. Yeah, you know, you know, commodity 411 00:23:33,880 --> 00:23:36,359 Speaker 1: has turned around. So we launched in December of two 412 00:23:36,440 --> 00:23:40,320 Speaker 1: thousand thirteen, and by the next summer the commodity supercycle 413 00:23:40,480 --> 00:23:44,680 Speaker 1: was was in deterioration. Currencies were weaken weakening versus the dollar. 414 00:23:44,800 --> 00:23:49,000 Speaker 1: European banks were pulling out because of Basil three, the 415 00:23:49,040 --> 00:23:52,679 Speaker 1: Balkanization bringing capital back home. The Chinese investment was at 416 00:23:52,760 --> 00:23:56,480 Speaker 1: least slowing, if not retracing. UM. But as we look 417 00:23:56,480 --> 00:23:58,560 Speaker 1: out at the medium to long term, this is giving 418 00:23:58,640 --> 00:24:01,639 Speaker 1: us better and better and better opportunities to acquire, to 419 00:24:01,800 --> 00:24:06,800 Speaker 1: fix and to blood in the streets. Well, if you're 420 00:24:06,840 --> 00:24:10,040 Speaker 1: going to invest, and if you still believe in Africa rising, 421 00:24:10,080 --> 00:24:14,000 Speaker 1: which in my mind is really around demographics and around 422 00:24:14,040 --> 00:24:19,480 Speaker 1: trade and around economy and jobs. You know, the population 423 00:24:19,480 --> 00:24:23,280 Speaker 1: in Africa is young, but it's also very very entrepreneurial. 424 00:24:24,080 --> 00:24:27,119 Speaker 1: By the midies, it will be the largest labor force 425 00:24:27,160 --> 00:24:30,360 Speaker 1: in the world. Um. There's over four companies and Sub 426 00:24:30,400 --> 00:24:33,800 Speaker 1: Saharan Africa with over a billion in revenues. Those companies 427 00:24:33,880 --> 00:24:37,840 Speaker 1: generally grow both revenues and profits faster than their global counterparts. 428 00:24:38,080 --> 00:24:40,119 Speaker 1: It's a lot of positives, but I will tell you 429 00:24:40,160 --> 00:24:43,480 Speaker 1: it's hard work. And you gave us that nice long 430 00:24:43,520 --> 00:24:45,280 Speaker 1: list of all the things that went wrong. And I'm 431 00:24:45,320 --> 00:24:47,240 Speaker 1: just wondering what it's like to be your personal assistant 432 00:24:47,240 --> 00:24:51,960 Speaker 1: and coming every morning. Go Bob, this is the problem. 433 00:24:52,119 --> 00:24:56,000 Speaker 1: We're talking with Bob Diamond from atlasent they owned banks. 434 00:24:56,400 --> 00:24:58,919 Speaker 1: What do you nine countries? Now we're in seven countries 435 00:24:58,920 --> 00:25:03,120 Speaker 1: with eight banks and countries around Africa, and will continue 436 00:25:03,119 --> 00:25:06,840 Speaker 1: our conversation here from the U s Africa Business Forum. 437 00:25:06,840 --> 00:25:09,600 Speaker 1: Bloomberg Philanthropies in the U. S Department of Commerce putting 438 00:25:09,640 --> 00:25:12,919 Speaker 1: on a day long program here at the Plaza Hotel 439 00:25:13,320 --> 00:25:17,280 Speaker 1: in New York. And this is Bloomberg Surveillance sy Michael 440 00:25:17,320 --> 00:25:20,159 Speaker 1: McKee along with Tom Keane at the Plaza for the U. 441 00:25:20,200 --> 00:25:24,000 Speaker 1: S Africa Business Forum with Bob Diamond of Atlas Mara. Um. 442 00:25:24,040 --> 00:25:27,880 Speaker 1: As you mentioned, um, you get seven countries, you're moving on. Uh. 443 00:25:28,440 --> 00:25:30,800 Speaker 1: One of the criticisms of your results so far is 444 00:25:30,840 --> 00:25:33,160 Speaker 1: that what you've put together is an agglomeration of small 445 00:25:33,160 --> 00:25:36,840 Speaker 1: banks that don't have the size to generate enough profits 446 00:25:36,880 --> 00:25:39,480 Speaker 1: to make it worthwhile. So where do you go from here? 447 00:25:39,720 --> 00:25:41,879 Speaker 1: You know, that's that's when one of our challenges. So 448 00:25:42,520 --> 00:25:46,120 Speaker 1: in Zambia is an example, Mike, our first acquisition, which 449 00:25:46,160 --> 00:25:49,600 Speaker 1: was part of excuse me, a five country acquisition with 450 00:25:49,680 --> 00:25:53,000 Speaker 1: Bank ABC. We recognize that the bank that we had 451 00:25:53,040 --> 00:25:55,760 Speaker 1: there was not in the top three or four. Uh 452 00:25:55,800 --> 00:25:58,920 Speaker 1: So in June we announced our second acquisition in Zambia, 453 00:25:58,960 --> 00:26:02,480 Speaker 1: which is FBS. We're now combining those two banks and 454 00:26:02,520 --> 00:26:05,680 Speaker 1: will be in the top tier. So exactly to your point, 455 00:26:05,800 --> 00:26:08,080 Speaker 1: we've been very, very public and very open on this. 456 00:26:08,359 --> 00:26:11,240 Speaker 1: In no country do we want to operate where we're 457 00:26:11,240 --> 00:26:13,520 Speaker 1: not on the top tier. And if we, as a 458 00:26:13,560 --> 00:26:17,280 Speaker 1: result of a multi country acquisition, have a presence in 459 00:26:17,320 --> 00:26:19,520 Speaker 1: a country where we're not in the top tier, we 460 00:26:19,600 --> 00:26:23,080 Speaker 1: either have a clear plan to get there or we exit. 461 00:26:23,320 --> 00:26:24,720 Speaker 1: So I agree with you. My plan is to have 462 00:26:24,720 --> 00:26:27,199 Speaker 1: a cocktail with you at the Dorchester Hotel in London 463 00:26:27,520 --> 00:26:30,480 Speaker 1: where people will lean forward and listen to Bob Diamond 464 00:26:30,800 --> 00:26:33,439 Speaker 1: about the heart of the matter for the Western investment world, 465 00:26:33,480 --> 00:26:35,840 Speaker 1: and that is you go back to Bill easterly at 466 00:26:35,920 --> 00:26:37,679 Speaker 1: n y U. You go back to Jeff Sex at 467 00:26:37,720 --> 00:26:43,320 Speaker 1: Columbia and the arch debate over African f DI African investment, 468 00:26:43,680 --> 00:26:46,639 Speaker 1: and the word that we always end with is corruption. 469 00:26:47,000 --> 00:26:49,960 Speaker 1: What have you learned in your tactical work in Africa 470 00:26:50,400 --> 00:26:55,200 Speaker 1: about an improved rule of law and improved arms length contract? 471 00:26:55,840 --> 00:26:57,840 Speaker 1: Two things I think our critical tom One is, as 472 00:26:57,880 --> 00:27:00,280 Speaker 1: you heard me say, there are ten to fifteen trees 473 00:27:00,480 --> 00:27:03,199 Speaker 1: that we're focused on. That's it. They get to the 474 00:27:03,200 --> 00:27:06,000 Speaker 1: majority of the banking population that we want to serve. 475 00:27:06,560 --> 00:27:08,960 Speaker 1: But they're also the countries where they have rule of law. 476 00:27:09,400 --> 00:27:12,280 Speaker 1: So there's thirty countries where where we have no plans 477 00:27:12,320 --> 00:27:14,680 Speaker 1: to enter. The second thing, and I think we really 478 00:27:14,720 --> 00:27:17,440 Speaker 1: got this this right, is we listed on the London 479 00:27:17,480 --> 00:27:20,720 Speaker 1: Stock Exchange on the Big Board. We have all the 480 00:27:20,760 --> 00:27:23,480 Speaker 1: governance that goes along with that, and as a London 481 00:27:23,560 --> 00:27:27,440 Speaker 1: listed public company, there's no option for us to get 482 00:27:27,440 --> 00:27:30,440 Speaker 1: involved in some of those activities. Often we don't even 483 00:27:30,440 --> 00:27:32,479 Speaker 1: get approached on it. But frankly we have a very 484 00:27:32,480 --> 00:27:34,760 Speaker 1: good answer, which is we're listed in the London Stock 485 00:27:34,760 --> 00:27:37,399 Speaker 1: has Change, we have very clear governance. It's a nonstarter. 486 00:27:38,040 --> 00:27:41,280 Speaker 1: Rules law important, but it must be difficult to try 487 00:27:41,359 --> 00:27:44,919 Speaker 1: to put together a banking group with a number of 488 00:27:44,920 --> 00:27:47,800 Speaker 1: different economic models in the countries that you serve and 489 00:27:48,000 --> 00:27:52,920 Speaker 1: varying levels of governance. Uh, how do you deal with that? 490 00:27:53,480 --> 00:27:56,640 Speaker 1: So regional integration is one of the things that UM 491 00:27:56,880 --> 00:27:59,640 Speaker 1: I would say I'm most pleased about and and want 492 00:27:59,640 --> 00:28:01,879 Speaker 1: to fall SUSTA is as much as I can and 493 00:28:01,960 --> 00:28:05,160 Speaker 1: we can so in the East African community, for example, 494 00:28:05,480 --> 00:28:09,320 Speaker 1: UM President Kagami, President Kenyata and the other presidents in 495 00:28:09,320 --> 00:28:13,480 Speaker 1: the East African community, they're breaking down trade blocks between countries. 496 00:28:13,520 --> 00:28:16,960 Speaker 1: They're making it easier for for labor to move across border. 497 00:28:17,200 --> 00:28:20,080 Speaker 1: They're building highways so transport. You know, one of the 498 00:28:20,160 --> 00:28:23,440 Speaker 1: things that's that's a fascinating, fascinating number to think about 499 00:28:23,680 --> 00:28:28,240 Speaker 1: is only of the trade in Africa is intra Africa. 500 00:28:28,800 --> 00:28:32,080 Speaker 1: That's silly, and there's a lot of internal blockcades to that. 501 00:28:32,760 --> 00:28:36,240 Speaker 1: Creating a lot more imports from outside of Africa. That 502 00:28:36,400 --> 00:28:39,680 Speaker 1: is such an opportunity. And I think today the African leaders, 503 00:28:39,680 --> 00:28:42,600 Speaker 1: and it's a big part here of regional integration, are 504 00:28:42,600 --> 00:28:45,720 Speaker 1: really thinking about the opportunities and regional trading blocks. How 505 00:28:45,720 --> 00:28:49,520 Speaker 1: will you hedge the clear and present danger for an exchange. 506 00:28:49,520 --> 00:28:51,920 Speaker 1: I mean it's a ken Rogo floating world right now, 507 00:28:52,680 --> 00:28:56,080 Speaker 1: You've been buffeted by four standard deviation moves here and there. 508 00:28:56,560 --> 00:28:59,200 Speaker 1: Is it an active day to day hedge in exchange. 509 00:28:59,240 --> 00:29:01,960 Speaker 1: I mean you hedge at Barclays, you had old team there, 510 00:29:02,440 --> 00:29:05,760 Speaker 1: but this is like almost hedging on steroids within the 511 00:29:05,840 --> 00:29:08,640 Speaker 1: dynamics of Africa. Well in the currency is whether you're 512 00:29:08,640 --> 00:29:11,480 Speaker 1: at Barclay's or whether you're at Atlas Mara. Uh don't 513 00:29:11,520 --> 00:29:14,080 Speaker 1: have the liquidity of the major currencies to start with, 514 00:29:14,160 --> 00:29:17,400 Speaker 1: So we have a treasury under Mike Chrystmallish. It's runs 515 00:29:17,480 --> 00:29:20,800 Speaker 1: centrally all of the currency business we do with our customers. 516 00:29:20,800 --> 00:29:23,120 Speaker 1: And a key part of this is many of the 517 00:29:23,160 --> 00:29:26,600 Speaker 1: small businesses and medium businesses have the same challenges. They 518 00:29:26,640 --> 00:29:29,920 Speaker 1: need to hedge out the currency. Are they dollars sterling based? 519 00:29:29,960 --> 00:29:31,840 Speaker 1: I mean it goes back to original sin Burry, Ike 520 00:29:31,880 --> 00:29:34,200 Speaker 1: and Green and Ricardo Housman. Are you dealing in the 521 00:29:34,280 --> 00:29:36,720 Speaker 1: sterling or dollar basis? Or do you deal in their 522 00:29:36,800 --> 00:29:41,440 Speaker 1: currencies within the countries. We're dealing in local currencies. For 523 00:29:41,520 --> 00:29:43,920 Speaker 1: the equity of the firm. We're in dollars and we 524 00:29:43,960 --> 00:29:46,360 Speaker 1: want to hedge the equity, but we don't hedge the 525 00:29:46,440 --> 00:29:50,920 Speaker 1: ongoing business in the countries because it reflects the domestic currency. 526 00:29:51,400 --> 00:29:53,920 Speaker 1: Can't let you go without asking you about Barkley's. You've 527 00:29:54,200 --> 00:29:58,360 Speaker 1: been in the hunt for Barkley's Africa, Barleys red Sox 528 00:29:58,360 --> 00:30:01,560 Speaker 1: sounds better? Sounds better? Six six games in a rowtip, 529 00:30:01,680 --> 00:30:05,400 Speaker 1: come on, four games up. It's a there's a commercial 530 00:30:05,440 --> 00:30:08,240 Speaker 1: coming up with you two guys talking about the pat 531 00:30:08,840 --> 00:30:11,720 Speaker 1: you were. You're in a consortium trying to buy the 532 00:30:11,800 --> 00:30:14,200 Speaker 1: last fift of Barkley's Africa, which would be a big 533 00:30:14,200 --> 00:30:18,080 Speaker 1: price for your bank. Carlisle, part of that consortium dropped out. 534 00:30:18,360 --> 00:30:22,280 Speaker 1: Are you still in the hunt without them? Carlisle decided 535 00:30:22,360 --> 00:30:25,640 Speaker 1: not to proceed for a number of reasons, including the 536 00:30:25,680 --> 00:30:28,240 Speaker 1: regulators were quite clear that they would prefer, whether it's 537 00:30:28,280 --> 00:30:31,400 Speaker 1: with Atlas Merchant Capital or with Carlisle private equity not 538 00:30:31,560 --> 00:30:34,080 Speaker 1: be a part of a bid for a majority. So 539 00:30:34,160 --> 00:30:37,280 Speaker 1: that was many many weeks ago, and and we've moved on. 540 00:30:37,400 --> 00:30:40,719 Speaker 1: We're still How could anyone not be focused on an 541 00:30:40,760 --> 00:30:44,920 Speaker 1: opportunity when a business as strong as Barkley's Africa is 542 00:30:44,960 --> 00:30:47,240 Speaker 1: out there. I wouldn't comment other than that, but anybody 543 00:30:47,280 --> 00:30:50,520 Speaker 1: involved in Africa would be focused on the opportunity of 544 00:30:50,600 --> 00:30:54,200 Speaker 1: Barkley's Africa. Well, do you have any can you tell 545 00:30:54,280 --> 00:30:56,320 Speaker 1: us where you are in the bid with, what what 546 00:30:56,480 --> 00:30:58,720 Speaker 1: the time frame is and what happens from here? No, 547 00:30:58,840 --> 00:31:01,160 Speaker 1: but the Red Sox of One Center roll the Patriots 548 00:31:01,280 --> 00:31:05,640 Speaker 1: his first two games without Brady, Bob Diamond, what do 549 00:31:05,720 --> 00:31:09,280 Speaker 1: you know, his chair yelling, his cheer, yelling the central 550 00:31:09,280 --> 00:31:13,200 Speaker 1: banker to Africa. Ah, that's a really, really good question. 551 00:31:13,280 --> 00:31:15,680 Speaker 1: And there's no question that the dollar is the dominant 552 00:31:15,720 --> 00:31:20,040 Speaker 1: currency in the world and is the dominant reference currency 553 00:31:20,200 --> 00:31:23,160 Speaker 1: for Africa. So what happens in the US and what 554 00:31:23,240 --> 00:31:25,960 Speaker 1: happens with the dollar has a huge Mike and I 555 00:31:26,000 --> 00:31:29,320 Speaker 1: are thrilled to take those Atlas Merchant Capital tickets, Clubs, 556 00:31:29,360 --> 00:31:32,920 Speaker 1: Red Socks World Series at Wrigley Feel Bob Diamond, thank 557 00:31:32,960 --> 00:31:36,640 Speaker 1: you so much. Here at our Bloomberg Philanthropies and Department 558 00:31:36,680 --> 00:31:40,760 Speaker 1: of Commerce US Africa Business Forum. Of course, all of 559 00:31:40,760 --> 00:31:45,800 Speaker 1: this wrapped around session of the u n General Assembly. 560 00:31:56,240 --> 00:31:59,280 Speaker 1: Well among those who are watching, of course very closely, 561 00:31:59,320 --> 00:32:01,600 Speaker 1: the UK got me economies around the world. Katherine Man. 562 00:32:01,760 --> 00:32:04,200 Speaker 1: Katherine Man, with many of you have heard me say 563 00:32:04,240 --> 00:32:07,280 Speaker 1: over the year is a definitive and important book. Kathy, 564 00:32:07,320 --> 00:32:10,040 Speaker 1: you wrote this when you were twelve. Is a trade 565 00:32:10,040 --> 00:32:14,880 Speaker 1: deficit sustainable? We know that, But in the decades on 566 00:32:15,200 --> 00:32:19,200 Speaker 1: from is the trade deficit sustainable? You have been proven correct. 567 00:32:19,360 --> 00:32:22,200 Speaker 1: And that is a new economy. We'll get to the 568 00:32:22,200 --> 00:32:24,920 Speaker 1: O E C. D markdowns today on global g d P. 569 00:32:25,800 --> 00:32:28,800 Speaker 1: But all of the original economics that you did not 570 00:32:28,960 --> 00:32:33,760 Speaker 1: teach at brandis um. Is this a new globalization? Is 571 00:32:33,760 --> 00:32:38,880 Speaker 1: this a new financial economic system that we are in? Well, 572 00:32:38,880 --> 00:32:41,680 Speaker 1: we do focus on the on the trade side of things, 573 00:32:41,720 --> 00:32:45,320 Speaker 1: sort of a traditional focus in the economic outlook, and 574 00:32:45,360 --> 00:32:49,600 Speaker 1: we note that um, it's really a flat situation on trade, 575 00:32:50,000 --> 00:32:53,720 Speaker 1: UM a declining global value chains and unraveling of global 576 00:32:53,760 --> 00:32:57,080 Speaker 1: value chains. And although maybe many people in the political 577 00:32:57,080 --> 00:32:59,600 Speaker 1: spectrum might think that's a good idea, a fact that 578 00:32:59,760 --> 00:33:02,080 Speaker 1: we see that it's a very damaging for growth and 579 00:33:02,120 --> 00:33:05,880 Speaker 1: it's damaging for productivity. We do a scenario whereby if 580 00:33:05,880 --> 00:33:08,040 Speaker 1: we were to return to the good days where not 581 00:33:08,080 --> 00:33:11,880 Speaker 1: only was trade rising quickly on on the back of 582 00:33:11,920 --> 00:33:14,760 Speaker 1: negotiations and so forth, but so is global growth, and 583 00:33:14,800 --> 00:33:17,920 Speaker 1: we could recover half of our way towards the good 584 00:33:18,000 --> 00:33:21,280 Speaker 1: days of productivity growth. So that's the traditional kind of 585 00:33:21,280 --> 00:33:23,920 Speaker 1: trades view. We also look and we also look in 586 00:33:24,000 --> 00:33:27,600 Speaker 1: the report on the financial side, and we've got concerns 587 00:33:27,640 --> 00:33:33,000 Speaker 1: there as well. Well, you've you've got concerns that underpinned 588 00:33:33,280 --> 00:33:37,080 Speaker 1: your latest global growth outlook, which is not particularly good. 589 00:33:37,440 --> 00:33:41,720 Speaker 1: You see growth flat ticking down a little bit. Uh, 590 00:33:42,080 --> 00:33:45,080 Speaker 1: what's what's driving that? Just a sort of unwe in 591 00:33:45,120 --> 00:33:47,480 Speaker 1: the global economy? Or is it Brexit? There? Is it 592 00:33:47,600 --> 00:33:51,000 Speaker 1: the possibility that the Republican nominee could be elected here 593 00:33:51,000 --> 00:33:54,720 Speaker 1: in the United States. Well, we've got five years now 594 00:33:54,880 --> 00:33:57,480 Speaker 1: of growth rates that are in the global economy that 595 00:33:57,520 --> 00:34:00,880 Speaker 1: are about three and we called this the low growth trap. 596 00:34:00,920 --> 00:34:03,040 Speaker 1: And the reason why we call it a trap is 597 00:34:03,040 --> 00:34:05,920 Speaker 1: because there aren't market signals being generated in the real 598 00:34:05,920 --> 00:34:10,080 Speaker 1: economy to promote business investment and to promote deepening trade. 599 00:34:10,400 --> 00:34:12,920 Speaker 1: And if you don't have investment and you don't have trade, 600 00:34:12,960 --> 00:34:15,360 Speaker 1: then you're not going to have growth either. Now, the 601 00:34:15,400 --> 00:34:19,400 Speaker 1: consequences of that coming down from three percent global growth 602 00:34:19,440 --> 00:34:21,799 Speaker 1: to what was our cruising speed of four percent over 603 00:34:21,840 --> 00:34:25,120 Speaker 1: the previous decades, that represents a real decline in the 604 00:34:25,120 --> 00:34:28,719 Speaker 1: capacity of economies to deliver increases in living standards that 605 00:34:28,760 --> 00:34:32,279 Speaker 1: are widely shared. So three percent just isn't good enough, 606 00:34:32,360 --> 00:34:35,600 Speaker 1: and there aren't market signals to get business UH and 607 00:34:35,760 --> 00:34:39,680 Speaker 1: consumers to get back on track. That's why we focus 608 00:34:39,760 --> 00:34:43,480 Speaker 1: on a pathway for policymakers to make the difference and 609 00:34:43,520 --> 00:34:46,319 Speaker 1: get the global economy growing again. I got about eight 610 00:34:46,320 --> 00:34:47,719 Speaker 1: ways to go here, and we'll do that in our 611 00:34:47,719 --> 00:34:51,239 Speaker 1: next section, Doctor man. You put Canada in the time out? 612 00:34:51,280 --> 00:34:55,480 Speaker 1: Share what it Canada? You wrong? They had a wildfire, 613 00:34:55,600 --> 00:34:59,400 Speaker 1: a very very big wildfire Fort Montgomery, UH fire, and 614 00:34:59,480 --> 00:35:05,600 Speaker 1: that undermined their production of a key export um of oil. 615 00:35:05,960 --> 00:35:08,640 Speaker 1: So both with production down in the domestic economy and 616 00:35:08,680 --> 00:35:11,560 Speaker 1: down as well, so they're in They're in the time 617 00:35:11,560 --> 00:35:14,239 Speaker 1: out chair because of data, not because they've done the 618 00:35:14,280 --> 00:35:17,360 Speaker 1: wrong thing. Back Canada is is one of the poster 619 00:35:17,480 --> 00:35:22,160 Speaker 1: child for embracing the type of fiscal expansion along with 620 00:35:22,200 --> 00:35:25,640 Speaker 1: structural reforms that we're arguing that other countries should do 621 00:35:25,680 --> 00:35:29,840 Speaker 1: as well. Right right, um, doctor man? Then if I 622 00:35:29,880 --> 00:35:32,480 Speaker 1: look at that it is an exogenous shock to say 623 00:35:32,520 --> 00:35:35,759 Speaker 1: the least is your O E c D report. Does 624 00:35:35,800 --> 00:35:39,720 Speaker 1: that set us up for greater effect of a given 625 00:35:39,719 --> 00:35:43,560 Speaker 1: exogen and shock? Well, when you're at a low rates 626 00:35:43,560 --> 00:35:46,640 Speaker 1: of growth UM. Any small shocks are most like are 627 00:35:46,680 --> 00:35:50,520 Speaker 1: more likely to put you into the negative column. That's 628 00:35:50,520 --> 00:35:53,239 Speaker 1: why we think that policymakers really have to step up. 629 00:35:54,120 --> 00:35:56,880 Speaker 1: It is a good day to speak to an adult 630 00:35:57,080 --> 00:36:00,520 Speaker 1: in the room. At the beginning of the financial crisis, 631 00:36:00,840 --> 00:36:04,799 Speaker 1: Christine Leguard was at CFR in Washington and begged for 632 00:36:04,840 --> 00:36:06,839 Speaker 1: adults in the room. One of the leading adults has 633 00:36:06,880 --> 00:36:10,200 Speaker 1: been Katherine Man of Brandeis and of course now at 634 00:36:10,200 --> 00:36:12,719 Speaker 1: the O E. C. D. And Kathy, as you brilliantly 635 00:36:12,800 --> 00:36:15,840 Speaker 1: do in your new report, you have the courage to 636 00:36:15,880 --> 00:36:20,680 Speaker 1: look at the financial system into our challenged economics. You 637 00:36:20,800 --> 00:36:25,480 Speaker 1: have a chart on pension funds, their funding gap, their 638 00:36:25,600 --> 00:36:30,480 Speaker 1: actuarial non assumption that is outright grim. Are we at 639 00:36:30,480 --> 00:36:34,320 Speaker 1: a stage now where all economists really begin to fold 640 00:36:34,360 --> 00:36:38,279 Speaker 1: in the financial effects you highlight well, I think that 641 00:36:38,360 --> 00:36:40,879 Speaker 1: everyone has to be looking at the financial effects. I mean, 642 00:36:41,080 --> 00:36:43,439 Speaker 1: it's been a long period of time with very low 643 00:36:43,480 --> 00:36:46,920 Speaker 1: interest rates. UM. It's challenging the business models, not just 644 00:36:47,040 --> 00:36:50,480 Speaker 1: of pension funds but also insurance companies and banks. We 645 00:36:50,600 --> 00:36:53,840 Speaker 1: also see no term premium, we see no credit risk premium, 646 00:36:54,120 --> 00:36:59,680 Speaker 1: we see no UM overall volatility premium. We've got equity 647 00:36:59,760 --> 00:37:02,719 Speaker 1: and old market disconnect. If you compare the forecasts for 648 00:37:03,360 --> 00:37:06,840 Speaker 1: output and then what's happening to equity markets? You know, um, 649 00:37:06,880 --> 00:37:10,880 Speaker 1: the financial markets have UH distortions and that's generating risks. 650 00:37:11,600 --> 00:37:16,680 Speaker 1: The UH, the financial markets distortions in many cases come 651 00:37:16,719 --> 00:37:20,880 Speaker 1: from central banks. What's your recommendation at this point? Is 652 00:37:20,920 --> 00:37:23,600 Speaker 1: it time to give up and to raise rates in 653 00:37:23,640 --> 00:37:28,240 Speaker 1: those countries they can, or to stop extraordinary policy and others. 654 00:37:28,280 --> 00:37:31,800 Speaker 1: So what we've we have noted that the balance between 655 00:37:31,920 --> 00:37:35,560 Speaker 1: costs and benefits has tipped over to the cost side 656 00:37:36,080 --> 00:37:39,279 Speaker 1: through the channel of distortions and risks. What this says 657 00:37:39,320 --> 00:37:42,640 Speaker 1: to us is not that central banks should be retreating, 658 00:37:42,880 --> 00:37:46,520 Speaker 1: but it does say that fiscal policy authorities and legislative 659 00:37:46,520 --> 00:37:50,840 Speaker 1: authorities who are charged with structural policies, they have to 660 00:37:50,880 --> 00:37:53,440 Speaker 1: step up. We've been saying this for a while. The 661 00:37:53,480 --> 00:37:57,560 Speaker 1: monetary policy authorities have been carrying the burdens, their overburdened. 662 00:37:57,560 --> 00:38:00,960 Speaker 1: That means the other authorities have to step up. Well. 663 00:38:01,000 --> 00:38:04,239 Speaker 1: The monetary policy authorities in large measure will say we 664 00:38:04,320 --> 00:38:07,040 Speaker 1: stepped up because the fiscal authorities would not. And there's 665 00:38:07,040 --> 00:38:09,719 Speaker 1: no sign that the fiscal authorities really want to so 666 00:38:11,440 --> 00:38:14,840 Speaker 1: continued to do this. You've got You've got some physical 667 00:38:14,880 --> 00:38:18,240 Speaker 1: authorities that actually have stepped up. As I say, Canada 668 00:38:18,280 --> 00:38:21,600 Speaker 1: has absolutely embraced the notion that they need to do 669 00:38:21,680 --> 00:38:25,520 Speaker 1: some expansion and a well structural policies. The United States 670 00:38:25,600 --> 00:38:29,840 Speaker 1: has indicated that infrastructure is on the docket. You've got China, 671 00:38:30,120 --> 00:38:33,080 Speaker 1: um maybe spending on not quite the right things, but 672 00:38:33,120 --> 00:38:36,560 Speaker 1: they're spending money. You've got Japan again some question marks, 673 00:38:36,600 --> 00:38:39,439 Speaker 1: although they are engaging in both fiscal spending as well 674 00:38:39,480 --> 00:38:42,200 Speaker 1: as structural reforms. And even in the UK you've got 675 00:38:42,239 --> 00:38:46,520 Speaker 1: some signaling going on about reprioritization of spending towards more 676 00:38:46,560 --> 00:38:50,720 Speaker 1: infrastructure and heart and soft infrastructure in the autumn statement. 677 00:38:50,920 --> 00:38:53,160 Speaker 1: So we are seeing changes there. We need to see 678 00:38:53,200 --> 00:38:56,000 Speaker 1: more ambition on structural otherwise we're not going to get 679 00:38:56,000 --> 00:38:58,000 Speaker 1: to where we need to go, which is higher global growth. 680 00:38:58,920 --> 00:39:01,840 Speaker 1: The doctor man, I'm real Rogoff's book, The Curse of Cash. 681 00:39:02,040 --> 00:39:03,920 Speaker 1: It's the shortlist of my book of the year. It's 682 00:39:03,920 --> 00:39:07,520 Speaker 1: superb not only on cash and the illegal effects of cash, 683 00:39:07,600 --> 00:39:10,400 Speaker 1: but corrupt effects, criminal effects, but of course also on 684 00:39:10,480 --> 00:39:13,000 Speaker 1: negative interest rates. I look at Marvin good Friends paper 685 00:39:13,360 --> 00:39:17,560 Speaker 1: that Jackson Hole on negative interest rates and particularly Dr 686 00:39:17,640 --> 00:39:20,880 Speaker 1: good Friends good work out of Carnegie Mellon is devoid 687 00:39:20,920 --> 00:39:23,879 Speaker 1: of an understanding of the immediate effect on Deutsche Bank 688 00:39:24,480 --> 00:39:27,399 Speaker 1: around BMP Perry BA in your Paris, or on JP 689 00:39:27,600 --> 00:39:31,000 Speaker 1: Morgan or for that matter, Mike on Bob Diamonds banks 690 00:39:31,000 --> 00:39:35,240 Speaker 1: in Africa. When when do the bankers stand up and scream, 691 00:39:35,560 --> 00:39:38,759 Speaker 1: you've gotta help us. When do we see that? Well, 692 00:39:38,800 --> 00:39:41,160 Speaker 1: in Europe they are screaming, and they're looking for they 693 00:39:41,160 --> 00:39:46,000 Speaker 1: are validation and uh they're looking for, uh an opportunity 694 00:39:46,120 --> 00:39:49,960 Speaker 1: to to move forward with banking union. I mean, Mike, 695 00:39:49,960 --> 00:39:52,520 Speaker 1: I haven't even looked at Deutsche Bank this morning. I'm 696 00:39:52,560 --> 00:39:55,920 Speaker 1: trying to bring it up here on the It's it's up, 697 00:39:56,000 --> 00:39:59,080 Speaker 1: but it's it's still at very low level. Uh. But 698 00:39:59,160 --> 00:40:04,360 Speaker 1: does this imply cathy that the several banks should stop 699 00:40:04,400 --> 00:40:07,800 Speaker 1: going further? Put it that way, Uh, In a general sense, 700 00:40:07,880 --> 00:40:12,120 Speaker 1: with monetary policy, has has it reached its limit? What 701 00:40:12,160 --> 00:40:15,160 Speaker 1: we say is that central banks should look very carefully 702 00:40:15,160 --> 00:40:20,719 Speaker 1: at the costume benefits of any increase in their unconventional means. Now, 703 00:40:20,760 --> 00:40:22,799 Speaker 1: there may be other things that they can do more 704 00:40:22,960 --> 00:40:25,600 Speaker 1: rabbits that they can pull out of the hat. But 705 00:40:26,040 --> 00:40:30,000 Speaker 1: basically the traction that you get for the real economy 706 00:40:30,200 --> 00:40:33,600 Speaker 1: relative to the risks that you create in the financial side, 707 00:40:34,000 --> 00:40:38,400 Speaker 1: that's unbalanced. I want to congratulate you Dr Man on 708 00:40:38,440 --> 00:40:41,359 Speaker 1: your paper. It is just folks, just like ten pages long, 709 00:40:42,080 --> 00:40:44,640 Speaker 1: maybe nine and a half pages long, and the charts 710 00:40:45,120 --> 00:40:48,239 Speaker 1: are just off the charts. So we didn't even have 711 00:40:48,280 --> 00:40:52,520 Speaker 1: time to do to raising trade intensity in terms of 712 00:40:52,520 --> 00:40:56,720 Speaker 1: boosting product growth. Dr Man mentioned it early in the interview. 713 00:40:56,760 --> 00:40:59,400 Speaker 1: Captain Man, thank you so much with the O. E. C. D. 714 00:40:59,440 --> 00:41:01,919 Speaker 1: I'm going to read out this report when I get 715 00:41:01,920 --> 00:41:06,120 Speaker 1: time to it. Everybody's attention to the charts, Mike just exquisite. 716 00:41:06,800 --> 00:41:10,879 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 717 00:41:10,960 --> 00:41:16,360 Speaker 1: listen to interviews on iTunes, SoundCloud, or whichever podcast platform 718 00:41:16,440 --> 00:41:20,520 Speaker 1: you prefer. I'm on Twitter at Tom Keane, Michael McKee 719 00:41:20,600 --> 00:41:24,160 Speaker 1: is at Economy. Before the podcast, you can always catch 720 00:41:24,280 --> 00:41:34,400 Speaker 1: us worldwide. I'm Bloomberg Radio. Who you put your trust 721 00:41:34,480 --> 00:41:38,960 Speaker 1: in matters? Investors have put their trust in independent registered 722 00:41:39,000 --> 00:41:42,799 Speaker 1: investment advisors to the tune of four trillion dollars. Why 723 00:41:43,640 --> 00:41:49,239 Speaker 1: learn more and find your independent advisor dot com