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Benchmark's Look Ahead to the Biggest Economic Stories of 2018 · Trumponomics

• 0:08
  Speaker 1: Welcome to Benchmark, a show about the global economy. I'm
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  Speaker 1: Daniel Moss, economics writer with Bloomberg View in New York,
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  Speaker 1: and I'm Scott landman and economics editor at Bloomberg News
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  Speaker 1: in Washington. Today we're given you part two of our
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  Speaker 1: two part Year and Special In case you missed the
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  Speaker 1: first one, Scott and I have brought in three of
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  Speaker 1: our colleagues from around the world. End The Kuren in
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  Speaker 1: Hong Kong, Yana Randau in Europe, and Viviani Rodriguez, our
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  Speaker 1: Latin America Managing editor for Economics and Government. We've already
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  Speaker 1: taken a look back at twenty seventeen. Now we're going
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  Speaker 1: to give you our predictions for the coming twelve months,
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  Speaker 1: looking at three for provoking questions. One what will be
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  Speaker 1: the most surprising economic development of the year? Two? Who
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  Speaker 1: will be a key influential person you may never have
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  Speaker 1: heard of? And three what will be a significant non
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  Speaker 1: economic development that actually has an economic impact. Some of
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  Speaker 1: the answers surprised me and they might very well surprise you.
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  Speaker 1: So let's hear what everyone had to say. What would
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  Speaker 1: be the most surprising economic development of twenty eighteen? End
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  Speaker 1: Growth and trade will disappoint. Then all the indications are
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  Speaker 1: wereheaded for another good year. We've had the best synchronized
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  Speaker 1: growth since at least it started a decade. The view
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  Speaker 1: is it's hard to stop a train in motion, but
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  Speaker 1: there are worry spots. Wait a second, are you reversing yourself?
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  Speaker 1: You just wrote about a trade war that didn't happen.
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  Speaker 1: In fact, trade boomed in that's right. But the issue
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  Speaker 1: with the trade is that a lot of it reflected
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  Speaker 1: a rebounding commodity prices and the technology boom that could
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  Speaker 1: fade as we go into twenty eighteen. And let's not
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  Speaker 1: forget Donald Trump, and it's a threat of a trade
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  Speaker 1: or they haven't gone away. And there's a view is
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  Speaker 1: that US China trade tensions could rotch it up next year.
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  Speaker 1: All right, all right, now you tell us Yana. I
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  Speaker 1: would say the biggest surprise would be if inflation in
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  Speaker 1: the Euro Area would finally pick up to a pace
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  Speaker 1: that the ECB considers in line with press stability. They
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  Speaker 1: have laid the groundwork. We've had negative interest rates for years.
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  Speaker 1: We have a que program that's set to reach two
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  Speaker 1: point six trillion euros. Think about that. In September and
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  Speaker 1: we see some indication that companies are raising prices, they're
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  Speaker 1: raising wages. The question now really is will it happen?
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  Speaker 1: Who knows well. If NAFTA survives without a major revamp,
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  Speaker 1: that would be a surprise and it would be quite significant,
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  Speaker 1: especially for Mexico's economy doing a presidential year. So so
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  Speaker 1: definitely want to look for Scott. One thing that if
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  Speaker 1: you watch or read Bloomberg, we're watching closely is the
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  Speaker 1: U S Treasury yield curve. This is the difference in
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  Speaker 1: interest rates between two year and ten year, or five
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  Speaker 1: year and thirty year, whichever way you want to slice it.
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  Speaker 1: That spread is falling really really fast, and when it
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  Speaker 1: becomes equal or the shorter end is higher than the
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  Speaker 1: longer end, it's called an inverted yield curve. That can
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  Speaker 1: be a sign that a recession is coming. And if
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  Speaker 1: that happens in eighteen as it seems increasingly possible, maybe
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  Speaker 1: not likely, but possible, it could spook markets and it
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  Speaker 1: could get people more talking about a downturn in the
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  Speaker 1: economy and change are thinking about how long this expansion
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  Speaker 1: is going to last. I'm going to second Viviani's call
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  Speaker 1: on NAFTA. It looked for a while as though NAFTA
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  Speaker 1: had dodged a bullet that we're going to do renegotiations
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  Speaker 1: rather than a US withdrawal. But those renego shations don't
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  Speaker 1: seem to be going so well. All right, Well, let's
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  Speaker 1: turn to our second question now around two who will
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  Speaker 1: be a key influential person in economics or the world
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  Speaker 1: of regional economy in that most people have not heard of, Janna,
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  Speaker 1: Why don't you go first, I'd say Mario Sentenno. So far,
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  Speaker 1: most people probably really haven't cared much about the man
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  Speaker 1: who became Portugal's finance minister about two years ago, but
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  Speaker 1: from next year onward they probably should. He wasn't a
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  Speaker 1: chief of the Eurogroup, the group of your area finance ministers,
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  Speaker 1: just this month, and his job will be incredibly tough
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  Speaker 1: next year. He will have to steer reforms that ensure
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  Speaker 1: that the your area recovery will hold. He will have
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  Speaker 1: to negotiate compromises on issues including banking, union, fiscal policy,
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  Speaker 1: and a little further down the line beyond our horizon.
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  Speaker 1: He will also be a key play here and selecting
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  Speaker 1: the next d president, who is also currently named Mario.
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  Speaker 1: To Mario's with difficult jobs. All right, let's turn to Vivian.
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  Speaker 1: Who's your choice? Oh? Hands down? Lopezo Brador in Mexico,
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  Speaker 1: known only as Amla. He's ahead on the polls for
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  Speaker 1: the presidential elections in July. He's really a firebrand and
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  Speaker 1: he's no paionetto if he gets elected. I mean, we
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  Speaker 1: can expect quite an interesting relationship in dayly sparring between
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  Speaker 1: him and Donald Trump via Twitter, viea, you name it.
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  Speaker 1: But definitely it could be the year of Amelo. How
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  Speaker 1: many times has he run for president? Almost every election
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  Speaker 1: in the last thirty years he threw his head there.
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  Speaker 1: But this time he has a real shot. Could be
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  Speaker 1: somebody who more people have heard of by the end
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  Speaker 1: of for sure. All right, and who's your pick? I
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  Speaker 1: look at Channa lou Hey. He's a keute advisor to
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  Speaker 1: President Chooting Ping, and he's growing. He's an influence behind
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  Speaker 1: the scenes, Harvard educated survivor of the culture whever, aolution
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  Speaker 1: not at all known on the global stage, but he's
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  Speaker 1: really growing his role and its influence, and he's tipped
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  Speaker 1: for something of a much bigger role as a shooting
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  Speaker 1: paying second term gets underway, and of course we not.
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  Speaker 1: There's a lot of a pigness around China's policy making,
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  Speaker 1: and there they have a lot of big challenges, and
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  Speaker 1: he's going to be tasked with managing stability of financial
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  Speaker 1: system and keeping the economy on track. Cha definitely an
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  Speaker 1: influential economic policy maker, but not a household name by
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  Speaker 1: any chance. Dad, how about you. I'm going to cheat
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  Speaker 1: a little and go for a thing rather than an individual.
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  Speaker 1: And it is China's Belt and Road Initiative. One of
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  Speaker 1: the great narratives running through discussions with serious people this
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  Speaker 1: year has been this question ken democracies, and the US
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  Speaker 1: is a proxy for that still do big things. You
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  Speaker 1: look across the China, which has a very different political system,
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  Speaker 1: yet it's managing to do big things. The Belt and
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  Speaker 1: Road Initiative is compare it quite favorably with the Marshall Plan,
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  Speaker 1: and it's just tough to conceive that the US could
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  Speaker 1: do something like that. These days probably will be influential,
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  Speaker 1: not just but years to come. Okay, I'm going to
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  Speaker 1: go last again, and my pick is Marvin good Friend.
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  Speaker 1: He was recently nominated to the Federal Reserve Board of
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  Speaker 1: Governors by President Trump, and he's a scholar of monetary policy,
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  Speaker 1: and somebody with a pretty strong research body who's likely
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  Speaker 1: to be influential because he will be pretty much the
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  Speaker 1: only person with that kind of background on the FED
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  Speaker 1: Board of Governors. Next year you have Janet Yellen leaving,
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  Speaker 1: obviously going to be replaced by Jerome Powell as chairman.
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  Speaker 1: He is not a scholar. He's a lawyer, been in
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  Speaker 1: various government positions, well respected, not a policy person. Stan Fisher,
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  Speaker 1: the well known vice chairman of the FED, has also
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  Speaker 1: already left, and the other people on are not scholars.
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  Speaker 1: So good Friend is well positioned to be influential in
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  Speaker 1: You're going to be hearing a lot about him, Scott.
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  Speaker 1: Can I just challenge you on that one. It's not
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  Speaker 1: like j Powell has not held senior economic post. It's
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  Speaker 1: not like he doesn't have a sense of how the
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  Speaker 1: economy works. He certainly does, but he doesn't have the
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  Speaker 1: intellectual research background that someone like good Friend has that
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  Speaker 1: Powell's predecessors Janet Yellen, Ben Bernanke, even Greenspan to some extent,
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  Speaker 1: have had and is also predominant in the world of
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  Speaker 1: central banking right now, as and Jana and Vivian No
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  Speaker 1: very well. Last one a little different name one non
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  Speaker 1: macro economic issue that will have a significant impact in
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  Speaker 1: ten d A. I. I know it's something of a cliche,
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  Speaker 1: but that doesn't mean we can ignore it. We're talking
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  Speaker 1: about deep learning, robots AI, and not just about factory
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  Speaker 1: floors and shenzen being automated. This is going to become
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  Speaker 1: an increasing themes through and beyond as our workplaces changed
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  Speaker 1: and our work practices change, how we drive change, how
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  Speaker 1: we learn at school universities change. One investor said to
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  Speaker 1: me this week, if you're not on board, you'll be
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  Speaker 1: like a luddit during the original Industrial Revolution. That's my
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  Speaker 1: tip for next year and beyond. Okay, Yanna, you're going
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  Speaker 1: to be smashing printing presses as well. No, no, I'll
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  Speaker 1: keep it very contained. Um. And as a huge soccer fan,
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  Speaker 1: I would have to say the World Cup in Russia.
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  Speaker 1: Economic studies put the positive economic impact of previous tournaments
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  Speaker 1: at anywhere between three billion dollars fourteen billion dollars, you
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  Speaker 1: make a pick. Some three point five million tickets have
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  Speaker 1: already been requested. That's huge, and while most of those
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  Speaker 1: requests have come from within Russia, tens of not hundreds
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  Speaker 1: of thousands will flock to the country, will make their
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  Speaker 1: way to Russia to see their teams play. That's despite
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  Speaker 1: sanctions weighing on Russia for its military operations in part
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  Speaker 1: of Ukraine, for example. And one other interesting thing is
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  Speaker 1: that even the oil market may be affected by this.
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  Speaker 1: Russia will face Saudi Arabia and the opening game, and
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  Speaker 1: just eight days later, just more week, uh, those nations
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  Speaker 1: will meet again at an openc table in Vienna discussing
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  Speaker 1: whether supply cuts should be extended. Perhaps we should root
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  Speaker 1: for a draw. Viviani. Well, I will draw attention to
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  Speaker 1: something very particular to that in America, which is we're
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  Speaker 1: seeing a stronger and deeper connection between the evangelical lobby
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  Speaker 1: and the narco money in the region. In Brazil alone,
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  Speaker 1: now we have what we call the phenomena of the
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  Speaker 1: mega churches and how actually they recruit. And I spent
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  Speaker 1: quite a lot of time in Brazil prisons for example,
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  Speaker 1: where they you know, like, for example, you're arrested, you're
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  Speaker 1: part of the narcos system, but when you out, you
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  Speaker 1: convert yourself and you start working for the church and
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  Speaker 1: you raiy is a lot of money. And how this
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  Speaker 1: money ends up really financing campaigns or somehow showing up
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  Speaker 1: in the way that it provides support to lobbies and
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  Speaker 1: and certain particulars agenda within Brazil Congress. So definitely a
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  Speaker 1: phenomenon that it runs deep, it runs a little bit underground,
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  Speaker 1: but it will keep growing in Latin America, especially in
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  Speaker 1: a year with so many elections Brazil, Colombia, Mexico, we
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  Speaker 1: might see more of this playing out. You know, this
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  Speaker 1: is fascinating. We in the United States are accustomed to
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  Speaker 1: thinking of the evangelical lobby in terms of Republican politics
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  Speaker 1: in the US and particularly in the South and the Midwest.
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  Speaker 1: You're saying that's not so exclusive. Well, in Latin America
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  Speaker 1: precisely is not so exclusive, I would say, I mean,
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  Speaker 1: obviously it has has more of a connection with impoverished communities.
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  Speaker 1: So you see more evangelical churches again in destitute communities
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  Speaker 1: in Brazil, right, many of them are ravished by the
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  Speaker 1: drug problem. So hence that connection between a lot of
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  Speaker 1: the I would say, maybe the parishes or or or
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  Speaker 1: the devout I mean, also has some connections with the
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  Speaker 1: Narco Scott you know, Dan, it feels increasingly like we're
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  Speaker 1: at a real historic moment in the United States. Every
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  Speaker 1: day there are more revelations. More and more women are
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  Speaker 1: coming forward to share their stories of sexual harassment by
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  Speaker 1: powerful figures in media, government, politics, and so on. And
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  Speaker 1: it also feels like we're just scratching the surface here
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  Speaker 1: that there are many, many more stories to come in
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  Speaker 1: many other industries, and not just in the US, but
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  Speaker 1: in other countries around the world as well. This is
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  Speaker 1: just going to grow and grow and grow, and it's
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  Speaker 1: going to topple many more leaders in business and government,
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  Speaker 1: and some of those are going to have an economic
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  Speaker 1: impact that will be felt in the US and possibly
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  Speaker 1: around the world. I'm going to go to Wisconsin. U. S.
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  Speaker 1: Supreme in Court has been hearing a case on jerrymandering
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  Speaker 1: of electoral districts in Wisconsin. Now, if the Supreme Court
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  Speaker 1: decides to overturn the Wisconsin electoral map, it will have
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  Speaker 1: precedent throughout the country. Right now, jerrymandering is widespread, with
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  Speaker 1: the possible exception of two states. One that might not
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  Speaker 1: surprise California, any other that might Iowa. Now, if jerrymandering
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  Speaker 1: is outlawed or weakening, you could see a lot more
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  Speaker 1: incentive for lawmakers to engage in serious policy focused legislation
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  Speaker 1: right now, if you're a Republican, the only thing you
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  Speaker 1: really have to worry about is a challenge from the right.
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  Speaker 1: If you're a Democrat, the only thing you really have
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  Speaker 1: to worry about is a challenge from the left. I'm
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  Speaker 1: not equating the two. I'm just saying there's this phenomenon
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  Speaker 1: people only have to worry about their base because many
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  Speaker 1: electoral districts have become so safe, make more of them competitive,
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  Speaker 1: more might have to engage in serious policy deliberation and legislation.
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  Speaker 1: Thanks to our panel, We're going to have to leave
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  Speaker 1: it there. We will have you back in twelve months
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  Speaker 1: time to give you some scrutiny and see what panned
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  Speaker 1: out and what didn't and why. Have a great new year.
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  Speaker 1: Thank you Danny's for fun. Thank you guys, that was great.
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  Speaker 1: Thank you looking forward to talking next year and twelve listeners,
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  Speaker 1: Thank you for staying with us for a second year.
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  Speaker 1: We literally couldn't have done it without you. I hope
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  Speaker 1: you have a great holiday and a great new year.
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  Speaker 1: A special thanks to Scott, my co host, who's persevered
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  Speaker 1: with me, and above all to Sarah Patterson, our producer,
• 14:52
  Speaker 1: without whom none of this could really happen. Benchmark will
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  Speaker 1: be back next week. In the meantime, you can find
• 15:01
  Speaker 1: us on the Bloomberg terminal, Bloomberg dot com, or Bloomberg app,
• 15:05
  Speaker 1: as well as on Apple Podcasts, pocket Casts, and Stitcher.
• 15:08
  Speaker 1: While you're there, take a minute to rate and review
• 15:10
  Speaker 1: the show so more listeners can find us and you
• 15:13
  Speaker 1: can let us know what you thought of the show.
• 15:15
  Speaker 1: Follow me on Twitter at at scott Landman Dan you're
• 15:19
  Speaker 1: at Moss Underscore. He Coat and is at at Enda Current,
• 15:24
  Speaker 1: Janna is at at j R A and d Ow
• 15:27
  Speaker 1: and Vivian is that at b I V Underscore r
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  Speaker 1: O D thirteen. This episode of Benchmark was produced by
• 15:34
  Speaker 1: Sarah Patterson and Tofur Forehead. The head of Bloomberg Podcasts
• 15:38
  Speaker 1: is Francesca Levy. Thanks for listening, See you next time.