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The Bad Economy Really Is Trump’s Fault: Matt Winkler · Bloomberg Intelligence

0:01
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Along
0:04
Speaker 1: with my co host of Bonnie Quinn. Every business day
0:06
Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,
0:10
Speaker 1: along with essential market moving news. Find the Bloomberg Markets
0:13
Speaker 1: Podcast on Apple Podcast or wherever you listen to podcasts,
0:17
Speaker 1: and on Bloomberg dot com. It is time now for
0:21
Speaker 1: Bloomberg Opinion. Let's bring in Bloomberg Opinion columnist and of
0:23
Speaker 1: course editor in chief emeritus of Bloomberg News, also the
0:26
Speaker 1: co founder child Be said Bloomberg News, Matt Winkler. Matt, welcome,
0:30
Speaker 1: We're speaking to you in the Bloomberg Interactive Broker's studio.
0:34
Speaker 1: Your latest column. Trump inherited the world's best economy in
0:37
Speaker 1: twenties seventeen and helped make it one of the worst.
0:40
Speaker 1: That's the main contention of the column. Matt explain to
0:43
Speaker 1: those who don't fully understand what the president could have
0:46
Speaker 1: done to actually hurt the economy, as everyone knows by now.
0:50
Speaker 1: And it's by the way, great to be with you, Vonnie.
0:53
Speaker 1: The coronavirus pandemic was something that all of us had
0:57
Speaker 1: to prepare for. When I say all of US, every
0:59
Speaker 1: country free. Uh. There was no question about that. And
1:03
Speaker 1: instead of preparing, the Trump administration, led by Trump himself,
1:09
Speaker 1: was defying science, muddling the message. UH. He was constantly
1:17
Speaker 1: attacking people for all kinds of reasons, and so there
1:22
Speaker 1: was massive confusion. So instead of any kind of coordinated
1:27
Speaker 1: attempt to contain the virus, UH, it was essentially every
1:32
Speaker 1: state was on its own. And some states did a
1:34
Speaker 1: very good job shutting down, like New York and New Jersey, UH,
1:39
Speaker 1: in Massachusetts and pretty much all of New England. But
1:43
Speaker 1: other states UH took Trump's message and said, we can
1:48
Speaker 1: open the economy. We don't have to fear about anything.
1:51
Speaker 1: In fact, Trump himself said the virus would go away.
1:54
Speaker 1: That confusion made it possible for the economy to actually
2:00
Speaker 1: be hit in all kinds of ways, because instead of
2:03
Speaker 1: a coordinated effort like you had in France or Germany
2:07
Speaker 1: or any number of developed nations, you had a completely
2:10
Speaker 1: confused one. And so our jobless numbers are off the charts,
2:15
Speaker 1: as you know, I mean four plus unemployment in April
2:19
Speaker 1: even as down to eleven. That's more than three times
2:22
Speaker 1: the UK's rate. So we are leading, as you know,
2:28
Speaker 1: in total number of cases, and we are leading in
2:30
Speaker 1: debts um for a country that historically has prided itself
2:35
Speaker 1: on its science, prided itself on its medical care, we're
2:39
Speaker 1: a complete mess now. And there's no sign that our
2:42
Speaker 1: unemployment rate, which is the worst than Sari Truan was
2:46
Speaker 1: in the White House, is going to get anything close
2:49
Speaker 1: to what it was before the pandemic started. So, yes,
2:53
Speaker 1: it's a combination of all these things, and clearly he
2:57
Speaker 1: has made it much worse than it had to be.
3:00
Speaker 1: So I guess, you know, this is my first pandemic,
3:02
Speaker 1: global pandemic. So but I was just shocked the fact
3:06
Speaker 1: that it is a national problem. Why do we not
3:09
Speaker 1: have a national slash federal response. I was shocked to
3:13
Speaker 1: see governors basically, as you say, kind of having to
3:16
Speaker 1: fend for themselves and some doing better than others. Why
3:21
Speaker 1: do you think initially there wasn't and there still is
3:23
Speaker 1: not today, a you know, coherent federal response because of
3:29
Speaker 1: leadership at the top. Because there was contempt for a shutdown,
3:33
Speaker 1: which was what was required. There was contempt for universal masking,
3:38
Speaker 1: which was the message from on high. So the federal
3:42
Speaker 1: government essentially abdicated its responsibility to Americans and left it
3:48
Speaker 1: to the states to figure it out. Um. And so
3:53
Speaker 1: that's why we're dealing with this the way we are.
3:56
Speaker 1: Not the case in the UK, not the case in France,
3:59
Speaker 1: not the case in Germany, not the case really anywhere else.
4:02
Speaker 1: Certainly not the case in Hong Kong, which has a
4:06
Speaker 1: great record because they have experience going all the way
4:09
Speaker 1: back to the beginning of this century with stars. Uh,
4:12
Speaker 1: and they know that masks work, which is why the
4:15
Speaker 1: pandemic basically has disappeared into insignificance in Hong Kong, which
4:19
Speaker 1: is one of the most densely populated places on the earth.
4:23
Speaker 1: So if Hong Kong would do it, we certainly could
4:25
Speaker 1: have two. But are you know federal response was non existent.
4:31
Speaker 1: The richest country in the world that can borrow at
4:34
Speaker 1: probably the lowest rate in the world and from anybody
4:37
Speaker 1: and hold onto it for the longest time. Why isn't
4:39
Speaker 1: there more anger Matt at the fact that one thirty
4:43
Speaker 1: thousand Americans have died. I'm sure some of them would
4:47
Speaker 1: have died anyway, but perhaps not that money. Well, I
4:53
Speaker 1: think there is anger, Um, you know, I think, uh,
4:56
Speaker 1: there was an assumption at the beginning of the year
4:58
Speaker 1: before the pandemics art that it was a very good
5:01
Speaker 1: chance Trump would have a second term um because the
5:06
Speaker 1: economy was relatively speaking, doing well. That is no longer
5:11
Speaker 1: the case. I mean, you read Bloomberg or any any
5:13
Speaker 1: other news organization right now, and every pole in every
5:18
Speaker 1: so called battleground state shows the tide has shifted dramatically
5:22
Speaker 1: away from him. So I have to believe a lot
5:27
Speaker 1: of this has to do with the pandemic itself, is
5:29
Speaker 1: that he's so bungled it, mishandled it, and compounded the
5:34
Speaker 1: suffering for so many people that even people who were
5:37
Speaker 1: willing to give him a chance again have no longer
5:41
Speaker 1: come around to that view. Is there a chance, Matt,
5:45
Speaker 1: that this, you know, not only impacts the president but
5:49
Speaker 1: also perhaps the Republican Party in generals as we think
5:52
Speaker 1: about the Senate in Yeah, look, it's sort of really
5:56
Speaker 1: above my knowledge to to go further or on politics,
6:01
Speaker 1: but yeah, it stands to reason that the president's enablers
6:06
Speaker 1: are going to be in the same political peril as
6:09
Speaker 1: he will be because they're part of the problem. So
6:12
Speaker 1: if you have governors, for example, who said you don't
6:15
Speaker 1: need to wear a mask, we should reopen the economy
6:18
Speaker 1: made something that should have been a scientific matter a
6:21
Speaker 1: political issue. Those people who are mostly Republicans are going
6:26
Speaker 1: to probably pay for that mistake, which is what it is.
6:30
Speaker 1: It's a mistake. But you point up in your column
6:33
Speaker 1: that Funds, Sorry, Matt, you point out in your column
6:36
Speaker 1: that Funds Italy and Spain were similarly victimized. But their
6:39
Speaker 1: unemployment is about half the percentage of Americans out of work,
6:41
Speaker 1: which is a phenomenal track record. Really, what about the
6:44
Speaker 1: UK though you don't really criticize Boris Johnson and yet
6:48
Speaker 1: their husband severe criticism of how he's handled a crisis. Well,
6:53
Speaker 1: I think that's right, except that he actually did get
6:57
Speaker 1: delivit nineteen. He suffered, his voters saw that he suffered,
7:02
Speaker 1: and when he recovered, fortunately uh, he did have a message,
7:08
Speaker 1: and the message was we have to do this in
7:11
Speaker 1: a concerted way. So the UK may have been slow initially,
7:15
Speaker 1: and there may have been some skepticism at the top,
7:18
Speaker 1: but the UK did actually uh come around and has
7:23
Speaker 1: been uh since then. Since Boris Johnson was victimized, they
7:30
Speaker 1: have had a pretty good record. And their unemployment rate,
7:32
Speaker 1: of course is you know, well below ours, and also
7:36
Speaker 1: their economy is is performing better for the time being.
7:40
Speaker 1: Matt Winkler, thanks so much for joining us. We appreciate that.
7:43
Speaker 1: Matt Winkler's co founder of Bloomberg News and editor in
7:47
Speaker 1: chief emeritus of Bloomberg News. Fascinating columns just kind of
7:50
Speaker 1: comparing the US response to the pandemic versus other countries
7:55
Speaker 1: around the world and the particulars it relates to the
7:57
Speaker 1: economic impact. And you look at data such as unemployment
8:00
Speaker 1: for example, and likely a GDP print that we're gonna
8:03
Speaker 1: get soon, it's gonna be the US does not compare well. Uh,
8:07
Speaker 1: and Matt's com kind of calls that out. You can
8:09
Speaker 1: see Matt's work at Bloomberg dot com slash Opinion, plus
8:14
Speaker 1: if you're on the terminal O P I n go,
8:16
Speaker 1: you can see all of Matt's opinion work plus that
8:18
Speaker 1: of Bloomberg Opinion, some great great work put out daily
8:21
Speaker 1: basis by the good folks at Bloomberg Opinion. Well, this
8:26
Speaker 1: COVID pandemic and the resulting economic dislocation has impacted all
8:31
Speaker 1: sorts of industries. That includes the residential real estate business
8:35
Speaker 1: in markets across the country, including a lot of luxury markets.
8:38
Speaker 1: To get the latest, we welcome. Best Friedman. She's CEO
8:41
Speaker 1: Brown Harris Stevens. Best, thanks so much for joining us here.
8:44
Speaker 1: Give us a snapshot. Let's start with Manhattan kind of
8:47
Speaker 1: the real estate market here. This was a market that
8:50
Speaker 1: was hit early and hit very hard by the pandemic.
8:53
Speaker 1: Where are we now, good morning, Thank you for having me. Well,
8:57
Speaker 1: you know, we just opened up on June set, which
9:00
Speaker 1: meant real estate professionals or were able to show. So
9:03
Speaker 1: that's been very good. But it's slow and steady. You know,
9:06
Speaker 1: people are still trying to figure things out. We're very
9:09
Speaker 1: much in the discovery mode after months of being shut down,
9:12
Speaker 1: not being able to show properties, and so now everybody's
9:15
Speaker 1: trying to figure out what they're gonna do. Are they
9:17
Speaker 1: gonna rent, are they going to sell? Do they want
9:19
Speaker 1: to buy? And so agents are trying to work through
9:21
Speaker 1: all that, and we're seeing new properties come on the
9:24
Speaker 1: market every day, a lot of rentals as well, and
9:27
Speaker 1: so at this point we're still looking at the data
9:30
Speaker 1: and trying to figure out what's going to be in
9:32
Speaker 1: the next quarter, in this quarter, the third quarter, so
9:36
Speaker 1: it's still new and um slow and steady is what
9:38
Speaker 1: I would say about New York City. But other markets
9:40
Speaker 1: like Palm Beach. You know, our Connecticut market has done
9:44
Speaker 1: incredibly well. There's been you know, there's not enough supply there.
9:47
Speaker 1: Uh And the Hampton's another market that's done very well. Uh.
9:51
Speaker 1: So New York, yes, has been harder because of you know,
9:54
Speaker 1: it's the city, it's vertical living. It offers different challenges
9:58
Speaker 1: that other places don't have. Because we're getting into elevators,
10:01
Speaker 1: were in lobbies with each other, you know. So, um,
10:04
Speaker 1: it's gonna be a little bit slower for our recovery best.
10:07
Speaker 1: You know. Anecdotally, I think a lot of people thought,
10:09
Speaker 1: are particularly people who would lived through the Great Financial
10:12
Speaker 1: Crisis in New York City, that there would be a
10:14
Speaker 1: big downdraft in prices because people were suddenly put out
10:17
Speaker 1: of work or they were, you know, uncertain about their future.
10:20
Speaker 1: Perhaps they needed to spend money on medical bills or
10:23
Speaker 1: put money aside with their parents or what have you.
10:25
Speaker 1: Did that happen? Could that happen still? I mean, I
10:29
Speaker 1: think it's possible. You know, we're still trying to unravel
10:32
Speaker 1: all of this. I think there's a lot of credence
10:34
Speaker 1: in the ability of the BED and the Treasury to
10:36
Speaker 1: bring about this economic recovery. So that's been good. But
10:39
Speaker 1: you know, people businesses are going to close down. We
10:42
Speaker 1: know restaurants will um And I think there's a lot
10:46
Speaker 1: of uncertainty as this pandemic looms. We're seeing upticks in
10:49
Speaker 1: other places where it has been mismanaged by certain governors
10:52
Speaker 1: for sure, um And I think it's going to take
10:55
Speaker 1: a little bit of time to figure out where everybody is.
10:58
Speaker 1: Um and And again we have to keep in mind
11:00
Speaker 1: in New York City as far as prices go for
11:02
Speaker 1: real estate, before the pandemic, we work already in a
11:06
Speaker 1: price correction and we were doing very well. The market
11:09
Speaker 1: was fluid and we were correcting. Um and So now
11:12
Speaker 1: I do expect there'll be a further correction as this
11:15
Speaker 1: all untangled in some places. You know, it depends and
11:19
Speaker 1: when there's oversupply, Uh, people are going to have to
11:22
Speaker 1: adjust their prices because we know not all square feed
11:25
Speaker 1: are created equally, depends on what's available. Yeah, let's talk
11:31
Speaker 1: about the concern about it maybe a intermediate or longer
11:34
Speaker 1: term exodus from New York City. I live here in
11:37
Speaker 1: North Jersey and the real estate market, particularly on the
11:39
Speaker 1: high end, is really really heated up as New Yorkers
11:43
Speaker 1: look to get out of the city for various reasons,
11:46
Speaker 1: pandemic related. What's your longer term view of New York.
11:49
Speaker 1: Some folks are suggesting this is the beginning of a
11:52
Speaker 1: very dark period for uh New York real estate. You know,
11:57
Speaker 1: I'll be honest, you know, I am. I do have
11:59
Speaker 1: my earns. Uh. You know, we had had been facing
12:03
Speaker 1: headwinds when it came to all this legislation in Albany
12:06
Speaker 1: before this pandemic hit. I'm sure you know the fat,
12:09
Speaker 1: the salt deduction, the cap was an issue, that the
12:12
Speaker 1: push up in the mansion tax. And now there's this
12:14
Speaker 1: looming Pieta tear tax that's push a lot of New
12:16
Speaker 1: Yorkers out already, and so now you have the pandemic
12:20
Speaker 1: um which is kind of a big bowl of bad
12:22
Speaker 1: for New Yorkers. But do I think everybody's gonna leave
12:26
Speaker 1: and it's gonna be a mass exodus? You know, I
12:29
Speaker 1: don't have a crystal ball. I don't believe. So. I
12:31
Speaker 1: think quality of life matters to people in New York
12:34
Speaker 1: City is a place where people just want to live
12:36
Speaker 1: because of the culture in the theater and the food.
12:39
Speaker 1: We know what New York city is about you know,
12:41
Speaker 1: it is the greatest city in the world. So I
12:43
Speaker 1: do think some people may leave for a period of time.
12:45
Speaker 1: But I don't see it like the seventies where this
12:48
Speaker 1: is there was this like white flight out of the city.
12:50
Speaker 1: I think we'll have a little bit of a mixed bac.
12:52
Speaker 1: Some people will leave, some people will come back. Some
12:54
Speaker 1: people may want to double down here like me, you know,
12:57
Speaker 1: and stay here and uh, you know, and wait while
13:00
Speaker 1: the city gets back together. But we are facing headwinds.
13:03
Speaker 1: There's no if and or butts about that. We have
13:05
Speaker 1: a lot of issues, um that we're trying to grapple with.
13:09
Speaker 1: So the amount of high rises that get built in
13:11
Speaker 1: New York is quite phenomenal, and you know, in many
13:14
Speaker 1: cases the number of apartments per floor is been pretty massive.
13:17
Speaker 1: So you see these huge numbers of people in buildings.
13:21
Speaker 1: Will that continue bes or will developers have to figure
13:24
Speaker 1: out new ways of spacing people out. I mean, that's
13:28
Speaker 1: that's it's a question mark. I mean I don't think
13:31
Speaker 1: I don't think they. I think people may gravitate towards
13:35
Speaker 1: maybe living in buildings that have less people in it
13:37
Speaker 1: for a time. But I may and maybe some developers
13:41
Speaker 1: will start to build buildings with that have less people
13:43
Speaker 1: on the floor, you know, But I don't I think
13:46
Speaker 1: it's going to be hard to do that. I don't
13:48
Speaker 1: know if the economics will make sense. And what are
13:50
Speaker 1: you asking price per square foot if you only have
13:52
Speaker 1: fifteen units in a building, um, and you know, just
13:55
Speaker 1: to cost the building in land in New York City
13:57
Speaker 1: all has to make sense for people. So I don't
14:00
Speaker 1: know if they're going to reinvent that. They may look
14:03
Speaker 1: at things differently. They may set up the space differently
14:05
Speaker 1: and make sure people have enough, maybe have outdoor space,
14:08
Speaker 1: or have home offices and the things that people are
14:10
Speaker 1: looking for. But I don't know if they're going to
14:12
Speaker 1: rejigger how they how they're you know, building buildings. That's
14:15
Speaker 1: a question you know that we'll see as this UM
14:19
Speaker 1: as we go down the line with the pandemic. I
14:21
Speaker 1: don't know. The good question though, and interesting best how
14:25
Speaker 1: about the international buyer on the margin? Over the last
14:28
Speaker 1: you know, ten years, the international buyers really pushed the
14:31
Speaker 1: high end of the New York real estate market up.
14:33
Speaker 1: As I looked down when I was in our Bloomberg
14:35
Speaker 1: office to look down fifty seven Street, we'd see all
14:38
Speaker 1: these just ridiculously tall towers that just stick out of
14:42
Speaker 1: nowhere or blight on the skyline in my personal opinion,
14:44
Speaker 1: but and I was my understanding was a lot of
14:47
Speaker 1: international buyers were supporting those types of buildings. Where is
14:50
Speaker 1: the international buyer today? Yeah, we call that. That's been
14:54
Speaker 1: called billionaires row just so you know, um, you know,
14:59
Speaker 1: you know, the internet national buyers. We're not seeing a
15:01
Speaker 1: lot of that. The only thing I have heard of
15:03
Speaker 1: recently was early on when the pandemic hit, there was
15:07
Speaker 1: an investor from South America that bought a block of
15:11
Speaker 1: units that a project on the West Side side unseen. Um.
15:14
Speaker 1: Other than that, I have heard very little about any
15:17
Speaker 1: international buyers in New York City. Um. I think that's
15:21
Speaker 1: dried up a bit, and I wonder, you know when
15:24
Speaker 1: that will will that come back and when? But you know,
15:27
Speaker 1: the majority of projects, if you ask developers, typically they
15:31
Speaker 1: say of the people that bought were international and the
15:34
Speaker 1: rest were domestic. So you know, but I do think
15:38
Speaker 1: that that's that's very quiet right now, and I think
15:40
Speaker 1: it's a it's a it's a real point to consider this.
15:43
Speaker 1: Where are your popular areas right now in New York
15:46
Speaker 1: City and and and just more generally the twice state areas.
15:49
Speaker 1: You know, I would say we're seeing a lot of
15:52
Speaker 1: the West Side is very busy. Downtown is always a
15:56
Speaker 1: place where we I spoke to an agent yesterday who's
15:59
Speaker 1: in a bidding more on something downtown. Um, and that's
16:02
Speaker 1: not the I've heard a few different agents tell me
16:05
Speaker 1: that they're you know, embidding more as with stuff in
16:07
Speaker 1: downtown areas. Thank you so much for speaking with us today.
16:10
Speaker 1: Phenomenal intelligence there from Best Friedman and A Brown, Harris
16:13
Speaker 1: Stevens Well andres Manuel Lopez Obradador or am Low is
16:21
Speaker 1: coming to the United States that he is the President
16:24
Speaker 1: of Mexico and the president is coming to a visit
16:27
Speaker 1: President Trump today to get a sense of kind of
16:29
Speaker 1: what the agenda might be and what the outcomes could be.
16:32
Speaker 1: We welcome Duncan Would, Director of the Wilson Centers Mexico Institute. Duncan,
16:37
Speaker 1: thanks so much for joining us here. What is the
16:39
Speaker 1: purpose of this trip, Well, the official purposes is actually
16:44
Speaker 1: to celebrate the coming into force of the U S
16:46
Speaker 1: n p A agreement, which began last last week on
16:50
Speaker 1: July one. But a lot of people are questioning really
16:53
Speaker 1: why it's necessary to come up and talk about this
16:56
Speaker 1: once all the hard work has been done. And so
16:58
Speaker 1: the Mexican government and the US government has said that
17:01
Speaker 1: there is an important opportunity to discuss bilateral relations in
17:04
Speaker 1: the context of the pandemic, but unfortunately really don't have
17:07
Speaker 1: much more detail than that. We suspect that there will
17:10
Speaker 1: be conversations about drugs and organized crime in Mexico. We
17:14
Speaker 1: suspect that there will be conversations about ongoing collaboration on
17:17
Speaker 1: stopping Central American migration UM And the most, perhaps the
17:20
Speaker 1: most intriguing part of the visit is going to be
17:23
Speaker 1: a dinner that will be held at the White House
17:24
Speaker 1: tonight where anders Manuel Lobrosovador, President of Mexico, and President
17:29
Speaker 1: Donald Trump will sit down with about twenty business leaders
17:33
Speaker 1: from both countries. And what we expect is that in
17:36
Speaker 1: that dinner a lot of awkward questions could be raised
17:39
Speaker 1: by the US business community about the way that President
17:42
Speaker 1: Lobosovador is running the Mexican economy, and in particular regulatory
17:47
Speaker 1: and legislative changes that are threatening the certainty that investors
17:51
Speaker 1: have enjoyed up to this point. Well, what certainty have
17:55
Speaker 1: investors enjoyed. It feels like it's been such a volatile
17:58
Speaker 1: time and the relationship between President Trump and Amlow has
18:01
Speaker 1: been extremely strained. And secondary to that question, what changed.
18:06
Speaker 1: Amlow is now suddenly a fan of President Trump. It's
18:10
Speaker 1: an extraordinary relationship that we've seen developing over the past
18:13
Speaker 1: few years. I remember that back in two thousand and eighteen,
18:17
Speaker 1: when Lopez Overdor was still a candidate for the presidency,
18:21
Speaker 1: he published a book called A Year Trump, which translates
18:24
Speaker 1: into Listen Up Trump, where he provided responses to all
18:28
Speaker 1: of President Trump's that attacks, verbal attacks on Mexico and
18:32
Speaker 1: the President. Lobos Overdoor, as a candidate, had said that
18:35
Speaker 1: he was a man that could stand up to Trump.
18:37
Speaker 1: Immediately after winning that victory in July of twenty eighteen
18:42
Speaker 1: in the presidential election, the two men, however, began to
18:46
Speaker 1: develop a relationship um Some people even speculated this would
18:50
Speaker 1: develop into a some kind of bromance. They seem to
18:52
Speaker 1: be so friendly with each other and andress Manuel Lobos
18:56
Speaker 1: Overdor has consistently said that he wants a relationship with
19:00
Speaker 1: mutual respect with the United States, and every time that
19:03
Speaker 1: there has been provocation from the northern side of the border.
19:06
Speaker 1: Then anders Manuel has refused to respond, instead saying that
19:11
Speaker 1: he wants relationships of love and peace with the world.
19:14
Speaker 1: And so what we've seen is that over time Donald
19:18
Speaker 1: Trump has actually come to recognize Lopez Overdored as a friend,
19:22
Speaker 1: as a partner, and you know, that's that's an extraordinary
19:26
Speaker 1: achievement in many ways. But what I think a lot
19:29
Speaker 1: of people are questioning is whether or not this will
19:31
Speaker 1: play out well for the Mexican president, both at home
19:35
Speaker 1: and here in the United States, in particular with Mexican
19:38
Speaker 1: migrant communities who have been left out of this visit.
19:41
Speaker 1: And you know, let's not forget that those same Mexican
19:43
Speaker 1: migrants are sending record levels of remittencies back to their
19:47
Speaker 1: families in Mexico at a time when they leave it
19:49
Speaker 1: the most duncan what's the feeling in Mexico about this visit?
19:53
Speaker 1: I mean, we have a U S presidential election just
19:55
Speaker 1: four months away here, I mean, is there a concern
19:58
Speaker 1: here that this is just a political stunt by amald
20:02
Speaker 1: in support of President Trump. So there's all kinds of
20:06
Speaker 1: speculation in Mexico. Back in I think it was April
20:10
Speaker 1: of this year, um, Mexico came to a deal with
20:14
Speaker 1: with Opeque plus on cutting oil production, but it wasn't
20:18
Speaker 1: able to deliver as much of a cut as the
20:20
Speaker 1: OPEC plus was demanding. And in that case, President Trump
20:24
Speaker 1: said that the United States would cut its production even
20:27
Speaker 1: more so as to compensate for Mexico not being able
20:29
Speaker 1: to deliver, and in exchange, Mexico kind of owed the
20:33
Speaker 1: United States of favor. And in Mexico a lot of
20:35
Speaker 1: people are saying, is this the favor that Donald Trump demanded?
20:38
Speaker 1: We have no evidence of that the case. However, what
20:42
Speaker 1: we do see is that there is a lot of
20:44
Speaker 1: concern amongst the intellectual elites in Mexico that this does
20:49
Speaker 1: set of a bad precedent, in particular because um, in
20:54
Speaker 1: addition to meeting with President Trump during what is clearly
20:58
Speaker 1: a you know, a very vibrant and dynamic campaign year,
21:02
Speaker 1: electoral year here in the United States, there is no
21:04
Speaker 1: meeting planned with candidate former Vice President Joe Biden, and
21:09
Speaker 1: the folks from the Biden campaign have been coming out
21:11
Speaker 1: and tweeting that they don't think that this is appropriate,
21:14
Speaker 1: that they think this is the wrong time for Amlow
21:16
Speaker 1: to come to UH to Washington. So it has become
21:20
Speaker 1: highly controversial in that way. But let me just tell
21:22
Speaker 1: you one thing, Amlow. Does a president love the redor
21:25
Speaker 1: does seem to have his finger on the pulse of
21:27
Speaker 1: the Mexican electorate because fift of Mexicans support him making
21:33
Speaker 1: the trip at this time, very very briefly were of time.
21:36
Speaker 1: But how is Mexico doing on coronavirus? Unfortunately, Mexically is
21:41
Speaker 1: doing extremely badly. Um you know, I mean here in
21:44
Speaker 1: the United States, we faced enormous problems. In Mexico, we
21:47
Speaker 1: have a terrible situation. We're seeing the number of dead
21:51
Speaker 1: rising over We're seeing that the reporting is really inadequate,
21:57
Speaker 1: so we really don't know the full extent of the crisis.
21:59
Speaker 1: And certainly the Mexican healthcare system, he's under enormous strain,
22:03
Speaker 1: and so this is a true crisis for the country
22:06
Speaker 1: and in fact, it is a true crisis for the
22:08
Speaker 1: Mexican president, and many people have speculated that's another reason
22:11
Speaker 1: why he wants to distract attention and con visit the
22:14
Speaker 1: United States. At this point, we have to live there
22:17
Speaker 1: with Duncan, thank you for all of the intelligence. Duncan
22:19
Speaker 1: would is director of the Mexico Institute at the Wilson
22:22
Speaker 1: Center of Washington, d C. And of course we will
22:25
Speaker 1: be keeping an eye out on all of those meetings
22:28
Speaker 1: today with am Low, and of course the dinner this
22:30
Speaker 1: evening as well. Now, let's turn back to the markets
22:34
Speaker 1: and bring in somebody who can tell us exactly what's
22:36
Speaker 1: going on, not just in the United States but internationally.
22:40
Speaker 1: Clive Gilmore is CEO and group ce IO at Montreal
22:43
Speaker 1: Investment Partners about forty one and a half billion dollars
22:45
Speaker 1: in assets under management, and he joins US. Now, Clive,
22:48
Speaker 1: thanks for joining. We're seeing a continued creep higher. In fact,
22:52
Speaker 1: it's it's more like a cantor hire these days, the
22:55
Speaker 1: odd day where we're seeing a down day. What's the
22:58
Speaker 1: basis for the simism in this market? Yeah, thank you.
23:04
Speaker 1: I think the key issue is one of liquidity. I
23:07
Speaker 1: think it's been taught about quite a bit because as
23:09
Speaker 1: we know, the backdrop economically is not a good one.
23:13
Speaker 1: The jury is still out as to which country is
23:16
Speaker 1: dealing with the COVID nineteen issue better. Certainly, there's been
23:20
Speaker 1: the pickup of cases in the US, and if you've
23:22
Speaker 1: just been looking at that data, you wouldn't believe that
23:25
Speaker 1: the US market would go up, but it clearly has
23:27
Speaker 1: been going up. But I think the point that I'd
23:30
Speaker 1: really make is the difference between the type of stocks
23:33
Speaker 1: that are going up. Um. I don't know if you're
23:35
Speaker 1: aware of this, but if you look at global equities,
23:37
Speaker 1: that's the US combined with all the international opportunities. The
23:41
Speaker 1: biggest difference between so called value and growth stops historically
23:46
Speaker 1: was in the fourth quarter of where the difference for
23:49
Speaker 1: fourteen percent. To put that into context, today, we're only
23:53
Speaker 1: in early July and the difference between growth and value
23:57
Speaker 1: is over. In other words, growth stops are out performing
24:01
Speaker 1: value starts by globally year to date. So it's really
24:05
Speaker 1: a reflection of liquidity and trying to find the type
24:09
Speaker 1: of companies that are short term beneficiaries. What's happening with
24:13
Speaker 1: COVID nineteen allied to the fact that discount rates have
24:17
Speaker 1: come down so much and their future growth companies obviously
24:21
Speaker 1: so Clive, where do you see when you and your
24:23
Speaker 1: team look globally, Are there areas of the globe that
24:27
Speaker 1: you see and markets that you see compelling opportunity here?
24:31
Speaker 1: Or is the risk from the pandemic just too much
24:34
Speaker 1: of an unknown right now? Well, Clearly, the jury is
24:39
Speaker 1: out as to what will happen, as I said, and
24:42
Speaker 1: it's difficult therefore put to pinpoint exactly how the next
24:45
Speaker 1: two years will work out. However, one thing that it
24:48
Speaker 1: seems clear to me is nations with a greater creditor
24:52
Speaker 1: status or companies with strong balance sheets are likely to
24:56
Speaker 1: be in a better position looking forward. And if you
24:59
Speaker 1: look at that objectively, then you're left with a number
25:02
Speaker 1: of countries which would seem to put their head above
25:04
Speaker 1: the parapet as being interesting on a long term basis.
25:08
Speaker 1: You may be surprised to him you say that one
25:10
Speaker 1: of those is Japan, and the reason for that is
25:13
Speaker 1: that for years people have complained about return on equity
25:16
Speaker 1: in Japan, in part because Japanese companies don't have optimal
25:20
Speaker 1: balance sheets. But that cash now is proven to be
25:23
Speaker 1: very valuable because whilst they can have operational leverage that's
25:27
Speaker 1: a change in revenue and its impact on profit, they're
25:29
Speaker 1: unlikely to have the problems related to financial leverage. And
25:34
Speaker 1: from a country point of view, obviously there are countries
25:38
Speaker 1: like Norway, Switzerland, Singapore, even Australia and New Zealand that
25:43
Speaker 1: have a much stronger fiscal position as nations themselves which
25:47
Speaker 1: you'd expect to be beneficiaries. A quick word here on
25:51
Speaker 1: Hong Kong. You notice I admitted it from that list. Clearly,
25:55
Speaker 1: Hong Kong does have a strong financial position, but there
25:59
Speaker 1: are various concerns within the Hong Kong framework, its proximity
26:03
Speaker 1: to China being the obvious one. The issue with the peg,
26:06
Speaker 1: which I think you've raised before, which I think is
26:08
Speaker 1: a fascinating one because the Chinese remembe is believed to
26:12
Speaker 1: be pegged against a basket of currencies, and the Hong
26:15
Speaker 1: Kong dollar only against the US dollar. So even if
26:19
Speaker 1: President Trump wasn't saying what he was saying about the peg,
26:23
Speaker 1: but maybe pressure on the Hong Kong dollar peg at
26:25
Speaker 1: some point anyway, So I think perhaps Hong Kong is
26:28
Speaker 1: not the optimal place to look for in Asia, but
26:30
Speaker 1: perhaps sing a pore in Japan. Do you really think
26:33
Speaker 1: that this time might be different when it comes to
26:35
Speaker 1: the Hong Kong peg though, Clive, Yes, Actually, look, people
26:41
Speaker 1: have always said the whole point of a peg, right
26:44
Speaker 1: is if it breaks, it will never hold again. You can't.
26:48
Speaker 1: It's very difficult to repeg because no one believes it's
26:50
Speaker 1: ever going to hold. So I think that the community
26:54
Speaker 1: worldwide of investors and the monetary community more generally believe
26:59
Speaker 1: that the Hong Kong dollar PEG is going to hold.
27:02
Speaker 1: But as I said, there's a pressure anyway, because for
27:06
Speaker 1: some time the Chinese government will wanted to renimdify trade
27:11
Speaker 1: within Hong Kong, and that means in the long term
27:14
Speaker 1: you would expect greater integration with Hong Kong and China.
27:17
Speaker 1: And if that's the case, it's difficult to believe that
27:19
Speaker 1: one currency could be against a basket impurity, the euro
27:23
Speaker 1: for example, and the other currency could be pegg nearly
27:25
Speaker 1: against the U. S. Dollar. That seems to make very
27:27
Speaker 1: little sense to the long term. Clive Gilmore thanks so
27:31
Speaker 1: much for joining us. We appreciate it. As always. Claud Gilmore,
27:34
Speaker 1: CEO and group ce IO at Montreal Investment Partners say
27:38
Speaker 1: about forty one billion dollars on the management based in London,
27:41
Speaker 1: giving us as always a very broad perspective on global
27:45
Speaker 1: investing around the world where opportunities might be. And again,
27:50
Speaker 1: as Clive was saying that there's certainly lots of uncertainty
27:53
Speaker 1: out there as it relates to the pandemic, but also
27:56
Speaker 1: some opportunities out there. Again, we have central banks around
27:59
Speaker 1: the lobe providing liquidity. It's not just about to reserve
28:02
Speaker 1: at the e c B, the Bank of Japan and
28:04
Speaker 1: others providing tremendous amounts of liquidity in this market. And uh,
28:07
Speaker 1: you know, as many strategists have stated, it's kind of
28:10
Speaker 1: a backstop for risk assets and we're seeing that in
28:13
Speaker 1: the market again today as the SNP is up about
28:15
Speaker 1: seven tenths at one percent. Thanks for listening to Bloomberg
28:19
Speaker 1: Markets podcast. You can subscribe and listen to interviews at
28:22
Speaker 1: Apple Podcasts or whatever a podcast platform you prefer. I'm
28:26
Speaker 1: Bonnie Quinn. I'm on Twitter at Bonnie Quinn, and I'm
28:29
Speaker 1: Paul Sweeney. I'm on Twitter at pt Sweeney. Before the podcast,
28:32
Speaker 1: you can always catch us worldwide at Bloomberg Radio