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Tech giants reveal algorithm secrets to Beijing

This podcast is originally published in BBC Business Matters with the link here: https://www.bbc.co.uk/programmes/w172ydpzfk05ps8

Roger Hearing is joined by writer and journalist Karen Percy in Melbourne, and the Founder of AI firm Complete Intelligence, Tony Nash, in Houston. 

They discuss the tech giants in China that have shared details of their algorithms with Beijing for the first time. 

The first day of campaigning is getting under way in Brazil’s presidential elections, due to take place on the Second of October. What is the impact on the economy? 

The Prime Minister of Australia, Anthony Albanese, has confirmed his predecessor secretly held five parliamentary roles undertaken in the two years before losing power in May earlier this year. Meanwhile, in the US voters in Wyoming are expected to oust Liz Cheney from her seat in Congress in Republican primary elections taking place on Tuesday.

Transcript

BBC: Also say hello to Tony Nash, founder of AI firm Complete Intelligence, who’s joining us from Houston. So, Tony, very good evening to you.

TN: Hi, Roger. Good evening.

BBC: Good to have you with us. And we’re going to talk let me come to you coming. You’re involved in the AI world, which I guess is in that zone, too. I mean, our algorithms really the great bugbear that we think they are, as Ken was saying, leading us in places we perhaps don’t want to go but are unable to resist, or is it just a very simple way of selling us stuff?

TN: Sometimes they are, sometimes they’re not. These things are trade secrets, whether or not they are, say, patents or excuse me or something like that, these are trade secrets. And companies have spent a lot of time and a lot of money developing them. And so in China, you can expect to have these things demanded to be revealed because there really isn’t personal property in China as much as we think there is, there isn’t in the west and the US. We like to think that we have personal property and company owned property. And so if a government were to command a company to release an algorithm or a trade secret or a business process, then that would effectively be nationalization of property, and it’s just not right.

BBC: Yeah. Some members of Congress certainly want that, as we heard from Facebook and others.

TN: All they do is talk for a living. They’ve never built a business. They don’t know what it’s like to actually value something. And so if something were commanded to be opened, unless it was for a national security reason, which everyone understands, but if things were commanded to be opened, it would be a long fight. But property rights, intellectual property rights are a really big deal, especially over the last 30, 40 years, as we’ve had a software led world. So, again, you can get this in China, where there really are not individual property rights. And for one to expect to have individual property rights in China is silly. But in the west, one would hope that we would have property rights, especially intellectual property rights, and this would not be something that would happen.

BBC: Yeah, but I suppose there’s always compromise in that. That’s a fair point, Tony, in the sense that these are mega companies with enormous power and they are trading in our data. So it isn’t a normal commercial relationship, is it?

TN: No, Roger. What governments have to do and what citizens have to do, if there is objectionable behavior, then they have to legislate and regulate that objectionable behavior. If people are being discriminated against, if people are being threatened, if one political party or another is being favored, those things need to be regulated and legislated. But seizing intellectual property is not the way to do it because the precedent there is devastating. And in the US. Where you have an IP based economy, it would take down valuations of massive companies very quickly.

BBC: But we’ve heard, Tony, that Twitter has effectively open source on this. I mean, maybe they’re not doing brilliantly, but they’re doing okay.

TN: That Twitter API.

TN: Has been available for years, and it kind of tells you what’s going on, but it really doesn’t. And so it’s not a credible example, really, because they kind of let you know a little bit of things. And sure, you can download the data, and that’s a business that Twitter has had for a long, long time, where you can download the data to detect patterns and these sorts of things, but it’s not really letting go of their trade secrets, and that’s where the value is.

KP: That one of the concerns I would have is that politicians, though, rarely want to regulate or legislate. There’s this whole kind of mantra like, oh, no, we’ll let you do your thing, whether it’s the market or whatever. Politicians don’t like to regulate, they don’t like to legislate, and they’re in the rub for me.

BBC: Well, I think there are politicians and politicians, if I can anticipate what I.

TN: Mean, I live in America. Politicians here love to regulate.

BBC: Maybe economics. Tell me there’s a funny aspect of this that Brazil almost seems to be shadowing the US. In a funny sort of way. A similar kind of president, perhaps, in Bolsonaro to what we saw with Trump and some of the same economic issues.

TN: Yeah, I really don’t follow Bolsonaro all that closely, although I know he’s populist and he’s had some new economic measures go out recently that were very populous. So from that respect, you may be right. I think Brazilians have seen Lula before, and they’ve seen Bolsonaro before, so they know what to expect from each president. So at least they’re voting with their eyes open because they know how each performed in previous administrations.

BBC: Yeah, which may of course, be what’s informing the polling, if we believe the polling at the moment. Exactly. And tell you, one of the aspects always seems to me is this is the classic sleeping giant. I mean, it’s an enormous country with enormous resources, and one always bumps into Brazilians. Almost everyone goes, you still about China in a way. It’s a sleeping giant of this. It’s odd that a country like this hasn’t risen to its proper position in the global economy.

TN: Well, but it’s getting there. If you look at, for example, the AG exports that Brazil provides to China, it is a major supplier of the Chinese economy with AG and metals. So Brazil is getting there, and it’s gradually building up. Of course, there’s still a lot of poverty there, and I don’t know of administration in Brazil, and maybe I’m overstepping here, but I don’t know of an administration in Brazil that hasn’t been accused of corruption. Lula was, Temerer was.

BBC: They all are. I think it seems to be a regular thing. True or not, it seems to be there.

TN: Right the time I was absolved. So I just want to make that clear. But they were accused of that coming out of office.

BBC: Of course, one of her key issues is what happened on January 6. She’s on the Congressional committee investigating that at the moment. So meanwhile, Mr. Trump has backed a candidate rivaling her, Harriet Huggerman, who opinion polls suggests will easily win the Republican nomination for the seat. Miss Cheney earlier urged Democrats to register as Republicans in order to boost her slim prospect. I mean, Tony, this is an extraordinary sort of development in a way, because this change is close. It comes really to Republican royalty, isn’t she?

TN: Unfortunately, yes. So we don’t really like royalty in American politics. And so I think part of the problem here is that Lynn Cheney is in the House of Representatives and she represents a state that, whether she likes it or not, is very pro Trump. And so she is not representing her constituents. And at the end of the day, that’s really what this story comes down to, is when a representative is elected by a state, the people expect that representative to actually represent their views in Washington, DC. That’s how the US legislature works. And what’s happened is Liz Cheney has decided that she doesn’t want to represent the people of Wyoming and she wants to have her own views and do things that they don’t want her to do. And that’s really what this comes down to.

BBC: Isn’t there an issue here, though, to do with you delegate and representative? I mean, many people who represent an area in the legislature aren’t necessarily going to transmit the views of the people who elected them because they were elected to have their views heard in the parliament or wherever it is.

TN: In the US Congress. In the House of Representatives. They have two year tenure and they have to be elected every two years. And that’s to ensure that we have a diversity of opinion in Washington, DC. Whether or not one likes Trump or doesn’t like Trump doesn’t matter. I think the issue here is that Liz Cheney is not representing the views of her constituents and they have every prerogative to vote her out. And that’s really what this is about. The people of Wyoming, I haven’t seen the results. I don’t think polls are closed yet.

BBC: But no, I think they’re still open. This Cheney represents the people of Wyoming, not just it is predominantly a Republican, as you say, but not just the Republican Party. She represents the people who voted for it.

TN: But there is one representative from Wyoming. And so, yes, she represents the people of Wyoming. But if she’s a representative of a political party and she’s elected by that political party and the voters in that, so the Republican Party of Wyoming has actually censored her. So they’ve told her that the actions she’s taking are not endorsed by the republican Party of Wyoming. She’s known for over a year. So shortly after the 2020 election, they censored her. And so she’s been way out of bounds for almost two years because it’s the party, she has to go through the party system at the state level to get on the ballot for the primary, so she can win the primary to win the election. And so she really does report to the people and to the party in Wyoming. So it’s kind of the ugly side of democracy, but there is accountability in representation.

BBC: Well, clearly, but I suppose the other thing is that I’ve heard reported is that Liz Cheney, in terms of her views, apart from on the subject of Donald Trump, her views aligned pretty perfectly with most of the Republican voters of Wyoming. Very conservative on most issues. It does seem to be Trump. That’s the issue. Which seems strange to hear that this man still has so much influence over almost everything that happens in US politics.

TN: I don’t know that that’s the case. I think, to be very honest, I think Trump is good for US media and I think US media love covering Trump. Trump has very little to do with a lot that goes on. But if you watch US media, every day has a story about Trump and that story gets the most clicks and the most views. So whether or not Trump has something to do with the story, us media love to make the story about Trump because they know they will get traffic on that story.

BBC: But the reason they get traffic on the story is because people are interested in them. It’s a circle, isn’t it?

TN: Well, I don’t know. I think most people would like to understand what the actual issues are exclusive of Trump, but with the obsession that US media have on Trump, people just can’t get away from it because you have a kind of a splintered media environment in the US. And a lot of that is partisan to the left and to the right. So people can get partisan news really anywhere. But it’s the main US media that really seemed to have this obsession with Trump that they just can’t quit because he gets views and he gets airtime and people watch their shows when he’s on it.

BBC: That would be true in Texas as well as Wyoming, where you are.

TN: Anywhere in the US.

If a story is about Trump, some people intensively hate him, some people intensively love him, and people are in the middle and you just cannot avoid it. You just can’t avoid it.

BBC: Penny I mean, your neck of the woods, I guess that might be where the William Mammoth ends up if colossal get their way. How do you feel about all this, Penny?

TN: Well, it’s a Texas company that did it exactly. Maybe they just wanted more things to hunt, right? We like to hunt in Texas.

BBC: Everything is big. Of course, in Texas. So that makes some sense.

TN: Yeah. So if we do make woolly mammoths, great. And I think I’m kidding about the hunting, but I think it’s really interesting as different species are, say, overhunted or whatever, I’m curious how they’ll be accepted once they’re reintroduced. So let’s say someone is the first farmer to find this to be a pest and shoots it. So how will that person be treated if this marsupial is reintroduced?

BBC: That’s a really key question.

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Podcasts

One year on from the US Capitol riot

One year on from the US Capitol riot

Our CEO and founder, Tony Nash, joins the BBC Business Matters podcast to discuss mainly the anniversary of the US Capital riot — and why most Americans don’t really care anymore. Also discussed are the patent-free Covid vax and the CES 2022 and the coolest thing in the event.

This podcast first appeared and originally published at https://www.bbc.co.uk/programmes/w172xvqrxgznjw6 on January 7, 2021.

Show Notes

FN: Let’s go to Tony and the view from Texas. And I’m just wondering, Tony, we talked about, you know, viewing this from outside the nation’s capital. What have people been talking about today?

TN: Fergus, I gotta be really honest. No, nobody cares. I talked to students. I talked to business people. I talked to people across the country, and this is a DC event, and it’s drama that DC has conjured up and nobody in the rest of the country really cares. It’s just not a big deal for people.

FN: Okay, I’ll tell you why. I find that interesting. One thing. People travel to DC, right? For this event, whether they attended the rally or whether they actually went to the capital and took part. They weren’t DC residents, all of them. And the second thing is it’s a political thing right now, surely, across the country, there are politicians running on this event as a mandate. No?

TN: I don’t think so. No, I don’t think there are politicians running on this. You may have some politicians who are trying to run on this, but honestly, I just spoke to a couple of College students an hour ago and asked them what they thought about it. They didn’t care. I spoke to business people today and they just didn’t care. And they shrug it off as just something that’s in DC, and they shrug it off as the administration trying to distract attention. That is in the middle of the country.

That is the view from Chicago down to Texas and across the middle of the country. Nobody cares. And even in the capital building. So if these guys really wanted to overthrow the government and harm Congress people, they would have gone to the administrative buildings. I mean, these aren’t stupid people, but nobody else cares.

KA: I’m sorry, that’s not accurate. They were in the capital building.

TN: It is. Absolutely. We were in the administrative building.

TN: There were Congress people who weren’t even close to the administrative building.

FN: So, demonstrators sitting in the Speaker’s chair. Right.

TN: The demonstrators were there. The Congress people weren’t there at the end of the day. Fergus, look at the end of the day here’s what we’re talking about. We’re talking about trespass and we’re talking about property crime. Okay. That’s why people don’t care.

FN: There were five fatalities.

TN: Yeah. The Capitol police shot a woman. Right.

FN: Tony, I want to pick up on your point about people in Chicago down to Houston, not caring. This is what you’re reflecting to us about. Hang on. Let me please ask. Does that mean that nobody from Houston up to Chicago, et cetera, in the middle of America believes the message that was behind this campaign because it strikes me that 48% of the Republican Party believe the message behind what happened a year ago.

TN: What message is that, Fergus?

FN: That the election was stolen. This is the message that President Trump continues. A former President Trump continues to put out and the message that those demonstrators sought to enact as they see it. When you say people don’t care, you’re suggesting that it’s done and dusted. And I’m suggesting to you that’s far from the case.

TN: I think it is done and dusted. And I think if you look at people like Ashley Babbitt, who was shot in the back as she was entering like she was unarmed and shot at the back, these were not people who were fighting for something. Right.

FN: All right. Tony, come in. You want to jump in there?

TN: Yeah. I think Rachel is absolutely right. With the Pelosi’s support of the storming of the entry into Ledgeco in 2019, I think the Apathy in the US is really just more exhaustion than anything. I think Americans are just tired of the partisan nonsense. They’re just exhausted by it. And I think people don’t care because they don’t see this coming to an end. And DC is a world unto itself. And most of America just doesn’t care anymore. Honestly.

FN: But at that point and Rachel’s point, I was just reflecting on some of Carrie Lam’s comments exactly a year ago. And this phrase double standards, she said foreign audience should set us. Do Americans recognize that as double standards?

TN: Oh, absolutely. Yes, absolutely. They do. Well, most do not all, of course. But I think most do. If you were to rewind to 2019 and show those tapes to many Americans, they would completely get it. We’re not the Cretans that everyone tries to make us out to be. We understand that.

FN: Tony Nash is with us from Houston, may well be familiar with many of the names we’ve been discussing in the last five, six minutes. Tony, let’s focus on the philanthropy first. Presumably, that’s something you recognize that when you don’t get federal funding, you don’t get the big sort of specific targeted funding that a lot of big Pharma got back at the beginning of the pandemic. You reach into donor sections.

TN: Sure. Yeah, absolutely. And I think the Baylor College of Medicine did fantastic work here with the resources they had, and everyone here is proud of them. Texas is a huge force in medical like in public health, in oncology in many areas of healthcare. And this is just a very public view, public way of doing it. I love what they’re doing. It’s hard not to love what they’re doing.

FN: In terms of the generic issue. We’ve heard a lot about big Pharma is, I guess, easy to demonize, because a lot of the companies are making some very big returns on vaccines, and these people seem to be ready to maybe not give up the whole game, but essentially go for the generic version so that it can be spread more quickly and more cheaply.

TN: Well, all of the private sector vaccine developers, I think they got $20 billion from the US government in 2020, so those medicines have been paid for. They should give them out for free. All their IP should be open source. There should be nothing secret. The American people paid for the ones that were developed in the US. And I think as a foreign policy, we should open source that and let every country develop it at whatever cost they can.

FN: It would be a fantastic kind of diplomatic soft power, too. Wouldn’t it be?

TN: Absolutely would.

FN: And, Tony, I’m not sure how much you heard. There a quick thought from you as we end the program on the survival of Tech despite the pandemic?

TN: I think tech has thrived in the pandemic. And I’m glad to see shows like CES happening where people can go in person or be remote. I think it’s great to be in person. So I’m really happy to see it. And the coolest thing I saw at CES was a car that could change color because of nanotechnology in the paint. That was the coolest thing I saw there.

FN: Yeah, I saw that one online as well. That’s the purple thing I was referring to. Kind of Sci-Fi is real, I guess. All right, Tony, thank you very much. Indeed. Glad we got you back. Briefly. Sorry we lost the line halfway through there.

Categories
QuickHit

QuickHit: What China is thinking right now?

What China is thinking right now?

China expert Chris Balding joins us this week for #QuickHit to discuss “What China is thinking right now?” What is the state of the Chinese economy? Are they really doing well in Covid? How about the deleveraging process, is that even real? And what’s happening to CNY? Also talked about are the politics around China especially how it relates to Afghanistan.

 

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This QuickHit episode was recorded on August 24, 2021.

 

The views and opinions expressed in this Sentiment has soured: How will governments and companies respond? (Part 1) QuickHit episode are those of the guest and do not necessarily reflect the official policy or position of Complete Intelligence. Any contents provided by our guest are of their opinion and are not intended to malign any political party, religion, ethnic group, club, organization, company, individual or anyone or anything.

Show Notes

 

TN: Hi, everyone. Thanks for joining us for another QuickHit. My name is Tony Nash with Complete Intelligence. Today we’re talking with Christopher Balding about what is China thinking now.

 

Chris, thanks for joining us. Can you let us know a few things about yourself? Give us a little background?

 

CB: Sure. I was a professor at Peking University in China for nine years and then two years in Vietnam at the Fulbright University Vietnam. And today I am a super genius in the United States.

 

TN: Yes, you are. Thanks for taking the time, Chris. You’re one of the very few people I know who’ve actually had on the ground experience in China with a Chinese government organization.

 

So I think it’s really important to go to people like you, who had experience like you to understand what kind of China or the Chinese government is thinking now. Of course, it’s not monolithic. There are a lot of different opinions, but it’s good to have that insider’s view.

 

So I want to start off as we look at where we are in COVID, we’re a year and a half into it, depending on the school of thought, maybe it did or didn’t start in China, but we hear that Chinese economy is doing great and they’ve come out of COVID really well, all these other things. I’m really curious your view on the state of the Chinese economy right now. And what are Chinese economic planners thinking right now as they kind of potentially go into year two of Covid.

 

CB: So I think there is a couple of highlights out of the Chinese economy. First of all is that they’ve resorted to the pretty similar playbook that they go back to every year, which is pump credit, pump construction and infrastructure type spending.

 

In the early part of this year, we saw a significant amounts of credit growth. That’s softened as we’ve moved into summertime. That’s primarily due to because there’s a very clear summer and fall building season that allows builders in China to do things because the weather becomes inclement in significant parts of the year. And then if you add in the Corona backlog, that kind of is essentially almost trying to put two years of expected growth into one year.

 

We actually saw a lot of that. And that front loaded a lot of the credit and demand for things like commodities. This is why you’ve seen such demand for things like coal and steel, which were quite high. We’ve seen that soften as firms built their inventory and really ramped up during the summer building season as the demand for credit has softened and some of the building has actually been undertaken. You’ve seen a softening of that which has caused you’ve already seen talk of maybe there’s going to be unleashing or the economy is a little bit softer than the planners would like. So there’s talk of unleashing some additional credit growth trying to stimulate different parts of the economy. We’ll have to wait and see if that happens.

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Generally speaking, the rule is, if there’s a debate about whether or not they’re going to unleash credit growth, I would definitely take the over.

 

TN: By about three times. Right. So one of the interesting things you mentioned is that you said that they expended credit in the early part of this year. But what I read from investment banks and what I’ve read from other people who look at China is that China just underwent this big deleveraging process. Is that real? I’m just not sure, because I see on one side that there’s this talk about deleveraging, but my gut tells me it may not necessarily be happening. Is it happening, or is it something that’s just happening on paper or what’s your view?

 

CB: It’s tough to understand the Chinese National Bureau of Statistics and PBOC’s math as to how they arrived at that, because if you’re just running more generalized numbers, it’s very clear that debt at all levels has continued to outpace GDP. So it’s very difficult to understand how they’re estimating a leveraging. And it’s important to note that we did not see, let’s say, the rapid, rapid expansion of economic growth that you saw, for instance, in the United States.

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And what I mean by that is, whereas any United States, maybe growth went from two or three to 5% relative, almost doubling, you know. You probably saw Chinese growth go for maybe like 5% last year to seven or 8% with the Corona boost where you have that base effect. And so you didn’t see it go to, like, 10, 12, 15% that you might have seen if it had really in relative terms, they doubled from the previous year.

 

And so it’s very difficult to understand how they arrive at those deleveraging numbers. And as we all know, China is famous for fudging their numbers. So it’s very difficult to understand how they’re arriving at those numbers.

 

TN: Right. No, I agree. I haven’t believed it when I’ve heard it, but I kind of nod along as if it’s real. But I think, you know, the Chinese economic data a lot more intimately than I do, but I just don’t see where it’s happening, where it’s actually materializing instead of just being debt transfers.

 

Okay. So earlier you said that Chinese economy is slowing. Now, from my perspective, that’s worrisome partly because you’re going into a big export season, and we’ve got some ports that are stopped up. We’ve also got an election next year with Xi Jinping being reelected, whether that’s in square quotes or not, but Xi Jinping being reelected next year.

 

In terms of the resources put towards stimulus this time around, do you expect that to be more intensive than normal?

 

CB: Typically, what you see. And you saw this the first time Xi was elected, you saw this second time Xi was elected. What you typically see is a pretty significant boost to fiscal outlays. And so I think if history is any guide, I think you’re probably going to see going in the fall and the first of year, it’s very, very likely you’re going to see some type of significant boost to fiscal outlays. And this pattern goes back many, many years well before Xi that when there are these elections. And I’m not sure if it’s a scare quotes or air quotes, but both seem to…

 

TN: Yeah.

 

CB: So I think it is very, very likely that you’re likely to see that. And one of the things I think that a lot of people have missed out on is yes, there were absolutely corporate, let’s say, bailouts or corporate funds for Corona. But one of the things is that in the United States, there were the large amounts of transfers directly to households. China has not enjoyed those transfers directly to households.

 

And so actually, consumer spending in China is actually pretty soft. And those are buying inflated data standards. And so I think that is something that is very important to note when we’re talking about the health of the Chinese consumer.

 

TN: Yep. That’s great. Okay. So I also want to talk about the supply chain issues. And I was just reading a story today about how Pudong Airport has been shut down. Cargo on Pudong Airport is going to be much slower for a period of time because of anothe Covid outbreak. This sort of thing. Do you see ongoing port capacity issues related to COVID? Is that something that you’re kind of concerned about?

 

CB: I think that is something that you’re going to be seeing for definitely the foreseeable future. And I should say it’s not just China. You’re seeing a lot of this in other parts of the world that I know, specifically Vietnam, the Middle East. I’ve heard of similar things in Europe where they are just straining at capacity. Sometimes it’s due to COVID shut down. Sometimes it’s due to other issues. But absolutely, these are issues that I think are not going away anytime soon.

 

And it is, I mean one of the debates in the United States right now is transitory or structural inflation. And I think, not to be capping out on the issue, but I do think it is kind of a mix of both. And I think the supply chain issues don’t be surprised if we’re looking at very likely two years before all these issues are really worked through, because when people went to, let’s say, just in time or contract manufacturing, what that did is that gave you less wiggle room. So you did not just have a massive warehouse of supply that you inventory, and then you could draw down as necessary where it would give you three months to make a mistake. Now people were essentially saying, I got one week of inventory, and if that one week gets shot, I’m in deep trouble.

 

So the chips are, there’s chips, there’s car, there’s Corona shutdowns, there’s capacity issues at some ports. And so it’s going to take a couple of years, probably to work through all these issues to return to what we think of as some degree of normalcy.

 

TN: Right. What’s interesting to me about that is the previous administration of the US tried to bring manufacturing businesses back to the US.

 

Now, with COVID because of the global supply chain issues and the intermittent supply issues, there’s more of a move to bring things back, at least to North America. I know lots going into Mexico right now. Some’s going into the US to minimize the disruption of things, especially in electronic supply chain.

 

So it seems like regardless of the kind of official policy, whether it’s trade policy or just say public health policy, it looks like more of this regionalization is happening. Does that make sense to you?

 

CB: Yeah, absolutely. I mean, look, nobody is going to announce that they’re leaving China for many reasons. But nobody’s going to announce that they’re leaving China. But you do absolutely see a spread of manufacturing capabilities.

 

Whether that is because they want to have multiple manufacturing bases, they want to be more diversified, whether it’s because of IT issues, whether it’s because of Corona risks, tariffs, all of these issues, there is absolutely increasing diversification of manufacturing capabilities, whether it’s Mexico, India, Malaysia, all of these different places. You’ve even seen Africa doing relatively well in certain areas. So it has absolutely happened.

 

TN: Okay. One last question on the economy then we’ll move to kind of politics and China’s place in the world. What’s the thought behind the elevated CNY? We’re trading much higher than we have for a long time, and it stayed there, right? It’s pegged right around 6.4 something, and it’s been there since Q1, I think. Why the persistent strength in CNY?

 

CB: Well, I mean, I think first of all, they have been running during Corona pretty significant surpluses. The United States has exports to China and other parts of the world have declined, not insignificantly or remained flat as we’re importing a lot more. That’s number one.

 

I think also the dollar has gone into a specific range. And the way that I think of the CNY is it’s basically just a reverse USB tracker, which I think explains most of what we’re seeing. I think what they’re trying to do and the reason that China has been buying some dollars, not in major amounts, but I think they kind of have, like, ICBC and CCB, those types of banks acting as dollar cushions for lack of a better term, is that they don’t want it to appreciate too much for a number of reasons, because they know they’ve become more expensive and that would just make it that much more expensive. So in a way, I think they’re trying to manage that, manage that flow. But I think it’s still generally within a range where it’s like you can say they’re within spitting distance of what their index say they should be. Okay, that’s fair.

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TN: Okay. Now let’s move on to politics. Let’s move on to kind of China’s big, long term, multi hundred year plan to rule the world, which I think is not real.

 

So let’s talk about Afghanistan. This just happened over the last couple of weeks, and there’s a few that China is going to be the master winner of the US withdrawal from Afghanistan. I think there are multiple perspectives on that, but the consensus view seems to be that the US really did had to job on the withdrawal. And the ultimate winner of this is China. Can you kind of walk me through some of your views on that? What are some of the possibilities there with China and Afghanistan?

 

CB: Sure. So I think it is very fair to say that the United States has pretty badly bungled the withdrawal. You know, why, you know, we should have waited until we’d already evacuated all the army to say we’re going to start evacuating US citizens and Afghani translators and people like that.

 

One of the things I do think is absolutely happening. And this is not just China. And you’ve heard this from country after country. Taiwan, Germany, UK on down is they are saying we need to go back to the drawing board and re evaluate everything we think we know.

 

Okay. And somebody that I was talking to, I think, expressed it very well is the United States still has credibility because we can move large amounts of assets, whether it’s military, governmental, other private sector, we can bring significant assets and influence to the table. What, this has really changed in a lot of people’s minds is confidence.

 

TN: Yes. That’s fair.

 

CB: That has changed a lot of people’s mind. So you have a lot of people going back to the drawing board. One of the things I’m going to be a little bit hesitant to do is start pronouncing winners, losers, and this is what XYZ country is going to do in ABC country is going to do. And the reason I say that is it’s very, very plausible to construct a scenario where the Taliban and the CCP become BFFs. Okay?

 

TN: Sure.

 

CB: I mean, if China is shipping large amounts of fentanyl out of northeast China, it’s not a crazy scenario to say they partner with the Taliban to start shipping large amounts of opium into the United States at the same time.

 

TN: Sure.

 

CB: Not a crazy scenario. It’s also not a crazy scenario for the Taliban to start bombing China within a year or two. Okay. You could very easily construct those types of scenarios that lead to that. Okay. So it’s very, very difficult to construct those types of scenarios with any what I would consider a degree of certainty. Okay?

 

TN: Sure. So what about the, the China-Pakistan relationship? $46 billion of investment, supposedly, supposedly a tight relationship there. That’s arguable. Do you think that pays dividends in Afghanistan, or is that kind of something that’s a little bit, I wouldn’t say irrelevant, but a little bit less directly connected.

 

CB: So I think Pakistan is actually very pretty directly involved in all of this. But again, it’s very difficult to say with a high degree of certainty what’s happening there because Pakistan has very direct connections into both the Taliban, Al Qaeda. Some would even say that they were a Pakistani security service creation. At the same time, it’s well known that there are blood feuds between groups within each of those organizations.

 

So it’s very difficult to get to say exactly who the winner, loser there. With regards to China and Pakistan, one of the things that you’ve seen very clearly is that pretty much the Pakistani government and the Pakistani elites are effectively compromised by China. They will say nothing about wingers and other issues.

 

At the same time, everything, I think indicative on the ground and of the mass population is that there is maybe not extreme, but I would say broad discontent with the Pakistani relationship with China for many reasons.

 

TN: From who and Pakistan? Is it from the armed forces? Is it from other parts of the government, from regular folks who isn’t happy with that relationship?

 

CB: I think a lot of folks broadly. The business community. I think there’s a growing sense that they are effectively a Chinese colony. One Pakistani I know who described it as such. So I think there is very broad discontent. And as we all know, Pakistan has quite the lengthy history of governmental instability.

 

So similar to what you’ve seen in other countries in the region, it’s very easy to paint a picture, a scenario where the current government remains compromised and under the thumb of the CCP for years to come. I think it’s also plausible that a new government or some type of political instability happens in Pakistan. And all of a sudden, there’s an about face on how to manage relationships with China.

 

Generally speaking, though, I think there is going to be very tight coordination between Beijing, Islamabad and Kabul because those… Pakistan, I mean, almost anything that happens in Afghanistan is going to be maybe not controlled by Pakistan. I think that overstate it. But there’s going to be large amounts of information flows and influence back and forth happens over what happens in Afghanistan.

 

TN: Yeah. Okay. That’s all really interesting. I think we could spend a long time talking about China, Pakistan, Afghanistan, India, Russia, kind of where all those countries come together, Central Asia. But I want to end on this.

 

We’ve seen, a lot really changed with US standing in the world over the past couple of weeks over Afghanistan. We’ve seen a lot change in the US China relationship over the past year with the new administration. And so let’s talk for a minute about the overall US China relationship. What’s your thought there? Are they getting along? Is there a constructive dialogue? How do issues like Taiwan fit within that discussion? Can you just help me think about some of your thoughts there?

 

CB: So I was talking to someone, and I think they put succinctly the way that I would characterize the Biden administration’s record on China. You can’t criticize them for what they’ve done on China because they really haven’t done anything at all. Okay. Other than adding a couple of names to the Sanctiosn books, there really has not anything taken place.

 

They promised that they were going to get out their China strategy plan in June. Then there were rumblings that might happen in July, where now at almost rapidly approaching September 1. And now there’s not even talk of when it might be released. So really, nothing has been happened except for the Alaska meeting, which apparently went over like a lead balloon.

 

Everything right now just seems to be a stalemate. And the Biden administration is worrying, and that China is still moving forward, and the Biden administration is basically doing nothing.

 

The most telling point to me about the by administration approach, and I think this is something I think you should fault in. In fairness, Trump for is look, we can talk about values and do the right thing and all this kind of good stuff. But the United States, at some point has to actually put resources into this effort.

 

And the Trump administration, other than political capital with allies or other countries, never put any real hard resources or assets into these issues. And the point I would make is the Biden administration has made a point of spending literally trillions of dollars. And to the best of my knowledge, there has been almost zero spending passed that has really anything to do with China. Okay.

 

We cannot continue to talk to countries like Vietnam, Malaysia, South Korea, Japan. You cannot talk about the threat China poses and never spend any money on the issue.

 

TN: Sure.

 

CB: Okay. And look, this doesn’t have to mean we go out and increase military spending by 20%. This could simply mean we’re going to go into Vietnam and say, we want to have a development program and, you know, help solve issues. This can mean capitalizing the Development Finance Corporation to help countries like India and Malaysia and say, look, there is a real opportunity that does not involve the Belt and Road, where there’s going to be green standards or these non-corrupt standards and things like this to make sure that this money is really helping your country. You know, and it was probably something that was negotiated could be all the way back to the Obama administration.

 

There was some type of military center opened in, I believe, Jakarta with the Indonesian government that was supposed to have other governments. It’s a small center. Even those types of things. There’s simply not the resources being dedicated. And I think that’s indicative of where this ranks within the Biden administration priorities.

 

TN: I’ll be honest, Chris, it sounds like a mess. It sounds pretty bleak to me.

 

So great. I really appreciate this. I think if anybody knows has an idea of what China is thinking, I think you’re the guy. And I really, really appreciate your time.

 

Everyone watching. Please please subscribe to our YouTube channel. The more we have, the more we can bring to you as a part of our videos. And, Chris, thank you so much. And thanks to everyone. We’ll see you on the next interview. Thanks.

Categories
QuickHit

Inflation: Buckle up, it may get worse (Part 1)

Nick Glinsman and Sam Rines are back in this QuickHit episode special Cage Match edition about inflation. Where are we in the inflation and what is the horizon? Both guests have different views and they explain exactly why they have such views. And what about China’s manipulation of CNY through hoarding metals and commodities? Is that a valid way of looking at inflation?

 

Part 2 of this discussion can be found here: https://www.completeintel.com/2021/05/06/quickhit-inflation-part-2/

 

Want the audio version? Play this on Spotify or find us in other podcast players. You can also find us in other podcast audio streaming services. Just search “QuickHit”.

 

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This QuickHit episode was recorded on April 28, 2021.

The views and opinions expressed in this nflation: Buckle up, it may get worse QuickHit episode are those of the guests and do not necessarily reflect the official policy or position of Complete Intelligence. Any content provided by our guests are of their opinion and are not intended to malign any political party, religion, ethnic group, club, organization, company, individual or anyone or anything.

 

Show Notes

 

TN: Today we’re talking about inflation. It’s been on everyone’s mind for the last couple months and we’ve got two macro geniuses to talk to us about it today. We’ve got Nick Glinsman from EVO Capital and we’ve got Sam Rines from Avalon.

 

We look at copper. We look at a lot of these indicators of inflation and it’s been on everyone’s mind over the last few months. A year ago, people were worried about deflation. Now the worry is inflation. Obviously we’ve seen a lot of monetary and fiscal policy in the interim.

 

So, Nick, can you give us your view on where we are with inflation and what that looks like over what horizon? Is it months? Is it five years? Is it, you know, how does this play out?

 

NG: The horizon is a little bit tougher. But my my thesis is based on looking back at historical precedence and I focused on the LBJ Vietnam War spending, combined with his great society fiscal spend, which ultimately led in the early 70s Paul Volcker’s fame containing huge inflation there was at that period.

 

And I’m sitting here having spent the last year but actually building this thesis up for a couple of years thinking that the equivalent of the Vietnam expenditure is Covid and the relief spending that’s been has combined Trump and now Biden, and then the great society equivalent would be Biden’s green infrastructure spending which, I slightly tongue-in-cheek called the green ghost plan, which is enormous. Amazing.

 

When I find myself agreeing with Larry Summers on inflation. I think his odds of a third in terms of this creating inflation, I would suggest a higher. In terms of timeline, it took five to seven years for the inflation to really kick in during the 60’s leading to Volcker. I think this time around, it will be much quicker due to the differences, a lot of globalization and supply chain management.

 

TN: Sam, can you kind of give us your view of where we are in inflation and what’s the duration that you kind of expect this to play out?

 

SR: I have a very different view. If you look at the lumber market, copper, et cetera, these are things that tend to sort themselves out rather rapidly. Being in Houston, the best cure for high prices and energy is high prices. We will pump more if oil ever goes to 80. It’s very similar with lumber and copper. Most of the mills are becoming much more efficient in lumber, for instance.

 

So we will see that begin to roll over and that will roll over in a very meaningful way as we begin to work through these supply chain issues that we know are coming in the summer and we know are probably going to persist in the fall. But as we get into the fall and we get into early 2022, even if we have a couple trillion dollars infrastructure, it’s going to be spread over the better part of 10 years infrastructure.

 

It’s not a fast spend and it will not save us from the fiscal cliff. It will not save us from the lower employment numbers that we’ve been seeing on an overall basis. Yes, unemployment is moving lower, but employment is not keeping up with the employment figures.

 

Once the economy begins to have to stand on its own two legs, even if it has a touch of a tailwind from the government, it’s still going to be very difficult to continue to see consumption going through the roof, continue to see the types of disruptions that we’ll see for the next six to nine months in terms of supply chain that will have one-off price implications.

 

But that to me says we’re probably getting towards the peak of the sugar high as we get into the summer and the other side of the sugar high is going to be very painful in terms of going back to a one and a half to two and a half percent growth rate in the US inflation that will be very difficult to get higher simply because it’s difficult to have sustained disruptions in supply and demographics that aren’t changing anytime soon. So we will continue to have a number of those headwinds. And I think that’s what the US 10-years is telling you, US tenure at 1.5 is telling you that the market’s looking through this summer and saying the next decade doesn’t look as good as the last decade in a lot of ways.

 

It’s something to at least keep in the back of our minds that the Fed doesn’t have great control over the 10-year. The fed has great control over zero to two-year timeframe. But nothing beyond that.

 

TN: Okay, so let’s look at common areas. It seems to me that both of you see inflation continuing to rise maybe not in terms of the rate of rise but certainly continue to rise until, let’s say say Q3 Q4? Do we at least have comic around there?

 

SR: Yeah.

 

NG: Yes, absolutely.

 

TN: When we look at some of the the pressures in inflation, part of my assertion has been, and I’m sure you’re both going to tell me I’m wrong, but as we’ve seen the CNY strengthen, my hypothesis has been with a strong CNY, Chinese manufacturers are stocking up on industrial metals, food, other things because it’s in dollar terms. They can get it pretty cheaply and they’re waiting for CNY to devalue again when their buying power will decline.

 

What I’m hearing is that a lot of these things are really going to China to be hoarded and as a play on a potentially devaluing CNY. What do you think of that hypothesis aligned with a lot of the central bank easing? Is that a valid way of looking at inflation? Meaning this is stockpiling more than it is demand pull?

 

NG: My view on China is that, if you look at food firstly, there is a food shortage crisis. And we all know what the CCP are most scared of, which is society unrest. And we can take the examples of the Arab Spring, food is the key. But I also wonder whether the Chinese are stockpiling in anticipation of decoupling? I think of rare earths, of which they have a large control of the refining thereof being problematic. Semiconductors, there is an issue there.

 

So if I extrapolate further, my view is I think the supply chain issues are much longer standing now because of various geopolitical forces creating a decoupling with China for sure. And we have this Anglosphere grouping that’s clearly beginning to take shape, which now looks like that will include India because of the health crisis there.

 

If we look at that, then the question is what happens with Europe? Again, I think that’s part of the supply chain problem whilst they decide which site they go to. Is it china-centric or is it anglers-centric?

 

So I think the supply chain issue is much longer standing, hence I suspect that we’ve got China positioning, because nothing goes on which in China without the government knowing about it, quite frankly. In terms of anticipating a supply chain issue, because all the commodities they’re importing they’re short off.

 

TN: Okay, Sam, first of all, what do you think about my hypothesis and then Nick’s qualification around the supply chain issues being much longer term on the back of decoupling?

 

SR: I would take the argument that decoupling isn’t an action. It’s a process, and the process takes a very, very long time. And that creates in my mind a much longer time frame for the United States to build out its portion of the supply chain, for instance semiconductors, et cetera. So I would say I don’t disagree that there is a decoupling underway. In my opinion or my argument would be that it will take much longer than a few years to really get that process to move and it’ll be particularly under this administration a much more diplomatic and less blunt force tools than we’ve seen in the past being used. So I don’t disagree with the supply chain eventually being at least somewhat disentangled from China. I would just argue that it will take quite a while to really begin to become an issue unto itself.

 

On your point that China stockpiling, that does appear to be happening. It does appear to be a hedge against a weaker CNY to come including with lumber. One of the reasons that lumber prices are spiking is because China’s buying a lot of lumber in the US. That is a significant problem. And I would point to, when they stop stockpiling, that tends to have a significant effect on the price of commodities in the opposite direction. We’ve seen that with copper a couple of times during their infrastructure builds.

 

The interesting thing right now is you’ve actually seen a pullback from infrastructure spending. From the peak in China, they’ve begun to do their form of policy tightening on that front already. Suspected will continue at least on the margin and that will be a significant headwind for those commodities that have been stockpiled when less of them are being used on the margin as well. So that that does play into a 2022 disinflationary type environment versus 2021.

 

TN: Given that we have all these different pressures, whether it’s supply chains, whether it’s stockpiling, whatever it is, what the people in the middle, so that the manufacturers, what capacity do they have to absorb these price rises? What are you guys seeing when you talk to people, when you read? Are you seeing that manufacturers can absorb the lumber prices, the copper prices and other things? Or are they passing that directly along?

Categories
QuickHit

QuickHit: The Anglosphere and the Multi-Speed Recovery

Macro specialist, geopolitics and history commentator Nick Glinsman joined us for the first time on QuickHit to discuss how the Anglosphere compares to the world in this multi-speed recovery in the wake of Covid.

 

Nick is based in Brazil and he brings decades of experience to macro, markets, and politics. His background is basically London and New York with a bit of Europe and, Australia and Hong Kong. He worked with the Salomon Brothers and Merrill Lynch. He’s doing a lot of advisory work and the ability to express views on the markets, geopolitics and macroeconomics in the market.

 

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This QuickHit episode was recorded on April 8, 2021.

 

The views and opinions expressed in this The Anglosphere and the Multi Speed Recovery? QuickHit episode are those of the guests and do not necessarily reflect the official policy or position of Complete Intelligence. Any content provided by our guests are of their opinion and are not intended to malign any political party, religion, ethnic group, club, organization, company, individual or anyone or anything.

 

Show Notes

 

TN: Nick, for a while you’ve talked about this concept called the anglosphere. Can you help us understand what you mean by the anglosphere?

 

NG: I’ll dig into it. I like the fact that you’re talking about the link between geopolitics and economics because with Trump and Brexit, that’s where what was a very boring macro environment suddenly started to become differently exciting. The politics would start to drive some of the macro markets and actually what’s interesting is  Brexit and Trump, part of the anglosphere. Not the formative part of the anglosphere.

 

So what we mean by the anglosphere is looking at countries that are historically tied via culture but critically also via common law, legal system, because that defines how the economy and how commerce can run. If you go back in history, there is a big difference between common law countries and roman law countries. Common law countries think of European Union countries and that construct. So what we mean by the anglosphere is being, better start with the UK because it is the mother country, it’s still the mother country for where you are currently still. If the US were now part of the commonwealth. You’re looking at an anglosphere. Now typically when I refer to it, I’m talking about UK, US, Canada, Australia, New Zealand. Five Eyes.

 

You could loosely add two countries. One of which has an anglo-saxon common law — India. The other one works much closer as a defeated entity country in World War II — Japan. So you’re getting the quad, which I would maintain is part of an angular influence, at least, if not anglosphere entity.

 

Let’s stick with that grouping. You’re looking at countries that have a similar legal system, similar financial structure, they have banks, central banks that are lenders of last resort and traditional backups, concept. Remember the European Union doesn’t have banks.

 

Back to common law. Common law also in this environment. This is where it’s getting critical. So Five Eyes is I would posit it’s the ultimate defense alliance.

 

TN: Even New Zealand, still? Ah, you know. Long discussion. That’s so much sarcastically.

 

NG: I know what you’re saying. Although she has the relation in the State of Victoria in Australia, who is actually not known as Kim Yong Dan. But if you look at what they’ve just done with the central bank, there is still a similarity there. And of course the travel corridor that’s about to open on the 16th I think it is, is between Australian and New Zealand. So as much as she kowtows to the panda in Beijing, they are still part of that structure.

 

So back to the common law and the financial. So you’ve got countries with central banks that act as lenders of last resort with independent monetary policy, you have independent fiscal policy and I would include of course in both these, Bank of Japan, RBI in India and so on so you’ve got independent fiscal policy, independent monetary central bank, which you don’t have in Europe.

 

There’s been no Hamiltonian moment there. So you have that flexibility and you can see that flexibility. You also have much more, common law enables Schumpeter’s creative destruction and thus reconfiguration. Much easier chapter 11 in the US or bankruptcy and start again. Right. Not so easy to either stop or start on the roman law. So that when you think of where we are now, you’ve gone through a pandemic where inexplicably a lot of countries have remained closed, the reopening is going to need that reconfiguration.

 

You’ve also been the countries that are advancing with the vaccine quickest of those that took a very commercial view as governments in terms of getting them… so you had operation walk speed in the US and you had a vc person take over the procurement policy and the vaccine policy in the UK. Private Sector innovation. And in fact, in the UK, you have that triangle, Oxford, Cambridge, London, that’s without biotech and so on and so forth, very flexible. You even have a situation where the famous Astrazeneca factory in Holland was financed by the British. Not by the Dutch.

 

We can get into that on another episode of the great vaccine debacle. But I think that’s part of the precautionary Roman Law System that the EU runs versus the go get innovative system that comes with the anglo-ceric countries, the common law system and the structure of finance business so and so forth.

 

TN: Okay. So it sounds to me like when you talk about the anglosphere and you look at it kind of post pandemic or at least post first wave of disaster in the pandemic as we enter a recovery, it sounds like you see a widening divergence between those with say common law and relatively independent central banks versus the other law formed be it roman and in independent fiscal policy as well.

 

So help me understand the… so we just had this IMF report come out earlier this week about 5.1% growth or whatever this year and everything’s amazing and which we know, given, it’s all base effects and if you do a three-year average, it doesn’t look good at all. In Europe, the only one, over that three years, the only one with positive growth is The Netherlands. Not even the UK. But I would argue there, they lean toward you know more of a British style than other styles.

 

So if we’re having a two-speed or multi-speed recovery, would it be fair for me to say that you believe the anglosphere will recover faster than the other spheres?

 

NG: Absolutely. Absolutely. You’re better expert on sinosphere than I would be. But I think the growth is going to disappoint because they’ve pushed so hard on the string of debt. Okay.

 

In terms of the Euro, Europe, I think there’s a very simple way of looking at things. It’s extent of vaccination and compare those and what does that mean? It’s now being said out of UCL, University College of London. UK’s herd immunity on Monday, 73%.

 

You can see there’s data coming out of the UK that is explosive as there is in the US. People are looking at the European and thinking, okay let’s close until August or beyond because this vaccine debacle is even worse. Everybody’s going to take Astrazeneca in Europe even though for the young women of age below 30, the chance of getting a blood clot is 1 in 600,000. Where the child’s getting Covid is substantially greater.

 

Because Europe and the Roman legal system has this precautionary black bent. It’s clear that this whole debacle in Europe has delayed that coming out of meltdown. The European summer season as the Germans would say is kaput.

 

TN: If we have this kind of two-speed recovery or multi-speed recovery, and let’s say Japan is part of the anglosphere, would you say Japan would be leading Asia out instead of China? Now I’m talking about real data. I’m not talking about Chinese 8.1% growth numbers like fictional. I’m talking about actual real performance with actual real usable output and you know all this other stuff.

 

NG: I’ve got so that’s going to be the case actually. I really do have that sense and I also, given the belligerence of the Chinese regime right now. You’ve got vocal and slightly belligerent actions against Taiwan, of course, which I’m with Albert on that. They’d have already invaded if they were going to do it. And you’ve got what’s going on in the Philippine islands with all these ships tied together.

 

I remember a very famous situation where chief ancient China economist from HSBC came into the office and talking about China and then we asked coming into that particular office, name unmentioned, always an aggressive to and fro Q&A, and then we have one of us asked about China, how’s the recovery going after Fukushima. Blood was coming out of this chad’s mouth having to talk a bit about China.

 

And we know that there is a much more passionate… we have passion against Germany or France as a Brit or as an Englishman come soccer. But, we love each other.

 

TN: Maybe that’s a bit strong. But we’ll use that.

 

NG: Maybe strong for Germans but with the French, there is a deep passion there and somebody keeps reminding the agent. But in the Far East, there has been that, you see that tension with the South Koreans and Japanese. However, the Chinese are forcing people out away from some of this stuff.

 

Japan with Australia and India will enable a lot of these countries to look elsewhere. Isn’t it ironic going back to the anglo-sphere link and that publicly is United Arab Emirates who are being given credit for getting India, Pakistan talking together. I have no doubt behind the show, the English are very active there because you’ve got a cricketer in charge. She made this game… So there’s stuff going on that gives you signals as to what could be happening.

 

It was rather like a mutual friend of ours, we were discussing India in terms of trade and I was saying, the UK and India are going to have a free trade deal as soon as it’s possible once they’ve overcome some of the agricultural stuff. And that person said India will do a trade with the EU well before they do it with the UK. And I’m saying hold your horses. No way!

 

TN: It’s familiar.

 

NG: One, it’s familiar. Two, one of the problems that the EU’s have with trade deals with anglospheres countries is legal interpretation thereof. And you know, I think they’ve been discussing it for 8, 10 years, EU and India, they’ve got a sub agreement already in the UK after several months.

 

TN: Just coming back to this kind of overall topic of the anglosphere and the multi-speed recoveries, so it does sound like you almost have this triangulated recovery from your perspective from India, Japan and Australia that’s leading the way in Asia. You have the UK, which is leading the way for Europe and then you have the US that’s kind of leading the way for the Americas. Is that kind of how you see things?

 

NG: I tend to think that’s the case. But I wonder whether one can justify the idea of UK leading the way for Europe given the tensions between the UK and the EU.

 

TN: I think the EU will play through… The EU will feel pain until they get tired of it and then they’ll relent, I think.

 

NG: There’s one big problem and this came up yesterday there was a meeting of the EU commission about article 122 vaccine export ban. Belgium, Holland, Sweden and Ireland said no way. All the others were saying we’re okay with it. With Germany covering itself with a few conditions. The damage to Europe’s role in the global supply chain is irreparable. They will not be able to go back to this.

 

And there’s another little fact of it which makes me wonder what will happen with Ireland because there’s tension building up in Northern Ireland again. Article 122, that export ban is specifically aimed at UK, US, Canada, Australia. They’ve stopped shipping to Australia already. US, UK, they’re saying well you’re not exporting anything. Paid for everything but not exporting everything. Canada just gets lumped in with the US and the UK.  So I think that’s really shattered the role of Europe in the global supply chain.

 

You’ll have people producing goods for Europe from European input but how can you possibly? Now going to Ireland where the UK has already said we’ll give the Republic of Ireland 3.7 million vaccines because it’s secures Northern Ireland in the coming out of lockdown. That’s an interesting overthought process.

 

Because you have a situation where Ireland is under attack like the Netherlands and Switzerland from Joe Biden’s global tax. If they come out, I would not be funny.

 

TN: It seems to me that what you’re also saying is there’s likely some kind of regionalization or re-regionalization that may emerge from this. Am I putting words in your mouth or is that?

 

NG: I would go and say US and commonwealth EU for as long as it stays stable, which may be problematic and then as you say Asia.

 

TN: Okay. Yeah, I mean I think that we’re coming to a place and I’ve been talking about this since about 2015, where you have global supply chains for goods that are long-term commoditized goods and then you have regional supply chains for the higher value goods.

 

NG: And that’s consistent with the decoupling that’s got to take place against China. And then you have that floater which you and I touched on before we got online, which is Russia and I have a slightly different view of where I can go, which will be, you know.

 

Categories
Visual (Videos)

CNA Asia First: How the US Foreign Trade Policies will Change after the US Election

Founder and CEO of Complete Intelligence, Tony Nash joins CNA Asia First to give insights around the 2020 US Elections and how the possible turnout will affect US’s foreign policies, economy, and trade. Was the delay in stimulus affected the voters’ decisions? Can oil companies be greener without causing a lot of disruptions? And did Trump’s trade strategies yield results?

 

This video segment was published on November 5, 2020 and is originally from Channel News Asia’s videos on demand, which can be found at https://www.channelnewsasia.com/news/video-on-demand/asia-first

 

Show Notes

 

CNA: Now for more on the markets, the US elections, and economy including trade policy from whoever takes place in the White House going forward, Tony Nash founder and CEO at Complete Intelligence joins us from Houston, Texas.

 

So Tony, it’s been a very divisive election and I don’t know at this point is it worth looking back at how there was gridlock and was difficult for congress to push forward any form of stimulus leaving a lot of Americans out in the cold. I don’t know if there’s weight on the minds of voters that maybe the whole of congress was complicit in this issue. But where do you think paving the way forward for the American economy needs to start.

 

TN: It really depends on where in America you are. There are parts of America that just can’t wait to get out and work and there are restrictions. There are other parts of America where people want to stay in under restrictions and generally that’s the red-blue divide in the US.

 

What we’ve seen is more people wanting to push out demonstrations and say California and other places where people just want to get out. The stimulus issues with congress, there were a number of windows where stimulus could have come out. But it didn’t. And that was a lever that was pulled largely by the house of representatives before the election. They wanted to hold off from it. Especially business owners, very frustrated by that. People who have been laid off, very frustrated by that. Certainly, some of this has been a part of the voting consideration.

 

CNA: Both sides red and blue are blaming each other on why stimulus was difficult and not being pushed forward before the election. But I want to get to the issue of the backbone of some of the sectors of the economy in this election. Climate change featured very heavily. You come from an oil state. The bigger question now going forward is because of this increasing climate consciousness, can these sectors actually pivot away from oil without causing huge disruption, political and economic?

 

TN: That’s fine in terms of climate change. The US actually performed very well in terms of emissions and efficiency. The bigger issue for these oil companies is actually the inefficiencies of their organizations and we’ve seen a lot of oil companies come out to say that they’d be laying off 16 percent of their global workforce. They’re realizing that with oil prices where they are and gas prices where they are,
they just can’t sustain the bloated workforces that they’ve had to date.

 

So, yes climate change is an issue and that’s a consideration. But with the fossil fuel companies, they’ve had bloated workforces that they’re having to contend with now that oil prices are lower.

 

CNA: As we look back at what the Trump administration set out to achieve with its very aggressive trade policy based on the metrics of leveling or gaining leverage to negotiate better terms for trade deals, do you think it has achieved this?

 

TN: What the current administration has been doing is a long game. It’s not something that is a short-term plan. To get factories to move, to get capital investment, to get say supply chains to move, that’s a three to five to ten-year process and can be even longer for industries that have super heavy capital investment. It’s making progress. If you look at investments say in electronic supply chains going into Mexico, I think both the aggressive nature toward China and the USMCA have really helped.

 

The electronics industry come back to Mexico and to the US. Those are some of the faster moving industries where we’re starting to see some real traction. But it is a long game. It’s something that if that’s dialed back now, you won’t necessarily see that continue or you may not see that continue.

 

CNA: The way that the Trump administration up and NAFTA, it does seem that it antagonizes some of its closest security partners including Canada. Is that counterproductive trying to form an alliance to counter the rise of China?

 

TN: There are two things with the USMCA, the kind of NAFTA part two. There was an agreement among the partners that it was a much better agreement. Getting them to the negotiating table was the first hurdle. But once they realized what the US wanted to do, what I understand is all sides were very happy especially Mexico. But in terms of getting a coalition against China together, I don’t think the US has necessarily tried to do that. The US has understood that where there are multilateral organizations or multilateral relationships countering China, that China will peel off one or two or three to create division. And so the US has taken China on one on one. This was a strategy from the very beginning and it’s yielded some of the results. But again, it’s a longer term strategy that they’ve tried to undertake.

Categories
News Articles

US and China: The odd couple, decoupled

This article is originally published at https://www.euromoney.com/article/b1n39tw56vk8fs/us-and-china-the-odd-couple-decoupled

 

The US and China are growing apart by the day, and whether Trump or Biden is in the White House come January may make no difference. What does this mean for financial institutions everywhere?

 

In March 2001, America’s hawkish defence secretary Donald Rumsfeld handed a report to George W Bush. It urged the new US president to see not Russia but China as the primary threat, and to redeploy more military resources to Asia.

 

Doing so would have altered history, but that had other plans. The September 11 attacks redirected Washington’s gaze from Beijing to west Asia. Three months after that, China joined the World Trade Organization and began its rise to become a trading superpower.

 

For 15 years, relations between the two powers were mostly cordial. Then Donald Trump came to power.

 

By now, America’s 45th president’s act is a known quantity. There is a lot of huffing and puffing, but most of it is hot air.

 

Except when it comes to China.

 

On the campaign trail, Trump accused Beijing of currency manipulation, stealing intellectual property and being “neither an ally or a friend” to America.

 

After the election, he dialled up the narrative, appointing Peter Navarro, author of ‘Death by China’, as his trade adviser. Later, he installed secretary of state Mike Pompeo and commerce secretary Wilbur Ross, China hawks both.

 

A trade war followed, then sanctions. Washington imposed tariffs of $360 billion on Chinese goods; Beijing retaliated with $110 billion in tariffs on US products.

 

All of that, it seems, was just a warm-up.

 

Trump banned smartphone firm Huawei from buying US semiconductors; in August, the firm said it was running short of processor chips. He then slapped sanctions on officials in Hong Kong and Xinjiang.

 

Beijing scoffed, but its banks didn’t. Terrified of being cut out of the dollar-funded financial system, lenders including Bank of China and China Construction Bank (CCB) are reportedly weighing up whether to do business with the officials.

 

 

Continuous hits

 

And the hits keep coming. Over the summer, as Covid cases continued intermittently to spike, the White House zeroed in on the financial markets.

 

On August 6, the president’s working group on financial markets – a set of powerful US regulators – said firms might need to de-list from US bourses by January 2022 if they do not provide access to their audit papers.

 

China is the only nation named in the report, and it follows a host of accounting scandals involving US-listed mainland firms, including Luckin Coffee.

 

On August 19, the US state department told American colleges and universities to sell any holdings of Chinese securities in their endowments.

 

It said all endowments, whose total market value is more than $600 billion, had a “moral obligation and perhaps a fiduciary duty” to manage “clean investments and clean endowment funds”, a phrase it left vague – perhaps intentionally so.

 

There are some who dismiss this is as grandstanding, noting the rise in rhetoric in the lead-up to the Republican Party’s convention, taking place now.

 

But this ignores Trump’s record on China. He targets its frailties with laser precision. Beijing has to import high-end semiconductors, so he cuts off that source. China is more dependent on trade with the US than vice versa, so hits that, too.

 

The same is true with those sanctions. No bank, even one run by Beijing, wants to be unable to raise money and lend in US dollars. Until the renminbi is a strong international currency, that will also be an Achilles heels.

 

“The folks advising the White House on China are very smart,” says Tony Nash, a former adviser to think tanks in Washington and Beijing, and founder and CEO of Complete Intelligence, an artificial intelligence and data analytics platform. “The bumbling act is not the reality. These people really know where its pain points are.”

 

 

Future flux

 

The future is in a state of flux and impossible to know, but a few thoughts occur.

 

Some level of US-China decoupling is inevitable. Firms are relocating factories from China to southeast Asia. Japan has set aside $2.2 billion to aid re-shoring.

 

Whoever is in the White House on January 20, rapprochement is unlikely. Relations between the two will be chilly if it’s Joe Biden or frosty if it’s Trump.

 

More Chinese firms will list in Hong Kong and on Shanghai’s Nasdaq-style Star Market, but not all will abandon the US, which offers capital, specialist investors and a chance to get personal wealth far from Beijing’s prying eyes. On August 10, wealth management portal Lufax filed to raise up to $3 billion in a US IPO by year’s end.

 

Will the two countries financially decouple? That is far harder to answer. China will surely seek to make the RMB more globally relevant.

 

Trump may twist the arm of a few college endowments, but it is hard to see big institutional investors dumping their mainland holdings, experts say.

 

If anything, the financial rapport between the two is closer than ever. US investment banks are lining up to buy a majority stake in their China joint ventures. On Monday, China’s banking regulator, the CBIRC, approved a wealth management joint venture owned by BlackRock, CCB and Singapore’s Temasek.

 

Beijing, desperate for fresh sources of capital and for better capital markets, has a few options on the table.

 

“The brilliant move would be to open its stock markets completely to foreign investors,” says one US-based lawyer. “That would make the Nasdaq and NYSE less relevant, which is exactly what the Chinese want.”

 

Either way, after decades of bumping along in a relationship more co-dependent than harmonious, the world’s two great powers seem set to grow apart for good. Who knows if it’s what Trump wants, but it’s what he’s going to get.

Categories
Podcasts

Economies are sputtering, which means trade war will intensify

Here’s another guesting of our founder and CEO Tony Nash in BFM Malaysia, talking about trade war between US and China. Can these two countries actually decouple? Or is the current supply chain too dependent to do that? Can the economy have the V-shaped recovery that everyone is dreaming of, or is it just an illusion? What can the policymakers do to improve the economic outlook for this year? What can his firm Complete Intelligence see happening based on the algorithms and AI?

 

We also discussed regionalization of supply chain as a result of the Trade War in this QuickHitQuickHit episode with Chief Economist Chad Moutray of National Association of Manufacturers.

 

BFM Description:

The trade wars between the US, China and the Eurozone seem to be gaining momentum. Tony Nash, CEO, Complete Intelligence, offers some insights, while also discussing European industrial activity.

 

Produced by: Michael Gong

Presented by: Wong Shou Ning, Khoo Hsu Chuang

 

Listen to the “Economies are sputtering, which means trade war will intensify” podcast in BFM: The Business Station.

 

Show Notes

 

This is a download from BFM eighty nine point nine. So is the station. Good morning. This is BFM eighty nine point nine. I’m considering that I’m with one shotting bringing you all the way through the 10:00 o’clock in the morning and Rano 76. We are talking about markets, but well above 50 bucks sort of because of that with about 15 minutes time, we’re talking to call you. Ling was an independent panel, a political economist at Ciggy and I’m advisers will be discussing palm oil.

 

BFM: So last night in America, the stock market slumped. Investors are cautious, right How did the markets do?

 

Not so well, because there’s been clearly a resurgence in virus cases in multiple states, which puts into question the economic recovery. So, unsurprisingly, the Dow closed down three percent and S&P 500 closed down 2.6 percent, while the Nasdaq closed down 2.2 percent. Meanwhile, in Asia yesterday, only Shanghai was up, which was up 0.3 percent, while the Nikkei 225 closed down marginally by 0.07 per cent. Hang Seng was down 0.5 percent, Singapore down 0.2 percent, and KLCI was down 0.3 percent.

 

So for more clarity into the whys and wherefores of markets, we’ve got it on the line with us Tony Nash, who is the CEO of Complete Intelligence. Now, Tony, thanks for talking to us. Trump’s getting tough on China rhetoric highlights, well, obviously, the American’s concerns about being too reliant on China. And, of course, we can see that being manifested in the list of 20 companies, which is deems suspicious. In your opinion, can the two economies decouple or other interests in supply chains too heavily aligned?

 

TN: Well, I don’t think it’s possible to completely decouple from China. I think the administration are really being hard on each other. And I think the hard line from the US, you know, it’s relatively new. It’s a couple years old. But I don’t think it’s possible, regardless of the hard line for those economies to decouple and for the supply chain to decouple. We had some comments over the weekend out of the U.S. saying that they could decouple if they wanted to. But that’s just the hard line and unaware of the possibilities. We’ve been talking about, for some time, probably two and a half, three years, is regionalization of supply chains. And what we believe is happening is the US-China relations have just accelerated regionalization. It means manufacturing for North America, moving to North America. Not all of it, but some of it. And manufacturing for for Asia is largely centered in Asia. Manufacturing for Europe, some of it moving to Europe. And that’s the progression of the costs in China. And some of the risks are relative risks to supply chains highlighted by COVID} coming to the realization of manufacturers.

 

BFM: U.S. markets corrected sharply last night. So is the market actually now waking up to the reality that COVID 19 is going to be a problem for economic recovery? And this V-shaped that what many investors thought is probably a pipe dream?

 

TN: I think what markets are realizing is that it’s not a straight line. Well, we’ve been saying for a couple months is that end of Q2 or early Q3, we would see a lot of volatility. Then people started to understand how the virus would play out. Until we’ve had some certainty around the path, we will have days like today. And we’ll have a danger with an uptick as optimism comes back, what’s happening is markets are calibrating. People are trying to understand not only the path of COVID, but what those actors mean—the governments, the companies, the individuals—will do to respond, how quickly the markets come back. But what are people going to have to do? What mitigations that we’re going to have to take? What monetary and fiscal policies will governments take as well? We’re not done in that respect. So more of that’s to come, but we don’t know what’s to come there exactly. Markets have moved a lot on new case count. I don’t believe that it’s the case counts itself because a lot of these are are really mild cases. It’s just the uncertainty around how long it will last. The magnitude and the mitigation that people will take around it. There’s more of this volatility to come.

 

BFM: Tony, you might have seen the IMF‘s growth forecast, which was just announced a few hours ago. They’ve now said that global growth will shrink 4.9 percent for 2020. That’s nearly two percent worse than what they originally thought. And I think the U.S. also marked by an expectation of a negative 8 percent, down from negative 6o.1 percent. Do you think this might cause the policymakers to have an even more vigorous policy response and liquidity into the system?

 

TN: It might. I think the U.S. has shown that it’s not really afraid to be pretty aggressive. I think you may see more aggressive policy responses in other places. Obviously, Japan is very active on the monetary policy side. But we need to see more actual spending and more direct support of individuals and companies to make it through this. So, I do think that, obviously, IMF’s forecast concern people and get policymakers attention. I do think that they’re probably a little bit overblown to the downside, though. So I wouldn’t expect 8 percent decline. I wouldn’t expect a global decline as acute as they’ve stated today.

 

BFM: If you look at oil prices declined last night and I think this is on the back of U.S. crude inventories increasing. But is this also a function of COVID-19 fears in terms of how that may impact the economy’s going forward and consumption of oil again?

 

TN: Yeah, that’s interesting. The oil price is our… I think there are a number of things. The storage, of course, as you mentioned. But there’s also how much are people starting to drive again? What do traffic patterns look like? Also, how much are people starting to fly again? We really need to look at like Google Mobility data. We need to be looking at flight data. We need to be looking at looking to really understand where those indicators are headed. So when we compare a $40 a barrel of oil at $39 s barrel for WTI today, compared to where it was a month ago. The folks in oil and gas are really grateful to have that price right now. And it’s a real progress from where we were a month or two months ago. So I think what people are looking at today is the progress and then the expectation. They’re not even necessarily looking at the real market activity today. It’s all relative to a couple of months ago and it’s all expectations about a couple of months from now.

 

BFM: Last question on perhaps the data that your algorithms generated, Complete Intelligence. What kind of signs and indicators does our technology and the AI tell us about the direction the market’s going forward?

 

TN: Yeah, well, this is where we we pulled our assertion of volatility. We we really expected things to be pretty range traded for some time. So, you know, crude oil is a good example. We were saying back in February, March, the crude oil would end the quarter in the low 40s. This is WTI and here we are. So, with volatility, we’re not necessarily trying to capture the high highs and the low lows. We’re just recognizing that the markets are trying to find new prices. So it’s interesting when you look at things like the dollar. The dollar is a relative indicator for, say, emerging market‘s uncertainty and troubles as well. We did expect a dollar rise toward the end of Q1, early Q2, as we saw. But we haven’t expected the dollar to come back to strengthen until, say, September. So there are a number of indicators around trade or on currencies. And what we’re finding generally with our client base, for global manufacturers generally, are the algorithms… We’ve found that our average-based forecasting has an error rate that is about nine percent lower on average than consensus forecasts. So when we had all of the volatility of the last three, four months, consensus forecasts in many cases were 20 to 30 percent off. Ours were about nine percent better than that. Nobody expected the COVID slowdown. If we look at that from a few months ago, the bias that’s in normally of doing things, negotiating, procurement, supply chain, the revenue, that sort of thing. We take that out and this passionate… I would suggest that there is a lot of passion in the analysis from day to day when you look at three percent fall in markets today, but you can’t extrapolate today into forever. And what we can do with AI is taking emotion out of this, take a rational view of things. And really remove, not all of the error, of course, nobody can remove the error. There area a lot of the error from the outlooks in specific assets, currencies, commodities and so on.

 

BFM: All right, Tony, thanks so much for your time. And that was Tony Nash, chief executive for Complete Intelligence talking from Texas, USA. Interesting that this kind of stuff that he does at his business, tries to remove the emotional, the emotive side of the markets and give something a predictor over the future. But I think that sometimes you can’t discount too much of human emotion because it’s all driven by essentially two emotions, right? Greed and of fear.

 

But you know, basically his nugget is it’s going to be volatile. Right. Hang onto your seats. Right. Because we really don’t know. There’s too much uncertainty out there at the moment. This is a scene where it’s for oil prices or even for equity markets.

Categories
Podcasts

Could COVID-19 Finally Kill the EU?

The fallout from COVID-19 might result in the disintegration of the European Union while the flight to safe havens like the USD is yet another headache for the financial markets to stomach, according to Tony Nash, CEO of Complete Intelligence.

Produced by: Michael Gong

Presented by: Roshan Kanesan, Noelle Lim, Khoo Hsu Chuang

 

Listen to the podcast in BFM: The Business Station

 

Show Notes:

 

BFM: So for more on global markets right now, we speak to Tony Nash, CEO of Complete Intelligence. Welcome to the show, Tony. Now U.S. markets closed down sharply again last night, erasing all gains from the time President Trump was elected. So what’s your outlook for markets? Is it still too early to buy?

 

TN: Gosh I don’t know. Actually, we don’t really know if it’s a really good time to buy. At this point, it’s really hard to catch that kind of falling knife. But what we don’t see is a V-shaped recovery. We think we’re in the zone where the fall may start slowing down. But we believe the equity markets will trade in a pretty low range for the next couple of months. And that’s because we’re not really sure of the economic impact of the slowdown in the West.

 

This COVID-19 is a government-driven recession that countries have lawfully gone into. So a lot of the recovery has been how quickly the fiscal stimulus is put into the hands of consumers and companies, and how quickly those individuals will get back to work.

 

 

BFM: Well, oil continues to fall last night to record lows with the Brent at $26 per barrel. What’s your view on oil? I know you are seeing the stock market. We do not know where the bottom is. But for oil, are we hitting the bottom yet?

 

TN: We may not be, but we’re pretty close. Our view is that crude will bounce once the Saudi-Russia price standoff is resolved. So we actually see crude moving back into the 40s in April.

 

But after that, we expect a gradual fall back into the low 40s to the high 30s in May. So, you know, we’ll see the next several months’ prices will be depressed. And we think it’s going to be quite a while before we see oil at 50 bucks again.

 

 

BFM: Yeah, Tony, you would have seen the stock futures point in green, obviously quite buoyed by the ECB’s whatever-it-takes policy. In Asia this week, four central banks are meeting. I’d like to go off a piece of possible talk about Australia, Thailand, Philippines, Indonesia. Our central banks are expected to meet this week. What do you expect them to do in terms of responding to the market turmoil?

 

TN: So it can’t just be central banks. I think central banks will do whatever it takes. But you really have to get finance ministries involved because, again, this is a government-induced recession.

 

Governments have demanded that people stay at home due to COVID-19. They’ve demanded that places of business close. And so until finance ministries and treasury departments get involved to get money in the hands of consumers and companies, we’re in a pretty rough place and there’s a lot of uncertainty.

 

So I think the central bank activity is fine. But I think getting a fiscal stimulus out there right now and not waiting is what they need to do. The US is talking about doing something in mid-April, that is just not good enough.

 

We have to get fiscal stimulus out right now because the governments have brought this on. The markets did not bring this on. The governments brought this recession on.

 

 

BFM: Yeah, Tony, obviously the helicopter money is going beyond the conceptual stage right now. But from a fiscal standpoint, how many central banks in Asia can afford, you know, the financial headroom to pay these helicopter money solutions?

 

TN: Well, whether they can afford it and whether they need to afford it are two different questions. And so I think we have real issues with a very expensive U.S. dollar right now.

 

Dollar strength continues to pound emerging market currencies. And emerging markets and middle-income markets may have to print money in order to get funds in the hands of consumers and companies.

 

So I think you have a dollar where appreciation continues to force the dollar strength. And you also have middle income and emerging market countries who may have to turn on printing presses to get money into the hands of consumers. So I think for middle income and emerging markets, it’s a really tough situation right now. The dollar, I think, is both a blessing and a curse for the U.S. But the U.S. Treasury and the Fed have to work very hard to produce the strength of the dollar.

 

There is a global shortage of dollars, partly because it’s a safety currency, partly because of the debt that’s been accumulated in U.S. dollars outside of the U.S.. And if those two things could be alleviated, it would weaken the dollar a bit. But the Treasury and the Fed are going to have to take some drastic measures to weaken the dollar.

 

 

BFM: Well, how much higher do you think the green buck can go?

 

TN: It can be pretty high. I mean, look, it depends on how panicked people get. And it depends on how drastic, I’d say, money supply creation is in other markets.

 

I think there are real questions in my mind about an environment like this and around the viability of the euro. The EU is in a very difficult place. I’m not convinced that they can control the outbreak. I think they have a very difficult demographic position. And I don’t think Europe within the EU, have the fiscal ability to stimulate like it is needed. The ECB cannot with monetary policy, wave a magic wand and stimulate Europe.

 

There has to be fiscal policy, and the individual finance ministries in every single EU country cannot coordinate to the point needed to get money into the hands of companies and individuals. So I think Europe and Japan, actually, have the most difficult times, but Europe has, the toughest hole to get out of economically.

 

 

BFM: It really sounds like Europe has its work cut out for it at this point. What do you think? What could we see coming out of Europe in terms of any fiscal policy? Or will this pressure the EU, put more pressure on the EU?

 

TN: ECB doesn’t really have the mandate for fiscal policy, so they would have to be granted special powers to develop fiscal policy solutions. It has to be national finance ministries in Europe that develops that.

 

So the ECB can backup as many dump trucks as it wants, but it just doesn’t have the power for fiscal policy. So, again, our view is that there is a possibility that the Euro and the EU actually break up in the wake of COVID-19.

 

This is not getting enough attention. But the institutional weakness in Europe and the weakness of the banking sector in Europe is a massive problem and nobody is really paying attention to it.

 

 

BFM: Do you think this has been a long time coming?

 

TN: Oh, yeah. I mean, look, we’re paying for the sins of the last 20 years right now. And for Asia, you know, Asian countries and Asian consumers and companies have taken on a huge amount of debt over the past 20 years to fund the quote unquote, “Asian Century.” And I think a lot of Asian governments and countries will be paying the price over the next six months. The same is true in Europe. But the institutions there are very, very weak.

 

The U.S., of course, has similar problems, not because the U.S. dollar is so dominant, the U.S. can paper over some of those sins, although those problems are coming from the U.S. as well.

 

So, again, what we need to think about is this: The people who are the most affected by COVID-19 are older people. Those people are no longer in the workforce generally, and they’re no longer large consumers, generally.

 

OK. So all of the workforce is being sidelined or has been sidelined in Asia, is being sidelined in the West now, and consumption is being delayed for a portion of the population that is no longer consuming and is no longer working.

 

And so getting the fiscal stimulus out is important because those people who are contributing to the economy can’t do anything, right?

 

So and this isn’t to say we’re not caring about the older populations. Of course, we all are. But it’s a little bit awkward that the beneficiaries of this economic displacement are largely people who are not contributing to economies anymore.

 

 

BFM: All right. Tony, thank you so much for joining us on the line this morning. That was Tony Nash, CEO of Complete Intelligence.

 

Listen to the podcast on COVID-19 in BFM: The Business Station

 

Categories
Podcasts

US warns against cruise ship travel as industry reels

Our CEO and founder is one of the live guests at BBC: Business Matters that talked about the cruise ship travel warnings, Italy’s Coronavirus, Wells Fargo, US politics, and sports.

 

BBC Notes:

 

The US State Department has told US citizens not to travel on cruise ships. We will look at how the industry has been left reeling from these latest government instructions.

 

Italy meanwhile remains on lockdown as the country attempts to stop the spread of coronavirus gripping it currently.

 

Wells Fargo, the bank that went bad, promises to Congress that it has turned the corner.

 

We look at whether we – or Congress – can take its new chief executive at his word. We ask who will help out companies when coronavirus hits supply chains harder, from Kerstin Braun, President of Stenn Group, an international provider of trade finance.

 

We talk about all this live with guests Yumiko Murakami from the OECD (Organisation for Economic Co-operation and Development) in Tokyo, and Tony Nash, CEO and Founder of Complete Intelligence, a contextual artificial intelligence platform in Houston, Texas.

 

 

Show Notes:

 

Do you think this is the way that all countries (same as Italy) will have to go? Could it happen in the States?

It could, but I don’t think it will.  Part of the problem in Italy is almost 25% of Italians are over the age of 65. If you look at the mortality rate, for those over 80 years old, it’s about 15% and for those over 70 is 8%. The biggest risk is in older populations. With Italy being the oldest country in Europe.

 

The people who are affected by it are largely older people and they are not working-age population and not consumption cohorts of the economy. Anybody under 60 years old, there’s a less than a 0.5% chance of fatality. It’s just not bearing out in the direct economy. But we are seeing concerns for older people, justifiably, we should be. But does it necessarily require the shut down of the economy? I’m not so sure.

 

Do you think he’s got what it takes to take on Trump?

I think it’s gonna be hard to beat Joe Biden at this point. But it’s gonna be an uphill battle for him with Trump because Trump is already taken him on in social media and speeches, and I’m not sure Joe Biden has the ability to respond to Trump in a debate, etc. in a way that Americans expect.

 

The populism way of 2016 is not really over in the US yet and Biden cannot grasp that. There was an issue with him in a factory him cursing a factory worker that upset a lot of people.

 

Do you think if the Coronavirus continues at this rate, and tips the economy into recession, does that make the President more vulnerable?

I think it can. That’s 6 months away, anything is possible in 6 months in politics. If the US is the only one affected or affected worse, then sure, it will make Trump vulnerable. But if the US is kinda similarly affected to other places, I think it’s hard to blame him. I’m not exactly sure how Biden will take that in November. They may just blame China.

 

It’s very hard for Biden to play the common man message. If you’re talking about the economic dislocation (1% vs the 99%), Joe Biden has been carried in the womb of government health care plans for the last 60 years or something. Most Americans are very resentful at public sector workers because they have a very good insurance plan. It will be very hard for Joe Biden to play the populist in that role. I just don’t see a scenario that Biden looks better than Trump in that scenario.

 

If you really want to drive a clear wedge between the Republicans and Democrats, Sanders would have been a very clear alternative to Trump. But you can’t really say that Biden, at least from the kinda rich guy getting his kids job, it’s really hard to say that Biden’s really much that different.

 

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