Why The US Dollar Is Poised to Weaken Vs Euro

at Bloomberg dot com. Well, the Mexican pay so today is close to its weakest since December, as trade tensions emerge from the US and there are questions, frankly about the health of the Mexican economy. Here joining us in studios at Al Hasseani. He is senior interest rate and currency analyst for Columbia thread Needle Investments uh from overseas four and fifty nine billion dollars from Minneapolis. Although you are here in our Bloomberg Atta Active Broker Studios, I

want to talk about the Mexican pay so. How much of this has to do with the economy itself. We did get last night Moodies and Fitch downgrading the nation based on Pemax, it's stayed owned oil company, as well as other economic headwins and how much is due to

potential ramifications from these US Mexico trade tensions. Yeah, it's a At the moment, I put more weight on the former in terms of the weakening economy, the contingental liabilities from from PEMM x um UM, and the fact that you know, both fiscal and monetary space in in Mexico is shrinking relatively quickly. Uh. You know that to me is kind of the key set of drivers for for a weaker pay. So in terms of trade tensions with the US, we actually haven't started pricing that into aggressively.

We haven't seen that in US risk assets. We still haven't seen it fully priced into Mexican risk assets either. So I think from from the perspective of upside downside for the Mexico, for the Mexican pay so, I think there's still more downside to come through. So. UM. Earlier today we had the married drag from the e C b Uh, you know, give his commentary. What did you take away from it? Yeah? I thought, you know, this was for me, one of the more interesting and one

of the more consequential meetings of the past two years. UM. A number of things came out. First, we cemented the fact that the path for policy rates really is flat to lower from here. Um. You know, this is an important change for them versus where they've been the course of the past, you know, EU plus Uh, there's been sort of an implicit upward bias to to the rate story,

and I think that's now gone. The discussion about deeper negative rates and additional queis now firmly on the table, um, And I think that's that's a new part of the discussion as well. And um, you know, in terms of the growth and the outlook, the growth on the inflation mixing the outlook, you know, that continues to to weigh to the downsides. In terms of downside risks continue to intensify. So the e c B isn't it's in a tough spot.

It doesn't have a lot of tools. But in terms of the tools that does have, I think the willingness to use those tools to ease policy has increased. The interesting thing to me, First of all, the ECB has pushed on a string at this point, right, I mean, if they cut rates further into negative territory, what's it going to do, Because it's not exactly fostering loan growth to a tremendous degree among consumers and risk your businesses.

Uh So that's that's a big question, um. But it's also a question from your perspective, from the currency perspective today, the euro strengthening versus the dollar, what gives that's not what you would expect? Sure, so, um, two things. Let me let me push back a little bit on the on the credit growth story. The credit growth story has actually been one of the bright spots for for the Eurozone and the ECB, and it's been one of the

success points in terms of the successive TOELTRA programs. The fact that the European banking system, which is relatively weak, relatively under capitalized, has actually seen very solid loan growth. And what the ECB doing right now is essentially risk management. They're seeing these risks intensified to the downside, which essentially means they can add best maintain their current policy stands um. But more likely they will increase the amount of easing

just to keep the current level of credit growth alive. Um. And one one interesting I think takeaway I think from the last you know, take four or five you know ECB discussions on the negative rate, is that they've come to the conclusion that inaggregate, the impact of negative interest

rates on loan growth is negligible. They're definitely certain banks where negative rates are eating into profitability, but the fact that they're providing these teltrual loans is actually cushions the banking system, and the banking overall continues to do quite well. So it given the rising trade tensions around the world relates China, Mexico, g maybe Indian so on, where do

you see value in emerging market currencies? So I one of the more interesting I think turning points in the course of the past you know, month or so has been the break and the dollar. It's it's very early days, but it does look like the buffer we have for the dollar versus developed market currencies has shrunk significantly. We had essentially US growth that was more solid than European and Asian growth, and we had US interest rates that

were significantly higher both in real and nominal terms. That buffer has shrunk very aggressively, with the Treasury rally and with growth expectations for the US being being downgraded, and we've seen that turn in the dollar versus the euro. And Lisa's question earlier, this is one of the reasons why the euro continues to rally today despite despite the fact that these e CBS announced, you know, additional easing

measures UH U s real rates continue to come down. UM. That weakness in the dollar, I think we'll start to feed into e m f X. And the question is are there idiosocratic stories where you know, real yields are high enough UH to provide us with that buffer. A couple of currencies rise to the top of my list. I think, you know, Russia is a good spot UM, limited external vulnerabilities, very good fiscal picture UH. Indonesia is another one. Well, there's there's been an improvement in the

growth story UH. And increasingly we're starting to take a look at South Africa in part because the currency is weakened quite significantly over the course of the past month. So from a value perspective, I think that that looks quite attractive. The Turkish lira, the Turkish lera is is interesting because look on on on most valuation metrics, it's

creates exceptionally cheap UM. And the question is is the current account or it's some of the external vulnerabilities shrinking fast enough to warrant the carry Are you gonna ever get will you ever get paid that carry? Um? And you know increasingly it's not terrible. UM, I would say the picture there is becoming a little bit more positive. Real rates remain quite high. Obviously there's policy risk with respect um to to the central banks next set of actions.

Given an inflation that's coming down, there will be under pressure to cut rates, which will be negative for the currency. Policy risk, by the way, is the understatement of the year when it comes to Ara to Wan's regime. But go on, but look, I mean, look, we're we're in in in in e M space. This this is what

you live with, and this is what you're getting paid for. UM. Policy risk in Turkey and in Argentina taken another place where you have high high high carry this one UM, I would say, of course Turkey and Argentina are at an extreme place in in in the m f X spectrum high risk, exceptionally high carry uh. And it's not very clear that you'll you'll make money over the next twelve months in those places. So I'm gonna take the risk and not clear that I'm going to make money.

So I think I know where to kind of avoid a little bit. That's Hey, there's no there's no big return without big risk big So there you go, right, I mean yep, ed Alf HUSSAINI thanks so much for joining us as a senior interest rate and currency analyst for Clumbia thread Needle based in Minneapolish thread Needle is but joining us here in our Bloomberg Interactor Broker studio. Thank you so much. Just looking at the currencies here, um, you know the your euro up slightly, the pound up today,

but you mentioned the ruble. The rubles also up a little bit as well. Well. Back at the day when I wanted to, I guess go to a Broadway show, I'd stand in line in Times Square at the t K T S kind of thing and wondering why am I doing this? This is so inconvenient. But I'm guessing there's a technology out there that can fix that, and in fact there is. We welcome Brian Fenty. Brian is a co founder and CEO of Today Ticks, based in New York City, joining us here in a Bloomberg Interactive

Broker studio. Brian, thanks so much for joining us today Ticks. Does that solve my problem? We try to solve your problem. Yes, we started about six years ago to take the t KTS booth and do all the heavy lifting of searching for discounts and putting it right in your in your hand through a mobile app. And of course now we're on a website and we're in seventeen cities and doing a lot more than just that. Um. But that's really what it is. It's best prices, best seats, last minute

on demand. How did you create this? Well, my partner and I were not technologists, um, which is always a challenge. Actually,

you know, everybody always talks about the technical founder. Um. We were Broadway producers, we were private equity guys UM and I worked for the New York Yankees for a couple of years, so we had very diverse experience, and we knew that Broadway was a broken business in terms of getting millennials to the table, um, and so we sort of penciled out what was Uber doing an open table and Airbnb and these great mobile millennial companies what

were they doing? And the answer was just great, simple seamless technology, having everything at your fingertips and making sure that it was a complete solution. So talking about talking about the business and Broadway, is it is? It a growing business. Is a big business? Is this something that people need a technical solution for? It's an unbelievable business.

It's it's often overlooked. So you know, the first piece of it is Broadway, meaning the the five block radius in New York, and that's, you know, a multibillion dollar industry. It's grown more this year than it did in any other year. It's it's honestly, it's a resilient potter to Hamilton's and Deer of Enhanson. It's a great it's the golden age of Broadway right now. It's just an amazing,

amazing time. Um. So, it's a huge industry. But you know most people don't know is it's twice the size of the film business on a revenue basis in the US. Um So it's a big business. Um But it's hard to access. It feels inaccessible to people, it feels expensive, it feels hard to engage with. And so we're trying to break down those walls. And it's not just Broadway, right, I mean, it's it's sort of theater. More broadly, are you thinking of expanding into sports or into music or

other types of live ventures. So we started with theater traditionally plays musicals. We've gone to performing arts now and we've sort of expanded our definition as we go to markets. So when we went to Chicago, comedy is everywhere. So if you don't have the second city, you're nobody. And so we went to Chicago. We got comedy, We have opera, we have dance, improv immersive sleep, no more, you know,

all of these different types of experiences. So really, as I say to our team, we don't compete with ticketing companies. We compete with a picture of Margarita's and Netflix. That is, you know, ultimately what we're trying to do. That's stiff competition. So, Brian, I guess thinking about Broadway per se that you know the five square blocks. You know, as my understanding is the kind of the theaters are kind of controlled by a handful of companies or a few companies. Did they

welcome you, did they embrace you today? Where they concerned about you? How do they how do you kind of work with a big theater company? They did not embrace this at the beginning. I'll tell you you know, this is a true story of disrupting. When we went and met with the three theater owners, you know. The first theater owners said, I owned the tickets, you don't have them, goodbye. Door shut. The second theater owner that we talked to said, millennials,

who needs them? They'll become adults someday. Shut the door. The third theater owners said mobile, who needs that? No one's going to spend money on it. And so we said, okay, guys, fine, if we go try to build this, will you support us? And they said, you know what, go try to build, Go, try to build the technology. And so for the last six years that's what we've been doing. And now five and a half million users later, Um, I think we've

proven that there really is a space for this. And you did just raise seventy three million dollars from Great Health Partners that which is a private equity company. What are you gonna do with the money? So I'd say three may vehicles. One is talent talent. Talent talent, make sure that we have the smartest people, the best subject matter experts terms of tech are in terms of tech, product growth, marketing. So it's amazing is we have theaters that work with us across the country and not a

single salesperson on our team. And so that hopefully speaks to the brand that we've built among the venues, UM and our audiences. So talent is number one. UM. Number two is content, making sure that we have the best content out there. UM. Millennials do hold you to a very high standard in terms of the types of content, programming, exclusivity that you have. And then the third piece is

just data. Data, data, So making sure that we use data to make the experience seamless for everyone, so that if you open the app, it's different from when I open the app, and we can see the shows that we want to see. So when I think of the ticketing experience, certainly in this country, really even globally, I think ticket master. So how do you guys compete against

the ticket masters of the world. So what we learned is that primary ticketers, because they have to do so many different things, they're selling for sports, concerts, large venues, small venues, their technology isn't great. And and how do we validate that it takes seven to nine minutes to buy a ticket on a major primary ticketing platform on

today takes it's thirty seconds or less. UM. So really what we do is we kill you with convenience UM and we try to bring you through that funnel in a big way, and I think that's why we have such high ratings. Are our net promoter scores about four times the next highest primary ticketer. How do you make money? Consumer fees? Um and And what I'll tell you is, though we make it slow and steady, so we have fixed fees for our consumers. We have the lowest fees

in the industry. And our view is to build a community of as many theater goers, arts goers and quite frankly, anyone who wants to do something in a night, we're your customer, were your place to go, and uh we grow from there. I know the Tony's are Sunday night, I believe on CBS when Broadway comes together to celebrate all the great work of the year, does that drive business? If a play wins Best Musical or Best Picture? How

important is that? There's a few awards. So obviously it's the moment of the year for for theater and it's an amazing evening and this year James Cordon's hosting, so it'll be a blast um. But what I'll say is there's one or two awards that really move the needle. And as you say it's best musical. Um, it's best revival of a musical, it's best play. Those are the three awards that can actually make what we call boffo, but you know, make the box office really hit. Thank

you so much for being with us. I have to say Today Ticks is something that I've just recently come to learn about and I'm excited. Still there, no mobile, no website, Still waiting in line Brian Fenti, co founder and CEO of Today Ticks, joining us here in our

Bloombergetter Active Brokers Studios disrupting the theater industry. Right now, we're looking at a market still searching for direction, taking a breather after a series of risk off moves and then fluctuating around coming up though, the focus really is going to be always on Washington, d C. Which is also the focus of markets right now at Bloomberg Politics, policy, power and law. Amy Morris, what do you have on?

So she's gonna be talking about US and Mexico extending their talks, which, of course markets are expecting that there will be some kind of deal. Also, we got some numbers with respect to the trade deficits showing as stalling out of imports and exports. We're gonna be looking ahead to the jobs data as well. Meanwhile, we are looking at a day finishing up. I mean, honestly, today, I'm I find it fascinating to me that we're taking a breather and yet there still is complacency there. Iss. Deals

are gonna get done. Deals are gonna get done. And Lisa brom WIT's along with Paul Sweeney, this is Bloomberg Markets. Tensions are rising between the US and Mexico. This certainly has hit particularly the automaker shares pretty hard, considering how much supply chain or sort of intra company activity goes cross border. Joining us to talk about what the effect is on small businesses is Hector Baretto. He's chairman of the Latino Coalition, former US Small Business Administrator under George W.

Bush through two thousand and six, joining us from Irvine, California. Hector, I'm so glad that you're here with us. What are you hearing from the people who you represent small business owners about the potential impact of these additional tariffs on goods from Mexico. Well, they're very concerned, and as you know, uh, probably of all businesses in the United states that do international trade are small businesses. They've seen their businesses grow over the last six months or so and they don't

want to see that stop. So they really feel we're kind of at a tipping point right now. So hector, how about on the other side of the border, what are you hearing from your contacts there about how the business community in Mexico views kind of these rising trade tensions. Well, I was just down there last week. We we opened up an office for our organization, and two months ago I met with the President of Mexico. They were cautiously optimistic.

You know, they've kind of gotten used to some of the rhetoric, but they're much more paying attention to the actions. They know that, you know, they can't respond to every tweet, every press release, every news uh, you know, but they've re sien some positive signs and obviously a lot of those leaders, business leaders and government leaders are in Washington today to talk to their counterparts and see if we can get to some kind of a compromise or solution

on this issue. So it's very interesting because we hear about positive signs from people, and certainly the market doesn't think that there's going to be some sort of increase in tariffs in Mexico that substantial at least, that's what a lot of analysts and fund managers seemed to be saying this morning. And yet President Trump seems to be the one driving the bus here, and it's sort of

unclear he's not backed away from his dance on tariff's right. Well, you know, uh, ironically, uh, in the last quarter Mexico, with our largest trading partner, we overtook China. So you know, they're starting to see some positive signs and again they don't want to see that derailed. And at the end of the day, you're right, President is going to decide, but there's gonna be other voices are gonna be part

of this equation. You're starting to see members of Congress, both sides of the ail, that are very concerned about this. They're tracking this issue very very closely. And the last thing we need to do is put a break on this economy. The economy has been pretty good over the last you know, year, better than we've seen it over the preceding six seven years, and so uh, you know, this is the wrong time to actually, you know, derail

the economy. And we're both affected. You know, days when we could say, oh, they're gonna be hurt more than we are. I don't see it that way. I think we're very interdependent and if one side gets hurt, the other side is gonna get hurt. And at the end of the day, you know that those costs are gonna be passed on to consumers. So you know, there's some

big stakes at hand right now. So the hector, the businesses that you represent, what are they how are they thinking about the Trump administration's you know, use of tariffs to kind of curb immigration. Well it can. Well, they don't like the fact that these two issues are being conjoined. I was in the White House yesterday. I'm actually in d C. And they're doing everything they could to say, look, there are two separate issues. We're going to continue on the trade track. We want U s m C A pass,

but we've got to deal with this immigration crisis. And it is a crisis. You can understand why there's so much frustration in the administration. They have not been able to turn this thing around. For months. People were saying, is Oh, it's not a big deal, it's going to go away. It's just seasonal. We haven't seen that. We've seen spikes at the border that we've never seen before. So there is a mutual responsibility on both sides of the border. Mexico can do a better job of enforcing

their southern border. We need to work with Mexico as our number one trading partner and work on things like you know, we used to have something called the Medida initiative where we would work with Mexico, and we've done that with other countries. We need to go back to

those kinds of cooperative efforts. I guess that. You know, it's interesting because if you are in Washington, what is sort of the consensus among the people you're speaking with who are within the administration as to the path of these negotiations, Because it seems like this kind of came I don't want to say out of the blue, but kind of out of the blue. Well, the the administration would say, for the people to say it's coming out of the blue, they haven't been listening, because you know,

it hasn't been that long ago. The president was very upset. He was talking about closing the border. There was a time when he said he was going to do away with NAPTA and not have anything to replace it with. UM. You know, he's talked about tariffs before. Obviously we're doing tariffs with China. So uh, you know that the business community, and I say this across the board. You know, I

also sit on the US Chamber of Commerce. Border directors, big business, medium business, small business are all watching this very closely. And by the way, it's not just our businesses that are watching it. Businesses around the world are watching. China's watching this to see if they can actually come to some agreement with the administration. So trust is in low supply right now. But at least they're talking. They're at the table with each other, and that's much better

than just screaming across the fence to each other. Hector burnetto chairman of the Latino Coalition and former US Small Business Administrator, thank you so much for joining us and helping us understand better. What is you know, a rising trade tensions between the the US and Mexico. They don't seem to be abating, but there is a As Hector mentioned Lisa, a group of Mexican business people on government

officials in Washington today meeting with US representatives. Uh. The hope obviously is that some resolution, at least a temporary resolution, can forestall uh, the terroiffs that are threatened to be going in place. But clearly, as Hector mentioned this, Mexico is our largest trading partner because just recently became a uh you know, certainly right there with China, So it's not just China, it's also in Mexico, uh, and these

issues are certainly weighing on the mark places. Let's turn our focus now to automobiles, in particular the murder that wasn't Fiat Chrysler saying that is no longer going to continue its bid for Renault. Renault shares tumbling more than seven percent. Both sides blame each other, joining us now Kevin Tynan, senior Auto's analyst for Bloomberg Intelligence. So who's to blame Kevin Well, Um, everybody? Nobody? Um, so I think.

And there's also Nissan involved in here too. So as difficult as a deal would be between f c A and and Rena, you know, you you also have that Nissan angle in there as well, So I think, you know, doing a deal between two big companies like that is difficult enough. And then when you add in the Nissan angle, and I'm not sure it's completely dead yet. Um, you

know it's not. It wouldn't have been unlike Sergio Marcioni, and you see that down through fc A management now and up to the chairman and John el Con to say it's as important to sit down as it is to walk away. So I think, uh, there may be a little bit of gamesmanship going on here, um, and then the deal might not be completely dead just yet. Well, Kevin, I think when we talked to you, you know, when

this deal was announced. You know, one of the things that you mentioned to us was the Fiat Chrysler's need for scale. Um, presumably that need is still there. What do you think their options are for them? Yeah? And I think, look at that's a company that has spent a lot of time and effort to make itself very attractive to you know, this kind of situation M and A or alliances and partnerships. So you know it doesn't end here for sure. Um. I if this does fall apart, ultimately,

I think it takes two players off the table. It probably takes Reno and most likely Pougeau off the table. But you know, this is a company that has spent years uh, and a lot of time to be this lean basically ram and Jeep business, you know, focused in North America on light truck market which is now of a volume here, uh, and huge profitability there to to look like it does to be attractive to other companies.

So how bad is this forward? Know, if this deal is off the table, and frankly, if any other suitor uh sort of starts to think about other options, just because it is so complicated, right, yeah, And I think the the issue is the valuation, and we talked about this on the show over the weekend. Um, there is that valuation of Rena and while that's one of the aspects that makes it attractive to other automakers and that European presence, uh, it's also what puts them at a

disadvantage in negotiations. So you know, it's it's not unlike buying buying a car, right, the seller wants as much as they can get and the buyer wants to get for as little as possible. And that's really the situation here. So Kevin, I think you mentioned poop Pougou and Pougeot and it's just interesting. The French government here seems to be a real sticking point for deal making in the

auto industry. Um, how does that really play out? If you're a buyer, you absolutely have to win over the government, correct, Yeah, I mean, and I think that's why I say, you know, Pougeot might be off the table as well, because it looks like it's the same you know, angry father, different daughter kind of scenario there. Um. You know that if IF and and Peugeot also and talking about valuation, is

a much more valuable company in that sense. Um. And I think the issue with f C as they really want to control whatever company emerges from this or or whatever the alliance looks like going forward. And I think that again is part of the issue with Nissan right there, they're saying the state stake in the enterprise gets smaller. Um, and f c A at least steps in and commands this this enterprise from the top down. Uh, And that's

difficult and even for the government to accept that. Meanwhile, from Fiat Chrysler's standpoint, is there some pressure to buy something else or sort of a mass more scale right now? Do you think that that's something in the near term that we're going to see. Oh? Yeah, absolutely, And I think this was, you know, back in Sergio's days, this was what was you know, the goal. Um. I think through this process you're starting to see start to see it happen. And again, I don't think this is the

end of it. Um. It just maybe with different partners. But you know, this company has worked itself into this shape for this very reason, and just because of one bad date here, I don't think they sort of get off the market. Kevin Tynan, Thank you so much. Kevin Tynan, senior auto analysts for Bloomberg Intelligence, calling us on the

phone from ba's headquarters in Princeton, New Jersey. At least, I'm just looking at the trailing twelve months a stock price performance for Down General Motors down seven percent, Fiat Chrysler Down. I think there's really is a concern here

among all the investors. I think obviously about long term demand for Yes, definitely that although we have to sort of put in the caveat here, which is uh that Mexico US trade would hit the automakers in the US much more substantially than arguably any other group of industries. So that's been an additional hit in the recent weeks that sort of come out of out of nowhere. Yeah, exactly right. So and we saw that just for some of the commentaries from some of the auto manufacturers. Thanks

for listening to the Bloomberg p m L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa Abramo wits one. Before the podcast, you can always catch us worldwide on Bloomberg Radio.