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This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amrie Hordern. Join us each day for insight from the best in markets, economics, and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from six to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg
Terminal and the Bloomberg Business app. Joining us now is Danid Peterson of the Conference Board, alongside Matt Dezock of Merrill and Bank of America Private Bank. Dana, can I come to you first, please and just get your response to jobless claims, the scare of a few weeks ago. Is it over?
Well, we don't really know.
But the thing is jabas claims are still extremely low, and as Lisa said, many companies are not letting their people go. They're holding on to their workers, they're hoarding them, and so we're probably not going to see much uptick in.
The unemployment rate going forward.
Jobs need companies need them, and also they're facing lots of people retiring, so I don't really see the labor market weakening significantly over the next year.
Matt, to bring them into the convi sanction. Do you share those thoughts? Do you have that constructive view a year round?
We do share those thoughts. On the employment market.
Corporate health looks very good right now and today that's what's going to drive the employer market. How are companies feeling, How are they doing? So we do feel very good about that. We're not too concerned about it. But the idea that rate hikes don't work, the idea that it won't slow the economy somewhat, would be a little skeptical in those kind of arguments that we're hearing.
Well, okay, just taking a step back. You are the one, and I think I misattributed this earlier saying that the FED pretends to be inflation sensitive but is actually employment sensitive. You say rate hikes work, it might just take a lot longer. Does that preclude the idea of a rate cut if they're employment sensitive and inflation is still too high.
So we do believe our baseline forecast is will get one rate cut this year, probably in December. But to your point, it will take time to see these rate hikes work their way through the economy. John MONTEI policy likes like a year to two years tenure just peaked at October November of last year. It's about, you know, six months ago. FED funds rate just peaked about nine months ago, so we're not even in that twelve to twenty four month window.
Come back to us in.
Early mid late twenty twenty five to see these rate hikes work. So we do think we're starting to see some of that now, uptaking credit card delinquencies, up take and autodelinquencies, some slow down in consumer spending, Retailers that are reporting earning seeing a little shift and mix, and lower income guys pulling back a little bit. So we are starting to see those effects. We believe, we give it time, we'll get there.
So Dana, can you weigh in on just sort of the odd discrepancy right now between what Matt was talking about, this slow down between the data that shows that jobless claims are not picking up and the fact that people
feel really bad. I mean, do you have a sense of whether it will take actually getting laid off for them to spending entirely for that to actually crack the market in a more material way, or do you think that this steady softening will eventually just bring us down to that soft landing nirvana.
Well, consumers have mixed feelings.
For the most part, they're happy that they're working right now, but they are still very upset about inflation, and certainly when they look out six months from now, they have concerns about their incomes, employment prospects, and also business prospects. And so that's why we've seen some weakening in our consumer confidence measure. But when it comes to spending, we
are seeing consumers pull back. Certainly, they're not buying homes, and once the FED raise interest rates and mortgage rates shot up, the housing market.
Responded almost immediately.
We also so that businesses stopped investing because the cost of capital was rising. And we see that consumers are pulling back on goods, and our consumer confidence survey suggests that they will continue to pull back on those big ticket items. The big question now is services. Can they
continue to spend on services? And the thing is that right now consumers are run out of that excess saving, so a lot of the trips and things that they're going on then services they're consuming, they're putting it on credit cards, and we know the interest rates are very high for credit cards and the debt services rising. So I think that this is all part of the plan, and that we will continue to see consumer spending slow and that we'll probably have.
A bit of a soft patch this year.
But as long as consumers are continuing to work, I think the FED can continue to focus on inflation.
I know how well aligned is consumer confidence with see business confidence.
At the moment, well, businesses CEOs are I would say, cautiously optimistic. For about a year and a half they were very negative, and then in the last two quarters it ticked up above our fifty threshold in terms of optimism. But still businesses are saying, look, we're not having trouble finding qualified workers, we're not laying people off, we're just holding onto people.
But we're not looking to invest much.
And the thing is that we are still facing high costs from labor because they intend to continue to raise wages to hold.
On to their people.
But still they're very concerned about a number of risks, especially the implications of the elections coming up, and also a number of geopolitical issues. So I'd say CEOs are not as gloomy as they were last year, but they're still very cautious.
Man.
This is what we're trying to figure out. How the dominoes fall from here. We can identify this week some of these retailers have lost pricing power. That's clear. The CEOs are talking about it. What we're trying to understand is what happens next. How do they protect margins? They pull back on costs, what can they do? Do they lay people off? To Dana's point, do they hold give the experience coming down of the pandemic. What do you think the ultimate outcome will pay.
We do think labor hoarding is probably going to continue. And again, when we think about this in a larger context, this is not pessimistic news.
This is good news. This is what we want to see.
We need to slow the economy somewhat to continue to bring inflation down. But the big picture inflation was nine percent. It's now down to, you know, three and a half percent. Core pcees already below three percent. We don't have to worry that much about getting them out to that exact on the screws two percent PCE number.
We're in a much better place right now.
If you look historically at equity market returns, it doesn't matter whether you're zero two percent inflation or two to four percent, you do just as well, and nominal just as well. In real This is a good news. What the Fed is doing will eventually work. They can keep rates about this level, maybe trim a little bit end of the year, and if they do that, we could have that mid nineties setup where everyone thought over session was happening.
It didn't happen.
Credit spreads stayed tight for a while, equity is absolutely ripped for the rest of that decade. So the slowdown we're seeing is optimistic, warranted, what we want to see, what the Fed's trying to encourage.
So it sounds like you agree with Dana that this is just a soft patch, not going to be softer for longer. But to John's point, if these companies are having to cut costs, you don't think at any point that will mean letting off employees.
Oh No, I absolutely do believe at some point if it continues on this trajectory, that's exactly what you see.
But that is what you expect to see. So it's always a question of that starts to happen. What does the FED do?
And as the show Gud said earlier, I believe it was and we completely agree, pretends to be super inflation sensitive. Now that eighty to nine percent of inflation fight is done, they're not. They're employment sensive. So when they start to see that more, which we're not yet but we will, then they'll adjust tech. Then hopefully they cut December, then they'll cut next year. Fine tune, keep the economic expansion going.
Dan, and let's build on that. How does that influence your fed co for this year?
Well, we have the FED cutting twice this year, probably at November, November, December meetings.
But I have to disagree a little bit.
I think the FED is still very inflation sensitive and they're probably a little less labor market sensitive.
Why because you know they'll.
Be okay if the unemployment rate rises a little bit. We have it topping out at four point two percent. That's extremely low. Most people want to work, will work. But the problem is that everyone experiences inflation, and they do want to get key and inflation they gauges back sustainably to the two percent target.
Sustainability is important. They don't want to just touch it and then move off of it.
And the thing is that they have to do that because of credibility purposes. They see their target is two percent, they want to get it there.
Do you have a response, So.
As we think about the inflation numbers, and again they're going to officially keep their target two percent, we believe that.
And you'll have to be a math major for this one.
If your inflation go to nine percent and never let it go below two, you're probably not going to average two percent. So they're already the facto kind of faded in that inflation target a little bit.
Again, we don't find out to be a tremendous problem.
Eight percent inflation problem, two to three andred percent inflation not a problem.
Phenomenal GDP not a problem.
And meanwhile, fixed income valuations are so much better now the tenuars round three percent, when seapowers running at nine percent. Now we've got the tenurebout four and a half and CPI pc below it. These are good valuation fixing investors.
We'll get to the bone market in just a moment. You say, not a problem. What did Governor Walta give last month's reay to Saint plus If it's not a problem.
To be fair, we're trying to be optimistic here with the bog gun, trying to be positive. There are problems within the inflation data, particularly as we've all talked about on the services side, and right now we're getting goods deflation or almost no inflation about zero percent. But you can't have an average inflation number of zero percent goods and four percent services, and we are seeing uptick in services.
So there are definitely areas that they need to focus on a watch, and the fight's not done, but again they're much closer done than they have been and some fine tuning hopefully gets them there.
Dan, I want to pick up on something that you said. You think that this FED is particularly inflation sensitive and less employment sensitive at a time where potentially we were speaking with Adam Posen of the Peterson Institute yesterday. He was talking about how a policy shift come December or January of next year could single handedly mean an increase
in tariffs or potentially a change the immigration policy. And frankly, the extra immigration a lot of people are arguing has made put a downward pressure on inflation that otherwise would.
Be in the system. Do you think that.
Given potential inflationary policies that would actually put the FED in a really awkward position with a labor market seeing the weakness that you're expecting while also seeing inflation remains stickier, even inflect upward.
We're already seeing inflationary pressures from policy, certainly industrial policies and the trade wars that we experienced back in twenty eighteen twenty nineteen that they are still going on. Those are all placing upward pressure on inflation.
And so the FED is this is the new norm.
The FED is going to have to operate in the world that it's in, and.
As it sees policies.
Or consumer behavior, or external events like climate events that are pushing up insurance costs, whatever it is, the FED is going to have to deal with that within the bounds of its mandates, right, And so I think that for this year, the FED probably will see that's slowing in inflation that it wants to see. It'll feel comfortable
cutting rates one, maybe two times this year. But next year's another story, and they're probably going to have to take a more gradual approach to cutting interest rates next year. And I think where rates will land will be higher than what we saw during the period between the Great Financial Crisis and the pandemic, both in nominal and real terms.
I think that's the new reality. Inflation pressures upward. Inflation pressures are the new reality that the FED is going to have to resist day in and day out, which.
Matt really points to this reason why maybe people are so optimistic about equities right now because that environment is supportive of equity valuations if inflation is actually allowing them to increase profitability in some other revenues. As an investors chief investment officer, do you say it is a safer bet to go with equities at this point than certainly duration given that type of backdrop.
We actually don't actually a slightly different view there. We do like equity risk here to be fair, where you are slightly overweight equities again two, three, four, even five percent inflation again, if you can grow your sales at that level thatout selling more goods or services, your earnings will do fine.
Great for equities.
We do want to take a little more macro risk in the portfolios who are slightly overoid equities. At the same time, if we look at the valuation picture on fixed income, you can easily build a diversified investi grade portfolio today of over five percent.
You haven't seen that in twenty years.
More importantly, in real rate terms two to two and a half percent real if we were talking January twenty twenty one, it was negative two percent. Right, for the privilege of giving your government one hundred dollars, you could get eighty dollars a purchasing.
Power back in ten years. Thanks for that.
Now you can give the one hundred and you get a hundred twenty dollars back in ten years. So again, that actually gets a bond guy excited. I know, maybe like you know, five percent yields. You know, if you're holding for a whole year, you can get half the return of a particular tech dot pre market. But for
a bondfolk, that's actually interesting. And we have to build portfolios for right, joking around a little bit, but we have to provide for both those for as what happens, we don't expect, and we do expect that treasuries, investigraate corporates easie workings back. They will provide diversification, maybe a little bit in terms of praise for Reid to come down, but more importantly by steady reliable, predictable income year in
a year. That's how they will diverse our portfolios. So we're actually slowly long duration.
At the moment, it doesn't say much to make you happy after the previous decade with ray so low and negative. Matt's good to see you been too long. Thank you, sir, Matt dezoch there of Meryl and Bank of America Private Bank, alongside Dana Peterson of the Conference Board in Vidio soaring
after delivering yet another beaten race. Sarah Hunt of Vampine Saxon words right in this margins look quite strong, although there will be a point at which the undersupplied market becomes less so in other industries, companies do not get as much credit when they are over earning. But the bloom remains on the rods for Nvidia here Sarah joins us. Now for more, Sarah, let's just start with those stat of numbers. Once again, the bar gets higher. They keep
beating it. How impressive was that yesterday afternoon? I think it was.
Pretty impressive, and I think that the concern was that there might be some slowdown in the change of you know, it's in the rapid change. Higher has been so fast that The question is that that slows down to people get worried. People are not worried, and I think the fact that they're able to absorb those when they have something new coming also tells you that people want to get into this game, and it doesn't matter if they
have to wait for something. They'll take what they can get right now because they don't want to get left behind in their own development. So I think that it was a very strong report. It needed to be a strong report, like all Q one. The Brocks needed to perform. They did, and that is driving right now, which you can see as another series of potential all timeimes.
Today you can see on the screen up seven percent in video broad come up to ADMD, up by three percent in the pre market as well, Sarah, When you go through these names, there's an AI theme. What is and what isn't driven by this theme in this equity market right now, given you tendencies are up by seven to white percent so far this month.
I think it's a lot of the stock market is hanging on not just the idea of AI in and of itself, but the productivity gains that it's going to bring and the fact that that can help with its economic oath, and I think that's been the biggest question is what happens coming out of this pandemic and what is going to fuel the next leg of growth.
In the economy.
And this is at least giving the market a story to tell itself whether or not that's going to happen in the time frame that people are looking for. You know, if someone was talking about how long it takes to permit elect company changes, it's enormous. There's a long time frame that's going to take. But you've got an infrastructure build that's going to go on here. And I think right now, as we get more use cases, that seems
like something that we can continue to think about. If it turns out that this doesn't work as well or it's not giving that productivity, that'll be a different story. But we're not even close to that discernment yet.
What I find fascinating Sarah and John was alluding to this the idea that we talk about the said right hiking site that left rates the highest levels in decades, and why is this economy so insensitive to that? Will you overlay a super cycle that is completely secular, that is independent of the macrocycle with respect to Nvidia and all of the investments from big tech, how much can that.
Keep going regardless of.
What happens in the macroeconomic backdrop, regardless of whether there is a downturn in some of the areas that we're already seeing softening.
Well, that's an excellent point, and that's exactly sort of when people start talking about is the economy rates sensitive the way it used to be in this particular sector, It isn't. In fact, higher rates for companies that are both cash generative and have a lot of cash sitting on their balance sheets is helpful to them because it's giving them some return on their cash, where for the
last decade and a half they were getting nothing. But it's these giant cash generating juggernauts that are really fueling the spending boom, and that's not going to be effected by higher rates. So I think that there is you know, how does not come about the AI cycle? I think the market would be struggling because the question would be what's going to happen to the economy next. This is giving people the reason to say there's a lot of
ways that we can see efficiencies here. Unfortunately, I think a lot of those efficiencies are going to end up being with less people working. But that's the question as we move forward. It's not a question right at this minute. Right now, we're building the infrastructure. And if I think about the build out for the Internet boom and how dark fiber and all these things that were ancillary to the Internet growing, You've had a lot of companies that
were generating no cash. You had a lot of customers that needed to be financed. Right now you've got customers that don't need any financing. They've got plenty of cash, they're willing to spend it. And I think that that's it of itself, a cycle that is not necessarily very sensitive.
We were talking earlier this morning with Duidi Bahugna about whether the sixty forty is kind of dead, and I would take that a step further and ask a question about whether some of these big tech stocks are the safety plays at a time where there's more uncertainty on the fiscal side, is more uncertainty on some of the voluntary policy than there is in just the ability for these companies right now to make bank even with their cash piles.
Well, I think that that becomes a question of valuation, and there's been a lot of discussions about valuation and
how valuation in and of itself doesn't stop cycles. There is a point at which that there is a higher risk to the reward, and I think in some of these names, you're starting to get there, just in terms of another kind of economic slowdown or some sort of hiccup in terms of some of these bottlenecks that we're talking about solving on the utility side and elsewhere, if you start to see companies having trouble getting data centers and getting room and data centers and getting them built,
which I think that there's a discussion on the edges of right now, you could see some timing delays and that could put into question the high valuations right now. But in terms of the longevity of this cycle right now, just from what you're hearing from Nvidia and the discussions about what people need and the other companies that are trying to get into this, I think you've got a runway on the demand side. That's difficult to say there's going to be a problem unless.
They are bottlenecks.
Sarah.
When you talk about the potential for AI disrupting the label market. John Authors recently wrote about this and talked about how Navidia's place is exactly so healthy. This would mean taking capital expenditure from other companies. This would potentially mean taking jobs away from the American workforce. When does that story actually start to bite well?
I think all of technology has been a continuum of finding ways in which to make productivity better, which also very often requires letting people go or having less people. But I think that you know, man Thing had a great decessment yesterday about how annoying chatbots and all the other things that we've been looking at as AI have been to users, and how that experience is going to get better. So some of that's already happened. It's just you're going to start to see a better situation in
places where you've already replaced people with technology. The question going forward for AI really is how much more how does that broaden out and to the extent that it does, how damaging is that to the labor economy? And I think that that's a question we don't really have an answer to yet.
Is there a company now that you think could potentially get on the AI space that is not and that we have yet to see.
Within the tech.
World, I think everybody is trying to get into the AI world, and the question really is how can they use it? And this goes back to the use cases and whether or not they generate money. I mean, you've seen on the web hosting side, You've seen in Microsoft and chat GPT that there's money to be generated here. The question is are companies going to find it useful and are they going to continue to invest in it?
And right now the answer is yes. Down the road, where does that end, I think every single company, I mean, we've already been using AI for the last decade or so in different ways. This is just the large language models make it an iteration better and makes everybody try to get into it in places that they weren't because they didn't like the use capers that were there before. So I think that there is not anyone who isn't going to be working into this space. The question will
really be who ends up using it better? And I don't know the answer to that, and it may very well be that some of the old economy stocks start to get much better data and use it better. We don't know yet, but I think that's the promise and that's what people are.
Expecting, Sarah, just quickly. As something Lisa mentioned a few times this week. We've talked about it before, how utilities are going to be perform at a down market, and we've got an experience of that yesterday that actually how lead the losses on the S and P five hundred given the way they've been bid up on this theme, are they defensive still in the equity market.
I think it's hard to make the case that they're defensive. And as I said, with the utilities especially, you've got a lot of issues that go into permitting, you've got
a lot of issues that go into spending. There's a lot of discussion about how we're going to have to build out a better grid, and we are that's not a question, but the timing is the question, and the regulatory backdrop is going to be the question, and how fast you can get things done, because there are awful lot of projects that people would like to do that get hindered with all sorts of nimby issues and everything else.
So I think that there's a timing issue for that, and there's an extent to which those get bid up that are also.
On the yield side.
You put those two stories together and it makes them a bit vulnerable.
Got it got to catch up as always, So hum there of our pint saxon words, full of those strong numbers. Once again from that name in Vidia, Augusmaning of Berenberg, writing, this may prefer to wait until after the election is out of the way. If either side wins a clear victory, US fiscal policy may become more expansionary once again, with significant new tax cuts from Republicans or further spending increases from Democrats. Holger joints around the table howl, good morning
to see you. Good morning twenty twenty five, said, talk to me about the prospect of raat Heights next year. Adam Posen making a case yesterday.
I don't quite believe it, because we rarely get in the US of an electric result which is so clear cut that one of the two sides could, in terms of fiscal policy, where Congress is in control, really do something dramatic. We had huge fiscal initiatives in the US right after the pandemic when everybody was kind of panicking
we need to do something big. But now with that unual situation over, we will likely be in Congress in regardless of the election results, the precise details into the kind of usual gridlock where not much happens at That means the fiscal impulse, which is currently propping up the US economy, will weaken over time, and that argues for rate cuts next year rather than rate hikes.
What kind of budget deficits you expected? We're running deficits of something like sixty seven percent with unemployment sound the four percent?
What do you expecting?
What's your base case?
That's in a way a separate question. Even with the fiscal impulse sort of petering out, the US will likely have fiscal deficits in the range of seven six to seven percent for quite a while. But this is sort of no longer new Yeah, in a way, that's not a new fiscal impact. That's just continuing the strong fiscal strands which we've had. That's not new money giving you new growth. It's just supporting the economy at the level
at is. So basically the case is we need to rebalance the US policy makes over time in and that means monetary policy less restrictive than it's now. We don't need to do it now, but we probably will have enough to do it in the coming years. Our call remains as it has been for quite a while. First cut in December.
It sounds like you didn't make much of the minutes, that it didn't change your view, and that you think that maybe people are over reacting when you say this is a hawkish stilt is changing everything.
Well, it is a hawkish tilt, yes, But first of all, we were not expecting a rate cut before December either, So for us, that's just confirmation. Okay, they're not close to cutting. They need a lot more evidence. And these are, of course the minutes which came before the latest economic data, which all sort of consistently show a bit of weakening of economic momentum. Plus that inflation for once did not surprise to the upside but to the downside. So in a way this is kind of past news.
The minutes everyone was talking about us exceptionalism. I'm wondering how long it's going to be until we're talking about European sweet spot or European goldilocks. Considering the fact that we got but as an expected activity data, in particular at Germany, at a time where the ECB is basically committed all but committed to a June rate cut. How positive is that for the economy and the European rates.
Well, goldilocks is possibly a big word, but indeed what's happening in Europe is the big Putine shock is over. That is, the search and energy and food prices which drove the economy into stagnation and drove inflation up. We are now returning with much lower still somewhat elevated, but much lower energy prices. We are now returning to normal, and normal does mean growth growth of close to one point five percent by the end of this year, and
normal means inflation settling a bit above two percent. And as a result, the ECB no longer needs to think about inflation getting too sticky to permanent. They can afford to cut rates somewhat.
When you look at the ECB, though, it's pretty much certain they're going to cut in June.
What happens after.
The ECB, in my view, will be in the slow lane. That is, we do not look for back to back cuts. We expect sort of quarterly moves in the next one September than December, early next year, because inflation will now probably hover around the current level, the economy will be
picking up. It will probably be only late this year, when falling household prices for gas and electricity will probably bring headline inflation to or slightly below the target rate of two percent, and that's when probably the easy b will then do a lot more cutting at the moment they have pre announced the June cut, but they'll be in the slow lane for a while thereafter.
Halger I like to circle back something you said in the beginning about how for this huge fiscal impulse you need to sleep of Congress, which Adam Posen also agreed with. But there's one area that could be inflationary that you don't need to sleep in Congress, and this is tariffs,
and that would affect central banks around the world. How are you thinking about potentially a Trump administration putting a ten percent tariff ring around the United States and sixty percent tariffs on Chinese imports.
Well, teriffs are bad. Sometimes there are good reasons for terrorists that can you ask There can be reasons if really there is too much of subsidies going on. Yeah, but basically tariffs are bad. Terriffs make all of us a little poorer. But the impact however, on us inflation, This is a huge domestic economy where imports play only a modest role. The impact on US inflation maybe in the zero point one zero point two percentage point range.
I don't think that would really really make the crucial difference. It would be a bit bigger in smaller economies. If they protect themselves in inverted commas, protect with hugeffs, their impact on their prices would be bigger. So this is a huge concern the tariffs, but less so for the inflation outlook.
But when you say tariffs are bad, are they bad if China is dumping supplies on European US markets and absolutely obliterating their own industries.
Well, the first economists response to that is if they give us a little gift. Yeah, if we can get the electric vehicle, it's cheaper, the solar panels cheaper. Thank you for doing that. We don't have to spend the money on it. You in China spend the money on
it with subsidies. The snag is, of course, if that core is too much of a disruption, Yeah, then of course you might want to slow down the process or if there are security concerns involved, and probably lesser for solar panels, but with cars electric vehicles, who is getting what data? Yeah, do I want China to know where twenty five percent of the European cars are currently parked? Probably not so. There are serious security concerns which need
to be addressed with China. Doesn't have to be teriffs has to be, for instance, like forcing them to make absolutely clear who gets what data, or that the key data relevant components actually have to be produced locally in the US or in Europe. That's, in a way, I think, a better strategy than to have these blanket tariffs.
Okay, you've got client meetings here in the US. How much daylight is that between the US perspective and the European one on this issue?
Well, I think there is among clients, among economists not all that much disagreement. There are, of course more political considerations. Well, you have the election campaign over here which play your role. There are to some extent political considerations in Europe we also have this not quite as important European parliamentary election.
But among I would say the majority of investors and economists there as a rough consensus basically tariffs are bad, but there are exceptions when you really sometimes have to strike back, and especially if you want the other side to offer concessions. You have to show your weapons. But after showing your weapons, you should sit down at the table and talk rather than just weird the weapons.
We know the German economy better than most. What do you think the German auto make us want right now? The access to China.
They'd be the most unhappy with any tit for tet trade war. Of course, no China, no doubt. Having said that, this is not the key concern I would say for Europe, and it's also not that much the key concern for the German economy. We have to distinguish between two things. The one is the profits that companies make who are listed on the German Stock Exchange. The other is what's actually the impact on the German economy, and that probably would be much less the impact on the German economy
we have a shortage of skilled daybor for instance. Yeah, that would be much less than the potential impact on the profits of companies who do a lot of business in China and may do less business in China in the future, if what hopefully won't be the case, if this escalates.
Interesting interesting perspective, Hoger, Thank you, it's going to see you as always. How are Sweden there of Breenberg on the latest out of Europe, the United States and least of the trajectory for policy.
Two.
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