This is the Bloomberg Surveillance Podcast.
I'm Tom Keene, along with Jonathan Farroh and Lisa Abramowitz. Join us each day for insight from the best an economics, geopolitics, finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and anywhere you get your podcasts, and always on Bloomberg dot Com, the Bloomberg Terminal and the Bloomberg Business App.
Mohammed al aerin Oft, Bloomberg Opinion and Queen's College, Cambridge, amongst many other things as well.
Mohammick, good morning, good morning, Thank you for having me.
Thanks for being with a Central Bank triple header next week. What are you focused on at those three decisions?
So all three are going to hike by twenty five basis points, but that's where the communality will end. I think the FED will come across as dubvish, the Bank of England will still be quite hawkish, and the ECB will be in the middle in terms of their forward politic guidance.
And donal motor comt is a question we keep laming going where are you on that now?
So the framing matters. If I go to your framing, which is to adopt the excessive data dependency, which is where the FED is today, and if I stick to a two percent inflation target, then they will keep open the possibility of a September hike. If I go to a different framing, which is a much longer term framing that looks at how the US economy functions, then it
should be one and done. The trouble is that we have all been pushed into this very short term framing where it's almost absurd that we talk about data dependency with policies that act with a long and variable lag. But that's where we are.
We're long and variable lag. But what we really are is trying to measure some form of algebraic plugins that lead us to a phrase restrictive or dominant constanmate Missuo says, super restrictive?
Are we super restrictive? Right now?
We are restrictive. We're not super restrictive, but we are restrictive. But tom it brings you back over and over again to a question that hardly anybody wants to talk about for understandable reasons, which is what is the right inflation target for the world we're living in today? For a world that I believe is a world of deficient aggregate supply, not a world of deficient aggregate demand where we had been.
So that's where it comes down to, ultimately, do you want to talk about that issue or do you want to push it back as long as you can? And I think Central Bank is for understandable reason, because they've been missing that target for so long, don't want to talk about this now.
Does that mean in our analysis we can't aggregate in that each society, each nation has to disaggregate into the halves, and they have nots.
So there are two aspects here. First, it doesn't make sense for so many countries to follow the same inflation target. It's as if I declare to everybody in this building, you should have the same weight target. We are different looking at me, these countries differ fundamentally.
Intrust the Egyptian humor there.
Started now seriously, Mahammed, carry on if you can.
I thought bage was slimming.
But the second issue, you and John, that's something about your base suit that John wants to pick on. But I'm not going to. I'm not going down.
Mamma said anything about these suits whole morning.
I know that's royalty. Thank you, And and you said earlier we deep into the summer somehow was on deep?
Did you see he made with the rent increases in London? His Royal Highness has had a thirty four million dollar pop in his real estate properties.
Did you see that?
You expect if you want to see what inflation is, We're gonna rip up.
We're gonna stop the show right now. This is very cool. You're doing all your fancy finance stuff. You go over and put a shingle out at a university and the Queen, her Majesty showed up to greet you at Queen's College.
What was that like?
It was incredible. She she we were honored to have her as our patroness and she was absolutely wonderful.
You mentioned if you want to experience inflation out of the UK, describe it for people. What's it like right now in the UK?
So, food inflation at seventeen percent, Labor understandably pushing back hard. So right now the senior doctors aren't strike. We've had a tube strike called off. We've had trained strikes, we've
had nurses strikes, we've had teacher strikes. You feel the real weight resistance and you feel the government in the Bank of England torn between on the one hand accommodating the price weight spiral, which they don't want to do, and on the other hand understanding the distributional impact of what has been a huge inflation shock.
So we can't just have a different inflation target for a different country every year. That's going to be chaos. But based on the structure of the UK economy right now and the way you see the United States, what with those inflation targets look like if you could change them right now, if Mohammad had all the pound you wrote down those targets, now, what would they be.
So first of all, no one ever talks about changing an inflation target every year. That will be absurd. You might as well not have one, sure, But the question is, if you look forward for the next five to ten years, where's the right inflation target? And I suspect that the right inflation target is much nearer to three percent than it is to two percent. Now that may not sound like a big difference, but it actually is a big difference over.
Time in the States, and what about the UK?
And in the UK as well. Europe is the only one where two percent still makes sense. And Japan, which is an interesting one that we don't talk about enough because they have a major exit coming up which they are denying for now, the exit from Yelkurve control there. It's probably also two percent.
So in gentlemen, he talked about this the former Italian Prime minister in Europe as well. I'm going to keep Europe away from it right now, because I think our audience really wants to understand your debate on our start. John Williams reframes to a lower our start. Ian Lingoln of BEMO Capital Markets.
Agrees with that.
Others agree with that we're going to step at us. I'm hearing from you. You brilliantly called higher interest rates to come. Do you see in our star that sets above where President Williams is or can it even be higher? Roguof suggesting even out to a higher new set for our start.
Yeah, I mean it's a fascinating debate if you're an economist. You mentioned Ken Rogoff, I've mentioned Larry Summers, I'd mentioned Olivier Blanchard. I mean, a very active debate among people who basically come from the same camp, and they're having this debate I'm more on the our star is higher than it has been in the past, so more on the Ken Rogoff Larry Summers end of the debate.
I mean, I look at it as you spent too much time out in California, and you may actually understand other factors. As Professor Blunchard talks about. This is not some neat economic surveillance Babbel, folks. There's a lot of other factors here, and one of them is a technological impulse. Over five ten years, do we completely underestimate technology is out relays or on our financial system?
So here we could have a five hour discussion.
We're doing that. You're here at eleven am.
Okay, think of technology that we're going through, the innovations doing this the following. If you think of whatever distribution you thought of future growth and future productivity, some of these technological innovations in science and AI move the distribution to the right. That's good, but fatten details enormously, and it is how do you manage those father tails that's coming in in this discussion.
I wanted to pick up on something you said earlier in the conversation. That's a big difference between two and three percent. It's a lot of people listening thinking, what are you talking about. There's not much difference between two and three percent, so why is the difference so large?
Compounding makes a huge difference over time, and it's what you target to. My big worry, and you know this, is that if the FED focuses on two percent in a relatively rapid timeframe, we will end up in a recession. And I keep on repeating. You've heard me say this for the last year. There's no reason for your economy to fall into recession. The endigenous elements of this economy are strong enough to power through this period. So the big risk is that we follow the wrong inflation target
and end up dipping this economy into recession. And it matters because you have the vulnerable segments of the population that have already seen that purchasing power eroded. Now you're going to add income and security to that. And that's why I think.
You know, it's great here.
I thought Elarian showed up just to see us.
You know what's pass Jersey.
He's here for the sold out jets, you know, pre training summer camps that pick up as rogers. Look at this summer head, John that he's going to pick up here. I mean, you know, the bucket that's more than a bucket.
That's like a Wimbledon that is more than a bucket.
It's like fancy.
I cann't afford that.
It's fancy, you know, So tell me, Tom, do you buy into this is the season the Jets make it to the playoffs, deep into the playoffs.
I say they make it in deep to the playoffs because we underestimated name of when he showed up, and you know, Aaron Rodgers is going to get a second you know, life here and all that. I'm actually pretty constructive.
On you're a Jets fan this year? Is that on the record.
No, I don't want to go that far. I'm a Tots fan. I mean that's enough.
Pain, different sport.
Do you have a Jets bow tie? No?
I do not have a Don't you dare? Don't you I got in Atlanta Braves, I got aware.
Now I know what I'm going to get you.
Oh you're killing me?
Is there going to bring us any much?
I hope?
So we find that as I'm with Neil Millington at the Lanesboro Hotel and he's just Tom, this is a once in a lifetime opportunity.
MAM's going to stick with us in place to say.
We're going to dive into this right now.
And for Global Wall Street and a Friday, we're distracted by the silliness of Barbie or this, that and the other thing.
Well, guess what.
There are serious themes ahead and they are by definition complex. Joining us now out of Columbia his work for years at Brown Brothers harrim and his doctor Wyn thin Head a currency strategy on Japan. When I need a clinic right now, we'd go to Robbie Feldman at Morgan Stanley or you at Brown Brothers Harriman.
About what they have wrought in Japan.
Was it a cultural decision in Japan to rip up the textbooks you studied at Columbia? Was it a cultural decision to impute an inflation into the system.
Well, Hi, Tom and Jonathan, thanks again for having me. I don't know if it's culture as more just of pure pragmatism. I remember Japan has been fighting deflation for decades, and I think they're really quite gunshy about removing accommodation. I think Marcus kind of got ahead of themselves about either a tweak and Yielker control or eventual lift off.
It's clear from the Bank.
Of Japan comments and from police making Japan that are very, very concerned.
The numbers are starting to turn over right now, not.
Only domestically, but obviously you know, globally, and so they are really really reluctant, and so I think that's the signal that's coming. Of course, Look, they can surprise us next week. They love to surprise us, but this is not a time for surprises to me, I mean, I think there's so much going on, Tom, to your point, this is a really crucial quarter or maybe half a year for global markets right now.
On an algebraic process, there has to be constraints on whatever the variable is, whatever the process is, whatever the derivative is within the function. To me, the constraint is they want to own the bonds, but they can't become the bond market. Is the Japanese government become the bond market. The ownership of the bonds is by the government and with the government.
Where the algebra doesn't work anymore.
Tom, I have to be honest.
I get anytime, like a young economists are doing analyst, ask me about what's going on Japan.
I really start get a headache because it's hard to explain.
Yes, the Bank Japan owns about half of jgb's in the market, and it's just it's just on something.
It's hard to explain, right, I mean, you don't see that anywhere else. And I think the big.
Difference is that Japan's the nation of savers, not to depend on foreign savings. So it's sort of this almost like a little domestic, little bubble of an experiment that that's so far is working. But again, I think they're very very worried about how to get out of this.
They've been stuck in.
This mode buying and easing for so long that I think it's very very scared.
Must precisely the point they want to do an action, which is to get out of it.
And they have this massive constraint that they own the bomb mark.
They dominates it that anyone else does. When the problem, though, I think that you could get, is the kind of spillover effects from anything they do, say to the European bond market, to treasuries. When how would that work? What would the dynamic be? Would it be Japanese investors coming back home again? How would you think that would work.
Yeah, John, I think there's quite a few channels, but the main thing would be obviously, if they abandoned Yulker control, JDB yields would would most likely shoot up, and you would have a spill effect of I think, pushing up US treasury yields and German Bund yields, et cetera. You know, they've been again the outliers Rankapans the sole outler, every other brank is h aggressively and it's the third biggest economy in the world, So it's to me it's there.
There's just a very potential negative spillover to bond markets. Now, in terms of currency markets, we would see the opposite. We would see the dollar in most likely knee jerk go down if there's any sort of removal accommodation. Again, that would have spillover effects on the regional economies. Again, this is such a crucial time for global markets, especially Japan. I really think that caution is sort of the watch road right now. I don't think they're going to surprise anyone.
I don't think they can take any kind of drastic action. That said, again, they love to surprise us, so we'll know more A week from now.
We're going to find out in a week when I want to finish on Europe. In the experience we had there, for many people, including myself, I had my dubts about the ability of the ac B to high interest rates, to back away from QA. Given developments over the last ten years in places like Italy, Spain, Portugal, Greece, they've been somewhat successful taken away that stimulus and not seeing big accidents to develop in the European bond market. Do you think Japan can take that as an example where
you could find some success. You can get that handoff away from central banks owning everything and then handing it back off.
Well two things.
I think Japan is such an extreme example. But yes, I think there is some hope that they can manage this. But again I think the best time to have done this when markets were doing okay. You know, in a sense, I think the Bank Japan was a little bit too late by wading so long. The other thing I would say about the Germans that there are even some cracks there.
You know, you've probably been covering how noted hawks not and another one just have been backing off about a September hike, And that's the first time I've heard the hawks are really really sort of back off from this really intense tightening cycle. And I think that's because countries are pripheral country like Italy Portugal starting to complain they are seeing cracks form in the Eurozone. I think that's something that's helped the euro sort of top out in recent days.
Is a Bundesbank, the Bundesbank we know in I mean, is the bundess Bank the court, the inner court that Martin Feldstein would talk about for years. Are they still interanged in an inflation worry?
Yes?
Absolutely, And then I just curtained me that mister Nagel, the bundess Bank president, is the other hawk slipped my mind there.
He was also one of the ones that crack.
So it's interesting, if anything else, that the bundess Bank has gotten I think at least changes rule of people that they realize it's not just all about Germany. There are other countries that have to be sort of within the calculus of the ECB. And I think when the East to We first started, they were still locked into that nineteen eighties nineteen nineties mentality. Uh, And I think they were seeing a subtle shift. Well again, we'll know
we're next week. We have the Fed Wednesday, easty b Thursday, Bank Japan Friday. To me, I think what's going to come out of this is that the US dollar, the Fed remains king ECB Banking Tom start to sort of blink perhaps, and I think that we can get a little bit higher in the dollar in the coming weeks.
Interesting within thin of Brown Brothers, Harriman Win, thank you sir.
Speaking of pain. It has been a difficult week in Ukraine. One of the great voices there is with Adam Posing and Olivia Blanchard at the Peterson Institute. Elena Riberkova not only has encyclopedic understanding of hurt Ukraine, but double barrels it with data science from the University of Virginia, and she follows on in our tradition here to keep Pharaoh happy, we're having University of Warwick July. We have to speak to anybody we can who's got parchment from the University
of Warwick. We dragged Skodolski in here on a day by day basis if we could get them. But Elena Riberkova, with economics from Warwick, is the kind of person we wanted to drop.
W No, I'm doing that. I've done that.
I'm just done it.
Just if you're nice to me, I'll made you do this.
You can do this. Elena joins us now, Elena Riberkova, Elena, wonderful to have you with us. I want to start with this in the commodity Thank you so much, thank you. It's an honor for us as well. In the commodity market, we're trying to figure around just how how much Russian crewed is still in this market? Can we start there? How much Russian oil is on this market now globally compared to where it was before this.
War about the same.
You know, I think we had this oil price cap which had dual objective which I'm afraid I have to compare was having a cake and eating it tool a little bit. So we wanted to have the Russian oil on the market, but at the same time lower Russian revenues. Well, we achieved the first objective. Rusian oil is on the market on the lowing over the revenues. That is a bit more nuanced and complicated.
Tell me, why just give me the maths around that? Why is that so much more nuance and complicated.
Well, we're in Bloomberg.
It's economic incentives on Russian side, about ten dollars per barrel for a year means a difference of about twenty billion dollars in revenues for the companies and for the budget as well. So it's a twenty billion dollars incentives to circumvent the oil price cap. They're putting everything that got in it to be able to do so. If we are not the same on our side, of course,
there are difficulties. So if we think about the cap, we still have provisions of the G seven shipping and insurance services to Russia and the limitations, and it's a very very small you know, I can put it attestation saying I have seen the contract and I promise to you it is below the cap. Imagine if we we're filing taxes the same way I have seen my income and I promise you it's very low.
And that's what we do.
Elena, bouncing off your work at City Group on Russia, you've really got an encyclopedic knowledge on this. What would you be your to do list for the Allies and particularly for the White House to make this more strident more forceful with mister Putin.
Well, if we wanted to be really ambitious, I would say we go for a run style as pro account, where we say everything has to go through one account, and then it will still have challenges, but at least we'll remove these complications attestations who are shipping where you know, transshipment. I think that will definitely busier. Failing that, we have to tighten the attestation regime. We have to go most seriously. We have to say you have to keep the paperwork.
We do risk based audits, and if we find that the company is still shipping Russian well above the cap, we're not saying we stuff your hand and we prevent you from ninety days. We're actually put a proper fine.
I mean, Alina, I don't know the details here, but I'm going to assume you summered in Odessa as a child. What is your belief of the fragility of the Black Sea right now? With wheat, with oil, with the new battles there, How fragile is the Black Sea territory this weekend?
It's absolute devastation. You know from Ukraine, more than ninety percent of all shipment including grain that we're talking about this weeks went through from.
Through the seas.
So the four key ports account for ninety percent of Ukrainian exports. Of course, there is no infrastructure to move elsewhere, and this is one of the absolutely key ports. Then the dam that was recently destroyed, you know, that flashed out a lot of you know, a lot of dirt from the ground, you know, a lot of sort of sewage, and it all were and minds actually it all went into the Black Sea. So an absolutely devastated situation, and it will take years for us to move forward. You know,
one year of war. I think it's more than five years of demining.
I look at the de mining and I guess that comes to the military. And I understand your mandates a bit off the military here, but you do follow the funding of the weapons. We're distracted in America by cluster bombs in their horror. What are you focused on is the next step to provide Ukraine with offense?
Well, I think the next step is for us to prevent Russia from getting our own equipment from Intel Texas instruments. Also some of the European companies to assemble that into their military production and use it against Ukraine. So we recently put out a study where Ukrainian Defense Ministry this attemp both more than sixty items and it's kinjals and it's all kinds of pediatary equipment that we all hope
never to become experts in, but we are so. And they found that two thirds of the components in this equipment comes from the US headquartered companies. And what we also find that Russia continues to import. In fact, the levels of the imports are at the same as the way before the war. How does that happen when we're just for Chairman Yellen talk well, the Head of Treasury Yell talk about the sort of the French shoring and on shoring. But unfortunately China uses US equipment, US parts,
produces that and ships it to Russia. Or we have countries on shipping, you know, saying maybe Turkyo or Yue or others buying it from the US and against shipping it to Russia. So unfortunately, on one hand, we're supporting Ukraine was everything that we've got. Unfortunately, on the other hand, Russia is getting our own equipment to use against Ukraine.
Chare Yellen, Vice chair Yellen take care I confused that for years. My Treasury Secretary Janney Yellen.
Adam Posen's never done that in his life.
Elena Ribecadam and nails at every time. The pit Uson Institute for International Economics, Lyda, thank you, thanks for bam with.
This on inflation now and this is the conversation of the day on price change in America. He invented it, the analysis of it, I should say, with Bob Ferrell years ago at Marylanch. David Rosenberg joins us in Toronto. He is with Rosenberg Research. David, you slice and dices. I want you to speak to Jerome Powell right now. Is the deflationary vector?
Is it in force?
And will we stay with disinflation into twenty twenty four?
Well, I think that this inflation trend, tom will be the primary trend. We're going to have a bit of a bump though, in the next month or two because the CRB has taken like an eight percent jump since the end of May for the reasons that you folks were talking about. And the question is you know how the Fed's going to treat that and whether it's going to be temporary or permanent. This run up we've had really across food prices in the commodity markets, and also
what's happening with oil coming off the bottom. If this is happening with a four and a half to five percent of employment rate and we got excess apply in the economy, not a problem. But at a time of full employment, this bounce we've had in commodity markets and in the context of the weight settlements we're seeing, I
think has to be on the Fed's mind. So I would say that that the primary trend is going to be towards disinflation into the next twelve months, But I would say that the next couple of months is going to challenge that view.
Are we beyond the pandemic? Are we doing traditional economics now? Whether you believe in ISLM dynamics or you believe in factor dynamics, whatever you know, microeconomic foundations, whatever it is, Are we beyond pandemic analysis?
I don't think so, Tom. I think that we're still seeing a lot of the after effects. It's one of the reasons why look yesterday, nobody seemed to care too much that the Conference boards leading economic indicator declined for the fifteen month in a row. It's already gone down enough and far enough from the peak of December twenty twenty one that the recession should have started. The inverted eel curve has been more than a year. It's very deep.
The dispersion across all eel curves would be telling you that the recession should be starting. And we have this debate as to whether or not there's even going to be a recession. And so what's happened is that this was the energizer bunny. The gift that kept on giving were those stimulus checks from the Biden budgetbuster and March of twenty twenty one, and those excess savings which historically
Americans would spend half in safe half. But we live in a much more narcissistic society today, right, I don't remember before this cycle, Like you're asking me about, is the COVID effect behind us, the worst of the COVID health issues behind us, But the COVID effects on the economy. I mean, we're developing new acronyms like yolo. You know, you only live once. So all the stimulus got spent
and that's what's basically clogged up the monetary channel. What that has done to the real economy, and that might be ending right now. But it's one of the reasons why people calling for a session like yours truly have been frustrated is because of the lagged impact of all that fiscal stimulus, you know, which was a product of the pandemic.
What's interesting about this, John, is you know you only live once. Rosenberg's going to see Barbie twice this weekend.
Is support retail.
I'd bet against that, David.
I want to dive here into my book of the Summer Blanchard and the ur Star debate. Blenchard feels it over time we will return to some form of quiesce in our start. John Williams has staked out the high ground saying we will return to our start.
Others go the other way.
Are we going to be in a two percent is FED range out five years, ten years, or does David Rosenberg have to set to a legitimate societal reflation?
Well, and I think you're referring to two percent funds rate in nominal terms as being that baseline. And Tom, what's very interesting is that you know, through all the pandemic and all the distortions around the pandemic, that the FED never once has changed its long run estimate of where the nominal neutral funds rate is. It's been stuck at two and a half percent. The work that's been done normally, our star refers to the real neutral rate. And let's assume that we get to that holy grail
of of you know, two percent inflation. And then you have John Williams, by the way, our work has corroborated his work, that there's a risk that are Star in real terms goes negative in the years ahead. And that's supported by what, well, what has been the what did COVID not change or the policies around COVID not change is aging demographics. Demographics has been and remains a dead weight drag on the.
Eject jilspe every day, continued mister rosenbreg And.
The constraints of excess of debt is another consideration. And then we look, we had something. Look, this has been wonderful for the growth stocks and the tech sector.
And it seems as though, you know.
In Nvidia back in May, with that you know, truly you know, bombshell earnings report almost felt like Pfizer Monday, you know, back in November of twenty twenty. I'm not going to say this is bigger than the Internet, but it's certainly bigger than three D printing, and it's going to have monumental impacts on structural shifts to the labor market,
labor saving technology. That again is going to be a I think from a labor market perspective, a significant disinflationary force, just like the Internet was not on the same scale, but it doesn't have to be in the same scale to be a truly disinflationary force and an impact on our star down the road, David, I.
Just want to squaze in an extra question on that then, and this is really sort of like out there thinking ten twenty years. But how on earth the politician is going to deal with this, David. If we start to see that kind of job replacement from this kind of boom.
Well it's going to be a big problem because with the Asian demographics comes with that higher dependency rates, and that puts added pressure on fiscal finances at a time when governments around the world have been so profligated on the spending side. So this is going to be a very big fiscal problem. Some people say the only way out of this is we have to inflate, we have
to inflate a way out of this debt problem. But the problem with inflation, and the reason why J. Powell has been fighting inflation and with cover from the White House, is that inflation is a tax on the poor and the elderly. So people say, well, we have to solve the debt problem, you know, with inflation, No, because it creates other social problems. Ultimately, we're going to have to have a revamping of the entire fiscal system, means testing
on entitlements. And the bottom line is that this dirty five letter word called tax are going to have to go up. And that's why I think that you know, when you're taking a look at why have bond yields not swored? I mean, even with what's happened with food stuffs and energy in the past few days, the Fed about to pin the fund rate at five and a quarter to five and a half, the stock market booming. Why isn't the ten year note have a five handle? Why are we at three to eighty on the ten
year note? With all this, so, the bond market's telling you something, As it comes back to Tom's initial question, the bond market is telling you something about that disinflationary future. So I think that in terms of how governments deal with it, I think this era right now that we're seeing a fiscal rectitude is going to have to switch towards fiscal tiding down the road because this is not sustainable.
I'm looking at this thinking, if you told everybody was happening with a stock market fiscal deficits, you know everything that we're talking about right now, we have to ask the question the biggest anomally is not what the stock market's doing. It's what the bond market is not doing.
Interesting, what's that message?
We'll keep asking that question, David, This was fun, deeply thoughtful. Thank you, sir David Rosenberg. There of Rosenberg Research and enjoyed the movies this weekend. I can't believe we've got a Tottenham fan seeing opposite the arsenal CEO I Vncate Sham joins us now vinn I great to see. It's a big game tomorrow against Manchester United at MetLife Stadium. Before we get to all of that, let's just start
with why here. I see a lot of Spanish clubs come to the United States now, A lot of Italian teams do their preseason tour here. Why is this so important for Arsenal Football Club?
Sure?
Well, firstly, thank you for having me on the show today. The US has become our number one international market and we see that anecdotally every time we come to the US. We come every couple of years. We can see the games growing and we can see Arsenal's popularities growing, and we also see it in the numbers. Last season with NBC Sports, we had the record audience for Arsenal Manchester United.
We see our social media following growing really fast. Twenty percent of our retail business is in the US, and we played the MLS All Star Game in Washington, jam pack full and jam pack full of Arsenal fans, which was great to see.
Great to see lots of money in it. I'm sure you're also spending lots of cash as well, and I'm sure a lot of Arsenal fans want us to go straight there. How much have you spent this summer on football talent? Well, so, I guess the story about this summer really starts with looking back at last season. So last season we had what we considered to be a successful season. We took the title race right until the last weeks in the end, we finished second rather than
the first that we were fighting for. But we have one of the youngest squads in the Premier league, so this season they're going to be another year more experienced. And what we've done this summer is supplement that fantastic squad with three new signings. The three positions we want to strengthen the three players we wanted and we were delighted to get them right at the start of the windows. So we have them here with us on tour in the US and it means they can assimilate in the squad.
And it was a heavy, significant investment, and that investment really shows the ambition of our ownership group. You know, they have had an enormous success with their franchises in the US over recent years, winning the Super Bowl, winning the Stanley Cup and then winning the NBA Championships. So they've really invested behind the team and they have really supported us this window, so we will be ready for the fight this season.
Thank you for making last season so interesting till the very end, and congratulations on your purchases. But let me let me put you in a tough Spotify may sure there's two views as to what model should major sports run. One is the UK model where you don't have forced equalization, where you have relegation. One is the US model, where
you don't have relegation, you have forced equalization. If you had to create the Premiership from the from scratch, would you keep the current model that allows a few Cup teams to dominate all the time or would you go to more like a US model that allows for far more equalization.
I keep the model that we have at the moment, and I think it's proven. The Premier League is the world's biggest league in the world's biggest sport. And I think one of the reasons the Premier League is so successful is the broadcast distribution in the Premier League is actually relatively equal, So the top club in the Premier League gets roughly one point eight times the bottom club
in the Premier League. So we try and keep the revenue distribution as equal as we can to make sure the league is as competitive as it can be, and it goes in cycles. Sometimes you have a period where teams dominate and sometimes you have a cycle where it's more competitive.
I'm for Sheffield United, Sheffield Sheffield United, me and Joe Elliot, it's destined.
So being a QPR supporter and just looking up to the Premiership, you'll understand how we feel about our inability to ever penetrate because of what happens above us. But let me ask a question. So you're seeing all this US support come to Arsenal and I'm hearing there's a lot more interest in in soccer as they call it here on there is this a pull fact or a
push factor? Is this people being pulled by the fact that NBC's covering more games or is it the fans that are pushing people to talk more about UK soccer, including Tom and John.
I think it's a little bit of both.
I think NBC have done a fantastic job for the Premier League over a long period, both in terms of how they promote the game and how they've also educated the audience around around all things football, and we see it in their viewers numbers. I think NBC's viewership numbers last season we're twenty percent higher than the season before. We've got our game tomorrow at MetLife. It's going to
be a sellout. It's going to be our biggest ever game from revenue perspective, that we've ever played in the US. And I think it's going to be Metlife's biggest ever soccer game that they've had in their stadium as well from a revenue perspective, So the demand is really, really, really there and it's growing really quickly.
Got to talk to you about sally involvement in the game increasing and increasing through this summer, particularly of the last couple of years with that purchase of Newcastle. More recently, what does it feel like as a CEO of a football club to be competing with a country, not a single person, but a nation. What does that feel like? Do you feel like you're doing that now this summer?
Well, this is the Premier League. One of the reasons the Premier League has been so successful is because it's so unbelievably competitive, and you know, Newcastle are another team that is stepping forward in that competition. They had a very successful season last season. They're they're in the Champions League. So it's a it's always a dynamically changing market. Another big change that everybody's been talking about this summer has been the number of players that actually transferred to Saudi
So that's another interesting development in the game. It's new, it's a little bit too early to know how that's going to affect the Premier League, if at all, and we'll all be watching with interest.
Long ago in my youth, I saw the Rochester Lancers and a wonderful guy named Charlie Chian.
I'll try to make this happen.
And the fact is it was perceived by me and everybody else in a Mayer America is minor league football. What is the symbolism of Messy going to MLS now? Does he take them from minor league football to something new and different?
Well, the MLS has been on, as I understand, a good growth trajectory over many years. The league's expanded. There's been a number of expansion franchises for us at Arsenal. We want football or soccer as we may call it here, to grow in popularity. So we want there to be a vibrant, healthy, domestic league in the MLS. Messi is a generational talent. To have him in MLS playing in Miami,
I think we'll have a really really positive effect. At the same time, the new Apple TV deal is going live as well, so we're really hopeful that that will help continue to grow MLS. And we've seen in the few days we've been here, how much coverage there has been around Messi and how many people have been talking to us about Messi And that's what we want. We want, we want that conversation.
Do you think Harry King could come to MLS?
Sure that AR would like Harry Kane to get out of the Premier League. To be honest with them, I won't ask him directly. The Apple deal, I've got forty five seconds, but I want to squeeze this in. The Apple deal is huge for a football player to get a slice of the TV money directly like that. Do you see more of that happening?
Well, I don't know the details of the Messi deal, so I just read what everybody else reads. But I think Messi. All I really say is I think Messi can have a really, really significant impact on the game. And I'm sure here in this country, and I'm sure it was a really competitive process to get him to play here, because there's lots of people that would love Messi playing in their league, and I'm sure and had to work really hard and really creatively to get here here.
And they've been successful because he's here and he's driving a whole lot of interest.
The Saudis were one of those. Weren't they trying to drag him over? This was great, Let's do this again. Good luck tomorrow.
September twenty four.
What's that North London. We're trying to get tickets?
I was going to do that.
You comes to the Amirates. Well right now you're talking. Now you're talking, and I thank you. This was great, Thank you, buddy, and good luck tomorrow.
Thank you.
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