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academics on statistics in Central Limit. Theomor Sobrada Rajapa joins us now without Question on debt Our Conversation of the day, Head of US Right Strategy at the Derivative Force Society General. So I'm gonna cut to the chase and go a little bit Matthey here and the equity markets, we talk about a collar maybe even in commodity markets, we talk about a collar trend of copper, live, catt or whatever. What is your world like when the two year yield
is collared? How do you respond to abandoned trade on yield in the derivative space?
So basically you point as you pointed out, I mean, Tom, you have you know, all yields across the curve and the treasury market have been very range. Found you're looking at a range for two years around four percent maybe four and accorded to three seventy five. Same with tenure as well. It's been in a very very tight range.
So really what that tells me, broadly speaking, is that there's really no strong conviction in the market on yields going either you know, monotonically higher or lower, broadly speaking, because of the fact that we're stuck between a rock and a hard place. In some respects, the data that we've gotten so far has been very very strong. The consumer is resilient, the employment pictures is relatively strong, inflation
is sticky. That would all argue for much higher years from your on, But then you have the dead seating overhand, the regional banking crisis, as well as rates being policy rates being high and sticky, that would argue for perhaps lower years over the longer ud. So we're kind of stuck in this range because of that.
When you are stuck, can you model out for higher in the case of where we are in the range right now, can you model out a bet for a higher yield and lower price.
It's hard because ultimately what you're looking at, especially in this environment is for the FED to pause. We're not talking about perhaps a pause, a skip, and then another height later on this year. Perhaps all that means is that if policy is going to remain restrictive for the remainder of the year, then that would mean ultimately that you're going to see a slow down in the economy. That's kind of what the FED wants to achieve in order to bring down inflation, and that will ultimately mean
lower yels. So we have a recession considered at for early twenty twenty four. The economy looks relatively robust a part of that point on, but then once we do go into a recession, the FED is going to have to cut greids. So the ultimate destination is perhaps for lower yels. The path between here and there is uncertain, given the fact that you have a lot of dynamics to get through over the short term as well as the medium term.
So Badria mentioned the regional banking crisis is potentially helping to drive down inflation or regional banking crisis, it seems like it's stabilized. We sweem to swing between it not existing, not having ever percolated, and suddenly still being a full blown issue that's going to help the FED, which is it?
So the regional banking crisis, broadly speaking, the headlines have definitely abated. You're seeing a little bit more stability in the banking sector. But broadly the transmission mechanism from the regional banking crisis is going to come from the credit crunch or tighter credit conditions. It's going to come from a greater regulation if you will, of both the smaller mid six as well as the larger banks that would broad speaking, would.
Tighten credit conditions.
As we progress through the year, you're seeing mortgage rate start to rise. You're seeing real yields around one point four percent, so that's also risen in the last few weeks. So broadly speaking, I think higher yields as well as tighter regulatory framework, it should lead to tighter credit conditions over the remainder of the years. So yes, it might not be a crisis in the regional banking sector as of now, but tighter credit conditions conditions I hear to stay.
Do you believe that right now that's going to perhaps constrain yields going forward? That that's really the key feature the H eight reports that come out on Friday that determine really what that band is the yields can trade within.
Yeah, I think over the near term yields are definitely constrained. You're probably going to see an environment where the two year is going to struggle to get past for and a quarter percent, because that would imply the market pricing out a lot of the cuts are priced in, perhaps even starting to price in for hikes at upcoming meetings. That doesn't seem to be in the cards. Powell seems to be squarely in the in the in the camp of pausing rates at least in the June meeting and
then taking a meeting by meeting thereafter. Uh So, in that sort of context, I think two years are going to struggle to rise meaningfully from here. And as far as the long end it's concerned, it's much more pegged to the outlook for growth not just in the US
but also globally. China has had a good year this year for for growth GDP is going to be positive, but again for upcoming years, you're looking at a meaningful store round and not just US but also global growth that should kind of heap the long and pegged and then ultimately decline over the coming uh you know, months as well as the next year.
Well fair speak through today. I can't white bulloud, bustic daily speaking throughout this morning and the afternoons. Savatra, thank you, Sabato, Yeah for that of SLK gen.
Christopher Marinac joins Director of Golf Jenny Montgomery Scott. He's not here to talk bank stocks, he's here to talk. We saw okill in the PGA this weekend, and you like live next door to Augusta as well. Very cool. I mean, give us a little vignette here after this spectacular weekend of golf, including a hole in one by the PGA pro from California. Give us a picture of your Augusta. What's it look like.
It's the prettiest place on earth, but it's also a golf course that actually gets totally taken apart in the summertime. So when they close next week, they'll be closed for three four months and they'll take the entire place apart and redo the greens, redo a lot of things. Certainly fix up a few trees that fell.
Back in April.
But it's an incredible piece of property.
It may be a place to relax when you're dealing with the bank stocks as well. Are you at any point a master's relaxation about the banking crisis or is it still very vivid on a Monday morning.
Well, it's early innings. We have a lot of to go.
I mean, we still have a recession to find and then real estate to work through. And the banks I think will continue to make money throughout this whole journey, but they certainly have issues to deal with the next three years.
It seems like the move is toward greater capital requirements. We're hearing that from Neil Kushkari today and we got a little hint of that today from the JP Morgan investor day. What did we hear from them?
Well, jpm morgan talks about their fortress balance sheet all the time, so you know their slides are no different this morning about that. I think their leadership position in the banking industry is second to none, and so they're going to continue to remind everybody the capital is king.
The stress tests come out.
In about a month and my sense is the Fed's going to pass most, if not all, the banks, but they're going to politely ask for more comfort capital and require banks to raise additional equity, which banks I think the banks and the stress test, and then that will get pushed down to regional banks. So you know, pretty much the rules work that anything that happens at the top twenty banks will get pushed down to the next twenty in the next twenty, so it kind of falls from the top down.
We talk about the potential for just profitability constraints within some of the regional banks. How much will the profitability be further constrained and their lending mechanisms be curtailed if there is greater carapital requirements foisted on them by the Fed.
Well, capital is going to naturally improve for the banks because of retained earnings, and I think there's a slight comeback on their equity securities just because you have natural amortization and payoffs of their at HTM and available for sale securities. The challenge is going to be that raising additional capital to cover what could be a future credit cycle in twenty four and twenty five. That's why the
capital I think goes up. We still have those unrealized losses that are not going to go to zero, They're just going to get incrementally better.
But should people buy individual stocks ETFs BKX. What's the intelligent way to play this three years out.
Well, I think a basket of stocks across all market caps makes sense. It's not just the large cap I think looking at MidCap and small community banks makes a bunch of sense. A lot of those are even cheaper than the regional banks that have been hit. My sense is that there is a real opportunity these companies, many of which are trading below tangible book value and tanswill book values growing.
Every now and again, TK and I take a stroll at Park Avenue. Brahma doesn't like to be with us publicly, and when T and I woke up, this is pretty popit, Guys's true, just saying like on air, but not outside of the building. We go at Park Avenue and we go past the First Republic. On the next corner, the next block is a Chase Private Client. Almost immediately true. And on those screens in First Republic, they're playing Bloomberg.
And often't always think of them, because you know, right now we're talking about them, and they're looking up at those screens and they're watching us talk about them. Can you tell me what's going to happen? With those branches, does anyone know.
I think they'll stay the same for probably a year or two and quietly change gears, maybe become a second GP Morgan office. Maybe they'll become something else. Most likely, it's going to be a slow play.
You don't think they're just going to immediately come out with a knife and just cut all these branches and close them.
I don't think so. They gave expense guidance this morning.
That's the same that they had before, excluding the FRC.
We heard from Jennet Yellen that there is going to be market soolidation akin to that First Republic getting acquired by JP Morgan. How much more it is JP Morgan still in the business of acquiring or is it going to be sort of the other Bank of America, the other big banks.
I think it might be nothing. Actually, I think that the consolidation may have already happened, because you have three banks that failed in March and April, and that represents about four percent of the assets for those big regional banks.
You know.
The interesting thing to me is if you look at the top twenty five banks in the country, they represent two thirds of the assets in the FDIC deposits, So why do we need consolidation when you already have two thirds held there? So I think the consolidation may be greater, mid mid size and smaller.
So every analyst who comes on talks about the regional banking crisis is something that's going to tighten credit conditions and actually help the FED. Are you pushing back and saying that's not really the case because it's over.
Well, I'm not sure the crisis really ever happened. I think we had mishaps in the month of March with these failed banks, but largely those were their own doing. I think the rest of the contagion that's been limited to pack West Western Alliance, both of which seem to be stabilizing. Pack West has positive news out this morning on asset sales. I think that the rest of the industry is marching ahead. We have seen deposit outflows in the industry, for sure, and those may continue just because
interest rates need to catch up for depositors. But most of these banks are lending money, making a profit and marching forward. So I think there is credit or tighter credit anyways, but it's not as bad and as negative as I think headlines have suggested.
The heritage of Jenny Montgomery Scott is Philadelphia, the mid Atlantic States and all the roll up there that happened thirty forty years ago. In banking, when do the regionals finally act and consolidate? Waiting and waiting and waiting and waiting, when do they finally say enough?
Well, you could see two or three mergers the next couple of years, so those regional banks. But I'm not sure it's going to be that often. I really think it's going to be a lot less than we anticipate. The FED has to really change gears at the examiner level to push these mergers.
The last two years mergers.
Have taken forever close and a handful of them terminated.
Just ask there's a people thing the examiners.
Sure, interesting interesting Master's tickets. Have we knat that down?
Yeah?
We had Chris is our new friend.
Okay, good?
The odds according to Golf died. Just thank you Simon for this to garner Master's tickets.
Isn't one and two hundred that's the one that's through the lottery, the lottery whatever they Okay, yeah, I just applied last year and we've got to know people. Do you know people. Okay, you know Christopher Marrinac, But Chris knows people.
He knows people that we know.
It's good tonight, It's nice, Chris. Thanks for bambudis Chris March gentle Montgomery Scope.
Let's go to a guest here right now to give us perspective here with all the different news flow we have, Lisa Hornby's head of US multisector fixed income at Schroeders.
The yield move that.
We have lifted up, does it take us up to a collar edge, yields up to resistance or is there something going on here, Lisa that's original?
You know, I think the market is still flirting with this idea of is there a path where things can actually be okay? And certainly resolution on the debt ceiling, which was last week's optimism or cause for optimism, is.
A step towards that path.
Of course, I think we'll be We'll have some fits and starts between now and then, and I don't think we'll see the highest end of the ten year range where the peaks that we got to last year. But I think, you know, I think there could be some tactical trading opportunity here for sure.
What are you doing on duration? We hardly taught touched down it this morning, not so much the price move or yield move, but the bet you place in maturity.
Yeah, you know, I think duration.
I think look, the outlook for bonds in our view this year has been compelling. I think we're ten years. We're probably looking at a range of three twenty five to three seventy five, So we're getting towards that up or band. We like tactically trading but airing towards being
long because our view is for economic deterioration. It's kind of a slow burn, but I think that that's where we're headed, and so we want to be We want to come out the other side of this long but understanding this is going to be a volatile market, as it really has been for the last four or five months.
ALESA, where are you seeing that signs of economic deterioration at the moment.
So certainly a slow grind, but we are starting to see it. On the consumer side. It's it's obviously very gradual, but we have seen credit card balances take up. We have seen on the auto loan side, now really across the figo spectrum a bit of deterioration. Obviously, jobs still remain very very resilient.
You know.
One of the things we're watching though closely is small businesses. You know, small business surveys have really deteriorated over the last I want to say, more than a year, and that deterioration, in our view, is probably set to increase as credit condition and tightened for these guys, particularly in light of what's going on on the regional banking side.
So that's where we're focused.
I mean, we have to remember small businesses in the US employ on a very large percentage of the population. You know, we spend a lot of time talking about the gees of the world, but probably ninety percent of the businesses in the US are small, small to mid size, So their outlook is pretty important and it's not particularly compelling when you look at the data.
We just had Chris Marrinack on over from Jenny Montgomery Scott, and he was talking about the regional banking crisis that wasn't and so I wanted to get your sense of what is happening in terms of the credit tightening. He said that regional banks are a much better position than people assume. They're not constraining their lending mechanisms all that much. Do you see something different or do you think it just hasn't happened yet, but just wait and it will.
I think it's again.
I think it's a bit of a slow burn, right we you know, the cost of capital has gone up, These regional banks are under increased scrutiny. I think there will be more focus on balance sheet preservation and the type of loan making that they're doing, and I think certain pockets of the economy will see a little bit more stress as a result of that and make it a bit harder to access capital. I mean, Tom said
it before while I was listening in earlier. The cost of capital has risen, and that poses an issue, and it's supposed to pose an issue, right The FED is doing this intentionally to try and slow economic growth, and they're doing it, but it takes some time.
Given how resilient the economy has been has been, and given that we haven't really seen the credit stress materialize in a way as significant as many people had expected at this point. What is the risk that the Fed's going to have to tighten further, It's going to have to hike again, perhaps even in June, because maybe the constraint isn't that great from the regional banks just yet, and then it will have to be the slow burn that goes on for a while.
Yeah, I mean the market is certainly flirting right that. Right, we've seen the probability of a FED hike at the next meeting move very between twenty five and forty percent. You know, if we get a debt ceiling resolution in the near term, I wouldn't be surprised to see that move higher. I think the Fed wants to be cautious.
I mean, if you listen to Powell's comments last week, he didn't explicitly suggest a pause here, but he did allude to the fact that, hey, we've done a lot, we can potentially be patient and see what the impact is. I mean, they are breaking things right, There are more you know, look at the move index and where it's been over the last year versus the previous several years. Things are starting to percolate in the background, and we have had if several banks now fell, I don't know
that that story is completely played out. I think that they realize that, you know, there are now some risks out there that are becoming a bit more serious and so all l Sql. I'm sure they would prefer to pause, but we have a lot of data between now and the middle of June, their next meeting, so we'll have to wait and see.
Well, let's just finish the Lisa, clearly, you're not going to keep on hiking until you see too. Do you think we've seen sufficient evidence right now that they are sufficiently restrictive or is this a guess based on the cunitive tightening that they've already delivered.
I think it's a great question. My sense is they've probably done enough. They might go a little bit further because they're looking at data on a leg. If we could fast forward six months from now, I said, I suspect that inflation will continue to slow and that they will get, you know, be closer to their targets and growth will be starting to roll over in a more serious way. But you know, if we get another five and a half percent inflation print, that all bets are off.
So I think, you know, we Unfortunately, the way monetary policy works is with a lag, and so they'll react to the data and as it comes in rather than you know, six months or twelve months from now, trying to see the bigger picture.
Hey, Lisa, this was great, Lisa Holbe. The Strouders appreciate it as always. Michael O. Larry see I've ran et on just right now. Michael grit to see in New York going to see my sois dollars? It's not, is it? So Michael tell me this is that a future still or things changed?
It is the future and things our margin are changing. I mean, I think you know we've ordered another three hundred aircraft from Boeing two weeks ago, so you know we're going to grow from one hundred and forty nine million passengers pre COVID to three hundred million passengers by the early twenty thirties. So there's still lots of growth for Ryanair, but growth is getting easier in Europe. The
market has consolidated post COVID. Capacity has come out. I mean, we're looking across Europe this summer where we're operating twenty five percent more seat capacity than we had pre COVID, but the rest of the market's only opening about ninety percent, so we're taking huge amounts of market share from everybody else.
We're still we're well hedged on fuel we're offering really low airfares, but those low airfares are of a bit like we expect our lowest airfare to rise probably five ten percent a year for the next couple of years. Because of this capacity constraint and with the manufacturer's challenge Boeing and Airbus huge backlock on orders can't increase monthly production because supply chain difficulties for the next four or
five years. I think you're looking at a European marketplace that will now copy some of America in the last decade. Stable capacity and more reasonable pricing going forward.
Is that good for you and bad for the paper traveling?
I think it's good for us.
It's also good for the people traveling.
But the challenge is if you look at the German market this year, for example, Lufthansa, which was bailed out by the German government to the June of thirteen billion during COVID, they've only restored eighty percent of their pre COVID capacity. Airfas in Germany have doubled this year over last year. So you know, German consumers are being stiffed by their national champion, and they're increasingly turning to us
because we have capacity growth. I'm taking fifty year craft a year from Boeing because we have capacity growth, we can keep fares down. But I have no doubt in my mind that one of the big drivers of Ryanair's growth the next couple of years is going to be the incumbent legacy carriers really driving airfares much higher in Europe than they are in US.
Are you willing to then just have a commensurate increase in your price.
Just perhaps less Absolutely not. Li So we're going to keep growing capacity. We're we will remain load factor active, vial passive. We intend to take huge amounts of market share from every incumbent in Europe as we grow our share in Europe from about twenty percent now to about thirty three percent in the early twenty thirties.
People talk about the travel boom that is really supported services globally as being a bit of yellow You only live once after the pandemic, get out there and travel, and if you're not dealing necessarily with the business segment as much, how confident are you that that's going to continue in perpetuity.
Perpetuity is a long time. I mean, it's too long for my horizon. Next five years is going to continue. There's a couple of fundamentals in Europe. One, we're seeing very strong business growth. I mean, businesses are flying around Europe, particularly two kind of Eastern Europe Morocco Portugal, fix repairing supply chains that they can no longer depend on a and they're looking to cheap find cheap manufacturing in Morocco, Portugal,
poland Romania. We're the biggest airlines in those markets. So we're seeing a very strong recovery in our business.
Travel.
I think people who are locked up for two and a half years are going back traveling, and that's not a short term phenomenon travel increasingly. I think what really surprises me about the moment, for all the negative coverage of higher energy prices, price inflation, they're still fundamentally full employment in Europe. People are getting paychecks at the end of every month, and what they do is they go traveling. Leisure time is rising. You have kids who are all
over Europe. I mean when I grew up in the seventies and eighties, as my children remember, keep reminding me that was the last century we went around Europe by training. You know, you're interrailing. Now they go around Europe on
Ryan Air this summer, huge US flows into Europe. The Asian market is recovering, but because only ninety percent of the pre COVID capacity has been restored, demand is strong and pricing is strong, and I see no reason why that won't continue for a four or five year period. Now there'll be curvebulls, COVID Ukraine invasions, things like that would throw us off course, but the underlying fundamentals are very strong. Demand for traveler is strong, and supply is
constrained by aircraft manufacturers. There's a cap on what they can build and how fast they can increase production.
I've got an aerospace team with a lot of really smart questions. Here's the only question our listeners and viewers care about. It looks like the US airfares are a complete scam. I looked at a geog quick eyeball sixty seventy dollars round trip on Ryanair versus three hundred dollars in the same flight in America roughly, and I look at the margin. You're making twelve cents modeled on the dollar versus six seven cents. It's say Kirby's wonderful United airlines.
Why can't America get this right? Why aren't you in America?
One? Because there's so much growth for us in Europe. Why would I want to go to America when we can deploy all of this growth in Europe and Europe is still fundamentally under exploited. Europe is moving towards consolidation. I think the American airs have slightly overplayed it. You know, we look at Southwest and you know, Southwest was a kind of heroic model for us when we first started this thirty years ago. But Southwest is no longer fundamentally
a low cost airline. You know, it's average ticket price one hundred and ten hundred and twenty dollars a seat. My average ticket price last year was forty euros a seat. So I think, you know, the more needs to be done there. You know, more capacity needs to be found in the American industry. But the challenge is going to
be for all of us. Because Boeing and Airbus can't fundamentally increase their production rates, We're going to be This industry is going to be challenged for the next four or five years, and I think we have to be careful not to repeat what's happening in the States. We don't want to push pricing too high. And that's I think why our three hundred aircraft order with Boeing is so key to keeping prices low and people traveling across Europe for the next decade.
You could buy some capacity you mentioned consolidation, You interested in that?
No, I mean, you know, it's just I'm buying somebody else's problem, right, But I'm very happy in Europe to see loft hands and by al Ittalia. Let's see iag by tap you know, consolidate away. And you'll need to consolidate because none of you are going to be are able to compete with Ryan Air because we have much lower costs than you, have much lower fairs than you. So you better well may as.
Well class Shay too. So if you don't want to play the consolidation game, you're sitting there with a great bandage shape.
No debt right now, right, No, when we're paying debt down, aggress to get down.
We have no net debt where we with dearnet cash net fantastic, okay, capital it sense.
I think it's coming, just not yet. I mean, we're paying down debt at the moment I've paid two bonds this year, one point five billion of debt. I've only got about two billion of debt left. I paid that all down in twenty twenty five and twenty six. I'm spending about two just over two two and a half billion a year in capex, which I'm funding out of
internally generated cash flow. And once we get through that, I think maybe next year, if we have another strong year and we have significant net cash balances, then we'll return those to shareholders.
Ryan Air twenty six percent debt U al seventy debt A.
Big difference, isn't It's just a massive difference. This was fun. Michael got into this. More often we do. I got to come back to the States more often.
You see, can you.
Bring your damn airline to the States? Lisa having an absolutely crush your secret is?
I mean why some people can offer forty dollars or forty years.
Double eighty ninety, I mean double eight hundred is a ridiculous.
You know, through history, the Irish have always been you know, we've been transport pioneers. We've built the roads, we built the railways, and now we're building the area. We're going to dominate the skies across Europe. Come to Europe for low fairs, don't bother holiday in the States.
When you're back, we need to talk about a business traveler. I do wonder what's going to happen here. I remember easy Jet might a big transition years ago to get the business traveler. And I wonder if your Captain's going to change its toll in years to come. Absolutely not over remind the sign you're going to keep the same thing business.
Travel with what's different about it? People keep confusing short hole on long hauld. What's different in shorthold is nobody will pay a premium for business travel. Business just wan on time, affordable, safe transport they want to get there longhould. Twenty percent of the market will still pay a ludicrous premium on long haul, which is why long haul and
shorthold is different. And we intend to continue to grow very strongly in Europe car with a huge growth in business travel as well as leisure travel out over the next decade. And I can only do that with my beloved airport aircraft partners palling.
The aircraft this week sales. I don't think they fight to Monte Carlo and Marcia. There we drive across way from New York City. Michael was great, Thank you, buddy. We wake up again to another morning, anticipating looking ahead to more talks on Capitol Hill. There are a range
of estimates out there. Here's one from Goldman and the team estimating that Treasury will drop below thirty billion dollars in cash as soon as June eighth, but one in the following The estimate is subject to substantial uncertainty, so there is certainly a chance that received could slow more than expected and leave the Treasury short of cash by June first or June second. T K we're taking this early June day, I think increasingly, seriously.
Absolutely to me, that was the frontline this weekend, and this is yelling out front, and maybe it is the acuity of being an economist, or she put a bow on it earlier, and the bow's moving, and it's moving quickly towards June. The other thing that's moving, I would point, is a calendar. We were talking about this on May tenth. It's not May tenth, it's May twenty second.
No, we're running out of time, We're runn out of time. I think it's less about the mood of the moment, the mood music, so to speak, and much more about substance. Now, let's get into the substance of it. What's the hang guy, I.
Would say, yeah, I would go with that, and the substance, of course, as the return of the president to Washington and Tokyo as our Amory Horden our Bloomberg Washington corresponded, Emory, there's points in a campaign where there's hallmarks along the way, not in the news flow, but maybe a research piece that's out there or in an op ed piece. This morning, the Washington Post drops a bombshell of an op peace
directly addressing the president's age. He returns to Washington for a debt debate, but he also returns to Washington looking at an eighty second birthday, et cetera on election day. How's he going to deal with that when you get back there and keep asking him tough questions.
Well, I think that's exactly what the president needs to be doing for the public to put rest aside these concerns. He's going to have to get in front of the public take questions from the press like he did yesterday at the end of the G seven summit, and that potentially could assuage voters concerns about his age. But Tom, I don't really think this is a bombshell. I think
everyone has been talking about this. Yes, whether or not the whispers are getting now louder echoes, but everyone has been talking about this because it shows up in polls. Americans are concerned about his age, but also in the same age bracket.
I would say, is.
The nominee right now that that's leading the Republican candidate for president, and that's the former president Donald Trump. He's just four years behind Biden. So regardless, we're going to have a president if it was to be a rematch of these two individuals, a president ending that next term in their eighties, and.
John ed was clearly addressed by the Washington Post and the op ed piece. It was not just about President Biden.
You wake up this morning, you just get the failing G seven wat G seven and Marie. What did they talk about? Because the President had to leave at dinner early, even on the way back reporting me on Air Force one, had to take a call with speaking McCarthy. He's going to Land engage in talks almost immediately. Did he ever really leave behind the domestic issues.
I think it's fair to say he had one foot here in Japan and one foot back home in Washington. He even brought Bruce Reid with him to make sure that there was an individual on the team keeping in touch with his key negotiating team in Washington. As you said, he left a dinner early to have a call phone called his team. He was constantly kept up to date on where the negotiations were. But the negotiations over the
weekend we're very much so on and off. Breaking that impass last night was this phone call the President had while he was on Air Force one with Speaker McCarthy. Speaker McCarthy then came out and said as productive. He also, really, for one of the first times it's been since the President's been abroad, did not criticize his trip abroad and
just said we're going to meet tomorrow. So that's today, President Biden and Speaker McCarthy, these two men in a room, and this is how a deal is going to be able to get over the finish line, because it's really just these two individuals being able to come to an agreement. Biden alluded to that in the press conference, saying, I guess he wants me to get home to be able to hammer out this negotiation. So that's where all eyes are, and I think, you know, there's other topics. Obviously at
the G seven China was a massive focus. President Zelenski was here in person. Russia was a massive focus. But for other world leaders and their concerns about future economic risks. When the President of United States is in the room, that the question would be going to him, sir, are you going to have a fault on treasuries? Which is the bedrock and it underpins our entire global financial system? So it loomed large over him and Maria.
I guess there's another way to reframe this build and what John's talking about, was this G seven a waste of time with a focus entirely on whether the US would get its ducks in a row back at home or were there some really substantive to things that took place, in particular having to do with China with a communicate that the Financial Times described as the strongest condemnation of China yet and really a tit for tat with China and Micron over the weekend that really left me highly
confused about whether we're thawing or exacerbating the tensions.
I think this week was a key week when we will look back in history in terms of a more multi polar world. Not only do you have Zelenski here at the G seven. Formerly this was a G eight where President Putin used to think of this club he was part of in a very prestigious way. Zlenski was here some six hundred miles away from Russia's Far East. At the same time, you had Zelenski in the Middle East, clearly for Putin, he's seeing that the Middle East is
no longer in his bag. And then you also had China xijingping last week sitting down in five ex Soviet states. So you can see there are changing movements in the geopolitical world. And when it comes to some substance that happened here on the foreign policy front, it was all about China, and the President reiterated that yesterday in his press conference. With this administration and the Europeans have really been able to coalesce around is language about not decoupling
but de risking. And I asked the President's Deputy National Security Advisor for Economic Affairs, Mike Pyle, what's the difference, and he said, look, D risking means we don't want China to get a hold of advanced technology for their military. We have concerns about economic coercion and their market practices, but how can you call something a D couple when US China trade was at a record last year. So that is the framework that we are going into. But Lisa,
you also bring up a great point. Just hours after we got this communicate, China came out and said that Micron did not pass their cybersecurity review. And one thing Rama Manuel, the US Ambassador to Japan, said to me was we're no longer really just seeing China take these
economic coertions against nations. They're now going against companies. So I think this was really a pivotal moment really in the geopolitical landscape this week, even though domestic concerns were definitely front and center.
MH. Buddy Kountrich of at a Weekend and this morning as Wow, em Marie, thank you out of Japan Following the G seven.
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