This is the Bloomberg Surveillance Podcast.
I'm Tom Keane, along with Jonathan Farrow 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. Deutsche Bank for David Folkritz Lando set in the intellectual
structure on equities and asset allocation. Chief global strategist spin from Chauda joins us this morning.
With dby Binkie.
You nailed the bullmarket. Took a while to happen, the Chada market. The Chada bullmarket took a while to happen, and with a vengeance, you nailed this. And when we were talking going to go in live here, you may clear ten percent of the people have participated in ninety percent of the people have been left behind. What's the next leg look like for ninety percent of the people that have missed this October market?
Yeah, so, I mean for them, you know, And the distinction that I was drawing was, you know, we've had to move up inequity positioning. So we have a simple sort of Z score plus minus one band and you know, we were at the bottom last year. That was the reason for the call for a positioning squeeze. Positioning today
is sitting in the middle of the band. The entire move in positioning up has come really from systematic strategies as VOLL has come down from extremely elevated levels to still very elevated levels outside I would say, you know, especially driven by really rates VOLL discretionary investors, which you know, in terms of assets under management or I would say eight to one in terms of relative size to systematic strategies.
Their positioning has been what I would describe as firmly underweight for the last year in you know, a very narrow.
Can I translate firmly underweight just.
So the participation has been you know, minimal to zero to non existing night this week, what we are seeing is basically some move up in what we put in our positioning measures, but it's really a sentiment indicator, and that's the aaii bullbear spread and that's moved up for the first time. Whether or not that actually translates into increased allocations we have to wait and see.
The call from here. From where we are at about forty three hundred at of forty five, just written your research last night, from the last week or so, it feels like it's all about earnings. Can you pair this view about earnings with what's happening on the other side of the research team, with Mattlasli and Deutsche Bank ultimately looking for a recession. Can you pay the two views at the moment of Binki.
Oh?
Absolutely, So that's really easy because they are the same view. The view so my earnings numbers te off of our house economics forecast, but with a small twist, I would say, remember that the S and P five hundred gets thirty to forty percent of its earnings from the rest.
Of the world.
So I have you know, a sales weighted global GDP measure obviously for US equities, you know, the US economy matters a lot. We have a framework. I'm going to leave that aside for a second. That's exactly what it is. But it teas off of basically our house economics forecast. So it's really a translation issue if you want. It embodies a recession. In Q four and Q one, the things to note about it are that the forecast is for a pretty mild recession.
Number two.
You know, we do have growth happening until then, and that means that the recession kicks in form a higher level in terms of earnings. And you know, what I would emphasize is that the equity market, when it looks at aggregate earnings like the S and P five hundred earnings, tends to look year and year and in year, you know, we are still negative in terms of growth. It's slightly less negative than you know, the prior quarter, but it's
still negative. But remember that, you know, when we look at all macro series, we look quarter on quarter, which in you know, equities, we call sequential growth, and our estimate of sequential growth in S and P five hundred earnings in Q one on a seasonally adjusted basis is a solid five percent. And I would emphasize that's not annualized.
Markets are not the economy, and you have to just keep repeating that markets are not the economy. Markets. John was mentioning that earlier, and I am wondering whether this could be the start of a bull market, even though the US has not yet had a full blown recession.
Yeah.
So so you know, there's two sort of elements about the recession that I would emphasize.
This is arguably the.
Most well telegraphed recession. Recessions, in my view, in terms of their impact on financial markets, are not really about you know, a couple of quarters of negative growth where everybody agrees that it's modest and temporary because the market's going to look through that. The market's meant to look
through that. You know, if you listen to corporates on earnings calls, we're at the point where we've been talking about recessions for at least three the impending recession basically for at least three quarters, and so you know, corporates are you know, already responding. And the idea I would put on the table is that, you know, it's very possible that the recession slow down. Part of that has
already you know, been brought forward if you want. If a recession is very well anticipated, it's not very you know, the little shock value to make you risk averse. So there will be some negative impacts, but you know a lot of the multipliers come really from a risk aversion, and it's you know the concept of anticipated risk version. You know, an anticipated shock is not a shock.
To tie this all together and to and where we began, do you think that we are seeing durable signs of a broadening out.
I think that it gets pretty choppy from here because the positioning squeeze that I spoke about at the beginning, that's mostly basically been done. I mean, as you you know, as Tom mentioned a vix at fourteen and thirteen, you know, the biggest driver of systematic strategies is decline involved and we are not looking for a you know, vault to
really go down from here. We're not really looking for discretionary investors to raise their positioning because as you said earlier, there is this very long list of concerns that they're focused on in on and I don't think the resolution of those is easy. So we're going to continue to have a tugger war. But the demand supply, the positioning squeeze is done, but the demand supply balance still looks,
you know, constructive. So I would say a grind higher forty five hundred per year, it should be pretty sharp. Soft landing will easily give you five thousand. Yeah, we've said that before, we published that before.
Think he's so measured out to take here. Last year, same time?
Great?
Yeah, this year, same time you had this year because.
You make the call, but the exxies you never know.
The life of a strategist. Think you just quickly Yeah? Does it feel a whole lot better when things are going right? Or do you get nervous that things are a bad to go wrong? Are you constantly paranoid? How do you think about it?
Constantly paranoid?
You're asking me this on air?
Approach to that. Last year was tough. I've talked about that with you many times. This year is better. You know, how do you approach things when you're right.
The same way as you approach them when you're wrong. You ask yourself, what have you got right? And I know you're right for the right reason, and what have you got wrong? And you were just your review accordingly, What.
Was the lesson from last year that helped you with this year?
The lesson from last year was a confirmation of my view earlier in the year that we would get a massive amount of anxiety from the FED. But the anxiety was of their own creation because they decided, for a variety of reasons to wait a long time. So when I listened to the fo mc now I hear calm. I mean, and that that really reaffirms my view that a lot of their nervousness, yes about inflation, still about inflation, but you know they were at zero to start the year.
We are now at five and and and so there's a lot less reason to be anxious.
Excuse to get out of the triple every doll case.
I mean, first order, I think this was great, tons of respect for you, but it always grayst catch out. Thank you out of the Deutsche Bank.
I get the Jones joins us right now their fixed income strategy. And I'm going to go to someone we were talking about with your exquisite ability to play piano, which is Gershwin George, where he said life is a lot like jazz boy, you better improvides. How do you improvise in the bond market with the oddity of post pandemic economics and the oddity of the ambiguity I.
Should say almost about where we are right now.
Yeah, I mean, I think that's really the challenge not only strategists have, but also the FED is facing right that how do they set policy in an environment that's really very unfamiliar. The way we've been doing it is simply either barbelling or laddering and not trying to play every little up and down in the market. So if you know you can stay short and try to roll out and time it perfectly, but there's a lot of reinvestment risk if you miss it because these moves are so fast.
Are you doing this with combining your work with Lizae Saunders. Are you doing it with the understanding there will be a jump condition in the short end or even a dramatic movement in the long end, or do you see sort of stability out there as you barbell or.
Ladder We think in the bond market it'll be more stable. We had huge volatility in the first half of the year, and I think that was the market readjusting to FED policy and all the surprises that we've had, and yet we haven't gone anywhere right. We had all this volatility, and yields pretty much from two years out are about the same as they were at the beginning of the year. But we think second half should be somewhat more stable. I mean, barring some sort of crazy financial market event
that seems to happen every six weeks. But barring that, I think that we should have a fairly stable move here.
There's this sort of renegade theory out there right now trying to justify perhaps some of the moves and some of the resilience in the economy or else it's just true, which is we've been talking about the lure of five to five and a half percent on cash as a negative, a sucking liquidity out of the market. But some people say it's actually stimulative because all of a sudden you can get returns on your cash, which gives you more money to go out and spend that much more. Which is it?
I guess that's a tough question to answer. I think the five percent, the higher yields are more punishment than reward, right because the number of savers that are actually benefiting from that are doing fine. But you have a whole bunch of people who are companies and individuals trying to borrow either get a mortgage a car loan, companies trying to refinance at higher rates. I would say it's more negative than positive.
It's negative in theory. But this is what I keep hearing from people that nobody who's buying a home is paying seven percent mortgage rate, everybody's getting some other mortgage rate. Companies can get pretty low rates if they're a good company. On average, they're high, but those companies that have to
pay through the nose aren't borrowing at those rates. So this interest rate effect, the punishment isn't actually bleeding to the economy, and the reward is actually driving even more investment. Is that an accurate way to understand the dynamic that's been so confounding so far this year?
Well, I would say, and the credit conditions have been easier if you go to the capital markets, then you know it would normally be under these circumstances. But if you're a like I say, are you a low credit borrower, those costs really are going up, and we're seeing a lot of weakness at the low end of the credit spectrum.
And I think it's just a matter of time. It's hard to believe that we can have all this tightening five hundred basis points and a very short period of time, qt also at the same time and not have an economic effect one year forward.
Letdered or bar belled, whatever the blend is. Full faith and credit corporate, are you clipping a coupon or can you actually manage and position for total return.
I think that the bulk of what you'll get will come from the coupon, but you can position to get some total return.
Youre going to give me a double digit total return?
Not double dita? I think that I can't. I'm sorry now I think eleven percent.
Well, that was just folks, I'm busting chops with Kathy Jones. That was a discussion from about ten, twelve, twenty years ago.
That was fun, wasn't it.
It was It was gott to give you a stamp. It's a bolt off. What Lisa say is one set of times in this country bulb of cash.
I noticed that, Glad you bring that.
Up high sharing like a decade. That was also the stamp, by the way, for the whole of last year. Two from redfins. So one third lease it to your point.
Yeah, they're bought in cash, and then the others are bought from developers straight up that are offering them much lower rates, or they're refinancing existing or they're sort of taking on other loans for lower Again, the point being, the impulse isn't making its way into slowing the economy in a material way, and this is the reason why people are wondering, why hasn't it been more painful?
Oh, they band new homes because they old ones out for sale exactly, They've got people in them with mortgages at three percent. This housing market is totally distorted completely. It's totally totally distorted it.
I would suggest it's always been distorted in the pandemic made it shockingly. I mean, the rent now is foury three hundred something. Jonathan Miller Miller, it's nuts.
But said this, Tom, this is a big question to ask, and it's connected to monetary policy and built on what Least is talking about because it's so important. Are the long and vailable lags longer, like thirty years long? Because mortgages three percent like thirty years long? And everyone did that? I hope you did that. I didn't do that. I wish I had done that. Using the term everyone loosely?
Or are we just finding out this economy is way more resilient, Kathy in that five percent doesn't get it done.
Yeah, I think it's the long and variable legs are longer. And you know, let's put housing aside and let's look at all the other costs. That are going up, and also the fact that we've had sub two percent growth now for several quarters. Manufacturing sector is really very weak, and we're starting to see the ism numbers on the service side come down as well new orders. So I think it's been longer because we had such a fiscal and monetary policy response to the pandemic that it's taking
longer for it to work its way out. But it's hard for me to believe again that that's not going to happen over time. And I think that's that the Feds whole hold on to high rates because if inflation continues to come down, holding is tightening, and particularly with QT going out of this.
That's such a good point that's missed by so many people, and I totally agree with you. You can keep the nominal right study, but the real right shifts. That's the point, right right, And.
Real rates are up, and if they stay up for another year or so, that's going to have an impact on the.
A ten year real rate one point five four percent, I modeled out two point zero five percent, and sort of before all this idiocy, do you people suggest we'll see a ten year real rate that will migrate back to the sort of the moving averages of another time and place.
I think two percent might be a little bit on the high side for a ten year, but we'd be actually looking at tips right here and locking in some of those really yields.
Interesting, Kathy, he's going to see Kathy John child swabble.
What we're going to do is talk to somebody who has an immense respect for legal pros on this. Terry Haynes is founder of penjea policy with decades of duty on Capitol Hill.
Terry, you know, I go to Law Fair like.
Everybody else, because these guys are the adults in the room, and they say, wait for the document.
What are we waiting for?
Well, we're waiting to see what the actual indictment says and what the chargers actually are. You know, you and
John are absolutely right. You know, there's a lot of dinner three sources to say, and you know, the former president wasted no time not only in getting out there and talking about it, but one thing I found significant was the first fundraising email showed up at about a half an hour after made that announcement, So you know, there's clearly an attempt by him not only to frame this thing, before the indictment whatever it is comes out as well as raised money, and you know it'd been
gin up as followers.
Terry, My experience here goes as far as Perry Mason, maybe law and order.
So you're going to help us right now.
To me, there's a massive distinguishing feature between state courts in New York or.
Any other state for that matter, in a federal court anywhere.
In this case in Miami, what is the state court versus federal court distinction for the former president.
Well, it's a couple of things. One is the is the sorts of offenses. I mean, there are things that are that are exclusively federal offenses, and you have in the in the Trump case, you have not only documents but kind of also investigations about January sixth matters. A lot of the state court matters have to do with things like his business and whether whether his business records were on the up and up, the tax evasion matter that they went through in Manhattan, those sorts of things.
But also the also one of the cases, which is a Georgia case, possibly has to do with whether or not he interfered with Georgia state election law as a result of the January sixth matter, asking Georgia officials to find him votes that sort of thing. So the matter really is kind of civil versus criminal, and it also has to do with the degree to which the former president can be punished, either by incarceration or fines or the like.
Terry John picked up on the right point here, which is, how do the other Republican potential candidates really step up and respond to this. Do they embrace the sort of deep state conspiracy or do they say this just shows he's not fit to run?
You know, the answer is, Lisa, is both. You know, they have to attack Trump head on. I think you'll see an intensification of what I call the pack swarm mentality, where the pack of these candidates all talk about Trump's unfitness to run and how he's not the best person
and why. And at the same time they hedge their bets a little bit by raising concerns about out about the justice system, and there are questions unresolved questions about not only whether or not you know, the potential indictment here is different treatment. I mean, remember, Trump's not the only person that's had took records home with him, that includes his vice president that includes the sitting president potentially others.
But also there's kind of a broader historical question about how these laws were enforced, and you know, the president, the President Trump is trying to make a case that both there's different treatment here for him, as well as a situation where these laws were never enforced in the way that the Justice Department is proposing to enforce those laws. You know, those are both questions that the Justice Department is going to have to answer as this case moves forward.
Terry, you mentioned that the fundraising emails went out right after the announcement by the former president. Does this type of issue have the same resonance with voter that it used to?
Oh?
I think it has a residence. You noticed in the Trump's statement, he's pushing the buttons about you know, you know, they talked about the Russia hopes and that was wrong. They talked about this that was wrong, that this that was wrong. Now this is the He refers to this as the Box's hoax, so he's trying to gin that up. What I will say on the primary battle is that you know, forget about the national beauty contests. If you look at the early states, you've got Trump about forty
percent in the field about sixty percent. And I think that what happens is that a lot of these candidates really kind of combined to take Trump down and at the same time appropriate the policies and say, hey, look, I'm your safer alternative.
Terry is so messy don in Washington, DC, as you know, I just wonder how much pressure will build now on House Republicans to push up their investigations into the sitting president. How much pressure is going to be on them to do that now?
Oh, I think there's no pressure on them. I think they put pressure on themselves to do that. Frankly, One thing I want to say here is that just because the Trumpet I think is less likely to become president as a result of all this, doesn't mean that Biden's more likely to become president. One reason for that is that those investigations I think intensify and ramp up. The other reason is should an alternative to Trump emerge? And we're really not going to know that for six months
or more. I mean, but if the Republican nominee isn't Trump, you know that person is better able and better capable of putting Biden on the back foot on policies as well as his health and his age. So this doesn't mean this isn't unalloyed good news for Biden by any means.
Terry Hines Panchee, Terry always appreciate it, said, thank you, just fantastic.
Jeffrey Curry's going to come out with his version of full by randomness on oil goal out of commodity at Research at Gold and Sex. Jeff Curry, I say this with a men's respect for your bulletproof University of Chicago microeconomics and econometrics. How did oil fool you by its randomness in the last twelve months?
Well, I have to say, we have never been this wrong for this long without seeing evidence to change our views. Now, obviously some of the upside has been taken away by recent events with you know, the sanctioned oil surprising to the upside, whether if it's Iran, Russia, Venezuela and more destocking, But the core thesis still very much remains intact, and I think one of the big drivers is you know, you've lost two hundred and fifty million barrels of paper
link in this market. We're back to where the market was as is as short as it was during COVID when we saw negative prices, and you've erased the overall length going back into the early two thousand and I've chalked this up to you know, ultimately a broad what we call the great d stocking. High interest rates are forcing d stocking of physical barrels, D stocking the sanction barrels, d stocking of sprs, D stocking of finished goods, even
de stocking of financial paper barrels. So we have been just continuously selling for about six months to nine months.
Now, can you elaborate a little bit, because for people who are not in the nitty gritty, a lot of what you said was perhaps a bit opaque, the connection of high interest rates to a lack of interest in buying oil on a whole range of areas, or a lack of sort of stockpiling physical or paper crude.
Let's just go yeah, let's go through the economics. Let's say to borrow money today to buy a barrel of oil, because you've got to you know, finance your your your physical inventory. Let's say it's seven eight percent somewhere like that. Live Or is paid you five and a quarter. That's your opportunity cost and putting your money into a risk free investment. So your net cost to holding physical inventory run somewhere around thirteen potentially even fifteen percent in this environment,
Why are you going to do that? You've got Navidia and Nasdak going up. There's so many better places to put your money. And I think the other point too, Oil copper and the rest of these markets don't have a positive carry, so they cost you to own it, cost you to store it. You're going to drain down these inventories as much you can. So oil copper, they
are a liability right now. They are not an asset, and until they become an asset, no one's going to want to hold them, hold them in an inventory, or hold them in a pay per form. And so you could just think about that the cost of holding these these commodities has risen so much that ultimately are de stocking. Now we've been waiting nearly a decade for the Iranian floating storage to discharge. It's finally discharging right now, which shows you no, nobody really wants to hold this commodity.
We think that's going to change, and I think it has to start with lower inventories, forcing what we call a backwardation, which is a positive carry in the curve, then somebody will want to own it.
This is fascinating because for years people were decrying the financialization of crude as sort of a bed on the macroeconomy.
Are you saying that it is no longer in the same kind of way that this is basically where it is traded, but it's actually a liability now that the financialization has come to such a place where people look at it as comparable to an interest bearing type of instrument, and you're waiting for some sort of not I want to say crisis, but a complete lack of inventory to spur prices in such an extreme way that you get a violent shift up that really forces a hand of
people who are left kind of in the dust.
I'm not going to say it's one hundred percent interest rates. It's fear of recession why people don't want to own these. The government discharge their reserves do over fears of inflation. So there's other factors at play here, But I think your broader point is absolutely right. We think about when was oil financialized in the two thousands, when interest rates, you know, is right after September eleventh in two thousand and one, when interest rates first went to near zero.
That's when you started to see the explosion in the financialization of oil and commodities. And we stayed into this loose money environment for nearly fifteen twenty years. And now money costs something.
There are a set of world cluss leaders, and you're one of them, Jeff Curry on this and with the acuity of the what I'm going to call almost the general equilibrium theory of hydrocarbons, you parachute into riod right now and you have to advise the Saudis on the elasticities of supply and demand around this new world, which is the old world of a cost of money.
How do you advise Saudi.
Arabia in this new world of higher nominal and real interest rates.
Their market power has never been higher. And one of the reasons why is you combine the higher cost of money combined with issues around the cost of funding hydrocarbon type of investments. They're the only game in town. They have no competition right now. When we look at the cut they made in October, that was the very first preemptive cut we've ever seen. Opak do, and we just saw two more cuts announced in the last the last
three months. Why because they don't have fear of competition. Yes, the oil that's coming on market is Russian, Iranian, in Venezuelan sanctioned oil, and eventually you'll run out of it and there's nothing behind it. But is there competition from the rest of the world. The answer is really no.
Is the United States not ignorant but unaware of the international dynamics of oil, of moving oil up to Japan, across the Pacific Rim and all the dynamics of the Middle East?
Have we gotten lazy?
I think it was a bigger focus on immediate term issues, things like inflation fighting, which is why we saw such a sharp rundown in the SPR And you know you're talking. You put all the sprs together, it was two hundred and fifty million barrels drawn down. That is a lot of oil. So I think the focus from a policy perspective is get the inflation down and keep it down. But here's a fact I like to throw out. You know, you look at core CPI at somewhere around five point five.
It was at that level, you know, going back nearly two years ago, what's changed is oil prices went down, taking headline from nine down to four point.
Five just quickly.
Jeff, do you think that that's the reason why the US is not refilling the spr more aggressively because they're still concerned about inflation and that that could on the margins push prices up.
Well, I think, with you know, the showdown over the debt ceiling, getting money to go buy oil would be really difficult to come by. But that aside. Listen to Frank, so listen to Germany. The focus now is building strategic reserves of green metals, you know, like battery metals like copper, lithium, cobal. So if you're going to build strategic reserves, you're probably gonna do it in you know, the green economy commodities, not in the old economy commodities.
Jeffers oil in a year.
I know it's an unfair question, given all the ambiguities out there right now, but I've got to ask. I mean, we're down, down, down, right wrong whatever scope out where we are in twelve months.
Yeah, I our viewers are going to be seeing substantial physical inventory draws because of these OPEC production cuts, particularly during the third quarter. As well as in fourth quarter. That's going to push us up into the low nineties. Now the question is will you bring the investor back into this market? And by the way, I put a question mark on it because it'll have to be a new class of investor. It takes that investor buying to
push you back up towards one hundred. We're not you know, I know a lot of them have gone left and it'll be difficul call to get them back. But I think the key question fundamentally, we can get this market higher, and I think it we get Once you turn oil into an asset, you'll track capital back to it. But I don't think it's going to be the same cast of characters.
Jeffrey Curry, thank you so much. Just absolutely brilliant there with Goldman Sachs. Right now, we are going to digress and we are thrilled to bring in someone who runs an economy that is better than good. She's picking up a trophy in New York this evening. Nadia Calvino is Spanish Vice President Minister for the Economy and Digitalization of Number one performing always Spain in the continent of John Why is Spain always the number one performer, what what.
Are talking about football?
The pixie dust there we're.
Talked about football?
Well football, yeah.
I mean there it is. But the answer is Spain is unique. We're thrilled that the Vice President could join us this morning. Thank you so much for joining us. I've got to go to the weather IMF for meat and Marrakesh and the idea is there is a drought in Africa coming over that will grossly destabilize the agricultural dynamo that is Spain and quite frankly, just worry about drinking water as well. How urgent is the drought in southern Spain.
Well, it is a very serious issue because Spain is a world superpower in the agri food sector and so the drought is having an impact on the harvest in some areas, having to do with cereal for example. But drinking water is guaranteed and we're investing very heavily, actually more than six billion euros in the digitalization of water
management and the efficient infrastructures for water management. You may know or not that Spain is the second most efficient country in the world after Israel in water management, and so we're heavily investing in that. So that we can continue to be highly performant.
There's so many other issues.
I'm going to leave it there that there's much to talk about, and that I'm sure we were on the coming months. What has changed is you and mister Sanchez have a snap election to deal with our landso Soto says, this is absolutely front and center. How will you approach the snap election?
Well, you know, the economy is performing, is outstanding. As you rightly pointed out.
It's good.
I read the notes, did okay.
Yeah, you did very well. Actually, no, it's better than good. And indeed, I mean the strong growth, strong job creation. Inflation is down to round three percent already in Spain. So the performance of the performance of the economy is outstanding, and I trust you know that Spanish citizens will Actually.
Why I don't mean to interrupt, this is important. The political turmoil in Spain is tangible. Why given a good inflation and good economy picture.
Well, we had regional and local elections and they what we saw there was a rise of the right and more importantly, the extreme right. This movement is not only is not only happening in Spain, you were talking about it. Of course, it's relevant here in the US. It is happening throughout the EU and this is a movement that I personally hope does not continue. And President Sanchez decided to call the snap election so that we can have clarity.
Spain will take over the presidency of the EU in July, and we need to have clarity and a stable government and not be in the middle of a campaign for the presidency.
It still work to do before we get there. Vice President Cavin, one thing you mentioned there was the drought and that's had an effect on price pressure. Now you've made some progress on inflation. You do have an anti inflation package due to expire at the end of this month. Is that something you're thinking about renewing.
Well, we're assessing which measures we should continue to have in the second part of the year and which no longer make sense because the evolution in international energy markets. You are just discussing that energy prices have gone down. We are in pre war level already, so we have to see whether those measures should continue or not beyond June. And likewise for VAT so indirect taxes on food and others.
Could you give me some insight on that now?
No, because we're in the midst of the analysis, and we know what we have been doing since the pandemic hit us is it just measures every three or six months, so that we could have a flexible approach and an efficient use of public resources. I mean, we talked about public money when we reduce taxes or we give public support, so we have to be very focused and very efficient. This has worked well so far, and that explains why
the Spanish economy is doing so well. And we should continue on the same line of responsibility and effectiveness.
How much have you enjoyed the europe being weak versus a dollar and sort of the tourism boom that has a verged on the heels of that.
Well, we've seen a very strong performance of the tourism sector, indeed, and April has been a record month in terms of number of visitors and in terms of the revenues of the sector. And we expect the summer to be so extremely positive. But the current account surplus that Spain is showing and this is a historical first. You know, never in history did we have the surplus, particularly when we
have so strong growth. But what's remarkable is not the good performance of tourism experts, but non tourism related services, showing that the Spanish economy is gaining competitiveness and market share. Not only the goods sectors, but the non tourism related services are being very positive and pulling growth up.
Is that what you're trying to emphasize right now, the sort of manufacturing side, the non tourism side, even as the tourism side really is one of the main drivers of the strength that has in some cases been unprecedented in Spain.
What I think should be highlighted is what we're talking about is not just a bouncing back or a strong recovery from a macroeconomic or micro magnitude point of view, but that there is a structural modernization and transformation of the Spanish economy ongoing, which has to do with the new Green economy, which has to do with digitalization, and it has a lot to do with the European Funds
Next Generation EU Investment and Reform program. We have front loaded that investment and reform plan and the results are already visible.
If you had a chat with Elon muskets All, no, should you have a conversation with him, because he's reportedly in talks to build an EV factory in Spain.
Yes, I mean we hear regularly. I should say, you know, we hear about a possible that.
You try to reach out and have that conversation.
I personally don't don't have a relationship with him, or I haven't had a chance to talk to him. But I am sure that the Prime Minister, the President's office is in contact with anybody that's interested in investing in Spain. Due to you know, thanks to the lower energy prices, high penetration of renewables and the competitiveness of the Spanish economy, we're attracting unprecedented investments.
Ask you for a friend.
I was in Washington and the Dutch Finance minister could not get us tickets to Vermire. The whole team wanted to go to Amsterdam and see the Vermire. Can we can you get us tickets to the Prado here with the Picasso opening up, I'm the fifteenth anniversary of this giant of Spain with old Greco.
We need tickets to the Produn.
I mean, Tom, anything you need, you.
Know, you know, last week of June from Madrid Vice President Calvino Nadia, thank you good to see it.
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