Bob I do want to start off here with what we saw over the last few days in Europe. New data that seems to suggest that the
economic recovery that had been unfolding in Europe appears to be to some degree of jeopardy given some of the concerns right
now with the energy supply and the war in Ukraine here. When you look at the picture there and their economic momentum here. Do
you see a chance there that that Europe can avoid a recession. It's a great question remain. I actually think Europe is in
recession now. I think when we look back we'll see that they're already in recession. I think
Germany the strongest economy is is struggling. And I think you know we all had a huge supply shock through the system with a
pandemic. And now we have two more supply shocks and each of them may be affecting or certainly one of them. Ukraine and the
war in Ukraine is impacting Europe more than the US but also the lockdown in China. So we have two more supply chains you know
supply shocks there. And the economy is seriously slowing. I think also that the amount of flexibility that the ECB has
relative to the Fed on any given day it's less because they don't have the kind of banking union or banking structure that
that the Fed is operating within the US. And I think right now because the economy is slowing down they have even less
flexibility. And you know if you look at all this and you just look at the
banking earnings in Europe and you look at banking earnings in Europe versus banking earnings in the US they are like night and
day and a very good indication of that. So I actually think Europe is in recession. Well Bill Barber I'm curious and does
that then make you a little bit surprised at some of the I guess relatively hawkish commentary that we heard out of Christine
Lagarde a couple of weeks ago. I I
I would expect that they're going to have to be much more cautious on any change to monetary policy relative to the Fed.
Yes. And also I want to get your thoughts on that as well particularly from the perspective of the war in Ukraine and some
of the supply shocks that we're seeing in the energy space and for that matter in the agricultural space as well.
I think we've lost her audio anyway but a bomb. Shoot me. Yes go ahead please. Police say the big issue will sink in is that you
haven't had this level of inflation in Europe for a very long time. The sensitivity since World War Two to the word inflation
is much higher in Europe. And so the one thing is that while you know maybe it is not prudent as Bob said if we are in a
recession to start increasing rates it might not be surprising if Christine Lagarde does start doing two 25 basis point
increases over the next couple of months. That is not impossible. But going back to what you said I think the big
issue of I think the world is Europe of course but also the rest of the world will be the issue of food as you said remain.
So we could be having one of the major the largest food famines coming up. You saw that the plantings in Ukraine are much
smaller than what what they had last year whether it's wheat or corn. You saw the news coming out of Indonesia about palm oil
not getting exported. You're starting to see food prices of course up all over the world including in Europe gone up a lot.
So that could be a huge problem for everyone on the globe. We'll talk to you. We'll talk about some of the measures that these
some of these countries have taken. You mentioned Indonesia. We've also seen some protectionist measures in Sri Lanka as well
as Malaysia to protect their own food supply and anticipation that maybe this will get worse. And I'm wondering are there
broader ramifications for that around the world whether it's just in some of these emerging market nations or even here in
the developed world are you starting to see it all over. But also it is both food by the way and also felt Brad Stone ISE
that you do need to produce food. So you're seeing everyone go protectionist. And I think that is across that's a theme you're
looking at. You remember like when we look at Covid vaccines and wealthy nations where you know sort of hoarded the vaccines.
What we're seeing now is all nations starting to sort of look out for themselves and moving away from the last 20 30 years of
globalization towards being much more centered than isolated on their own economies and making sure they're feeding their
people. They're getting enough energy. But while we're talking about the negative again I always want to look at the positive
side remain. That might also be the force that moves us to green energy much sooner. But there's one forget green energy is a
local source. Right. So if you can get to solar wind and other forms of green energy you will be much more reliant on your own
and not reliant on Middle East oil or Russian oil or other sources of natural gas. And Bob as we speak here now huge swaths
of the population in mainland China is still under some degree of a Covid related lockdown. We've seen of course the ports over
there. If they haven't completely shut down they've certainly curtailed their operations pretty significantly.
I'm wondering whether you think the economic ramifications from these lockdowns in China and around the rest of the world could
be substantial enough that investors may need to adjust to that potential fallout. So they're looking at that very closely
Romain. I think it's spot on. As I said earlier you know this all began three years ago during Covid or the beginning of the
pandemic with a huge supply shock. And we talked about the supply chain issues that we had with the
war in Ukraine continuing and the lockdown in China continuing. Then definitely that's the focus of that is one of the many
things that investors have to watch out in terms of the further supply shock supply shock. Do you do you think we need China in
the same sense that we need a China with regards to global economic growth and global economic stability that we need that
contribution in the same way now that maybe we needed it a few years ago. Well I think you saw it in some of the GDP numbers. I
think I've sort I talked about imports. If I haven't. Correct. Imports were up but sales from the US outside of the US were
down significantly. So that was one of the one of the impacts on the six point nine percent to minus one point four. So certainly
we want to have trade now on. When you look at not just what's going on there in China but kind of the disconnect now that
we're potentially going to see with regards to economic growth from nation to nation and for that matter region to region here
the sort of unsinkable nation now that we've may I guess be about to witness here. Do you think that that's something that
the economy at least here in the U.S. that we can withstand that.
I think definitely the cost of production of goods will start going up. And it was interesting in the speech that Secretary
Yellen had last week there was a huge departure I think for a U.S. treasury secretary from the past. And she talked about
producing goods more close to the home market and she talked about a reform of the multilateral institutions for the next
decades. And if you listen carefully to what she said it would imply that
we are moving towards being more self-sufficient in the U.S. and that Europe will. And Europe and other friends of the U.S. will
start moving to work working together and exporting and importing together. But going back to what Bob said I don't want
us to forget China. Last year import export did 30 percent more than the previous year.
That's a huge number. So we can't say we're just you know with the blink of an eye. And at that we are out of doing business
with China. I think countries will remain reliant on each other. But the degree of reliance I think will be changing quite
dramatically over the next year. Well just real quickly here ISE. I mean with regards to the war in Ukraine and some of the
geopolitical issues going on right now with the rest of the world versus Russia if you will here how does that dynamic
change if at all with regards to our relationship with China and their relationship with Russia.
The Chinese have been incredibly careful. But let's not forget if you know Germany and the rest of Europe
stop importing energy from Russia it will become very very cheap source of energy for China. And it will do everything in its
power to to take advantage of that.