What’s driving the good vibes, and what else is top of mind for one of the banking industry’s top executives? MM has a few excerpts from our chat on the sidelines of Milken, edited for length and clarity. What’s behind the optimism? How much of it is U.S. structural advantages? How much of it is policy? It’s structural [in the] U.S., and it’s seeing the signal in the U.S. economy despite the headwinds. Who would think that it could be that strong at a time when we have two shooting wars going on around the world and the inflationary environment we're in? And yet there does seem to be a lot of enthusiasm for the U.S. economy right now. I think people are looking at broader causes of this than government policy. I don't hear people talking about the Biden administration as a cause of this or U.S. government policy — or, frankly, government policy in other countries as the cause of this. [MM sidebar for further reading: The U.S. is expected to grow faster this year than any of its G7 peers, and foreign investors expect that comparative strength to persist.] Why isn't Biden getting credit? This is a group that feels some frustration at the regulatory environment. There’s an accumulation of rules being promulgated, which don’t feel like they’ve been coordinated with each other. They often don’t feel fully formed. Some of them feel politically motivated. How are things looking outside the U.S.? There's a really desynchronized economic situation right now. We talked about the U.S. and the strength here. Europe is in a very different place. Persistent inflation. You have Germany suffering from weak manufacturing growth. You do have Spain and Greece and some parts of southern Europe with real tourism strength. But the economy in Europe is just not going the way the U.S. economy is going. China, it feels like they've hit the bottom of the cycle. There's still some amount of weakness in the real estate sector there, but it's probably manageable. And then you have India, which we talked about last year as a great positive spot, and we continue to believe that. A government devoted to fiscal discipline. They seem to have a better inflationary environment than some places around the world. Investment-led growth. So we're pretty bullish on India. You really have a sense that, and I think it shows up in the data, foreign direct investment into China has dried up. So, to the extent people want exposure to China, they want it through U.S. and other non-Chinese companies, which is a development that I think has been crystal clear talking to people at the conference. One thing that has been interesting is Argentina, with President [Javier] Milei here. It does feel like they have the right policy prescriptions to solve their problems. It’s tough love, but they feel the way they need to feel to get it done. For the Milken crowd, what’s at stake in the U.S. election? You hear two things in people analyzing the election. One is, what effect will it have on geopolitics and especially trade relations and the relationship with China? People perceive that the Trump administration would be tougher on China than the Biden administration has been and more inclined to impose tariffs. So people are paying attention to that. That creates both risks and opportunities for global financiers. The second thing they’re paying attention to is, what does the election do for the regulatory environment in the United States? The pace and prudence of some of the regulations that have been imposed over the course of the past three years, you hear people criticizing that. There certainly is a sense it may be a more measured regulatory environment if the White House changed hands. But could it come down to administration nominees and staffing? You hear a lot of talk about the question of personnel. You hear a lot of people arguing against the conventional wisdom and saying that there are some really good people poised to serve in a Trump administration. It’s Tuesday — Send tips to zwarmbrodt@politico.com.
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