I had a CNBC Power Lunch hit yesterday to discuss the G20 meetings in Buenos Aires, one of the most beautiful cities in the world. My first trip to Buenos Aires was early in 1981 when I was sent by the State Dept. to explain Reaganomics to the Argentine government–at the time a military junta. It was at a dinner where the Minister of the Economy introduced me to 23 former Ministers of Economy that I realized the true meaning of instability. And it was there that I first held a 1 million peso bill. Unfortunately, Buenos Aires today has become the poster child for the increasingly violent battle between rich and poor that plagues the world. Last week, there was violence between fans of the 2 big football teams that forced officials to move the soccer match to Madrid for fear of riots. The approval ratings of Argentine President Macri, product of a wealthy family, have fallen with the Argentine economy half their levels of a year ago. The workers of Argentina are not happy.
What Can We Expect from the G20 Meetings? The answer, just like when Jack Black (2010), Jackie Chan (2001), Bruce Springsteen (1985), Edwin Starr (1970), and The Temptations (1969) asked “War, huh, Good God y’all. What is it good for?”, is absolutely nothing. G20 meetings are not places where 20 heads of state (actually, 19 plus the EU) go to decide things. They are highly orchestrated performances where leaders get their pictures taken together.
That said, the G20 meetings are interesting because it is a chance to watch the body language when heads of state meet. And this year, the body language people will most be watching is Trump/Xi regarding the worsening US/China trade war and Trump/Putin to see if Trump pushes back on back on Putin for his most recent aggression in Ukraine.
I was personally looking forward to this discussion because it was with just the anchors–way better than fighting with another guest–and because one of the anchors was Bill Griffith. Bill and I have been working together since the early ’80s when he was one of the founding anchors of FNN, the precursor of CNBC. I have always found him to be smart and fair, just what we need good journalists to be. You can see a short video clip of my discussion with Bill, Melissa Lee, and Courtney Reagan by clicking here.
And you can read a news story CNBC ran on their blog about one aspect of the interview, my worry that the intensifying Russia probe may result in more tariffs, by clicking here.
Before every hit, I prepare a brief set of talking points so the producers can brief the anchors about what is likely to come out of my mouth. I have copied the talking points for yesterday’s show below:
- The fact that we are covering this meeting, instead of the G7 meetings like in the old days, reflects the way the world has changed. Increasingly, it is China, India, Russia, and other emerging markets that drive global growth. The US and Europe no longer call the shots.
- The backdrop of global growth news is quite negative coming into the meetings. The IMF and OECD have lowered global growth forecast, largely due to trade war damage, reducing 2019 growth forecasts for the US (2.5%), EU (1.8%), UK (1.4%), Japan (0.9%) and China (6.2%). Brexit has put Europe under a dark cloud. GM’s announcement that they are closing 5 plants closings.
- Cameras will of course be on Trump/Xi/Putin with stories about other leaders ‘below the fold.’
- Trump and Xi will meet tomorrow for dinner. Their issues will be
- The headline issue is the trade war. New numbers yesterday showed falling US exports and a higher (goods) trade deficit for the US. (Not covered in the news, China will record a small overall current account trade deficit for 2018 with the rest of the world.
- Both Xi and Trump would like to show some progress to their home audiences but can’t afford to look weak. I expect Trump to be aggressive. Xi and other Chinese leaders have concluded the trade war is a permanent fact of life reflecting increased friction with the US on many levels and will have nothing material to offer.
- There is a good chance Trump and Xi may announce an armistice of sorts, where they agree that neither side will adopt new restrictions, and that they are going to look for solutions. That would pacify the stock markets in both countries to some extent. And the story could be reported quite differently in the US and Chinese press, allowing each leader to appear to be the tough guy to his own home audience.
- The risk, as I mention in the video, is that yesterday’s revelations about Mr. Cohen could result in Trump going all macho and aggressive for the cameras, which would be very damaging for the US/China talks. The fact that the White House has announced that my old friend Peter Navarro–the trade hawk Rasputin in this story–will be attending the Trump/Xi dinner makes this more likely.
- Unfortunately, there are more important issues than the trade war that are not likely to be dinner conversation, in particular the growing dispute over who is going to dominate the rollout of 5G communications networks across the world. China has been spending a ton of money and political capital in Africa, Asia, and South America through its One Belt, One Road initiative and by financing infrastructure projects. (Huawei and ZTE are the visible tip of the spear.) The US badly wants to stop China from gaining more influence but is not spending meaningful money to counter their efforts. Why does it matter? Because 5G (basically really fast, no delay data transfer via optical fiber) is necessary to do all the things that will drive productivity growth for the next decades, such as autonomous cars, and IOT (internet of things). This is far more important than who buys whose steel, cars, or soybeans today.
JR
