 Welcome to the MarketWatch podcast by Amplify Live, where you can access the latest market insights with me, Anthony Chung, the Head of Market Analysis, and joined by Head of Trading, Piers Currin, getting you up to speed on what mattered in markets this week. Okay. A very good morning to you. It's Friday, 28th of May. As ever, I'm joined by Head of Trading, Piers Currin, and we're going to talk over a couple of the major themes in markets this week, namely the latest initial jobless claims falling to a new pandemic low. We're going to talk about the White House's new proposal for a $6 trillion budget for the next fiscal year. And then from that, we're going to talk about some of the geopolitics that have been going on, Belarus, Russia, and we're going to talk about China as well. So that's what's on the agenda, but Piers, how's it going? Good. Good morning. I'm looking forward to the chat, but you've just sprung a surprise on me because you've just told me that we're not going to be actually videoing this as in the visual side. Obviously, the audio is getting recorded, but we're not going to be actually videoing it. I made a special effort this morning. Yeah, you've got your baby blue ironed shirt on. Normally, these days, you're in your hoodie. Yeah. Well, I've got a meeting, post-meeting. This is actually, it's weird, actually, this is the first time I've worn what you might describe as a work shirt since, yeah, it must be February 2020, I guess. Yeah. It feels a bit weird, but yeah, I'm going to see a guy with big, big, big cheese at Morgan Stanley, actually. So you've got to tie yourself up, though, because it's like date night. Yeah, I've got to be sharp. Well, I actually ventured into town yesterday. I had to deliver at a business school that has an entire floor in the shard. I think they've got two floors, don't they? Got two floors. Wow. I believe. They didn't show me the VIP room. They just showed me the standard lecture theatre. So what was surprising was these students that I met, they were MSc students. They'd studied entire year, just about to do their final exams, and this was the first lecture they had received. What face-to-face? Face-to-face. Yeah. Incredible. But I spoke to the students, and also I spoke to the faculty, and the technology now is incredible. They had these, so they had cameras. Everyone sat there, it's like the UN conference, and they all sat there in these glass shields. I have my facial visor on, and there's a camera above my head as they deliver at the front. And every time, everyone's got like one of those stents or old school kind of microphones on their desk. And when they click the button, the light goes off on their desk so I can see, the camera automatically facial recognition picks them up and pivots to their spot. So virtually people around the world can interact both online and in person. Did you have people tuning in online as well as those face-to-face? That's what happens when we go global. OK, we need to up our game here for these podcasts. I won't tell you how much it costs to get out the one that actually hits it. You might have second thoughts in it. But yeah, it was really great to interact with some of these students, and I definitely sympathise with students all over the country, all over the world. They've had like a very unique 12 months for sure, but I just wanted to kind of convey to them, look, it never feels like obviously a good time to be coming into the workforce. I remember one of the guys I was talking to, he graduated 2008, I think when I graduated that was just when 9-11 the recession happened then as well. So I mean, you've got to think that in a pandemic time, right, that there's new opportunity, new innovation, the greatest thing that humanity has is our ability to adapt, right? Absolutely. It's definitely a bad mindset, I mean, because the problem is students trying to get jobs at top, global institutions, you're aiming for the top and you're going to get masses of knockbacks and refusals and rejections. And it's just having the right mindset to get through that and just pick yourself up onto the next and say positive, stay confident, it's very difficult and, yeah, sure, you can't control the time that you graduate and hit the workforce, that's your parents' fault for giving birth to you. Not dear to the economic cycle, I'm like, how could you do that to me? So you can't control that. So there's no point worrying about stuff you can't control. I know it's easy to say that, but sure, I mean, I graduated into a into a recession as well, the post.com bubble bursting. And I found it tough. I think I probably said in a podcast, I'm not sure I can't remember now, but I I applied to all the banks and I got rejected from all of them, apart from one. And you only need one, you know, you only need that half door open. You just got to smash it down and take what you can get and go from that. Good. That's it. Who needs Wayne Gretzky when I've got Pierce Curran? All right, well, let's crack on with things and kicking things off there. We had filing new claims for unemployment benefits in the US dropped by 38000 to 406000 last week as the lowest level. Now, since the pandemic first hit the labor market overseas since March 2020, below expectations. So combination, I guess, of the vaccination campaign continues, albeit the pace of vaccinations is slow. But we were kind of anticipating that on the supply of vaccines and that should pick up. But restrictions on businesses are being lifted. The other interesting thing, because this goes back to a previous podcast and you were talking about McDonald's and how McDonald's were literally paying people to come was it 50 bucks to come and have an interview? Just for an interview. Yeah. Just for an interview. And one of the kind of things that wasn't top level apparent, but was interesting, I thought, was that many states recently have decided to withdraw from federal unemployment benefit programs following these reports that it's been more difficult to hire because benefits that have been going out for the government pay more than most minimum wage jobs. Yeah. But this is important, right? For this whole idea about the second economy and transitry, all these types of things. So any thoughts on that? Yeah, I mean, that's right. The stimulus checks plus the unemployment benefit bump up. Yeah, it's just meant people, you know, they don't want to do they don't want to stack shelves for minimum wage. You know, who enjoys that? So if I've got the opportunity to earn more money, well, earn to receive more money and do nothing, well, then, you know, people are naturally taking that, right? And so it's caused a massive issue. So companies can't hire there's not even though the unemployment rate is higher than it was before the crisis. Companies can't find anyone who want to come and work for them. And it's have it is causing real issues with the recovery. And, you know, that's contributing to the temporary inflation spike. So what some states are doing, and I absolutely I think it's the perfect policy there, they're now rejecting that federal unemployment benefit and saying, right, that's not available to people in our states now to just kick people off the sofa and say, look, come on, there's jobs out there. Get on with it. Get out there. Get get working, you know, let's get back to normal and off this kind of, yeah, this temporary life support machine, which is the fiscal sort of paychecks. Yeah, and from a from a context point of view, what we're still seven and a half million jobs away from returning to pre pandemic levels. So there's a huge gap there. And obviously, this is like the Fed are looking at because beyond temporary or not inflationary conditions, we're a long way off on that side of things, which is obviously a key focus. And on the jobless claims front, so that was the figure yesterday. And it was like, wow, that's a really good figure that's dropped much further than was expected. So obviously here that this is an unusual data set whereby the lower the number, the better it is, of course, so the fewer people claiming jobless benefit, obviously, the better. So it dropped to four hundred and six thousand. Now, I was I was checking back. So I just want to remind myself because, you know, pre pandemic. I was looking back the last time we were at four hundred and six thousand. You've actually got to go all the way back to twenty eleven. And hang on, let me explain between twenty eleven and twenty twenty the jobless claims number was below four hundred thousand. So even though this is a really good number, it's actually if you take out the pandemic, it's still the worst number since twenty eleven. So and actually we went down to yeah, we're training down at two hundred on this figure through sort of twenty nineteen. That was the kind of lowest point. So even though these states are, you know, blocking this federal support, the jobless claims figure is still high in in kind of post, sorry, pre pandemic terms. And so there's still this output gap, there's still slack. And, you know, there's still there's still work to do here. Yeah, and and Joe's aware of that. So what does he do? He puts his hand deep in his pocket and finds and finds six trillion dollars and says, you know what, guys? It's OK, I'm going to I'm going to propose six trillion dollar twenty twenty two budget to Congress, which would be the biggest federal spending push since the Second World War. Obviously, we're getting into a period now where midterms start to come to the forefront in terms of political positioning. Let's call it. And if you think about actually what is in this domestic agenda for for Biden, and we'll talk about domestic and then foreign affairs, because these are important things in markets this week because you've got China, Iran, sanctions, Belarus and Russia is a lot going on. But with Biden combating climate crisis, investments in social services, reduced poverty, expand housing. This sounds like like a kind of a ticket for success in order for performing at the midterms and to give people a bit of context with that. Because as I was saying to you earlier, I think people really remember in 2010 when Obama first came president and he had his first midterms, it was the worst democratic midterm election defeat in 70 years. And Biden's name was on that ticket as well as the team as well. So and Biden's 105 years old. So he's lived through a couple of these. He knows the deal. He needs to strike big, hard and fast. And that's that's only accentuated in my mind by a pandemic because there's a lot of people suffering. You know, just like you said, there's a massive gap here. There's other people still facing incredible difficulties. So now's the time to over promise. And we know what they promise and what gets fulfilled is completely different. I mean, I can imagine it were democratic officials yesterday when they heard that figure going, what in his own party ever mind opposition? So, you know, I just I just thought that the market. What surprised me yesterday? I don't know about you, but the market rallied on this news. And I wasn't taken aback by that. Well, I mean, yeah, it's on the one hand, it's the classic game of. Oh, yeah, obviously, politically, you know, it's, you know, his motivations are partially selfish with regards to his, you know, ability to get reelected. But let's we just put that to one side for a second. You know, you know what it's like with a negotiation, you know, you start, you set out your stall and you set it out miles, six trillion. And of course, then, you know, the game is well, hang on, the opposition is going to shut up six trillion. No, thanks. But then, you know, OK, then we kind of march towards some kind of middle ground and a deal can be done. So I guess the point and maybe the market's reaction yesterday was more about just increasing their expectations of how much stimulus there's going to be by no means pricing in six trillion, but pricing in slightly more than they were perhaps thinking beforehand, because Biden has set out his stall, you know, further away than where they were expecting him to start from. I think I think that's probably the market's reaction. I mean, obviously, Democrats have only got a slender majority and so it's going to be an interesting battle in Congress and it's going to take some time. But then I see I thought I'd step back a little bit and just think about this in the longest term context as well. Because the academic world has been quite divided on this. So there's a guy called Paul Krugman, who you'll have heard of, of course, economics, Nobel Laureate, no less. But he's a massive supporter of Biden, you know, big Democrat. And he puts forward some interesting arguments. And that is actually that governments have really been failing for decades to actually, you know, stimulate the well, actually to reduce output gaps entirely and get economies growing at their full potential. So what happened in the 1970s is kind of a hangover from there. In the 1970s, we had massive inflation spikes in the early 80s and inflation was up at 10 plus percent, 15 percent. And it was an absolute killer for the economy. And ever since then, governments have, you know, been very conscious of that period and, you know, wanting to not see a return to it. OK, so one big argument about too much stimulus, of course, is that it will generate, in the end, it will generate an inflation spike and will be back to the 1970s crisis. So naturally, governments have been fearful of stimulating too much. And I think so that's partially it's the fear of inflation. But the other thing is measuring the output gap is notoriously incredibly difficult. And the output gap is just simply, you know, the difference between the economy. How fast is it growing now compared to how fast is its full potential growth? It's incredibly difficult to calculate. But as time's gone on, it's become increasingly obvious that actually we've been underestimating the output gap for like 20, 30 years. So governments have been, their fiscal stimulus strategy has been dogged by a fear to the return to hyperinflate or not quite hyper, high inflation and a thought that the output gap is actually not that big anyway. So here comes Biden and maybe his, you know, this is the moment to kind of pivot and snap out of that sort of 30, 40 year lethargy misguided conservativeness and actually now step up and get, you know, can he get this economy growing at its full potential? This is Krugman's argument. And, you know, it's interesting. This is probably, it depends how much he gets through, but it will probably be the biggest experiment of maybe the biggest economic experiment of our generation. And it's just interesting to see how it'll play out. But I do agree on the inflation front. I do think we are over obsessed and over fearful of inflation. And I think that has influenced policy in a negative way for actually too long now. It'll be interesting because when I think about it and the nature of Western politics and it being short-tism in its focus, like four, five year stints, why not experiment? I mean, you might say, well, what about the future and generations to come? But I think that things like debt and accumulation of debt, you know, I remember when the financial crisis happened and the period thereafter and everyone was freaking out when the USA lost its triple A rating and it's like, hang on, things have got materially worse if you're looking at it with that angle. And yet no one mentions this stuff anymore because we are desensitized and this is the new norm and balance sheets being what they're at doesn't make people panic anymore. And why can't that continue to grow and be okay? Well, an interest rates is zero, right? So if you're going to have a lot of debt, that's the time to have a lot of debt. But yeah, I mean, look, it's the ultimate risk. I mean, I like that I'm a trader. So my job is calculated risk. And this is calculated risk. But you know, honest, I, you know, it's probably the biggest calculated risk. I mean, I don't know if I had long, right? And sure, it could fail. And all right, then we've got a problem because there'll be a generation or two after us that are going to have to pick up this tab and pay for it. Or it actually might succeed. And we could kind of kick onto a growth trajectory that actually meets an economy's potential. So, okay, so with all this then, there's obviously a strong emphasis for the administration to focus on domestic issues for the things we've discussed. But this week, there's a lot of other things going on that involve the administration. We'll get on to China. And then we'll discuss a few things to do with that. But I guess the, in my mind, the one that's lowered down is Iran. There's been lots of discussions with Iran about trying to rekindle that relationship that they had with an agreement back in 2015, which basically Trump just kind of tore up at the time in regard to their nuclear development of enrichment of uranium and so on. Surprisingly, I found myself, oil was selling off last week. I mean, that's completely been taken aback. And in fact, oil's trading right back up there again, towards $67 a barrel. But the idea that successfully establishing a new relationship with Iran was going to be easy. It was a little bit wishful thinking, I think. And I was surprised to see oil come down last week. And I think it's back in its right place to be quite honest. The combination of that not materializing quickly, but also with the whole reopening demand side of the equation, I think oil is well supported at these levels. So that was the Iran thing. But then Russia was obviously a big one because of the incident that happened with the Ryanair flight and the a lot of geopolitical tension that's been between the EU, Russia, Biden's been involved. And so just wanted to briefly talk about that. Because I guess with a trading perspective, you see all these headlines. And that's very mainstream media because it's like, what? There's Russian secret agents on a plane and they grab this guy and they down a plane. The Ryanair guy starts coming out saying all sorts. You know, it's tantamount to like terrorist activity and all these sorts of things. But is it important for markets? I mean, that's I guess the question in terms of trade. I guess there's a difference between trading or geopolitically important that could have repercussion more long term. Right. Exactly. It's short term or long term. I think that on the one hand, those that are coming to markets now for the sort of first time, this isn't unusual where we've got a Russian sort of Western political incident here. But in fact, rather than it being abnormal, it's very normal. And I was just looking back at some of the incidents like, don't forget in 2014, Russia invaded the Ukraine. You know, they also shot down a Malaysian airline, passenger plane and 200 odd people died. There's airstrikes in Syria. There's poisoning of former spies here on UK soil. They've been poisoning the opposition leader last year. Alexei Navalny, you know, this is my point is that this is just another episode. So it's not a brand new thing. That's that's one point to say. The other point there from a trader's point of view, I mean, I can't help it. When something happens, I'm like, all right, is there an angle here? You know, is there an edge? Is there something? Is there a trade here? And what I've come to my thought process, I thought it might be interesting to share. I'm like, OK, Belarus. OK, so there's potential. There's potential sanctions going to happen here, right? Between Europe and Belarus. And we'll talk about the pipeline, the oil pipeline in a minute, but just talk about Belarus specifically. So what people may not know is Belarus is a massive producer of something called potash, which is a key component of fertilizers, which is used by the farming industry globally. And so they're actually the second biggest producer behind Canada, believe it or not. And so if there's sanctions against Belarus, well, then obviously the potash industry would probably be the most effective target for the West. That's because the Belarusian government is incredibly reliant on revenues coming from their state-owned potash producer. And it's a huge industry there. So hitting the potash industry would be quite an effective tool. So if that were to happen and they restrict the supply of Belarus and potash, well, then you got a potash supply drop, which therefore perhaps the prices of potash goes up, right? So how can you trade that? Well, who else produces potash? Well, actually Canada is the number one. So I'm straight away, right? Who are the Canadian publicly listed potash miners? That's my thought process. And the biggest of all of them actually, the biggest in the world is a company called Neutrion. So I'm like, right, okay, there's your... That's interesting. Do you buy Neutrion shares off the basis that sanctions against Belarus will restrict supply sending potash prices higher? So that's a great thesis, there's only one problem. Neutrion share price is already trading right at its all-time high. It's testing a monster technical resistance level. The 2018 high, $74.50, it's right there. So actually it could be an interesting breakout trade. So how long has it been going bid, though? Is it a reason? So like a lot of commodity producers collapse in price when COVID hit, and then it kind of bottomed out summer of last year down just south of $45, all-time low. Well, since they publicly listed, by the way, which was only back in 2018. So low, and then they've rallied all the way back from $45 up to $75 to test right now at the 2018 high. Sorry for the noise. So my trade is, right, monitoring that, are they going to be sanctions against Belarus? Is it going to evolve potash? How's that potash price going to react? Is this the time to buy nutrient shares on a breakout trade as it kind of breaks that 2018 high? Okay. Well, the one thing I would say on that thesis is Russia is the largest supplier of crude oil to Europe. Okay. So in fact, the largest shipments go through a pipeline called the Drusper pipeline that crosses Belarus. So if you sanctioned Belarus on potash, if I was Mr. Belarus, I'd say, excuse me, you do realize that I can just push this big red button here, and all crude oil stops going through that pipeline that serves Europe from Russia that you are dependent on. So don't do that. Absolutely. They've not the ultimate kind of retaliatory when, which is why I'm not buying nutrient shares yet. I'm certainly on my radar, but yeah. Well, on this discussion point, one of the main things we wanted to emphasize here, we're going to get to China was that these things have dominated a lot of the news sphere this week. But when you think about then the involvement of the US, it's kind of where is their energy being deployed? And that's what we're kind of insinuating is that this Iran or relationship to Russia, because Biden is going to be Putin in the coming weeks and with China, as we'll discuss, is these things are going to kind of simmer, I would think, in the coming year or so, while these other geopolitical risks get managed and the domestic focus is taken care of in my mind. But an interesting report out of BlackRock that came out this week, and they have a proprietary geopolitical risk indicator. And it's one of these models that they run and it's far too long of variables for me to comment on what makes the model. But the point being, it fell to a four-year low as of the latest reading they put out this week. And what they were saying was that investors are not attributing a great deal of attention to geopolitical risks because everyone is so focused on inflation and this economic recovery narrative. And they said that actually their analysts noted geopolitical shocks is the one major thing that could catch investors more off guard than usual because of the market kind of positioning, if you like, at the minute. The three top three risks that they looked at were separation of US and Chinese technology industries. So that's pretty cool to the whole entire trade battle that's been going on in recent years. A major cyber attack, which we've seen, we discussed in a previous podcast, the colonial pipeline. And then a political crisis in emerging markets as a result of countries inability to control the pandemic, the coronavirus, which you could quite easily see happening when you look at countries, I mean, even like India. Thankfully, the situation in India is improving from the worst it was at just a few weeks ago. But you can see that these lesser absolute countries, it's incredibly difficult to control, particularly mass populations like that. So yeah, just quite an interesting thing there, an observation I saw, but that does lead us on to China. And this is the final kind of thing to talk about because they had a phone call. It was the first kind of top level official phone call that they've had under the new administration to try and resolve these differences on trade. And they were kind of referring to it as being candid conversations, which I guess is the PR polish to say that they kind of had a discussion, nothing really happened. They're not particularly happy with one another, and that was it. But I guess China at this point, their position in this new dialogue is, look, you've got to roll back these tariffs if you want to have a relationship. And obviously, Biden's now, I don't know, was anyone thinking Biden was going to be softer on China than Trump? I don't think that they were, were they? No, I mean, I think, well, firstly, can I just comment on Black Rocks, Black Box? Oh yeah, yeah. Because a four-year low for global geopolitical risk. I don't know what they've got in their Black Box, but I could have told you that. Do you want to know why? What happened four years ago? Trump got elected. Then you had four years of Donald Trump, and now Trump's gone away. Full stop. There you go. Why do they hire all these, like, pay all these analysts so much money? Anyway, I think Biden, in some ways, Biden has got, he needs to thank Trump for one thing. Trump certainly resets in quite an aggressive way. He reset the trajectory of the relationship between the US and China, entirely repivoted it. And now that Trump has reset it, Biden can come in and maintain that much more sort of, well, let's just call it anti-China sort of approach, and that fear of China and how large they're becoming and how influential they're becoming, and taking them much more seriously as a threat, rather than Obama that was much more about being pals and matey. So I think Trump obviously reset that, and Obama has him to thank for that. Oh, sorry, Biden has to thank you for that. Now Biden is going to maintain this harder approach. So I think these talks, fine, they're underway. Candid talks, what does that mean? It means absolutely nothing. It just means what? They didn't lie to each other? I don't know, but they're talking fine, but nothing's going to happen with regards to tariffs. And not this year, I wouldn't say. And so right now, from a trading point of view, whilst, yes, it's a risk still, these tariffs, remember the whole world was freaking out about these tariffs a few years ago, these tariffs are still there. It's just everyone's forgotten about them. And they've forgotten about them because there's way more powerful things on world economies now than those tariffs. And so it's not the biggest thing to worry about. And so it's kind of all gone under the carpet, but it's still there. And obviously China want them rolled back, but it's not going to happen. Shaping that Biden agenda heading into the midterms, what was quite interesting is when you actually looked at that $6 trillion he proposed, or he's going to propose today. Interestingly, $715 billion Department of Defense budget is going to be shifted in order to take old systems to modernize the nuclear arsenal that the U.S. has specifically to deter China and also develop, they said, their future warfare capability. Hang about. Are we talking Biden or Trump at the moment? Yeah, right. Yeah, I mean, well, Yeah, throw in as well earlier this week. The other headline in the news, of course, was the administration requesting the origin of COVID report. Yeah, I mean, come on. Just call it what it is. This is the let's out China report. Yeah, and it's all domestic politics, in a way, as you're saying with the midterms coming. Yeah, that harsh hard line against China is a great domestic political line to take for a U.S. president. Yeah. And look, let's look at China, because this week has been quite meaningful because the Chinese Yuan extended its gains against the dollar. It's going to head for its best weekly performance is November at the moment. But when the Chinese currency starts to strengthen, as it has done and starts hitting multi-year highs, trainers get very aware of commentary coming out of the state of China and the PBOC about what are they going to do about this? So why is the strength of the currency such a thing for the Chinese government? Yeah, well, that's just all about the fact that China's economy is geared up for manufacturing and exporting. It's like a classic, it's not an emerging economy anymore, but it's a developing economy. But of course, it's all about exporting to the developed economies of the world. Okay. Now, if you're selling goods, if you're an exporter, then the cheaper your currency is compared to the countries where you're sending these goods, the cheaper your currency is the better, because the price of goods for those customers in other markets are cheaper. Okay. If your currency appreciates and appreciates and appreciates, then the goods become more expensive for your international customers. Also for companies, let's say global companies that use China as their manufacturing base, you know, the cost of manufacturing for that global enterprise increases if the yuan appreciates in value. So again, that means these big companies perhaps might start looking elsewhere other than China to kind of have their manufacturing base. So an expensive currency for China is bad, a cheap currency for China is good. But then you flip the argument entirely on the other side. Trump was calling China a currency manipulator for the entire time he was in office. And that was all about, if you're on the opposite side of that equation, you know, China manipulating their currency and making it cheaper gives China an economic advantage and there's an economic disadvantage on the opposite side of that equation, which is the US. So the classic story of US jobs being lost to China, go to Detroit, it's been in a depression for like 30 years. Okay. And it's China's fault because all the manufacturing jobs have gone over there. Okay. So it's all part of this bigger argument. So that's the history behind it. So yeah, the yuan has been strengthening you know, for the last, well, 12 months actually, but it's accelerated a little bit this week. And there's a big sort of, I'd say level which is around about 6.27, which was the low in the start of March 2018 that people are eyeing up. But what I would say is this yuan strength it's not yuan strength, it's dollar weakness. The dollar has been weakening against all currencies. And so actually, you know, in my mind, it's actually more a dollar story, this move in the dollar yuan than it is a yuan story. But it might become a thing if the Chinese government starts stepping up and going, Oi, this currency is getting too expensive here. And if the Chinese authorities can just hold firm and there isn't a breakout of further acceleration in yuan, surely this is just a timing disconnect of the reopening process because China are ahead of that. I mean, they were kind of the first to get back up. We don't know exactly to what detail. But the point being is that the Fed are going to have to start talking tapering. They are going to have to taper and they are going to have to lift rates at some point. It's just the fact that we're not quite there at that point as of yet. And so right now, I don't know if China can just maintain it. And as they do, I guess it's not like they intervene and bang, it moves strongly. It's just about management, isn't it? More of the currency than... Yeah, the last thing you want is violent moves in your currency's value. That's the last thing anyone wants, that's the last thing China want. So stable currencies. This is why Bitcoin is not a currency, by the way. But anyway, that's for a different reason. OK, on that point then, let's talk the EO1. Ah, yes. My best Jamaican accent there. So the electronic UM, a digital currency powered by blockchain technology. Feels like I'm doing an advert for it. But a bit of background then. The EO1 works through a two-tier system. And through that system, the People's Bank of China will be in charge of distributing it to authorized commercial banks. And from there, banks will be tasked with spreading the currency to their own customers. The overall execution of the release of EO1 is to set closely or resemble the existing digital payment methods that are actually already in use. And I think that's where China is quite different from here in the UK, for sure, and in the US, where we're almost victim to legacy systems. And it's very hard to steer the Titanic away from an iceberg when you've just gone through this very established banking system of hundreds of years. Whereas China don't have that. And China have really embraced financial services in new technology. And that's predominantly being things like WeChat and WeChat Pay, Alipay. And what I found fascinating reading about this week and just doing some research for this podcast was about, I was kind of thinking, what's happened to Jack Ma and Financial and all these things? Jack who? Jack who? It's like he's disappeared. And certainly he was on like a meteoric rise, wasn't he? Up until probably the last 12 months. And it just seems to me, reading between the lines that the Chinese government are very aware about individuals like him. And in actuality, if you can understand and track people's payments via a digital mechanism, or that's a lot of power in that information. And I don't think the Chinese government want it in the hands of a third party entity like Jack Ma. Hence the EUN. He's a victim of his own success, Jack Ma. His own unbelievable success, which has put him in a position of power. And it's all about power. And the Chinese government want to be all powerful. And hang on, here you've got this guy who's threatening that. In a non-political way, or at least initially in a non-political way. So it's an interesting threat for them. And yeah, they've slapped him down. No question. What do you think about these central bank digital currencies, though, compared to, say, Bitcoin? Okay. Now, well, first thing to say is that China aren't the first government to issue a digital version of their own currency. Do you know who was the first? Bahamas. Yes. That's the first time you've got one of my questions right. I think in 18 podcasts. No, I did know that your man crush was Paul Gascoigne as well. Okay. Yeah. The Bahamas, right? But look, this is the first big economy to kind of go down this path. And so on the one hand, you're thinking, well, hang on, most of China pay for stuff electronically anyway. So kind of what's the difference here? And okay, this is a digital currency, but the reason why it's not like a crypto is because, of course, the whole point of crypto currencies is not controlled by a central government, right? Hang about, they are. They're controlled by Elon Musk. So this is a central government-controlled digital currency. So it's like, okay, what's the difference then? And I don't think there is much. So here's the thing. I think actually the government, I think this is this is a currency that's going to have a place in their system, but it's not going to have a big place in their day-to-day economic system anytime soon. I think it's a play that just further kind of gives Jack Ma a slap on the wrist, but the problem they have with the problem governments will have with digital currencies is what the last thing they want is savers to switch out of bank deposits on mass, switch out of my bank deposits into this digital, new digital currency. The problem with that is your banking system will collapse. The banks need these bank deposits to be able to operate. And without a banking system operate, you know, an operational banking system, go and have a look at what happened in 2008 when the banking system stopped working. We had a global crisis. So it goes back, it's all about legacy. So at the moment, the banking system requires bank deposits to operate. These digital currencies would replace those bank deposits, which is why they can't be replaced in any big way. I mean, some of the predictions are saying that it might go up maybe 5% of the monetary, the money in the system might end up being this new electronic yuan. No more than that. And anyway, they've done some studies, right? And they've been giving people some experiments, I should say, and they're giving people free yuan to see what they do with them. And great, they're going, okay, this is all novel. All right, I'll just buy something with this. Great. And then the feedback afterwards was, okay, well, yeah, that was interesting. But I'll just go back to Alipay, please, because it's just way more convenient for me. And it's tied into commercial and social messaging networks, and it's just way more convenient for people to operate their day-to-day consumption via an Alipay than it is to have to go via this. Hang on, what is this government digital thing? No, not sure. So you're not a buyer of Alibaba and Tencent shares anytime soon then? No, I think that story's played out. And I think the government now, firmly, firmly, it's not only on their radar, they're now acting to curb their influence. Yeah, yeah, they've been handing out some sizeable finds for anti-competitive practices for sure. But look, let's wrap it up there. Wish you luck on your date in the city. Yeah, thanks very much. And if you've made it to the end of the podcast, thank you very much as ever for listening. We'd hugely appreciate it if you're listening on a platform like Apple Podcast. If you could rate and review, leave a comment. Get in touch with us if you want us to cover something. Specifically, just email info at AmplifyTraining.com. And we'd be happy to take on board your feedback. But enjoy the long weekend. Yes, absolutely, aren't you? All right, take care.