We Just Saw Europe's Biggest Week in Decades

Joe Weisenthal (0:00)

Hey, Odd Lots listeners, we're coming to DC.

Tracy Alloway (0:02)

We're finally doing it, Joe. It's gonna be our first live show in Washington, DC, our nation's capital. It's also finally gonna be the time where we actually talk about the Jones Act.

Joe Weisenthal (0:13)

We've been talking about doing the Jones Act episode of Odd Lots for a long time, and it's become this recurring joke that we've never done. But we're gonna do it in grand style, because we're gonna be doing it live in DC, and it's actually gonna be a debate.

Tracy Alloway (0:28)

Yeah, so we have Sara Fuentes from the Transportation Institute. She's gonna be taking the pro side, and we also have Colin Graybaugh of the Cato Institute. He'll be taking the against side. It's gonna be really interesting to see how all of that shakes out.

Joe Weisenthal (0:43)

In addition to that, we're gonna be speaking with Blair Levin, who was around during the telecom bubble, and we have Andrew Ferguson, the new head of the FTC, the one who's replaced Lena Kong. We're gonna be talking about mergers and acquisitions and all that stuff. So it should be a really fun night.

Tracy Alloway (0:59)

If you want to come and join us for that evening, it's gonna be on March 12th at the Miracle Theatre. Go to bloomberg.com/oddlots, and you can find the link to purchase tickets. We hope to see you there.

SPEAKER_3 (1:14)

Bloomberg Audio Studios, podcasts, radio, news.

Tracy Alloway (1:29)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (1:34)

And I'm Joe Weisenthal.

Tracy Alloway (1:35)

Joe, do me a favor and pull up a chart of the 10-year German Bund.

Joe Weisenthal (1:39)

Oh, yeah, okay, let's see. German generic 10-year bond.

Tracy Alloway (1:46)

You don't know the ticker? You haven't memorized it?

Joe Weisenthal (1:48)

No, but we have the beautiful autofill. Wow, that is a chart. So, back in the beginning of December, the yield was about 2%. It's been climbing. It was about 2.4% at the end of February. And in the last two days, it's rocketed up. It's close to 2.9%.

And I saw a headline yesterday. We're recording this March 6th. Yesterday's move was the largest one-day move since basically around the time the Berlin Wall fell.

Tracy Alloway (2:15)

It's a line that goes straight up. It's a pretty big move, as you mentioned. The euro is also up against the dollar. European defense stocks have been soaring. There are lots of lines going straight up charts out there relating to Europe.

Joe Weisenthal (2:31)

European financials doing really well too. It's like, you know, everyone was so down on everything Europe, and then Trump was expected to make those lines go down further and they've just been rocketing up.

SPEAKER_3 (2:43)

Yeah.

Tracy Alloway (2:43)

And the argument that seems to be happening here is the idea that the possibility of tariffs from the Trump administration and the loss of the US security umbrella are so bad for Europe that they could turn out to be good in the sense that Europe has to spend lots of money to counteract them. Maybe they integrate some more and maybe that'll boost growth. And if you think about all the military equipment that they'll need to buy, or maybe the possibility that long-suffering German car makers are going to pivot into defense or something like that, it kind of makes sense.

Joe Weisenthal (3:17)

While I'm going to say what I'm about to say, you just pull up a chart of the DAX.

Tracy Alloway (3:21)

Oh yeah.

Joe Weisenthal (3:21)

It's pretty remarkable.

Tracy Alloway (3:22)

Another line going straight up chart.

Joe Weisenthal (3:23)

You know, there's two elements here. I joked yesterday that the history of finance Twitter is essentially 15 years of waiting for Germany to pull out the fiscal bazooka, to sort of pull back from its obsession with balanced budgets. The Schwarznull. Did I say that okay?

Tracy Alloway (3:43)

Schwarznull.

Joe Weisenthal (3:44)

Schwarznull.

Tracy Alloway (3:45)

Yeah.

Joe Weisenthal (3:45)

So there's two things though. There's one, there's the realization that perhaps more money should be spent. And then two, there's can you get the political stars to align to act on that realization? And one thing people seem to be thinking is, and this is a very complicated problem for all kinds of structure, architectural reasons within the EU or the Eurozone. And there seems to be a belief and more than a belief that this sort of actions of the Trump administration over the last several weeks may be solving both of these problems at once.