Odd Lots - Why Eurodollars Might Be Ground Zero for De-Globalization

Episode Date: October 29, 2018

Eurodollars have nothing to do with the euro-dollar exchange rate. Instead, they're effectively a source of dollars that operates outside the control of the U.S. Jeff Snider, Head of Global Research at Alhambra, has a theory that recent market volatility might have its roots in some eurodollar drama. See omnystudio.com/listener for privacy information.

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And I'm Joe Wisenpaw. So Joe, you like to talk about money, right? I love talking about money. I think where money comes from, it's origin, stuff like that, or even just what it is, is one of those topics that I can never get enough of. So what is that? Are we going to talk about that today? Yeah, we are.

But we're going to talk about a type of money that, doesn't normally get a lot of attention outside certain aspects of the financial community. We are going to be talking about euro dollars. So, Euro dollars, you know what? I have to say, like, this is one of those topics that I know I'm supposed to know a lot more about than I do. I kind of vaguely get this idea that people use futures in Euro dollars to bet on what they think the Fed is going to do.

But then beyond that, like what, and I guess. And I kind of have the sense that their dollars held outside of banks that aren't in the U.S. But honestly, I know very, I know embarrassingly little about them and how they actually work and what their point is. Well, you're being very modest as usual. No, actually, in this case, I'm really not. Like, that's it. I just told you the extent to which I know. Like, I don't even really get how it works. Like, I don't even get how you can hold a dollar at a bank outside the U.S.

Like, in the first place, that's a very strange concept to me because I have this conception of like how. banks hold money, and I don't really understand how that can happen outside the U.S. So the whole thing is very mysterious to me, and I'm glad we're finally doing an episode that will hopefully clear it up. Sometimes I'm modest, but this time I'm not. Okay. Well, mysterious is actually the key word here. So just to boil it down really simply before we start, Eurodollar basically refers to

U.S. dollar denominated deposits that are at foreign banks, and by foreign, I mean non-U.S. Or foreign branches of U.S. banks. So that's the simplest explanation. But of course, there is a lot of sort of mystery and controversy swirling around these. Lots of people think this is a sort of form of like shadow bank liquidity that's floating around in the system outside of the Federal Reserve's control. people talked about it a lot during the financial crisis, and we are seeing some people talking about it again with the recent market sell-off. And one of those people is our guest for today.

Before we get into this, can I just say, did anyone, do you think anyone else like me first when they thought, when they heard the word Eurodollar, just thought that was what the Euro was? That, like, the Euro was short for Euro dollars? Oh, Joe. No, surely not. For years, when I heard Eurodollar, I just assumed that the Euro was just the Euro was just, the nickname for Euro dollars. I know that's not the case right now, but just to really emphasize how ignorant I am on this topic,

that really is what I thought for years until I realized there was something else. No, you're absolutely right. Lots of people think Eurodollar is just the exchange rate. So for the avoidance of doubt, we are not going to be talking about the Eurodollar cross-exchange rate. That's not what this is about. This is about something much more interesting

about a specific type of money that's actually quite important to the way the financial system works. So, without further ado, let's bring on our guest. It is Jeffrey Snyder. He is Head of Global Research at Alhambra. Jeffrey, thank you so much for joining us. Good morning. Thanks for having me, Joe and Tracy.

So given Joe's lack of expertise in this particular topic, maybe we should start really, really slow with, sorry, Joe, that's very patronizing. Please. No, no, no, no, please. But let's start slow. What exactly is a euro dollar? Well, you know, I mean, it's a common misperception,

and I think you guys explained it pretty well. I mean, lots of people that hear the term euro dollar and they think obviously euro, because that kind of term and that kind of terminology isn't common in usage. And most people, they've never heard of a euro dollar before anyway. So it's not uncommon for this to be a very confusing topic. And in fact, the term euro in front of dollar simply means, as you both pointed out, that these are dollars offshore somewhere.

And it could be anywhere around the world. It could be a bank in the Cayman Islands. It could be a bank in Europe as the original term was used. That's where the term came from. And in fact, it's not just dollars that are offshore. There's an entire currency ecosystem that exists, including something that's called a euro euro. There are offshore euros in this euro-euro market that makes me. even more strange and complex and, I guess, interesting at some places.

So one of the things that I do understand to some extent about banking is that it's not like there's this fixed pool of money out there that gets shifted around, that banks are essentially creators of money is one way to think about it. And banks issue loans and those loans turn into deposits and then the deposits are held at banks and then new money is created. So explain what's really happening. You mentioned a bank in the Cayman Islands. A customer holds Euro dollars there. Where did these dollars come from?

How did they create them? What is the mechanics in which they come into being? Well, yeah, and that's another thing. You know, the term Eurodollar is anachronistic. Originally, it referred to actual dollars on deposit in the bank somewhere. When you talk about a dollar deposit, people think probably quite correctly that there are stacks of cash in a bank vault. in the Cayman Islands. And you think that's a dollar deposit, right?

I mean, because that's traditionally what you told in school. That's what people refer to in convention. But that's not actually what it is. Euro dollars in the beginning used to be, you know, stacks of cash in a vault somewhere. But over time, they have become, and they have evolved into simply bank liability. Some bank offshore somewhere has a dollar denominated liability.

However it came about, doesn't really matter. once they obtain dollars in any format, they can then multiply them in various different other forms of bank liabilities. So it's essentially an interbank international system where it's denominated primarily in dollars and it's operated offshore outside the United States. So the way in which these dollars come to existence is simply one bank somewhere says, I want to do something. And another bank on the other side says, I want to do something. they get together, the exchange liabilities and assets, and that's how it's done. So long as the bank on the one side has balance sheet capacity to, quote, unquote, lend these euro dollars to the other bank, both banks accept the transaction, and it takes place.

So there's no actual physical money, there's no actual physical currency, there's no actual physical anything in the system. It's simply ledger money. It's just one bank on a computer screen has a number. The bank on the other side has a computer screen. those two numbers match, therefore money has been created and the transaction takes place. So when it comes to money being created, and Jeff, I think you just mentioned multiplying at that point. Can you give us a specific example? Like let's say I'm, I don't know, like a rich Arab shake or something that was Milton Friedman's famous example. And I have a million US dollars and I

wanted to deposit it in a non-US bank. What happens to that million dollars and how? how much extra money or liquidity would be generated given that the foreign bank will still have some sort of reserve requirement? Well, you know, in Milton Friedman's example, back in the late 1960s, early 1970s, there were reserve requirements and those were applicable. But still, you know, in the way at which it happened, there's a whole variety of ways in which these dollars become euro dollars. And a lot of cases, it's not just a, you know, a foreigner who decides he has a dollar balance

domestically in the United States and wants to put them in London because he can obtain a better interest rate. That's one of the ways in which the euro dollar market first evolved was to take advantage of interest rate differentials offshore versus onshore. But once those dollar liabilities came into existence, that opened up the whole range of possibilities in terms of this multiplier effect, where, you know, you mentioned earlier in the introduction, where euro dollars apply not just to foreign banks holding dollars, but also U.S. domestic banks and their foreign subsidiaries. And so over time, they're evolved a way for domestic U.S. banks to transfer dollar liabilities to their foreign subsidiaries often operating out of London, again, the term euro dollar,

meaning Europe. And so there's any number of ways for these dollar liabilities to be created domestically and then get transferred overseas. And it's easy just to transfer back and forth from the, from the domestic U.S. bank to its foreign subsidiary. Once those liabilities were created outside the United States, once they're transferred to their foreign subsidy on the Eurodollar market, they can then be multiplied in any number of ways and any number of kinds of transactions. And over time, the way in which that has happened, a way in which banks have been able to do that is it's not just quantitative expansion, it's qualitative expansions, any number, any number of different exotic liabilities that can be created. Once those those,

dollars are offshore. Now that there's a huge, robust market for these dollars offshore, the sky's the limit, essentially. And that's what's been for over the last three or four decades. The euro dollar market has grown exponentially, or it had up until 2007, simply because it was, you know, offshore system. So does that mean that euro dollars are basically an extra source of liquidity in the financial system? Like, is that how banks end up using them? That's how it started. The intent here was, you know, how do we solve the, you know, Triffon's paradox, what was left over from Bretton Woods.

Bretton Woods and the gold exchange system was constraining on global trade and globalization. And the rising demand for trade globally meant we need some form of international money to intermediate between different systems trying to do merchandise trade. What the Eurodollar did on what Milton Friedman showed in 1969 was that we could multiply dollars outside the United States that would not affect the domestic money supply, thereby solving Triffon's paradox. And over time, this is exactly what happened in the 1960s and early 1970s is the euro dollar took over the liquidity adjustment functions of a global reserve currency. And so originally, the intent was how do we finance globalization, how do we finance

a growing need for global trade? But over time, especially in the late 80s and the early 1990s, it started to get into other forms of financialization and different functions. And so it became, instead of just a strictly global trade, currency system, intermediation, that kind of thing, it became an entire financial ecosystem whereby, you know, you go back to 2008, why were German banks being nationalized over a U.S. housing bubble? Well, the reason is because they were financing those U.S. dollar assets on the euro dollar markets. And so it became something very different over time. And it kind of really, toward the end, got really out of control.

But this is really interesting. And this is something that I hadn't really put together before in my understanding. When we talk about the dollar as the reserve currency and it's by far the most stable medium of exchange and someone in Turkey might want to trade with someone in China, but neither of them want the other country's currency per se, this is sort of the role that the euro dollar market can play. and essentially this common third currency for parties all around the world that can then be exchanged via any two banks. Right. And that's, you know, there's a lot of misconception about when we talk about a global reserve currency, what does that actually mean?

And Joe, you just described it perfectly. A lot of people think, you know, reserve currency is, you know, oil gets priced in dollars. Well, that's part of it. That's a benefit of having a global reserve currency. But there is a function. there's a mechanical need for a reserve currency to perform the role, just as you said. How do we get different systems that want to trade with each other? Because free trade is definitely a good thing.

How do we get those to be able to do that without having everybody around the world have to hold everybody else's currencies or be able to process payments and somebody else's currency? And so, you know, it was historically the British pound performed that role originally. and then the bread and wood system added the U.S. dollar to the role of global reserve, but that created, again, Triffin's paradox where the dollar supply was fixed by gold, and therefore it was not necessarily the best way to allow this intermediation to happen under a rapidly globalizing system. So the euro dollar arose at the right time and in the right place and in the right way

to be able to take over that role so that globalization and global trade could be unhampered by constricted supply. Because essentially, that's what we talked about before, because it's an offshore currency system, because it's a bank ledger system, it's an interbank system, it really isn't a lot of restrictions on it, placed on it that constrains the flexibility, the liquidity that is necessary to perform these roles. Right. So one of the, I mean, I don't know if you would call it a criticism, but one of the things that people point out about Euro dollars is it's something that the Federal Reserve doesn't necessarily have a lot of control over in the same way that they might be able to affect the banking system and other kinds of liquidity by raising interest rates or changing

reserve requirements. Can you explain how exactly that comes about? Well, I would argue they have no control. They have actually no very little influence at all in the euro dollar market, which is why 2008 happened. The Federal Reserve did a whole bunch of stuff in 2008. Nothing worked. The reason is because it was a euro dollar payment. panic, not a dollar panic. And that's, you know, we talk about the Eurodollar and the term itself being anachronistic. What we really mean is that it's a bank-centered system. It's a credit-based monetary system. Therefore, what matters and what's at the center of the system are these global banks that are creating and trading all of these dollar denominated liabilities.

And so the Federal Reserve has very little input into that system. Mostly it had been just psychological, the idea of a Greenspan put. But starting in 2007, banks began to realize that the Federal Reserve was really powerless. And this, by the way, was one of the earliest criticisms of the Eurodollar system. You go back into the 1970s and 80s, some of the officials and some of the economists that actually studied the euro dollar system kept warning. You know, we have this international supply of dollars outside the United States out of the reach of any central bank anywhere. And so that could be a problem because there's, first of all, it's non-reservable, so there aren't really reserves there. And second of all, there's no way to create them because there's no central bank operating in any of these places because it's offshore from everywhere.

So in one sense, it was good because it performed the roles that were required for globalization and global trade. But in another sense, there was nothing to restrain it. There was nothing to make sure it was a robust system that could withstand even some of the things we saw, especially with the housing bubble and the massive credit growth in the. in the last decade. You can get the news whenever you want it with Bloomberg News Now. I'm Amy Morris. And I'm Karen Moscow here to tell you about our new on-demand news report delivered right

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And we don't wait an hour to publish breaking news. When news breaks, we'll have an episode up in your podcast feed within minutes. So you're always getting the latest stories and developments. Get the reporting and the context from Bloomberg's 3,000 journalists and analysts we're all over the world. Listen to the latest from Bloomberg News Now on Apple, modify or anywhere you listen. I think this is a really key point to helping people understand the system.

So I want to drill down further. Like if I have a bunch of money at a U.S. bank, like say Citigroup or J.P. Morgan, and people perceive that to be pretty safe because even in the worst situation, Citigroup or JP Morgan could pledge collateral to the Fed and get liquidity and get dollars. And my deposit is going to be pretty good. If I have millions of dollars in deposits with some non-US bank that doesn't have that same relationship with the Federal Reserve, in a panic, there's no easy way for them to get a stable supply of dollars to meet that liability.

And of course, I guess this is why the Fed had to engage in dollar swap lines with other central banks around the world during the crisis so that those regional central banks could then supply dollar liquidity to their banks? Or attempt to supply. Attempt. Yeah, you know, that was one of the misunderstood aspects of the crisis was where, why do we need all of these dollar swaps? And at one point it was, you know, $600 billion.

The massive amount of dollars that the Fed was trying to put out there into the market. But it wasn't, it wasn't the right kind of liquidity. It was, you know, bureaucratic. It was rigid. It wasn't a good enough replacement for a malfunctioning euro dollar system. But your point being, is exactly right. I mean, we have this international money system. And again, because it's largely an interbank system, the issue isn't so much for a U.S.-based depositor who has money in dollars outside.

It's really what happens to a bank in the Caymans that says it has a dollar liability and has been trading off dollar liabilities when all of a sudden funding those kinds of transactions becomes difficult because the market starts to break down. Who do you turn to? Well, if normally you turn to any number of banks operating in the market, and all of a sudden, all of them are very skittish and nervous, and don't offer you any good terms to fund your liability structure. You have no recourse to anything. So that's why, you know, 2008 was mostly a bank panic among banks. It was an interbank panic more than it was, you know, something like the 1930s, where you saw people lined up trying to convert to cash outside of, you know, the local country bank anywhere in the United States. It was an

interbank panic because this monetary system is itself an international interbank money system. Okay. So in 2008, you have basically an interbank funding crunch that manifests itself in the euro dollar market, as well as some other markets, repo, I guess being the one other famous example. The Fed comes in, provides extra dollar liquidity, and that solves the problem, at least for a little while. Can we fast forward to today, Jeff, because, you have some interesting theories that you've been writing down on your blog, talking about how the recent market sell-off might have its origins in a sort of similar collateral crunch that's taking place in the euro-dollar market.

Yeah, well, when we look at the euro-dollar system, you know, because it's been somewhat of a mystery for so long and because officially it, you know, it doesn't exist. Central banks do not admit that there's this offshore money market because how could they? because there isn't a whole lot of information about it, we don't have a lot of good statistics. But, you know, what we've seen anecdotally, what we've seen in prices and what we've seen in the statistics we do have is that the system broke down on August 9th, 2007, and then it was never restored. It never got back to operation. So there's been, for the last 11 years, ongoing intermittent euro dollar squeeze, as I call it, where we have these episodes. This would be the fourth one, if that's exactly what's taking place right now.

There's these episodes where the system goes from, you know, partial recovery back to nervousness, and then the system contracts, and we get into these global downturns. Financial markets go back into turmoil. And then it'll get to a point where it can go into a reflation period, where things seem to be getting better, things loosen up a little bit, and then all of a sudden it'll turn back into another downturn. Again, we've seen this three times before, and I think we're seeing it again for a fourth time. And the reason is because the system has never. been able to go back to before August 9, 2007, and operate in the way that it did before.

And the reason is because people realize that the risks involved here, whereas, you know, before 2008, 2007, the belief was common that there was no risk, that you could just grow and expand and take on any form of liability, any form of assets that you wanted to do. And as long as you were growing, everything would be fine. And then come along 2007 and 2008, they finally, the system finally realized and began, and began to doubt itself, hey, there's a whole lot of risk here, and we're not being compensated for that risk. And so banks have been pulling back from their money-dealing activities in these Eurodollar spaces for 11 years. But they don't do it all at once. They do it again in these

intermittent episodes. And I think that's what we're seeing right now. All right. What is the data that you look at to assert that, A, we've never really gotten back to the pre-crisis sort of behavior of this market? And then when you talk about this is the third or fourth of these episodic stresses within the Eurodollar market, what are you looking at or what are you seeing specifically that tells you that that's the sort of the key thing to understand about these market sellouts? Well, some of the data is just price data. For example, you look at the repo rate, your general collateral U.S. Treasury repo rate. In a system that worked before August 9, 2007, the repo rate should be less than. the unsecured federal funds, LIB, or whatever it be, because, you know, a collateralized

transaction is less risk. But what we've seen since, especially the end of 2008 in the institution of ZERP, the repo rate is no longer tied to the unsecured rate. There's a breakdown in hierarchy. In other words, there should be a repo rate negative spread to something like federal funds, but there are these very specific periods where the repo rate will just go crazy. In this case, and in each of the four cases, subsequent cases, the repo rate will go way above federal funds, which makes no sense. I mean, in a hierarchical structure of predictable money market function, we should see the repo rate be less than federal funds, but yet in these very specific periods where we see all this financial distress and we see global economic concerns,

the repo rate will be well above federal funds. And that happened earlier this year. the repo rate got to be almost 50 basis points above, and maybe even more 50, I'm going off a memory here. But it got to be a substantial amount more than the reverse repo floor that the Fed sets for its money market corridor. So that's one way to look at it. There are others, just the exchange value of the dollar, for example.

You know, in the middle 2000s up until 2008, the dollar was falling consistent with rising euro dollar supply on these markets. Since then, the dollar has been rising and people trying to figure out why, how could that be? And what it is, it's simply this euro dollar squeeze. When there are periods where euro dollars are hard to come by, the value of the dollar goes up because these people on the other side of these transactions, banks and foreign locations, who are short synthetically these U.S. dollars because of their interbank liabilities, when it becomes difficult for them to fund in U.S. dollars as they have to do,

the price of the dollar goes up. And so it's almost like a short squeeze. But in terms of actual data, physical data, I won't say physical data, but actual concrete data, we can use things like the Treasury Department's tick data. Most people think of tick as, you know, how much are foreigners buying and selling U.S. treasuries in a given month. But there's a whole bunch of other data that the Treasury Department collects, including the cross-border U.S. dollar activities of U.S. banks. What you see there again is the same thing. Up until 2007, you have a parabolic rise in these cross-border dollar transactions. And since then, you have these intermittent periods of ups and downs where over the last 11 years,

the cross-border dollar activity between U.S. banks and foreign banks has stagnated. It stopped. There's no more growth in that kind of business anymore. And you can see it just in if you follow the balance sheets of the total asset structure of these global banks. You know, look at J.P. Morgan. JP Morgan's balance sheet was growing exponentially until 2008. Now it's essentially flat over the last decade. Banks don't grow anymore.

So, Jeff, if you're right, if we are seeing another bout of stress in the euro dollar market, and it is manifesting itself in a stronger dollar as people look for alternatives to euro dollars, how does that, or how do you think that's going to play out in the market? So we get the dollar strengthening and presumably that might cause tighter financial conditions, which maybe means that we see some risk assets sell off, or does the sell-off necessarily come through the fact that liquidity in the form of euro dollars is evaporating? I think it's a little bit of both. And there's also sentiment to consider too, because you have to think about this in economic terms.

What's established to these ups and downs is that the global economy, especially global trade, because, again, the euro dollar at its heart is supposed to be about intermediating global trade. If there's a problem in the euro dollar market, there's a problem in the global trade system, and therefore the global economy, and therefore, you know, sentiment turns on the lack of opportunity and the economic risk of all of these things, too. So you have a bunch of different feedback effects that all feed into the same direction, which is rising nervousness and eventually fear, which permeates into, you know, all sorts of liquidation, events, you think about China recently. Chinese stocks have been liquidated since they reopened

from the Golden Week. That has its origination in this dollar problem. U.S. stocks are probably more about sentiment than actual liquidity. But still, it all feeds back into the same thing. And over time, if it goes far enough and it continues in this direction, it becomes self-reinforcing, like we saw in 2015, for example, or 2011 and 2012, where the economy starts to fall off or roll over, which feeds into more uncertainty and fear in this dollar system, which causes the dollar system, constrain even more, which causes the economy to get even more precarious and so on and so on. Is there a plus side in the fact that we have these episodic stresses that we're not building up to something big and catastrophic like we saw in 2007 and 2008? And instead,

we just sort of have these, you know, many, many blowups, but that sort of relieve pressure from the system overall? Well, I would argue this is actually the worst case. I'd rather have a crash at this point. Really? I know that's counterintuitive in a way, but, you know, the global economy has never recovered from 2008, and time is a big factor in that.

And so the cost of the system malfunctioning the way it has, in my opinion, aren't strictly economic anymore. We suffered the economic consequences. look at places like Italy, for example. The Italian economy is smaller today than it was in 2008. It has never recovered. The European economy has never recovered. The U.S. economy has never recovered. I know people are talking about how it's booming right now, but the U.S. fell off trend 10 years ago, and it's getting further and further behind that trend. And so to me, these periodic episodes are the reason that the economy hasn't recovered, and therefore they're taking us

further and further away from a stable position. I think that's why you've seen the rise of populism, the rise of distrust in establishment or however you want to call it, it's because economic opportunity has largely disappeared because of the malfunctioning in the International Reserve currency. And so how do we fix that? And I don't think you can fix it by just keep doing, but just allowing it to go the way it is. We need to get to a stable currency system so we can get to stable an actual real economic growth again. And the way you do that, is to get people to pay attention to this euro dollar system that doesn't work. So, okay, this doesn't work.

What should be done in your view if this sort of basic system of international finance is inherently flawed? You mean, how do we replace the euro dollar problem with something that isn't so susceptible to? Yeah, like, ultimately, like the problem with the gold standard was sort of manifest. We saw in 2008 that the euro dollar wasn't a perfect solution either. in your view. Is there a solution to this dilemma, or will we always be stuck with the problem that if we want to stable a global trading currency, there's going to be the challenge that the supply of it will inherently be limited? Well, yeah, and I think you're right, Joe, because, you know, the pendulum has swung too far in the other direction. You know, the gold

exchange system under Bretton Woods was too constraining. The euro dollar system was way in the other direction. It was far too free and unconstrained. So the answer may be somewhere in the middle, but how do you actually design a system that replicates the good features of the euro dollar system, which there are many. It's not perfect, and it got way too far in the wrong direction, but there are some good elements of the euro dollar system, including the ability to flexibly supply money to where it's demanded. So how do we keep those characteristics,

but also put some kind of constraints on it so that it doesn't get out of hand again? And that's an incredibly complex question, especially when you get into the, really into the shadow spaces of what actually takes place in these kinds of interbank transactions internationally, because they are incredibly complex and exotic, and they don't lend themselves to easy analysis. So this might not be the right form to get into that. Sounds like a whole separate episode. Yeah, maybe. All right.

Well, I guess we'll have to leave it there in that case. Jeffrey Snyder, head of global research at Alhambra. Jeff also has something called the Eurodollar University, if you want to check that out and actually get more than just a half hour primer on Euro dollars. So that's on YouTube as well as the Macro Voices podcast. Jeff, thanks so much. Thanks, Jeff. Thank you, Joe. Thanks, Tracy. So, Joe, I'm so glad we finally got to devote an entire episode to the Eurodollar. And I thought that was a really great primer as well as a really interesting theory about what. might be driving the recent market sell off. Yeah, I mean, I definitely would disagree on the sort of big picture that we haven't had a global

recovery and so forth. But it's certainly true that the recovery has been disappointing around the world since the crisis and looking at the financial roots of that may be one important aspect. But that aside, I do think this idea of the mechanics of money creation and I hadn't is really important. And I hadn't really thought before about the inherent challenge of what it means when everyone wants to trade in a stable currency, but not everyone has the same equal access to that currency. And so the opportunity or what the euro dollar, the problem that the euro dollar market solved, but also the inherent risks of that. Yeah. And also Jeff's point about how euro dollars have essentially grown in tandem with globalization was really interesting.

And, you know, I wonder about the link between what we've currently been saying in terms of trade tensions and the recent euro dollar stress. Like that seems like a natural connection to potentially make. Right. And I do think this is going to be one of the biggest stories. And we've talked about it for a long time, but just sort of like de-globalization as a whole. And we talk about it a lot from the trade perspective all the time. We don't talk about it as much from the financial system. perspective, but it feels like we have a financial system very much designed for an era of expanding globalization and an economic system and a political system where the gears seem to be turning

the other way. So I think you're absolutely right that it's going to be really interesting to see the interplay here. Right. No one ever thinks about the euro dollar as ground zero for de-globalization. People think about, you know, Apple supply chains and stuff like that. Right, right, exactly. All right. Well, this has been another episode of the Oddlots podcast. I'm Tracy Allaway. You can follow me on Twitter at Tracy Allaway. You can also follow Jeff Snyder. He is at Jeff Snyder underscore AIP. And a shout out as well to one of our listeners at Gubb Mint Cheese for suggesting Jeff in the first place. And I'm Jill Wisenthall. You can follow me on Twitter at The Stallwork. And you should follow our producers. Tofer Forges on Twitter, he's at Forges T, as well as the Bloomberg head of podcast, Francesca Levy, at Francesca today. Thanks for listening. I'm Francine Lacqua, an award-winning journalist, and I've got a new podcast, leaders with Francine Laqua from Bloomberg Podcasts.

I've interviewed everyone from heads of state to fashion icons about the news of the moment. But I've always been curious, who are these people as leaders? I don't think there's one right way to be a leader. Make decisions. A poor decision is always better than no decision. Listen to new episodes every other Monday. Follow leaders with Francine Lacroix wherever you get your podcasts.