CONTINUE TO PRESSURE THE STOCK LOWER IS THE DEMAND SIDE OF THE EQUATION, AND ULTIMATELY THAT WHAT THAT MEANS FOR EARNINGS >> ALL RIGHT OUR NEXT GUEST CALLS CHINA'S ZERO COVID POLICY AN UNMITIGATED DISASTER STEPHEN ROACH IS A YALE UNIVERSITY SENIOR FELLOW AND HAS A NEW BOOK COMING OUT TOMORROW SO YOU CAN ALL GET IT TOMORROW "ACCIDENTAL CONFLICT: AMERICA, CHINA" AND THE CLASH ON FALSE NARRATIVES." HE CAN EITHER LET THIS SORT OF PLAY OUT OR REALLY CRACK DOWN. WHAT DO YOU THINK HAPPENS? >> HE IS NOT GOING TO DROP HIS ZERO COVID POLICY. HE IS GOING TO TWEAK IT ON THE EDGES. BUT AUTOCRATS CAN'T AFFORD EVER TO LOSE FACE AND FOR HIM TO ADMIT THAT THIS IS AN ABSURD, IMPRACTICAL, HARSH POLICY IS NOT IN HIS DNA BUT, YOU KNOW, HE'LL REDUCE THE QUARANTINE RESTRICTIONS A BIT, AND THERE WILL BE SOME EASING OFF. BUT WHAT HE'S GOT TO GET IS A BREAK FROM THE HIGHLY TRANSMISSIBLE OMICRON.
THAT'S UNLIKELY TO HAPPEN FOR QUITE SOME TIME. I MEAN, EVERYBODY KNOWS HOW TRANSMISSIBLE THESE VARIANTS ARE. I FINALLY GOT HIT BY IT TWO WEEKS AGO MYSELF IT'S ABSURD TO THINK THAT HE'S GOING TO REDUCE THIS POLICY AT A TIME WHEN THE TRANSMISSIBILITY IS SURGING >> DO YOU THINK THAT IT GETS TO THE POINT, THOUGH — BECAUSE WE DO KNOW THAT XI'S TOP PRIORITY IS NATIONAL SECURITY, AND THAT HE'S WILLING TO SACRIFICE SOME DEGREE OF ECONOMIC GROWTH FOR THAT THE SECURITY OF JUST NOT HIS PEOPLE, BUT SECURITY OF THE PARTY.
AND IN THAT GOAL, STEPHEN, DO YOU THINK HE ENFORCES MILITARY LAW? DO WE SEE THIS ESCALATE TO THE POINT OF A TIANANMEN SQUARE, FOR INSTANCE >> NO, WE DON'T. I THINK EVERY NEWSPAPER THAT I LOOKED AT TODAY, I PROBABLY LOOKED AT FIVE OR SIX OF THEM, AND THEY ALL HAD THE TIANANMEN SQUARE COMPARISON IN THE LEAD PARAGRAPH. TIANANMEN SQUARE WAS TRIGGERED LARGELY BY A YOUNG GENERATION WHOSE POLITICAL CHAMPION, THE FORMER LEADER AND REFORMER HU YAO BING HAD DIED. AND THE MOVEMENT BECAME A MOVEMENT THAT WAS FOCUSED ON THESE POLITICAL ISSUES XI JINPING, AS YOU KNOW, HAS NO POLITICAL OPPOSITION HE TOOK CARE OF THAT IN THE RECENT PARTY CONGRESS. SO THIS ISN'T ABOUT POLITICS THIS IS ABOUT UNDERSTANDABLY FRUSTRATED AND ANGRY POPULATION WHO IS SUFFERING JOB LOSS AND ECONOMIC HARDSHIP FROM A RIDICULOUS COVID POLICY.
>> SO HE DOESN'T ADMIT THAT HE IS WRONG HE TWEAKS AROUND THE EDGES THINGS LARGELY GO AS THEY ARE. AND THAT'S IT, STEPHEN I MEAN, THAT SEEMS TO BE SO LIMITED. IT DOES SEEM LIKE THESE PROTESTERS ARE OF A YOUNGER GENERATION THEY DID NOT WITNESS THE MIRACLE OF ECONOMIC GROWTH THAT HE SHEPARDED IN THE '90s OR SO. THEY WERE NOT YOUNG ENOUGH TO REMEMBER I'M JUST WONDERING IF IT JUST ENDS HERE. BECAUSE SOME ARE EVEN CALLING FOR HIS STEPPING DOWN, WHICH WOULD BE AN OFFENSE THAT WOULD BE JAILABLE IN CHINA >> YEAH, I WOULDN'T BET ON THE AUTOCRAT STEPPING DOWN I DON'T THINK HE'S GOING TO CALL FOR MARTIAL LAW.
I THINK HE DOES HAVE AT HIS DISPOSAL A FAR MORE REPRESSIVE AND SURVEILLANCE TECHNOLOGY THAN WAS EVIDENT BACK IN 1989 SO HE CERTAINLY KNOWS HOW TO RESTRICT THE DISCOURSE AND THE CONCERNS THAT ARE BEING EXPRESSED BY THE PROTESTERS. AS I SAID, HE WILL TWEAK SOME OF THE RESTRICTIONS AT THE MARGIN AND HOPE THAT AS WE'VE SEEN IN THIS COUNTRY, THAT THE INCIDENTS, THESE VARIANCES EBB AND THEY FLOW, AND HE'LL GET A BREAK AS OMICRON STARTS TO RECEDE AS I WRITE IN MY BOOK, HE COULD HAVE BEEN SO MUCH BETTER FOR CHINA IF THEY HAD COLLABORATED WITH US ON HEALTH CARE PRACTICES AND LEARNED FROM OUR EXPERIENCE IN DEVELOPING THESE mRNA VACCINES, IF THEY HAD VACCINATED THEIR VULNERABLE ELDERLY POPULATION, HE WOULDN'T BE DEALING WITH THIS.
BUT HE DOESN'T WANT TO COLLABORATE AND COOPERATE WITH US, AND WE DON'T WANT TO COLLABORATE AND COOPERATE WITH HIM. SO THAT'S WHY I'M WORRIED ABOUT THIS CONFLICT ESCALATION THAT I WRITE ABOUT IN MY BOOK >> SO DOES THIS CHANGE AT ALL WHAT'S GOING ON IN CHINA RIGHT NOW? DOES THIS CHANGE AT ALL THE BACKDROP FOR COMPANIES DOING BUSINESS IN CHINA IN YOUR VIEW >> I THINK IT MAKES ANY COMPANY MORE MINDFUL OF CHINA CONCENTRATION RISKS. YOU KNOW, YOU'VE BEEN TALKING ABOUT APPLE HERE APPLE IS A CLASSIC CASE WHERE IT HAD BET 100% ON THE PRODUCTION ASSEMBLY PLATFORM IN GUANGDONG PROVINCE AND LO AND BEHOLD, IT'S NOW JUST STARTING TO MAKE iPHONES IN INDIA. SO SUPPLY CHAIN DIVERSIFICATION, WEANING YOURSELVES JUST FROM RELYING ON THE WORLD'S LARGEST AND MOST EFFICIENT OFFSHORE PRODUCTION PLATFORM DOESN'T MAKE AS MUCH SENSE TODAY AS IT DID BEFORE THIS CONFLICT AND COVID-RELATED DISRUPTIONS GRIPPED THE CHINESE ECONOMY. >> ALL RIGHT STEPHEN, ALWAYS GOOD TO SEE YOU. THANK YOU VERY MUCH. WE'LL ALL BE LOOKING FOR YOU BOOK OUT TOMORROW.
STEPHEN ROACH. ALL RIGHT. SO WHAT DO WE DO IN TERMS OF THINKING ABOUT A NIKE, A STARBUCKS? WE'VE BEEN TALKING ABOUT THIS FOR A LONG TIME. BUT IT SEEMS LIKE THERE ARE MORE AND MORE EXAMPLES AGAIN AND AGAIN AND AGAIN OF THE RISK THAT MIGHT NOT NECESSARILY BE PRICED IN, GUY. >> YEAH, I THINK IT'S A BROADER MARKET STORY AS WELL YOU'RE RIGHT TO FOCUS ON THOSE STOCKS I STILL THINK APPLE'S GOT THE GIGANTIC CROSSHAIRS ON THEIR COLLECTIVE BACK. AND THE CHANCES — LISTEN, MAYBE IT'S TAIL RISK, MAYBE IT'S 10, 15%. BUT IF THIS THING ESCALATES, APPLE IS GOING TO BE IN THE CROSSHAIRS OF CHINA, WITHOUT QUESTION AND JUST TO THROW APPLE IN THERE ONE MORE TIME, DON'T DISCOUNT NOW A VERY PUBLIC FEUD SEEMINGLY GOING ON WITH ELON MUSK IN TERMS OF HIS ROLE AT TWITTER NOW, IN TERMS OF APPLE AS WELL THERE ARE SO
