Ash Bennington and Ed Harrison discussed Russian central bank policy action, risks to the commercial real estate market, and the changing role of China in the global political and financial system on today’s Real Vision Daily Briefing.

The Bank of Russia announced it will cut interest rates and people are getting into government bonds, which is causing yields to fall. Harrison said that investors normally say ‘you’re cutting you need dollars, or you are an emerging market so you need to increase your rate to attract our money,’ but it is the opposite now. He thinks this is an example of the buoyancy the Fed created in the US trickling down into other markets around the world. 

Bennington and Harrison also talked about commercial real estate being a problem going forward. With store closures, companies like Macy’s furloughing the majority of its workforce, and the explosion in online shopping, things are changing structurally in commercial real estate space. They wondered how pressure on commercial real estate will feed through to banks, and Harrison said he thinks a rapid snapback is unlikely because there is so much going on under the surface and there are landmines on bank balance sheets we can’t yet see.

Finally, talk turned to China as Bennington and Harrison wondered how the country will handle emerging market debtors in this crisis. With the US and China are moving apart from one another, they called the situation “hairy political football.” Harrison said he thinks there will be a land grab of sorts and the potential for a breakdown of globalization. 

“It’s hard to come up with anything positive to say about this issue,” he said. “Confrontation is the word.”