Bloomberg Businessweek USA - 05.08.2019

 FINANCE

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two years, I continue to believe that the era of the

strong-dollar policy is over,” says Nathan Sheets,

chief economist for PGIM Fixed Income and a for-

mer Treasury official. “This is something different.

What’s not yet clear is exactly how to characterize

the new dollar policy and the features of the new

regime.” Even so, Trump’s desire for a weaker cur-

rency should be taken seriously by markets, says

Setser, now a senior fellow at the Council on Foreign

Relations.

Treasury Secretary Steven Mnuchin has sent

mixed signals on the dollar, which has gained

against most of its Group of 10 peers in 2019. A

trade-weighted index of the greenback adjusted

for inflation isn’t far below its highest point since

2003, showing the headwinds U.S. exports face.

“Over the long term, I do believe in a strong dollar,

which signifies a strong U.S. economy,” Mnuchin told

CNBC on July 24, adding that he wouldn’t push for

a “weak-dollar policy” in the near term. That asser-

tion came days after he told Bloomberg News that

there’s no change in the nation’s currency policy

“as of now”—a disclaimer that stoked speculation

that the U.S. could later step into markets to forcibly

weaken the dollar.

Wall Street analysts still see intervention as an

outside chance but not impossible. The U.S. hasn’t

sold dollars for the purpose of weakening the cur-

rency since 2000, a move that was part of a coordi-

nated international effort to buoy the euro. Unilateral

intervention would torpedo a long-standing commit-

ment reaffirmed in June by the U.S., along with other

Group of 20 members, to avoid weakening exchange

rates to boost exports. The events of late July suggest

there are divisions within the administration over

whether to take that step.

A simpler way for Trump to get a weaker cur-

rency would be to say that the U.S. is scrapping its

policy, Bank of America Corp. strategists wrote in

a report in July. Although the phrase “strong-dollar

policy” is largely symbolic, abandoning it in favor

of a “strong-growth policy” would ripple through

the markets and could spur a 5% to 10% drop in the

greenback, they estimated. However, the administra-

tion would need to be careful to communicate the

pivot in a way that doesn’t “undermine the case for

owning U.S. assets,” the analysts cautioned.

Replacing this Clinton administration legacy

would create lots of unknowns. What matters, Setser

says, is “not so much the death of the strong-dollar

policy, so much as what policy options that might

open.”—Katherine Greifeld, with Saleha Mohsin

BW Talks Adena Friedman

The CEO of Nasdaq wants you to know

the company is more than a stock

exchange, even if it’s where about 20% of

U.S. equity trades are made. “Complacency

is the killer of every great company,” she

tells Carol Massar and Jason Kelly.

○ Became CEO of Nasdaq Inc. in 2017 ○ Although she’s spent much

of her career at the company, she left to be chief financial officer

of the Carlyle Group from 2011 to 2014 ○ For nine years, she ran

Nasdaq’s data business

○ Interviews are edited for clarity and length. Listen to Bloomberg Businessweek With

Carol Massar and Jason Kelly, weekdays from 2 p.m. to 5 p.m. ET on Bloomberg Radio.

Nasdaq has recently gotten into sports

betting. How so?

We are providing technology

to a company called the

Football Index. It’s a U.K.-

based firm, so “football”

means soccer. It allows

people to bet on certain

players—it’s almost like

fantasy football in a betting

context. They’ve created

a marketplace that allows

people to essentially buy

interest in a player, watch

that player’s performance,

and understand the returns.

We already are in the horse-

racing business. We have

three racing authorities

that use our pari-mutuel

betting platform.

Are you moving away from

the core business of trading?

It’s about 25% or 30% of

overall revenue depending

on the quarter. The rest

can come from data

and analytics, corporate

services, and market

technology. Think of us as

almost like Switzerland: We

can provide that technology

to other exchanges. We can

provide technology to some

of our competitors. And it is

the fastest-growing part of

our business.

People talk about companies staying

private for much longer. How is that

impacting you?

We have something called

Nasdaq Private Market that

helps private companies

manage their liquidity. But

of course we’d much rather

see companies tap the

public markets as soon as

they’re ready. The right thing

over time is for the average

investor to be able to invest

in these companies, too.

You were once an intern at Nasdaq.

What are the biggest market changes

you’ve seen over your career?

I started in 1993, in the

trading business. I was able

to look at the trading as a

technology. But at the time,

we were just a U.S. equities

market. Today we’re a global

technology company that

serves 130 other markets,

and we’re also a European

equities, options, and

futures market.

THE BOTTOM LINE A weaker buck could boost U.S. exports,
but walking too quickly away from a strong-dollar policy could roil
ILLUSTRATION BY 731. FRIEDMAN: ALEX FLYNN/BLOOMBERG. DATA: FEDERAL RESERVEglobal markets.