Glenn Freeman: U.S.-China is basically tipped as being the most important issue relative to Europe – the European situation. How does that tie into the broader U.S. situation and these fears over U.S. recession, will they, won't they?

Peter Warnes: Well, I mean, it's on everyone's lips, you read every morning, you see the markets – volatility is there. One morning markets have gone up because there is increased confidence about the trade talks and then the next day they are down because that confidence wasn't, it wasn't justified and so they were all upset…

Freeman: Because Trump didn't shake his hand the right way.

Warnes: Whatever, but I mean it's – they are big issues, there is no doubt about that because whatever happens, the arm wrestle between the two biggest economies in the world it will disrupt global supply chains and it will disrupt global trade. And that is what makes, that’s what economic activity is all about. And so if it's distorted to any great degree, yes, there will be backwash and there will be implications for both those parties in terms of their economies and the economies of people who trade with them. And Australia has to be careful that it doesn’t get – it will get caught up if this thing – is a war of attrition. In other words last man standing, it's going to be very, very dangerous situation. Because 30% of our exports are China facing and there is no doubt that if China economy does slow to a more – to a greater extent than it has been over the last three or four years then we will see backwash here. And I suspect and I have said this before, but I suspect that China is in a better situation or better positioned to replace the U.S. market than the U.S. is to replace the Chinese market.

Freeman: And you have taken a slightly different slant on the, now the talk about whether, will there, won't there be U.S. recession in 2019 or 2020.

Warnes: There may or may not be a recession in the U.S. in 2020. If the markets think there will be, it's likely to happen you get the reaction that it will pre-warn in 2019. You'll get a correction in the market predicting a contraction in the economic activity at a later date. The Fed has got a dual mandate in full employment and price stability. They have to have monetary policy in place before these things happen. So that when the conditions adjust whether they contract and they stimulus or the other way around. They have the policy in place that they can react and then do something. So having Fed funds arrive at 3% in the back end of 2019 if in fact an exogenous factor drives the U.S. economy into a contraction. They haven’t got a lot of ammunition to stimulate because we already know that this balance sheet is full. It's still got $4 trillion worth of assets on it from qualitative easing. So they haven’t normalized their balance sheet and I don’t think they've got to the stage where they would really like, I think the normalization of the monetary policy hasn't run it's full course. They are battling with the White House. The White House is continuing to stick its nose into what the Fed is trying to do that is – that’s persona non grata.

Freeman: It’s not unprecedented, but it's incredibly rare isn’t it.