WEBVTT - Bloomberg Wall Street Week: Moynihan, Sharma, Summers 0:00:00.240 --> 0:00:05.000 This is Bloomberg Wall Street Week. Market shruggle, higher consumer prizes. 0:00:05.040 --> 0:00:07.400 The economy is in the process of rebounding. Will the 0:00:07.480 --> 0:00:10.479 Utter Reserve have its own digital currency? The financial stories 0:00:10.520 --> 0:00:12.879 that cheap hard work. Many people think the eels are 0:00:12.880 --> 0:00:15.080 just going to keep marching out. We have more spending 0:00:15.120 --> 0:00:17.160 coming out of Congress. One of the big questions I 0:00:17.200 --> 0:00:19.880 think on investor's mind inflation. Through the eyes of the 0:00:19.920 --> 0:00:23.560 most influential voices. Larry Summer is the former Treasury Secretary, 0:00:23.640 --> 0:00:26.880 Bryan Wynihan Bank of America, Will Smart, CEO of Charlie 0:00:26.920 --> 0:00:31.560 Sharp Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 0:00:31.800 --> 0:00:35.159 It's a whole new world of diplomacy and maybe of 0:00:35.200 --> 0:00:38.800 monetary policy. So what difference will it make? This is 0:00:38.840 --> 0:00:42.080 Bloomberg Wall Street Week. I'm David Weston. Bank of America 0:00:42.159 --> 0:00:44.879 Chairman and CEO. Brian moynihan has been a leader in 0:00:44.920 --> 0:00:48.480 bringing private industry together to establish standards for the environmental, 0:00:48.520 --> 0:00:51.520 social and governments, working with both the World Economic Forum 0:00:51.560 --> 0:00:54.000 and with His Royal Highness Prince Charles. It was in 0:00:54.000 --> 0:00:56.440 that capacity that he was invited to participate in the 0:00:56.480 --> 0:00:58.960 G seven Summit in Cornwall last weekend and we asked 0:00:59.160 --> 0:01:02.760 what happened. His Royal Highness, Prince Charles for years, for 0:01:02.800 --> 0:01:05.640 four decades plus, has been focused on the environment a 0:01:05.640 --> 0:01:08.480 few years and he's had various initiatives with business people 0:01:08.640 --> 0:01:11.440 and other groups over the years. A couple of years ago, 0:01:11.840 --> 0:01:14.160 UM a group of us sat with him and talked 0:01:14.160 --> 0:01:16.479 about how we could get the private sector really who 0:01:16.520 --> 0:01:19.600 has to drive this change aligned and so he announced 0:01:19.600 --> 0:01:23.400 in early two thousand twenties Sustainable Markets Initiative. Yes m I, 0:01:23.560 --> 0:01:26.960 that is three CEO is working as a coalition the 0:01:27.040 --> 0:01:31.759 willing to help along industry groups to help share best practices, 0:01:31.800 --> 0:01:33.520 to help figure out how we can move things faster, 0:01:34.080 --> 0:01:37.280 to help promote public policy ideas that would be helpful. 0:01:37.600 --> 0:01:40.360 And that SMI group, through the leadership as Royal Highness, 0:01:40.520 --> 0:01:44.120 was able to meet with the G seven leaders for 0:01:44.480 --> 0:01:47.400 an engagement around you know, the private sectors here. We 0:01:47.480 --> 0:01:50.440 don't need money. We were ready to move or moving fast, 0:01:50.600 --> 0:01:53.440 but if he did these types of policy implementations, we 0:01:53.480 --> 0:01:55.760 could move even faster. So I'm a leader of the 0:01:55.760 --> 0:01:57.840 group like co chair was. Royal Highness had a chance 0:01:57.880 --> 0:02:00.400 to speak a bit and then we had a interaction 0:02:00.440 --> 0:02:01.800 with the eight or nine c e o s were 0:02:01.800 --> 0:02:03.760 there with the G seven leaders to kind of make 0:02:03.800 --> 0:02:05.960 sure they understood that we're there to help them, support 0:02:06.000 --> 0:02:09.119 to make this transition be a just transition and help 0:02:09.320 --> 0:02:11.560 have it help but happen. So I know that you've 0:02:11.560 --> 0:02:13.800 been heading up the initial Business Council for the World 0:02:13.840 --> 0:02:16.120 Economic Forum. How does this fit with that? Because I 0:02:16.120 --> 0:02:18.160 know you're coming up with uniform standards. You've got quite 0:02:18.160 --> 0:02:20.200 a few companies to sign onto that so far. What 0:02:20.280 --> 0:02:22.959 kind of progress are you making? So the World Economic Forum, 0:02:23.240 --> 0:02:26.799 UH International Business Council, which I've been chairing for the 0:02:26.880 --> 0:02:29.519 last couple of years UH with a group of hundred 0:02:29.560 --> 0:02:32.600 thirty CEOs or so, they adopted a set of metrics 0:02:32.600 --> 0:02:34.600 in ninety years. So companies have signed up and we're 0:02:34.600 --> 0:02:38.359 pushing that through the system that basically aligned against the 0:02:38.360 --> 0:02:41.240 sustainable development goals are you unadopted in two thousand fifteen 0:02:41.280 --> 0:02:45.320 and frankly defined stakeholder capitalism and those you know, people place, 0:02:45.880 --> 0:02:49.920 planet and prosperity and so on the environment which links 0:02:49.960 --> 0:02:53.560 to this obviously it's disclosure scope one two three and 0:02:53.800 --> 0:02:56.680 what are you doing about things like that? So one 0:02:56.680 --> 0:02:58.560 of the things we told the G seven leaders is 0:02:58.600 --> 0:03:01.400 you need convergence and met trics and the IBC work 0:03:01.720 --> 0:03:04.520 led by the Big four accounting forms bringing together the 0:03:04.560 --> 0:03:07.720 work and pushing for a convergence with even the groups 0:03:07.720 --> 0:03:11.560 that support metrics sas by g R, I, etcetera. The 0:03:11.560 --> 0:03:13.520 idea is to push to one set of metrics. So 0:03:13.560 --> 0:03:15.520 we don't have all the work as I said that 0:03:15.560 --> 0:03:18.320 she said was going into calculating things. We have the 0:03:18.320 --> 0:03:20.880 work going and actually making the metrics better. And so 0:03:21.400 --> 0:03:23.440 you know, you have the SEC looking at these metrics, 0:03:23.480 --> 0:03:25.360 you have the I, f R S looking at these metrics, 0:03:25.360 --> 0:03:27.200 that e. Looking through metrics, and then you have all 0:03:27.200 --> 0:03:30.120 the unofficial sectors. The idea is to push the metrics together, 0:03:30.520 --> 0:03:32.799 get to standard set of metrics. That's what the IBC 0:03:33.000 --> 0:03:36.240 did and that feeds directly into the SMI because those 0:03:36.280 --> 0:03:38.320 are the metrics the s m I believes should be 0:03:38.320 --> 0:03:40.480 adopted by companies around the world to show them making 0:03:40.520 --> 0:03:44.000 progress on the SDGs. Brian, you studied this so careful 0:03:44.040 --> 0:03:46.520 and you understand it well as a practical matter. Will 0:03:46.560 --> 0:03:48.880 we get where we need to go without the government's 0:03:48.880 --> 0:03:51.040 adopting those metrics? Can the private sector do it on 0:03:51.080 --> 0:03:53.960 its own Well. I think the important thing is the 0:03:54.000 --> 0:03:56.280 private sector has the money. So if you think about 0:03:57.120 --> 0:04:01.280 the calculation of what the sustainable development goals cost per 0:04:01.360 --> 0:04:05.440 annum is about six trillion, So charity, you know, is 0:04:05.560 --> 0:04:08.120 a trillion plus a year. It's wonderful think about all 0:04:08.120 --> 0:04:09.720 that money people are giving a way to help things. 0:04:09.960 --> 0:04:12.559 But it's a trillion if you look at all the foundations, 0:04:12.600 --> 0:04:14.280 and one of debates in the world is why all 0:04:14.320 --> 0:04:16.400 these foundations just don't give away all their money tomorrow? 0:04:16.480 --> 0:04:18.520 What that gets you through about a third of a 0:04:18.600 --> 0:04:21.200 year to Also, if you look at governments arounding huge deficits, 0:04:21.279 --> 0:04:23.640 is because the pandemic, they can only do so much. 0:04:24.000 --> 0:04:26.600 The private sector has trillions of dollars in market, capt 0:04:26.680 --> 0:04:29.360 trillions of dollars, many trillions of dollars of market, many 0:04:29.400 --> 0:04:33.000 trillions dollars of bounty. But importantly, many trillions dollars are 0:04:33.000 --> 0:04:35.599 operating expenses. So how they operate in their company and 0:04:35.640 --> 0:04:39.720 how they buy services including electricity and power and things 0:04:39.720 --> 0:04:42.000 like that can move markets. And that's why the private 0:04:42.040 --> 0:04:45.159 sector has to lead it. Innovation, inovation, uh, and when 0:04:45.160 --> 0:04:47.800 your private sector leads it, it becomes capitalism. When capitalism 0:04:47.880 --> 0:04:51.040 has it will keep sustaining itself. And so that's that's 0:04:51.080 --> 0:04:53.960 the sort of intellectual thought process. Can the private sector 0:04:54.000 --> 0:04:55.839 do it on its own? Absolutely not. This is going 0:04:55.880 --> 0:04:59.080 to take everybody. But I will use a specific example, 0:04:59.520 --> 0:05:02.480 David sustainable aviation fuels. If there's a mandate for ten 0:05:02.560 --> 0:05:06.560 percent in in in in the world, you will then 0:05:06.600 --> 0:05:08.960 get an instant market that people can build the plans 0:05:09.000 --> 0:05:11.880 to produce it. It works today, it's going in planes today, 0:05:11.920 --> 0:05:15.080 but until there's a more of a requirement, it becomes 0:05:15.240 --> 0:05:19.400 you know, uh, country by country, region by region very hard. 0:05:19.440 --> 0:05:21.599 The airlines are in there doing it already, and the 0:05:21.680 --> 0:05:23.839 question is we could create much more stable markets and 0:05:23.839 --> 0:05:26.280 then the private set you provide all the financing, all 0:05:26.279 --> 0:05:28.080 the stuff because they know the market's going to be there. 0:05:28.120 --> 0:05:31.120 That's how the policy and a private market can work 0:05:31.120 --> 0:05:33.000 in tandon to make something happen right. One of the 0:05:33.000 --> 0:05:34.720 things that the G seven took up over there was 0:05:34.760 --> 0:05:37.680 that to propose global minimum tax that would have to 0:05:37.720 --> 0:05:39.320 go to the G twenty and then O E C 0:05:39.400 --> 0:05:41.760 D have to go through Congress. Have you taken a 0:05:41.760 --> 0:05:43.840 hard look, I'm sure you have what effect they would 0:05:43.839 --> 0:05:45.919 have on Bank of America and perhaps as important, more 0:05:45.960 --> 0:05:48.800 important to your customers if it went through well. Banks, 0:05:48.839 --> 0:05:51.440 as you know, David, are pay a lot, a lot 0:05:51.480 --> 0:05:53.680 of taxes, so we have very little shelter. So the 0:05:53.720 --> 0:05:56.120 only reason why our tax rates not the exact tax 0:05:56.240 --> 0:05:58.080 rate in place like the United States, has more to 0:05:58.120 --> 0:06:01.480 do with the uh investments we make in lower modern 0:06:01.480 --> 0:06:06.400 income housing and sustainable energy. When when solar et cetera, 0:06:06.480 --> 0:06:08.680 that allows to the tax and centers to bring it down. 0:06:08.680 --> 0:06:11.680 But that's it. We don't have big depreciation things other 0:06:12.200 --> 0:06:15.080 other companies do. So the banking system is always affected 0:06:15.080 --> 0:06:17.200 by taxes. They pay a lot of taxes, frankly, and 0:06:17.240 --> 0:06:20.960 that's that's the reality. Highest percentage of taxes paid and 0:06:21.040 --> 0:06:24.960 highest dollar mount in the US. The globalization of it's 0:06:24.960 --> 0:06:27.600 really to try to get out of the What goes 0:06:27.640 --> 0:06:29.719 on in the US and other countries, even within regions 0:06:29.839 --> 0:06:32.000 is people bidding using attacks, right, and they're trying to 0:06:32.080 --> 0:06:34.400 put a floor in. That was Bank of American CEO 0:06:34.520 --> 0:06:38.560 Brian William coming up. Bubbles, bubbles everywhere, but are they 0:06:38.640 --> 0:06:41.880 really bubbles? And what does it look like if they pop? 0:06:42.240 --> 0:06:45.320 From sure? Sharma of Morgan Stanley puts some of what 0:06:45.360 --> 0:06:49.000 we're seeing now into an historical context and has some 0:06:49.040 --> 0:06:52.600 answers for us. That's next on Wall Street Week on Bloomberg. 0:06:57.839 --> 0:07:02.880 This is Bloomberg Wall Street with David Weston from Bloomberg Radio. 0:07:03.040 --> 0:07:06.159 It's hard to talk about investments these days without hearing 0:07:06.200 --> 0:07:08.760 the word bubble. We're getting towards the end of an 0:07:08.800 --> 0:07:12.280 asset bubble, housing bubble, warnings, trouble, bubble. Since we're talking 0:07:12.320 --> 0:07:14.280 about it, is it a bubble or not? The bubble 0:07:14.600 --> 0:07:17.320 I think in the bottom market creating these bubbles. But 0:07:17.440 --> 0:07:19.920 for all the talk, how can we tell what's a 0:07:19.960 --> 0:07:22.920 bubble and what's not and what happens if it is 0:07:22.960 --> 0:07:26.840 a bubble and it bursts. Morgan Stanley's Rusher Charma decided 0:07:26.920 --> 0:07:30.280 to go back in history, analyzing the ten biggest bubbles 0:07:30.280 --> 0:07:33.239 over the last century, everything from the U S Stock 0:07:33.280 --> 0:07:37.200 market in nine to Chinese shares in two thousand fifteen. 0:07:37.480 --> 0:07:39.640 And what they had in common was a price that 0:07:39.760 --> 0:07:43.080 rose one in the year before they peaked, with much 0:07:43.080 --> 0:07:45.960 of the gain packed into frenzied trading in the last 0:07:46.000 --> 0:07:49.760 few months as day traders and other latecomers came rushing in. 0:07:50.400 --> 0:07:53.000 So if history is a guide, where do we see 0:07:53.040 --> 0:07:56.600 those traits. Today, We're welcome back now to Wall Street Week. 0:07:56.600 --> 0:07:58.680 We're sure. Charma, the man who has done this work 0:07:58.680 --> 0:08:01.680 on the history of bubbles, is the chief Global strategist 0:08:01.880 --> 0:08:04.520 for Morgan Stanley Investment Management and author of the book 0:08:04.720 --> 0:08:08.400 The Ten Roles of Successful Nations. Fascinating study you did, 0:08:08.720 --> 0:08:10.320 but take a suit of it. You went back over 0:08:10.360 --> 0:08:12.840 a hundred years, the ten biggest bubbles. One are the 0:08:12.840 --> 0:08:15.920 things that you found in common about these bubbles? That David, 0:08:15.960 --> 0:08:18.880 there's so much chattering the market about bubbles, but yet 0:08:18.920 --> 0:08:21.480 what exactly is a bubble? How do you define a bubble? 0:08:21.960 --> 0:08:26.000 Is subject to much speculation itself and subjectivity. So what 0:08:26.040 --> 0:08:30.760 I did was to look at the ten biggest bubbles 0:08:30.760 --> 0:08:33.840 of the past century and see what were the common 0:08:33.920 --> 0:08:39.360 features here? And some uh objective characteristics were present in 0:08:39.440 --> 0:08:42.040 all the bubbles, and some of it was obviously subjective, 0:08:42.520 --> 0:08:45.959 but the one common factor was this that typically a 0:08:46.080 --> 0:08:49.040 bubble is a trend that has been going on for 0:08:49.080 --> 0:08:53.160 a while, and in the final year, the final twelve months, 0:08:53.280 --> 0:08:56.880 you see a massive acceleration in that trend, with prices 0:08:56.960 --> 0:09:01.360 increasing by typically hundred percent over a twelve month period, 0:09:01.679 --> 0:09:04.040 and a lot of the gains packed into the last 0:09:04.360 --> 0:09:07.040 few months of that twelve month period. So that is 0:09:07.080 --> 0:09:10.720 the most objective criteria of looking at any bubble. The 0:09:10.760 --> 0:09:14.280 most subjective one is that it's also accompanied by a 0:09:14.280 --> 0:09:19.960 lot of speculative activity, frenzy trading, uh, mass, detailed participation. 0:09:20.480 --> 0:09:22.840 Those are some of the other subjective criteria that go 0:09:22.920 --> 0:09:26.360 hand in hand. But a hundred percent increase in the 0:09:26.400 --> 0:09:29.520 price of any acid that has already been rising for 0:09:29.559 --> 0:09:34.160 a while but concentrated towards the game is one objective 0:09:34.160 --> 0:09:37.600 criteria that you can see in every single big bubble 0:09:37.880 --> 0:09:40.360 of the past century. Sure, I think it's fair to 0:09:40.400 --> 0:09:43.040 say just about every week we're seeing some frenzy speculations 0:09:43.040 --> 0:09:46.280 someplace or the other. But applying your objective criteria that 0:09:47.040 --> 0:09:50.320 run up up to the peak, what do you see 0:09:50.400 --> 0:09:51.839 right now in the market place? Where do you see 0:09:51.880 --> 0:09:54.880 things that fit that those criteria? So I think if 0:09:54.920 --> 0:09:57.480 you look at both the objective and the subjective triteria, 0:09:57.559 --> 0:10:01.400 remember about a but it's not just something about one 0:10:01.440 --> 0:10:04.280 stock rising. It's a concept. It's about the fact that 0:10:04.320 --> 0:10:07.800 everyone believes in some new new thing, that this concept 0:10:07.960 --> 0:10:10.520 is here to stay and about to change the world. 0:10:10.640 --> 0:10:13.640 So it is um as I say, a good idea 0:10:13.880 --> 0:10:16.840 going too far. So what is it in the marketplace 0:10:16.880 --> 0:10:21.000 today that we see which looks like about a bubble? 0:10:21.480 --> 0:10:23.760 So I think that you see this ince and obviously 0:10:23.840 --> 0:10:27.880 some of the cryptocurrency space. We see this in, uh, 0:10:28.120 --> 0:10:31.080 some of the clean energy stocks. We see this in 0:10:31.200 --> 0:10:34.800 some of the stacks. We see this in some of 0:10:34.800 --> 0:10:38.600 those pandemic stocks, the small cap stocks which have benefited 0:10:38.600 --> 0:10:42.400 a lot because of the pandemic. And we also see 0:10:42.400 --> 0:10:45.960 this in some of these tech companies that really have 0:10:46.080 --> 0:10:50.479 no earnings. Uh. You know. So there are various indcas 0:10:50.520 --> 0:10:55.480 on Wall Street that define these uh trends um. And 0:10:56.360 --> 0:10:58.840 these are what I call bubblets. And I think that 0:10:58.920 --> 0:11:02.960 this is a slight a new concept. Bubbles are industrial uh, 0:11:03.400 --> 0:11:05.680 the entire market white. Right that you had the big 0:11:05.720 --> 0:11:08.920 bubble of nine, you had the Chinese they share bubble 0:11:09.000 --> 0:11:12.520 of two fifteen, You had the gold bubble of the nineties, 0:11:12.520 --> 0:11:18.960 seventies oil. Uh, those are the really big market bubbles. 0:11:19.000 --> 0:11:21.440 But I think that one step below that is what 0:11:21.480 --> 0:11:26.240 I call bubblets. These are not market white bubbles, but 0:11:26.880 --> 0:11:31.360 sector specific bubbles. And what we have today is I 0:11:31.360 --> 0:11:33.400 don't think we have a market white bubble because the 0:11:33.440 --> 0:11:35.880 earnings have been very strong. But I think we do 0:11:36.000 --> 0:11:38.920 have sector white bubbles where you do not really have 0:11:39.000 --> 0:11:43.840 any earnings or any great fundamental free cash flow for 0:11:43.880 --> 0:11:48.080 these companies, and yet you have massive run ups on 0:11:48.120 --> 0:11:50.480 the back of the concept. So that I think is 0:11:50.520 --> 0:11:54.960 the important defining feature today and also differentiating feature today 0:11:55.000 --> 0:11:58.320 of the bubblets we have in the marketplace. As you 0:11:58.360 --> 0:12:02.200 look at past bubbles or bubbles, Uh, do you see 0:12:02.240 --> 0:12:05.400 situations where there's a correction then it resumes its rise 0:12:05.520 --> 0:12:08.280 up or is there a correction it resumes it's right, 0:12:08.320 --> 0:12:11.640 it's fall down. That's a great point, David, And we 0:12:11.679 --> 0:12:15.080 looked at that specifically, and here's what I came up with, 0:12:15.280 --> 0:12:18.240 which is that if you look at most trends, nothing 0:12:18.280 --> 0:12:21.440 goes up in a straight line. Uh. It only seems 0:12:21.440 --> 0:12:26.360 so in retrospect, But typically what we found was that 0:12:26.640 --> 0:12:31.959 you have draw downs of around those do not classify 0:12:32.000 --> 0:12:35.480 as a break in trend. But once any of these 0:12:35.800 --> 0:12:40.600 trends decline by more than thirty five percent, that usually 0:12:40.640 --> 0:12:42.880 marks the end of the bubble. That means the trend 0:12:42.960 --> 0:12:46.079 is broken, and they often want to decline as much 0:12:46.120 --> 0:12:50.600 as seventy from the peak over two year time horizon, 0:12:51.000 --> 0:12:54.839 so that is the broad template, and what we see 0:12:54.840 --> 0:12:57.319 in the bubble it's today is that most of them 0:12:57.600 --> 0:13:01.920 have declined by more than thirty five set. So that's 0:13:01.920 --> 0:13:04.520 what makes me feel that the trend is broken in 0:13:04.600 --> 0:13:07.800 many of these bubblets, and we may have further downside 0:13:08.160 --> 0:13:11.240 in the months, if not quarters ahead. One of the 0:13:11.280 --> 0:13:13.600 big debates going on in all sorts of ways, including 0:13:13.600 --> 0:13:15.360 with the inflation and other things right now, is is 0:13:15.360 --> 0:13:18.560 it different this time? And certainly it is different, at 0:13:18.600 --> 0:13:21.440 least in the fact of a very rapid fall in 0:13:21.480 --> 0:13:23.040 the economy as we shut it down, and then a 0:13:23.160 --> 0:13:25.679 very rapid rise. But it's also different in the degree 0:13:25.760 --> 0:13:29.720 of monetary and fiscal support for the economy. Could that 0:13:29.760 --> 0:13:31.800 make us have a different result when it comes to 0:13:31.800 --> 0:13:35.360 your bubblets? Yes, entirely possible. You know, we have never 0:13:35.400 --> 0:13:41.600 had such an extraordinary um uh accommodation in monetary policy 0:13:41.720 --> 0:13:45.120 and fiscal policy to go with it. There's one statistic 0:13:45.160 --> 0:13:48.400 I keep repeating, which are the twenty percent of all 0:13:48.440 --> 0:13:51.960 the dollars in circulation in the world were printed just 0:13:52.160 --> 0:13:56.160 last year, So that's an extraordinary amount of monetary accommodation. 0:13:56.200 --> 0:13:58.679 And even if you end up getting some hawkish not 0:13:59.240 --> 0:14:02.280 noises from FED in other central banks to reverse their 0:14:02.280 --> 0:14:05.760 accommodation will mean a lot. So it's entirely possible that 0:14:05.800 --> 0:14:10.680 this trend lasts longer, and maybe the historical template doesn't 0:14:11.120 --> 0:14:14.079 follow this time, but I still feel the probability is 0:14:14.160 --> 0:14:20.200 kewed on the downside because uh, these trends are very extended. 0:14:20.680 --> 0:14:24.640 We are getting some amount of less monetary accommodation, and 0:14:24.680 --> 0:14:27.360 so even though it could be different this time, and 0:14:27.440 --> 0:14:31.640 maybe some of these UH patterns don't apply to things 0:14:31.640 --> 0:14:34.280 like cryptocurrency on which I had been very polish last 0:14:34.360 --> 0:14:37.720 year because this is a new news thing and this 0:14:37.800 --> 0:14:40.800 is still not something which people are used to, but 0:14:40.880 --> 0:14:44.640 I still feel broadly, for these buglets, the trend is 0:14:45.120 --> 0:14:49.200 down and the risks are skewed to the downside. Okay, sure, 0:14:49.200 --> 0:14:51.120 thank you so much for your time today, that's for sure, 0:14:51.120 --> 0:14:54.400 Sharma of Morgan Stanley. Coming up, we take a look 0:14:54.400 --> 0:14:57.200 at the week ahead on Global Wall Street. That's next 0:14:57.240 --> 0:15:05.880 on Wall Street Week on Bloomberg. This is Bloomberg Wall 0:15:05.920 --> 0:15:10.120 Street Week with David Weston from Bloomberg Radio, p WC 0:15:10.320 --> 0:15:12.480 Privorice water as Cooper's Where where we used to know. 0:15:12.520 --> 0:15:15.480 It is investing twelve billion dollars across its global business 0:15:15.480 --> 0:15:17.960 in an overhaul, and important part of it has to 0:15:18.000 --> 0:15:21.160 do with PwC US as it's really reorganizing the way 0:15:21.280 --> 0:15:24.160 it does business in a very different way. We welcome 0:15:24.200 --> 0:15:27.040 now Tim Ryan. He's p w c US chairman and 0:15:27.120 --> 0:15:29.520 senior partners. So Tim, thank you for being here. Take 0:15:29.600 --> 0:15:31.720 us through what you're doing here, because it's it's fascinating, 0:15:31.760 --> 0:15:35.880 it really reflects a fundamental redo of your professional services organization. 0:15:36.200 --> 0:15:37.760 What we did the last couple of years is we 0:15:38.000 --> 0:15:39.680 try to look around the corner. A big thing our 0:15:39.720 --> 0:15:41.640 clients look for us is not just to tell them 0:15:41.680 --> 0:15:44.400 what's happening today, but to help them peak around the 0:15:44.480 --> 0:15:46.920 corner and see what's going to define the big issues 0:15:47.120 --> 0:15:49.600 over the next ten years. And as we did that, 0:15:49.880 --> 0:15:54.120 it became very clear that the single biggest element of 0:15:54.320 --> 0:15:57.320 in terms of opportunity and challenges our clients will have 0:15:58.080 --> 0:16:02.120 is gaining trust and maintain aiming trust. Where expectations are 0:16:02.160 --> 0:16:05.080 going up and the topics are becoming broader over the 0:16:05.160 --> 0:16:08.840 next ten years, and how companies balance profits and purpose 0:16:09.320 --> 0:16:13.200 gain competitive advantage all across the globe. It's the issue 0:16:13.320 --> 0:16:15.880 that has led us to launching this new strategy, which 0:16:15.880 --> 0:16:18.320 is we call the New Equation until I dare say, 0:16:18.360 --> 0:16:19.880 I think we saw some glimmers of that in the 0:16:19.960 --> 0:16:22.960 G seven meetings, actually in the in the Cornwall Consensus, 0:16:23.280 --> 0:16:25.640 where the nations now are reaching out. They're not just 0:16:25.800 --> 0:16:28.720 dealing with geopolitical issues, they're dealing with health issues. They're 0:16:28.760 --> 0:16:32.720 dealing with with equality and inclusion. Uh So when you're 0:16:32.760 --> 0:16:34.840 talking about trust, because as I'm saying, one of your 0:16:34.880 --> 0:16:38.800 divisions with the Trust Right consultancy, what does that include? Yeah, So, 0:16:38.960 --> 0:16:42.280 David great point. What we saw very clearly there's good 0:16:42.320 --> 0:16:44.680 news for business. The good news today is businesses amongst 0:16:44.680 --> 0:16:47.160 the most trusted institutions in the world. But when we 0:16:47.200 --> 0:16:50.000 peek around the corner, what's clear is the bar is 0:16:50.080 --> 0:16:53.720 going up and the number of topics that businesses will 0:16:53.760 --> 0:16:57.320 be expected to be trustworthyond is widening. So, for example, 0:16:57.480 --> 0:17:01.640 we see financial reporting hugely important, supporting hugely important. But 0:17:01.760 --> 0:17:03.760 what's going to happen over the next several years. It 0:17:03.800 --> 0:17:06.680 will go to issues like E. S G. Likes, tax like, tax, 0:17:06.760 --> 0:17:11.480 morality like tax fairness, data protection, data security, how you 0:17:11.560 --> 0:17:14.400 treat your workers, worker pay, and we see the number 0:17:14.480 --> 0:17:17.680 of topics going broader where businesses that need to be 0:17:17.800 --> 0:17:20.399 trusted on. We did see a glimpse at the G 0:17:20.600 --> 0:17:23.080 seven and we'll continue to see that more and more. 0:17:23.520 --> 0:17:24.879 And a big part of what we're trying to do 0:17:25.040 --> 0:17:27.440 is make sure we're ready to meet our clients needs 0:17:27.800 --> 0:17:30.440 as we lead them into the future. So one of 0:17:30.440 --> 0:17:32.200 the things that we're doing is we're in the US 0:17:32.320 --> 0:17:35.400 reorganizing our business and we will have the largest trust 0:17:35.480 --> 0:17:38.520 solutions business in the world as one of our two 0:17:38.600 --> 0:17:41.320 major segments to help our clients meet these needs. It 0:17:41.320 --> 0:17:44.040 will drive investment and where we drive our clients and 0:17:44.080 --> 0:17:46.359 work with them to help them succeed. Break that down 0:17:46.480 --> 0:17:50.000 and trust solutions as opposed to consulting solutions. What goes 0:17:50.040 --> 0:17:52.320 in each of those buckets great questions. So what goes 0:17:52.320 --> 0:17:55.560 into trust solutions is first our legacy assurance business, which 0:17:55.640 --> 0:17:58.159 is hugely important, and we'll continue to drive out of 0:17:58.200 --> 0:18:01.879 quality up our legacy tax reporting businesses, but also are 0:18:02.040 --> 0:18:06.679 very fast growing businesses such as E s G, Diversity inclusion, governance. 0:18:06.960 --> 0:18:09.600 All goes in that business cybersecurity, where we look to 0:18:09.720 --> 0:18:13.240 drive more capabilities up again because they will define trust 0:18:13.800 --> 0:18:17.480 and our consulting solutions business. It's our legacy advisory deals 0:18:17.600 --> 0:18:21.720 consulting and tax consulting businesses because in order to give 0:18:21.800 --> 0:18:25.200 strategy or execution consulting, we need to make sure taxes 0:18:25.320 --> 0:18:28.280 at the table because it's so important to company's future 0:18:28.320 --> 0:18:30.880 strategies as well. So that's what's in the two segments. 0:18:31.160 --> 0:18:34.159 Both will see significant investment in as we look to 0:18:34.200 --> 0:18:36.359 meet those needs of our clients. Tim, you run up 0:18:36.440 --> 0:18:38.080 tax a couple of times. Now, that was one of 0:18:38.119 --> 0:18:40.000 the things addressed to the G seven with the proposal 0:18:40.080 --> 0:18:42.119 for a global minimum tax. I mean, you know this 0:18:42.240 --> 0:18:45.040 area terribly well. Give us a sense of where that's going, 0:18:45.200 --> 0:18:47.520 and particularly talked about tax fairness. I guess that's one 0:18:47.520 --> 0:18:49.320 of the arguments for it. Yeah, without a doubt, David. 0:18:49.400 --> 0:18:51.520 So when we look at what's happened all across the globe, 0:18:51.600 --> 0:18:55.280 virtually every major country has done a major stimulus package. 0:18:55.320 --> 0:18:58.480 They've used their balance sheets to guide their countries their 0:18:58.560 --> 0:19:02.000 citizens through this incredible, big crisis that we've seen. Ultimately, 0:19:02.080 --> 0:19:04.639 somebody has to pay for that. As we studied the trends, 0:19:04.720 --> 0:19:06.520 what's clearly going to be important as tax will be 0:19:06.960 --> 0:19:10.000 critical oment of that. It's critical the individual countries, it's 0:19:10.040 --> 0:19:13.520 also critical to the overall global tax system. So it's 0:19:13.560 --> 0:19:16.400 not it's not unreasonable. It's not a surprise that we're 0:19:16.440 --> 0:19:19.920 seeing things like a global minimum tax discussed. But what's 0:19:19.920 --> 0:19:22.199 equally important is each country will need their share as 0:19:22.240 --> 0:19:24.200 well to pay down their debt as they look to 0:19:24.280 --> 0:19:27.960 deal with those balance sheets. So we expect ongoing dialogue. 0:19:28.200 --> 0:19:31.080 And when I talk to CEOs, people understand that taxes 0:19:31.119 --> 0:19:33.560 will likely go up. They want to read sure it's fair, 0:19:33.960 --> 0:19:36.960 predictable so they can plan for the long term. We'll 0:19:37.000 --> 0:19:38.680 see more and more. This is this places out. I 0:19:38.720 --> 0:19:41.600 think the G seven is just the beginning Artimilarly, try 0:19:41.640 --> 0:19:43.760 to put together two subjects that I think would go 0:19:43.840 --> 0:19:47.600 into your trust category. On the one hand, diversity and 0:19:47.720 --> 0:19:50.560 equity and inclusion very much an issue on everyone's mind 0:19:50.600 --> 0:19:53.840 and particularly us business right now, and audits because one 0:19:53.840 --> 0:19:57.040 of those issues is the racial audits. Where do you 0:19:57.119 --> 0:19:58.840 come out on that. Do you have clients who are 0:19:58.960 --> 0:20:01.960 engaging that or thinking about it deciding not to do it? David, 0:20:02.000 --> 0:20:03.920 one of the things that gives me great optimism is 0:20:03.960 --> 0:20:06.800 I trouble around not now physically again, which is great 0:20:06.880 --> 0:20:09.320 and virtually over the last year. As I speak with 0:20:09.400 --> 0:20:12.200 CEO is what we're constantly hearing is a number of 0:20:12.240 --> 0:20:14.800 topics right to the top of the list. I'm inspired 0:20:14.840 --> 0:20:18.440 by the fact that diversity inclusion is on every CEO's minds. 0:20:18.720 --> 0:20:20.600 I'm inspired that I see E. S. G In the 0:20:20.680 --> 0:20:23.119 topic for his minds in addition to the digital cyber 0:20:23.440 --> 0:20:26.680 In those topics, what I see is that businesses trying 0:20:26.720 --> 0:20:29.159 to think think about how they look forward. One of 0:20:29.200 --> 0:20:30.800 the big things we're doing is part of the New 0:20:30.880 --> 0:20:35.040 Equation is we're launching a three hundred billion dollar three 0:20:35.119 --> 0:20:38.680 year commitment that we call Tomorrow takes trust a big 0:20:38.840 --> 0:20:42.240 element that is a trust institute where we will take 0:20:42.359 --> 0:20:46.120 ten thousand current in future, seek speed executives to get 0:20:46.200 --> 0:20:49.000 them ready in the future as they need to deal 0:20:49.080 --> 0:20:52.160 with these complicated questions where we need to make progress 0:20:52.200 --> 0:20:55.600