1 00:00:09,720 --> 00:00:12,880 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with 2 00:00:13,600 --> 00:00:16,560 Speaker 1: David Gura. Daily we bring you insight from the best 3 00:00:16,560 --> 00:00:22,279 Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance 4 00:00:22,320 --> 00:00:27,000 Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course 5 00:00:27,320 --> 00:00:34,040 Speaker 1: on the Bloomberg Let's count to ten, but let's do 6 00:00:34,080 --> 00:00:37,559 Speaker 1: it in Greek. That's what quants do. Matthew Rothman, formerly 7 00:00:38,120 --> 00:00:40,639 Speaker 1: enormous it Lehman Brothers it wasn't his fault they went 8 00:00:40,680 --> 00:00:43,279 Speaker 1: down in flames, is now at Credit Squeeze. He's had 9 00:00:43,320 --> 00:00:48,159 Speaker 1: a global quantitative equity research and really has major credit 10 00:00:48,159 --> 00:00:51,239 Speaker 1: out of Chicago. In the Greek letters and trying to 11 00:00:51,280 --> 00:00:54,480 Speaker 1: figure out in this quiet time of low volatility, want 12 00:00:54,560 --> 00:00:57,520 Speaker 1: to do? Joining us well, taking notes, Gabrielle Santos of 13 00:00:57,640 --> 00:01:01,280 Speaker 1: JP Morgan, Matt, wonderful to have you with us here 14 00:01:01,360 --> 00:01:03,640 Speaker 1: this morning. I wanted to a look back of ten years. 15 00:01:03,760 --> 00:01:06,920 Speaker 1: We all read Fooled by Randomness, We read this that 16 00:01:07,280 --> 00:01:10,400 Speaker 1: other quantz stuff. I think of ken Osban and binomial 17 00:01:10,880 --> 00:01:13,600 Speaker 1: clouds and Bob dot dot. Have we learned anything? Are 18 00:01:13,640 --> 00:01:16,320 Speaker 1: we any smarter ten years down the road than the 19 00:01:16,400 --> 00:01:18,920 Speaker 1: quants were ten years ago or a lot smarter today 20 00:01:18,959 --> 00:01:21,360 Speaker 1: than we were ten years ago. Um, we're really now, 21 00:01:21,360 --> 00:01:23,800 Speaker 1: I would kind of say, almost in quant three point oh, 22 00:01:23,840 --> 00:01:25,960 Speaker 1: where ten years ago we were really at the end 23 00:01:26,000 --> 00:01:29,520 Speaker 1: of quant one point Um. We've learned a lot more 24 00:01:29,560 --> 00:01:32,280 Speaker 1: about how to get out of each other's way, We've 25 00:01:32,360 --> 00:01:35,040 Speaker 1: learned a lot about trading, We've learned really what other 26 00:01:35,120 --> 00:01:37,759 Speaker 1: people know U and really have. The world has become 27 00:01:37,840 --> 00:01:40,760 Speaker 1: so much more digitalized every day. Uh, and so just 28 00:01:40,800 --> 00:01:44,000 Speaker 1: the levels of data that we have, machines that are 29 00:01:44,080 --> 00:01:46,440 Speaker 1: at our at our fingertips are just so much more powerful. 30 00:01:46,840 --> 00:01:48,960 Speaker 1: Um that we've just made a lot of advance. Whether 31 00:01:49,000 --> 00:01:53,840 Speaker 1: it's seven or or two thousand seven, it's about blown 32 00:01:53,920 --> 00:01:57,800 Speaker 1: up certitude of hedges or arbitrage, or I've got a 33 00:01:57,840 --> 00:02:01,680 Speaker 1: constructed trade that blows up, maybe it's leverage or whatever. 34 00:02:01,960 --> 00:02:05,400 Speaker 1: What is the constructive trade of two thousand and seventeen 35 00:02:05,720 --> 00:02:10,160 Speaker 1: that worries you? What worries me is um one. There's 36 00:02:10,200 --> 00:02:13,120 Speaker 1: just been a a rush into quant and there's almost 37 00:02:13,120 --> 00:02:16,480 Speaker 1: been a little bit of a mania on the belief 38 00:02:16,560 --> 00:02:19,240 Speaker 1: that of what machine learnings can do, can can do 39 00:02:19,360 --> 00:02:21,960 Speaker 1: for you, uh, and what what it's capable of. I 40 00:02:21,960 --> 00:02:23,919 Speaker 1: think we need to take a step back and really 41 00:02:23,960 --> 00:02:25,840 Speaker 1: think about where we are and what it can do 42 00:02:25,880 --> 00:02:28,960 Speaker 1: and can't do. Full editorial agree with that statement, and 43 00:02:28,960 --> 00:02:31,560 Speaker 1: you see the FT article today which really shows the 44 00:02:31,639 --> 00:02:34,480 Speaker 1: wall of money going into your world not seeing till 45 00:02:34,560 --> 00:02:39,920 Speaker 1: Eban is anti fragile, talks about stressing and testing the system, 46 00:02:39,960 --> 00:02:45,799 Speaker 1: about robustness found through small failures. Are we there yet? 47 00:02:45,840 --> 00:02:48,560 Speaker 1: Are we more anti fragile where you've got a greater 48 00:02:48,680 --> 00:02:52,400 Speaker 1: confidence in the system. I think that what we've really 49 00:02:52,480 --> 00:02:54,360 Speaker 1: learned was what I learned the first day in my 50 00:02:54,440 --> 00:02:57,079 Speaker 1: class at the University of Chicago, where Eugene fam I 51 00:02:57,200 --> 00:02:59,120 Speaker 1: kind of came in and said, everything I'm going to 52 00:02:59,160 --> 00:03:02,160 Speaker 1: teach you is long. It's a model, right, and we 53 00:03:02,240 --> 00:03:04,880 Speaker 1: know it's a model, it's not reality. And I think 54 00:03:05,200 --> 00:03:08,200 Speaker 1: that most quants are very careful now to understand where 55 00:03:08,240 --> 00:03:11,600 Speaker 1: their models fail. What I worries me is that that 56 00:03:11,680 --> 00:03:13,840 Speaker 1: becomes a lot harder when you get into the deep 57 00:03:13,919 --> 00:03:18,440 Speaker 1: learning machines UH and artificial intelligence to really understand what 58 00:03:18,560 --> 00:03:21,360 Speaker 1: your machines don't know. If you don't really know what 59 00:03:21,440 --> 00:03:24,040 Speaker 1: your machines are doing and how they're doing it. And 60 00:03:24,080 --> 00:03:26,120 Speaker 1: I think those are the kind of systematic failures that 61 00:03:26,160 --> 00:03:29,520 Speaker 1: worry me, Matthew, where do you think the next financial 62 00:03:29,520 --> 00:03:34,680 Speaker 1: crisis will come from? What worries me most about that 63 00:03:34,920 --> 00:03:37,680 Speaker 1: is that we've been in an area an era of 64 00:03:37,840 --> 00:03:42,240 Speaker 1: very low volatility UH and in an era of particularly 65 00:03:42,320 --> 00:03:46,400 Speaker 1: low dispersion across returns, which is different than volatility. General 66 00:03:46,520 --> 00:03:49,360 Speaker 1: volatility can be driven by macro events UH, and so 67 00:03:49,400 --> 00:03:52,040 Speaker 1: you can see the VIX spike on macro news, but 68 00:03:52,160 --> 00:03:55,240 Speaker 1: all stocks may or may not move together at that point. 69 00:03:55,480 --> 00:03:58,000 Speaker 1: What's really remarkable about this time is that we've seen 70 00:03:58,160 --> 00:04:02,760 Speaker 1: very low dispersion across returns idiosyncratic news as we kind 71 00:04:02,760 --> 00:04:06,160 Speaker 1: of call it, an individual stock specific news, Those features 72 00:04:06,160 --> 00:04:09,240 Speaker 1: are very low, and so that, more than the VIX 73 00:04:09,680 --> 00:04:13,200 Speaker 1: being low, is what I think leads people towards leverage UM. 74 00:04:13,240 --> 00:04:16,040 Speaker 1: And so what we really need to see is um 75 00:04:16,320 --> 00:04:21,680 Speaker 1: for some kind of orderly pick up in dispersion across returns. Matthew. 76 00:04:21,680 --> 00:04:23,000 Speaker 1: What I'm trying to get at, right is that you're 77 00:04:23,000 --> 00:04:24,880 Speaker 1: saying that quants are more careful now, so that they 78 00:04:24,960 --> 00:04:27,279 Speaker 1: learned things in terms of models that they look and 79 00:04:27,440 --> 00:04:30,880 Speaker 1: the analysis that they're going through because of financial crisis. 80 00:04:30,920 --> 00:04:32,880 Speaker 1: But what if we had a financial crisis or a 81 00:04:32,920 --> 00:04:35,200 Speaker 1: crisis that came from something that we had to even 82 00:04:35,240 --> 00:04:37,960 Speaker 1: thought about. What does that mean for your models, the 83 00:04:38,040 --> 00:04:41,920 Speaker 1: quants models? It means something bad for everybody's models. Uh. 84 00:04:42,000 --> 00:04:44,719 Speaker 1: You know, if there's something that none of us can foresee, 85 00:04:44,720 --> 00:04:46,599 Speaker 1: of course your quant models aren't going to look at it, 86 00:04:46,720 --> 00:04:49,320 Speaker 1: and of course your fundamental analysts aren't going to get it. 87 00:04:49,320 --> 00:04:52,680 Speaker 1: It's bad for everybody. Okay, this is this is really important. Man. 88 00:04:52,680 --> 00:04:54,520 Speaker 1: If you bring up this chart, this is where Gabriel 89 00:04:54,600 --> 00:04:57,360 Speaker 1: Santos is living every day, and the low of the quiet, 90 00:04:57,400 --> 00:04:59,560 Speaker 1: you can look at any sset classes happens to be 91 00:04:59,880 --> 00:05:02,120 Speaker 1: the VIX and the quiet down to nine point nine 92 00:05:02,160 --> 00:05:05,280 Speaker 1: eight right now on the VIX. Is it harder for 93 00:05:05,320 --> 00:05:09,520 Speaker 1: you to have certitude about fancy quant systems given dampen 94 00:05:09,720 --> 00:05:12,919 Speaker 1: volatility in that all of these you know, the media 95 00:05:13,000 --> 00:05:16,279 Speaker 1: talks about them's linear functions and straight lines and you 96 00:05:16,320 --> 00:05:18,720 Speaker 1: and I know they're not. Is there almost a risk 97 00:05:18,760 --> 00:05:23,520 Speaker 1: of a convexity an acceleration of outcomes and bad outcomes 98 00:05:23,560 --> 00:05:26,120 Speaker 1: because of where the VIX is right now? You know, 99 00:05:26,160 --> 00:05:28,880 Speaker 1: the VIX is very important to look at um and 100 00:05:28,960 --> 00:05:32,320 Speaker 1: to understand volatility, but it doesn't measure the volatility that 101 00:05:32,400 --> 00:05:35,760 Speaker 1: concerns quants the most, which is that we want to 102 00:05:35,760 --> 00:05:39,599 Speaker 1: look at the dispersion among returns. So if everything is 103 00:05:39,640 --> 00:05:43,880 Speaker 1: moving together exactly, that makes it very hard. That's different 104 00:05:43,920 --> 00:05:48,320 Speaker 1: than time series volatility or macro shock volatility, and um, 105 00:05:48,360 --> 00:05:51,880 Speaker 1: so I'm less concerned with macro shock volatility, but I'm 106 00:05:51,920 --> 00:05:56,240 Speaker 1: really concerned about if you have a huge dispersion for 107 00:05:56,279 --> 00:05:59,760 Speaker 1: some reason that was to kick up in across returns. Okay, well, 108 00:05:59,800 --> 00:06:02,040 Speaker 1: one one final question on this. We're gonna geek out 109 00:06:02,040 --> 00:06:04,120 Speaker 1: here on the back end of the time series function 110 00:06:04,160 --> 00:06:07,160 Speaker 1: as an epsilon. Gabriella learning this in Pennsylvania. Some of 111 00:06:07,160 --> 00:06:09,400 Speaker 1: them struggle through it with the CEF. Hey on the 112 00:06:09,440 --> 00:06:11,880 Speaker 1: back end of a linear function. Thank you. James Hamilton 113 00:06:11,960 --> 00:06:14,760 Speaker 1: out at San Diego. Is this epsilon? Do you have 114 00:06:14,839 --> 00:06:17,320 Speaker 1: a clue or does she have a clue, or does 115 00:06:17,400 --> 00:06:20,640 Speaker 1: Jamie Diamond have a clue? Or Nil saus have a 116 00:06:20,640 --> 00:06:25,440 Speaker 1: clue where the epsilon is in this system? Today? You know, 117 00:06:26,800 --> 00:06:30,080 Speaker 1: we do have some clues on where the epsilons are. Um. 118 00:06:30,120 --> 00:06:32,480 Speaker 1: If you're a good quant you are stressing your models 119 00:06:33,120 --> 00:06:36,919 Speaker 1: all the time exactly, and you're trying to understand what 120 00:06:37,040 --> 00:06:39,520 Speaker 1: doesn't what don't you know? Uh? And that is what 121 00:06:39,680 --> 00:06:42,240 Speaker 1: is most dangerous. Uh. And that's true whether your quant 122 00:06:42,360 --> 00:06:45,320 Speaker 1: or not. Now take the brilliance of this gabriella over 123 00:06:45,320 --> 00:06:48,320 Speaker 1: to your world. You have to explain to pools of money, 124 00:06:48,680 --> 00:06:52,600 Speaker 1: the Rothman world. How do you take his world over 125 00:06:52,640 --> 00:06:54,520 Speaker 1: to mom and pop with a pot of money or 126 00:06:54,520 --> 00:06:56,880 Speaker 1: an institution with a pot of money. So a couple 127 00:06:56,880 --> 00:06:58,960 Speaker 1: of the concepts we were discussed saying, first of all, 128 00:06:59,000 --> 00:07:01,560 Speaker 1: in terms of all until day, that's a conversation we've 129 00:07:01,560 --> 00:07:04,120 Speaker 1: been having a lot with, as you called the mom 130 00:07:04,120 --> 00:07:08,240 Speaker 1: and pop Inbustorum. Our view on low volatility um is 131 00:07:08,279 --> 00:07:10,720 Speaker 1: that this is a very different world than it's been 132 00:07:10,800 --> 00:07:14,440 Speaker 1: for the last six years. Volatility in terms of economic 133 00:07:14,520 --> 00:07:17,000 Speaker 1: data is much lower than it used to be. You 134 00:07:17,080 --> 00:07:20,480 Speaker 1: now have a much better, much more solid global economy, 135 00:07:20,760 --> 00:07:23,680 Speaker 1: and the volatility and earnings has improved as well. So 136 00:07:23,760 --> 00:07:27,440 Speaker 1: we would this low volatility to us makes sense and 137 00:07:27,520 --> 00:07:29,760 Speaker 1: that's something we've been trying to explain to our investors. Okay, 138 00:07:29,800 --> 00:07:32,240 Speaker 1: this has been fabulous. We're gonna put this conversation with 139 00:07:32,280 --> 00:07:35,840 Speaker 1: Miss Santos and Dr Rothman out on iTunes on the 140 00:07:35,920 --> 00:07:38,800 Speaker 1: podcast today this is extraordinary, and I'll throw some books 141 00:07:38,840 --> 00:07:42,000 Speaker 1: out on social media as well to keep up, including 142 00:07:42,000 --> 00:07:59,960 Speaker 1: Sheldon Atenberg's classic on the Greek letter, James David's uh, 143 00:08:00,000 --> 00:08:03,360 Speaker 1: among other things, was an admiral in the Navy, and 144 00:08:03,440 --> 00:08:06,360 Speaker 1: like all people going up the food chain, he even 145 00:08:06,400 --> 00:08:10,880 Speaker 1: spoke to marines, having forbid on destroyers, on aircraft carriers, 146 00:08:10,960 --> 00:08:15,520 Speaker 1: and even spoke to other parts of our military operations. UH. 147 00:08:15,680 --> 00:08:18,360 Speaker 1: Mrs de Retus has moved on to international relations at 148 00:08:18,400 --> 00:08:22,880 Speaker 1: the Fletcher School of Tuft University. His book, The Leader's Bookshelf. 149 00:08:23,760 --> 00:08:26,160 Speaker 1: The Leader's Bookshelf is my book of the summer. I 150 00:08:26,240 --> 00:08:31,280 Speaker 1: can't say enough about it. Is just absolutely spectacular, giving 151 00:08:31,280 --> 00:08:35,160 Speaker 1: you a wide set of books. Admiral, good morning, great, 152 00:08:36,880 --> 00:08:39,600 Speaker 1: it's going very good. In the back of The Leader's Bookshelf, 153 00:08:39,640 --> 00:08:43,840 Speaker 1: you spend more time on a general from Brighton, Massachusetts 154 00:08:43,840 --> 00:08:48,000 Speaker 1: than anybody in your book, maybe with the possible exception 155 00:08:48,040 --> 00:08:50,760 Speaker 1: of Maddis, but there's a beautiful point there where you 156 00:08:50,800 --> 00:08:55,080 Speaker 1: have Kelly of Boston and Maddis with seven hundred or 157 00:08:55,120 --> 00:09:00,280 Speaker 1: three thousand books in their library. General Kelly is a leader. 158 00:09:00,720 --> 00:09:04,600 Speaker 1: The president is not. What will General Kelly teach the 159 00:09:04,640 --> 00:09:08,720 Speaker 1: president of the United States. Well, going back to the book, 160 00:09:08,760 --> 00:09:12,600 Speaker 1: the Leader's Bookshelf, I would suggest that John Kelly pulled 161 00:09:12,640 --> 00:09:15,280 Speaker 1: the book out and talked to the President about three 162 00:09:15,280 --> 00:09:19,080 Speaker 1: books that are in there. One is by his National 163 00:09:19,120 --> 00:09:23,520 Speaker 1: Security advisor, General H. R. McMaster. It's General Election and Duty, 164 00:09:23,559 --> 00:09:26,160 Speaker 1: and I think Kelly needs to say to the president, 165 00:09:26,760 --> 00:09:30,360 Speaker 1: Mr President, my intention is to speak truth to your power, 166 00:09:31,400 --> 00:09:34,120 Speaker 1: as the Joint chiefs of Staff did not do during 167 00:09:34,160 --> 00:09:36,480 Speaker 1: the war in Vietnam. The second one is Doris Kearns 168 00:09:36,480 --> 00:09:41,000 Speaker 1: Goodwin's Team of Rivals and the idea that we can 169 00:09:41,040 --> 00:09:44,120 Speaker 1: have rivals in this White House, but at the end 170 00:09:44,120 --> 00:09:46,840 Speaker 1: of the day, it has to be a team, not 171 00:09:47,000 --> 00:09:50,280 Speaker 1: just a team of rivals. And then thirdly, I think 172 00:09:50,320 --> 00:09:53,640 Speaker 1: the book that uh Donald Trump ought to read is, 173 00:09:53,760 --> 00:09:56,240 Speaker 1: and this may surprise you a Connecticut Yankee and Keen 174 00:09:56,360 --> 00:10:01,360 Speaker 1: Arthur's Court for Innovation for Change, because he's got to 175 00:10:01,440 --> 00:10:04,000 Speaker 1: change the way he's doing business at this point. Now. 176 00:10:04,600 --> 00:10:07,640 Speaker 1: General Kelly, even with all of his characteristics, may not 177 00:10:07,679 --> 00:10:09,760 Speaker 1: be able to get the President to read those books, 178 00:10:09,760 --> 00:10:12,360 Speaker 1: but he can talk to him about them. He can 179 00:10:12,600 --> 00:10:15,600 Speaker 1: drive on those principles and hope to bring some order 180 00:10:15,640 --> 00:10:18,720 Speaker 1: out of chaos in the White House alongside Ivanka Trump 181 00:10:18,920 --> 00:10:21,640 Speaker 1: has been quoted as saying she's thrilled to be alongside 182 00:10:21,679 --> 00:10:25,360 Speaker 1: the marine general. Tell me about command and control in 183 00:10:25,360 --> 00:10:28,600 Speaker 1: the world is of Rita's or Kelly? What does that 184 00:10:28,640 --> 00:10:32,800 Speaker 1: actually mean? When the media talks about general's coming in 185 00:10:32,880 --> 00:10:37,920 Speaker 1: with command and control, translate that. So when I was 186 00:10:38,040 --> 00:10:41,200 Speaker 1: the Supreme Alley Commander of NATO, I had control of 187 00:10:41,720 --> 00:10:44,800 Speaker 1: hundreds of thousands of forces. And the one thing you 188 00:10:44,960 --> 00:10:48,120 Speaker 1: learn early on in a military career is that there 189 00:10:48,160 --> 00:10:50,800 Speaker 1: can be only one chief of staff. My chief of 190 00:10:50,840 --> 00:10:53,920 Speaker 1: step by the way, Tom was a German four star general, 191 00:10:54,200 --> 00:10:56,800 Speaker 1: and you haven't seen order and discipline that you've seen 192 00:10:56,800 --> 00:11:00,719 Speaker 1: that German general as a chief of staff. Um. And 193 00:11:00,760 --> 00:11:03,679 Speaker 1: I think John Kelly knows this equally well. He was 194 00:11:03,760 --> 00:11:06,680 Speaker 1: commander of Southern Command while I was over there in Europe, 195 00:11:07,120 --> 00:11:10,560 Speaker 1: and he will seek to drive home the principle that 196 00:11:10,960 --> 00:11:14,520 Speaker 1: no one stands alongside the chief of staff. That just 197 00:11:14,920 --> 00:11:17,440 Speaker 1: doesn't work, and we saw it blow up already with 198 00:11:17,520 --> 00:11:21,640 Speaker 1: the previous ban and arrangement. There's only one way to 199 00:11:21,800 --> 00:11:24,240 Speaker 1: run the staff and a book Bonka. Trump wants to 200 00:11:24,280 --> 00:11:28,040 Speaker 1: be on the staff and not just be an exocicio adviser. 201 00:11:28,120 --> 00:11:29,520 Speaker 1: That's a different role. But if she wants to be 202 00:11:29,559 --> 00:11:32,600 Speaker 1: on the staff, she reports to the key word here 203 00:11:32,920 --> 00:11:35,679 Speaker 1: chief of Staff, and well Strees, let me ask you 204 00:11:35,720 --> 00:11:38,000 Speaker 1: a question here about how you might approach this job. 205 00:11:38,080 --> 00:11:40,480 Speaker 1: Something that's been highlighted here in recent days is that 206 00:11:41,360 --> 00:11:43,439 Speaker 1: John Kelly doesn't have a whole lot of experience dealing 207 00:11:43,480 --> 00:11:45,160 Speaker 1: with Congress. A lot of what the chief of Staff 208 00:11:45,200 --> 00:11:48,480 Speaker 1: does is finesse the president's agenda with the legislative agenda 209 00:11:48,760 --> 00:11:51,520 Speaker 1: on Capitol Hill. If you were in his shoes, how 210 00:11:51,559 --> 00:11:55,400 Speaker 1: would you foster or build that relationship or better that 211 00:11:55,480 --> 00:11:58,839 Speaker 1: relationship between the White House and the Congress. Great point, 212 00:11:58,920 --> 00:12:02,480 Speaker 1: David um One. A little notice thing about John Kelly 213 00:12:02,640 --> 00:12:05,280 Speaker 1: I'll add to the conversation is that he spent two 214 00:12:05,360 --> 00:12:09,560 Speaker 1: years on Capitol Hill as a one star Marine general 215 00:12:09,679 --> 00:12:13,400 Speaker 1: in charge of the U. S. Marine Corps relationships with 216 00:12:13,840 --> 00:12:17,840 Speaker 1: the Congress. So he has traveled, he has interacted. He 217 00:12:17,960 --> 00:12:21,160 Speaker 1: is well known up there, not as a political figure 218 00:12:22,000 --> 00:12:24,240 Speaker 1: but as a military figure. So the key for him, 219 00:12:24,320 --> 00:12:26,480 Speaker 1: Your point is that he has to be able to 220 00:12:26,520 --> 00:12:30,959 Speaker 1: translate his previous role on Capitol Hill of representing Marine 221 00:12:31,000 --> 00:12:33,920 Speaker 1: Corps to now representing the President of the United States 222 00:12:34,000 --> 00:12:37,280 Speaker 1: and the executive branch. He needs to talk to the 223 00:12:37,280 --> 00:12:40,520 Speaker 1: people on the hill, use the personal relationships he has, 224 00:12:40,559 --> 00:12:43,480 Speaker 1: but convinced them that he can make that transition, and 225 00:12:43,520 --> 00:12:45,760 Speaker 1: I think he can. I interviewed him shortly after he 226 00:12:45,800 --> 00:12:48,160 Speaker 1: became the Secretary of the Department of Homeland Security, and 227 00:12:48,160 --> 00:12:50,840 Speaker 1: I was struck by his sense of duty. He told 228 00:12:50,840 --> 00:12:52,920 Speaker 1: me that he hadn't met the president before their first 229 00:12:52,960 --> 00:12:55,719 Speaker 1: meeting after Donald Trump had been elected president. He was 230 00:12:55,760 --> 00:12:58,600 Speaker 1: asked to do the job right after that. As I said, 231 00:12:58,880 --> 00:13:01,959 Speaker 1: a real sense of duty evaded his conversation about what 232 00:13:02,080 --> 00:13:05,600 Speaker 1: led him to take that that job. From your your 233 00:13:05,679 --> 00:13:08,640 Speaker 1: relationship with him, knowing him, help us understand why he 234 00:13:08,640 --> 00:13:10,480 Speaker 1: would take this job. This seems like a real dog's 235 00:13:10,480 --> 00:13:12,599 Speaker 1: dinner in a way to become White House Chief of 236 00:13:12,600 --> 00:13:15,840 Speaker 1: Staff at this point, Uh, well, I know John Kelly 237 00:13:15,920 --> 00:13:19,120 Speaker 1: for over four years. We were a young lieutenants banging 238 00:13:19,160 --> 00:13:24,200 Speaker 1: around on Carrier Forestall back in the late seventies. Um, 239 00:13:24,240 --> 00:13:26,480 Speaker 1: and he is all about dude. He comes out of 240 00:13:26,559 --> 00:13:31,360 Speaker 1: a tough neighborhood in Boston, where you stand with your friends, 241 00:13:31,440 --> 00:13:34,920 Speaker 1: you work for someone, it matters. The relationships you have 242 00:13:35,840 --> 00:13:39,400 Speaker 1: are who you are. So it is a dog's breakfast 243 00:13:39,440 --> 00:13:42,000 Speaker 1: for him to shift the meal time slightly. And I 244 00:13:42,000 --> 00:13:46,080 Speaker 1: think that that General Kelly took the job because he 245 00:13:46,200 --> 00:13:49,959 Speaker 1: thinks he can help the country move forward. His whole 246 00:13:49,960 --> 00:13:52,679 Speaker 1: life has been about that. Well. I agree with that 247 00:13:52,720 --> 00:13:55,120 Speaker 1: on duty and of course you know some of the 248 00:13:55,160 --> 00:13:58,040 Speaker 1: critics have said the president was born on third base. 249 00:13:58,200 --> 00:14:00,240 Speaker 1: General Kelly was out of the grand stand as the 250 00:14:00,320 --> 00:14:04,880 Speaker 1: chief seats of fenwayn park Um on page one of 251 00:14:04,960 --> 00:14:07,839 Speaker 1: your book, and again, folks, the leader's bookshelf my book 252 00:14:07,840 --> 00:14:10,360 Speaker 1: of the summer. I'd also note that Stravidez doesn't stop 253 00:14:10,400 --> 00:14:14,200 Speaker 1: writing every day see powers jaw dropping view of our 254 00:14:14,280 --> 00:14:18,959 Speaker 1: oceans as well. But Admiral, you've got the chief of 255 00:14:19,000 --> 00:14:23,880 Speaker 1: Staff of the Army or Di Naro writing about George Marshall, 256 00:14:24,320 --> 00:14:28,400 Speaker 1: who is of generation before us, their hero. And one 257 00:14:28,440 --> 00:14:33,040 Speaker 1: of the features here is speak your mind, George Marshall 258 00:14:33,160 --> 00:14:36,200 Speaker 1: on speak your mind. How does anyone thought, as someone 259 00:14:36,280 --> 00:14:40,480 Speaker 1: with a charm of General Kelly actually sit the commander 260 00:14:40,520 --> 00:14:43,400 Speaker 1: in chief down and go, no, sir, this is how 261 00:14:43,400 --> 00:14:45,920 Speaker 1: we do it. Can you envision that's going to occur? 262 00:14:47,000 --> 00:14:49,840 Speaker 1: I do Tom, and he'll do it exactly the way 263 00:14:49,920 --> 00:14:53,320 Speaker 1: you just said. It, but he'll do it privately. It 264 00:14:53,400 --> 00:14:55,680 Speaker 1: will not be leaked. You and I aren't going to 265 00:14:55,760 --> 00:14:59,680 Speaker 1: be talking about the details of those conversations. And I 266 00:14:59,680 --> 00:15:03,840 Speaker 1: think General Kelly will establish rapport with the President that 267 00:15:03,880 --> 00:15:07,440 Speaker 1: allows him to uh take the bark off the tree, 268 00:15:07,480 --> 00:15:11,320 Speaker 1: as don rumsfl calls it, and really have that conversation. 269 00:15:11,760 --> 00:15:14,760 Speaker 1: If he does, he'll succeed. If he cannot do that, 270 00:15:15,040 --> 00:15:18,000 Speaker 1: he will fail. And I'd say there's a better than 271 00:15:18,080 --> 00:15:20,920 Speaker 1: even chance that he'll succeed, but not much over a 272 00:15:20,960 --> 00:15:23,880 Speaker 1: better than even chance. Let me get you to react 273 00:15:23,880 --> 00:15:26,800 Speaker 1: to the announcement that was made on Twitter last last week, 274 00:15:26,800 --> 00:15:28,960 Speaker 1: a policy announcement from the President. Tom and I were 275 00:15:29,000 --> 00:15:31,200 Speaker 1: on areas. These three tweets came out of the President 276 00:15:31,240 --> 00:15:34,720 Speaker 1: saying that the transgender individuals will not be allowed to 277 00:15:34,760 --> 00:15:37,120 Speaker 1: serve in any capacity in the US military. I wonder 278 00:15:37,120 --> 00:15:39,280 Speaker 1: if you could just react to how that announcement was 279 00:15:39,320 --> 00:15:42,600 Speaker 1: handed down and if you were a commander at this point, 280 00:15:42,600 --> 00:15:45,800 Speaker 1: what you would make of of of that directive communicated 281 00:15:45,840 --> 00:15:49,920 Speaker 1: in three three tweets of a hundred forty characters each. Yeah, 282 00:15:49,920 --> 00:15:52,640 Speaker 1: I think it would be extremely charitable to call it 283 00:15:52,680 --> 00:15:55,800 Speaker 1: a policy at all that Um, they really was a 284 00:15:55,880 --> 00:15:59,840 Speaker 1: series of disconnected tweets. You've watched both the uniform military 285 00:16:00,000 --> 00:16:02,720 Speaker 1: in the Department of Defense effectively walk away from it, 286 00:16:03,200 --> 00:16:06,240 Speaker 1: uh and say, hey, if you are transgender and you 287 00:16:06,280 --> 00:16:09,360 Speaker 1: are an active duty you're gonna continue serving until the 288 00:16:09,480 --> 00:16:13,040 Speaker 1: policy actually changes. It's a pretty good example of why 289 00:16:13,160 --> 00:16:16,680 Speaker 1: Jim Maddis took the right course of action when confronted 290 00:16:16,720 --> 00:16:19,240 Speaker 1: with a set of decisions. And these are decisions that 291 00:16:19,360 --> 00:16:23,560 Speaker 1: have to be made about whether we perform surgeries, whether 292 00:16:23,600 --> 00:16:26,720 Speaker 1: we take people as they are, what what are the 293 00:16:26,800 --> 00:16:29,800 Speaker 1: specifics of this? And General Man has said, look, I 294 00:16:29,800 --> 00:16:32,240 Speaker 1: need six months to figure this out. He's in the 295 00:16:32,280 --> 00:16:36,160 Speaker 1: middle of doing that. So for the president to try 296 00:16:36,200 --> 00:16:40,160 Speaker 1: and pre empt something uh, this sensitive makes no sense. 297 00:16:40,320 --> 00:16:43,600 Speaker 1: And I think, frankly, those tweets have been relegated to 298 00:16:43,640 --> 00:16:45,880 Speaker 1: the tweet bin of history at this point. And you're 299 00:16:45,920 --> 00:16:48,480 Speaker 1: going to see the military. You're gonna see the military 300 00:16:48,760 --> 00:16:52,239 Speaker 1: figure it outcome to the president regular order, make a recommendation, 301 00:16:52,560 --> 00:16:54,720 Speaker 1: then we'll have a policy going forward. That's how you 302 00:16:54,760 --> 00:16:57,800 Speaker 1: do business. And James Travites of course at Toughs the 303 00:16:57,840 --> 00:17:01,880 Speaker 1: Fletcher School. His new book is Seapower History and Geopolitics 304 00:17:01,960 --> 00:17:06,040 Speaker 1: of the World Oceans. The opening of it is absolutely spectacular. 305 00:17:06,600 --> 00:17:11,000 Speaker 1: Young stevidies translating tweets on the deck of the destroyers. 306 00:17:11,040 --> 00:17:14,120 Speaker 1: It goes out of San Diego Harbor, and he had 307 00:17:14,119 --> 00:17:16,960 Speaker 1: to take his dramam me no, I'm kidding. Anyways, Stevinus 308 00:17:17,000 --> 00:17:19,800 Speaker 1: will be with us the Seed Powers, wonderful new book, 309 00:17:19,880 --> 00:17:22,399 Speaker 1: a surprising book on our oceans, and of course the 310 00:17:22,480 --> 00:17:26,040 Speaker 1: Leader's Bookshop. We will continue where the Admiral Strevinus much more, 311 00:17:26,080 --> 00:17:30,320 Speaker 1: of course, on international relations and your Washington. This is 312 00:17:30,320 --> 00:17:33,680 Speaker 1: Bloomberg yesterday afternoon, animal Stevidus. So we had a moment 313 00:17:33,720 --> 00:17:35,480 Speaker 1: in foggy Bottom we haven't had in a while. The 314 00:17:35,520 --> 00:17:37,800 Speaker 1: Secretary State waltzed out to a podium and spoke to 315 00:17:37,840 --> 00:17:40,159 Speaker 1: reporters for a pretty extended period of time. He marked 316 00:17:40,400 --> 00:17:42,520 Speaker 1: at the end of six months in that office. And 317 00:17:42,520 --> 00:17:44,359 Speaker 1: one of the things that he talked about was the 318 00:17:44,440 --> 00:17:46,919 Speaker 1: U s relationship with Russia. And he said that he 319 00:17:47,000 --> 00:17:50,639 Speaker 1: talked to President Putin and to Sergei Lavrov, the Ford Minister, recently, 320 00:17:50,640 --> 00:17:52,879 Speaker 1: and told him that while the relationship is bad between 321 00:17:52,920 --> 00:17:56,520 Speaker 1: the US and Russia, indeed it could get worse. The 322 00:17:56,560 --> 00:17:59,080 Speaker 1: Secretary State scheduled to meet with Mr laugh Rov in Manila, 323 00:17:59,160 --> 00:18:02,440 Speaker 1: I believe later this week give us your sense of 324 00:18:02,680 --> 00:18:06,000 Speaker 1: the state of this relationship now and your prescription for 325 00:18:06,119 --> 00:18:10,760 Speaker 1: what Secretary Tylorson could do to mend things a little 326 00:18:10,760 --> 00:18:14,679 Speaker 1: bit here going forward. First of all, it's good to 327 00:18:14,720 --> 00:18:18,680 Speaker 1: see the Secretary out and about and actually conducting some 328 00:18:19,160 --> 00:18:21,719 Speaker 1: public diplomacy. He needs to do a lot more of 329 00:18:21,760 --> 00:18:25,600 Speaker 1: that than he has been, and that's salutary. In terms 330 00:18:25,640 --> 00:18:29,120 Speaker 1: of the relationship with Russia, David and Tom were at 331 00:18:29,160 --> 00:18:31,440 Speaker 1: the lowest point since the end of the Cold War. 332 00:18:31,640 --> 00:18:37,560 Speaker 1: I'd say that we have still some further bottom below us, however, 333 00:18:38,080 --> 00:18:41,199 Speaker 1: and what we need to be doing is confronting Russia 334 00:18:41,280 --> 00:18:44,960 Speaker 1: where we have to things like Syria where they support 335 00:18:44,960 --> 00:18:48,639 Speaker 1: a brutal dictator, Ukraine where they've annexed Crimea, the cyber 336 00:18:48,680 --> 00:18:51,359 Speaker 1: intrusions above all into our own electoral process. We have 337 00:18:51,440 --> 00:18:54,600 Speaker 1: to confront where we must, but we should cooperate where 338 00:18:54,640 --> 00:18:56,960 Speaker 1: we can. We have to look for some zones of cooperation. 339 00:18:57,040 --> 00:19:00,119 Speaker 1: At the moment there are few and far between. But 340 00:19:00,160 --> 00:19:03,280 Speaker 1: if I were the Secretarian State, I would put cooperation 341 00:19:03,320 --> 00:19:07,879 Speaker 1: in Afghanistan, cooperation in the Arctic, cooperational counter terrorism and 342 00:19:07,920 --> 00:19:11,000 Speaker 1: cooperation and counter narcotics at the top of my list. 343 00:19:11,040 --> 00:19:14,040 Speaker 1: So you can at least keep a dialogue open confront 344 00:19:14,080 --> 00:19:18,640 Speaker 1: where you must cooperate where you can and over time, 345 00:19:18,840 --> 00:19:22,840 Speaker 1: let's hope that this Russian investigation is completed. We need 346 00:19:22,880 --> 00:19:26,120 Speaker 1: to get that behind us, find out what happened, respond 347 00:19:26,160 --> 00:19:28,919 Speaker 1: to it before we can really repair this relationship. We 348 00:19:29,000 --> 00:19:31,159 Speaker 1: had news at the beginning of the week here Russia 349 00:19:31,240 --> 00:19:34,919 Speaker 1: expelling or requesting that two thirds of our diplomatic staff 350 00:19:35,000 --> 00:19:38,679 Speaker 1: in Russia leave that country. Aside from the symbolism of that, 351 00:19:38,720 --> 00:19:40,359 Speaker 1: and sure enough there there, there is a lot of 352 00:19:40,400 --> 00:19:43,040 Speaker 1: it there. What are the consequences of that, This this 353 00:19:43,160 --> 00:19:47,240 Speaker 1: back and forth with regard to diplomatic personnel, it will 354 00:19:47,400 --> 00:19:51,720 Speaker 1: further degrade relations between the countries. It's unfortunate that it 355 00:19:51,720 --> 00:19:55,800 Speaker 1: occurs just as we begin to move our new ambassador 356 00:19:55,880 --> 00:20:01,200 Speaker 1: to Russia, very competent uh individual John hunt Smun, former governor, 357 00:20:01,320 --> 00:20:05,480 Speaker 1: former ambassador to China. Uh. He's moving towards Moscow now, 358 00:20:05,520 --> 00:20:09,000 Speaker 1: but he'll arrive with a gutted staff and that he's 359 00:20:09,080 --> 00:20:12,400 Speaker 1: going to create real challenges for him as he tries 360 00:20:12,400 --> 00:20:14,160 Speaker 1: to get his teat on the ground. Top. We could 361 00:20:14,200 --> 00:20:16,320 Speaker 1: talk for three hours this morning, Ed, Well, let me 362 00:20:16,359 --> 00:20:18,960 Speaker 1: ask you about David and Nish's the Washington Post this 363 00:20:19,000 --> 00:20:22,840 Speaker 1: morning with just a scathing and interesting and smart op 364 00:20:23,080 --> 00:20:26,760 Speaker 1: ed on China. He talks about how the Secretary of 365 00:20:26,800 --> 00:20:30,200 Speaker 1: Commerce has been humiliated by the White House. The White 366 00:20:30,240 --> 00:20:36,160 Speaker 1: House was strong, harsh language, untraded on sanctions, and then 367 00:20:36,160 --> 00:20:38,520 Speaker 1: the Secretary of Defense has to deal with the same 368 00:20:38,560 --> 00:20:42,200 Speaker 1: dialogue of threats to the Korean How does a pro 369 00:20:42,400 --> 00:20:47,040 Speaker 1: like you synthesize the bellicost nature of a White House 370 00:20:47,359 --> 00:20:53,280 Speaker 1: that even defeats two visible and principal cabinet officers. But 371 00:20:53,400 --> 00:20:56,760 Speaker 1: I'm really worried about with China, Tom, The big prize 372 00:20:56,800 --> 00:21:00,679 Speaker 1: in this uh, in this relationship between the United States 373 00:21:00,680 --> 00:21:04,280 Speaker 1: and China, is the South China Sea, which is full 374 00:21:04,280 --> 00:21:07,000 Speaker 1: of hydrocarbons, which is the one piece of the puzzle 375 00:21:07,160 --> 00:21:10,200 Speaker 1: China doesn't happen. They don't have oil, they don't have 376 00:21:10,280 --> 00:21:13,000 Speaker 1: natural gas. They want control of those shipping lanes. This 377 00:21:13,160 --> 00:21:15,240 Speaker 1: is a vast body of water size in the Gulf 378 00:21:15,280 --> 00:21:18,520 Speaker 1: of Mexico, and we're gonna twist and turn over it. 379 00:21:18,600 --> 00:21:22,200 Speaker 1: In this relationship, the White House has got to construct 380 00:21:22,320 --> 00:21:25,439 Speaker 1: a fundamental strategy for how we're going to approach China 381 00:21:25,720 --> 00:21:28,760 Speaker 1: because China is playing the long game and they're gonna 382 00:21:28,760 --> 00:21:31,639 Speaker 1: say quickly if we don't map, does this start with 383 00:21:31,680 --> 00:21:33,719 Speaker 1: the Philippines? I mean, how do you how do you 384 00:21:33,760 --> 00:21:37,800 Speaker 1: develop a dialogue with the Philippines? And Mr Doutarte I 385 00:21:37,800 --> 00:21:40,520 Speaker 1: would put Mr to Turk in the ice box at 386 00:21:40,520 --> 00:21:43,000 Speaker 1: the moment. We're just not going to get anywhere with 387 00:21:43,080 --> 00:21:45,480 Speaker 1: the Filipines while he's there. We ought to be focused 388 00:21:45,480 --> 00:21:49,440 Speaker 1: instead on Vietnam and Malaysia, the two other principal name 389 00:21:49,720 --> 00:21:52,560 Speaker 1: around that about China Sea never enough time. Thank you 390 00:21:52,640 --> 00:21:54,600 Speaker 1: so much. I can't say enough about his two books 391 00:21:54,920 --> 00:21:59,080 Speaker 1: see Power on Your Oceans. It is illuminating in my 392 00:21:59,119 --> 00:22:01,960 Speaker 1: book of the Summer by James te Vitas and Manning Ansel, 393 00:22:02,359 --> 00:22:05,320 Speaker 1: The Leader's Bookshelf. I just rave about it. It's just 394 00:22:05,359 --> 00:22:09,600 Speaker 1: a fabulous, fabulous book. Throw it at every single board 395 00:22:09,680 --> 00:22:11,960 Speaker 1: kid at home and say shut up and read some 396 00:22:12,040 --> 00:22:14,639 Speaker 1: of the books in this book. That's what John Tucker 397 00:22:14,720 --> 00:22:29,680 Speaker 1: did this summer with his kids. My colleague Alex Steel 398 00:22:29,720 --> 00:22:32,120 Speaker 1: sitting down with Lloyd blank Find and Michael Bloomberg. Here 399 00:22:32,480 --> 00:22:35,440 Speaker 1: is Alex, Lloyd tell us why we're here in Baltimore today, 400 00:22:35,640 --> 00:22:38,719 Speaker 1: we're here in Baltimore to um to attend a graduation 401 00:22:39,000 --> 00:22:43,080 Speaker 1: of our first cohorts in our program ten thousand Small Businesses, 402 00:22:43,440 --> 00:22:46,920 Speaker 1: which is something which is a program that educates kind 403 00:22:46,920 --> 00:22:49,399 Speaker 1: of a mini n b A, if you will, for 404 00:22:50,000 --> 00:22:53,920 Speaker 1: established but established small business people who are in the 405 00:22:54,080 --> 00:22:57,679 Speaker 1: threshold who have the potential for explosive growth, and we 406 00:22:57,760 --> 00:23:01,080 Speaker 1: provide a lot of education, mentor ship in some cases 407 00:23:01,119 --> 00:23:04,439 Speaker 1: financing to get them over that hump and to have 408 00:23:04,560 --> 00:23:07,399 Speaker 1: them grow and then to hire people to get on 409 00:23:07,440 --> 00:23:11,360 Speaker 1: that virtuous cycle of more hiring, more employment. Therefore more 410 00:23:11,359 --> 00:23:14,960 Speaker 1: small businessmen get their products bought, etcetera, etcetera. So you know, 411 00:23:15,160 --> 00:23:19,840 Speaker 1: it's uh, it's the example of a program that we've 412 00:23:19,840 --> 00:23:22,040 Speaker 1: done in fourteen other cities around the country and it's 413 00:23:22,080 --> 00:23:25,880 Speaker 1: been very successful for us graduates. But for the first time, 414 00:23:25,920 --> 00:23:28,520 Speaker 1: Mike Bloomberg Philanthropies and Goldman is going to usher another 415 00:23:28,520 --> 00:23:31,919 Speaker 1: ten million dollars to the fund really to promote in Baltimore. 416 00:23:32,200 --> 00:23:34,359 Speaker 1: If you had this when you were starting out, what 417 00:23:34,359 --> 00:23:36,800 Speaker 1: would that have been like for you? Well, I might 418 00:23:36,840 --> 00:23:38,639 Speaker 1: have been success. Might have been success. I mean, you know, 419 00:23:38,680 --> 00:23:41,640 Speaker 1: I got ganging at Solomon Brothers. But funny thing we're doing, 420 00:23:41,720 --> 00:23:45,080 Speaker 1: we're copying to some extent Goldman's ten thousand Small Businesses 421 00:23:45,400 --> 00:23:48,080 Speaker 1: with Mayors. So we've had a bunch of program program 422 00:23:48,080 --> 00:23:50,840 Speaker 1: where we bring in mayors and train them. We do 423 00:23:50,880 --> 00:23:52,960 Speaker 1: it joint with Harvard University. The Case School and the 424 00:23:53,000 --> 00:23:55,879 Speaker 1: b School helped train In the end, it's management that 425 00:23:55,960 --> 00:23:59,679 Speaker 1: makes these organizations work. Whether it's a company or a 426 00:24:00,600 --> 00:24:03,919 Speaker 1: uh government or even your family. Somebody has to be 427 00:24:03,960 --> 00:24:05,880 Speaker 1: in charge and know how to bring people and make 428 00:24:05,920 --> 00:24:08,480 Speaker 1: them work together and bring them along and train them. 429 00:24:08,760 --> 00:24:12,840 Speaker 1: But small businesses. The ten Small Businesses reaches out to 430 00:24:12,880 --> 00:24:15,120 Speaker 1: people who have already started their business and now they've 431 00:24:15,160 --> 00:24:17,840 Speaker 1: got something going now they need some management training and 432 00:24:17,960 --> 00:24:21,520 Speaker 1: Bloomber Philanthropies is happy to partner with them. But we're 433 00:24:21,560 --> 00:24:24,680 Speaker 1: also doing it for cities may as who have already 434 00:24:24,680 --> 00:24:27,800 Speaker 1: been elected and giving them the management skills. Lloyd, you 435 00:24:27,840 --> 00:24:30,280 Speaker 1: obviously run an enormous company, but for a small business, 436 00:24:30,320 --> 00:24:32,840 Speaker 1: what's the hardest part for them? Now? Some of that 437 00:24:32,960 --> 00:24:36,399 Speaker 1: is very similar. I mean we're all wrestling around with regulation, 438 00:24:36,520 --> 00:24:40,720 Speaker 1: anxiety about whether an investment will be back over time. Um, 439 00:24:40,760 --> 00:24:42,760 Speaker 1: you know what the economic climate is going to be, 440 00:24:42,920 --> 00:24:46,560 Speaker 1: The risk that you take limitation of resources. I mean, 441 00:24:46,560 --> 00:24:49,080 Speaker 1: do you have the bandwidth, do you have enough people 442 00:24:49,200 --> 00:24:51,600 Speaker 1: can to help you manage a bigger enterprise than what 443 00:24:51,680 --> 00:24:54,680 Speaker 1: you have? What are the consequences of it not working out? Uh? 444 00:24:54,720 --> 00:24:56,919 Speaker 1: The only problem is is for a small business person, 445 00:24:57,160 --> 00:25:00,320 Speaker 1: all that's magnified that in many cases it's you, maybe 446 00:25:00,359 --> 00:25:02,639 Speaker 1: you and your immediate family, maybe you and your immediate 447 00:25:02,720 --> 00:25:06,040 Speaker 1: family and three employees or ten employees, and so the 448 00:25:06,080 --> 00:25:08,920 Speaker 1: consequence is a much more dramatic and you know something, 449 00:25:08,920 --> 00:25:11,199 Speaker 1: at the end of the day, Goldman Sachs has departments 450 00:25:11,560 --> 00:25:14,280 Speaker 1: to deal with regulation, to deal with planning, to deal 451 00:25:14,320 --> 00:25:18,720 Speaker 1: with assessing the investment return on a capital good that 452 00:25:18,760 --> 00:25:21,680 Speaker 1: we buy. But in a small business, uh, you don't 453 00:25:21,760 --> 00:25:24,480 Speaker 1: have that. And so what we are trying to do 454 00:25:25,080 --> 00:25:29,400 Speaker 1: is we're trying to give people, um, the the information 455 00:25:29,960 --> 00:25:32,119 Speaker 1: lessons you know, we have on the various segments that 456 00:25:32,160 --> 00:25:36,680 Speaker 1: we bring people through. We have things on business planning, negotiations, strategy, 457 00:25:36,960 --> 00:25:40,040 Speaker 1: how to negotiate with a bank for financing, how to 458 00:25:40,200 --> 00:25:43,200 Speaker 1: estimate the return profile of an investment that you make 459 00:25:43,200 --> 00:25:46,240 Speaker 1: in your business, and Uh, but what one thing we 460 00:25:46,280 --> 00:25:50,520 Speaker 1: do start out with these are fabulous people. We're already 461 00:25:50,600 --> 00:25:52,720 Speaker 1: keep it with taking people, as Mike has alluded to, 462 00:25:53,000 --> 00:25:57,359 Speaker 1: who are already somewhat successful in their business. Their commitment 463 00:25:57,440 --> 00:26:00,240 Speaker 1: is established, their ambition is establishment. The capable that he 464 00:26:00,280 --> 00:26:04,320 Speaker 1: has established there on the threshold possibly of a breakout, 465 00:26:04,760 --> 00:26:07,800 Speaker 1: and that really is a sweet spot for growth relative 466 00:26:07,840 --> 00:26:10,280 Speaker 1: to the investment you put in by getting them over 467 00:26:10,320 --> 00:26:12,600 Speaker 1: that hump. In addition to everything else, I think we 468 00:26:12,680 --> 00:26:15,520 Speaker 1: give them, we give them confidence in who they already 469 00:26:15,560 --> 00:26:18,080 Speaker 1: are and what they've already accomplished. And part of that confidence, 470 00:26:18,119 --> 00:26:20,360 Speaker 1: Mike obviously comes from that support, but also it comes 471 00:26:20,400 --> 00:26:23,000 Speaker 1: from visibility in the economy, and right now that feels 472 00:26:23,000 --> 00:26:25,760 Speaker 1: like visibility in d C. And the story that we 473 00:26:25,880 --> 00:26:28,720 Speaker 1: continually here is that nothing's gonna get done, no change 474 00:26:28,760 --> 00:26:31,880 Speaker 1: is going to happen. Is that the correct story? Well, 475 00:26:32,000 --> 00:26:33,480 Speaker 1: I don't know what the future is gonna hold. The 476 00:26:33,480 --> 00:26:36,119 Speaker 1: Trump administration has only been in office for six months. 477 00:26:36,640 --> 00:26:39,000 Speaker 1: I've always thought that what Trump should focus on is 478 00:26:39,040 --> 00:26:41,719 Speaker 1: building a team. He's been struggling to do that. But 479 00:26:41,800 --> 00:26:44,359 Speaker 1: he'll eventually get it right, I think, and I hope 480 00:26:44,840 --> 00:26:49,080 Speaker 1: the country needs that. But the bottom line is it's 481 00:26:49,119 --> 00:26:51,639 Speaker 1: small businesses. They're creating most of the job growth in 482 00:26:51,640 --> 00:26:56,159 Speaker 1: the country. Big businesses are doing okay. The economy is 483 00:26:56,200 --> 00:26:58,960 Speaker 1: better than most people thought. The stock market certainly seems 484 00:26:59,000 --> 00:27:01,199 Speaker 1: to like what's going on. But the future of this 485 00:27:01,320 --> 00:27:05,560 Speaker 1: country is to create small businesses that will take people 486 00:27:05,680 --> 00:27:09,880 Speaker 1: from the old industries that will eventually downsize and maybe 487 00:27:09,920 --> 00:27:14,280 Speaker 1: even disappear as taste change, technology changes, the marketplace changes, 488 00:27:14,720 --> 00:27:17,480 Speaker 1: and this is where the next group of big businesses 489 00:27:17,480 --> 00:27:20,960 Speaker 1: will come from. They start out small with somebody that's 490 00:27:21,000 --> 00:27:24,480 Speaker 1: got an entrepreneurial spirit. At that point, if Golden Stacks 491 00:27:24,520 --> 00:27:26,520 Speaker 1: steps in or others and gives them some of the 492 00:27:26,520 --> 00:27:29,600 Speaker 1: management skills, they can keep growing. And the transition from 493 00:27:29,600 --> 00:27:32,719 Speaker 1: doing it all yourself to learning how to delegate and 494 00:27:32,800 --> 00:27:35,720 Speaker 1: bring in other people is the toughest thing for small 495 00:27:35,760 --> 00:27:39,440 Speaker 1: businesses to do. Giving up some control and return for 496 00:27:39,760 --> 00:27:43,639 Speaker 1: a depth of bench if you will to continue to grow. 497 00:27:44,040 --> 00:27:47,120 Speaker 1: That's what Golden Stacks ten small businesses can really do. 498 00:27:47,359 --> 00:27:51,080 Speaker 1: And Blomberg Philanthropies with them and similar program keeps saying 499 00:27:51,080 --> 00:27:53,160 Speaker 1: with the mayors and Lloyd, you touched on the other 500 00:27:53,200 --> 00:27:54,920 Speaker 1: part of it, and that's regulation, like give a whole 501 00:27:54,960 --> 00:27:57,720 Speaker 1: department as scared towards that a small business doesn't really 502 00:27:57,720 --> 00:28:01,520 Speaker 1: have that opportunity. Um, what going to be the easiest 503 00:28:01,560 --> 00:28:04,080 Speaker 1: part of regulation that you feel like would be material 504 00:28:04,640 --> 00:28:08,040 Speaker 1: for growth and for woman. Well, I think, um, you 505 00:28:08,080 --> 00:28:11,160 Speaker 1: know the one thing that that you know people are 506 00:28:11,160 --> 00:28:13,440 Speaker 1: talking about, you know, the administration where they're going to 507 00:28:13,520 --> 00:28:14,919 Speaker 1: get things, and you know there's some things that are 508 00:28:14,960 --> 00:28:17,359 Speaker 1: already getting done that you have to say, which is 509 00:28:17,400 --> 00:28:20,800 Speaker 1: that there's a bit of a change in sentiment and attitude. 510 00:28:21,440 --> 00:28:24,560 Speaker 1: And I think the way rules are implemented, the attitude 511 00:28:24,760 --> 00:28:30,120 Speaker 1: of the new new class of regulators that are coming in. 512 00:28:30,400 --> 00:28:33,280 Speaker 1: And again we operate obviously in the financial services, but 513 00:28:33,320 --> 00:28:37,600 Speaker 1: where you know, we're big corporate advisor, re business and 514 00:28:37,720 --> 00:28:39,880 Speaker 1: M and A and so we get involved in every industry, 515 00:28:39,880 --> 00:28:42,720 Speaker 1: and every industry is regulated and tell you the truth, 516 00:28:43,120 --> 00:28:45,840 Speaker 1: in this day a lot more highly regulated than they 517 00:28:45,920 --> 00:28:49,000 Speaker 1: had been. So I would say that a almost an 518 00:28:49,000 --> 00:28:52,400 Speaker 1: instantaneous thing which doesn't need Senator approved in some cases 519 00:28:52,600 --> 00:28:55,880 Speaker 1: doesn't need approval, uh some case it does, but certainly 520 00:28:55,880 --> 00:29:00,520 Speaker 1: doesn't need legislation. Is just the way regulations are implement 521 00:29:00,600 --> 00:29:04,120 Speaker 1: existing laws are implemented, and the attitude towards it. And 522 00:29:04,160 --> 00:29:06,680 Speaker 1: I think we're I think we're already witnessing in some 523 00:29:06,760 --> 00:29:09,600 Speaker 1: of these industries a changing sentiment. What I find fascinating 524 00:29:09,680 --> 00:29:14,560 Speaker 1: his Goldman Sex big company known for being aggressive, phenomenally profitable, 525 00:29:14,640 --> 00:29:17,600 Speaker 1: successful firm with a great history, go back a long ways, 526 00:29:18,200 --> 00:29:21,800 Speaker 1: and they're focusing on the next generation small businesses. And 527 00:29:21,840 --> 00:29:23,239 Speaker 1: you can say, what do they have, what do they 528 00:29:23,280 --> 00:29:27,120 Speaker 1: know about small businesses? Because all businesses, like all cities, 529 00:29:27,280 --> 00:29:31,760 Speaker 1: are the same. People need respect and recognition. They need 530 00:29:31,840 --> 00:29:34,040 Speaker 1: to have a product that people want, whether it's a 531 00:29:34,120 --> 00:29:38,640 Speaker 1: service or something that physically you can touch. They need 532 00:29:38,680 --> 00:29:43,040 Speaker 1: to be able to adjust as the world changes and 533 00:29:43,120 --> 00:29:46,320 Speaker 1: we want to create jobs. And so what I find 534 00:29:46,360 --> 00:29:49,880 Speaker 1: fascinating is Goldman's taking all of their resources or some 535 00:29:49,960 --> 00:29:53,760 Speaker 1: of them and working on the next generation's problem because 536 00:29:53,760 --> 00:29:57,120 Speaker 1: some of those cut those ten thousand small businesses someday 537 00:29:57,200 --> 00:30:02,200 Speaker 1: will be Goldman customers. The making an investment in the future, 538 00:30:02,240 --> 00:30:04,239 Speaker 1: which is great for the country. Yeah, there's a lot 539 00:30:04,280 --> 00:30:06,200 Speaker 1: of big business goes you have to keep growing in 540 00:30:06,240 --> 00:30:08,680 Speaker 1: where to make those. But I you just elaborate a bit. 541 00:30:09,000 --> 00:30:11,280 Speaker 1: It is no thought. I mean, these are very small businesses, 542 00:30:11,360 --> 00:30:15,240 Speaker 1: were very institutional firm. A lot of the impetus for 543 00:30:15,360 --> 00:30:20,080 Speaker 1: us is to have and demonstrate on a human scale 544 00:30:20,440 --> 00:30:23,040 Speaker 1: what we do on an institutional scale. You know, everybody 545 00:30:23,040 --> 00:30:25,120 Speaker 1: who goes you know, if you go into pharmaceuticals, you 546 00:30:25,200 --> 00:30:28,040 Speaker 1: really want to find cures for things. If you are 547 00:30:28,120 --> 00:30:30,240 Speaker 1: in Manufet, you know, people have an ethic and a 548 00:30:30,360 --> 00:30:33,440 Speaker 1: narrative and a sense of purpose that goes beyond making 549 00:30:33,480 --> 00:30:35,400 Speaker 1: a living. And you know, people in our industry also 550 00:30:35,760 --> 00:30:39,840 Speaker 1: we believe in capitalism and the capital markets, in growth 551 00:30:39,880 --> 00:30:43,920 Speaker 1: that gets created by finding capital for entrepreneurs, and the 552 00:30:44,000 --> 00:30:48,680 Speaker 1: virtuous circle of people making money and then paying families 553 00:30:48,720 --> 00:30:51,520 Speaker 1: and they in turn by products from others and spawn 554 00:30:51,600 --> 00:30:54,280 Speaker 1: new entrepreneurs. And we believe in that, and sometimes in 555 00:30:54,280 --> 00:30:56,959 Speaker 1: our business we can lose sight of the human element 556 00:30:57,000 --> 00:31:00,760 Speaker 1: of that because we operate on such a government or 557 00:31:01,320 --> 00:31:05,280 Speaker 1: big corporate or big institutional level that you that you 558 00:31:05,280 --> 00:31:07,920 Speaker 1: don't see the human scale of things. And what makes 559 00:31:07,920 --> 00:31:10,640 Speaker 1: it so attractive in our firm is not that thirty 560 00:31:10,680 --> 00:31:12,760 Speaker 1: years from now someone might grow and become a customer. 561 00:31:12,800 --> 00:31:16,320 Speaker 1: What makes it is that becomes a validation a really 562 00:31:16,920 --> 00:31:19,800 Speaker 1: our purpose in life, other than the mere fact that 563 00:31:19,840 --> 00:31:22,040 Speaker 1: we make a good living doing what we do. We 564 00:31:22,120 --> 00:31:25,000 Speaker 1: really believe, you know, you could do philanthropy and write 565 00:31:25,000 --> 00:31:27,440 Speaker 1: a check and you better write that check every year. 566 00:31:27,520 --> 00:31:30,560 Speaker 1: If it's strictly philanthropy. If you invest in somebody and 567 00:31:30,600 --> 00:31:34,240 Speaker 1: you build a business and that is endors and survives 568 00:31:34,400 --> 00:31:37,200 Speaker 1: and grow, it's not only good for that family that 569 00:31:37,280 --> 00:31:40,520 Speaker 1: has that business, but also the families getting employed about that. 570 00:31:40,640 --> 00:31:43,440 Speaker 1: And that's the virtuous circle that we believe operates at 571 00:31:43,480 --> 00:31:45,960 Speaker 1: a huge scale across the country, but we get to 572 00:31:46,000 --> 00:31:47,800 Speaker 1: see it on a human scale in our ten thousand 573 00:31:47,840 --> 00:31:50,280 Speaker 1: small Business program. I'd like to welcome our TV and 574 00:31:50,360 --> 00:31:52,600 Speaker 1: radio viewers. We're here at the Baltimore Center stage with 575 00:31:52,640 --> 00:31:56,160 Speaker 1: Mike Bloomberg and the CEO of Goldman Sax, Floyd blank Find. 576 00:31:56,400 --> 00:31:59,040 Speaker 1: I want to stay in Washington for two seconds. Uh. First, 577 00:31:59,120 --> 00:32:01,680 Speaker 1: is the Vocal Well talking about regulation? Lloyd, we heard 578 00:32:01,720 --> 00:32:03,520 Speaker 1: that the Office of the Controller of the Currency is 579 00:32:03,560 --> 00:32:06,360 Speaker 1: now starting the official process where companies like you can 580 00:32:06,360 --> 00:32:08,920 Speaker 1: go and comment of what you want to see rolled back. 581 00:32:09,360 --> 00:32:11,880 Speaker 1: Can you help quantify what the Vocal Rule did like 582 00:32:11,920 --> 00:32:15,120 Speaker 1: with if it was still not in place, what your 583 00:32:15,160 --> 00:32:18,240 Speaker 1: profits would be like what you want to roll back there? Well, 584 00:32:18,280 --> 00:32:20,680 Speaker 1: I'd say with the Vocal Rule, look when they were 585 00:32:21,400 --> 00:32:23,240 Speaker 1: when they were trying to when they were going through 586 00:32:23,240 --> 00:32:27,600 Speaker 1: financial um, financial regulation you could have. You know, you 587 00:32:27,640 --> 00:32:30,760 Speaker 1: could regulate the amount of capital. You can regulate processes, 588 00:32:30,800 --> 00:32:33,880 Speaker 1: you can regulate leverage, you can regulate, and you can 589 00:32:33,880 --> 00:32:38,120 Speaker 1: regulate activities. Um, you can do this transaction. You can't 590 00:32:38,120 --> 00:32:41,000 Speaker 1: do that kind of a transaction. What the vocal rule 591 00:32:41,080 --> 00:32:43,520 Speaker 1: did was it imposed a little bit of a state 592 00:32:43,560 --> 00:32:46,600 Speaker 1: of mind test. You can do. You could take positions, 593 00:32:47,360 --> 00:32:50,200 Speaker 1: but they wanted to. They wanted to damp down speculation. 594 00:32:51,120 --> 00:32:55,000 Speaker 1: But the line between speculation, which has a word thinks 595 00:32:55,120 --> 00:32:57,840 Speaker 1: very easily that we should all back off of, and 596 00:32:58,000 --> 00:33:01,920 Speaker 1: market making facility hating other people's trading. Taking the other 597 00:33:02,000 --> 00:33:05,160 Speaker 1: side of what your client wants to do is also 598 00:33:05,200 --> 00:33:08,720 Speaker 1: a risk taking principal activity, and the line between the 599 00:33:08,720 --> 00:33:12,360 Speaker 1: two is very blurry and indistinct. But with the vocal 600 00:33:12,440 --> 00:33:16,800 Speaker 1: rule basically says, in effect, if you are taking positions, 601 00:33:16,840 --> 00:33:21,000 Speaker 1: points of view in anticipation or in connection with a 602 00:33:21,080 --> 00:33:27,640 Speaker 1: specific client operation, that's good. If you're doing it away 603 00:33:27,680 --> 00:33:31,000 Speaker 1: from that specific it's not good. But if you're a 604 00:33:31,040 --> 00:33:33,360 Speaker 1: market maker sitting in a desk, it's very hard to 605 00:33:33,400 --> 00:33:36,680 Speaker 1: know where that distinction is. Because what really makes a 606 00:33:36,760 --> 00:33:41,080 Speaker 1: market is a million people all at the same time 607 00:33:41,560 --> 00:33:44,080 Speaker 1: buying and selling because someone thinks it's going to go down, 608 00:33:44,080 --> 00:33:46,520 Speaker 1: someone thinks it's going to go up, and then clients 609 00:33:46,520 --> 00:33:49,880 Speaker 1: are join that kind of moving sidewalk that's called a market. 610 00:33:50,360 --> 00:33:53,920 Speaker 1: And really in practice it's been very cumbersome, very hard 611 00:33:53,960 --> 00:33:56,760 Speaker 1: to do, makes people who sit on trading desks very 612 00:33:56,880 --> 00:33:59,640 Speaker 1: very nervous. And I think what it's done is it's 613 00:33:59,680 --> 00:34:03,760 Speaker 1: real put had a dampening effect on liquidity uh in 614 00:34:03,800 --> 00:34:06,680 Speaker 1: the marketplace. And I think the regulators appreciate by the way, 615 00:34:06,680 --> 00:34:09,080 Speaker 1: the regulators didn't cause that. The regulators were filling in 616 00:34:09,120 --> 00:34:13,439 Speaker 1: the regulations of statutes. But I think, um, I think 617 00:34:13,520 --> 00:34:14,960 Speaker 1: now that it's been in place for a while and 618 00:34:15,000 --> 00:34:17,360 Speaker 1: they see how it operates, I think there's a consensus 619 00:34:17,360 --> 00:34:19,480 Speaker 1: it has to be re examining. You know, what we 620 00:34:19,560 --> 00:34:22,440 Speaker 1: have in this country as a problem with employment. We 621 00:34:22,480 --> 00:34:25,120 Speaker 1: want to create jobs. If you want to create jobs, 622 00:34:25,160 --> 00:34:28,280 Speaker 1: you have to have banks that have money to invest. 623 00:34:28,400 --> 00:34:32,279 Speaker 1: Banks make money by taking risk. Now nobody wants speculation. 624 00:34:32,719 --> 00:34:34,360 Speaker 1: As Lloyd points out, it's very hard to tell the 625 00:34:34,360 --> 00:34:37,480 Speaker 1: difference between investment and speculation. After the facts, you can 626 00:34:37,520 --> 00:34:39,480 Speaker 1: look back. If it didn't work, it was speculation, If 627 00:34:39,480 --> 00:34:41,680 Speaker 1: it did work, it was But but nobody knows in 628 00:34:41,719 --> 00:34:44,000 Speaker 1: advance what to do, and so what we want to 629 00:34:44,000 --> 00:34:46,160 Speaker 1: do is make sure that the industry can't get in 630 00:34:46,200 --> 00:34:50,480 Speaker 1: trouble the way it did back eight years ago. But nevertheless, 631 00:34:50,920 --> 00:34:53,440 Speaker 1: it doesn't pull back and stop taking the risks that 632 00:34:53,440 --> 00:34:56,759 Speaker 1: would generate the capital that let us expand our economy, 633 00:34:56,800 --> 00:35:00,480 Speaker 1: give everybody the ability to feed their family, give create 634 00:35:00,560 --> 00:35:05,040 Speaker 1: moneys for curing diseases and advancing art and all of 635 00:35:05,080 --> 00:35:08,239 Speaker 1: those things that we want. And whether or not this 636 00:35:08,280 --> 00:35:11,640 Speaker 1: piece of regulation goes too far, that's Lloyd's express. Some 637 00:35:11,640 --> 00:35:14,600 Speaker 1: of the rules is so obscure it has killing effect 638 00:35:14,640 --> 00:35:16,839 Speaker 1: on activity. So we have a couple more minutes left, 639 00:35:16,880 --> 00:35:18,439 Speaker 1: So Lloyd, I want to ask you a question about 640 00:35:18,440 --> 00:35:21,800 Speaker 1: Goldman Sack specific business. Uh. The question after the quarter 641 00:35:22,120 --> 00:35:25,800 Speaker 1: was your FICK business? How can something not be wrong 642 00:35:25,840 --> 00:35:30,280 Speaker 1: with Fick at the last two quarters, Well, we didn't 643 00:35:30,280 --> 00:35:32,000 Speaker 1: make as much money, so that was that was that 644 00:35:32,080 --> 00:35:35,480 Speaker 1: was wrong. First of all, we have many you know 645 00:35:35,600 --> 00:35:39,799 Speaker 1: we have we're diversified business group, and everyone performed very well, 646 00:35:39,880 --> 00:35:42,120 Speaker 1: so well that we actually did well as a firm. 647 00:35:42,239 --> 00:35:45,799 Speaker 1: Are are we return on equity is doubled? Is still 648 00:35:46,000 --> 00:35:49,680 Speaker 1: for the six months double digit? Are we that being said, 649 00:35:50,239 --> 00:35:53,360 Speaker 1: we didn't perform well. And thick thick is a risk business. 650 00:35:53,480 --> 00:35:58,120 Speaker 1: We don't always perform well. That being said, other people 651 00:35:58,440 --> 00:36:00,800 Speaker 1: who are other firms, who are operating the same environment 652 00:36:00,800 --> 00:36:04,480 Speaker 1: did better than us, and so we are on the 653 00:36:04,520 --> 00:36:07,120 Speaker 1: balls of our feet. You know, we're of course concerned 654 00:36:07,160 --> 00:36:10,040 Speaker 1: about it. In my thirty five years doing this, they've 655 00:36:10,040 --> 00:36:13,040 Speaker 1: been long. They've been periods long, a lot longer than 656 00:36:13,040 --> 00:36:17,399 Speaker 1: this period where we've underperformed only to outperform. It's been very, 657 00:36:17,480 --> 00:36:21,280 Speaker 1: very newsworthy. Not because we're a chronic underperformer, but because 658 00:36:21,320 --> 00:36:25,840 Speaker 1: we've been a chronic outperformer. That being said, we underperformed. 659 00:36:25,920 --> 00:36:29,120 Speaker 1: We know, we know what we have to do and 660 00:36:29,400 --> 00:36:31,640 Speaker 1: we're doing it. And it's a big it's a it's 661 00:36:31,680 --> 00:36:34,319 Speaker 1: it's an execution matter for us, and guess what, that's 662 00:36:34,320 --> 00:36:37,680 Speaker 1: what we do. So execution seems to me like it's cyclical. 663 00:36:37,960 --> 00:36:40,040 Speaker 1: There are many saying that there's a structural or problem 664 00:36:40,080 --> 00:36:41,920 Speaker 1: in that the commodities business because a lot of the 665 00:36:41,920 --> 00:36:44,759 Speaker 1: other guys dumped. There's you've stood by yours, uh and 666 00:36:44,840 --> 00:36:47,960 Speaker 1: you have to rethink that view. Now, well, we've all 667 00:36:48,000 --> 00:36:49,960 Speaker 1: cut back a lot because we had to meet the 668 00:36:50,040 --> 00:36:52,879 Speaker 1: environment but the fact of the matter is if we 669 00:36:52,880 --> 00:36:56,320 Speaker 1: were simply bigger and had more invest in more assets, 670 00:36:56,480 --> 00:36:58,359 Speaker 1: we would have made more money. That's why I tell 671 00:36:58,360 --> 00:37:00,640 Speaker 1: you it's an execution issue because as we should have, 672 00:37:01,239 --> 00:37:04,840 Speaker 1: the expectation is we would do better because historically we 673 00:37:04,920 --> 00:37:09,680 Speaker 1: have and we really haven't. And we know there's several 674 00:37:09,719 --> 00:37:12,839 Speaker 1: reasons in retrospect that we can look at and say, gee, 675 00:37:12,920 --> 00:37:15,400 Speaker 1: we may have slipped up. We tend to be overly 676 00:37:15,440 --> 00:37:18,920 Speaker 1: weighted in our business to a client base, which is 677 00:37:18,920 --> 00:37:21,759 Speaker 1: a terrific lient base, which will never abandon, but we're 678 00:37:21,760 --> 00:37:27,200 Speaker 1: disproportionately involved in trading kind of clients who trade a lot, 679 00:37:27,280 --> 00:37:29,799 Speaker 1: let's say, hedge funds and other things. Again, we're an 680 00:37:29,800 --> 00:37:33,440 Speaker 1: investment bank, the more corporate banks tend and I have 681 00:37:33,600 --> 00:37:36,799 Speaker 1: much more business with corporates and others. That's something that 682 00:37:36,840 --> 00:37:39,880 Speaker 1: we should fix. You shouldn't have let it get that disproportionate, 683 00:37:40,040 --> 00:37:42,680 Speaker 1: but we did. We'll fix it. Some of the products 684 00:37:42,760 --> 00:37:45,840 Speaker 1: we tend to focus on. We are in the commodities business. 685 00:37:45,840 --> 00:37:48,520 Speaker 1: Commodities has been in recession, and very few of the 686 00:37:48,520 --> 00:37:51,759 Speaker 1: other banks that are compared to us are in that business. Well, 687 00:37:51,760 --> 00:37:53,560 Speaker 1: if you look out and about and you look at 688 00:37:53,560 --> 00:37:57,919 Speaker 1: other firms that transacting commodities, commodity firms, oil companies that's 689 00:37:57,960 --> 00:38:01,360 Speaker 1: been in a bit of a recession. That's a cyclical matter. 690 00:38:01,480 --> 00:38:03,799 Speaker 1: Do I think that oil is always going to be 691 00:38:04,280 --> 00:38:06,520 Speaker 1: this price and within three dollars of this price for 692 00:38:06,560 --> 00:38:09,120 Speaker 1: a long time and then it's no, I don't think so. 693 00:38:09,560 --> 00:38:13,480 Speaker 1: But still you have to scale it to the environment 694 00:38:13,520 --> 00:38:16,719 Speaker 1: that we're in. So whether it's the you know, the 695 00:38:16,800 --> 00:38:20,000 Speaker 1: kinds of things that we trade, we have to focus on. 696 00:38:20,200 --> 00:38:23,280 Speaker 1: Whether it's the people we serve. We should be serving 697 00:38:23,360 --> 00:38:26,960 Speaker 1: everybody and not a disproportionately more focused base. And we're 698 00:38:26,960 --> 00:38:29,560 Speaker 1: working on it, but I'll tell you we've been I 699 00:38:29,880 --> 00:38:32,279 Speaker 1: can't say that we're right all the time because we're 700 00:38:32,320 --> 00:38:34,719 Speaker 1: obviously not um, but I will tell you we have 701 00:38:34,719 --> 00:38:38,200 Speaker 1: a good reputation for resilience and adaptation, and that really 702 00:38:38,280 --> 00:38:42,320 Speaker 1: is our core UH skill set. The markets are always changing, 703 00:38:42,600 --> 00:38:45,399 Speaker 1: but never that dramatically. I've been watching Goldman Sex since 704 00:38:45,440 --> 00:38:47,839 Speaker 1: I came to New York in nineteen sixty six, where 705 00:38:47,840 --> 00:38:49,880 Speaker 1: they offered my first job and instead I went to 706 00:38:49,920 --> 00:38:52,759 Speaker 1: Solomon Brothers. This is a firm that has changed with 707 00:38:52,800 --> 00:38:55,759 Speaker 1: the times, has certainly been down years there's up years 708 00:38:55,760 --> 00:38:58,120 Speaker 1: and that sort of thing, but they're still around. And 709 00:38:58,160 --> 00:38:59,840 Speaker 1: if you go back and look at the list of 710 00:39:00,000 --> 00:39:04,120 Speaker 1: companies that were in this business in nineties, six of 711 00:39:04,160 --> 00:39:09,120 Speaker 1: them have gone, so I mean about one quarter right there. 712 00:39:09,400 --> 00:39:14,239 Speaker 1: He's terrific. True. No, but also you know you sit here. 713 00:39:14,800 --> 00:39:20,000 Speaker 1: I mean, look, I've gone through the like Jamie Diamond 714 00:39:20,000 --> 00:39:22,680 Speaker 1: on the taping mark, and that's gonna happen through the 715 00:39:22,719 --> 00:39:25,640 Speaker 1: financial this is we're sitting here with you again. For 716 00:39:25,640 --> 00:39:28,719 Speaker 1: the year so far, double digit. Are we investment, you know, 717 00:39:28,840 --> 00:39:32,520 Speaker 1: merging and acquisitions number one doing great. Inequities are investing 718 00:39:32,560 --> 00:39:35,319 Speaker 1: businesses are doing great. Our asset management business and a 719 00:39:35,360 --> 00:39:39,719 Speaker 1: slow time for for active managers is growing assets consistently. 720 00:39:40,280 --> 00:39:43,480 Speaker 1: There's a ton of things. Everything is going well. But 721 00:39:43,480 --> 00:39:47,640 Speaker 1: but but I do agree that believe me, I'm not. 722 00:39:48,600 --> 00:39:50,759 Speaker 1: I'm not, you know, none of us are hysterical about this, 723 00:39:51,040 --> 00:39:52,799 Speaker 1: but we're focused on it. And I'm sure you're going 724 00:39:52,880 --> 00:39:55,560 Speaker 1: to tell him that the solution to his problem to 725 00:39:55,680 --> 00:39:59,719 Speaker 1: fix what terminals, more terminals and more other services from Bloomberg. 726 00:39:59,719 --> 00:40:02,560 Speaker 1: It's more terms. Well, obviously that's the number one. But 727 00:40:02,920 --> 00:40:05,239 Speaker 1: to wrap up really quickly. Part of the reason also 728 00:40:05,239 --> 00:40:07,400 Speaker 1: as you wind up seeing a lot of Goldman employees 729 00:40:07,440 --> 00:40:09,080 Speaker 1: now in d C. I'm not gonna ask Lloyd that, 730 00:40:09,120 --> 00:40:10,840 Speaker 1: but Mike, I wanted to get your take on if 731 00:40:10,840 --> 00:40:13,440 Speaker 1: you did. Gary Cohen at the Fed, Steve Manutian in there. 732 00:40:13,560 --> 00:40:15,120 Speaker 1: Is that a good thing for you? Do you like 733 00:40:15,200 --> 00:40:17,440 Speaker 1: to see the Wall streeters doing that? Jerry Cohen I 734 00:40:17,440 --> 00:40:19,720 Speaker 1: know very well. He's a very confident guy. Steve Manuchan 735 00:40:19,800 --> 00:40:21,800 Speaker 1: I met once or twice. His father used to be 736 00:40:21,840 --> 00:40:23,480 Speaker 1: a good friend of mine when he was a competitor 737 00:40:23,480 --> 00:40:26,600 Speaker 1: at Goldman. The fact that Goldman has these people that 738 00:40:26,680 --> 00:40:29,439 Speaker 1: government keeps wanting to take says something about the kind 739 00:40:29,440 --> 00:40:31,680 Speaker 1: of people that Goldman hires and the kind of people 740 00:40:31,840 --> 00:40:34,319 Speaker 1: and what they learn at Goldman. And a lot of 741 00:40:34,360 --> 00:40:37,359 Speaker 1: them have records if you go back particular and financial side. 742 00:40:37,480 --> 00:40:41,200 Speaker 1: That is really impressive of these people. Goldman alumni who 743 00:40:41,239 --> 00:40:45,000 Speaker 1: have done enormous things for this country, including incidentally Paulson 744 00:40:45,080 --> 00:40:47,400 Speaker 1: and Steele when they went and bailed out the country 745 00:40:47,440 --> 00:40:50,440 Speaker 1: and the crisis. That has an awful lot to be 746 00:40:50,520 --> 00:40:53,239 Speaker 1: proud of of what they've done to this Let me, 747 00:40:53,440 --> 00:40:56,160 Speaker 1: you didn't ask me, but I'll say I'm enormously proud 748 00:40:56,560 --> 00:40:58,719 Speaker 1: of the Goldman people that went in there. I think 749 00:40:58,719 --> 00:41:03,600 Speaker 1: they're very, very capable, very capable, um and UM. I 750 00:41:03,640 --> 00:41:06,440 Speaker 1: think they've done that at an enormous personal sacrifice to 751 00:41:06,480 --> 00:41:10,320 Speaker 1: themselves and we should. You know, I support them totally, 752 00:41:10,640 --> 00:41:13,120 Speaker 1: and you know, we miss them, but they're doing a 753 00:41:13,160 --> 00:41:21,600 Speaker 1: lot for us because of what they're doing for the country. 754 00:41:23,800 --> 00:41:27,960 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 755 00:41:28,040 --> 00:41:33,360 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 756 00:41:33,480 --> 00:41:37,560 Speaker 1: platform you prefer. I'm on Twitter at Tom Keene David Gura. 757 00:41:37,880 --> 00:41:41,600 Speaker 1: Is that David Gura before the podcast? You can always 758 00:41:41,640 --> 00:41:44,360 Speaker 1: catch us worldwide. I'm Bloomberg Radio.