1 00:00:05,120 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene, along 2 00:00:09,240 --> 00:00:13,080 Speaker 1: with Jonathan Ferroll and Lisa Brownwitz Jay Leye. We bring 3 00:00:13,119 --> 00:00:17,159 Speaker 1: you insight from the best and economics, finance, investment, and 4 00:00:17,280 --> 00:00:23,280 Speaker 1: international relations. Find Bloomberg Surveillance, an Apple podcast, Suncloud, Bloomberg 5 00:00:23,360 --> 00:00:29,680 Speaker 1: dot Com and of course on the Bloomberg termament. Let's 6 00:00:29,680 --> 00:00:32,120 Speaker 1: have a conversation with Jared Bernstein u S Council of 7 00:00:32,159 --> 00:00:36,400 Speaker 1: Economic Advisors Member. Jared, we appreciate your ongoing transparency off 8 00:00:36,440 --> 00:00:38,159 Speaker 1: the back of a huge effort to deliver at one 9 00:00:38,200 --> 00:00:40,800 Speaker 1: point nine trillion dollar plan. Let's start with this, how 10 00:00:40,920 --> 00:00:46,000 Speaker 1: unique this moment is and why a unique approach is required. Yeah, 11 00:00:46,000 --> 00:00:50,200 Speaker 1: it's a great question. Uh. The American Rescue Plan, which 12 00:00:50,200 --> 00:00:53,960 Speaker 1: we expect to pass the Congress any moment now, is 13 00:00:54,280 --> 00:00:56,279 Speaker 1: certainly one of the most consequential and one of the 14 00:00:56,280 --> 00:01:00,320 Speaker 1: most progressive pieces of legislation in in in Reese Intoor 15 00:01:00,360 --> 00:01:04,120 Speaker 1: even distant American history. We're talking about getting four hundred 16 00:01:04,160 --> 00:01:07,280 Speaker 1: dollars in checks out to almost a hundred and sixty 17 00:01:07,319 --> 00:01:10,319 Speaker 1: million American families, and those checks start going out the 18 00:01:10,360 --> 00:01:15,800 Speaker 1: door days after signage. Uh. In fact, speaking of deadlines, UH, 19 00:01:16,000 --> 00:01:20,280 Speaker 1: in just a few days, about eleven million Americans risk 20 00:01:20,360 --> 00:01:23,920 Speaker 1: the potential of losing enhanced unemployment benefits if we don't 21 00:01:23,959 --> 00:01:26,319 Speaker 1: extend them, which is of course at the heart of 22 00:01:26,319 --> 00:01:29,280 Speaker 1: the American rescue plan. And then there's of course the 23 00:01:29,360 --> 00:01:33,120 Speaker 1: crucial issue of finally gaining control of this virus, producing, 24 00:01:33,120 --> 00:01:35,440 Speaker 1: distributing the vaccine, getting shots and arms so we can 25 00:01:35,440 --> 00:01:37,720 Speaker 1: get to the other side of this crisis and launch 26 00:01:37,800 --> 00:01:42,280 Speaker 1: a robust, reliable, and inclusive recovery. The shock is different, 27 00:01:42,360 --> 00:01:44,679 Speaker 1: yet we have been conditioned by the previous cycle, and 28 00:01:44,680 --> 00:01:47,640 Speaker 1: the lessons learned from the previous cycle being applied to 29 00:01:47,680 --> 00:01:50,960 Speaker 1: this one, not Yad. That's something I'm struggling with. We've 30 00:01:50,960 --> 00:01:53,280 Speaker 1: been conditioned by the previous cycle that we need to 31 00:01:53,280 --> 00:01:56,400 Speaker 1: do more because the recovery was so so shallow. If 32 00:01:56,400 --> 00:01:58,360 Speaker 1: the shock is different, why are the lessons that we've 33 00:01:58,440 --> 00:02:02,000 Speaker 1: learned previously? Person, and to this one, I think the 34 00:02:02,040 --> 00:02:04,240 Speaker 1: critical lesson there is the one you've said, and I 35 00:02:04,280 --> 00:02:06,960 Speaker 1: don't think that, if anything, the magnitude of the shock 36 00:02:07,040 --> 00:02:09,680 Speaker 1: would would really emphasize that lesson, which is that our 37 00:02:09,720 --> 00:02:11,720 Speaker 1: tendency has been to do too little, not to do 38 00:02:11,760 --> 00:02:14,200 Speaker 1: too much. You know, when I came up in this business, 39 00:02:14,240 --> 00:02:16,440 Speaker 1: there was no such thing as a jobless recovery. You 40 00:02:16,480 --> 00:02:19,280 Speaker 1: had these more v shaped dynamics, and you know, a 41 00:02:19,320 --> 00:02:22,320 Speaker 1: bunch of folks refurlowed from the factory. The shotka went 42 00:02:22,320 --> 00:02:24,079 Speaker 1: into the rear view mirror, and a bunch of folks 43 00:02:24,120 --> 00:02:27,679 Speaker 1: came back. Now, we've had these sluggish, jobless recoveries that 44 00:02:27,800 --> 00:02:32,520 Speaker 1: often set up UH an expansion that underperforms. That's not 45 00:02:32,600 --> 00:02:35,280 Speaker 1: the way Joe Biden wants to see his administration get 46 00:02:35,320 --> 00:02:37,399 Speaker 1: out of the gate. And with the American rescue plan 47 00:02:37,520 --> 00:02:41,200 Speaker 1: behind us, we think again, especially with getting the finally, 48 00:02:41,240 --> 00:02:44,920 Speaker 1: getting this virus behind us is so critical to launching 49 00:02:45,240 --> 00:02:47,240 Speaker 1: not a wait and see, not an on to get 50 00:02:47,240 --> 00:02:50,080 Speaker 1: off again kind of recovery, but a reliable recovery that 51 00:02:50,120 --> 00:02:53,440 Speaker 1: would be durable. Dr Burston, good morning, thrilled to have 52 00:02:53,600 --> 00:02:56,680 Speaker 1: you with us today. You did a front line interview 53 00:02:56,720 --> 00:02:59,360 Speaker 1: and the heat of the financial crisis talking about you 54 00:02:59,400 --> 00:03:03,200 Speaker 1: guys in hair. In a recession, your critics will say 55 00:03:03,440 --> 00:03:08,120 Speaker 1: you are manufacturing a boom economy with this stimulus, and 56 00:03:08,160 --> 00:03:11,040 Speaker 1: they will then go on to say you are manufacturing 57 00:03:11,560 --> 00:03:16,720 Speaker 1: new higher inflation. Defend the administration. Sure, Well, first of all, 58 00:03:17,280 --> 00:03:20,200 Speaker 1: I don't hear too many of those voices outside of 59 00:03:20,560 --> 00:03:25,440 Speaker 1: partisan Republicans. Um even even some economists who've been worrying 60 00:03:25,440 --> 00:03:28,360 Speaker 1: about overheating and critical of the magnitude of the package 61 00:03:28,400 --> 00:03:32,560 Speaker 1: have recognized the support and recognized and support the importance 62 00:03:32,600 --> 00:03:35,800 Speaker 1: of rescue and relief. But let's talk about your inflation question. 63 00:03:36,120 --> 00:03:38,160 Speaker 1: I want to tell you about the three sas Okay, 64 00:03:38,200 --> 00:03:43,440 Speaker 1: you ready for the three s is spending, slack, and savings. 65 00:03:43,760 --> 00:03:47,640 Speaker 1: So spending, by which I mean spend out. Uh. The 66 00:03:47,720 --> 00:03:50,400 Speaker 1: spend out of the American Rescue plan does not occur 67 00:03:50,560 --> 00:03:53,000 Speaker 1: in one month or two months. It is true, and 68 00:03:53,040 --> 00:03:55,880 Speaker 1: it's very important that the checks and the unemployment insurance, 69 00:03:55,880 --> 00:03:58,760 Speaker 1: the enhanced benefits get out very quickly, right out the door. 70 00:03:59,160 --> 00:04:01,800 Speaker 1: But the planets spends out over a couple of years. 71 00:04:01,800 --> 00:04:04,680 Speaker 1: So some of the folks on kind of the overheating 72 00:04:04,760 --> 00:04:09,520 Speaker 1: team don't recognize the spend out pattern. Then there's slack, Okay, 73 00:04:09,680 --> 00:04:12,920 Speaker 1: there is still way more slack in this labor market time. 74 00:04:12,920 --> 00:04:15,480 Speaker 1: And I think your question implied. We have an unemployment 75 00:04:15,520 --> 00:04:18,400 Speaker 1: rate for African Americans of nine point nine percent, eight 76 00:04:18,440 --> 00:04:21,880 Speaker 1: point five percent for Hispanics. Nine point five million jobs 77 00:04:21,880 --> 00:04:24,520 Speaker 1: in the whole still that's deeper than the deepest part 78 00:04:24,560 --> 00:04:27,400 Speaker 1: of the Great Recession. And then of course savings the 79 00:04:28,240 --> 00:04:31,800 Speaker 1: other suh. Some of these benefits, some of these uh, 80 00:04:31,920 --> 00:04:34,400 Speaker 1: parts of the American rescue plan will be at least 81 00:04:34,440 --> 00:04:37,640 Speaker 1: initially saved by people who will then use it to 82 00:04:37,720 --> 00:04:41,359 Speaker 1: meet accumulated debts, say from rents and mortgage forbearance. That 83 00:04:41,520 --> 00:04:44,680 Speaker 1: too puts downward pressure on price pressures. But Jared, we've 84 00:04:44,720 --> 00:04:46,560 Speaker 1: had a number of economists come on and say that 85 00:04:46,560 --> 00:04:49,280 Speaker 1: that was actually perhaps a bit overstated, that actually consumers 86 00:04:49,320 --> 00:04:51,480 Speaker 1: are not as indebted as they have been in the past, 87 00:04:51,560 --> 00:04:54,159 Speaker 1: There isn't as much debt to pay down. That is 88 00:04:54,200 --> 00:04:57,440 Speaker 1: one argument, but there's another argument saying, yes, the depth 89 00:04:57,480 --> 00:05:00,159 Speaker 1: of this crisis was deeper in some ways in the 90 00:05:00,240 --> 00:05:02,440 Speaker 1: last crisis, but it was very different and the bounce 91 00:05:02,480 --> 00:05:06,200 Speaker 1: back has been much faster than economists are predicting. What 92 00:05:06,360 --> 00:05:09,280 Speaker 1: makes you confident that that isn't a sign that we're 93 00:05:09,279 --> 00:05:11,080 Speaker 1: going to get some sort of growth that was going 94 00:05:11,120 --> 00:05:14,120 Speaker 1: to be turbocharged and the inflation also with it. That 95 00:05:14,200 --> 00:05:16,159 Speaker 1: will be a very different picture than what we've seen 96 00:05:16,200 --> 00:05:18,880 Speaker 1: in the past ten years. Yeah. Well, first of all, 97 00:05:19,000 --> 00:05:21,280 Speaker 1: let me talk about the debt issue. And for that, 98 00:05:21,360 --> 00:05:23,320 Speaker 1: you know, you might want to consult with our good 99 00:05:23,320 --> 00:05:26,640 Speaker 1: friend Mark Zandy, who has been tracking a very specific 100 00:05:26,680 --> 00:05:28,560 Speaker 1: type of that, which is the type I've had in mind, 101 00:05:28,839 --> 00:05:32,599 Speaker 1: and that's for people who've been benefiting from rent moratoriums 102 00:05:32,600 --> 00:05:36,320 Speaker 1: and mortgage forbearance. This type of debt is uh, I think, 103 00:05:36,680 --> 00:05:39,720 Speaker 1: quite escalated right now, and it's precisely the type of debt. 104 00:05:39,760 --> 00:05:42,040 Speaker 1: And there's some evidence for this that folks are using 105 00:05:42,080 --> 00:05:45,000 Speaker 1: these benefits to spend down. You know, eviction risk is 106 00:05:45,040 --> 00:05:47,960 Speaker 1: still upon the land, and and and the American Rescue 107 00:05:48,000 --> 00:05:51,120 Speaker 1: Plan addresses that head on. Now. You talked about the 108 00:05:51,160 --> 00:05:54,560 Speaker 1: pace of the recovery. Every forecast I've seen has a 109 00:05:54,600 --> 00:05:57,560 Speaker 1: couple of things common to it. One is that we 110 00:05:57,680 --> 00:06:00,080 Speaker 1: will grow above trend this year and next year. And 111 00:06:00,160 --> 00:06:03,279 Speaker 1: that is precisely the kind of growth rates that the 112 00:06:03,320 --> 00:06:06,039 Speaker 1: American Rescue Plan is supposed to set off again in 113 00:06:06,080 --> 00:06:08,880 Speaker 1: a reliable sense, because we finally put the virus behind us, 114 00:06:08,920 --> 00:06:11,919 Speaker 1: We've safely opened schools, we've gotten families and business as 115 00:06:11,960 --> 00:06:16,840 Speaker 1: a relief they need. But these forecasts also showed heat, yes, 116 00:06:17,080 --> 00:06:20,440 Speaker 1: heat in terms of interest and inflation rates, but not overheat. 117 00:06:20,480 --> 00:06:22,520 Speaker 1: And I think that's the key, j before we let 118 00:06:22,560 --> 00:06:24,760 Speaker 1: you go in about thirty seconds, if you can, something 119 00:06:24,800 --> 00:06:26,520 Speaker 1: you've been finding for for a long long time will 120 00:06:26,560 --> 00:06:28,240 Speaker 1: not be in this bill that goes through the House today. 121 00:06:28,240 --> 00:06:30,960 Speaker 1: It's a high minimum white what's the administration's message to 122 00:06:31,120 --> 00:06:33,520 Speaker 1: progressive members of the House who didn't get what they 123 00:06:33,560 --> 00:06:38,359 Speaker 1: want either. President Biden was disappointed by the ruling of 124 00:06:38,400 --> 00:06:41,120 Speaker 1: the Senate parliamentarian to keep this out of the bill. However, 125 00:06:41,200 --> 00:06:45,320 Speaker 1: that doesn't mean he's at all putting this fight behind him, 126 00:06:45,320 --> 00:06:49,560 Speaker 1: and in fact, he continues to be extremely committed. I 127 00:06:49,600 --> 00:06:51,640 Speaker 1: got an email this morning to that effect, and I 128 00:06:51,680 --> 00:06:54,400 Speaker 1: won't divulge what it's said, but I will say that 129 00:06:54,480 --> 00:07:00,640 Speaker 1: the administration remains that the administration, our administration remains absolutely 130 00:07:00,640 --> 00:07:03,799 Speaker 1: committed to finding a path forward on a fifteen dollar 131 00:07:04,200 --> 00:07:07,039 Speaker 1: minimum wage, and that's going to be work that you'll 132 00:07:07,040 --> 00:07:09,360 Speaker 1: hear a lot more about going forward, Jared. Hopefully we'll 133 00:07:09,360 --> 00:07:11,080 Speaker 1: hear from you soon. This is truly a big, big 134 00:07:11,120 --> 00:07:13,720 Speaker 1: effort down in Washington, d c. And it deserves transparency, 135 00:07:13,720 --> 00:07:16,360 Speaker 1: and I'm pleased we're getting it from you today. Jared Bernstein, there, 136 00:07:16,280 --> 00:07:26,320 Speaker 1: the U. S. Council of Economic Advisors member, let's bring 137 00:07:26,360 --> 00:07:28,960 Speaker 1: it Bruce Cansman's som JP Morgan, chief Economist and head 138 00:07:29,000 --> 00:07:32,640 Speaker 1: of Global Economic Research, Bruce Great to catch obvious. Typically 139 00:07:32,680 --> 00:07:34,640 Speaker 1: we'd start with the analysis, then we get to the forecast. 140 00:07:34,720 --> 00:07:36,360 Speaker 1: Can we just start with the call? What is the 141 00:07:36,400 --> 00:07:39,720 Speaker 1: call from you and the team for this year? So 142 00:07:39,760 --> 00:07:41,960 Speaker 1: we've got the US economy growing at a six and 143 00:07:42,000 --> 00:07:45,240 Speaker 1: a half percent pace UM with the middle part of 144 00:07:45,280 --> 00:07:49,120 Speaker 1: the year uge almost nine growth for the next two quarters. 145 00:07:49,640 --> 00:07:52,000 Speaker 1: I would just want to emphasize the global dimension of 146 00:07:52,040 --> 00:07:55,760 Speaker 1: what's happening here. The US is lifting largely a physical stimulus, 147 00:07:55,840 --> 00:07:58,400 Speaker 1: but we don't want to ignore the lifting you get 148 00:07:58,440 --> 00:08:01,960 Speaker 1: in Western Europe coming as the virus starts to fade 149 00:08:01,960 --> 00:08:04,600 Speaker 1: as the vaccines come on. That's as big a lift 150 00:08:04,600 --> 00:08:06,880 Speaker 1: in our forecast. So we have both the U S 151 00:08:06,920 --> 00:08:09,320 Speaker 1: and Western Europe booming over the next couple of quarters, 152 00:08:09,480 --> 00:08:12,360 Speaker 1: and our mobility and disease are suggesting that that lift 153 00:08:12,400 --> 00:08:15,240 Speaker 1: in Europe started in February. That's right where I want 154 00:08:15,240 --> 00:08:17,880 Speaker 1: to go, Dr Kasmin, and I'll go to Columbia University. 155 00:08:17,960 --> 00:08:20,720 Speaker 1: Let's de tell your world leading market economics with the 156 00:08:20,760 --> 00:08:24,080 Speaker 1: academics of Xavier sale E Martin. If I look at 157 00:08:24,160 --> 00:08:28,480 Speaker 1: growth economics right now, How does the stimulus actually work 158 00:08:28,800 --> 00:08:31,920 Speaker 1: and the emerging markets of Professor salet E Martin or 159 00:08:31,960 --> 00:08:37,320 Speaker 1: in the JP Morgan world, how does it actually diffuse worldwide? Well, 160 00:08:37,360 --> 00:08:39,880 Speaker 1: that's an interesting question, and I think what we're going 161 00:08:39,960 --> 00:08:43,520 Speaker 1: to see is just the dominant effect of of spending 162 00:08:43,600 --> 00:08:46,280 Speaker 1: in the US and Western Europe, which is gonna be 163 00:08:46,480 --> 00:08:49,319 Speaker 1: sucking in imports from the rest of the world. Um, 164 00:08:49,440 --> 00:08:52,280 Speaker 1: that is gonna lift everybody, but there are offsets in 165 00:08:52,400 --> 00:08:55,880 Speaker 1: terms of higher interest rates, in terms of central banks 166 00:08:56,120 --> 00:08:59,120 Speaker 1: in emerging markets, not the FED of course, beginning to 167 00:08:59,160 --> 00:09:01,760 Speaker 1: move towards tight policy. The net effect of this is 168 00:09:01,760 --> 00:09:04,920 Speaker 1: a very clear positive. The other reaction, which I think 169 00:09:05,000 --> 00:09:08,600 Speaker 1: is important is China. They've had a very successful recovery. 170 00:09:09,000 --> 00:09:11,480 Speaker 1: They're gonna sit on the demand they get from the 171 00:09:11,520 --> 00:09:14,240 Speaker 1: rest of the world and tighten policy here. So Chinese 172 00:09:14,280 --> 00:09:17,520 Speaker 1: demand is gonna slow, being somewhat of an offset against 173 00:09:17,559 --> 00:09:20,880 Speaker 1: it otherwise booming global growth picture brus How much is 174 00:09:20,880 --> 00:09:23,800 Speaker 1: this to recovery from some of the lost productivity, the 175 00:09:23,840 --> 00:09:26,800 Speaker 1: lost growth that we saw in and how much are 176 00:09:26,800 --> 00:09:30,720 Speaker 1: we entering a new cycle of potential inflation. Well, the 177 00:09:30,720 --> 00:09:33,360 Speaker 1: way we've been thinking about this is to recognize that 178 00:09:33,400 --> 00:09:36,960 Speaker 1: there is a huge bounce that's coming as we normalize, 179 00:09:37,160 --> 00:09:41,240 Speaker 1: as we get bottleneck pressures, as we're seeing commodity prices. 180 00:09:41,240 --> 00:09:44,040 Speaker 1: So the inflation pick up here looks to us like 181 00:09:44,080 --> 00:09:47,160 Speaker 1: it's gonna bring us and global inflation possibly to the 182 00:09:47,200 --> 00:09:49,920 Speaker 1: highest space we've seen in a decade. I want to 183 00:09:49,920 --> 00:09:52,000 Speaker 1: fade that. I think there's a lot of temporary forces 184 00:09:52,040 --> 00:09:54,840 Speaker 1: that are gonna start to dissipate as we get later 185 00:09:54,880 --> 00:09:58,160 Speaker 1: in the year. However, I think behind the scenes, what 186 00:09:58,200 --> 00:10:02,080 Speaker 1: we're seeing is committed pol sees. We're seeing with this stimulus, 187 00:10:02,160 --> 00:10:04,560 Speaker 1: a very healthy balance sheet on the part of the 188 00:10:04,600 --> 00:10:08,200 Speaker 1: household sector. We're seeing the interaction of FED policy and 189 00:10:08,240 --> 00:10:11,760 Speaker 1: fiscal policy. So I want to buy the reflationary trend, 190 00:10:12,080 --> 00:10:13,880 Speaker 1: and I want to fade the bounce that we're going 191 00:10:13,920 --> 00:10:15,679 Speaker 1: to see in the next few months, which is going 192 00:10:15,720 --> 00:10:19,760 Speaker 1: to weigh over state the degree to which this is changing. Bruce, 193 00:10:19,800 --> 00:10:21,880 Speaker 1: do you think that will be the dominant market narrative 194 00:10:22,400 --> 00:10:24,480 Speaker 1: later this year when we get that better data And 195 00:10:24,480 --> 00:10:26,080 Speaker 1: I keep going back to this story because it's so 196 00:10:26,120 --> 00:10:28,800 Speaker 1: important the data will get better. We can only agree 197 00:10:28,800 --> 00:10:31,040 Speaker 1: on that. Whether you bearish or bullish, what the bears 198 00:10:31,080 --> 00:10:34,120 Speaker 1: believe is that the inflation starts to run away and 199 00:10:34,160 --> 00:10:36,320 Speaker 1: that the market starts to tighten up and then bring 200 00:10:36,360 --> 00:10:38,440 Speaker 1: forward FED hikes as well. Do you think everyone else 201 00:10:38,559 --> 00:10:41,079 Speaker 1: gets your view of the world, or enough people get 202 00:10:41,120 --> 00:10:43,440 Speaker 1: to that view. I think there's no doubt as we 203 00:10:43,480 --> 00:10:45,600 Speaker 1: go through the next number of months and we see 204 00:10:45,640 --> 00:10:49,120 Speaker 1: inflation spikeire as we see these huge growth numbers, the 205 00:10:49,200 --> 00:10:51,680 Speaker 1: debate is going to be are we gonna overshoot our inflation? 206 00:10:51,720 --> 00:10:53,840 Speaker 1: Is the FED going to have to move earlier? I 207 00:10:53,840 --> 00:10:55,640 Speaker 1: think the FED is going to be an anchor here, 208 00:10:55,960 --> 00:10:59,240 Speaker 1: basically telling us that at least until the end of 209 00:10:59,280 --> 00:11:02,240 Speaker 1: twenty two, they're on hold here. They're not gonna change. 210 00:11:02,280 --> 00:11:05,320 Speaker 1: They're they're thinking anytime soon. And I think if we're right, 211 00:11:05,360 --> 00:11:07,680 Speaker 1: what we're gonna see is the inflation numbers settled down, 212 00:11:08,080 --> 00:11:10,960 Speaker 1: but I think in an underlying sense show signs that 213 00:11:10,960 --> 00:11:13,880 Speaker 1: it is moving higher here. So I think the bottom 214 00:11:13,960 --> 00:11:16,839 Speaker 1: line here is that we're gonna definitely buy this as 215 00:11:16,880 --> 00:11:19,160 Speaker 1: a very different event than what we saw after the 216 00:11:19,160 --> 00:11:22,200 Speaker 1: global financial crisis. But we've got to get through this scare, 217 00:11:22,240 --> 00:11:24,319 Speaker 1: and I don't doubt that there's gonna be a lot 218 00:11:24,320 --> 00:11:26,560 Speaker 1: of talk about whether inflation is getting out of control 219 00:11:26,640 --> 00:11:30,760 Speaker 1: here verse I mentioned the X axis, the timeline moments ago. 220 00:11:30,920 --> 00:11:34,560 Speaker 1: Michael Faroli has been a great leader on potential g 221 00:11:34,679 --> 00:11:39,000 Speaker 1: d P. What's the Chasman timeline to get back to 222 00:11:39,080 --> 00:11:43,280 Speaker 1: two potential g d P? Are we grossly off? Is 223 00:11:43,320 --> 00:11:46,920 Speaker 1: it much farther out than we think? I think that's 224 00:11:46,920 --> 00:11:49,679 Speaker 1: a really hard one, Tom, And we're kind of struggling 225 00:11:49,720 --> 00:11:53,360 Speaker 1: with trying to figure out the lasting implications of what's 226 00:11:53,400 --> 00:11:57,520 Speaker 1: what's happening here. Um. There are clearly some negatives here 227 00:11:57,600 --> 00:12:01,199 Speaker 1: in terms of having created disclok asians, scarring in the 228 00:12:01,280 --> 00:12:05,400 Speaker 1: labor market that are going to continue here for some time. Um. 229 00:12:05,400 --> 00:12:08,000 Speaker 1: But at the same time, we're getting a boost to growth. 230 00:12:08,280 --> 00:12:11,480 Speaker 1: It's not only lifting growth back to its previous level, 231 00:12:11,679 --> 00:12:14,320 Speaker 1: it's actually raising it above the path we were on. 232 00:12:14,840 --> 00:12:18,319 Speaker 1: And there's some real possibilities here that that dynamic, if 233 00:12:18,320 --> 00:12:22,319 Speaker 1: it's sustained, creates positive factors. Our potential growth estimates for 234 00:12:22,360 --> 00:12:24,880 Speaker 1: the US are one and a half. We haven't changed 235 00:12:24,920 --> 00:12:27,760 Speaker 1: that yet, but I have to say I'm somewhat agnostic 236 00:12:27,800 --> 00:12:29,760 Speaker 1: about what the next couple of years are going to 237 00:12:29,880 --> 00:12:32,240 Speaker 1: deliver on that front. Bruce always get to see you 238 00:12:32,280 --> 00:12:34,400 Speaker 1: and great to catch you out, Bruce Kasman that Jap Morgan, 239 00:12:34,440 --> 00:12:42,679 Speaker 1: chief economist and the head of Global Economic Research. This 240 00:12:42,800 --> 00:12:45,120 Speaker 1: is a joy on. On March tenths we get out 241 00:12:45,200 --> 00:12:48,080 Speaker 1: front of what is possibly my book of the summer. 242 00:12:48,120 --> 00:12:50,120 Speaker 1: I'm not willing to say that yet, but boy does 243 00:12:50,200 --> 00:12:52,719 Speaker 1: James Travinis go to the top of the pile. Ad 244 00:12:52,840 --> 00:12:56,600 Speaker 1: Mr Venus provides value as Bloomberg opinion. Calumness, the former 245 00:12:56,800 --> 00:12:59,800 Speaker 1: NATO Supreme Commander, We're thrilled that you could join us 246 00:12:59,840 --> 00:13:03,400 Speaker 1: with Ackerman and Tavita's two thousand thirty four. It's the 247 00:13:03,480 --> 00:13:06,720 Speaker 1: three o the three page novel that begs to be 248 00:13:06,840 --> 00:13:09,480 Speaker 1: read now. Ad was Tavidas, thank you so much for 249 00:13:09,600 --> 00:13:12,960 Speaker 1: joining us. The banner that begins your book is chilling. 250 00:13:13,400 --> 00:13:16,200 Speaker 1: It is a March day in two thousand thirty four 251 00:13:16,320 --> 00:13:19,880 Speaker 1: in our United States Navy is in the South China Sea, 252 00:13:20,480 --> 00:13:23,480 Speaker 1: looking and staring at China. Is there a risk here 253 00:13:23,520 --> 00:13:26,240 Speaker 1: that we need to wait for war with China before 254 00:13:26,360 --> 00:13:32,200 Speaker 1: two thousand thirty four? Low risk over the next few years. 255 00:13:32,240 --> 00:13:34,480 Speaker 1: But the reason we set the book about fifteen years 256 00:13:34,480 --> 00:13:37,280 Speaker 1: in the future, Tom, is because that's when the trend 257 00:13:37,320 --> 00:13:41,600 Speaker 1: lines really start to look difficult, shall we say. Chinese 258 00:13:41,640 --> 00:13:45,880 Speaker 1: cyber capability goes up, their maritime capability goes up, their 259 00:13:45,920 --> 00:13:49,920 Speaker 1: ability to employ stealth, their determination to hold on to 260 00:13:50,080 --> 00:13:53,120 Speaker 1: the South China Sea where the novel opens. It could 261 00:13:53,120 --> 00:13:56,480 Speaker 1: be a collision, It could be a miscalculation. We ought 262 00:13:56,480 --> 00:13:58,560 Speaker 1: to worry about it. In twenty thirty four is a 263 00:13:58,679 --> 00:14:03,920 Speaker 1: cautionary tale on page six. I think this is so important, John, 264 00:14:04,400 --> 00:14:07,679 Speaker 1: the couple sliding in a couple of beers at the 265 00:14:07,760 --> 00:14:11,319 Speaker 1: Old Abbott Grill or the hay Adams Bar, and then 266 00:14:11,320 --> 00:14:13,760 Speaker 1: they came back later. I mean, forget about that, John, 267 00:14:14,040 --> 00:14:17,520 Speaker 1: this is outrageous where stravitas. John Farrell is going to 268 00:14:17,559 --> 00:14:21,320 Speaker 1: the fiction of someone having cocktails at the hay Adam Hotel. 269 00:14:22,960 --> 00:14:25,080 Speaker 1: So much Tom, because this is the same approach that 270 00:14:25,120 --> 00:14:29,520 Speaker 1: you have in foreign relations. This wall, Admiral, were set 271 00:14:29,560 --> 00:14:32,400 Speaker 1: that scene at the Willard Hotel, which also has a 272 00:14:32,440 --> 00:14:35,120 Speaker 1: great ground driving bar. So there we go. Well, my 273 00:14:35,280 --> 00:14:37,440 Speaker 1: d C bars not to work. I'm sure you've shared 274 00:14:37,440 --> 00:14:40,240 Speaker 1: a drink with Tom at several of those bars as well, Admiral. 275 00:14:40,360 --> 00:14:43,120 Speaker 1: Looking forward and how this relationship evolves, There has been 276 00:14:43,120 --> 00:14:45,560 Speaker 1: talk and I believe it came from the South China 277 00:14:45,600 --> 00:14:48,320 Speaker 1: Morning Post and just yesterday in the last twenty four 278 00:14:48,360 --> 00:14:50,160 Speaker 1: hours that there could be a meeting with the top 279 00:14:50,240 --> 00:14:53,720 Speaker 1: end boys between the United States and China, potentially in Alaska. 280 00:14:54,040 --> 00:14:56,520 Speaker 1: How do you think this relationship resets, what's the approach 281 00:14:56,520 --> 00:14:57,880 Speaker 1: and how is it different to what we saw with 282 00:14:57,920 --> 00:15:01,760 Speaker 1: the previous administration. I think you'll see the Biden team 283 00:15:01,920 --> 00:15:05,080 Speaker 1: work from a script, if you will, they'll create a 284 00:15:05,200 --> 00:15:11,360 Speaker 1: strategy that will put together military deterrence, diplomacy, economic tools, 285 00:15:11,520 --> 00:15:17,120 Speaker 1: cultural tools, strategic communication, and above all work with our allies. 286 00:15:17,280 --> 00:15:21,520 Speaker 1: That's the formula here. The Trump administration was very episodic, 287 00:15:21,640 --> 00:15:23,520 Speaker 1: very tactical. I think you're going to see a more 288 00:15:23,560 --> 00:15:27,160 Speaker 1: strategic approach. That's what we need. This is the big 289 00:15:27,200 --> 00:15:30,720 Speaker 1: strategic challenge of this part of the centry. What's the objective? 290 00:15:30,760 --> 00:15:33,560 Speaker 1: What do you think the objective should be. I think 291 00:15:33,600 --> 00:15:38,479 Speaker 1: a strategy ought to see to confront where we must 292 00:15:38,200 --> 00:15:41,400 Speaker 1: and we can't turn over the entire South China Sea 293 00:15:41,480 --> 00:15:45,200 Speaker 1: to China as territorial waters, which they claim. We've got 294 00:15:45,240 --> 00:15:48,040 Speaker 1: to confront them there, but we have to cooperate wherever 295 00:15:48,200 --> 00:15:51,240 Speaker 1: we can. We have to find zones of cooperation example 296 00:15:51,840 --> 00:15:56,440 Speaker 1: the environment, example, prepare for the next pandemic, example, work 297 00:15:56,520 --> 00:16:00,680 Speaker 1: together on medical diplomacy in the developing world, so confront 298 00:16:00,720 --> 00:16:04,400 Speaker 1: where we must cooperate where we can, Let's avoid the 299 00:16:05,560 --> 00:16:08,920 Speaker 1: scenario at all costs. Admiral, you're giving me permission to 300 00:16:08,960 --> 00:16:11,080 Speaker 1: go with gloomy what ifs, which is basically what I 301 00:16:11,120 --> 00:16:13,440 Speaker 1: like to do with my pastime. And I'm wondering as 302 00:16:13,480 --> 00:16:16,280 Speaker 1: you look towards what some of the risks are. I'm curious, 303 00:16:16,280 --> 00:16:18,200 Speaker 1: what does a world war look like in a post 304 00:16:18,320 --> 00:16:24,800 Speaker 1: nuclear era. It's going to include cyber as a significant component, 305 00:16:24,840 --> 00:16:28,480 Speaker 1: particularly by the end of this decade, as quantum computing 306 00:16:29,120 --> 00:16:32,520 Speaker 1: collides with what we think of traditionally as cyber bits, 307 00:16:32,600 --> 00:16:37,480 Speaker 1: ones and zeros, and computing much more complicated, opens many 308 00:16:37,520 --> 00:16:41,560 Speaker 1: more abilities. Stealth will be even better than it is now. 309 00:16:41,920 --> 00:16:44,600 Speaker 1: Space will be an important component. That's why the United 310 00:16:44,640 --> 00:16:48,840 Speaker 1: States created as Space Force. And finally, you're going to 311 00:16:48,920 --> 00:16:53,440 Speaker 1: see good old fashioned naval conflict here because, uh, for 312 00:16:53,560 --> 00:16:55,560 Speaker 1: better or for worse, We're not going to get into 313 00:16:55,560 --> 00:16:58,160 Speaker 1: a land war with China. It's going to be played 314 00:16:58,160 --> 00:17:02,040 Speaker 1: out in the scenarios of the need more than anywhere else. 315 00:17:02,440 --> 00:17:04,679 Speaker 1: Do you think that the United States has both the 316 00:17:04,720 --> 00:17:07,760 Speaker 1: intellectual capacity in the government jobs that need to be 317 00:17:07,840 --> 00:17:10,040 Speaker 1: filled in order to prepare ourselves for some of the 318 00:17:10,040 --> 00:17:12,840 Speaker 1: cyber attacks, as well as the investment on the private 319 00:17:12,880 --> 00:17:16,280 Speaker 1: side towards some of these resources. You put your finger 320 00:17:16,400 --> 00:17:20,359 Speaker 1: on the key element here, which is private public cooperation. 321 00:17:20,720 --> 00:17:23,680 Speaker 1: The government can't do this by itself. A good first 322 00:17:23,680 --> 00:17:27,000 Speaker 1: step would be to create a cyber force, just like 323 00:17:27,119 --> 00:17:29,800 Speaker 1: our Space Force was created a year or so ago. 324 00:17:30,320 --> 00:17:34,960 Speaker 1: But secondly, there has to be pretty seamless cooperation across 325 00:17:35,040 --> 00:17:39,200 Speaker 1: this enormous threat surface that we're facing. So we've got 326 00:17:39,200 --> 00:17:41,199 Speaker 1: work to do in that regarding and we're gonna have 327 00:17:41,200 --> 00:17:45,160 Speaker 1: to compete Hart with Silicon Valley to bring that talent 328 00:17:45,600 --> 00:17:49,120 Speaker 1: to bear on this problem in cyber James, the shocking 329 00:17:49,200 --> 00:17:53,080 Speaker 1: immediacy of this book two thousand thirty four, from your 330 00:17:53,119 --> 00:17:55,440 Speaker 1: heritage of coming out of San Diego on a boat 331 00:17:55,440 --> 00:17:58,320 Speaker 1: when you were a kid, and of course also Elliott 332 00:17:58,359 --> 00:18:03,199 Speaker 1: Ackerman's wonderful word, the realism of this is tangible. Is 333 00:18:03,240 --> 00:18:07,040 Speaker 1: our US Navy too ready to do what's in two 334 00:18:07,080 --> 00:18:11,960 Speaker 1: thousand thirty four? Yes, and they are already at sea. 335 00:18:12,400 --> 00:18:16,160 Speaker 1: The challenge is going to be numbers of ships. And 336 00:18:16,280 --> 00:18:19,120 Speaker 1: even now this makes surprise you tom but China has 337 00:18:19,200 --> 00:18:22,960 Speaker 1: more warships than the United States does. Ours are more capable. 338 00:18:23,040 --> 00:18:26,720 Speaker 1: We have those big, beautiful nuclear aircraft carriers. China is 339 00:18:26,880 --> 00:18:29,760 Speaker 1: gaining air speed in this regard where I don't mean 340 00:18:29,760 --> 00:18:32,080 Speaker 1: to interrupt bed, but this is so important. We've lost 341 00:18:32,160 --> 00:18:34,879 Speaker 1: Hong Kong. We can't show the flag there anymore. I 342 00:18:34,920 --> 00:18:39,160 Speaker 1: believe where is our harbor is? We base affairs out 343 00:18:39,160 --> 00:18:42,840 Speaker 1: of the South China Sea. We're gonna be forward time 344 00:18:43,040 --> 00:18:48,400 Speaker 1: from Guas and that's gonna be the board based. Remember 345 00:18:48,440 --> 00:18:50,760 Speaker 1: it used to be Pearl Harbor. Now you're all the 346 00:18:50,800 --> 00:18:53,359 Speaker 1: way forward to Guam. And a second important piece of 347 00:18:53,400 --> 00:18:58,080 Speaker 1: this is up in Tokyo Bay, ironically enough, where the 348 00:18:58,080 --> 00:19:02,080 Speaker 1: World War two ended. That's our large just naval base 349 00:19:02,400 --> 00:19:06,040 Speaker 1: in the Pacific is in a place called Yakuska, Japan. 350 00:19:06,200 --> 00:19:09,760 Speaker 1: In Tokyo Bay. That's where the seventh Fleet is based. 351 00:19:10,000 --> 00:19:12,680 Speaker 1: They will go forward. They'll also operate out of bases 352 00:19:12,840 --> 00:19:17,240 Speaker 1: in South Korea. It's good to have allies in this one, admirable. 353 00:19:17,359 --> 00:19:19,000 Speaker 1: I want to finish out by what you think this 354 00:19:19,080 --> 00:19:20,880 Speaker 1: is going. You've told about the objective, and I think 355 00:19:20,880 --> 00:19:23,320 Speaker 1: it's really important to understand where things aheading and whether 356 00:19:23,720 --> 00:19:26,560 Speaker 1: we can just slow them down, or whether we can 357 00:19:26,640 --> 00:19:29,320 Speaker 1: change the outcome. Do you think the outcome is already 358 00:19:29,320 --> 00:19:33,520 Speaker 1: predetermined now? I do not, although we ought to be concerned. 359 00:19:33,560 --> 00:19:36,560 Speaker 1: If we look back in history, so often when there 360 00:19:36,680 --> 00:19:41,920 Speaker 1: is an established power Athens confronted by a rising power Sparta, 361 00:19:42,200 --> 00:19:46,200 Speaker 1: or an established power the United Kingdom a hundred years 362 00:19:46,200 --> 00:19:50,000 Speaker 1: ago challenged by a rising Kaiser's Germany, so often those 363 00:19:50,040 --> 00:19:53,480 Speaker 1: scenarios do lead to war. We can still avoid this. 364 00:19:53,640 --> 00:19:57,840 Speaker 1: That's why we wrote four to lay out a cautionary tale. 365 00:19:58,240 --> 00:20:01,280 Speaker 1: We need a strategy to do that that employs all 366 00:20:01,320 --> 00:20:05,920 Speaker 1: elements of US national power. And we need to understand 367 00:20:06,119 --> 00:20:10,520 Speaker 1: China better. Today China knows us better, we know China. 368 00:20:10,800 --> 00:20:13,680 Speaker 1: We have work to do, Admiral, before we let you go. 369 00:20:14,200 --> 00:20:16,520 Speaker 1: Why a novel? And why now? I believe this is 370 00:20:16,520 --> 00:20:19,280 Speaker 1: your first novel ever. Tom just may haveron it tried 371 00:20:19,280 --> 00:20:21,359 Speaker 1: to throw it out at John, you did try to 372 00:20:21,400 --> 00:20:24,719 Speaker 1: throw it. I just want to confirm that George Clooney 373 00:20:24,800 --> 00:20:29,400 Speaker 1: is gonna play Strevitas, Leonardo DiCaprio is gonna play Lieutenant Faroh. 374 00:20:29,400 --> 00:20:31,159 Speaker 1: Come on, It's a no brainer, all right? So I 375 00:20:31,280 --> 00:20:34,919 Speaker 1: fix in because in fiction we can allow ourselves to 376 00:20:35,000 --> 00:20:38,720 Speaker 1: imagine the future. If I'd written a dry as dust 377 00:20:39,000 --> 00:20:44,439 Speaker 1: policy kind of book interest items, but this reaches the 378 00:20:44,560 --> 00:20:49,000 Speaker 1: big audience and want to let people know this is 379 00:20:49,000 --> 00:20:51,960 Speaker 1: a real danger. James to Venus, how is our new 380 00:20:52,040 --> 00:20:57,920 Speaker 1: defense secretary doing? I forgot his name? Secretary Lloyd Austin, 381 00:20:58,000 --> 00:21:00,960 Speaker 1: one of my contemporary is a wonderful officer. He's opted 382 00:21:00,960 --> 00:21:05,440 Speaker 1: to a terrific start by being steady, by being very 383 00:21:05,480 --> 00:21:08,160 Speaker 1: concerned about the people in the forest. He's a real 384 00:21:08,200 --> 00:21:11,320 Speaker 1: expert on the Middle East. He's gonna be spending a 385 00:21:11,359 --> 00:21:14,680 Speaker 1: lot of time focusing on the Pacific. I'm not sure 386 00:21:14,720 --> 00:21:17,920 Speaker 1: if the President's listening. Go no sophisticated to human, So 387 00:21:18,080 --> 00:21:21,119 Speaker 1: I'll give you that apple James to the President doesn't listen, 388 00:21:21,119 --> 00:21:22,920 Speaker 1: But the two dogs are in front of the screen 389 00:21:23,040 --> 00:21:25,240 Speaker 1: every morning. And good luck with the book release and 390 00:21:25,280 --> 00:21:27,439 Speaker 1: we look forward to catching up with you soon. Apple 391 00:21:27,520 --> 00:21:30,199 Speaker 1: James to vidis that of bloom Bug opinion columnist. Then 392 00:21:30,200 --> 00:21:40,480 Speaker 1: fulminates how Supreme allied Commanda. Then it is now a 393 00:21:40,640 --> 00:21:43,959 Speaker 1: joy and annual visit for us with Craig Moffatt and 394 00:21:44,000 --> 00:21:48,840 Speaker 1: Michael Nathanson of Moffatt Nathanson, the founding partners legendary at 395 00:21:48,880 --> 00:21:51,760 Speaker 1: Sanford Bernstein. If you got your hands on their Black 396 00:21:51,800 --> 00:21:54,480 Speaker 1: Book years ago, you read it cover to cover. In 397 00:21:54,520 --> 00:21:57,800 Speaker 1: this folks, more than ever, we've spoken with Moffatt and 398 00:21:57,840 --> 00:22:03,240 Speaker 1: with Nathanson the importance of our homes, our TVs. Our kids, 399 00:22:03,560 --> 00:22:06,400 Speaker 1: and what the future is for media. This is must 400 00:22:06,440 --> 00:22:08,520 Speaker 1: listen for Global Wall Street. I don't even know who 401 00:22:08,560 --> 00:22:11,560 Speaker 1: to begin with. I think Craig Moft is better looking. Michael, 402 00:22:11,720 --> 00:22:16,520 Speaker 1: I'm going with Craig. Oh my god, start the time. No, no, 403 00:22:16,760 --> 00:22:21,159 Speaker 1: you're never going to hear that where this Craig I 404 00:22:21,320 --> 00:22:24,080 Speaker 1: was thunderstruck in your neck of the woods, wire and 405 00:22:24,119 --> 00:22:27,480 Speaker 1: all that at the cord cutting that's going on when 406 00:22:27,480 --> 00:22:32,600 Speaker 1: the pandemics over, do we continue to cut the chord? Sure, 407 00:22:32,640 --> 00:22:34,919 Speaker 1: of course we do. And first of all, thank you 408 00:22:34,960 --> 00:22:36,520 Speaker 1: for having us on. It's always a pleasure for us 409 00:22:36,520 --> 00:22:38,600 Speaker 1: to do this as well, so so thank you and 410 00:22:38,640 --> 00:22:40,959 Speaker 1: thanks for the kind words. And look, of course we're 411 00:22:40,960 --> 00:22:43,359 Speaker 1: going to continue to the cord cut. And I think 412 00:22:43,440 --> 00:22:45,200 Speaker 1: what Michael and I have been writing a lot about 413 00:22:45,280 --> 00:22:49,080 Speaker 1: over the last year is that this has now become 414 00:22:49,119 --> 00:22:53,320 Speaker 1: almost a self fulfilling prophecy. We talked about two vicious 415 00:22:53,320 --> 00:22:57,280 Speaker 1: cycles that have started in chord cutting, where first it 416 00:22:57,359 --> 00:23:01,240 Speaker 1: was about sports, where the sports contract x are are 417 00:23:01,280 --> 00:23:05,040 Speaker 1: fixed for the programmers, their prices therefore keep going up. 418 00:23:05,080 --> 00:23:07,639 Speaker 1: They have no choice but to push those price increases 419 00:23:07,640 --> 00:23:12,439 Speaker 1: through to the distributors cable and satellite operators, who therefore 420 00:23:12,520 --> 00:23:14,960 Speaker 1: raise their prices and make it less and less attractive 421 00:23:15,000 --> 00:23:18,359 Speaker 1: for anybody who's not a sports fan. Those customers leave, 422 00:23:18,480 --> 00:23:21,080 Speaker 1: That drives the price even higher for the customers who 423 00:23:21,080 --> 00:23:23,440 Speaker 1: were left, and you get this kind of this self 424 00:23:23,480 --> 00:23:27,080 Speaker 1: fulfilling doom loop of more and more customers leaving. Now 425 00:23:27,119 --> 00:23:31,600 Speaker 1: you're augmenting that with the media companies themselves getting rewarded 426 00:23:31,680 --> 00:23:34,240 Speaker 1: for taking their best content and moving it over to 427 00:23:34,800 --> 00:23:38,760 Speaker 1: their direct to consumer platforms Spot and a BOD and 428 00:23:38,840 --> 00:23:41,439 Speaker 1: so that too is starting to accelerate, and you're strip 429 00:23:41,480 --> 00:23:45,080 Speaker 1: mining the traditional ecosystem. So there's I think we're past 430 00:23:45,160 --> 00:23:49,280 Speaker 1: the point of no return for this transition and cutting 431 00:23:49,280 --> 00:23:51,840 Speaker 1: now just moves all the way to Spot and a 432 00:23:51,920 --> 00:23:54,520 Speaker 1: BOD for non sports. Michael Nathans, and since our last 433 00:23:54,600 --> 00:23:56,280 Speaker 1: joint visit with the two of you, what I have 434 00:23:56,359 --> 00:23:59,080 Speaker 1: been thunderstruck by is you know, I'll make it narrow 435 00:23:59,160 --> 00:24:02,800 Speaker 1: the courage of Mr Iger at Disney, the courage of 436 00:24:02,880 --> 00:24:06,159 Speaker 1: people to be bold. Do we see more Iger like 437 00:24:06,400 --> 00:24:09,760 Speaker 1: courage in the coming quarters? Oh? With that a doubt, Tom. 438 00:24:10,000 --> 00:24:13,200 Speaker 1: They've been rewarded for that vision and that courage, and 439 00:24:13,240 --> 00:24:16,359 Speaker 1: everyone is now going to emulate Disney because Wall Street 440 00:24:16,359 --> 00:24:19,600 Speaker 1: has rewarded Disney for the execution of that vision, and 441 00:24:19,640 --> 00:24:22,800 Speaker 1: people want the same narrative for their stocks. Right. So, 442 00:24:22,840 --> 00:24:26,760 Speaker 1: in the past couple of months, Discovery, Viacom have all 443 00:24:26,920 --> 00:24:30,119 Speaker 1: joined you know this bandwagon, Peacock, and Comcast, and as 444 00:24:30,160 --> 00:24:33,640 Speaker 1: Craig said, because is going to accelerate all the media 445 00:24:33,680 --> 00:24:36,720 Speaker 1: companies going to in their own word, you know, world's 446 00:24:36,800 --> 00:24:41,159 Speaker 1: accelerate growth as well, and followed Disney down the same path. Cleig, 447 00:24:41,240 --> 00:24:43,879 Speaker 1: you said something that was really important non sports. This 448 00:24:43,960 --> 00:24:46,480 Speaker 1: was his key phrase because right now Cable is holding 449 00:24:46,520 --> 00:24:49,359 Speaker 1: onto sports and there is a question of how much 450 00:24:49,400 --> 00:24:52,959 Speaker 1: of a lock grip Cable has on sports, especially as 451 00:24:52,960 --> 00:24:56,280 Speaker 1: Amazon I think inks a Thursday Night exclusive deal with 452 00:24:56,320 --> 00:24:59,320 Speaker 1: the NFL. What's your vision going out one to three 453 00:24:59,400 --> 00:25:02,199 Speaker 1: years in the relationship, Craig, you know what, I'm going 454 00:25:02,280 --> 00:25:05,200 Speaker 1: to defer to Michael. He's really the expert on sports. 455 00:25:05,400 --> 00:25:06,840 Speaker 1: Um and I think Michael has done a lot of 456 00:25:06,840 --> 00:25:09,280 Speaker 1: really interesting works. So Michael, I'll let you answer that one. 457 00:25:09,760 --> 00:25:12,800 Speaker 1: Thanks Craig, and thanks LUSA. Um So our view is 458 00:25:12,880 --> 00:25:17,400 Speaker 1: that only the biggest events the NFL um X Thursday Night, 459 00:25:17,880 --> 00:25:21,560 Speaker 1: Major League Baseball playoffs, NT Double A Playoffs, the biggest 460 00:25:21,560 --> 00:25:24,680 Speaker 1: events will stay in the ecosystem. But you're starting to see, 461 00:25:25,040 --> 00:25:28,080 Speaker 1: as you said, Li said, the chipping away of the course, 462 00:25:28,240 --> 00:25:31,640 Speaker 1: you know, course sports. So Amazon's taking a package. You'll 463 00:25:31,680 --> 00:25:34,240 Speaker 1: probably see the NHL do some deals over the top 464 00:25:34,280 --> 00:25:37,400 Speaker 1: of other with other companies. So the bundle is going 465 00:25:37,440 --> 00:25:40,280 Speaker 1: to still have core sports in it, but now sports 466 00:25:40,280 --> 00:25:43,960 Speaker 1: fans will have to maybe pick other streaming platforms to 467 00:25:44,080 --> 00:25:47,240 Speaker 1: get you know, secondary sports. So it's going to basically, 468 00:25:47,640 --> 00:25:50,680 Speaker 1: I think, lead to more and more inflation for consumers 469 00:25:50,840 --> 00:25:54,680 Speaker 1: when it comes to the cost of of of the video. Basically, well, 470 00:25:54,760 --> 00:25:57,280 Speaker 1: there's raises a question, Craig, just in terms of at 471 00:25:57,280 --> 00:26:00,040 Speaker 1: what point people are going to cut the core to 472 00:26:00,200 --> 00:26:02,240 Speaker 1: have you done any research in sort of the price 473 00:26:02,320 --> 00:26:04,800 Speaker 1: point at which people decide forget it it's just not 474 00:26:04,840 --> 00:26:08,320 Speaker 1: worth it. Well, I don't sorry, I was just gonna 475 00:26:08,359 --> 00:26:09,800 Speaker 1: say at least I don't think you can say it's 476 00:26:09,880 --> 00:26:14,919 Speaker 1: it's just price anymore, because, as Michael was describing the 477 00:26:15,400 --> 00:26:19,600 Speaker 1: vision of Disney, as the companies are rewarded for putting 478 00:26:19,600 --> 00:26:23,400 Speaker 1: their best content on their direct consumer platforms. It's more 479 00:26:23,400 --> 00:26:26,760 Speaker 1: than just price. It's it's about the product itself. And 480 00:26:26,920 --> 00:26:28,840 Speaker 1: you know, we've done some work on the video value 481 00:26:28,920 --> 00:26:32,600 Speaker 1: chain that says you have to really think about, um, 482 00:26:32,640 --> 00:26:36,280 Speaker 1: what what is coming being the aggregation of individual shows 483 00:26:36,400 --> 00:26:40,119 Speaker 1: rather than the aggregation of cable networks, and cable networks 484 00:26:40,160 --> 00:26:44,679 Speaker 1: themselves sort of disappear. And in that world, it is 485 00:26:44,800 --> 00:26:48,760 Speaker 1: really hard to say there's a floor for for cord cutting. 486 00:26:48,800 --> 00:26:51,879 Speaker 1: If you define cord cutting as who's buying the traditional 487 00:26:51,880 --> 00:26:54,199 Speaker 1: bundle of cable networks, there has to be a bundle 488 00:26:54,200 --> 00:26:59,800 Speaker 1: of cable networks to buy for that to have a floor. Well, Michael, please, 489 00:26:59,840 --> 00:27:03,359 Speaker 1: my will jump in. Okay. So our core thesis had 490 00:27:03,359 --> 00:27:07,040 Speaker 1: always been there's the U S population that's a sports 491 00:27:07,040 --> 00:27:09,520 Speaker 1: and news fan. As long as sports a new stad 492 00:27:09,600 --> 00:27:13,200 Speaker 1: in the bundle, the bundle will survive. But now you're 493 00:27:13,200 --> 00:27:16,320 Speaker 1: starting to see that fragmentation of people putting their sports 494 00:27:16,359 --> 00:27:19,280 Speaker 1: on their own services and in the bundle, and that's 495 00:27:19,320 --> 00:27:21,879 Speaker 1: going to lead to real you know, the acceleration of 496 00:27:21,880 --> 00:27:24,440 Speaker 1: court kind. I want to get to the lessons learned here, 497 00:27:24,440 --> 00:27:26,360 Speaker 1: and I can go to Warner Brothers and all that 498 00:27:26,480 --> 00:27:28,960 Speaker 1: mass with HBO, but I want to start the two 499 00:27:29,000 --> 00:27:31,080 Speaker 1: of you and Craig. Let me start with you. Maybe 500 00:27:31,080 --> 00:27:33,760 Speaker 1: that's wrong, but I'm gonna go there because Nathanson is 501 00:27:33,800 --> 00:27:36,840 Speaker 1: better looking than you. Craig, and and and what what 502 00:27:37,240 --> 00:27:39,639 Speaker 1: I wouldn't want to say, Craig is a T and T. 503 00:27:40,600 --> 00:27:44,040 Speaker 1: What a train wreck you published? It was a train wreck. 504 00:27:44,320 --> 00:27:46,160 Speaker 1: We all knew it was going to be a train wreck. 505 00:27:46,480 --> 00:27:49,720 Speaker 1: What were the lessons learned from a T and T 506 00:27:49,960 --> 00:27:53,720 Speaker 1: s effort to go into the moffat Nathan's world? Well, 507 00:27:54,320 --> 00:27:58,800 Speaker 1: the the lesson is when you overpay for for declining assets, 508 00:27:58,880 --> 00:28:01,359 Speaker 1: bad stuff happens, right. I mean, I don't know that 509 00:28:01,440 --> 00:28:04,800 Speaker 1: it has anything it tells you anything all that specific 510 00:28:04,880 --> 00:28:09,200 Speaker 1: about media as much as it does. You know, it 511 00:28:09,560 --> 00:28:12,600 Speaker 1: wasn't It wasn't a mystery when they bought direct TV 512 00:28:12,880 --> 00:28:15,320 Speaker 1: that they were overpaying for an asset that was poised 513 00:28:15,320 --> 00:28:17,760 Speaker 1: to decline. We wrote it at the time, and lost 514 00:28:17,800 --> 00:28:21,000 Speaker 1: of other people knew it at the time. They doubled 515 00:28:21,000 --> 00:28:24,080 Speaker 1: down in part because they got into so much trouble 516 00:28:24,119 --> 00:28:26,960 Speaker 1: on the direct TV deal that that they their dividend 517 00:28:27,000 --> 00:28:30,600 Speaker 1: once again looked questionable, and they had to then spend 518 00:28:30,680 --> 00:28:34,360 Speaker 1: even more to buy Time Warner. And in retrospect, remember 519 00:28:34,400 --> 00:28:37,520 Speaker 1: what Time Warner was. It had some wonderful assets like HBO, 520 00:28:37,920 --> 00:28:40,960 Speaker 1: but it was still mostly a collection of cable networks 521 00:28:41,000 --> 00:28:43,960 Speaker 1: that too now looks like it is a declining business 522 00:28:44,000 --> 00:28:46,960 Speaker 1: that they paid much for. So so now they the 523 00:28:47,040 --> 00:28:49,480 Speaker 1: problem they've got right now is the balance sheet, and 524 00:28:49,480 --> 00:28:51,760 Speaker 1: and they have had that balance sheet problem for a while, 525 00:28:51,800 --> 00:28:53,960 Speaker 1: and I don't see how they grow out of it. 526 00:28:54,000 --> 00:28:56,480 Speaker 1: But Michael, to me, the major lesson here is the 527 00:28:56,600 --> 00:28:59,360 Speaker 1: creative side. Disnety you know, hit a home run with 528 00:28:59,480 --> 00:29:02,400 Speaker 1: mandalor In and John favor I get all that. Do 529 00:29:02,520 --> 00:29:06,160 Speaker 1: you see any evidence financial types can do creative I 530 00:29:06,200 --> 00:29:09,480 Speaker 1: don't observe it. No, tom See, I was gonna say 531 00:29:09,560 --> 00:29:12,360 Speaker 1: and jump on Craig's answer. The other lesson is you 532 00:29:12,440 --> 00:29:16,000 Speaker 1: can't have a T and T management leading creative companies, right, 533 00:29:16,160 --> 00:29:19,120 Speaker 1: And I think there's a certain degree of viewers that 534 00:29:19,200 --> 00:29:21,040 Speaker 1: they had that they could run all these businesses and 535 00:29:21,080 --> 00:29:24,440 Speaker 1: you can't write creating businesses. And the way that Disney approaches. 536 00:29:24,480 --> 00:29:28,200 Speaker 1: Their business is unique, right, and that is why Disney 537 00:29:28,240 --> 00:29:30,760 Speaker 1: has been able to scale so quickly. And I think, 538 00:29:31,040 --> 00:29:33,040 Speaker 1: you know, I think slowly, but surely we on the 539 00:29:33,080 --> 00:29:36,800 Speaker 1: street have realized that not every management team is the same. 540 00:29:37,160 --> 00:29:38,880 Speaker 1: And you see it in the outcome. I think you 541 00:29:39,000 --> 00:29:42,400 Speaker 1: hit something, Tom that's hard to measure, hard to distinguish, 542 00:29:42,680 --> 00:29:44,400 Speaker 1: but you know when you see it, right, And that 543 00:29:44,480 --> 00:29:47,080 Speaker 1: I think is the other lesson of a T and 544 00:29:47,160 --> 00:29:49,400 Speaker 1: T time warner. At the end of the day, it's 545 00:29:49,440 --> 00:29:51,240 Speaker 1: a great point because remember, this is not the first 546 00:29:51,240 --> 00:29:54,320 Speaker 1: time they've done that. The old timers like me, the 547 00:29:55,080 --> 00:29:57,320 Speaker 1: telcos tried to get into the media business back in 548 00:29:57,360 --> 00:30:00,320 Speaker 1: the late ninety nineties and it failed miserably for all 549 00:30:00,320 --> 00:30:03,400 Speaker 1: the reasons that Michael was just saying. Right, these companies 550 00:30:03,440 --> 00:30:09,040 Speaker 1: do not do well in managing creative businesses. Yeah, guys, 551 00:30:09,200 --> 00:30:13,160 Speaker 1: we're on a time. Let's do this again. Okay, let's 552 00:30:13,160 --> 00:30:16,400 Speaker 1: do this again. This is like affecting every single listener, 553 00:30:16,800 --> 00:30:19,920 Speaker 1: every single viewer. We do MafA Nathan's and where that's 554 00:30:19,920 --> 00:30:22,040 Speaker 1: their wonderful research. I do want to point out, don't 555 00:30:22,080 --> 00:30:25,200 Speaker 1: ask Lisa me for their research. We protect the copyright 556 00:30:25,240 --> 00:30:34,280 Speaker 1: of all of our guests, if you have any interest 557 00:30:34,320 --> 00:30:37,880 Speaker 1: in international markets, This is, without question, our interview of 558 00:30:37,920 --> 00:30:40,440 Speaker 1: the day, the interview of the moment. We had Bruce 559 00:30:40,520 --> 00:30:43,880 Speaker 1: Casman on earlier of JP Morgan as leadership in economics, 560 00:30:44,120 --> 00:30:47,360 Speaker 1: and he needs to understand the minutia of em. He 561 00:30:47,400 --> 00:30:51,520 Speaker 1: turns to Gabriella Santos of JP Morgan Asset Management as 562 00:30:51,560 --> 00:30:55,880 Speaker 1: an aside. She speaks fourteen languages. Gabriella, wonderful to have 563 00:30:56,000 --> 00:30:59,800 Speaker 1: you on today. The Chinese stock market is down for 564 00:31:00,200 --> 00:31:05,800 Speaker 1: team percent. It is truly plunged. Why thank you, Tom 565 00:31:05,800 --> 00:31:09,160 Speaker 1: in English is one of those languages, So we're good. Um. 566 00:31:09,200 --> 00:31:12,040 Speaker 1: In terms of the Chinese stock market, we have seen 567 00:31:12,640 --> 00:31:16,080 Speaker 1: a correction from those February highs Um. I think it 568 00:31:16,160 --> 00:31:18,560 Speaker 1: has very much to do with a similar story to 569 00:31:18,600 --> 00:31:22,200 Speaker 1: what's happening in the Nasdaq in the US. Chinese markets 570 00:31:22,200 --> 00:31:28,440 Speaker 1: are extremely growthy, they're very geared towards technology innovation, and 571 00:31:28,480 --> 00:31:33,240 Speaker 1: they did extremely well last year during the pandemic, top 572 00:31:33,240 --> 00:31:36,760 Speaker 1: performing market thirty percent, so came into this year with 573 00:31:36,800 --> 00:31:40,120 Speaker 1: elevated valuations. So I think all you're seeing in Chinese 574 00:31:40,160 --> 00:31:44,600 Speaker 1: markets is just a correction from a very very good 575 00:31:44,920 --> 00:31:47,400 Speaker 1: year last What everybody wants to know Gabriella as your 576 00:31:47,440 --> 00:31:50,600 Speaker 1: reset on emerging markets. You talk about a tug of war. 577 00:31:50,720 --> 00:31:54,760 Speaker 1: There's many tug of wars in many different parts of EM. 578 00:31:54,800 --> 00:31:57,240 Speaker 1: Can you stay in e M, can you add new 579 00:31:57,280 --> 00:31:59,520 Speaker 1: cash to e M? Or you do? Or do you 580 00:31:59,640 --> 00:32:03,880 Speaker 1: dashed to America? Now? Emerging markets is for US both 581 00:32:04,160 --> 00:32:08,680 Speaker 1: cyclically and structurally UH and overweight in portfolios UM. But 582 00:32:08,760 --> 00:32:11,360 Speaker 1: I think it's it's important to understand how emerging markets 583 00:32:11,360 --> 00:32:14,640 Speaker 1: have changed. UH. So it's a different Emerging markets at 584 00:32:14,640 --> 00:32:16,400 Speaker 1: the beginning of this cycle than it was at the 585 00:32:16,400 --> 00:32:19,200 Speaker 1: beginning of the last cycle. It is an index that 586 00:32:19,440 --> 00:32:22,560 Speaker 1: is a lot more growthy UH. It has a similar 587 00:32:22,600 --> 00:32:25,520 Speaker 1: percentage of tech to the US about a quarter of 588 00:32:25,520 --> 00:32:29,600 Speaker 1: the index. It has six percent exposure to growthy regions 589 00:32:29,640 --> 00:32:33,320 Speaker 1: like China, Korean, Taiwan. So you can get a correction 590 00:32:33,360 --> 00:32:36,240 Speaker 1: and broader e M markets when you have a correction 591 00:32:36,240 --> 00:32:39,640 Speaker 1: and growth. If you're looking for cyclicality and emerging markets, 592 00:32:39,960 --> 00:32:42,400 Speaker 1: you have to do that actively. You can't just rely 593 00:32:42,880 --> 00:32:46,600 Speaker 1: on the benchmark. So for US, EM is really about 594 00:32:46,640 --> 00:32:51,000 Speaker 1: alpha this year, it's really leaning into some cyclical areas 595 00:32:51,000 --> 00:32:54,920 Speaker 1: of emerging markets. For example in China, right it's playing 596 00:32:55,000 --> 00:32:59,520 Speaker 1: the consumer recovery in China this year through consumer discretionary 597 00:32:59,760 --> 00:33:04,040 Speaker 1: as well as Chinese banks playing the improvement in credit growth, 598 00:33:04,160 --> 00:33:07,360 Speaker 1: especially for small and medium sized companies. Can emerging markets 599 00:33:07,440 --> 00:33:11,520 Speaker 1: rally if the dollar doesn't keep weakening, Yeah, So I 600 00:33:11,560 --> 00:33:15,280 Speaker 1: think the dollar has always been critical for emerging markets, 601 00:33:15,320 --> 00:33:18,040 Speaker 1: and it's really a function of why the dollar is moving. 602 00:33:18,520 --> 00:33:21,240 Speaker 1: So there are really two extremes that cause the dollar 603 00:33:21,320 --> 00:33:24,000 Speaker 1: to strengthen, and neither of those are good for e M. 604 00:33:24,000 --> 00:33:26,680 Speaker 1: On one side, it's the US doing better than everybody 605 00:33:26,680 --> 00:33:29,520 Speaker 1: else or US exceptionalism. We've had some of that here 606 00:33:29,520 --> 00:33:31,760 Speaker 1: at the beginning of the year. And the other extreme 607 00:33:31,840 --> 00:33:34,120 Speaker 1: is the US doing too poorly, and I was having 608 00:33:34,200 --> 00:33:37,680 Speaker 1: fears of some sort of issue in the US and 609 00:33:37,720 --> 00:33:41,320 Speaker 1: broader global economy. We've kind of been toggling between these 610 00:33:41,360 --> 00:33:45,520 Speaker 1: two extremes causing dollar strength. Ultimately, though, we think this 611 00:33:45,600 --> 00:33:47,880 Speaker 1: is just a pause and what should be a broader 612 00:33:47,920 --> 00:33:51,560 Speaker 1: cycle dollar weakness as we get to the sweet spot 613 00:33:52,120 --> 00:33:54,400 Speaker 1: where the US is doing well but so is the 614 00:33:54,480 --> 00:33:57,080 Speaker 1: rest of the global economy. So think it's a pause 615 00:33:57,120 --> 00:33:59,800 Speaker 1: in em before we get a broader rally again. And 616 00:33:59,800 --> 00:34:01,880 Speaker 1: this goes into your call where you said we see 617 00:34:01,880 --> 00:34:04,200 Speaker 1: a positive setup for risk acids over the next twelve 618 00:34:04,200 --> 00:34:06,840 Speaker 1: to eighteen months. The question is, and to me, this 619 00:34:06,920 --> 00:34:10,320 Speaker 1: is the key question. How quickly we move to mid cycle? 620 00:34:10,520 --> 00:34:12,640 Speaker 1: What are you looking at? What are the benchmarks that 621 00:34:12,680 --> 00:34:14,880 Speaker 1: you're looking at you determine the answer to that question. 622 00:34:16,040 --> 00:34:19,200 Speaker 1: It's fascinating. This cycle is so different than the cycle 623 00:34:19,239 --> 00:34:22,080 Speaker 1: we had last time, just the speed through which we're 624 00:34:22,080 --> 00:34:24,640 Speaker 1: moving at. In terms of the economy, we look at 625 00:34:24,640 --> 00:34:26,680 Speaker 1: the unemployment rate as a measure of where we are 626 00:34:26,680 --> 00:34:29,440 Speaker 1: in the cycle, and we think we'll hit uh, you know, 627 00:34:29,760 --> 00:34:34,560 Speaker 1: go back to full employment over two years from peak 628 00:34:35,040 --> 00:34:38,960 Speaker 1: to full employment. Remember that took ten years during the 629 00:34:39,040 --> 00:34:41,799 Speaker 1: last cycle. So we're moving very fast here through the 630 00:34:41,840 --> 00:34:45,080 Speaker 1: economic cycle. Now, the cycle doesn't end when we reach 631 00:34:45,400 --> 00:34:48,080 Speaker 1: full employment, but it does slow down back to potential. 632 00:34:48,760 --> 00:34:52,279 Speaker 1: In terms of the market even faster. Uh. It took 633 00:34:52,320 --> 00:34:55,000 Speaker 1: us six months to reach all time highs again instead 634 00:34:55,040 --> 00:34:57,880 Speaker 1: of five years, which is what took us last time. 635 00:34:58,160 --> 00:35:00,880 Speaker 1: So I think we're also a broaching a more mature 636 00:35:00,920 --> 00:35:04,239 Speaker 1: phase of the market cycle. Were return to auderate and 637 00:35:04,280 --> 00:35:07,000 Speaker 1: there are a lot more related to earnings growth. I mean, 638 00:35:07,000 --> 00:35:09,320 Speaker 1: we're missed Gabriella, if I didn't ask you about Brazil. 639 00:35:09,400 --> 00:35:11,719 Speaker 1: We had Lula once, we have Lula again. We've got 640 00:35:11,760 --> 00:35:15,400 Speaker 1: Brazilian real and retreat. It's one of my great great 641 00:35:15,560 --> 00:35:19,400 Speaker 1: miscalls of my my career. I was totally wrong on 642 00:35:19,520 --> 00:35:25,000 Speaker 1: Lula and the prosperity of Brazil. Can he do it again? So? 643 00:35:25,080 --> 00:35:27,560 Speaker 1: I think that's the big question and investors, if you 644 00:35:27,600 --> 00:35:30,080 Speaker 1: look at the way the Brazilian rail has been weakening 645 00:35:30,239 --> 00:35:32,440 Speaker 1: or long term bond yields have been moving, I think 646 00:35:32,600 --> 00:35:36,560 Speaker 1: investors are answering no to that question. Um. And and 647 00:35:36,640 --> 00:35:39,719 Speaker 1: it's all about the kind of team that a potential 648 00:35:39,840 --> 00:35:43,000 Speaker 1: president Lula could get together. And there's a perception that 649 00:35:43,160 --> 00:35:46,480 Speaker 1: this time around things are so polarized, um, that we 650 00:35:46,560 --> 00:35:50,440 Speaker 1: would really see a less orthodox team than the first 651 00:35:50,840 --> 00:35:53,200 Speaker 1: time around. So I really think the balance of risks 652 00:35:53,239 --> 00:35:58,400 Speaker 1: for Latin America has worse than significantly related to local politics. Gabby, 653 00:35:58,440 --> 00:36:00,360 Speaker 1: thank you grant to catch you up coming science so 654 00:36:00,440 --> 00:36:03,320 Speaker 1: stat of J. T. Mulgan Asset Management. This is the 655 00:36:03,360 --> 00:36:08,000 Speaker 1: Bloomberg Surveillance Podcast. Thanks for listening. Join us live weekdays 656 00:36:08,080 --> 00:36:11,440 Speaker 1: from seven to ten am Eastern on Bloomberg Radio and 657 00:36:11,640 --> 00:36:15,440 Speaker 1: on Bloomberg television each day from six to nine am 658 00:36:15,960 --> 00:36:19,680 Speaker 1: for insight from the best in economics, finance, investment, and 659 00:36:19,840 --> 00:36:26,319 Speaker 1: international relations. And subscribe to the Surveillance podcast on Apple podcast, SoundCloud, 660 00:36:26,520 --> 00:36:30,080 Speaker 1: Bloomberg dot com, and of course, on the terminal. I'm 661 00:36:30,160 --> 00:36:32,759 Speaker 1: Tom Keene, and this is Bloomberg.