1 00:00:00,240 --> 00:00:04,960 Speaker 1: This is Bloomberg Wall Street Week. Market shruggle, higher consumer prizes. 2 00:00:05,040 --> 00:00:07,400 Speaker 1: The economy is in the process of rebounding. Will the 3 00:00:07,480 --> 00:00:10,479 Speaker 1: utter Reserve have its own digital currency? The financial stories 4 00:00:10,520 --> 00:00:12,879 Speaker 1: that cheap hard work. Many people think the eels are 5 00:00:12,880 --> 00:00:15,080 Speaker 1: just going to keep marching up. We have more spending 6 00:00:15,120 --> 00:00:17,160 Speaker 1: coming out of Congress. One of the big questions I 7 00:00:17,200 --> 00:00:19,880 Speaker 1: think on investor's minds inflation through the eyes of the 8 00:00:19,880 --> 00:00:23,560 Speaker 1: most influential voices. Larry Summer is the former Treasury Secretary 9 00:00:23,640 --> 00:00:27,240 Speaker 1: Bryan Wynhan a backup America, Will Smart, CEO of Charlie Sharp. 10 00:00:27,360 --> 00:00:31,560 Speaker 1: Bloomberg wool Street Week with David Weston from Bloomberg Radio. 11 00:00:32,000 --> 00:00:35,880 Speaker 1: Now you see it, now you don't. Concerns about inflation 12 00:00:36,000 --> 00:00:38,160 Speaker 1: and tightening went up in a proof of smoke this week, 13 00:00:38,479 --> 00:00:40,919 Speaker 1: and all it took was a few more words from 14 00:00:40,920 --> 00:00:43,839 Speaker 1: Fed chair J. Powell. This is Bloomberg Wall Street Week. 15 00:00:44,120 --> 00:00:47,760 Speaker 1: I'm David Weston. Whatever the market saw this week, they 16 00:00:47,800 --> 00:00:50,600 Speaker 1: certainly liked it, as equities were up across the board, 17 00:00:50,680 --> 00:00:54,280 Speaker 1: the SMP ending the week at another record high, joining 18 00:00:54,280 --> 00:00:56,440 Speaker 1: the Dow Jones and the NASTAC and rising more than 19 00:00:56,480 --> 00:00:59,960 Speaker 1: two percent, while the ten year Treasury added nine basis points, 20 00:01:00,200 --> 00:01:03,120 Speaker 1: and the yield curve overall steeping about ten basis points. 21 00:01:03,360 --> 00:01:05,200 Speaker 1: To give us a sense of how investors see this 22 00:01:05,480 --> 00:01:07,399 Speaker 1: round trip with the market to the last two weeks. 23 00:01:07,480 --> 00:01:10,399 Speaker 1: Welcome now Barbara and Bernard. She is founder of Windcrest 24 00:01:10,480 --> 00:01:13,920 Speaker 1: Capital and Chris Alman, Calcar's chief investment officer. Welcome to 25 00:01:13,959 --> 00:01:16,080 Speaker 1: both of you to Wall Street Week. So Barbara and 26 00:01:16,160 --> 00:01:18,440 Speaker 1: let me start with you first. We had sort of 27 00:01:18,440 --> 00:01:20,760 Speaker 1: two versions from what at least what the market saw 28 00:01:20,959 --> 00:01:22,760 Speaker 1: and what's going on. One is we gotta be worried 29 00:01:22,800 --> 00:01:24,760 Speaker 1: on inflation. It may be sticking around. The other is, 30 00:01:24,840 --> 00:01:26,640 Speaker 1: don't worry about it. It's a long way off. It's 31 00:01:26,680 --> 00:01:29,399 Speaker 1: not the bigger problem. Which was right, I categorize this 32 00:01:29,480 --> 00:01:31,800 Speaker 1: market is all great and no fear, and that's exactly 33 00:01:31,840 --> 00:01:34,319 Speaker 1: what you saw this week. You know, if I Finance 34 00:01:34,360 --> 00:01:36,759 Speaker 1: were taught the love of seventy two, which essentially means 35 00:01:36,840 --> 00:01:39,200 Speaker 1: if you're annulyzing your returns at seven percent a year, 36 00:01:39,240 --> 00:01:41,360 Speaker 1: you're going to double your money every ten years. The 37 00:01:41,440 --> 00:01:46,559 Speaker 1: pp I clopped six point two. That's really meaningful because 38 00:01:46,560 --> 00:01:50,040 Speaker 1: by that same math, you're losing half of your purchasing 39 00:01:50,040 --> 00:01:52,560 Speaker 1: power every eleven point two years, and this is what 40 00:01:52,640 --> 00:01:56,360 Speaker 1: the market really needs to be focused on. Inflation is 41 00:01:56,400 --> 00:01:59,160 Speaker 1: here to stay. It's not transitory. How will try to 42 00:01:59,240 --> 00:02:02,960 Speaker 1: paint it, is this inflation rat going through the anaconda. 43 00:02:03,160 --> 00:02:05,200 Speaker 1: We all see the bulge in it's moving, don't worry 44 00:02:05,200 --> 00:02:09,720 Speaker 1: about it. I disagree because of the way inflation is calculated. 45 00:02:09,840 --> 00:02:13,600 Speaker 1: It's a year on year number. So sure, cars being 46 00:02:13,680 --> 00:02:16,639 Speaker 1: up thirty five, used cars being up thirty this year 47 00:02:17,000 --> 00:02:20,640 Speaker 1: maybe part of a reopening trade. Lumber being up maybe 48 00:02:20,639 --> 00:02:23,120 Speaker 1: part of a reopening trade, and people going back and stop, 49 00:02:23,600 --> 00:02:26,320 Speaker 1: you know, working on their porches. Maybe why lumbers falling. 50 00:02:26,880 --> 00:02:31,120 Speaker 1: But things like wages, wage, that's sticky, that's not falling. 51 00:02:31,400 --> 00:02:35,080 Speaker 1: And so even if you had zero percent inflation next year, 52 00:02:35,400 --> 00:02:39,079 Speaker 1: that's still a six point increase in the cost of goods, 53 00:02:39,360 --> 00:02:42,880 Speaker 1: So that, in my opinion, is permanent. Um. The other 54 00:02:42,960 --> 00:02:47,000 Speaker 1: thing I would say is that Al kept talking about 55 00:02:47,040 --> 00:02:50,959 Speaker 1: an inclusive and equitable recovery, and what you've gone from 56 00:02:51,040 --> 00:02:54,799 Speaker 1: is an administration that was obsessed with wealth creation to 57 00:02:54,960 --> 00:02:59,280 Speaker 1: one that's really obsessed with wealth redistribution that is inflationary 58 00:02:59,320 --> 00:03:02,119 Speaker 1: as well. And you also look at the Biden administration, 59 00:03:02,160 --> 00:03:05,240 Speaker 1: they're quite focused on decarbonization that is going to take 60 00:03:05,280 --> 00:03:10,880 Speaker 1: a sustained investment, and investment is inflationary. So for multiple reasons, 61 00:03:11,240 --> 00:03:13,680 Speaker 1: I think inflation is here to stay. I think it's 62 00:03:13,720 --> 00:03:16,959 Speaker 1: being underappreciated um and it's something we really need to 63 00:03:17,000 --> 00:03:19,600 Speaker 1: focus on. So Chris Alwin, give us your perspective. You 64 00:03:19,639 --> 00:03:21,720 Speaker 1: are all long term investor. You have a lot of 65 00:03:21,800 --> 00:03:23,919 Speaker 1: money to invest, you also have a lot of obligations 66 00:03:23,919 --> 00:03:26,559 Speaker 1: in the out years. At this point, are you adjusting 67 00:03:26,680 --> 00:03:30,519 Speaker 1: your investment calculus because of the prospect of increased inflation? 68 00:03:30,800 --> 00:03:33,200 Speaker 1: We are, And I agree with Barbara Anna. I think 69 00:03:33,200 --> 00:03:35,880 Speaker 1: that inflation is here to stay, and I think that 70 00:03:36,000 --> 00:03:39,720 Speaker 1: it's subtle and creeping. In the way the government measures 71 00:03:39,840 --> 00:03:43,000 Speaker 1: c p I is not effective at all. But if 72 00:03:43,000 --> 00:03:45,760 Speaker 1: you ask the average person, they're feeling it. They see 73 00:03:45,760 --> 00:03:48,680 Speaker 1: it in prices they're paying, and as she pointed out, 74 00:03:49,280 --> 00:03:52,640 Speaker 1: it's going to be a wage pull as well as 75 00:03:52,680 --> 00:03:56,119 Speaker 1: a price push on inflation. So I'm not sure when 76 00:03:56,160 --> 00:03:58,720 Speaker 1: CPI will really pick it up, but I know we 77 00:03:58,960 --> 00:04:02,120 Speaker 1: feel it and it showing up in lots of different places. 78 00:04:02,200 --> 00:04:04,760 Speaker 1: So as a long term pension plan, as you put 79 00:04:04,840 --> 00:04:08,760 Speaker 1: David with a thirty year horizon, inflation is the real threat. 80 00:04:08,840 --> 00:04:12,960 Speaker 1: So we're actually increasing our inflation sensitive assets, which is 81 00:04:12,960 --> 00:04:16,520 Speaker 1: a whole basket of different things, uh, and increasing it 82 00:04:16,600 --> 00:04:18,840 Speaker 1: pretty steadily over time. We really wanted to be a 83 00:04:18,920 --> 00:04:21,880 Speaker 1: larger percentage of our portfolio. So Barbara, and let me 84 00:04:21,880 --> 00:04:23,280 Speaker 1: ask you about something that was a little bit a 85 00:04:23,320 --> 00:04:26,880 Speaker 1: debate this week on Bloomberg between Severda supermani and of 86 00:04:26,960 --> 00:04:29,679 Speaker 1: Bank of America and Jonathan Golub from the Credit Suite 87 00:04:29,920 --> 00:04:32,440 Speaker 1: about whether an investor should take ano account the ability 88 00:04:32,440 --> 00:04:36,080 Speaker 1: of a company to pass on increased costs to customers. 89 00:04:36,760 --> 00:04:38,839 Speaker 1: Is that doable because some people think it is something 90 00:04:38,839 --> 00:04:41,960 Speaker 1: that is that one way to try to compensate for inflation. 91 00:04:42,000 --> 00:04:44,480 Speaker 1: We're expecting absolutely. I mean, I think you want to 92 00:04:44,520 --> 00:04:46,960 Speaker 1: invest in companies with a high inflation pass through, right. 93 00:04:47,279 --> 00:04:49,920 Speaker 1: If you look at something like Amazon, it's nothing more 94 00:04:50,000 --> 00:04:53,000 Speaker 1: than a price comparison website. If you're selling white goods 95 00:04:53,160 --> 00:04:56,360 Speaker 1: through a price comparison website, it's really hard to pass 96 00:04:56,400 --> 00:05:00,080 Speaker 1: through those costs. You know. You also had Worldpool this 97 00:05:00,080 --> 00:05:02,640 Speaker 1: this this week say they were trying to increase costs, 98 00:05:03,200 --> 00:05:06,320 Speaker 1: but it's you know, it's a crisis. Steals up substantially, 99 00:05:06,360 --> 00:05:08,640 Speaker 1: It's gonna hit margins. So I don't want to be 100 00:05:08,680 --> 00:05:10,560 Speaker 1: in those companies. I want to be in companies with 101 00:05:10,600 --> 00:05:13,200 Speaker 1: a very high inflation passed through rate. Chris, let me 102 00:05:13,360 --> 00:05:15,320 Speaker 1: ask a slightly different question. Another thing that happened this 103 00:05:15,360 --> 00:05:17,840 Speaker 1: week was infrastructure. I mean, it's not there yet, but 104 00:05:18,000 --> 00:05:21,279 Speaker 1: certainly the President announced bipartisan agreement. It looks more likely 105 00:05:21,279 --> 00:05:22,680 Speaker 1: than it did last week. I think it's fair to 106 00:05:22,720 --> 00:05:25,320 Speaker 1: say that, Uh, to what extent does that affect an 107 00:05:25,360 --> 00:05:29,440 Speaker 1: investor's perspective of infect we get a substantial investment infrastructure, 108 00:05:29,560 --> 00:05:31,520 Speaker 1: What does that mean for the long term growth of 109 00:05:31,520 --> 00:05:33,680 Speaker 1: the economy. Well, David, I remember you and I talking 110 00:05:33,680 --> 00:05:37,679 Speaker 1: about inflate infrastructure a couple of years ago. You watch 111 00:05:37,800 --> 00:05:41,000 Speaker 1: Washington much closer than I do. So, yes, we got closer. 112 00:05:42,240 --> 00:05:45,640 Speaker 1: I'll believe it when I see it. But longer term, 113 00:05:45,680 --> 00:05:49,080 Speaker 1: I think it is an interesting area. UM. You know, 114 00:05:49,440 --> 00:05:53,120 Speaker 1: we really do think that that internet services an infrastructure 115 00:05:53,120 --> 00:05:57,880 Speaker 1: type of investment. Broadband UH and the charging stations. That's reality, 116 00:05:57,960 --> 00:06:00,760 Speaker 1: that that's going to be an investment opportunity. UH. The 117 00:06:00,839 --> 00:06:03,080 Speaker 1: government needs to step in and be in the first 118 00:06:03,120 --> 00:06:06,000 Speaker 1: lost position. But I think you'll see private capital flow. 119 00:06:06,320 --> 00:06:09,240 Speaker 1: There's a ton of capital not just in the USA 120 00:06:09,320 --> 00:06:13,000 Speaker 1: but around the world. It's very interested in long, stable 121 00:06:13,040 --> 00:06:17,159 Speaker 1: returns from an infrastructure play. And they love the USA 122 00:06:17,320 --> 00:06:20,200 Speaker 1: because we have a rule of law. We have very 123 00:06:20,240 --> 00:06:23,520 Speaker 1: clean rules and contracts. But they've got to see an 124 00:06:23,520 --> 00:06:26,560 Speaker 1: opportunity where they can make a steady return out of it. 125 00:06:26,760 --> 00:06:30,360 Speaker 1: So the USA always has that challenge in infrastructure and 126 00:06:30,440 --> 00:06:34,239 Speaker 1: just full bonds are always the cheapest form of cost 127 00:06:34,360 --> 00:06:38,400 Speaker 1: of capital to build something, but let's face it, they're 128 00:06:38,440 --> 00:06:41,039 Speaker 1: not good at maintaining it. So if you want to 129 00:06:41,040 --> 00:06:44,039 Speaker 1: build something and maintain it, you've got to have some 130 00:06:44,120 --> 00:06:46,640 Speaker 1: private capital in there. And that's going to be the 131 00:06:46,720 --> 00:06:48,880 Speaker 1: challenge with this bill is figuring out with all this 132 00:06:49,000 --> 00:06:52,760 Speaker 1: federal money coming in, how does private capital fit in 133 00:06:52,800 --> 00:06:55,440 Speaker 1: that capital stack. Okay, our panel of Chris Element of 134 00:06:55,520 --> 00:06:58,600 Speaker 1: Kelster's and Barbara and Bernard of Windcrest Capital will be 135 00:06:58,640 --> 00:07:00,600 Speaker 1: staying with us as we turn to the E s 136 00:07:00,680 --> 00:07:04,479 Speaker 1: G investing and how it could change our world. This 137 00:07:04,600 --> 00:07:12,480 Speaker 1: is Wall Street Week on Bloomberg. This is Bloomberg Wall 138 00:07:12,560 --> 00:07:16,360 Speaker 1: Street Week with David Weston from Bloomberg Radio. E s 139 00:07:16,400 --> 00:07:19,280 Speaker 1: G Environmental, Social and Governance Investing. He's gonna a lot 140 00:07:19,280 --> 00:07:21,720 Speaker 1: of talk these days, and lately it's getting some action 141 00:07:21,760 --> 00:07:24,720 Speaker 1: as well, with the Engine Number one Dissidents Shareholder group 142 00:07:24,960 --> 00:07:27,680 Speaker 1: up ending the x ON Mobile board and this week 143 00:07:27,760 --> 00:07:30,360 Speaker 1: launching an e t F to take that campaign into 144 00:07:30,400 --> 00:07:33,440 Speaker 1: other boardrooms as well. Chris Alement of Callister's and Barbara 145 00:07:33,480 --> 00:07:36,360 Speaker 1: and Bernard of Windcrest Capital are still with us. So Chris, 146 00:07:36,440 --> 00:07:37,480 Speaker 1: I want to start with you because you had a 147 00:07:37,480 --> 00:07:39,480 Speaker 1: little something to do with this with Engine number one. 148 00:07:39,800 --> 00:07:42,600 Speaker 1: Give us your sense of why you back these dissidents 149 00:07:42,600 --> 00:07:44,160 Speaker 1: and what effect you think it's going to have on 150 00:07:44,200 --> 00:07:48,400 Speaker 1: ex On. David, we have been having engagement and dialogue 151 00:07:48,440 --> 00:07:52,160 Speaker 1: with the integrated oil companies for several years now because 152 00:07:52,200 --> 00:07:55,920 Speaker 1: we're really concerned about the future and then and it's 153 00:07:55,920 --> 00:07:58,160 Speaker 1: going to be a lower carbon and these companies have 154 00:07:58,280 --> 00:08:02,560 Speaker 1: to change and adjust. XL Mobibile has just been calcil Trent. 155 00:08:02,720 --> 00:08:06,400 Speaker 1: They have just ignored shareholders for several years. New York 156 00:08:06,400 --> 00:08:09,320 Speaker 1: Common May to run at them um New York City 157 00:08:09,360 --> 00:08:13,160 Speaker 1: Calipers and they just rebuffed everybody. We felt that it's 158 00:08:13,200 --> 00:08:17,640 Speaker 1: time to change at the top. When Engine went approached 159 00:08:17,720 --> 00:08:21,400 Speaker 1: us and said they're going to propose an alternative slate 160 00:08:21,440 --> 00:08:24,480 Speaker 1: for a board, we said we would get behind them. 161 00:08:24,480 --> 00:08:26,680 Speaker 1: So when they announced in December, we came out the 162 00:08:26,720 --> 00:08:30,720 Speaker 1: same day endorsing their slate UH. And that was intentional, 163 00:08:30,760 --> 00:08:34,920 Speaker 1: and we worked behind that UH, supporting their effort. We 164 00:08:34,920 --> 00:08:38,080 Speaker 1: weren't proxy solicitors. What we were doing was really just 165 00:08:38,200 --> 00:08:42,360 Speaker 1: calling our huge network of institutional investors in all the 166 00:08:42,400 --> 00:08:45,520 Speaker 1: groups and raising this and making them aware. UH. And 167 00:08:45,640 --> 00:08:48,119 Speaker 1: I think in the end it was Exon's own actions 168 00:08:48,200 --> 00:08:52,240 Speaker 1: of adding board members suddenly talking about carbon sequestration. They 169 00:08:52,360 --> 00:08:56,559 Speaker 1: really changed their tune because they realized that shareholders were 170 00:08:57,000 --> 00:09:00,800 Speaker 1: unhappy and we're frustrated. And look at that stock chart. 171 00:09:00,920 --> 00:09:03,520 Speaker 1: It really turned around. Now all the integrated oils have 172 00:09:03,640 --> 00:09:06,320 Speaker 1: come up, but look at Exon relative to the others. 173 00:09:06,960 --> 00:09:09,640 Speaker 1: And I think the fact that we were finally engaging 174 00:09:09,679 --> 00:09:13,080 Speaker 1: with them and making some traction with management was waking 175 00:09:13,600 --> 00:09:16,400 Speaker 1: the shareholders up and they cared and it was a 176 00:09:16,480 --> 00:09:19,840 Speaker 1: huge move. So I think the the announcement that we 177 00:09:19,920 --> 00:09:23,040 Speaker 1: saw that we elected three they elected three board members 178 00:09:23,040 --> 00:09:26,600 Speaker 1: onto the Excellent Mobile board is dramatic and it really 179 00:09:26,679 --> 00:09:29,160 Speaker 1: is going to signal a change from the top. Now 180 00:09:29,200 --> 00:09:32,280 Speaker 1: their hard work begins. I don't want ex On Mobile 181 00:09:32,320 --> 00:09:37,400 Speaker 1: to become a codact a Blockbuster video store, or I'll 182 00:09:37,400 --> 00:09:40,320 Speaker 1: go back in my time a warehouse record store. We 183 00:09:40,360 --> 00:09:43,440 Speaker 1: want to see ex On Mobile actually exist twenty and 184 00:09:43,520 --> 00:09:46,440 Speaker 1: thirty years from now. But they've got to change and 185 00:09:46,520 --> 00:09:49,040 Speaker 1: adapt to be able to do that. They can't just 186 00:09:49,520 --> 00:09:53,200 Speaker 1: stick their head in an oil and gas only and 187 00:09:53,360 --> 00:09:57,400 Speaker 1: I now we've received criticism that because that's their main calling. 188 00:09:57,800 --> 00:10:00,319 Speaker 1: But they can adapt and they can adjust. Have a 189 00:10:00,520 --> 00:10:04,559 Speaker 1: become an energy company, and we're gonna need the hydrocarbons 190 00:10:04,559 --> 00:10:07,320 Speaker 1: into the future, but we're not gonna in necessarily need 191 00:10:07,360 --> 00:10:09,360 Speaker 1: to burn them. We're gonna use them for lubricants and 192 00:10:09,440 --> 00:10:12,439 Speaker 1: other things. So they've got a product mix, They've got 193 00:10:12,440 --> 00:10:16,440 Speaker 1: a very solid company, they have good research. I'm optimistic 194 00:10:16,480 --> 00:10:19,040 Speaker 1: with a new fresh board at the top and a 195 00:10:19,160 --> 00:10:21,680 Speaker 1: change of tone at the top that this company can 196 00:10:21,760 --> 00:10:25,440 Speaker 1: can adjust and adapt into the future and survive as 197 00:10:25,480 --> 00:10:27,679 Speaker 1: we're seeing with all the major oils having to do 198 00:10:27,800 --> 00:10:33,360 Speaker 1: to recognize the future is lower and lower carbon emissions. Barbara, 199 00:10:33,400 --> 00:10:35,400 Speaker 1: and what about it. You're an expert in E s 200 00:10:35,480 --> 00:10:38,440 Speaker 1: G investing and something I think of an enthusiast for Chris, 201 00:10:38,480 --> 00:10:40,920 Speaker 1: what I think you did was great, and if you 202 00:10:40,960 --> 00:10:44,679 Speaker 1: can change their capital allocations decisions and save your investment. 203 00:10:45,120 --> 00:10:48,040 Speaker 1: Good on you. That is phenomenal. But what happened this 204 00:10:48,080 --> 00:10:51,520 Speaker 1: week with the launch of another index tracking e t F, 205 00:10:51,760 --> 00:10:54,320 Speaker 1: I don't think is the answer. There is no energy 206 00:10:54,360 --> 00:10:58,320 Speaker 1: transition without an investor transition. So E s G one 207 00:10:58,360 --> 00:11:01,240 Speaker 1: point oh was by the end X and slightly overweight 208 00:11:01,280 --> 00:11:04,120 Speaker 1: tech and underweight oil and gas and charge a premium 209 00:11:04,160 --> 00:11:07,199 Speaker 1: for it. So we've gone from passive B s G 210 00:11:07,520 --> 00:11:09,959 Speaker 1: to what I would now call passive aggressive E s 211 00:11:10,040 --> 00:11:13,080 Speaker 1: G with engine one point oh. And while it's good 212 00:11:13,080 --> 00:11:15,240 Speaker 1: and I hope you know I wish them, I wish 213 00:11:15,280 --> 00:11:17,960 Speaker 1: them well. I think E s G two point oh 214 00:11:18,160 --> 00:11:20,520 Speaker 1: is not engine number one. E s G two point 215 00:11:20,520 --> 00:11:23,480 Speaker 1: oh is the little engine that could, and the little 216 00:11:23,559 --> 00:11:28,000 Speaker 1: engine that could invest in the renewables and the copper 217 00:11:28,080 --> 00:11:30,960 Speaker 1: and nickel and lithium minds that are mining and sustainable 218 00:11:30,960 --> 00:11:34,080 Speaker 1: ways that are going to drive this transition. It's investing 219 00:11:34,120 --> 00:11:38,040 Speaker 1: in E s G leaders who are decarbonizing and are 220 00:11:38,120 --> 00:11:41,000 Speaker 1: disrupting their models because we do need, as Chris says, 221 00:11:41,040 --> 00:11:44,520 Speaker 1: their services, but we need them with less carbon. So 222 00:11:45,040 --> 00:11:46,599 Speaker 1: I don't think E s G two point I was 223 00:11:46,600 --> 00:11:49,760 Speaker 1: about the index at all. I think it's about decarbonization, 224 00:11:49,840 --> 00:11:53,319 Speaker 1: and it takes investment, not divestment. If you listen to 225 00:11:53,320 --> 00:11:56,480 Speaker 1: all they wrote a report they said we need fifty 226 00:11:56,520 --> 00:11:59,959 Speaker 1: trillion to solve climate change. A hundred and three trillion 227 00:12:00,360 --> 00:12:04,040 Speaker 1: has been committed for the un principle responsible investment, two 228 00:12:04,120 --> 00:12:07,200 Speaker 1: times what's needed. So the problem isn't the money. The 229 00:12:07,240 --> 00:12:10,600 Speaker 1: problem is it's going to all the wrong places. And so, Chris, 230 00:12:10,679 --> 00:12:13,960 Speaker 1: I'm so excited that institutional capital is finally starting to 231 00:12:13,960 --> 00:12:17,560 Speaker 1: work together. But what I now that you've got directors 232 00:12:17,720 --> 00:12:19,840 Speaker 1: and now that you've got disclosure, I think the next 233 00:12:19,880 --> 00:12:23,560 Speaker 1: step is using your health to advocate for policy change, 234 00:12:24,160 --> 00:12:27,360 Speaker 1: because if you enact attack on carbon, you're going to 235 00:12:27,480 --> 00:12:30,640 Speaker 1: get the same the same result without having to jump 236 00:12:30,720 --> 00:12:32,120 Speaker 1: up and down on the board room. When you change 237 00:12:32,120 --> 00:12:36,280 Speaker 1: the incentive, you change behaviors. Chris, what do you say? No, Barbara, 238 00:12:36,320 --> 00:12:38,120 Speaker 1: and I agree with you. I was just gonna say that, 239 00:12:38,400 --> 00:12:40,840 Speaker 1: you know, and I think that the key is we 240 00:12:40,960 --> 00:12:44,319 Speaker 1: have been making very large sustainable and long term investments. 241 00:12:44,360 --> 00:12:48,319 Speaker 1: We've been allocating more money to more sustainable companies. What 242 00:12:48,360 --> 00:12:51,160 Speaker 1: we're trying to do is to recognize that everybody, whether 243 00:12:51,200 --> 00:12:53,880 Speaker 1: it's an index and there's just still a lot of 244 00:12:53,920 --> 00:12:57,640 Speaker 1: money in index funds, but that all the companies, if 245 00:12:57,640 --> 00:13:00,000 Speaker 1: they want to survive in the future, have to change 246 00:13:00,080 --> 00:13:04,520 Speaker 1: and adapt um. They can't just stay stuck in the 247 00:13:04,640 --> 00:13:07,560 Speaker 1: current methodology. And and you're right, David, We've got to 248 00:13:07,559 --> 00:13:10,280 Speaker 1: take carbon out of the atmosphere. We've got to change 249 00:13:10,320 --> 00:13:14,080 Speaker 1: the way we get energy, the way we transport, and 250 00:13:14,240 --> 00:13:17,800 Speaker 1: especially the way we do agriculture, and then ultimately certain 251 00:13:17,800 --> 00:13:21,200 Speaker 1: things like as we've talked, concrete steel manufacturers have to 252 00:13:21,240 --> 00:13:25,560 Speaker 1: find new, better ways, less carbon intensive ways to do that. 253 00:13:26,080 --> 00:13:31,240 Speaker 1: So for us, it's it's a holistic investment including our index, 254 00:13:31,559 --> 00:13:35,000 Speaker 1: not excluding it, but including it. And it is active management. 255 00:13:35,000 --> 00:13:37,320 Speaker 1: I've said for a while, but I think of E, 256 00:13:37,559 --> 00:13:41,640 Speaker 1: S and G climate change is the one active decision 257 00:13:41,720 --> 00:13:43,640 Speaker 1: people have to make, and they have to make it 258 00:13:43,679 --> 00:13:46,800 Speaker 1: now because in the next ten to twenty years the 259 00:13:46,840 --> 00:13:49,880 Speaker 1: world is going to radically change and you can't just 260 00:13:49,960 --> 00:13:53,000 Speaker 1: sit on an index and wait. You need to invest 261 00:13:53,080 --> 00:13:57,079 Speaker 1: and make active decisions ahead of that to create capture 262 00:13:57,120 --> 00:14:01,640 Speaker 1: those opportunities. So we think that the changes is inevitable. 263 00:14:01,840 --> 00:14:05,000 Speaker 1: We've got a big sustainable portfolio that we already invest 264 00:14:05,760 --> 00:14:09,360 Speaker 1: over a billion in new sustainable solutions and we're gonna 265 00:14:09,640 --> 00:14:12,040 Speaker 1: increase that over time. So this is a truly great 266 00:14:12,040 --> 00:14:13,880 Speaker 1: discussion on s G. I want both of you come 267 00:14:13,920 --> 00:14:15,560 Speaker 1: back and have it at greater the links because we 268 00:14:15,600 --> 00:14:16,839 Speaker 1: have more to talk about. But I want to throw 269 00:14:16,840 --> 00:14:18,520 Speaker 1: you a curve ball right now. I'll go to view Barbara, 270 00:14:18,520 --> 00:14:21,440 Speaker 1: and because we now know the game stop that meme 271 00:14:21,480 --> 00:14:24,240 Speaker 1: stock has been added, the Russell one thousand. That's just 272 00:14:24,320 --> 00:14:26,160 Speaker 1: happened at the end of the week. So what do 273 00:14:26,200 --> 00:14:28,040 Speaker 1: you make of these meme stocks? Are they changing the 274 00:14:28,160 --> 00:14:32,400 Speaker 1: entire index investing scene? Oh goodness, you know I don't. 275 00:14:32,680 --> 00:14:35,080 Speaker 1: I love to short, but I don't even involved in 276 00:14:35,120 --> 00:14:38,080 Speaker 1: those of these. It's not a good investment, right, and 277 00:14:38,120 --> 00:14:41,000 Speaker 1: so it's it's a heartbreaking to see companies like that 278 00:14:41,040 --> 00:14:43,920 Speaker 1: getting an index. We all know it's not worth what 279 00:14:44,040 --> 00:14:47,160 Speaker 1: it is to what it's trading for today. Um, so yeah, 280 00:14:47,200 --> 00:14:49,720 Speaker 1: I don't. I'm not I'm not for passive investing. There 281 00:14:49,760 --> 00:14:51,840 Speaker 1: you go. I really appreciate this panel has been terrific. 282 00:14:51,880 --> 00:14:54,920 Speaker 1: It's our panel of Chris Aleman, he's Calcier's c I O, 283 00:14:55,040 --> 00:14:59,160 Speaker 1: and Barbara and Bernard CEO and founder of Windcrest Capital 284 00:14:59,560 --> 00:15:02,040 Speaker 1: coming up. So many ways to take a company of 285 00:15:02,040 --> 00:15:05,600 Speaker 1: public from I p O s to direct listings to spacts. 286 00:15:05,680 --> 00:15:09,080 Speaker 1: Which one is right for you? We asked Stacy Cunningham, 287 00:15:09,320 --> 00:15:13,040 Speaker 1: the president of the New York Stock Exchange. That's next 288 00:15:13,080 --> 00:15:19,520 Speaker 1: on Wall Street Week on Bloomberg. This is Bloomberg Wall 289 00:15:19,560 --> 00:15:24,520 Speaker 1: Street Week with David Weston from Bloomberg Radio. Spacks companies 290 00:15:24,520 --> 00:15:27,480 Speaker 1: are turning to blank check mergers to go public more 291 00:15:27,520 --> 00:15:30,560 Speaker 1: than ever before. Just this year, there have been more 292 00:15:30,560 --> 00:15:34,160 Speaker 1: than five hundred and fifty SPACs so far, which is 293 00:15:34,160 --> 00:15:37,120 Speaker 1: more than all of two twenty when more than eighty 294 00:15:37,160 --> 00:15:41,320 Speaker 1: three billion dollars flooded into the space. Here's James Zelter 295 00:15:41,560 --> 00:15:45,000 Speaker 1: of Apollo, So with it with this fact product really 296 00:15:45,080 --> 00:15:48,240 Speaker 1: gaining emergence in the equity markets because of what's going 297 00:15:48,280 --> 00:15:50,960 Speaker 1: on the I P O process, You know, is our 298 00:15:51,320 --> 00:15:55,800 Speaker 1: is our ecosystem of clients and borrowers are our spac issuers. 299 00:15:56,440 --> 00:15:58,680 Speaker 1: We want to make sure that we have the tools 300 00:15:58,680 --> 00:16:01,000 Speaker 1: to respond to them. But this back boom is seeing 301 00:16:01,040 --> 00:16:04,000 Speaker 1: some bumps in the road. A blank check company might 302 00:16:04,080 --> 00:16:06,840 Speaker 1: get you public, but thus far the returns after you 303 00:16:06,880 --> 00:16:10,640 Speaker 1: get the deal done haven't been all that impressive. One 304 00:16:10,680 --> 00:16:14,880 Speaker 1: index that tracks SPACs is down since it's February. High 305 00:16:15,160 --> 00:16:18,800 Speaker 1: fading trading volumes and the possibility of tighter monetary conditions 306 00:16:18,840 --> 00:16:21,720 Speaker 1: are taking a toll on companies that went public through 307 00:16:21,760 --> 00:16:24,840 Speaker 1: blank check mergers. Bab. It is not just something about 308 00:16:24,840 --> 00:16:27,800 Speaker 1: one stock rising. It's a concept. It's about the fact 309 00:16:27,800 --> 00:16:30,800 Speaker 1: that everyone believes it's some new newould saying that this 310 00:16:30,920 --> 00:16:34,160 Speaker 1: concept is here to stay and about to change the world. 311 00:16:34,240 --> 00:16:37,240 Speaker 1: So it is um as I say, a good idea 312 00:16:37,480 --> 00:16:42,280 Speaker 1: going too far. That's Rashier Sharma from Morgan Stanley Investment Management. 313 00:16:42,520 --> 00:16:45,440 Speaker 1: SPACs provide a shortcut to the stock market which business 314 00:16:45,440 --> 00:16:47,840 Speaker 1: is seeking to go public are eager to take on 315 00:16:47,880 --> 00:16:50,360 Speaker 1: the other side of the equation. Investors and SPACs have 316 00:16:50,480 --> 00:16:52,960 Speaker 1: the chance to score a big gain, but know that 317 00:16:53,000 --> 00:16:55,760 Speaker 1: they'll get their money back if the SPAC doesn't meet 318 00:16:55,800 --> 00:16:58,920 Speaker 1: its deadline in getting a big deal done. Here's Social 319 00:16:58,960 --> 00:17:02,840 Speaker 1: Capitals Schamath, Paula Hapatia. It evens the playing field. It 320 00:17:02,920 --> 00:17:07,040 Speaker 1: democratizes access to high growth companies. How because it allows 321 00:17:07,080 --> 00:17:12,320 Speaker 1: retail and it allows long tailed institutional investors. Folks that 322 00:17:12,400 --> 00:17:16,480 Speaker 1: may not have necessarily been Tier one hatch funds now 323 00:17:16,520 --> 00:17:19,280 Speaker 1: they can also play. Regulators have struggled to keep up 324 00:17:19,320 --> 00:17:22,200 Speaker 1: with this back craze, and now the SEC is taking 325 00:17:22,200 --> 00:17:26,240 Speaker 1: a closer look, at least at the disclosure issues. Investors 326 00:17:26,240 --> 00:17:29,240 Speaker 1: in blank check companies give cash to sponsors before they 327 00:17:29,280 --> 00:17:32,359 Speaker 1: know what company they will be investing in. It's really 328 00:17:32,400 --> 00:17:37,000 Speaker 1: making sure that the sponsor who's behind that is fully 329 00:17:37,040 --> 00:17:43,320 Speaker 1: disclosing their take on it. These are very expensive dilutive products. 330 00:17:43,480 --> 00:17:47,720 Speaker 1: That's SEC Chair Gary Gensler. Another concern with SPACs is 331 00:17:47,760 --> 00:17:50,840 Speaker 1: that companies can pitch to investors based on their forward 332 00:17:50,840 --> 00:17:55,520 Speaker 1: looking financials, which isn't allowed in a traditional I p O. Again, 333 00:17:55,840 --> 00:17:59,920 Speaker 1: here's Gensler, and it's those disclosures. Ensuring that the red 334 00:18:00,000 --> 00:18:03,840 Speaker 1: tail investors get the right disclosures and are protected and 335 00:18:03,920 --> 00:18:08,320 Speaker 1: somebody's not misleading them, and secondarily that they're participating just 336 00:18:08,400 --> 00:18:11,760 Speaker 1: like the the institutional investors. So how do you know 337 00:18:11,920 --> 00:18:14,720 Speaker 1: which way of going public is right for you? When 338 00:18:14,720 --> 00:18:16,719 Speaker 1: we turn now to the woman really at the center 339 00:18:16,800 --> 00:18:19,760 Speaker 1: of this process, she is Stacy Cunningham, President of the 340 00:18:19,800 --> 00:18:21,919 Speaker 1: New York Stock Exchange. Stacy, thank you so much for 341 00:18:21,960 --> 00:18:23,720 Speaker 1: being with us on Wall Street Week. There are so 342 00:18:23,760 --> 00:18:26,800 Speaker 1: many different ways I p o s and direct listings 343 00:18:26,840 --> 00:18:30,400 Speaker 1: and SPACs. Now what determines which is the best way 344 00:18:30,440 --> 00:18:33,400 Speaker 1: to take a given company public. It depends on the company. 345 00:18:33,680 --> 00:18:36,440 Speaker 1: If you want to raise money the traditional way, you 346 00:18:36,520 --> 00:18:38,879 Speaker 1: might consider using an I p O, going out on 347 00:18:38,920 --> 00:18:41,159 Speaker 1: the road show with your bankers who are holding your 348 00:18:41,200 --> 00:18:44,120 Speaker 1: hand throughout the process, and working to get that established 349 00:18:44,119 --> 00:18:46,720 Speaker 1: investor base that you want for the long term. And 350 00:18:46,760 --> 00:18:48,960 Speaker 1: that's the reason why so many companies continue to choose 351 00:18:48,960 --> 00:18:51,399 Speaker 1: the I p O processes. They want to choose that 352 00:18:51,440 --> 00:18:54,320 Speaker 1: investor based with the allocation process. If you want to 353 00:18:54,320 --> 00:18:57,320 Speaker 1: have more control around timing and price and work with 354 00:18:57,359 --> 00:18:59,760 Speaker 1: a counterparty, a spact might make more sense for you 355 00:19:00,320 --> 00:19:03,840 Speaker 1: as an issuer, and so you there's less dependency on 356 00:19:03,880 --> 00:19:06,600 Speaker 1: market conditions. With this fact process, you have a little 357 00:19:06,600 --> 00:19:10,240 Speaker 1: bit more control. And then a direct listing really takes 358 00:19:10,240 --> 00:19:13,760 Speaker 1: the elements of of democratizing access to that first day. 359 00:19:13,840 --> 00:19:15,879 Speaker 1: All investors are on a level playing field with a 360 00:19:15,920 --> 00:19:19,400 Speaker 1: direct listing, so retail and institutional alike can just enter 361 00:19:19,440 --> 00:19:22,520 Speaker 1: their their interest and the market prices that opening. And 362 00:19:22,560 --> 00:19:25,200 Speaker 1: so if you're focused on cost of capital and having 363 00:19:25,280 --> 00:19:28,280 Speaker 1: equal access to all investors, that's been a real driver 364 00:19:28,400 --> 00:19:32,080 Speaker 1: for many of those companies choosing a direct listing. Another 365 00:19:32,200 --> 00:19:35,400 Speaker 1: element of the direct listing that's been interesting to companies 366 00:19:35,800 --> 00:19:38,560 Speaker 1: is being able to provide forward looking guidance. And so 367 00:19:38,600 --> 00:19:41,400 Speaker 1: if it's a company that wants to talk about their 368 00:19:41,440 --> 00:19:44,560 Speaker 1: future projections, they've been able to do so within a 369 00:19:44,640 --> 00:19:47,720 Speaker 1: direct listing. They were also relying on that within a spack, 370 00:19:47,880 --> 00:19:50,879 Speaker 1: But the SEC put out some guidance in April about 371 00:19:50,920 --> 00:19:54,520 Speaker 1: the more accounting in spacts and about that future guidance 372 00:19:54,560 --> 00:19:57,720 Speaker 1: because it wasn't uh. Companies have been relying on the 373 00:19:57,840 --> 00:20:02,200 Speaker 1: the a safe harbor provision that is typical for mergers 374 00:20:02,480 --> 00:20:04,520 Speaker 1: to be able to provide that future guidance. In the 375 00:20:04,560 --> 00:20:06,560 Speaker 1: SEC said, wait a minute, that might not apply here 376 00:20:06,920 --> 00:20:09,280 Speaker 1: because as a spack you're really becoming a public company 377 00:20:09,320 --> 00:20:11,840 Speaker 1: for the first time. And so those that those were 378 00:20:11,880 --> 00:20:14,560 Speaker 1: elements that are being slowed down this back market a bit, 379 00:20:14,680 --> 00:20:17,040 Speaker 1: and you're starting to pick them up. The important thing 380 00:20:17,200 --> 00:20:20,040 Speaker 1: is is companies have choices now and they're looking at 381 00:20:20,080 --> 00:20:22,800 Speaker 1: what is the right path to the public markets for them. 382 00:20:22,880 --> 00:20:25,320 Speaker 1: At the end of the day, no matter which path 383 00:20:25,359 --> 00:20:28,320 Speaker 1: they choose, they become a public company and investors are 384 00:20:28,320 --> 00:20:30,480 Speaker 1: going to price their their their stock in the public 385 00:20:30,520 --> 00:20:32,960 Speaker 1: markets exactly the same way. Thank you. So much for 386 00:20:33,000 --> 00:20:35,000 Speaker 1: being with us on Wall Street Week. That's Stacy Huntingham. 387 00:20:35,160 --> 00:20:39,280 Speaker 1: She is the president of the New York Stock Exchange. Thanks. 388 00:20:39,280 --> 00:20:41,640 Speaker 1: Coming up, we get the take of our special contributor 389 00:20:41,760 --> 00:20:44,920 Speaker 1: Larry's Summers of Harvard on a trust policy and whether 390 00:20:44,960 --> 00:20:48,400 Speaker 1: the Biden administration just might be headed in the wrong direction. 391 00:20:48,800 --> 00:20:56,000 Speaker 1: That's next down Wall Street Week on Bloomberg. This is 392 00:20:56,080 --> 00:21:00,399 Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 393 00:21:00,640 --> 00:21:02,480 Speaker 1: And to wrap up the week, we're joined once again 394 00:21:02,480 --> 00:21:05,879 Speaker 1: by our special contributor, Larry Summers of Harvard. So, Larry, 395 00:21:05,880 --> 00:21:08,200 Speaker 1: We've had a lot of infrastructure Weeks over the last 396 00:21:08,200 --> 00:21:10,960 Speaker 1: few years. Maybe this one really will be infrastructure Week 397 00:21:11,000 --> 00:21:12,800 Speaker 1: because President Biden came out of the White House and 398 00:21:12,840 --> 00:21:16,920 Speaker 1: announced a bipartisan agree at least on a framework on infrastructure. 399 00:21:16,920 --> 00:21:20,399 Speaker 1: There has about five eight billion dollars in new money. 400 00:21:20,520 --> 00:21:22,719 Speaker 1: What do you make of what was agreed to? I 401 00:21:22,800 --> 00:21:25,960 Speaker 1: was glad to see it. The investments overdue. The investment 402 00:21:26,000 --> 00:21:31,119 Speaker 1: will strengthen our economy. The investment will help support employment 403 00:21:31,240 --> 00:21:35,480 Speaker 1: of groups that have had uh trouble. The investment will 404 00:21:35,520 --> 00:21:40,600 Speaker 1: show that America is able to come together and do things. 405 00:21:40,960 --> 00:21:44,880 Speaker 1: And the investment was paid for. I was particularly gratified 406 00:21:45,040 --> 00:21:49,879 Speaker 1: to see for the first time a bipartisan congressional agreement 407 00:21:50,320 --> 00:21:52,520 Speaker 1: recognizing that if we do what we need to do 408 00:21:52,600 --> 00:21:56,080 Speaker 1: as a country and enforced the tax law, better give 409 00:21:56,119 --> 00:21:59,040 Speaker 1: the I R S the resources it needs to go 410 00:21:59,080 --> 00:22:02,359 Speaker 1: back to the strength once had that we can raise 411 00:22:02,480 --> 00:22:05,800 Speaker 1: meaningful amounts of revenue. And I think all of that 412 00:22:06,240 --> 00:22:10,320 Speaker 1: bodes very well for the future. At the same time, Laurie, 413 00:22:10,640 --> 00:22:13,440 Speaker 1: we quickly learned that it's one step in a two 414 00:22:13,480 --> 00:22:16,119 Speaker 1: step process. It's a little bit of an ambiguity here 415 00:22:16,119 --> 00:22:19,200 Speaker 1: about that second step, but certainly Nancy Pelosi, the Speak 416 00:22:19,240 --> 00:22:20,960 Speaker 1: of the House, said we're not going anywhere with this 417 00:22:21,080 --> 00:22:24,920 Speaker 1: agreement on bipartisan bill without having the more partisan approach 418 00:22:25,119 --> 00:22:27,359 Speaker 1: that has the other part of infrastructure, with the White 419 00:22:27,359 --> 00:22:30,719 Speaker 1: House calls the family part of the infrastructure. How essential 420 00:22:30,840 --> 00:22:34,760 Speaker 1: is that second component. Look, we need to make human 421 00:22:34,800 --> 00:22:38,159 Speaker 1: investments in this country. We need above all to be 422 00:22:38,240 --> 00:22:44,960 Speaker 1: investing in early childhood education, uh for our kids. We 423 00:22:45,080 --> 00:22:48,640 Speaker 1: talk about STEM, but how can we how can our 424 00:22:48,720 --> 00:22:53,040 Speaker 1: kids believe we're serious about STEM when huge fracts to 425 00:22:53,080 --> 00:22:57,280 Speaker 1: the chemistry dribs in the country have air conditioning and 426 00:22:57,280 --> 00:23:02,639 Speaker 1: heating systems and UH air air systems that UH don't work. 427 00:23:03,080 --> 00:23:06,080 Speaker 1: So we need more investment than is in this bill. 428 00:23:06,160 --> 00:23:09,160 Speaker 1: This bill is a beginning, it is not an end, 429 00:23:09,680 --> 00:23:14,520 Speaker 1: and so the aspiration too much more is in my view, 430 00:23:14,560 --> 00:23:19,320 Speaker 1: completely correct. Um will it all fit together and happen? 431 00:23:19,840 --> 00:23:22,800 Speaker 1: Here's what I know. We weren't going to get to 432 00:23:22,840 --> 00:23:25,199 Speaker 1: the end of the race unless we've got out of 433 00:23:25,240 --> 00:23:28,080 Speaker 1: the blocks, and we surely got out of the blocks 434 00:23:28,119 --> 00:23:33,439 Speaker 1: in a really important way UH here, and I'm glad. 435 00:23:34,240 --> 00:23:37,919 Speaker 1: I'm glad to see that. And I hope we'll find 436 00:23:37,920 --> 00:23:41,600 Speaker 1: an approach that will pay for the spending UH that 437 00:23:41,640 --> 00:23:46,000 Speaker 1: we need, that will recognize its benefits to the economy 438 00:23:46,240 --> 00:23:49,719 Speaker 1: in a clear way, that will make sure that we're 439 00:23:49,760 --> 00:23:52,760 Speaker 1: investing in what, after all, is our most precious national 440 00:23:52,840 --> 00:23:58,560 Speaker 1: resource UH, our people, that will be taking steps necessary 441 00:23:58,960 --> 00:24:02,240 Speaker 1: in terms of the global issues, like the prevention of 442 00:24:02,280 --> 00:24:08,240 Speaker 1: climate change and like the mitigation of future UH pandemics. 443 00:24:08,400 --> 00:24:12,760 Speaker 1: There is a lot that is left to do that 444 00:24:12,920 --> 00:24:15,760 Speaker 1: should be supported, and the question is are we gonna 445 00:24:15,760 --> 00:24:21,359 Speaker 1: find ways of doing it that are carefully thought out, 446 00:24:21,920 --> 00:24:25,680 Speaker 1: that are disciplined, that are involving the private sector where 447 00:24:25,720 --> 00:24:30,600 Speaker 1: it can make a major contribution, and I hope that's 448 00:24:30,640 --> 00:24:34,280 Speaker 1: what we'll see going forward. But I'm gratified by the 449 00:24:34,280 --> 00:24:37,440 Speaker 1: progress we've seen. Larry, this may have been Infrastructure Week, 450 00:24:37,560 --> 00:24:40,040 Speaker 1: but ANNA trust is a near runner up. As a 451 00:24:40,080 --> 00:24:42,920 Speaker 1: practical matter, we had five bills get through the Judiciary 452 00:24:42,920 --> 00:24:46,399 Speaker 1: committea about fundamentally redoing our antitrust laws to really go 453 00:24:46,480 --> 00:24:48,159 Speaker 1: after I think it's fair to say big tech to 454 00:24:48,200 --> 00:24:50,399 Speaker 1: a large degree. We also have a new chair of 455 00:24:50,480 --> 00:24:53,119 Speaker 1: the CFTC and Lena Khan, who has made a career 456 00:24:53,200 --> 00:24:55,400 Speaker 1: thus far of really challenging some of the big tech 457 00:24:55,640 --> 00:24:59,080 Speaker 1: and that more fundamentally, the antitrust approached, the overall approach 458 00:24:59,119 --> 00:25:01,600 Speaker 1: to the question what do you make of this? Do 459 00:25:01,680 --> 00:25:04,240 Speaker 1: we need to be rethinking in a trust approach in 460 00:25:04,359 --> 00:25:07,720 Speaker 1: light of what's happened with big tech? I'm halfway UH 461 00:25:08,000 --> 00:25:13,280 Speaker 1: with the critics. A new economy needs new thinking and 462 00:25:13,840 --> 00:25:21,000 Speaker 1: UH new approaches. UH. The old concepts weren't designed with 463 00:25:21,240 --> 00:25:28,639 Speaker 1: issues like UH platform companies in mind. But I part 464 00:25:28,760 --> 00:25:35,640 Speaker 1: company completely with UH. The legal scholars UH scholars who 465 00:25:35,720 --> 00:25:40,720 Speaker 1: frankly in many cases are not very familiar with UH 466 00:25:41,040 --> 00:25:46,400 Speaker 1: economic reasoning UH in its intricacy. The people who call 467 00:25:46,520 --> 00:25:49,560 Speaker 1: themselves neo Brandeisians and want to go back to what 468 00:25:49,720 --> 00:25:56,639 Speaker 1: Justice Brandi said in nineteen sixteen. Ultimately, an efficient economy 469 00:25:56,680 --> 00:26:03,399 Speaker 1: that serves consumers well is the right criteria for antitrust policy. 470 00:26:03,600 --> 00:26:09,679 Speaker 1: Any attempt to change the goal of antitrust policy to 471 00:26:09,840 --> 00:26:16,920 Speaker 1: be protecting competitors rather than protecting competition, I believe will 472 00:26:16,920 --> 00:26:22,600 Speaker 1: do grave damage to UH the American economy. So yes, 473 00:26:22,880 --> 00:26:27,600 Speaker 1: we need new approaches, possibly new UH laws, but they 474 00:26:27,640 --> 00:26:33,960 Speaker 1: need to be ultimately grounded in an economic approach that 475 00:26:34,280 --> 00:26:38,760 Speaker 1: is based on having a more functional and efficient economy, 476 00:26:38,800 --> 00:26:42,960 Speaker 1: and the idea that big is bad per se, or 477 00:26:43,000 --> 00:26:46,760 Speaker 1: the idea that big should be broken up just so 478 00:26:46,800 --> 00:26:51,840 Speaker 1: that smaller companies have a better chance to compete even 479 00:26:51,840 --> 00:26:56,920 Speaker 1: when they are less efficient. You read the traditional antitrust 480 00:26:57,000 --> 00:27:02,200 Speaker 1: decisions of the nineties sixties, and they are a horror 481 00:27:02,240 --> 00:27:08,000 Speaker 1: show in terms of their economic illiteracy, where companies make 482 00:27:08,080 --> 00:27:13,080 Speaker 1: efforts to defend themselves by saying that they're inefficient and 483 00:27:13,200 --> 00:27:17,560 Speaker 1: therefore they're not gonna win out over competitors and competition. 484 00:27:18,040 --> 00:27:22,760 Speaker 1: That is the way to American failure, and we must 485 00:27:22,920 --> 00:27:26,359 Speaker 1: make sure that we don't go back to that point. 486 00:27:26,680 --> 00:27:30,359 Speaker 1: That is no argument for indiscriminate corporate power. That is 487 00:27:30,400 --> 00:27:36,560 Speaker 1: no argument for accepting what may maybe abusive practices. But 488 00:27:36,680 --> 00:27:41,919 Speaker 1: let's have a new uh anti trust for a new economy, 489 00:27:42,119 --> 00:27:46,240 Speaker 1: not go back to fail and replace doctrines of the past. 490 00:27:46,720 --> 00:27:50,080 Speaker 1: So learn. Let's conclude with a quick round of summer says. Here. 491 00:27:50,680 --> 00:27:52,880 Speaker 1: Number one, we had Janet Yell in the Treasury Secondary 492 00:27:52,920 --> 00:27:55,199 Speaker 1: go up on Capitol Hills, was testing on her budget actually, 493 00:27:55,280 --> 00:27:58,159 Speaker 1: and she said she's fairly confident the inflation we'd be 494 00:27:58,240 --> 00:28:00,760 Speaker 1: back down under five percent at the end of the year. 495 00:28:00,760 --> 00:28:05,359 Speaker 1: What was your reaction, Gosh, Dave, that anybody was talking 496 00:28:05,359 --> 00:28:10,879 Speaker 1: about five cent would have been inconceivable uh three or 497 00:28:10,920 --> 00:28:14,320 Speaker 1: four months ago, when the consensus was in a completely 498 00:28:14,600 --> 00:28:19,480 Speaker 1: uh different uh place. My guess is that at the 499 00:28:19,640 --> 00:28:23,440 Speaker 1: end of the year inflation will for this year come 500 00:28:23,480 --> 00:28:28,879 Speaker 1: out pretty close to five And it would surprise me 501 00:28:29,000 --> 00:28:32,880 Speaker 1: if we had five percent inflation with no effect on 502 00:28:33,200 --> 00:28:37,840 Speaker 1: inflation UH expectations. It could go either way with respect 503 00:28:37,880 --> 00:28:40,520 Speaker 1: to five percent, I'd be happy, happy to take the 504 00:28:40,560 --> 00:28:45,000 Speaker 1: bet on over at UH four and a half four 505 00:28:45,040 --> 00:28:48,240 Speaker 1: and a half percent. But I think the real comment 506 00:28:49,120 --> 00:28:54,400 Speaker 1: is that it was only three weeks ago when acknowledgements 507 00:28:54,440 --> 00:28:58,520 Speaker 1: that inflation would reach three percent UH this year were 508 00:28:58,520 --> 00:29:04,200 Speaker 1: treated as significantly news UH newsworthy. So this is in 509 00:29:04,360 --> 00:29:07,280 Speaker 1: line with what I have to say. I have predicted 510 00:29:07,360 --> 00:29:11,560 Speaker 1: on your show almost every week that inflation is going 511 00:29:11,600 --> 00:29:15,080 Speaker 1: to surprise on the highside relative to expectations, and I'm 512 00:29:15,080 --> 00:29:18,000 Speaker 1: afraid that continues to be my view. So very well, 513 00:29:18,040 --> 00:29:19,760 Speaker 1: we're on the second half, looking at the second of 514 00:29:19,800 --> 00:29:22,000 Speaker 1: the year. Let's talk about markets overall. What are you expecting? 515 00:29:22,040 --> 00:29:26,200 Speaker 1: More urbulence, less turbulence. I think more UH. You know, 516 00:29:26,360 --> 00:29:31,160 Speaker 1: I for the crisis in some ways that I grew 517 00:29:31,240 --> 00:29:36,360 Speaker 1: up with, UH was the Japanese bubble in the late 518 00:29:36,440 --> 00:29:41,560 Speaker 1: nineteen eighties. And what was interesting was that there were 519 00:29:41,600 --> 00:29:44,760 Speaker 1: a lot of people who were anxious about the Japanese market, 520 00:29:44,880 --> 00:29:48,800 Speaker 1: and then it survived and it kept going and kept rising, 521 00:29:48,880 --> 00:29:52,200 Speaker 1: and then more people got anxious and it grew and 522 00:29:52,280 --> 00:29:55,480 Speaker 1: at a certain point most of the anxious to thrown 523 00:29:55,520 --> 00:29:59,320 Speaker 1: in the towel, and that's when we had UH, really 524 00:29:59,360 --> 00:30:03,840 Speaker 1: an epic UH financial collapse in Japan. And Japan isn't 525 00:30:03,880 --> 00:30:06,600 Speaker 1: Japan's market isn't anywhere near back to where it was 526 00:30:07,040 --> 00:30:10,480 Speaker 1: UH thirty years UH thirty years ago. I don't think 527 00:30:10,480 --> 00:30:13,320 Speaker 1: we're gonna get anything like that in the United States, 528 00:30:13,720 --> 00:30:18,360 Speaker 1: but I think there's a point uh there, when warriors 529 00:30:18,400 --> 00:30:22,040 Speaker 1: have been disproved a few times and people are saying 530 00:30:22,080 --> 00:30:24,920 Speaker 1: we're in a new era, that's when you need to 531 00:30:24,920 --> 00:30:28,120 Speaker 1: be very careful. So my guess is we'll see higher 532 00:30:28,200 --> 00:30:31,120 Speaker 1: rates over the next six months, in the second half 533 00:30:31,200 --> 00:30:34,640 Speaker 1: of the year, and with those higher rates, they'll probably 534 00:30:34,800 --> 00:30:39,959 Speaker 1: be uh more uh more turbulent. Uh. I was glad 535 00:30:40,040 --> 00:30:43,920 Speaker 1: to see the Fed uh move in a quite significant 536 00:30:44,080 --> 00:30:48,880 Speaker 1: way to reflect worries where I've been concerned and others 537 00:30:48,880 --> 00:30:51,760 Speaker 1: have been concerned that they were behind the curve. But 538 00:30:52,080 --> 00:30:55,120 Speaker 1: I think we've got a lot of processing ahead of 539 00:30:55,160 --> 00:30:58,200 Speaker 1: us in markets. Okay, thank you once again to Larry Summers, 540 00:30:58,200 --> 00:31:02,200 Speaker 1: our special contributor. Of course, he's a professor at Harvard. Finally, 541 00:31:02,480 --> 00:31:05,840 Speaker 1: one more thought, and this one hits close to home. 542 00:31:06,480 --> 00:31:09,440 Speaker 1: New York is, after all, the home of Wall Street. 543 00:31:09,480 --> 00:31:12,400 Speaker 1: That location in Lower Manhattan named for a wall the 544 00:31:12,480 --> 00:31:15,120 Speaker 1: Dutch built in the seventeenth century to keep out the 545 00:31:15,160 --> 00:31:18,040 Speaker 1: British and pirates. And let's be frank, I'm not sure 546 00:31:18,120 --> 00:31:21,200 Speaker 1: how successful they were on either of those. New York 547 00:31:21,240 --> 00:31:25,080 Speaker 1: has always been centered in business and in commerce. It's 548 00:31:25,120 --> 00:31:28,520 Speaker 1: always been open to the world, particularly the commercial world. 549 00:31:28,840 --> 00:31:32,240 Speaker 1: And so when the pandemic hit and commerce and imports, 550 00:31:32,240 --> 00:31:35,960 Speaker 1: whether of goods or of tourists, shut down overnight, New 551 00:31:36,040 --> 00:31:39,960 Speaker 1: York was hit particularly hard. This week, New York took 552 00:31:39,960 --> 00:31:43,440 Speaker 1: an important step toward coming back as it gathered at 553 00:31:43,440 --> 00:31:46,880 Speaker 1: the polls for the first time since the pandemic. This 554 00:31:47,040 --> 00:31:50,600 Speaker 1: first post pandemic election was to choose the candidates for 555 00:31:50,720 --> 00:31:53,880 Speaker 1: mayor and controller and the rest of the city leadership. 556 00:31:54,400 --> 00:31:56,520 Speaker 1: We don't know the results yet, we won't know for 557 00:31:56,560 --> 00:31:59,120 Speaker 1: some weeks to come because of that ranked choice voting 558 00:31:59,160 --> 00:32:01,600 Speaker 1: we've learned so much of about, but we do know 559 00:32:01,680 --> 00:32:04,320 Speaker 1: that Wall Street will have a new mayor, and one 560 00:32:04,400 --> 00:32:08,720 Speaker 1: that sees the enormous potential for growth. So once again, 561 00:32:09,000 --> 00:32:12,719 Speaker 1: it's time for New York to reinvent itself. And whatever 562 00:32:12,880 --> 00:32:16,320 Speaker 1: our political persuasion, global Wall Street passed to be rooting 563 00:32:16,360 --> 00:32:19,000 Speaker 1: it on. That does it. For this episode of Wall 564 00:32:19,000 --> 00:32:22,280 Speaker 1: Street Week, I'm David Weston. This is Bloomberg. See you 565 00:32:22,320 --> 00:32:23,920 Speaker 1: next week.