WEBVTT - Bloomberg Wall Street Week - March 8th, 2024 0:00:00.240 --> 0:00:02.440 This is Bloomberg Wall Street Week. 0:00:02.480 --> 0:00:04.400 And we may not have an overall recession, we're having 0:00:04.400 --> 0:00:06.720 a rolling recession. To kind of roll looks pretty strongly 0:00:06.760 --> 0:00:07.680 is when it comes to jobs. 0:00:07.720 --> 0:00:09.840 The financial stories that shape our world. 0:00:09.960 --> 0:00:13.600 Three major regional bank failures send shockwaves through the banking system. 0:00:13.680 --> 0:00:15.440 We're all trying to figure out what to make of 0:00:15.600 --> 0:00:17.000 generative AI. 0:00:16.920 --> 0:00:19.320 Through the eyes of the most influential voices. 0:00:19.440 --> 0:00:22.400 Welcome down, Doctor Paul Krugman, Ryan moynihan, AM Bank of America, 0:00:22.560 --> 0:00:25.279 Zebro Lair of the Paulson Institute, well then Hubbard of 0:00:25.280 --> 0:00:26.280 the Columbia Business School. 0:00:26.280 --> 0:00:30.160 Bloomberg Wall Street Week with David Weston from Bloomberg Radio. 0:00:30.360 --> 0:00:33.240 The chair goes to the hill, voters go to the polls, 0:00:33.320 --> 0:00:35.600 and the jobs market, well, it just keeps on going. 0:00:36.080 --> 0:00:39.240 This is Bloomberg Wall Street Week. I'm David Weston. This 0:00:39.400 --> 0:00:42.280 make Larry Kulp of GE joins the newly minted CEO 0:00:42.320 --> 0:00:45.360 of spinoff Vernova, Scott Strazek, to take us through the 0:00:45.440 --> 0:00:48.080 last steps in the restructure of an iconic company. 0:00:48.360 --> 0:00:51.080 Given that the capital markets clearly liked the businesses but 0:00:51.120 --> 0:00:54.480 didn't like them together, it was actually an easy decision. 0:00:54.080 --> 0:00:56.960 Sustainability really is at the heart of everything we're doing. 0:00:57.120 --> 0:01:00.600 Ill as Sally Crotcheck on the massive wealth trans to women, 0:01:00.720 --> 0:01:01.800 we're about to see. 0:01:01.840 --> 0:01:05.440 Women are going to inherit tens of trillions of dollars 0:01:05.560 --> 0:01:07.479 over the next couple of decades. 0:01:07.160 --> 0:01:10.520 And Economist editor Zanni Minton Bedos on a US China 0:01:10.600 --> 0:01:13.520 economic competition that goes to the heart of two very 0:01:13.560 --> 0:01:14.520 different systems. 0:01:14.560 --> 0:01:16.360 I think it's only a slight exaggeration to say that 0:01:16.440 --> 0:01:31.160 China has sort of become uninvestable for outsiders in many sectors. 0:01:32.800 --> 0:01:35.920 But we begin with the number one issue that's been 0:01:35.959 --> 0:01:38.600 on the mind of Global Wall Street since inflation numbers 0:01:38.640 --> 0:01:41.240 first shot up back in twenty twenty, something our special 0:01:41.280 --> 0:01:44.040 contributor Larry Summers warned us about at the time. 0:01:44.680 --> 0:01:48.920 I think there's a real possibility that within the year 0:01:49.480 --> 0:01:53.800 we're going to be dealing with the most serious incipient 0:01:53.920 --> 0:01:58.040 inflation problem that we have faced in the last forty years. 0:01:58.240 --> 0:02:00.680 Throughout the three year battle of them, and there's been 0:02:00.720 --> 0:02:03.920 a question whether it could be tamed without higher unemployment. 0:02:04.440 --> 0:02:06.920 I've said that I'd be surprised if we get to 0:02:06.960 --> 0:02:12.760 the two percent inflation target without an unemployment rate that 0:02:13.000 --> 0:02:16.240 approaches or exceeds six percent. 0:02:16.720 --> 0:02:19.480 But on Friday this week we got the latest jobs numbers, 0:02:19.480 --> 0:02:23.600 and unemployment stayed under four percent, even as inflation continues 0:02:23.639 --> 0:02:27.080 to moderate, something that's led Larry to reassess the possibility 0:02:27.120 --> 0:02:30.160 of a so called soft landing, one where inflation comes 0:02:30.200 --> 0:02:33.240 back in line without a lot of people losing their jobs. 0:02:33.600 --> 0:02:36.720 Things did come back in a way that was more 0:02:36.840 --> 0:02:43.240 favorable than standard models would have expected, though I'm much 0:02:43.360 --> 0:02:46.960 less prepared to declare that it's all over. 0:02:47.360 --> 0:02:49.359 And we are joined once again by our very special 0:02:49.360 --> 0:02:51.440 contributor here on Wall Street Week. He is Larry Summers 0:02:51.440 --> 0:02:53.359 of Harvard Luri, thanks so much for being with us. 0:02:53.440 --> 0:02:55.799 On Friday, we got the jobs numbers out. They were 0:02:55.840 --> 0:02:58.040 a little lower than some people expect that and particularly 0:02:58.040 --> 0:03:00.160 when you look at the revisions from last month. What 0:03:00.240 --> 0:03:01.880 did you make of these jobs numbers? 0:03:02.360 --> 0:03:07.040 I don't think they changed anybody's picture very fundamentally of 0:03:07.080 --> 0:03:15.120 the economy. We've got a strong economy. Inflation has come down, 0:03:15.880 --> 0:03:22.639 inflation is not yet at the FEDS two percent target, 0:03:23.440 --> 0:03:31.040 but job growth, even on a slower basis, remains considerably 0:03:31.080 --> 0:03:36.800 more rapid than underlying population growth. So we've got a 0:03:36.840 --> 0:03:39.000 relatively strong economy. 0:03:38.880 --> 0:03:40.440 Well, and that raises the question what does that mean 0:03:40.440 --> 0:03:43.360 for monetary policy. I mean, one question we ask sometimes 0:03:43.400 --> 0:03:45.320 if people at the FED is why are we talking 0:03:45.320 --> 0:03:47.280 about rate cuts right now when economy seems to be 0:03:47.360 --> 0:03:49.920 doing so well and weathering this five and a half 0:03:49.960 --> 0:03:50.880 percent rate. 0:03:51.440 --> 0:03:55.280 There's something very fundamental that has happened that I'm not 0:03:55.320 --> 0:03:58.880 sure that the FED has fully realized. I think the 0:03:59.600 --> 0:04:05.120 neral interest straight is way above the two and a 0:04:05.160 --> 0:04:10.760 half percent that the FED likes to talk about. I think, 0:04:10.800 --> 0:04:15.040 given the experience of the last several years, that the 0:04:15.080 --> 0:04:21.799 market perceives normal inflation as probably being somewhat above two percent, 0:04:23.640 --> 0:04:27.240 at least on a CPI basis. And I think that 0:04:28.760 --> 0:04:35.000 huge deficits more spending to come, substantial investments in renewables, 0:04:35.600 --> 0:04:43.480 substantial investments in resilience, substantial capital costs of various kinds 0:04:44.040 --> 0:04:52.800 associated with artificial intelligence and aging population meaning more dissavers 0:04:53.640 --> 0:04:59.479 less capital flow coming from abroad. I think all of 0:04:59.480 --> 0:05:03.080 that means a much higher neutral real interest rate. So 0:05:03.120 --> 0:05:08.120 I think when the FED compares five percent with the 0:05:08.240 --> 0:05:11.680 two and a half percent neutral rate, it sees and 0:05:11.800 --> 0:05:16.960 people say that monetary policy is substantially restrictive. That's wrong. 0:05:17.560 --> 0:05:20.320 The neutral rate is much higher than that, and so 0:05:20.440 --> 0:05:25.840 monetary policy is much less restrictive than is generally supposed. 0:05:25.920 --> 0:05:28.960 And the clear evidence of that is that we have 0:05:29.040 --> 0:05:33.960 this supposedly really restrictive monetary policy and still have a 0:05:34.040 --> 0:05:38.480 quite robust economy. So I think the FED needs to 0:05:38.520 --> 0:05:45.159 be very careful in its judgments about what would be 0:05:45.200 --> 0:05:49.600 anypocl shift from the regime we've had for the last 0:05:49.680 --> 0:05:56.839 several years to a regime of easing monetary policy. They've 0:05:56.960 --> 0:06:03.400 moved substantially since December. Market used to be expecting six 0:06:03.520 --> 0:06:10.000 cuts in twenty twenty four. Now the market's expecting three cuts, 0:06:10.600 --> 0:06:13.960 and the Fed's carried that off skillfully. There hasn't been 0:06:14.040 --> 0:06:19.040 much disruption or dislocation as that change has taken place, 0:06:19.680 --> 0:06:25.160 But I think that's going to be there with us 0:06:25.200 --> 0:06:30.599 for the next while. And my own guests is probably 0:06:30.800 --> 0:06:34.560 that there's a little more adjustment to come and the 0:06:34.600 --> 0:06:38.120 FED may end up not deciding to cut quite as 0:06:38.240 --> 0:06:42.760 much as markets are now expecting. But I do think 0:06:42.839 --> 0:06:49.080 we need to get ourselves to an idea that neutral 0:06:49.160 --> 0:06:53.320 rates are closer to having a four handle than they 0:06:53.320 --> 0:06:54.600 are to having a two handle. 0:06:55.040 --> 0:06:57.480 We had Torsten Slock of Apollo this week come out 0:06:57.520 --> 0:06:59.159 and say he doesn't think they're gonna be any cuts 0:06:59.160 --> 0:07:01.880 this year for some of the reasons you suggest. I'm 0:07:01.880 --> 0:07:03.640 not asking you to commit on what will happen, but 0:07:03.640 --> 0:07:04.960 does that seem plausible to you? 0:07:05.920 --> 0:07:09.440 Yeah. I think I said on the show maybe a 0:07:09.480 --> 0:07:13.120 month ago, that several weeks ago, that there was a 0:07:13.160 --> 0:07:18.440 fifteen percent chance that we wouldn't have cuts this year. 0:07:18.560 --> 0:07:22.640 I think, if anything, that fifteen percent may have drifted 0:07:23.200 --> 0:07:29.680 slightly upwards, and markets are kind of consistent with that 0:07:30.280 --> 0:07:35.280 if you look at options markets. So I think the 0:07:36.080 --> 0:07:39.640 base or presumptive case is probably that the next move 0:07:39.760 --> 0:07:42.360 is going to be down. But I think it'd be 0:07:42.400 --> 0:07:46.400 a real mistake for people to regard that as any 0:07:46.520 --> 0:07:48.880 kind of certainty. 0:07:49.120 --> 0:07:50.960 Okay, Larry, thank you so very much for being back 0:07:50.960 --> 0:07:53.559 with us. That's Larry Summers, our very special contributor here 0:07:53.600 --> 0:07:57.600 on Wall Street Week. China has been holding its fourteenth 0:07:57.760 --> 0:08:01.640 National People's Congress this week. Of slower growth than in 0:08:01.640 --> 0:08:04.560 the recent past, it has set it's GDP growth target 0:08:04.640 --> 0:08:06.840 at five percent for this year, but has yet to 0:08:06.840 --> 0:08:08.960 give us much information about how it's going to achieve 0:08:09.040 --> 0:08:12.120 that goal. To help us understand where China may be heading. 0:08:12.200 --> 0:08:15.240 Welcome back now, Zanny Minton Bedos. She's the editor of 0:08:15.280 --> 0:08:17.000 The Economist. Sandy, great to have you back on walls. 0:08:17.000 --> 0:08:18.120 Reree really great to be here. 0:08:18.240 --> 0:08:20.880 So you have actually a piece right now and the 0:08:20.880 --> 0:08:23.040 Economist about China. What do you make of what's going 0:08:23.080 --> 0:08:25.160 on economically right now in China? What do we know? 0:08:25.600 --> 0:08:27.760 Well, right now, the Chinese economy is really not in 0:08:27.840 --> 0:08:30.680 very good shape. We know that it's in the middle 0:08:30.760 --> 0:08:33.200 of a very big property bust. Growth has been slowing, 0:08:33.320 --> 0:08:37.600 it's slipped into deflation. There's a tremendous loss of confidence investment, 0:08:37.760 --> 0:08:42.400 Foreign investment has collapsed, domestic confidence has collapsed. It feels 0:08:42.480 --> 0:08:44.880 pretty bad. And so there were a lot of signals, 0:08:44.880 --> 0:08:48.480 a lot of questions with this week coming of, you know, 0:08:48.520 --> 0:08:50.480 would there be some sign that there'd be a big 0:08:50.559 --> 0:08:52.800 stimulus from the government to try and kind of get 0:08:52.800 --> 0:08:55.120 the economy going again. And as you said, what we 0:08:55.200 --> 0:08:58.040 got was an ambitious growth target five percent, which is 0:08:58.040 --> 0:09:00.000 the same that they had last year. But last year, 0:09:00.040 --> 0:09:04.160 remember China was coming out of its really strict pandemic lockdown, 0:09:04.400 --> 0:09:07.000 and there was an expectation that the economy would rebound 0:09:07.040 --> 0:09:10.080 as controls were lifted, it didn't actually rebound that much 0:09:10.440 --> 0:09:12.360 this year. No one's quite sure how they're going to 0:09:12.360 --> 0:09:14.959 get to five percent, particularly because there was not much 0:09:15.559 --> 0:09:18.400 detail of any sort about a big stimulus package, in 0:09:18.400 --> 0:09:21.440 fact the opposite, And so increasingly I think there's a 0:09:21.480 --> 0:09:24.520 lot of worry about the depth of the problem that 0:09:24.520 --> 0:09:25.719 the Chinese economy is in. 0:09:26.120 --> 0:09:27.800 Is this, you know, is this a kind of. 0:09:27.880 --> 0:09:32.400 Japan style multi year, perhaps multi decade malaise. Is it 0:09:32.480 --> 0:09:34.760 something they can fix in the short term. No one 0:09:34.800 --> 0:09:38.160 really knows. And compound that with the fact that Jijingping 0:09:38.320 --> 0:09:42.280 has you know, amassed ever more power around himself. One 0:09:42.280 --> 0:09:45.120 of the really striking things about this week's gathering and 0:09:45.160 --> 0:09:47.720 this is this gets into kind of crimininology of what's 0:09:47.760 --> 0:09:50.280 going on in China. But the premiere, who traditionally gives 0:09:50.280 --> 0:09:52.480 a press conference at the end of this meeting, this 0:09:52.600 --> 0:09:55.920 time that's not going to happen. No one apparently can speak, 0:09:56.320 --> 0:09:58.800 you know, other than you know, the word of using Ping, 0:09:58.960 --> 0:10:02.839 and the the working report of what was what's coming 0:10:02.840 --> 0:10:05.720 for the Chinese economy has more and more references to Jijinping, 0:10:05.880 --> 0:10:09.920 So he's asserting a lot of control. There are ambitious targets, 0:10:09.960 --> 0:10:12.120 not clear how to get there, and this is an 0:10:12.240 --> 0:10:15.720 environment where the economy is really very weak and consumer 0:10:15.760 --> 0:10:18.480 confidence is very very low. So it's pretty bad. 0:10:18.520 --> 0:10:21.640 Actually, no news characters has had this year, but I 0:10:21.640 --> 0:10:23.320 think they also indicate they're not going to have one 0:10:23.360 --> 0:10:24.120 until further notice. 0:10:24.720 --> 0:10:26.240 Yeah, I mean they're not. 0:10:26.360 --> 0:10:28.000 And you know, kind of what do you make of that? 0:10:28.000 --> 0:10:31.160 Because one of the interesting things in China, and I'm 0:10:31.240 --> 0:10:33.840 not a China expert, although I have a fantastic China team, 0:10:33.840 --> 0:10:35.480 but I go there pretty regularly. I'm going there again 0:10:35.559 --> 0:10:38.480 next month. All through the years that I've been going there, 0:10:38.600 --> 0:10:42.360 it has been true that the kind of technocratic competence 0:10:42.440 --> 0:10:45.760 of Chinese economic policymakers has been really exemplary. And if 0:10:45.800 --> 0:10:48.800 you think back, you think back to the Great Financial Crisis, 0:10:48.840 --> 0:10:52.920 when China did a really big stimulus, they were technocratically 0:10:53.040 --> 0:10:55.000 really clear about what they needed to do to keep 0:10:55.040 --> 0:10:57.280 their economy going, to keep it strong, and there were 0:10:57.320 --> 0:11:01.040 those years of tremendous growth. Growth obviously has now slowed, 0:11:01.080 --> 0:11:04.239 but there was still a view that kind of technically 0:11:04.600 --> 0:11:07.680 they knew what to do to achieve the growth targets 0:11:07.679 --> 0:11:11.319 because in the end, the kind of legitimacy of this 0:11:11.360 --> 0:11:14.320 regime has always hinged on the fact that it has 0:11:14.440 --> 0:11:19.319 provided for material prosperity. And you know, the social contract, 0:11:19.360 --> 0:11:21.719 if you will, had always been you put up with 0:11:21.760 --> 0:11:24.520 an authoritarian government, you put up with all of those strictures. 0:11:24.559 --> 0:11:28.199 But you have China is being made great again, and China, 0:11:28.559 --> 0:11:32.360 Chinese prosperity is rising. That's really shifted. I mean, and 0:11:32.800 --> 0:11:34.960 you see it, for example, with the high levels of 0:11:35.160 --> 0:11:39.280 unemployment amongst young people. You sense a sense of disillusionment. 0:11:39.679 --> 0:11:43.040 People young Chinese now know that they are not going 0:11:43.080 --> 0:11:45.920 to see the remarkable increase in living standards that their 0:11:46.160 --> 0:11:49.040 parents saw, so there's a sense of loss of confidence. 0:11:49.280 --> 0:11:51.880 At the same time, there's this very clear clampdown from 0:11:52.000 --> 0:11:54.800 using Ping not only a massing power around himself, but 0:11:55.640 --> 0:12:00.800 really shifting the focus towards national security, towards a you know, 0:12:00.840 --> 0:12:04.920 a great Chinese state in conflict with or at least 0:12:04.960 --> 0:12:07.880 confrontation with the United States. That's what he's focused on. 0:12:08.640 --> 0:12:11.160 He is not I don't think he's not really interested 0:12:11.160 --> 0:12:15.160 in economics. He's very statist, he doesn't believe in stimulus. 0:12:15.000 --> 0:12:18.440 He's got a very kind of you might even say, 0:12:18.600 --> 0:12:21.240 I mean economically illiterate view of what the economy needs. 0:12:21.240 --> 0:12:24.679 But he's not focused on that. And so the question is, 0:12:24.960 --> 0:12:28.920 is all of these ingredients together, how does China actually 0:12:29.040 --> 0:12:30.240 get out of its malaise? 0:12:30.679 --> 0:12:32.400 Zenny is such a treat having on Wall Street Week. 0:12:32.440 --> 0:12:35.239 Thank you that as any mitten Bellows of the economists 0:12:37.160 --> 0:12:39.640 coming up. There is a massive transfer of wealth on 0:12:39.720 --> 0:12:42.360 the horizon, and it's not just to the next generation. 0:12:42.559 --> 0:12:45.480 We talk with Sally Kratchek of Eloves about the rising 0:12:45.640 --> 0:12:51.479 role of women investors. This is Wall Street Week on Bloomberg. 0:12:52.640 --> 0:12:56.880 This is Bloomberg Wall Street Week with David Weston from 0:12:57.000 --> 0:12:59.679 Bloomberg Radio. 0:13:04.440 --> 0:13:07.360 This is Wall Street Week. I'm David Weston. Global. Wall 0:13:07.400 --> 0:13:10.480 Street is on the cusp of a major transfer in wealth, 0:13:10.800 --> 0:13:14.599 as aging men who amassed capital pass from the scene 0:13:14.720 --> 0:13:18.080 most oftens. This is described as a generational issue, but 0:13:18.160 --> 0:13:20.680 Elvius has released a new study showing that there will 0:13:20.679 --> 0:13:23.960 also be a gender component to it, as great wealth 0:13:24.040 --> 0:13:26.439 is put in the hands of women around the world. 0:13:26.920 --> 0:13:29.000 We talked to the founder and CEO of l of Us, 0:13:29.120 --> 0:13:30.840 Sally Krotchik, about what they. 0:13:30.760 --> 0:13:36.760 Found the baby boomers have built and on his historically 0:13:36.840 --> 0:13:40.200 unprecedented amount of wealth. Baby boomers are hitting eighty this year, 0:13:40.600 --> 0:13:42.680 and as they begin to pass away, that money gets 0:13:42.679 --> 0:13:44.800 passed down. And you talk to most people and you 0:13:44.800 --> 0:13:47.080 say who's the money going to? And they say the millennials. 0:13:47.800 --> 0:13:50.000 The bottom line is is going to women because it 0:13:50.040 --> 0:13:52.800 goes to the widows first, average age of widowhood by 0:13:52.800 --> 0:13:56.240 the way, late fifties, goes to the women first and 0:13:56.280 --> 0:13:59.400 then goes on to the kids. And so the Great 0:13:59.400 --> 0:14:02.320 Wealth Transfer is about to do something that Leanan did not, 0:14:03.200 --> 0:14:05.680 which is get to women. The majority of wealth in 0:14:05.720 --> 0:14:09.280 this country. Women are going to inherit tens of trillions 0:14:09.280 --> 0:14:11.680 of dollars over the next couple of decades. 0:14:12.000 --> 0:14:15.400 Well that's a big shift, potentially a big shift. Yeah, 0:14:15.400 --> 0:14:17.360 But what do you think of the consequences of that? 0:14:17.520 --> 0:14:19.760 I mean, how are women different from men when they invest? 0:14:20.520 --> 0:14:24.440 Well, so let's back up, because it does tend to 0:14:24.520 --> 0:14:26.640 change everything. One of the big findings you and were 0:14:26.680 --> 0:14:29.120 talking about earlier is we tend to think women don't 0:14:29.120 --> 0:14:31.360 invest as much as men do. It's because they don't 0:14:31.400 --> 0:14:34.840 have the money confidence that men do. What this survey 0:14:34.840 --> 0:14:37.400 has shown is it's not they don't have the confidence 0:14:37.400 --> 0:14:38.880 so they don't have the money. It's they don't have 0:14:38.880 --> 0:14:41.280 the money, so they don't have the confidence. You put 0:14:41.280 --> 0:14:44.080 that money in the hands of women, their confidence sorees. 0:14:44.120 --> 0:14:46.880 It goes from something like forty five percent of women 0:14:46.920 --> 0:14:49.720 are confident around money to eighty one percent after they 0:14:49.760 --> 0:14:53.160 get an inheritance or a wealth transfer, become more confident 0:14:53.200 --> 0:14:57.800 than men. The other thing that changes marriages. Marriages something 0:14:57.880 --> 0:15:00.720 like double the amount of women who get in inheritance 0:15:00.760 --> 0:15:03.360 get a wealth transfer, you know, say that they could 0:15:03.440 --> 0:15:07.080 leave relationships that they don't want to be in, which 0:15:07.160 --> 0:15:10.360 is really significant. You see it for young millennial and 0:15:10.440 --> 0:15:13.680 Gen Z women who three times the number of them 0:15:13.680 --> 0:15:16.560 say they'll leave a relationship as those who don't get 0:15:16.600 --> 0:15:17.360 an inheritance. 0:15:17.960 --> 0:15:19.800 So as we look around the industry today, I mean 0:15:19.800 --> 0:15:23.200 it's certain my experience looking at it, we don't have 0:15:23.280 --> 0:15:26.800 many women in the senior most leadership roles in sort 0:15:26.800 --> 0:15:31.200 of global Wall Street correct. And maybe it's gotten better, 0:15:31.240 --> 0:15:33.840 but I'm not sure how much better it's gotten. What's 0:15:33.920 --> 0:15:34.440 causing that? 0:15:34.480 --> 0:15:37.600 Do you think, yeah, it's gotten better, It hasn't gotten 0:15:37.640 --> 0:15:39.760 better enough. When you consider that women are fifty one 0:15:39.800 --> 0:15:45.280 percent of the population. You know, it's inertia. You know, 0:15:45.320 --> 0:15:47.520 an object in motion stays in motion, and object at 0:15:47.560 --> 0:15:51.160 rest stays at rest. But it's truly important, and it's 0:15:51.200 --> 0:15:53.880 truly important beyond the g I wish there were a 0:15:53.920 --> 0:15:56.880 handful of women who get to senior roles and do 0:15:57.040 --> 0:16:02.520 well good. Yes, that matters. What really matters is the 0:16:02.600 --> 0:16:05.680 financial services is, of course the lifeblood of our economy, 0:16:06.320 --> 0:16:09.800 and the research shows you the diversity is a driver 0:16:09.960 --> 0:16:15.920 of superior performance. The homogeneity conversely means take you trust 0:16:15.920 --> 0:16:18.280 each other too much, you take on more risk thinking 0:16:18.360 --> 0:16:21.760 subprime crisis here right when you don't have that diversity 0:16:21.880 --> 0:16:26.160 thought perspective background. So we should all care about diversity 0:16:26.160 --> 0:16:29.600 in financial services because it is again the life blood 0:16:29.600 --> 0:16:32.600 of the economy. And we should also care because of 0:16:33.000 --> 0:16:35.200 if we are a woman, we want to be reflected. 0:16:35.640 --> 0:16:38.000 If we're fathers and we have daughters, we want them 0:16:38.080 --> 0:16:42.360 to be reflected. And the industry needs to do and 0:16:42.880 --> 0:16:45.960 will do with more diversity, a better job for women again, 0:16:46.000 --> 0:16:48.440 who are coming into a ton of money with a 0:16:48.440 --> 0:16:49.479 great wealth transfer. 0:16:49.640 --> 0:16:51.760 In your experience, do you think that the leadership of 0:16:51.880 --> 0:16:54.960 the large financial institutions, and by that I mean the CEO, 0:16:55.240 --> 0:16:58.080 the c suite and the board understand what you just said, 0:16:58.120 --> 0:17:00.440 because over the last few months we've seen why dof 0:17:00.440 --> 0:17:03.520 you senior women leave their roles. Now maybe we just 0:17:03.600 --> 0:17:05.159 noticed it more, but it feels like there are a 0:17:05.200 --> 0:17:07.000 lot of senior women moving on. Yeah. 0:17:07.119 --> 0:17:09.919 You know, look, I think everybody believes in the power 0:17:10.400 --> 0:17:13.000 of you know, having a team that is diverse and 0:17:13.040 --> 0:17:16.480 can debate. I mean, forget about this blowback on DEI. 0:17:16.600 --> 0:17:19.320 But if you're in senior leadership, you know sort of 0:17:19.400 --> 0:17:22.280 understanding that you want these different perspectives. I think it 0:17:22.320 --> 0:17:25.240 can be hard to overcome corporate culture. What I do 0:17:25.320 --> 0:17:28.680 think is men do not see the great wealth transfer 0:17:28.760 --> 0:17:32.239 coming and do not fully understand the difference it's going 0:17:32.280 --> 0:17:33.959 to make. And how do I know that? In the 0:17:34.160 --> 0:17:37.280 l of S survey we ask men, we said, here's 0:17:37.320 --> 0:17:39.080 this great wealth transfer. Who do you think is going 0:17:39.119 --> 0:17:41.960 to benefit? Just fourteen percent said women. 0:17:43.040 --> 0:17:45.080 Oh, most people said the next generation. Me. 0:17:47.480 --> 0:17:49.680 I think it's going to be bed you know, and 0:17:50.119 --> 0:17:52.600 look at what we saw this summer where women kept 0:17:52.640 --> 0:17:55.520 the country out of recession, you know, through going to 0:17:55.520 --> 0:17:58.600 see Barbie, through going to see you know, Taylor Swift 0:17:58.640 --> 0:18:01.439 and Beyonce and all all of the economic power that 0:18:01.560 --> 0:18:04.480 generated and you say, look, this is a world this 0:18:04.640 --> 0:18:05.800 beginning to change. 0:18:07.119 --> 0:18:09.960 Just over two years ago now GE announced plans to 0:18:10.000 --> 0:18:14.080 divide its business into three publicly traded companies focused on healthcare, 0:18:14.440 --> 0:18:18.120 energy and aviation. GE Healthcare was spun off just over 0:18:18.160 --> 0:18:21.119 a year ago, and early next month the last piece 0:18:21.200 --> 0:18:23.840 will fall into place when GE separates in the GE 0:18:23.880 --> 0:18:28.520 Aerospace and GE Vernova, encompassing its energy business. We sat 0:18:28.560 --> 0:18:31.280 with the GE CEO who has overseen the restructuring from 0:18:31.320 --> 0:18:33.639 the start, Larry Kulp, and the man who will be 0:18:33.760 --> 0:18:36.119 CEO of g Vernova, Scott Straisik. 0:18:36.480 --> 0:18:40.720 If you go back five years, we really were, I think, 0:18:40.880 --> 0:18:45.480 tasked with two simple objectives. One was a significantly leveraging 0:18:45.600 --> 0:18:50.399 of our balance sheet. Secondly, we needed to execute an 0:18:50.400 --> 0:18:55.080 operational turnaround across the business, but it was particularly acute 0:18:55.359 --> 0:18:57.960 in our power segment, particularly the gas power business that 0:18:58.560 --> 0:19:02.800 Scott ran at the time. So you fast forward, we 0:19:02.840 --> 0:19:06.720 reduced our debtload by over one hundred billion dollars. Scott 0:19:06.720 --> 0:19:10.760 and the team really executed I think a phenomenal turn 0:19:11.040 --> 0:19:13.520 in gas power and then with the rest of our 0:19:13.600 --> 0:19:17.000 power segment. And we were sitting there as the pandemic 0:19:17.080 --> 0:19:19.280 was beginning to lift. We could see the merger of 0:19:19.320 --> 0:19:23.240 our aircraft leasing business with one of our key competitors, 0:19:23.560 --> 0:19:27.920 air Cap, coming to a quick close, and we really 0:19:27.920 --> 0:19:31.720 had to decide what's the go forward structure for GE, 0:19:32.359 --> 0:19:35.400 And given we had had so much success with the decentralization, 0:19:36.080 --> 0:19:38.800 given that the capital markets clearly liked the businesses but 0:19:38.840 --> 0:19:42.080 didn't like them together, it was actually an easy decision 0:19:43.040 --> 0:19:45.479 when we took a little over two years ago to 0:19:45.520 --> 0:19:47.880 say it take us a couple of years to pull 0:19:47.920 --> 0:19:52.119 this off, but when the dust settles, GE Healthcare, Chievranova, 0:19:52.440 --> 0:19:55.360 and GE Aerospace will all be on their own bottoms. 0:19:55.480 --> 0:19:57.600 You may have just answered that in your answer, which 0:19:57.640 --> 0:19:59.919 is why'd you pick Scott not to speak to you? 0:20:00.040 --> 0:20:02.400 What about your presence Scott? But how'd you pick Scott? 0:20:02.480 --> 0:20:04.400 Is it because of the role he had turnaround? 0:20:04.960 --> 0:20:09.040 Most definitely. I met Scott back August of eighteen. I 0:20:09.119 --> 0:20:12.040 wasn't even in this chair yet. It was the first 0:20:12.080 --> 0:20:15.520 GE business that I had visited down in Atlanta, and 0:20:16.720 --> 0:20:20.000 I came away thinking this is a really strong team, 0:20:20.359 --> 0:20:22.560 but there's some things that we're doing that probably are 0:20:22.600 --> 0:20:26.719 working against us. So we began the pivot to focus 0:20:26.760 --> 0:20:29.840 more on the businesses as opposed to the segment. Scott 0:20:29.880 --> 0:20:32.960 was running gas Power Services at the time we asked 0:20:33.000 --> 0:20:34.960 him to step up into a big job to run 0:20:35.440 --> 0:20:39.200 all of gas Power. We knew that was job one 0:20:39.240 --> 0:20:43.080 with respect to the overall operational turnaround at GE, and 0:20:43.119 --> 0:20:47.000 he and the team I think executed near flawlessly through that, 0:20:47.320 --> 0:20:49.840 and then he picked up additional responsibility with the rest 0:20:49.840 --> 0:20:54.920 of the power segment and then in turn the renewables businesses. 0:20:54.960 --> 0:20:57.480 And at each step of the way, Scott stepped up 0:20:57.680 --> 0:21:01.679 delivered built teams that did the same. So when it 0:21:01.720 --> 0:21:04.520 came time to think about the next CEO for this 0:21:04.600 --> 0:21:07.240 business as a public entity, Scott was an easy choice. 0:21:07.280 --> 0:21:09.040 So Scott, and now you've got the big job. What 0:21:09.200 --> 0:21:12.240 in your experience in GE and specifically in that turnaround, 0:21:12.359 --> 0:21:14.760 really do you think prepares you for this big new role. 0:21:15.280 --> 0:21:17.760 Well, I mean GE has always been a great laboratory 0:21:17.800 --> 0:21:20.600 to learn and experiment, and we've always had great people. 0:21:20.800 --> 0:21:22.800 But I think over the last five to five and 0:21:22.800 --> 0:21:25.880 a half years, really the lean operating system that we've 0:21:25.880 --> 0:21:29.240 been implementing and really started with gas right in nineteen 0:21:29.720 --> 0:21:32.399 where we were on a monthly cadence with Larry and 0:21:32.480 --> 0:21:36.919 really focusing a team that always had great ambition, but 0:21:37.000 --> 0:21:39.199 did we really have an ability to focus on the 0:21:39.240 --> 0:21:44.000 critical few customer KPIs every day while also protecting for 0:21:44.040 --> 0:21:47.920 the long term breakthroughs and the ability to multitask those 0:21:47.960 --> 0:21:50.960 things our teams weren't always great with. And that's really 0:21:51.000 --> 0:21:53.120 a lot of what we were focused on in nineteen 0:21:53.680 --> 0:21:56.919 into twenty together is to build that rhythm that we 0:21:56.920 --> 0:22:00.400 could prioritize what mattered most to get it's a short 0:22:00.440 --> 0:22:04.520 term right, but not at the expense of also investing 0:22:04.560 --> 0:22:06.080 for the long term. And that's a lot of what 0:22:06.119 --> 0:22:09.119 we worked on in gas Power together in nineteen and 0:22:09.160 --> 0:22:12.560 that was really foundational for gas Power and it's really 0:22:12.640 --> 0:22:14.960 what we've been extrapolating across the rest of Vernova. 0:22:15.400 --> 0:22:18.639 At the center of Vernova's strategy is growing its energy 0:22:18.640 --> 0:22:21.240 business in the midst of a massive transition to more 0:22:21.280 --> 0:22:26.320 sustainable energy around the world. It's chief sustainability Officer, Roger Martella, 0:22:26.440 --> 0:22:29.160 gives us an example how Vernova will set its priorities 0:22:29.240 --> 0:22:31.399