1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,200 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg. The 5 00:00:27,360 --> 00:00:30,040 Speaker 1: top story today's shake up at Curtis Sweets to gent 6 00:00:30,280 --> 00:00:32,680 Speaker 1: and being ousted at chief executive joining us now as 7 00:00:32,720 --> 00:00:36,760 Speaker 1: Curtis Sweet as top shareholder. He's David Harrold of Harris Associates. 8 00:00:36,920 --> 00:00:40,440 Speaker 1: David um We spoke on Monday and your position was 9 00:00:40,560 --> 00:00:43,000 Speaker 1: very clear in regards to the chief executive and his 10 00:00:43,040 --> 00:00:48,159 Speaker 1: battle with the chairman. The CEO now resigned after being ousted. 11 00:00:48,320 --> 00:00:52,239 Speaker 1: Are you still committed to Curtis Suiss Well, we are 12 00:00:52,280 --> 00:00:55,600 Speaker 1: committed to Credit Swie because we think that the organization 13 00:00:55,640 --> 00:00:59,360 Speaker 1: and the strengths of the business go far beyond the 14 00:01:00,200 --> 00:01:03,640 Speaker 1: weak chairman and the poor decision making by the board 15 00:01:03,640 --> 00:01:08,160 Speaker 1: of directors. You know what's beneath the corporate board, the 16 00:01:08,200 --> 00:01:12,920 Speaker 1: board of directors is a very solid and vastly improved company, 17 00:01:13,560 --> 00:01:18,240 Speaker 1: largely because of the efforts Mr Tim and so this 18 00:01:18,319 --> 00:01:21,000 Speaker 1: is why we wanted him to stay. And you know, 19 00:01:21,040 --> 00:01:24,440 Speaker 1: as I mentioned, you know earlier in the week, that 20 00:01:25,120 --> 00:01:30,320 Speaker 1: basically Uster Tim had to repair the damages that were 21 00:01:30,480 --> 00:01:35,360 Speaker 1: made by the previous managements, which were presided over by 22 00:01:35,440 --> 00:01:39,040 Speaker 1: the existing chairman who stayed. And this is the economy, 23 00:01:39,080 --> 00:01:42,440 Speaker 1: is the whole situation, is that the person who presided 24 00:01:42,520 --> 00:01:45,600 Speaker 1: over the creation of the mess stayed and the person 25 00:01:45,640 --> 00:01:48,800 Speaker 1: who cleaned up the mess left. But what his left 26 00:01:48,920 --> 00:01:53,480 Speaker 1: is a much much stronger and better company than when 27 00:01:53,600 --> 00:01:56,600 Speaker 1: Mr TM came. And it's because of his efforts and 28 00:01:56,800 --> 00:02:00,800 Speaker 1: his leadership. But David Harrow, will you cut your stake 29 00:02:00,840 --> 00:02:06,120 Speaker 1: in quite a suite? You know, we're never comment on trading. 30 00:02:06,360 --> 00:02:10,880 Speaker 1: We certainly think the company is less valuable uh than 31 00:02:11,040 --> 00:02:14,720 Speaker 1: with Mr Tim. But however, we believe the business is 32 00:02:14,800 --> 00:02:19,560 Speaker 1: still very very attractive and very attractively place and Mr 33 00:02:19,600 --> 00:02:23,760 Speaker 1: Gottenstein is a very capable executive. Now, of course, our 34 00:02:23,880 --> 00:02:28,240 Speaker 1: worry will be that you have this new CEO who's 35 00:02:28,320 --> 00:02:34,880 Speaker 1: capable and talented, but above him sits a chairman who 36 00:02:35,560 --> 00:02:38,720 Speaker 1: is less than capable and talented, and a board that 37 00:02:38,840 --> 00:02:45,880 Speaker 1: seems to just mimic whatever, just follows blindly whatever he says. 38 00:02:46,480 --> 00:02:49,560 Speaker 1: And there's someone who's personally been misled by the chairman. 39 00:02:50,040 --> 00:02:52,000 Speaker 1: You know, this is going to make it difficult for 40 00:02:52,080 --> 00:02:56,080 Speaker 1: the new CEO. The new CEO, on the one hand, 41 00:02:56,200 --> 00:03:00,360 Speaker 1: what's below him. He inherited a very good and improved bank. 42 00:03:00,440 --> 00:03:02,919 Speaker 1: But above him, you know, he's going to have to 43 00:03:03,000 --> 00:03:07,440 Speaker 1: deal with with a board that doesn't function for the 44 00:03:07,520 --> 00:03:12,120 Speaker 1: purpose of creating value for shareholders. So at this stage, 45 00:03:12,200 --> 00:03:15,040 Speaker 1: you know, we're happy with our holding and credit suites 46 00:03:16,040 --> 00:03:20,079 Speaker 1: and we think it still offers great potential. But this 47 00:03:20,160 --> 00:03:24,520 Speaker 1: shows the need for changes at the board of directors. 48 00:03:24,680 --> 00:03:27,600 Speaker 1: And I'm listening to some of the sports press and 49 00:03:27,840 --> 00:03:30,639 Speaker 1: the chairman says, you know, all the shareholders are behind them. 50 00:03:30,680 --> 00:03:34,080 Speaker 1: You know that wasn't one shareholder came up publicly in 51 00:03:34,160 --> 00:03:37,000 Speaker 1: support of him, so you know, I don't know where 52 00:03:37,000 --> 00:03:39,600 Speaker 1: he's coming from. And he's going to see that most 53 00:03:39,600 --> 00:03:43,000 Speaker 1: shareholders when they get put to a vote, didn't get 54 00:03:43,000 --> 00:03:46,240 Speaker 1: to put to a vote very shortly. And we're going 55 00:03:46,320 --> 00:03:49,960 Speaker 1: to see if he survives that vote. But I think 56 00:03:50,000 --> 00:03:52,920 Speaker 1: for the good of the company, the chairman should step 57 00:03:53,000 --> 00:03:59,600 Speaker 1: down as well. And you know, yeah, have you been 58 00:03:59,600 --> 00:04:02,680 Speaker 1: speaking to other shareholders and are you now going to 59 00:04:02,720 --> 00:04:08,600 Speaker 1: try and remove the chairman or suna? We do think 60 00:04:08,680 --> 00:04:12,040 Speaker 1: that the of course, we've been sharing our thoughts. So 61 00:04:12,160 --> 00:04:16,559 Speaker 1: we've been sharing our thoughts with other shareholders, and every 62 00:04:16,560 --> 00:04:20,440 Speaker 1: shareholder I've spoken to seems to its. You know, some 63 00:04:20,480 --> 00:04:23,560 Speaker 1: people don't tell you, and we don't push. We want 64 00:04:23,600 --> 00:04:26,880 Speaker 1: to know other thoughts, and of course people know our position. 65 00:04:26,920 --> 00:04:30,960 Speaker 1: Our position is very very public and absolutely we will 66 00:04:31,000 --> 00:04:36,560 Speaker 1: be voting against Mr Rowna, and we believe for the 67 00:04:36,640 --> 00:04:40,839 Speaker 1: good of the company, other shareholders should vote against Mr Rohner. 68 00:04:41,120 --> 00:04:46,240 Speaker 1: And further, Mr Rohner really was concerned about the company, 69 00:04:46,520 --> 00:04:49,000 Speaker 1: and if he really loved the company, he should step 70 00:04:49,040 --> 00:04:53,359 Speaker 1: down and resign. That's what he should do. Will you 71 00:04:53,440 --> 00:04:56,160 Speaker 1: take David Harrod legal steps to try and get him removed. 72 00:04:57,600 --> 00:05:00,640 Speaker 1: We're going to examine all options. We're to do what 73 00:05:00,720 --> 00:05:05,600 Speaker 1: it takes to protect our investment and to protect our shareholders. 74 00:05:05,680 --> 00:05:09,480 Speaker 1: And we think there is great potential and credits and 75 00:05:09,520 --> 00:05:12,719 Speaker 1: we would hate to see it ruined by a chairman 76 00:05:12,880 --> 00:05:15,799 Speaker 1: and who is not on the same page of shareholder 77 00:05:15,880 --> 00:05:19,400 Speaker 1: value creation as we are. Do you think the new 78 00:05:19,480 --> 00:05:23,200 Speaker 1: chief executive is on the same page as you in 79 00:05:23,320 --> 00:05:26,560 Speaker 1: terms of strategy? I I have met him and I 80 00:05:26,560 --> 00:05:29,599 Speaker 1: think he is on the same page in terms of 81 00:05:29,680 --> 00:05:33,160 Speaker 1: strategy he has a very good reputation. He's done a 82 00:05:33,440 --> 00:05:37,120 Speaker 1: very good job at the Swiss the Universal Bank UM. 83 00:05:37,200 --> 00:05:40,440 Speaker 1: You recall that was almost the public a few years ago, 84 00:05:41,400 --> 00:05:43,360 Speaker 1: and he would have been the CEO of the publicly 85 00:05:43,400 --> 00:05:47,880 Speaker 1: listed company UM. I think he's talented. I think he 86 00:05:47,920 --> 00:05:52,159 Speaker 1: is capable. UM. But I do fear. I do fear 87 00:05:52,279 --> 00:05:56,320 Speaker 1: the fact that he has to work with the chairman, who, 88 00:05:56,640 --> 00:06:00,040 Speaker 1: you know, just from what I've dealt with UM and 89 00:06:00,240 --> 00:06:02,960 Speaker 1: what he's done to Mr Kem. You know, right as 90 00:06:03,120 --> 00:06:07,080 Speaker 1: Mr Kems pared the bank, you know, pushed him out 91 00:06:08,800 --> 00:06:15,560 Speaker 1: and going to continue. Are you concerned that actually the 92 00:06:15,560 --> 00:06:18,040 Speaker 1: new chief executive will take the bank in a different 93 00:06:18,040 --> 00:06:22,920 Speaker 1: direction that it will be. I don't believe he will. Yeah, 94 00:06:22,920 --> 00:06:25,560 Speaker 1: I don't believe he will because he's been part of 95 00:06:25,560 --> 00:06:29,080 Speaker 1: the team and I think he could see the success 96 00:06:29,080 --> 00:06:33,599 Speaker 1: that the bank has had in the direction that Tjan 97 00:06:34,080 --> 00:06:38,160 Speaker 1: has put the bank in the right, the direction he's 98 00:06:38,200 --> 00:06:41,359 Speaker 1: pushed the bank into. So you know, he's part of 99 00:06:41,400 --> 00:06:43,760 Speaker 1: the executive board, part of the management team that I 100 00:06:43,760 --> 00:06:47,679 Speaker 1: think clearly he's able to see the success of team 101 00:06:47,839 --> 00:06:51,240 Speaker 1: strategy UM. And I do believe he will stick with 102 00:06:51,279 --> 00:06:55,559 Speaker 1: the strategy. We haven't spoken with him the sense he's 103 00:06:55,640 --> 00:06:59,360 Speaker 1: become the new CEO, but we have not with him 104 00:07:00,120 --> 00:07:05,560 Speaker 1: many times beforehand. Have you spoken to the chairman or 105 00:07:05,640 --> 00:07:10,160 Speaker 1: Stroner in the last couple of weeks and now we've 106 00:07:10,240 --> 00:07:14,000 Speaker 1: communicated last week. The last last I spoke with him 107 00:07:14,080 --> 00:07:16,720 Speaker 1: was when he denied that he or anyone from the 108 00:07:16,760 --> 00:07:22,160 Speaker 1: board linked the story Friday. Will you try and reach 109 00:07:22,200 --> 00:07:25,680 Speaker 1: out Is there any insight and getting into into you 110 00:07:25,720 --> 00:07:28,320 Speaker 1: know how this this has been done. Did you get 111 00:07:28,360 --> 00:07:34,400 Speaker 1: a call from anyone discussing this before? No? Now and 112 00:07:34,440 --> 00:07:36,880 Speaker 1: then they didn't believe it was important to communicate with 113 00:07:36,920 --> 00:07:41,880 Speaker 1: their largest sharehold their Epidently, Um, what are you doing 114 00:07:42,200 --> 00:07:44,360 Speaker 1: David Harry today? Will you fly to Zurich? Will you 115 00:07:44,400 --> 00:07:47,160 Speaker 1: try and and speak to the chair Are you speaking 116 00:07:47,160 --> 00:07:52,000 Speaker 1: to the chief executive now? I'm not. I don't plan 117 00:07:52,080 --> 00:07:55,160 Speaker 1: on flyining. Is Eric? What a plan I'm doing is 118 00:07:55,200 --> 00:07:57,960 Speaker 1: at some point we had to talk with Mr Gamstein 119 00:07:59,280 --> 00:08:01,960 Speaker 1: and this stage, you know, there's not a lot that 120 00:08:02,040 --> 00:08:05,160 Speaker 1: can be done, but you know, we have to protect 121 00:08:05,160 --> 00:08:08,720 Speaker 1: our investment, and to protect our investment and our shareholders 122 00:08:08,840 --> 00:08:11,360 Speaker 1: means that we have to make sure that there is 123 00:08:11,400 --> 00:08:15,840 Speaker 1: a board in place looking after the shareholders. Interests, the 124 00:08:15,880 --> 00:08:20,520 Speaker 1: company's interests and employees interest. We do not believe Credits 125 00:08:20,520 --> 00:08:24,880 Speaker 1: Reach today as a chairman and a board in place 126 00:08:25,560 --> 00:08:29,760 Speaker 1: that is mindful of their duties to the company and 127 00:08:29,760 --> 00:08:33,680 Speaker 1: to the owners all the stakeholders. We do not believe 128 00:08:33,880 --> 00:08:38,199 Speaker 1: that the Credits Reached today has a board that is 129 00:08:38,640 --> 00:08:42,520 Speaker 1: as looking after the stakeholders. And we think this is 130 00:08:42,520 --> 00:08:47,080 Speaker 1: a very very valuable asset. And so you know, we 131 00:08:47,120 --> 00:08:50,000 Speaker 1: will take steps to do what we can do. And 132 00:08:50,280 --> 00:08:52,720 Speaker 1: at this stage, I don't know exactly what we can do, 133 00:08:53,120 --> 00:08:55,320 Speaker 1: but when we find out what we can do, we 134 00:08:55,360 --> 00:08:59,360 Speaker 1: will take these steps to make sure that we will 135 00:08:59,720 --> 00:09:03,680 Speaker 1: we will do our finishary duty to our shareholders and 136 00:09:03,760 --> 00:09:06,760 Speaker 1: make sure that there's a board in place that represents 137 00:09:06,800 --> 00:09:10,560 Speaker 1: the best interests of the stakeholders. Um, David Harr, I 138 00:09:10,559 --> 00:09:12,600 Speaker 1: know you have to go. But one final question, are 139 00:09:12,600 --> 00:09:15,360 Speaker 1: you looking to replace the chairman or the or the 140 00:09:15,400 --> 00:09:20,880 Speaker 1: whole board. Well, that is a good question, but we 141 00:09:20,920 --> 00:09:25,960 Speaker 1: don't know exactly how the whole board really um hand out. 142 00:09:26,000 --> 00:09:29,400 Speaker 1: But I think for now, for now, the chairman should 143 00:09:29,400 --> 00:09:32,760 Speaker 1: be replaced. The chairman should be replaced. In fact, as 144 00:09:32,800 --> 00:09:36,719 Speaker 1: I said, if he really cares about the organization if 145 00:09:36,760 --> 00:09:41,640 Speaker 1: he really cared about credatories, he would step down this chairman. 146 00:09:42,600 --> 00:09:46,400 Speaker 1: This would really bring stability and it would allow Mr 147 00:09:46,520 --> 00:09:52,040 Speaker 1: Gerstein's the opportunity for a true fresh start. But as 148 00:09:52,120 --> 00:09:55,480 Speaker 1: long as Mr Rona is there, there will be doubt 149 00:09:55,520 --> 00:09:59,760 Speaker 1: and questions. Um, you know, who's going to be the 150 00:09:59,800 --> 00:10:04,719 Speaker 1: next wanted to be pushed out and so I think 151 00:10:04,760 --> 00:10:07,480 Speaker 1: the best thing for the organization would be And I'm 152 00:10:07,480 --> 00:10:11,360 Speaker 1: surprised that when the board maybe this changed. When the 153 00:10:11,440 --> 00:10:14,439 Speaker 1: board made this change, you know, they did say he's 154 00:10:14,520 --> 00:10:17,920 Speaker 1: leading one. That's not enough. He's got a lead before 155 00:10:17,960 --> 00:10:23,360 Speaker 1: that he shouldn't leave immediately. David Harrow, thank you so 156 00:10:23,440 --> 00:10:25,360 Speaker 1: much for your time. As always, he is a chief 157 00:10:25,360 --> 00:10:28,280 Speaker 1: investmentscer at Harris Associates and of course a top Credit 158 00:10:28,320 --> 00:10:43,200 Speaker 1: Suite shareholder. John Farrow and Lisa want to do a 159 00:10:43,280 --> 00:10:46,120 Speaker 1: detailed jobs report coverage of Ellen Zentner, but we have 160 00:10:46,160 --> 00:10:49,400 Speaker 1: to digress now is the chief economists and Morgan Stanley 161 00:10:49,440 --> 00:10:53,160 Speaker 1: went back to her really seminal market economic work with 162 00:10:53,240 --> 00:10:56,400 Speaker 1: a fabulous OpEd in the New York Times over the weekend. 163 00:10:57,160 --> 00:11:00,280 Speaker 1: Millennials aren't spending all their money on avocado toe most 164 00:11:00,440 --> 00:11:06,160 Speaker 1: actually Allen Sander, congratulations on a sharp essay. What is 165 00:11:06,200 --> 00:11:09,560 Speaker 1: the consumption that you see that was within your essay. 166 00:11:10,400 --> 00:11:13,040 Speaker 1: Our millennials and the boomers and all of them, are 167 00:11:13,040 --> 00:11:17,360 Speaker 1: we still consuming? Uh? Yeah we are, Tom, But I 168 00:11:17,400 --> 00:11:21,080 Speaker 1: think what I wanted to focus on was, um something 169 00:11:21,120 --> 00:11:24,640 Speaker 1: believe it or not. That's not so negative about millennials. Um. 170 00:11:24,679 --> 00:11:27,080 Speaker 1: You know, we've we've loved to to feel bad for 171 00:11:27,160 --> 00:11:31,880 Speaker 1: them graduating into a terrible labor market and and uh, 172 00:11:31,960 --> 00:11:34,160 Speaker 1: you know, accusing baby boomers of sucking up all of 173 00:11:34,200 --> 00:11:38,959 Speaker 1: the wealth um in the nation. But you know, there's 174 00:11:39,040 --> 00:11:43,240 Speaker 1: there's a very simple policy change here that has been 175 00:11:43,320 --> 00:11:48,080 Speaker 1: overlooked that is actually helping millennials save more, right, not 176 00:11:48,200 --> 00:11:51,120 Speaker 1: just been, but save more than say, my generation did 177 00:11:51,160 --> 00:11:54,600 Speaker 1: at their same age. I'm generation X. And it's as 178 00:11:54,679 --> 00:11:57,360 Speaker 1: simple as the continued rise of the presence of four 179 00:11:57,360 --> 00:12:00,800 Speaker 1: oh one case and specifically auto enrollment by companies in 180 00:12:00,840 --> 00:12:05,079 Speaker 1: four oh one case. So it's it's leaving millennials, yes, 181 00:12:05,160 --> 00:12:09,920 Speaker 1: with less disposable income out of their paychecks. Um, but 182 00:12:10,000 --> 00:12:12,480 Speaker 1: they're saving more. They actually have more built up in 183 00:12:12,520 --> 00:12:18,000 Speaker 1: financial assets today than I did at the same age. Ellen, 184 00:12:18,040 --> 00:12:21,200 Speaker 1: you were doing you know, global trouts fishing, you know, 185 00:12:21,600 --> 00:12:25,080 Speaker 1: like trips, so you didn't save well. But Ellen, this 186 00:12:25,160 --> 00:12:27,800 Speaker 1: raises an interesting question here, especially as we look at 187 00:12:27,800 --> 00:12:31,040 Speaker 1: the jobs report, and that is, you know, is somehow 188 00:12:31,360 --> 00:12:34,800 Speaker 1: the jobs market profoundly different and sort of what people 189 00:12:34,880 --> 00:12:36,880 Speaker 1: are doing with the money. I mean, I'm just wondering, 190 00:12:36,880 --> 00:12:39,040 Speaker 1: in other words, what are you looking for within the 191 00:12:39,160 --> 00:12:43,520 Speaker 1: jobs report that will indicate the disposable income that people 192 00:12:43,559 --> 00:12:47,160 Speaker 1: have to spend un stuff to keep the recovery going well? 193 00:12:47,200 --> 00:12:49,000 Speaker 1: I think. So it's a great question. You know, we 194 00:12:49,160 --> 00:12:54,679 Speaker 1: slic and dise wages to the minute detail, and uh, 195 00:12:54,720 --> 00:12:58,360 Speaker 1: you know, wage growth being accelerating for the better part 196 00:12:58,400 --> 00:13:00,360 Speaker 1: of the last couple of years, and most of being 197 00:13:00,440 --> 00:13:03,640 Speaker 1: driven by the middle to lower income or middle to 198 00:13:03,679 --> 00:13:09,280 Speaker 1: lower paying sectors, whereas higher paying had really stagnated. And 199 00:13:09,320 --> 00:13:11,520 Speaker 1: if if we just break it out, it's really the 200 00:13:11,559 --> 00:13:14,679 Speaker 1: supervisory workers where wage growth is stagnated. And that's much 201 00:13:14,679 --> 00:13:17,720 Speaker 1: of that demographic effect of you know, as we age. 202 00:13:18,240 --> 00:13:20,040 Speaker 1: Tom can tell you this, I can tell you this, 203 00:13:20,440 --> 00:13:23,920 Speaker 1: at some point your income tops out right, I joke 204 00:13:23,960 --> 00:13:25,840 Speaker 1: and say, I think I think mine topped out a 205 00:13:25,840 --> 00:13:28,800 Speaker 1: few years ago. But at the low end, when you're 206 00:13:28,800 --> 00:13:33,280 Speaker 1: climbing the ladder, that's when that's when, uh, when wages 207 00:13:33,280 --> 00:13:36,000 Speaker 1: are growing the fastest. And so we've seen the acceleration 208 00:13:36,600 --> 00:13:39,360 Speaker 1: um basically at the early stages of the ladder, but 209 00:13:39,440 --> 00:13:42,719 Speaker 1: at the later stages that's where it's topped out. Um. 210 00:13:42,760 --> 00:13:44,560 Speaker 1: What we've seen in the last couple of months though, 211 00:13:44,559 --> 00:13:49,000 Speaker 1: and so that that has been driving general discretionary spending 212 00:13:49,000 --> 00:13:51,760 Speaker 1: in the economy, whereas we've really seen high end spending 213 00:13:52,200 --> 00:13:54,320 Speaker 1: slow down, and it's been slowing down for more than 214 00:13:54,360 --> 00:13:57,120 Speaker 1: a year now. Uh. What we've seen in the last 215 00:13:57,120 --> 00:13:59,360 Speaker 1: couple of months, though, has been disconcerting is that now 216 00:13:59,559 --> 00:14:04,920 Speaker 1: wage growth has slowed, the pace has slowed across the board. 217 00:14:05,320 --> 00:14:08,680 Speaker 1: We want to see that that's not a lasting trend um, 218 00:14:08,760 --> 00:14:11,400 Speaker 1: that that does turn upward again because it's been important 219 00:14:11,440 --> 00:14:14,560 Speaker 1: that those lower income groups are where the accelerating wage 220 00:14:14,559 --> 00:14:18,040 Speaker 1: growth has been because of course, from an impartial view 221 00:14:18,120 --> 00:14:21,760 Speaker 1: from an economist, that's where your higher propensity to consume 222 00:14:21,840 --> 00:14:25,920 Speaker 1: comes from, because they tend to spend more. Now millennials 223 00:14:25,920 --> 00:14:28,040 Speaker 1: are the are the same or they're spending a high 224 00:14:28,040 --> 00:14:30,480 Speaker 1: amount of their income even though they're saving through four 225 00:14:30,520 --> 00:14:35,840 Speaker 1: oh one case um, but they're spending differs than prior generations. 226 00:14:35,880 --> 00:14:38,320 Speaker 1: For instance, and this would go back to the avocado toast, 227 00:14:38,400 --> 00:14:41,800 Speaker 1: and maybe it's this social media effect. They're spending more 228 00:14:42,400 --> 00:14:47,680 Speaker 1: of their after tax income on food um off, you know, 229 00:14:47,760 --> 00:14:50,440 Speaker 1: out of the home consumption. They're willing to spend more 230 00:14:50,560 --> 00:14:54,520 Speaker 1: on organics, avocado toasts, other things. Are more aware of 231 00:14:54,520 --> 00:14:56,480 Speaker 1: what goes in their bodies, they care what goes in 232 00:14:56,520 --> 00:14:59,040 Speaker 1: their bodies, and they're willing to spend a much greater 233 00:14:59,040 --> 00:15:01,760 Speaker 1: share of their income on that. That's what we're seeing 234 00:15:01,800 --> 00:15:06,000 Speaker 1: in some of the some of the trend side doesn't 235 00:15:06,320 --> 00:15:10,480 Speaker 1: doesn't probably not the best diet. Note to Ellen to 236 00:15:10,560 --> 00:15:12,040 Speaker 1: wrap things up and want to bring the FED into 237 00:15:12,080 --> 00:15:14,040 Speaker 1: the conversation. There's a belief at the moment or at 238 00:15:14,080 --> 00:15:16,320 Speaker 1: lease a signal coming from the bond market that this 239 00:15:16,400 --> 00:15:18,760 Speaker 1: FED will keep rates low, but they won't be able 240 00:15:18,800 --> 00:15:21,880 Speaker 1: to generate inflation. What's the Morgan Stanley view on that. 241 00:15:22,960 --> 00:15:25,080 Speaker 1: I think it's gonna be very tough. So we've got 242 00:15:25,160 --> 00:15:27,480 Speaker 1: some We've got a few months here coming up. It's 243 00:15:27,520 --> 00:15:29,400 Speaker 1: going to start with the January c p I is 244 00:15:29,400 --> 00:15:32,600 Speaker 1: going to surprise to the upside and and the the 245 00:15:32,720 --> 00:15:36,200 Speaker 1: year over year comps comparisons to last year extremely easy. 246 00:15:36,240 --> 00:15:39,800 Speaker 1: When financial service prices collapse. Then in March apparel prices 247 00:15:39,840 --> 00:15:42,320 Speaker 1: collapse so very quickly. Here we're gonna get close to 248 00:15:42,320 --> 00:15:45,720 Speaker 1: a two core pc year over year rate. And the 249 00:15:45,760 --> 00:15:50,280 Speaker 1: Fed understands that's transitory, it's easy comps and the like. Uh, 250 00:15:50,280 --> 00:15:52,960 Speaker 1: and then it's going to struggle to get higher thereafter. 251 00:15:53,480 --> 00:15:56,120 Speaker 1: And so if they're saying they want to see a 252 00:15:56,200 --> 00:16:00,200 Speaker 1: significant and persistent, you know, return and above the two 253 00:16:00,200 --> 00:16:03,400 Speaker 1: percent inflation goal, it's unlikely they're going to see that 254 00:16:03,520 --> 00:16:06,240 Speaker 1: this year. Ellen Jobs guests for later for thirty five 255 00:16:06,240 --> 00:16:08,240 Speaker 1: minutes time, what are you looking for? Oh so boring. 256 00:16:08,320 --> 00:16:11,200 Speaker 1: We're at one which is not far from consensus. I 257 00:16:11,240 --> 00:16:14,440 Speaker 1: hate being close to consensus. Um. The more interesting thing 258 00:16:14,480 --> 00:16:16,480 Speaker 1: will be what are the benchmark revisions look like? And 259 00:16:16,520 --> 00:16:19,160 Speaker 1: then again going back to the wage growth, does it 260 00:16:19,320 --> 00:16:23,160 Speaker 1: look like it's continue to decelerate or is it starting 261 00:16:23,200 --> 00:16:25,720 Speaker 1: to turn back upward again? That's what we'll be looking 262 00:16:25,720 --> 00:16:27,680 Speaker 1: for and great to catch up with the valenzena that 263 00:16:27,760 --> 00:16:42,800 Speaker 1: Morgan Stanley, Chief US Economists right now A Lisa Martin 264 00:16:42,800 --> 00:16:47,160 Speaker 1: neusia is whether she's a Bloomberg opinion. She's encyclopedic on 265 00:16:47,280 --> 00:16:51,840 Speaker 1: the fabric and culture of European banks and Lisa with 266 00:16:51,840 --> 00:16:53,320 Speaker 1: credit sweet. So I don't want to look at the 267 00:16:53,320 --> 00:16:57,120 Speaker 1: immediate details and the gossip and all that. I just 268 00:16:57,480 --> 00:17:01,440 Speaker 1: want to look forward. What is the imp paritive for 269 00:17:01,520 --> 00:17:07,360 Speaker 1: the Cantons of Switzerland to keep ubs and in credit 270 00:17:07,440 --> 00:17:15,480 Speaker 1: suis independent and fully Swiss? Are they even possibly merger candidates? 271 00:17:15,480 --> 00:17:17,840 Speaker 1: Funny you should ask? I think you know, UM the 272 00:17:17,920 --> 00:17:20,000 Speaker 1: awesome who argue that that that would make you know, 273 00:17:20,080 --> 00:17:23,360 Speaker 1: that would make very good sense? Um? Do you need 274 00:17:23,520 --> 00:17:26,600 Speaker 1: to you know, to two large wealth managers? UM? I 275 00:17:26,600 --> 00:17:29,280 Speaker 1: think you know what what this case has shown though 276 00:17:29,280 --> 00:17:32,040 Speaker 1: it is that you know that happen. There have been 277 00:17:32,080 --> 00:17:35,560 Speaker 1: some undertones of you know, the management needing to be Swiss. 278 00:17:36,080 --> 00:17:39,919 Speaker 1: UM and today the UM the chairman pointed to the 279 00:17:40,000 --> 00:17:43,320 Speaker 1: deterioration of the reputation of the bank, particularly in Switzerman, 280 00:17:43,400 --> 00:17:47,240 Speaker 1: as being something that ultimately led to the CEO change 281 00:17:47,640 --> 00:17:50,080 Speaker 1: with with this at least and I know Lisa Brandwiz 282 00:17:50,160 --> 00:17:52,000 Speaker 1: has a lot of questions for at least Martin US 283 00:17:52,119 --> 00:17:56,080 Speaker 1: as well. UM. I look at this and I say 284 00:17:56,080 --> 00:18:03,320 Speaker 1: to myself, is there an Anglo Saxon happiness over shareholder performance? 285 00:18:03,680 --> 00:18:07,159 Speaker 1: I look at the charts and they're unacceptable or is 286 00:18:07,200 --> 00:18:09,720 Speaker 1: that not part of the Swiss dialect of what you 287 00:18:09,800 --> 00:18:14,160 Speaker 1: do in banking? The shareholders really manage to these people? Yeah, 288 00:18:14,440 --> 00:18:16,280 Speaker 1: as you rightly point out, you know, the shares are 289 00:18:16,359 --> 00:18:19,679 Speaker 1: you know, don't don't paint a pretty picture. Um. You know, 290 00:18:19,800 --> 00:18:24,400 Speaker 1: this restructuring, which is finally U bearing food, the restructuring 291 00:18:24,440 --> 00:18:28,120 Speaker 1: that tm undertook to tilt the bank more to old 292 00:18:28,119 --> 00:18:32,280 Speaker 1: wealth management and back from you know, volatile trading, hasn't 293 00:18:32,320 --> 00:18:37,000 Speaker 1: really resulted yet in the shareholder returns and performance that 294 00:18:37,040 --> 00:18:40,040 Speaker 1: you would have been expecting by now. Um. That said, 295 00:18:40,040 --> 00:18:43,679 Speaker 1: I think in the last six months, this drama and 296 00:18:44,000 --> 00:18:48,760 Speaker 1: incessant headlines have not held. I believe this is the 297 00:18:48,800 --> 00:18:51,680 Speaker 1: first time in twenty years that there has been a 298 00:18:51,760 --> 00:18:56,600 Speaker 1: Swiss chief executive officer of Credit Swiss, and there is 299 00:18:56,600 --> 00:19:01,480 Speaker 1: a question can Credit Swiss be considered a global bank? 300 00:19:01,600 --> 00:19:04,440 Speaker 1: I mean, given the fact they want that Swiss culture, 301 00:19:04,880 --> 00:19:09,159 Speaker 1: they have it and they're trenching. I think, Um, you know, 302 00:19:09,200 --> 00:19:11,440 Speaker 1: the sense at the moment is that you know, the 303 00:19:11,440 --> 00:19:15,400 Speaker 1: the successor Thomas Goldstein will very much pursue and continue 304 00:19:15,440 --> 00:19:18,600 Speaker 1: to embody the strategy that Tjan had put in place. 305 00:19:19,119 --> 00:19:20,760 Speaker 1: Um there in mind, you know, he had been part 306 00:19:20,800 --> 00:19:23,240 Speaker 1: of that management team when the strategy was put together, 307 00:19:23,680 --> 00:19:27,159 Speaker 1: and he's been running the Swiss Universal Unit, which is 308 00:19:27,200 --> 00:19:30,840 Speaker 1: basically a mini credit Swiss within Switzerland, exposed in bust 309 00:19:30,880 --> 00:19:33,639 Speaker 1: and banking and and and and wealth. So um, the 310 00:19:33,680 --> 00:19:37,960 Speaker 1: sense of the moment is the strategy won't won't them 311 00:19:38,080 --> 00:19:41,080 Speaker 1: what won't take a turn? Um? You know, of course 312 00:19:41,080 --> 00:19:42,440 Speaker 1: on on the invest and banking side there are a 313 00:19:42,440 --> 00:19:45,400 Speaker 1: lot smaller than they work globally before TM took over, 314 00:19:45,480 --> 00:19:47,560 Speaker 1: but you know, in wealth they were clearly pushing, you know, 315 00:19:47,600 --> 00:19:52,280 Speaker 1: quite aggressively in Asia and other emerging markets. I'm just 316 00:19:52,320 --> 00:19:54,920 Speaker 1: wondering that because there has been this feeling that particularly 317 00:19:54,960 --> 00:19:58,399 Speaker 1: European banks are pressured with negative rates, has made it 318 00:19:58,480 --> 00:20:01,840 Speaker 1: even more challenging to explain and internationally, And I'm wondering 319 00:20:02,359 --> 00:20:05,639 Speaker 1: is this going to sort of proceed an ongoing shift 320 00:20:05,720 --> 00:20:09,280 Speaker 1: that way, both among Swiss banks and German banks and 321 00:20:09,840 --> 00:20:13,280 Speaker 1: even perhaps Japanese banks and thinking with a similar kind 322 00:20:13,280 --> 00:20:16,160 Speaker 1: of trend. Well, if you look at the rest of Europe, 323 00:20:16,160 --> 00:20:18,199 Speaker 1: if you look at the Eurozone, for example, there is 324 00:20:18,320 --> 00:20:21,960 Speaker 1: a growing sense that Europe's banks um need to sort 325 00:20:21,960 --> 00:20:24,800 Speaker 1: of be stronger and bigger to compete on the global stage, 326 00:20:25,200 --> 00:20:28,400 Speaker 1: and you have that being part of the reason that 327 00:20:28,440 --> 00:20:32,000 Speaker 1: Europe is considering pushing ahead with deeper and you know, 328 00:20:32,040 --> 00:20:36,240 Speaker 1: banking union, completing the Banking Union project, which would would 329 00:20:36,320 --> 00:20:40,080 Speaker 1: help potentially foster consolidation. So I think, you know, at 330 00:20:40,080 --> 00:20:42,240 Speaker 1: the moment, I would be pleasant to jump to the 331 00:20:42,240 --> 00:20:45,720 Speaker 1: conclusion that we'll see a greater retrenchment, never boring at 332 00:20:45,800 --> 00:20:47,520 Speaker 1: least Martin News. You thank you so much writing for 333 00:20:47,560 --> 00:20:51,600 Speaker 1: Bloomer Opinion and so much of continental and United Kingdom banking. 334 00:20:51,640 --> 00:20:54,919 Speaker 1: And I'm sure there will be important essays out on 335 00:20:55,000 --> 00:21:08,040 Speaker 1: this for the one house is feel on the jobs 336 00:21:08,040 --> 00:21:09,680 Speaker 1: report now and ready please to say we joined on 337 00:21:09,720 --> 00:21:13,320 Speaker 1: Bloomberg Television and on Bloomberg Radio by Larry Cudlow, National 338 00:21:13,359 --> 00:21:17,160 Speaker 1: Economic Council Director, Larry. Great to see you. Great week 339 00:21:17,200 --> 00:21:20,240 Speaker 1: for the administration as well, stellar job numbers. Big debate 340 00:21:20,280 --> 00:21:23,520 Speaker 1: around this table on Bloomberg TV and on Bloomberg Radio 341 00:21:23,800 --> 00:21:26,520 Speaker 1: as to whether we have found full employment yet in 342 00:21:26,560 --> 00:21:30,080 Speaker 1: the United States of America. What's your take, Larry, Yeah, 343 00:21:30,080 --> 00:21:33,800 Speaker 1: it's a good point. Look, I'm focusing on the employment 344 00:21:33,840 --> 00:21:38,480 Speaker 1: to population ratio, which a lot of labor economists uh 345 00:21:39,000 --> 00:21:41,600 Speaker 1: ed Lazier and others say is the best measure when 346 00:21:41,640 --> 00:21:44,240 Speaker 1: you look at that, Jonathan, we went up to tens 347 00:21:44,280 --> 00:21:46,960 Speaker 1: of a percent in today's report for the January. So hey, 348 00:21:47,040 --> 00:21:50,879 Speaker 1: that's good, But b we're at sixty one. The peak 349 00:21:51,480 --> 00:21:55,679 Speaker 1: back in two thousand and six was over sixty. What 350 00:21:55,920 --> 00:21:59,439 Speaker 1: that means in terms of our growing population is that 351 00:21:59,480 --> 00:22:03,440 Speaker 1: there could be as many as six million workers who 352 00:22:03,440 --> 00:22:05,760 Speaker 1: are still out there that may have dropped out of 353 00:22:05,800 --> 00:22:09,040 Speaker 1: the labor force. You know, we've had labor force increase 354 00:22:09,080 --> 00:22:12,960 Speaker 1: of three and a half million. UH. Prior administration lost jobs. 355 00:22:13,000 --> 00:22:16,159 Speaker 1: But the point is people see the better job opportunities, 356 00:22:16,320 --> 00:22:19,919 Speaker 1: they see retraining and reskilling opportunities. They're coming out of 357 00:22:19,920 --> 00:22:23,640 Speaker 1: the woodwork, and the employment ratio suggests if we keep 358 00:22:23,680 --> 00:22:26,720 Speaker 1: marching up towards the prior peak, as I believe they will, 359 00:22:26,920 --> 00:22:29,960 Speaker 1: and today's blowout numbers suggest, you could have as many 360 00:22:30,000 --> 00:22:33,840 Speaker 1: as six million more workers in this country ready to 361 00:22:33,880 --> 00:22:36,760 Speaker 1: come back to work and join the labor rolls. So, Leary, 362 00:22:36,800 --> 00:22:38,760 Speaker 1: this is not necessarily a bad thing. I'm just wondering, 363 00:22:38,800 --> 00:22:40,560 Speaker 1: just in terms of your assessment, do you think the 364 00:22:40,600 --> 00:22:43,000 Speaker 1: administration and many other people on Wall Street as well, 365 00:22:43,240 --> 00:22:45,800 Speaker 1: have underestimated the amount of work still left to do 366 00:22:46,320 --> 00:22:50,080 Speaker 1: to get back to that peak. The amount of workers 367 00:22:50,080 --> 00:22:52,480 Speaker 1: your main joan, Yeah, to get people back to work again, 368 00:22:52,520 --> 00:22:54,600 Speaker 1: to get to that position where unemployment is low enough 369 00:22:54,640 --> 00:22:58,200 Speaker 1: to get wages moving in a bigger way. Well, look, 370 00:22:58,880 --> 00:23:03,119 Speaker 1: the progression is good, the patterns are good. May also 371 00:23:03,920 --> 00:23:09,960 Speaker 1: suggest in yesterday's productivity report the last four quarters productivity 372 00:23:10,000 --> 00:23:12,879 Speaker 1: output per hour has climbed all the way back to 373 00:23:13,320 --> 00:23:18,800 Speaker 1: one eight percent, and so your hours worked or employment 374 00:23:18,840 --> 00:23:22,840 Speaker 1: growth is well over one. So you're looking at the 375 00:23:22,880 --> 00:23:26,000 Speaker 1: potential for three percent GDP, which I think you know 376 00:23:26,119 --> 00:23:29,960 Speaker 1: contradicts a lot of these secular stagnation scenarios that we reject. 377 00:23:30,440 --> 00:23:33,480 Speaker 1: All I say is what President Trump has done. You 378 00:23:33,560 --> 00:23:35,720 Speaker 1: heard it in the State of the Union and you 379 00:23:35,800 --> 00:23:39,320 Speaker 1: heard it in Davos. He's restructured the economy, has rebuilt 380 00:23:39,359 --> 00:23:43,119 Speaker 1: it so that we have new incentives for people to work, save, 381 00:23:43,240 --> 00:23:47,159 Speaker 1: and invest. Uh. That's what a market oriented economy should 382 00:23:47,200 --> 00:23:53,040 Speaker 1: be doing. Tax rates come down, sweeping deregulation, energy independence, 383 00:23:53,320 --> 00:23:57,560 Speaker 1: and new trade deals that will open up terrific export markets. 384 00:23:57,680 --> 00:24:00,280 Speaker 1: I want to make a point on the export side anything, 385 00:24:00,320 --> 00:24:03,359 Speaker 1: because I don't want to overlook that President She and 386 00:24:03,520 --> 00:24:09,119 Speaker 1: uh Trump spoke by phone last evening, very constructive conversation. 387 00:24:09,920 --> 00:24:14,120 Speaker 1: President Trump believes that China can handle the virus. We're 388 00:24:14,160 --> 00:24:16,760 Speaker 1: helping them with all kinds of experts and so forth. 389 00:24:17,080 --> 00:24:21,440 Speaker 1: But again, China cutting their terrorists by is a great sign. 390 00:24:21,720 --> 00:24:25,639 Speaker 1: And finally, on the export story, not only the tariff reductions, 391 00:24:26,040 --> 00:24:30,919 Speaker 1: but President She apparently said maybe a little slower to 392 00:24:31,040 --> 00:24:35,399 Speaker 1: purchase American exports, but it will get done by the 393 00:24:35,560 --> 00:24:38,840 Speaker 1: end of the year and next year. They're especially interested 394 00:24:39,119 --> 00:24:43,399 Speaker 1: in medical supplies, farmer stuff, and agriculture. So you know 395 00:24:43,560 --> 00:24:47,119 Speaker 1: the export boom that we are expecting from these strong 396 00:24:47,320 --> 00:24:50,000 Speaker 1: new trade deals let's include U S, m c A, 397 00:24:50,119 --> 00:24:52,600 Speaker 1: and that that's going to really help the economy and 398 00:24:52,680 --> 00:24:55,080 Speaker 1: wages as well. So let's unpack some of that because 399 00:24:55,080 --> 00:24:57,680 Speaker 1: you mentioned some comportent things. It's China consulted with the 400 00:24:57,760 --> 00:25:00,919 Speaker 1: United States and have the requested some exceptions to that 401 00:25:01,000 --> 00:25:05,240 Speaker 1: purchase agreement that you've made just a month ago. Not formally, 402 00:25:05,359 --> 00:25:07,560 Speaker 1: I mean they're consulting because the two leaders have talked 403 00:25:07,560 --> 00:25:11,880 Speaker 1: about it and staff level discussions, nothing formal. The point 404 00:25:12,040 --> 00:25:16,160 Speaker 1: is that obviously they're in a shut in regarding their 405 00:25:16,200 --> 00:25:19,399 Speaker 1: industrial plants and a number of cities and so forth. 406 00:25:19,720 --> 00:25:23,800 Speaker 1: But President She apparently reassured President Trump in this phone 407 00:25:23,800 --> 00:25:27,480 Speaker 1: call that while there might be some delays in the 408 00:25:27,520 --> 00:25:31,560 Speaker 1: purchase of American exports, the job, the markers of two 409 00:25:31,680 --> 00:25:34,320 Speaker 1: hundred billion over the next couple of years will in 410 00:25:34,440 --> 00:25:36,320 Speaker 1: fact be met. To be clear, the LANDA, do you 411 00:25:36,320 --> 00:25:38,640 Speaker 1: think they can meet the targets for this year, never 412 00:25:38,640 --> 00:25:41,040 Speaker 1: mind over the two years. I'm just wondering this year 413 00:25:41,240 --> 00:25:43,520 Speaker 1: whether we're setting our south up for failure here on 414 00:25:43,560 --> 00:25:45,600 Speaker 1: the Chinese side, maybe as well as the U s side, 415 00:25:45,600 --> 00:25:48,120 Speaker 1: because as you can see, last chunks of that economy 416 00:25:48,160 --> 00:25:49,520 Speaker 1: is shut down. How on earth are they going to 417 00:25:49,600 --> 00:25:53,240 Speaker 1: meet those targets anytime soon. Well, look, we're not setting 418 00:25:53,240 --> 00:25:56,560 Speaker 1: ourselves up for failure. We're setting ours up for a 419 00:25:56,640 --> 00:26:01,480 Speaker 1: mild delay. Look, I'm not a medical spurt. Okay. A 420 00:26:01,560 --> 00:26:04,160 Speaker 1: lot of people think this virus is gonna run five 421 00:26:04,240 --> 00:26:07,400 Speaker 1: or six months. Some people are saying that the rate 422 00:26:07,440 --> 00:26:10,640 Speaker 1: of increase the rate of its spreading has already slowed down. 423 00:26:10,840 --> 00:26:14,479 Speaker 1: The World Health Organization apparently disagrees, So I'll stay with 424 00:26:14,520 --> 00:26:17,320 Speaker 1: the official view that it's not yet slowing down. Having 425 00:26:17,359 --> 00:26:20,639 Speaker 1: said all that, Uh, the issue here is not an 426 00:26:20,640 --> 00:26:23,840 Speaker 1: economic issue. It's not a trade policy issue. It's obviously 427 00:26:23,880 --> 00:26:26,720 Speaker 1: a public health issue. We are doing what we can 428 00:26:27,320 --> 00:26:31,800 Speaker 1: along with the who We've sent our best CDC experts 429 00:26:31,960 --> 00:26:36,280 Speaker 1: over their secretariats are as monitoring this thing all day long, 430 00:26:36,320 --> 00:26:40,080 Speaker 1: every day, so that that's really a you know, separate issue. 431 00:26:40,200 --> 00:26:44,600 Speaker 1: There is no failure because the export schedules and the 432 00:26:44,680 --> 00:26:50,080 Speaker 1: Chinese purchase schedules will continue literally as soon as physically possible, 433 00:26:50,160 --> 00:26:51,840 Speaker 1: so learry, as you know, a public health issue can 434 00:26:51,880 --> 00:26:54,080 Speaker 1: of course become an economic problem. And I won't expect 435 00:26:54,080 --> 00:26:56,320 Speaker 1: to talk to the medical side of things, neither of 436 00:26:56,400 --> 00:26:58,440 Speaker 1: us a medical professionals, but I would like to talk 437 00:26:58,480 --> 00:27:01,239 Speaker 1: to you about the diplomat excited things between the US 438 00:27:01,280 --> 00:27:03,280 Speaker 1: and China right now. This is a quote from the 439 00:27:03,359 --> 00:27:06,280 Speaker 1: Chinese Foreign Ministry spokeswoman. She said this week, the US 440 00:27:06,359 --> 00:27:09,480 Speaker 1: government hasn't provided any substantial assistance to US, but it 441 00:27:09,520 --> 00:27:12,160 Speaker 1: was the first to evanculate personnel from its consulate in Wuhan, 442 00:27:12,359 --> 00:27:14,879 Speaker 1: the first to suggest partial withdrawal of its embassy staff, 443 00:27:15,000 --> 00:27:17,879 Speaker 1: and the first to impose a travel bell on the travelers. 444 00:27:17,920 --> 00:27:20,520 Speaker 1: Now on that travel ban, that same Foreign Ministry spokeswoman 445 00:27:20,520 --> 00:27:22,719 Speaker 1: has followed up today in the last twenty four hours, 446 00:27:23,119 --> 00:27:26,720 Speaker 1: we deplore and oppose those countries who went against whose 447 00:27:26,760 --> 00:27:30,960 Speaker 1: professional recommendations. Is there any tension there whatsoever between the 448 00:27:31,080 --> 00:27:34,680 Speaker 1: U S And China right now, Larry No, I say 449 00:27:34,800 --> 00:27:38,439 Speaker 1: no emphatically. And I don't know who this spokesperson is. 450 00:27:38,480 --> 00:27:40,960 Speaker 1: I don't know anything about that. What I want to 451 00:27:41,000 --> 00:27:44,479 Speaker 1: say is from day one, when this thing broke and 452 00:27:44,520 --> 00:27:48,880 Speaker 1: I was in this room interviewing various media TV outlets, 453 00:27:49,200 --> 00:27:54,600 Speaker 1: the United States has offered the best healthcare, public healthcare 454 00:27:54,720 --> 00:27:58,160 Speaker 1: experts we have and we have the best public health 455 00:27:58,200 --> 00:28:02,080 Speaker 1: system in the world, and we have been working with 456 00:28:02,160 --> 00:28:06,240 Speaker 1: the World Health Organization. We offered it several times. I 457 00:28:06,240 --> 00:28:10,360 Speaker 1: guess China has finally accepted that offer. President Trump has 458 00:28:10,440 --> 00:28:13,880 Speaker 1: told us privately in the oval, and I think publicly 459 00:28:13,960 --> 00:28:17,280 Speaker 1: has said this. We want to be compassionate. We are 460 00:28:17,359 --> 00:28:21,320 Speaker 1: engaging with China. U S. China relations have never been better. 461 00:28:21,680 --> 00:28:25,720 Speaker 1: Following the conclusion of the Phase one trade deal. We 462 00:28:25,720 --> 00:28:27,960 Speaker 1: were not the first countries, by the way, to issue 463 00:28:27,960 --> 00:28:30,720 Speaker 1: a travel band. Russia was ahead of US, and some 464 00:28:30,840 --> 00:28:32,960 Speaker 1: other countries were ahead of US. I don't know where 465 00:28:32,960 --> 00:28:35,480 Speaker 1: this spokes first woman got what he or she got, 466 00:28:35,680 --> 00:28:40,120 Speaker 1: but it's not true. And we have taken steps as 467 00:28:40,240 --> 00:28:42,280 Speaker 1: much as we can do. They have to let us 468 00:28:42,280 --> 00:28:44,800 Speaker 1: in the country, and I guess now that has been 469 00:28:44,800 --> 00:28:48,680 Speaker 1: solved with the w h O. This is not about jobs, 470 00:28:48,720 --> 00:28:52,080 Speaker 1: this is not about trade companies whatever. This is about 471 00:28:52,520 --> 00:28:56,520 Speaker 1: compassion and good public healthcare. And we have done whatever, 472 00:28:56,640 --> 00:28:59,720 Speaker 1: we have offered whatever we can offer. So I totally 473 00:28:59,760 --> 00:29:03,240 Speaker 1: just agree. And that is not Let me emphasize, that 474 00:29:03,400 --> 00:29:07,440 Speaker 1: was not the thrust of the UH Podice She call 475 00:29:07,600 --> 00:29:10,240 Speaker 1: last night. I got the print outs the readouts to 476 00:29:10,320 --> 00:29:14,840 Speaker 1: that call. That was a constructive, cooperative, very friendly call 477 00:29:15,120 --> 00:29:18,640 Speaker 1: where President she was hate thanking us for our help 478 00:29:18,720 --> 00:29:21,640 Speaker 1: on the public health care front and assured us that 479 00:29:21,680 --> 00:29:24,680 Speaker 1: Phase one was going to go true through and as 480 00:29:24,720 --> 00:29:27,440 Speaker 1: I said before, assured us that if there are any 481 00:29:27,480 --> 00:29:31,560 Speaker 1: delays because of the virus UH, the Chinese purchases of 482 00:29:31,720 --> 00:29:35,160 Speaker 1: US sports would be picked up later on. Larry her words, 483 00:29:35,160 --> 00:29:36,920 Speaker 1: not mine, he allowed and clear, and I can see 484 00:29:36,920 --> 00:29:38,880 Speaker 1: you've very fought up on this, and quite rightly side. 485 00:29:38,880 --> 00:29:41,000 Speaker 1: I mean, I don't know, you know, it's like no, 486 00:29:41,120 --> 00:29:43,800 Speaker 1: no good deed goes undone or something. I mean that 487 00:29:43,800 --> 00:29:46,959 Speaker 1: that's just just utterly not true. I get it. I'm 488 00:29:47,000 --> 00:29:49,320 Speaker 1: gonna ask you a sensitive question, though, Do you trust 489 00:29:49,320 --> 00:29:53,880 Speaker 1: the data coming from China regarding the coronavirus? Oh? I 490 00:29:53,920 --> 00:29:57,520 Speaker 1: don't know. I honestly can't answer that. I've seen a 491 00:29:57,600 --> 00:30:00,240 Speaker 1: lot of speculation in the papers. Not my jobs, aren't 492 00:30:00,240 --> 00:30:01,920 Speaker 1: my rule. But Larry, isn't that a problem that you 493 00:30:01,920 --> 00:30:05,800 Speaker 1: don't know that you can't emphatically say that you do well? Look, 494 00:30:05,960 --> 00:30:09,600 Speaker 1: I will say this, Secretary as are pretty smart fellow, 495 00:30:10,000 --> 00:30:13,320 Speaker 1: been in this business a long time, he has said, 496 00:30:13,400 --> 00:30:17,120 Speaker 1: and I believe Secretary Pompeo, but I know that Alexaser 497 00:30:17,160 --> 00:30:22,960 Speaker 1: has said this, that China has shown more transparency during 498 00:30:23,000 --> 00:30:27,520 Speaker 1: this coronavirus crisis than we've seen in similar problems in 499 00:30:27,560 --> 00:30:30,840 Speaker 1: the past. That Secretary as our statement. That's about as 500 00:30:30,840 --> 00:30:32,960 Speaker 1: far as I can go. Let's talk about a state 501 00:30:33,000 --> 00:30:35,720 Speaker 1: of the union and next steps. The president talking about 502 00:30:35,760 --> 00:30:40,080 Speaker 1: one priority is paramount reversing decade of calamitous trade policies. 503 00:30:40,240 --> 00:30:41,840 Speaker 1: You and I talked the other week Can Davos. I 504 00:30:41,880 --> 00:30:43,720 Speaker 1: caught up with the Commiseectory Wilbert ross Is. Well, we 505 00:30:43,760 --> 00:30:47,400 Speaker 1: had some great conversations about Europe and next steps. Larry, 506 00:30:47,440 --> 00:30:49,440 Speaker 1: what are the next steps. What's the timeline to deal 507 00:30:49,480 --> 00:30:51,760 Speaker 1: with the issue that is Europe, at least from the 508 00:30:51,800 --> 00:30:54,200 Speaker 1: administration side of things, in the coming months. What are 509 00:30:54,200 --> 00:30:59,960 Speaker 1: you looking for? Very good talks yesterday between Ambassador Lighthouser 510 00:31:00,640 --> 00:31:03,760 Speaker 1: and UH Phil Hogan, who's the new EU Trade Commissioner. 511 00:31:04,040 --> 00:31:07,440 Speaker 1: Hogan is a smart guy. He was formerly the Agriculture Commissioner. 512 00:31:08,040 --> 00:31:10,920 Speaker 1: I met with him after Bob Lighthouse. I met with 513 00:31:11,000 --> 00:31:16,320 Speaker 1: him the bilot we had in Davos with the EU president. 514 00:31:16,400 --> 00:31:20,080 Speaker 1: The new President Vanderland was very constructive. She's got a 515 00:31:20,080 --> 00:31:22,960 Speaker 1: lot of energy, wants to restart the talks and move 516 00:31:23,080 --> 00:31:27,000 Speaker 1: things along. President Trump said he'd be delighted to do so. 517 00:31:27,320 --> 00:31:30,200 Speaker 1: I think there's a lot of new urgency into those talks. 518 00:31:30,720 --> 00:31:34,040 Speaker 1: I'm not going to go into detail. That's uh Lightheiser's 519 00:31:34,160 --> 00:31:37,800 Speaker 1: UH domain. I would just say that there have been 520 00:31:37,880 --> 00:31:40,920 Speaker 1: some new proposals put on the table which could amount 521 00:31:40,920 --> 00:31:44,320 Speaker 1: to some very positive developments. I'm not here to do details. 522 00:31:44,360 --> 00:31:46,600 Speaker 1: I'm not here to do timing. That's up to our 523 00:31:46,640 --> 00:31:51,760 Speaker 1: trade ambassador. I thought that's what this conversation was about, 524 00:31:51,800 --> 00:31:54,480 Speaker 1: that you've give me the details. Well, you know, Jonathan, 525 00:31:54,520 --> 00:31:56,800 Speaker 1: you're awful good man, and you've been great to me. 526 00:31:57,160 --> 00:31:59,320 Speaker 1: I can tell you what I can tell you, and 527 00:31:59,360 --> 00:32:01,760 Speaker 1: then we have to dot dot dot dot to finish 528 00:32:01,760 --> 00:32:03,960 Speaker 1: the sentence. I understand that. Let's talk about one final 529 00:32:04,000 --> 00:32:06,840 Speaker 1: issue though, and it's on Europe. Commas Secretary Wilbert Ross 530 00:32:06,880 --> 00:32:11,200 Speaker 1: said the Section two investigation had completed last year at 531 00:32:11,200 --> 00:32:13,160 Speaker 1: the end of last year, as you know, and that 532 00:32:13,240 --> 00:32:15,920 Speaker 1: they determined that it was a national security risk and 533 00:32:15,960 --> 00:32:18,840 Speaker 1: that was the imports of European autos into the United States. 534 00:32:19,280 --> 00:32:21,480 Speaker 1: And then he said to me that the presidents decided 535 00:32:21,520 --> 00:32:23,800 Speaker 1: that it is a risk. That we've decided as administration 536 00:32:23,800 --> 00:32:26,000 Speaker 1: that it is a risk, but we're going to negotiate. 537 00:32:26,440 --> 00:32:29,200 Speaker 1: Why are we negotiating around national security risk? It's either 538 00:32:29,240 --> 00:32:34,600 Speaker 1: a national security risk or it's noticen't it? Well, no, 539 00:32:34,760 --> 00:32:38,400 Speaker 1: I don't think it's quite that straightforward. Look, the Trade 540 00:32:38,400 --> 00:32:44,520 Speaker 1: Principles Group submitted our report to the President and he 541 00:32:44,600 --> 00:32:48,040 Speaker 1: has the authority under Section to thirty two to take 542 00:32:48,080 --> 00:32:51,960 Speaker 1: whatever actions that he deems necessary. He has not taken 543 00:32:52,000 --> 00:32:55,400 Speaker 1: any actions thus far, and I think that whole discussion 544 00:32:55,840 --> 00:32:58,480 Speaker 1: is on hold for the moment while we work through 545 00:32:58,520 --> 00:33:02,160 Speaker 1: a good faith effort with respect to the possibility of 546 00:33:02,200 --> 00:33:05,280 Speaker 1: an EU trade deal, and as I said, those talks 547 00:33:05,280 --> 00:33:07,440 Speaker 1: are heating up. We had good meeting with the new 548 00:33:07,480 --> 00:33:10,800 Speaker 1: EU president Uh. Their trade guy Hogan was here and 549 00:33:10,880 --> 00:33:15,040 Speaker 1: had good talks with Lighthouzer yesterday, So that's really front 550 00:33:15,040 --> 00:33:17,360 Speaker 1: and center. I think, Um, you know, we'd like to 551 00:33:17,440 --> 00:33:20,840 Speaker 1: make a good deal with the European Union. I don't 552 00:33:20,880 --> 00:33:23,760 Speaker 1: want to speculate on anything right now, except there's a 553 00:33:23,800 --> 00:33:26,400 Speaker 1: new energy to those talks, Larry, and we hope the 554 00:33:26,480 --> 00:33:30,240 Speaker 1: energy transpons materializes into a positive outcome. Larry Caudler. Always 555 00:33:30,280 --> 00:33:32,040 Speaker 1: great to see you to get your thoughts, especially after 556 00:33:32,080 --> 00:33:34,920 Speaker 1: the payrolls report. Larry cudla that the National Economic Council 557 00:33:35,000 --> 00:33:38,280 Speaker 1: Director joining us from Washington, d C. Thanks for listening 558 00:33:38,360 --> 00:33:42,920 Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews 559 00:33:42,920 --> 00:33:48,160 Speaker 1: on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 560 00:33:48,720 --> 00:33:52,040 Speaker 1: I'm on Twitter at Tom Keane. Before the podcast, you 561 00:33:52,080 --> 00:34:02,920 Speaker 1: can always catch us World One. I'm Bloomberg Radio