1 00:00:01,200 --> 00:00:04,480 Speaker 1: This is Bloomberg Wall Street Week. We turn our attention 2 00:00:04,559 --> 00:00:09,040 Speaker 1: to the markets this week. USCPI never's reinforcing concerns about inflation, 3 00:00:09,160 --> 00:00:12,280 Speaker 1: the financial stories that cheap our world, a really different 4 00:00:12,280 --> 00:00:15,240 Speaker 1: reaction to market. Two more indications of just how hot 5 00:00:15,280 --> 00:00:17,680 Speaker 1: the US economy really is through the eyes of the 6 00:00:17,680 --> 00:00:22,120 Speaker 1: most influential voices Larry Summers, the former Treatury Secretary, Katherine Keating, 7 00:00:22,280 --> 00:00:24,720 Speaker 1: CEO of the n y Mollen Sam's l Chairman and 8 00:00:24,960 --> 00:00:28,479 Speaker 1: founder of Equity Group Investment in Bloomberg wool Street Week 9 00:00:28,600 --> 00:00:33,040 Speaker 1: with David Weston from Bloomberg Radio. Not there yet, in 10 00:00:33,120 --> 00:00:36,440 Speaker 1: the war in Ukraine, in recovering from an environmental disaster 11 00:00:36,560 --> 00:00:39,840 Speaker 1: in Ohio, in coming to terms with social media, or 12 00:00:39,960 --> 00:00:43,440 Speaker 1: in taming inflation. This is Bloomberg Wall Street Week. I'm 13 00:00:43,520 --> 00:00:47,120 Speaker 1: David Weston, this week's special contributor to Larry Summers. Oh 14 00:00:47,159 --> 00:00:50,159 Speaker 1: Harvard on whether the FED has the tools it needs 15 00:00:50,200 --> 00:00:55,000 Speaker 1: to deal with inflation. We've got an extremely difficult economy 16 00:00:55,160 --> 00:00:58,880 Speaker 1: to read. Former National Security Advisor Tom Donnelin on how 17 00:00:58,920 --> 00:01:03,200 Speaker 1: the war in Ukraine has changed investment behavior. Any analysis 18 00:01:03,280 --> 00:01:05,800 Speaker 1: right with respect to which respect and the best day 19 00:01:06,040 --> 00:01:09,680 Speaker 1: has to take into accountdown geopolitics and ways that you 20 00:01:09,800 --> 00:01:13,440 Speaker 1: might not before. And Bob Diamond of Atlas Merchant Capital 21 00:01:13,520 --> 00:01:30,160 Speaker 1: on the future of digital payments After FTX this week, 22 00:01:30,400 --> 00:01:32,920 Speaker 1: it wasn't so much about what's been finished as it 23 00:01:33,000 --> 00:01:36,120 Speaker 1: was about what's yet to be finished, Starting with the 24 00:01:36,120 --> 00:01:39,200 Speaker 1: war in Ukraine one year old as of this Friday, 25 00:01:39,400 --> 00:01:42,640 Speaker 1: which took President Biden to the region. The whole accountable, 26 00:01:42,680 --> 00:01:46,039 Speaker 1: those are responsible for this war and will seek justice 27 00:01:46,080 --> 00:01:50,840 Speaker 1: from the war crime, crimes against humanity continuing to be 28 00:01:50,880 --> 00:01:54,080 Speaker 1: committed by the Russians, with the Russian President Putin providing 29 00:01:54,240 --> 00:01:59,560 Speaker 1: his alternative view of events. Day to blame for unleashing 30 00:01:59,640 --> 00:02:03,400 Speaker 1: the war, and we are doing a best up mixed 31 00:02:03,680 --> 00:02:06,880 Speaker 1: to stop the wolf. It wasn't a war that took 32 00:02:07,040 --> 00:02:10,760 Speaker 1: Transportation Secretary Pete Buddha Jedge and former President Donald Trump 33 00:02:10,800 --> 00:02:14,400 Speaker 1: to Ohio, but an environmental disaster from a trained development 34 00:02:14,440 --> 00:02:18,040 Speaker 1: that spilled toxic chemicals through the small community of East Palestine, 35 00:02:18,360 --> 00:02:22,119 Speaker 1: with the clean up far from finished, a long way 36 00:02:22,160 --> 00:02:26,000 Speaker 1: to go, a long way to go before we're in 37 00:02:26,080 --> 00:02:29,800 Speaker 1: the finish line. It will be months and years before 38 00:02:29,840 --> 00:02:33,840 Speaker 1: the residents of that community are going to feel safe 39 00:02:33,919 --> 00:02:37,120 Speaker 1: in their homes and in their community. At the Supreme Court, 40 00:02:37,200 --> 00:02:39,760 Speaker 1: there were two days of oral arguments trying to sort 41 00:02:39,760 --> 00:02:43,200 Speaker 1: out just when, if ever, social media companies might be 42 00:02:43,280 --> 00:02:47,360 Speaker 1: held responsible for terrible acts arguably encouraged by videos and 43 00:02:47,400 --> 00:02:51,360 Speaker 1: tweets posted on their sites, with Justice Elena Kagan summing 44 00:02:51,440 --> 00:02:53,720 Speaker 1: up how difficult it is for the Supreme Court to 45 00:02:53,800 --> 00:02:57,480 Speaker 1: draw lines around the Internet. And we're a court. We 46 00:02:57,639 --> 00:03:01,359 Speaker 1: really don't know about these things. You know, these are 47 00:03:01,400 --> 00:03:05,560 Speaker 1: not like the nine greatest experts on the Internet. And 48 00:03:05,639 --> 00:03:08,240 Speaker 1: then there was the Federal Reserve, which released the minutes 49 00:03:08,280 --> 00:03:11,960 Speaker 1: from its January meeting, which markets had been eagerly anticipating, 50 00:03:12,040 --> 00:03:14,840 Speaker 1: but in the end didn't really change much. The path 51 00:03:14,960 --> 00:03:18,240 Speaker 1: we sought. The Fed was on the minute say, the 52 00:03:18,320 --> 00:03:22,400 Speaker 1: participants agreed the risks were still to the downside for 53 00:03:22,520 --> 00:03:27,800 Speaker 1: economic activity. They worried about an unexpected negative shock that 54 00:03:27,880 --> 00:03:31,359 Speaker 1: could quote tip the economy into recession in an environment 55 00:03:31,400 --> 00:03:37,320 Speaker 1: of subdued growth. But then on Friday, COREPC numbers came 56 00:03:37,400 --> 00:03:40,520 Speaker 1: in hotter than expected, delivering a clearer message to the 57 00:03:40,560 --> 00:03:43,240 Speaker 1: markets that rates are likely to be higher for longer, 58 00:03:43,520 --> 00:03:46,320 Speaker 1: leaving the SMP five hundred down almost two point seven 59 00:03:46,360 --> 00:03:49,080 Speaker 1: percent for the week, while the NASDAC lost three point 60 00:03:49,120 --> 00:03:52,760 Speaker 1: three percent, and what equities lost, bond yields gained, with 61 00:03:52,880 --> 00:03:55,400 Speaker 1: the yield on the ten year up twelve basis points 62 00:03:55,600 --> 00:03:57,840 Speaker 1: to end the week at three point nine four. To 63 00:03:57,880 --> 00:04:00,320 Speaker 1: explain it all to us, we welcome now to gregs 64 00:04:00,320 --> 00:04:04,440 Speaker 1: He's Pjim Cocio for fixed income and Lizen Saunders Charles Schwab, 65 00:04:04,640 --> 00:04:07,400 Speaker 1: chief investment strategist. Welcome back, Will as You're good to 66 00:04:07,440 --> 00:04:09,280 Speaker 1: have you here. So, Lisenne, let me start with you. 67 00:04:09,440 --> 00:04:11,480 Speaker 1: Are the markets starting to come to terms? Well, let's 68 00:04:11,520 --> 00:04:15,040 Speaker 1: likely to come? And if so, what is likely to come? So? Yeah, 69 00:04:15,080 --> 00:04:17,520 Speaker 1: I do think that the stock market is going through 70 00:04:17,560 --> 00:04:22,080 Speaker 1: a bit of a reset. You know, there's the old 71 00:04:22,200 --> 00:04:25,280 Speaker 1: phrase I'm actually coined by my first boss in this business, 72 00:04:25,279 --> 00:04:27,640 Speaker 1: so like Great Marty's Wide who was part of the 73 00:04:27,680 --> 00:04:30,479 Speaker 1: original Wall Street Week for for many many years, and 74 00:04:30,520 --> 00:04:32,240 Speaker 1: he quite the phrase don't fight the Fed. And I'll 75 00:04:32,240 --> 00:04:34,720 Speaker 1: beginning a lot of questions. Do you think stock market 76 00:04:34,720 --> 00:04:37,320 Speaker 1: has been fighting the Fed? I think the stock market 77 00:04:37,360 --> 00:04:39,480 Speaker 1: has been fighting the bond market and the messages from 78 00:04:39,480 --> 00:04:42,240 Speaker 1: the bond market. I think I've been telling a more 79 00:04:42,279 --> 00:04:46,559 Speaker 1: accurate story and there was a disconnect there for a while, 80 00:04:46,720 --> 00:04:49,720 Speaker 1: certainly a big part of the rally in January. Now, 81 00:04:49,760 --> 00:04:52,440 Speaker 1: I think the equity market is coming to terms with 82 00:04:52,880 --> 00:04:55,400 Speaker 1: the fact that the job has not done for the FED. 83 00:04:55,880 --> 00:04:58,600 Speaker 1: They probably have to hike at least maybe once or 84 00:04:58,640 --> 00:05:01,960 Speaker 1: twice more than what was he built into expectations a 85 00:05:02,040 --> 00:05:07,040 Speaker 1: week ago because the inflation data continues to be I think, 86 00:05:07,040 --> 00:05:09,159 Speaker 1: too high for the Fed's comfort zone. And now I 87 00:05:09,200 --> 00:05:13,000 Speaker 1: think the market, the equity market is adjusting not only 88 00:05:13,000 --> 00:05:16,640 Speaker 1: its expectations, but some of the embedded leadership trends that 89 00:05:16,720 --> 00:05:19,960 Speaker 1: I think we're sending a different message in January, Greg 90 00:05:20,000 --> 00:05:22,279 Speaker 1: to the different indicators in the market really agree with 91 00:05:22,320 --> 00:05:24,200 Speaker 1: one another, are the point in the same direction, Because 92 00:05:24,240 --> 00:05:28,159 Speaker 1: you have things like, at least until recently, really pricing 93 00:05:28,160 --> 00:05:30,960 Speaker 1: and price cuts, rate cuts across the board. At the 94 00:05:31,000 --> 00:05:33,080 Speaker 1: same time, we've got a very tight labor market. We've 95 00:05:33,080 --> 00:05:35,560 Speaker 1: got a really inverted yield curve. Where does this all 96 00:05:35,839 --> 00:05:40,000 Speaker 1: add up to. Yeah, so it has to be reconciled, David, 97 00:05:40,640 --> 00:05:44,400 Speaker 1: And so I agree with Liz Anne. The equity market 98 00:05:44,480 --> 00:05:47,040 Speaker 1: is fighting the bond market. The bond market is telling 99 00:05:47,040 --> 00:05:49,920 Speaker 1: you with the inversion in the curve, and it just 100 00:05:50,040 --> 00:05:52,960 Speaker 1: priced out the cuts. But it's still telling you that 101 00:05:53,560 --> 00:05:56,800 Speaker 1: rough roads are ahead in terms of the economy. It's concerned. 102 00:05:57,160 --> 00:06:00,960 Speaker 1: Yet risk markets have been flying up until recently, and 103 00:06:01,000 --> 00:06:03,599 Speaker 1: so I think what two and twenty three is really 104 00:06:03,640 --> 00:06:08,440 Speaker 1: going to be about is reconciling those two markets so 105 00:06:08,520 --> 00:06:12,400 Speaker 1: you can't have an inverted yield curve that's predictive of 106 00:06:12,440 --> 00:06:17,000 Speaker 1: a recession and equities and risk markets rallying as hard 107 00:06:17,040 --> 00:06:20,760 Speaker 1: as they've been. So I think it's just the start 108 00:06:20,800 --> 00:06:22,919 Speaker 1: of it, to be honest with you. Well, well, listen, 109 00:06:22,960 --> 00:06:25,000 Speaker 1: I wonder what that reconciliation works going to up because 110 00:06:25,040 --> 00:06:26,520 Speaker 1: there are a lot of indicators in the economy to 111 00:06:26,600 --> 00:06:28,880 Speaker 1: say it's pretty strong still. There's a lot of growth, 112 00:06:28,880 --> 00:06:32,359 Speaker 1: particularly consumer sentiment, a lot of consumer buying still going on, 113 00:06:32,520 --> 00:06:34,720 Speaker 1: certainly with a tight labor market. At the same time, 114 00:06:34,720 --> 00:06:38,640 Speaker 1: we keep adding employees, but the productivity is not going up. Yeah, 115 00:06:38,680 --> 00:06:41,120 Speaker 1: And I think that's what's embedded in this odd mix 116 00:06:41,360 --> 00:06:46,719 Speaker 1: of some measures showing pretty weak economic data, particularly a 117 00:06:46,760 --> 00:06:50,120 Speaker 1: fourth quarter not GDP but the real final sales to 118 00:06:50,720 --> 00:06:53,239 Speaker 1: on the domestic side. That's kind of a cleaner way 119 00:06:53,560 --> 00:06:56,040 Speaker 1: of looking in the economy that takes out the inventory 120 00:06:56,080 --> 00:06:58,800 Speaker 1: effects as well as some of the trade effects, and 121 00:06:58,880 --> 00:07:02,120 Speaker 1: that was barely in positive territory. Yet you had this 122 00:07:02,320 --> 00:07:06,080 Speaker 1: you know, boom in job creation in January. I think 123 00:07:06,080 --> 00:07:10,960 Speaker 1: there may have been some seasonal adjustments that kind of 124 00:07:10,960 --> 00:07:13,720 Speaker 1: recavoc with that number and may help to explain why 125 00:07:13,720 --> 00:07:17,600 Speaker 1: there is that disconnect. But you know, what we've been 126 00:07:17,640 --> 00:07:19,920 Speaker 1: talking about is this the rolling nature of how this 127 00:07:20,000 --> 00:07:22,680 Speaker 1: cycle is unfolding, not just in terms of the economy. 128 00:07:22,840 --> 00:07:24,800 Speaker 1: We've been calling it a rolling recession where there are 129 00:07:24,800 --> 00:07:29,640 Speaker 1: pockets of the economy, certainly housing many of the consumer 130 00:07:29,800 --> 00:07:33,160 Speaker 1: goods oriented segments of the economy that we're big beneficiaries 131 00:07:33,200 --> 00:07:37,960 Speaker 1: of the lockdown phase, those are in recession territory. That's 132 00:07:38,000 --> 00:07:42,080 Speaker 1: where we have been seeing not just disinflation but outright deflation. 133 00:07:42,200 --> 00:07:44,560 Speaker 1: But we've had the offsetting more recent strength on the 134 00:07:44,560 --> 00:07:47,480 Speaker 1: services side service as a larger employer. That's helped to 135 00:07:47,520 --> 00:07:51,600 Speaker 1: explain why the job market has been relatively healthy. The 136 00:07:51,720 --> 00:07:55,640 Speaker 1: real problem right now is that we still have the 137 00:07:56,000 --> 00:07:59,800 Speaker 1: sticky services inflation on the high side, well, we're starting 138 00:07:59,800 --> 00:08:04,400 Speaker 1: to lose the offset of deflation on some of the 139 00:08:04,400 --> 00:08:08,640 Speaker 1: goods categories. You saw tick back up and used car prices. 140 00:08:08,920 --> 00:08:11,440 Speaker 1: I think retailers have worked off a lot of the 141 00:08:11,480 --> 00:08:15,200 Speaker 1: inventory that was sort of extreme in its excess even 142 00:08:15,240 --> 00:08:18,880 Speaker 1: just a few months ago. And so what we may 143 00:08:18,920 --> 00:08:20,800 Speaker 1: see happening is, even if we start to see some 144 00:08:20,880 --> 00:08:23,560 Speaker 1: retreat on the services side, we're getting a little bit 145 00:08:23,560 --> 00:08:26,760 Speaker 1: of an uncomfortable lift again within the inflation data on 146 00:08:26,800 --> 00:08:29,640 Speaker 1: the good side. Not exactly what any of us and 147 00:08:29,720 --> 00:08:31,960 Speaker 1: certainly the FED wants to see, so greg pick up 148 00:08:32,000 --> 00:08:34,440 Speaker 1: on that, specifically the inflation data, because one of the 149 00:08:34,480 --> 00:08:36,720 Speaker 1: issues is the so called supercore that did I understand 150 00:08:36,880 --> 00:08:40,200 Speaker 1: is the core inflation less taking out the housing issue, 151 00:08:40,440 --> 00:08:42,520 Speaker 1: and that seems to not be going in a favorite 152 00:08:42,520 --> 00:08:44,000 Speaker 1: way for the Fed. Where does that tell a Fed 153 00:08:44,160 --> 00:08:46,640 Speaker 1: fifty basis points next time or just do twenty five 154 00:08:46,760 --> 00:08:50,960 Speaker 1: more often? Well, the Fed is kind of stuck here 155 00:08:51,400 --> 00:08:54,720 Speaker 1: or the near term. The markets now have changed pricing 156 00:08:54,760 --> 00:08:59,000 Speaker 1: pretty radically, where now after today it's a fifty percent 157 00:08:59,120 --> 00:09:01,760 Speaker 1: chance of the fit the basis point hype in March 158 00:09:02,160 --> 00:09:06,000 Speaker 1: March up until recently, it was barely twenty five, and 159 00:09:06,040 --> 00:09:08,480 Speaker 1: there were many market players who were suggesting that they're 160 00:09:08,520 --> 00:09:11,760 Speaker 1: already done and maybe the last twenty five. So the 161 00:09:11,800 --> 00:09:16,120 Speaker 1: inflation data have not really moved in their favor, but 162 00:09:16,280 --> 00:09:19,600 Speaker 1: the services is tied to the labor market, and I 163 00:09:19,640 --> 00:09:22,200 Speaker 1: think the trick that we have in terms of shaking 164 00:09:22,200 --> 00:09:25,440 Speaker 1: out inflation in this economy is that it's really hard 165 00:09:25,800 --> 00:09:31,000 Speaker 1: to shakeout services inflation when you have such strong labor markets. 166 00:09:31,480 --> 00:09:34,840 Speaker 1: And so we're at a record unemployment rate, and so 167 00:09:35,240 --> 00:09:38,120 Speaker 1: I think the Fed believes now that in order to 168 00:09:38,120 --> 00:09:41,440 Speaker 1: get inflation under control, they have to do more in 169 00:09:41,559 --> 00:09:45,640 Speaker 1: terms of weakening the labor market. Thanks so much for 170 00:09:45,720 --> 00:09:47,880 Speaker 1: Lazanna Sanders and Greg Peters. They were going to be 171 00:09:47,880 --> 00:09:49,839 Speaker 1: staying with us as we turned to what a full 172 00:09:49,920 --> 00:09:52,800 Speaker 1: year of war in Ukraine means for investors. That's next 173 00:09:52,800 --> 00:10:03,240 Speaker 1: on Wall Street Week on Bloomberg. This is Bloomberg Wall 174 00:10:03,320 --> 00:10:13,440 Speaker 1: Street Week with David Weston from Bloomberg Radio. Actually, the 175 00:10:13,480 --> 00:10:17,400 Speaker 1: market did cheer for Carter for about one hour Monday morning. 176 00:10:18,280 --> 00:10:21,040 Speaker 1: Then arrived the first of several indications that when it 177 00:10:21,080 --> 00:10:25,240 Speaker 1: came to the details of a comprehensive Mideast agreement, Menachem 178 00:10:25,320 --> 00:10:28,920 Speaker 1: begin and anwar Sadat might just possibly have been attending 179 00:10:29,080 --> 00:10:33,880 Speaker 1: two different summits. Investors got the jitters about the possibility 180 00:10:33,920 --> 00:10:36,760 Speaker 1: that it might all come on glued, and that provided 181 00:10:36,760 --> 00:10:40,600 Speaker 1: a perfect excuse to resume worrying about less cosmic matters 182 00:10:41,280 --> 00:10:45,080 Speaker 1: like whether an ambitious young investor could really find wealth 183 00:10:45,080 --> 00:10:49,280 Speaker 1: and happiness with the prime rate approaching ten percent. Oh, 184 00:10:49,440 --> 00:10:53,040 Speaker 1: fragile bird of peace? Where have you flown? That was 185 00:10:53,120 --> 00:10:55,439 Speaker 1: Lewis Rookheiser on Wall Street week back in September of 186 00:10:55,520 --> 00:10:58,800 Speaker 1: nineteen seventy eight, when then President Carter was working on 187 00:10:58,840 --> 00:11:00,840 Speaker 1: what seemed to be mirror holes in the Middle East 188 00:11:01,040 --> 00:11:03,480 Speaker 1: and the markets just seemed to be shrugging it all off. 189 00:11:03,760 --> 00:11:06,240 Speaker 1: The number one movie that week was Animal House with 190 00:11:06,320 --> 00:11:08,640 Speaker 1: John Belushi, and the number one song was Believe It 191 00:11:08,720 --> 00:11:11,840 Speaker 1: or Not Boogie Oogie Oogie by a Taste of Honey, 192 00:11:11,840 --> 00:11:13,959 Speaker 1: which I'm not going to try to sing. Still with 193 00:11:14,040 --> 00:11:16,920 Speaker 1: us are Lizian Saunders of Charles Schwab and Greg Peters 194 00:11:16,960 --> 00:11:19,000 Speaker 1: of PGM. So Greg, I want to ask you to 195 00:11:19,000 --> 00:11:20,679 Speaker 1: sing it either, but give us a sense from an 196 00:11:20,679 --> 00:11:22,920 Speaker 1: investor's point of view, a bond investor in particular, given 197 00:11:22,960 --> 00:11:25,079 Speaker 1: what you and Lisian have been talking about in the markets, 198 00:11:25,160 --> 00:11:28,880 Speaker 1: what does a bond investor to do right now? I 199 00:11:28,960 --> 00:11:31,440 Speaker 1: think they sit and wait. We've had a pretty big 200 00:11:31,520 --> 00:11:35,559 Speaker 1: move in risk assets. I still believe there's some repricing 201 00:11:35,880 --> 00:11:37,920 Speaker 1: in the bond market. If you look at the shape 202 00:11:37,960 --> 00:11:40,079 Speaker 1: of the curve, you know it has to be reconciled 203 00:11:40,120 --> 00:11:42,920 Speaker 1: within the bond market too. So if we do hit 204 00:11:42,920 --> 00:11:46,079 Speaker 1: a soft planning, then the inverted yield curve can't be 205 00:11:46,160 --> 00:11:49,880 Speaker 1: at its extreme level that we see today, and then 206 00:11:50,080 --> 00:11:54,439 Speaker 1: vice versa. If re enter a recession, then it's more reaffirmed. 207 00:11:54,480 --> 00:11:58,160 Speaker 1: But I think the pressure for yields or the near 208 00:11:58,280 --> 00:12:01,400 Speaker 1: term is higher, not lower. At the same time, though, 209 00:12:01,480 --> 00:12:04,960 Speaker 1: once yields get above four percent all of sequal, we 210 00:12:05,040 --> 00:12:08,000 Speaker 1: get a lot more excited around investing in the sovereign 211 00:12:08,000 --> 00:12:10,960 Speaker 1: bond market here in the US. So Lesander, what about 212 00:12:11,080 --> 00:12:14,320 Speaker 1: suck picker? What should they do well? One of the 213 00:12:14,360 --> 00:12:16,959 Speaker 1: things we were saying during the sort of hard or 214 00:12:17,120 --> 00:12:19,480 Speaker 1: maybe I should say heat of the January rally was 215 00:12:19,559 --> 00:12:26,760 Speaker 1: to fade the low quality, high beta, nonprofitable, heavily shorted 216 00:12:27,240 --> 00:12:31,080 Speaker 1: trades that had kicked back in and lean more into 217 00:12:31,200 --> 00:12:34,600 Speaker 1: quality factors. I think when you take a factor based approach, 218 00:12:34,720 --> 00:12:38,560 Speaker 1: essentially investing based on characteristics, one of the things investors 219 00:12:38,600 --> 00:12:42,280 Speaker 1: should do is focus on factors that represent things that 220 00:12:42,320 --> 00:12:45,400 Speaker 1: are dear from a macro perspective. So we're in a 221 00:12:45,559 --> 00:12:50,400 Speaker 1: declining earnings revision, declining forward earnings estimate environment, So look 222 00:12:50,440 --> 00:12:53,760 Speaker 1: for companies with positive earnings revisions. Positive earning surprises were 223 00:12:53,760 --> 00:12:57,520 Speaker 1: obviously in a rising interest rate environment. Look for strength 224 00:12:57,520 --> 00:13:01,200 Speaker 1: of balance sheet with high cash levels debt, companies with 225 00:13:01,559 --> 00:13:06,560 Speaker 1: pricing power in a more constrained demand environment. So kind 226 00:13:06,559 --> 00:13:11,160 Speaker 1: of lean into up quality and fade the down quality 227 00:13:11,200 --> 00:13:15,960 Speaker 1: that I think was disconnected from the fundamentals at a 228 00:13:16,000 --> 00:13:19,040 Speaker 1: more macro level, and we have already started to see 229 00:13:19,040 --> 00:13:21,360 Speaker 1: a reversal theres and one last one to you from 230 00:13:21,400 --> 00:13:23,480 Speaker 1: your point of view, are we looking at a new 231 00:13:23,520 --> 00:13:26,079 Speaker 1: world of higher prices and not just because of energy 232 00:13:26,080 --> 00:13:28,600 Speaker 1: and the disruption of energy because of Ukraine, but also 233 00:13:28,720 --> 00:13:31,160 Speaker 1: some of the disruption or changed at least in globalization, 234 00:13:31,440 --> 00:13:35,959 Speaker 1: in labor markets. I think we're in now secular environment 235 00:13:36,000 --> 00:13:41,040 Speaker 1: of more volatility in inflation, in commodity prices, in geopolitics. 236 00:13:41,720 --> 00:13:43,760 Speaker 1: And I think that you know, the error of the 237 00:13:43,760 --> 00:13:46,280 Speaker 1: Great Moderation I think is definitively over. That was the 238 00:13:46,400 --> 00:13:50,720 Speaker 1: era of abundant access to cheap goods, cheap energy, cheap labor, 239 00:13:50,920 --> 00:13:55,000 Speaker 1: and that those ships have sailed, and in particular demographics, 240 00:13:55,040 --> 00:13:58,640 Speaker 1: I think is reshaping this next secular phase here, and 241 00:13:58,679 --> 00:14:00,600 Speaker 1: it's just not going to look like to twenty years 242 00:14:00,640 --> 00:14:04,880 Speaker 1: pre pandemic. Do you agree with that, Greg? I do. Indeed, 243 00:14:04,920 --> 00:14:08,400 Speaker 1: that's just one of the many secular shifts, so I 244 00:14:08,520 --> 00:14:11,480 Speaker 1: definitely agree with that thematic. Okay, thank you both very 245 00:14:11,520 --> 00:14:13,319 Speaker 1: much for being back with us. Next time, I promise 246 00:14:13,360 --> 00:14:17,599 Speaker 1: we'll do bogie together. Many thanks to Lizian Sanders of 247 00:14:17,679 --> 00:14:21,280 Speaker 1: Charles Schwab and Greg Peters of PJIM. The promise of 248 00:14:21,320 --> 00:14:24,720 Speaker 1: digital transformation of finance has excited investors for years now, 249 00:14:24,960 --> 00:14:29,440 Speaker 1: with particular attention given recently to blockchain technology, cryptocurrencies, and yes, 250 00:14:29,560 --> 00:14:33,160 Speaker 1: the prospects of regulation. Bob Diamond's Atlas Merchant Capital has 251 00:14:33,200 --> 00:14:36,320 Speaker 1: been an early adopter and investor and were welcoming back 252 00:14:36,360 --> 00:14:38,080 Speaker 1: now to Wall Street. Were great to have you here, Bob, 253 00:14:38,120 --> 00:14:40,320 Speaker 1: Thank you for joining us, bring us up to speed 254 00:14:40,360 --> 00:14:42,880 Speaker 1: on where we are on blockchain, on digital finance. Where 255 00:14:42,880 --> 00:14:44,920 Speaker 1: we are because there have been some bumps along the road, 256 00:14:45,040 --> 00:14:47,120 Speaker 1: I mean, there have been some scandals, a roads, some 257 00:14:47,120 --> 00:14:49,360 Speaker 1: people have lost some money. Is it slowing things down? 258 00:14:50,080 --> 00:14:53,240 Speaker 1: Not really? I mean I think in many ways FTX 259 00:14:53,360 --> 00:14:55,720 Speaker 1: and many of the other issues that we've had to 260 00:14:55,760 --> 00:14:59,000 Speaker 1: deal with over the last year have definitely had an impact. 261 00:15:00,080 --> 00:15:03,240 Speaker 1: And you know, crypto is a very broad term, but 262 00:15:03,320 --> 00:15:06,400 Speaker 1: I think of the space really is more around technology. 263 00:15:07,240 --> 00:15:09,240 Speaker 1: There's no doubt in my mind that we're going to 264 00:15:09,320 --> 00:15:11,680 Speaker 1: have a digital version of the US dollar. It just 265 00:15:11,800 --> 00:15:14,920 Speaker 1: makes sense. There's no doubt in my mind that blockchain 266 00:15:15,560 --> 00:15:18,680 Speaker 1: technology will continue to be implemented in most of the 267 00:15:18,680 --> 00:15:23,680 Speaker 1: big financial institutions. It just it makes things faster, it 268 00:15:23,720 --> 00:15:27,440 Speaker 1: makes them cheaper, and in this day and age, having 269 00:15:27,440 --> 00:15:31,480 Speaker 1: a digital version of the US dollar or most major 270 00:15:31,600 --> 00:15:35,680 Speaker 1: fiat currencies just makes total sense. As an investor in these, 271 00:15:35,760 --> 00:15:38,200 Speaker 1: I'm curious how much of that is consumer facing and 272 00:15:38,200 --> 00:15:40,280 Speaker 1: how much of that is as it we're in the plumbing. 273 00:15:40,800 --> 00:15:43,080 Speaker 1: You can have the banks use a blockchain for their 274 00:15:43,120 --> 00:15:45,680 Speaker 1: transactions and things. You have the FED do that. That's 275 00:15:45,720 --> 00:15:47,880 Speaker 1: different from selling it to the public. Well, as you know, 276 00:15:47,920 --> 00:15:50,240 Speaker 1: we've been an early investor in Circle, which is US 277 00:15:50,280 --> 00:15:54,000 Speaker 1: digital coin, and that's very much business to business. It's 278 00:15:54,040 --> 00:15:58,200 Speaker 1: about the large institutional payments which traditionally you know, have 279 00:15:58,280 --> 00:16:00,600 Speaker 1: gone from bank to bank and you and I've waited 280 00:16:00,640 --> 00:16:04,280 Speaker 1: two or three days to have those types of transactions 281 00:16:04,760 --> 00:16:09,680 Speaker 1: take place, with blockchain, with the Internet, with digital currency 282 00:16:11,000 --> 00:16:14,800 Speaker 1: using USDC, these things can be done anytime twenty four 283 00:16:14,840 --> 00:16:18,960 Speaker 1: to seven, instantaneously and without an intermediary. And I think 284 00:16:19,760 --> 00:16:24,040 Speaker 1: the dramatic impact this will have on kind of the 285 00:16:24,120 --> 00:16:27,760 Speaker 1: treasury functions of corporates and financial institutions and around the 286 00:16:27,800 --> 00:16:31,000 Speaker 1: world over the next five to ten years will be significant. 287 00:16:31,000 --> 00:16:33,960 Speaker 1: And I think to me, the positive of everything that 288 00:16:33,960 --> 00:16:37,360 Speaker 1: went on with FTX, for example, is that people now 289 00:16:37,440 --> 00:16:42,880 Speaker 1: understand the difference between offshore and onshore, and Circle, which 290 00:16:42,920 --> 00:16:48,560 Speaker 1: again is US digital coin operates within the US regulatory perimeter, 291 00:16:49,800 --> 00:16:55,479 Speaker 1: really really embraces regulation. Any sound business. Once sound regulation 292 00:16:56,680 --> 00:17:01,359 Speaker 1: is very very transparent about what the portfolio is the USDC, 293 00:17:01,640 --> 00:17:04,960 Speaker 1: which is cash in short term treasury bills, where a 294 00:17:05,000 --> 00:17:07,879 Speaker 1: dollar is a dollar is a dollar. And I think, David, 295 00:17:07,920 --> 00:17:12,040 Speaker 1: at the end of the day, is it best for 296 00:17:12,119 --> 00:17:15,080 Speaker 1: our government for the Federal Reserve to be developing the 297 00:17:15,119 --> 00:17:19,119 Speaker 1: digital currency or the private sector people like Circle to 298 00:17:19,200 --> 00:17:21,879 Speaker 1: develop it and then have it properly regulated. And I 299 00:17:21,880 --> 00:17:26,480 Speaker 1: think that's the way most technical innovations, whether it's the 300 00:17:26,560 --> 00:17:30,320 Speaker 1: fedwire or the Swift payment system have come about. So 301 00:17:30,400 --> 00:17:33,320 Speaker 1: from your perspective, which is a terribly valuable one. Is 302 00:17:33,320 --> 00:17:35,159 Speaker 1: it best to leave the regulation right where is right 303 00:17:35,200 --> 00:17:38,000 Speaker 1: now because it works basically for people like you and 304 00:17:38,080 --> 00:17:40,840 Speaker 1: your companies, it works fine. Or are there things that 305 00:17:40,960 --> 00:17:43,760 Speaker 1: could be regulated actually help you do ad buchereship business 306 00:17:44,359 --> 00:17:46,679 Speaker 1: or is there some other way of doing this? What 307 00:17:46,680 --> 00:17:48,119 Speaker 1: do you think is the right way to go for 308 00:17:48,160 --> 00:17:50,240 Speaker 1: the US government? So I think there's a couple of 309 00:17:50,240 --> 00:17:54,520 Speaker 1: buckets here. I think number one, operating on shore within 310 00:17:54,560 --> 00:17:58,120 Speaker 1: the US regulatory permital is critical, and I think that 311 00:17:58,119 --> 00:18:01,600 Speaker 1: that was written large during f TX when people realize 312 00:18:01,640 --> 00:18:03,760 Speaker 1: what was going on on the Bahamas outside of the 313 00:18:03,840 --> 00:18:07,760 Speaker 1: US regulatory perimeter. Since then, the market share of USDC 314 00:18:08,040 --> 00:18:12,120 Speaker 1: which is within that perimeter is dramatically improved relative to TETHER, 315 00:18:12,520 --> 00:18:15,679 Speaker 1: which is offshore somewhat murky in terms of what's in 316 00:18:15,720 --> 00:18:19,280 Speaker 1: that portfolio. So we're seeing the impact already. The next 317 00:18:19,280 --> 00:18:22,240 Speaker 1: step in this is who is the regulator? So right 318 00:18:22,240 --> 00:18:26,199 Speaker 1: now the states are regulating payments and will it be 319 00:18:26,240 --> 00:18:28,439 Speaker 1: the FED, will it be the SEC, And what's the 320 00:18:28,480 --> 00:18:31,400 Speaker 1: next step for the federal government in terms of assigning 321 00:18:31,440 --> 00:18:37,840 Speaker 1: regulatory responsibility. We embrace getting those decisions made in going 322 00:18:37,880 --> 00:18:45,159 Speaker 1: forward with frankly, a more transparent, more regulated environment. Proper regulation, 323 00:18:45,440 --> 00:18:49,440 Speaker 1: good regulation. Strong regulation is what good, strong companies want, 324 00:18:49,480 --> 00:18:50,840 Speaker 1: and I think it will help us get to the 325 00:18:50,840 --> 00:18:53,440 Speaker 1: next step in digital currencies. Thank you so much, Bob. 326 00:18:53,440 --> 00:18:55,400 Speaker 1: It's always great to have you here on Wall Street Week. 327 00:18:55,560 --> 00:18:58,040 Speaker 1: That's Bob Diamond. He is the founder and CEO of 328 00:18:58,080 --> 00:19:01,280 Speaker 1: Atlas Merichard Capital, who is very vested, as you can tell, 329 00:19:01,560 --> 00:19:05,640 Speaker 1: in digital finance. Coming up, we'll wrap up the week 330 00:19:05,680 --> 00:19:08,520 Speaker 1: with our special contributor Larry Summers of Harvard. That's next 331 00:19:08,520 --> 00:19:15,080 Speaker 1: down Wall Street Week on Bloomberg. This is Bloomberg Wall 332 00:19:15,200 --> 00:19:25,520 Speaker 1: Street Week with David Weston from Bloomberg Radio. This is 333 00:19:25,560 --> 00:19:28,119 Speaker 1: Wall Street Week. I'm David Weston. We're welcome once again 334 00:19:28,160 --> 00:19:31,280 Speaker 1: our special contributor Larry Summers of Harvard. So Larry, great 335 00:19:31,280 --> 00:19:34,040 Speaker 1: to have you as always. Let's start with those FED minutes. 336 00:19:34,080 --> 00:19:35,880 Speaker 1: We were all waiting for them. They came out. I'm 337 00:19:35,920 --> 00:19:37,920 Speaker 1: not sure they indicated the FED is heading in any 338 00:19:37,960 --> 00:19:42,120 Speaker 1: different direction than what you've been saying. Those minutes were 339 00:19:42,160 --> 00:19:46,679 Speaker 1: superseded by history in terms of the strong CPI print, 340 00:19:46,800 --> 00:19:52,840 Speaker 1: the incredible job market creation, and the retail sales. So 341 00:19:52,880 --> 00:19:58,879 Speaker 1: I don't think there was anything much informative in them. Look, 342 00:19:58,920 --> 00:20:03,399 Speaker 1: I think we've got an extremely difficult economy to read. 343 00:20:04,000 --> 00:20:06,160 Speaker 1: On the one hand, we got a set of very 344 00:20:06,240 --> 00:20:10,240 Speaker 1: very strong statistics. I think the data are coming in 345 00:20:10,240 --> 00:20:14,840 Speaker 1: in a way that confirms the view that I have 346 00:20:14,960 --> 00:20:18,760 Speaker 1: had for a long time that inflation does not get 347 00:20:18,760 --> 00:20:26,960 Speaker 1: back to two percent without a meaningful slowdown in economic activity. Yes, 348 00:20:27,119 --> 00:20:31,840 Speaker 1: inflation may, over some intervals come down, but that's really 349 00:20:31,920 --> 00:20:37,439 Speaker 1: mean reversion from the transitory increases that took place. But 350 00:20:37,600 --> 00:20:41,920 Speaker 1: that's not enough to bring us to enduring two percent. 351 00:20:42,680 --> 00:20:47,119 Speaker 1: The other big uncertainty that we have is that while 352 00:20:47,560 --> 00:20:52,480 Speaker 1: so called coincident indicators, things that move right along with 353 00:20:52,560 --> 00:20:57,280 Speaker 1: the economy look very strong, they're a variety of leading 354 00:20:57,320 --> 00:21:02,080 Speaker 1: indicators that are more troubling. Inventories look to be building 355 00:21:02,160 --> 00:21:07,160 Speaker 1: up relative to sales firms or reporting concerns about their 356 00:21:07,400 --> 00:21:11,760 Speaker 1: order books. It looks like the business sector has a 357 00:21:11,840 --> 00:21:15,040 Speaker 1: lot of people on hand for the level of output 358 00:21:15,320 --> 00:21:21,760 Speaker 1: their producing, and consumer savings are being depleted with a 359 00:21:21,880 --> 00:21:26,720 Speaker 1: low savings rate, and who knows where the market's going 360 00:21:26,880 --> 00:21:29,920 Speaker 1: to go next. Laura lets you and they asked the 361 00:21:30,040 --> 00:21:32,960 Speaker 1: scary question at a time when you and others were 362 00:21:32,960 --> 00:21:35,639 Speaker 1: concerned about inflation, and jap I was saying, don't worry. 363 00:21:35,680 --> 00:21:38,240 Speaker 1: If it happens, we have the tools to deal with it. 364 00:21:38,280 --> 00:21:40,760 Speaker 1: Is it possible the FED does not have the tools 365 00:21:40,800 --> 00:21:43,080 Speaker 1: it needs to really get inflation out of control given 366 00:21:43,119 --> 00:21:47,439 Speaker 1: the circumstances right now. Look, you can always stop the 367 00:21:47,480 --> 00:21:52,080 Speaker 1: car by hitting the brakes hard enough, but that doesn't 368 00:21:52,119 --> 00:21:55,760 Speaker 1: mean you can stop the car without the car skidding 369 00:21:55,800 --> 00:22:01,080 Speaker 1: and sliding and hitting things. And so, Yeah, the FED 370 00:22:01,200 --> 00:22:07,640 Speaker 1: can stop inflation. But whether it can stop inflation with 371 00:22:07,760 --> 00:22:13,080 Speaker 1: a soft landing without impacts on economic activity, that's been 372 00:22:13,320 --> 00:22:19,080 Speaker 1: very much in doubt from the beginning here since we 373 00:22:19,200 --> 00:22:23,960 Speaker 1: set off this inflation, and my own senses that it 374 00:22:24,040 --> 00:22:29,480 Speaker 1: continues to be very much in doubt. And as the 375 00:22:30,040 --> 00:22:35,520 Speaker 1: figures have come in, and particularly the figures on non 376 00:22:35,600 --> 00:22:41,280 Speaker 1: housing services look to be running way above target level, 377 00:22:41,920 --> 00:22:46,879 Speaker 1: I think the chances of a soft landing, which look 378 00:22:46,920 --> 00:22:52,240 Speaker 1: to be getting better, are now receding a bit. What 379 00:22:52,400 --> 00:22:56,480 Speaker 1: the timing will be that is hard to know. But 380 00:22:57,080 --> 00:23:01,760 Speaker 1: we don't have historical examples when unemployment gets below for 381 00:23:02,080 --> 00:23:07,200 Speaker 1: and inflation gets above for of getting through the situation 382 00:23:07,320 --> 00:23:11,920 Speaker 1: without having a recession at some point. And I think 383 00:23:11,960 --> 00:23:16,440 Speaker 1: that's a powerful historical truths, and I think it's one 384 00:23:16,520 --> 00:23:22,480 Speaker 1: that's relevant to our current situation. Larry, this week, as 385 00:23:22,480 --> 00:23:25,879 Speaker 1: you know, marks one year now since the beginning of 386 00:23:25,920 --> 00:23:29,880 Speaker 1: the war in Ukraine when Russia invaded. Obviously, there's been 387 00:23:30,040 --> 00:23:33,760 Speaker 1: a horrific costs in terms of lives and also include 388 00:23:33,800 --> 00:23:36,120 Speaker 1: the currents of the damage done to the Ukraine economy. 389 00:23:36,280 --> 00:23:39,760 Speaker 1: But what about globally, what have been the global economic effects? 390 00:23:39,760 --> 00:23:45,439 Speaker 1: From your perspective of this conflict, it's been devastating for 391 00:23:46,480 --> 00:23:51,679 Speaker 1: poor people in poor countries around the world that have 392 00:23:51,800 --> 00:23:56,560 Speaker 1: had to deal with food price hikes of a very 393 00:23:56,560 --> 00:24:02,080 Speaker 1: substantial scale, that have had to deal for some UH 394 00:24:02,640 --> 00:24:15,159 Speaker 1: interval with higher energy prices. It's accelerated the concerns about 395 00:24:15,240 --> 00:24:21,240 Speaker 1: the fracturing of the global economy, and that will, ultimately, 396 00:24:21,960 --> 00:24:26,119 Speaker 1: whatever its impacts on us, I think, have some substantially 397 00:24:26,160 --> 00:24:32,840 Speaker 1: adverse impacts for four countries where historically exports have been 398 00:24:33,320 --> 00:24:39,919 Speaker 1: a major route to economic growth. Look, I think the 399 00:24:39,960 --> 00:24:44,879 Speaker 1: world's gonna have to step up in UH the international 400 00:24:44,920 --> 00:24:50,640 Speaker 1: economic area. We're gonna have to spend a lot ultimately 401 00:24:50,800 --> 00:24:59,160 Speaker 1: supporting the Ukrainian economy and reconstructing the Ukrainian economy. We've 402 00:24:59,160 --> 00:25:03,359 Speaker 1: got substanti initial increases for that reason and for others 403 00:25:03,400 --> 00:25:09,080 Speaker 1: of refugees. But that doesn't make the question of climate, 404 00:25:09,200 --> 00:25:14,880 Speaker 1: that doesn't make question of preventing the next pandemic, that 405 00:25:14,920 --> 00:25:20,720 Speaker 1: doesn't make the question of poverty, That doesn't make what's 406 00:25:20,760 --> 00:25:26,120 Speaker 1: happening in the Sahel any less urgent. And so this 407 00:25:26,200 --> 00:25:28,600 Speaker 1: is a time when we're going to need a lot 408 00:25:28,640 --> 00:25:34,040 Speaker 1: of imagination, a lot of energy from global policymakers. Well, 409 00:25:34,080 --> 00:25:35,840 Speaker 1: when you talk about the world stepping up, one of 410 00:25:35,880 --> 00:25:38,160 Speaker 1: the institutions we traditional to look to is the World Bank. 411 00:25:38,200 --> 00:25:40,920 Speaker 1: We receive a word on Friday the prison Biden will 412 00:25:40,960 --> 00:25:46,280 Speaker 1: nominate J Bonga, He's the former MasterCard CEO to the position. 413 00:25:46,520 --> 00:25:48,560 Speaker 1: What do you think about that? I guess as important 414 00:25:48,680 --> 00:25:51,320 Speaker 1: what stands stands in front of mister Bonga if in 415 00:25:51,320 --> 00:25:53,960 Speaker 1: fact he becomes the head of the World Bank. I J. 416 00:25:54,200 --> 00:25:59,680 Speaker 1: Bonga was seen as a visionary and highly highly successful 417 00:26:00,840 --> 00:26:11,280 Speaker 1: leader of MasterCard, which was unique or substantial in its 418 00:26:11,520 --> 00:26:17,480 Speaker 1: global vision and in its commitment to inclusion of a 419 00:26:17,600 --> 00:26:24,800 Speaker 1: very very wide range of people in financial services. Of course, 420 00:26:24,800 --> 00:26:28,960 Speaker 1: the World Bank is a very different kind of institution 421 00:26:29,680 --> 00:26:38,240 Speaker 1: than any other bank, having global development as as its 422 00:26:37,840 --> 00:26:45,719 Speaker 1: UH Central Mission, and it's gonna need a transformation of 423 00:26:45,760 --> 00:26:51,119 Speaker 1: a kind it has not seen probably since uh Robert 424 00:26:51,160 --> 00:26:56,600 Speaker 1: mcdamara was its leader more than fourteen years ago. So 425 00:26:56,880 --> 00:27:01,800 Speaker 1: I think that a Jay Banga has a huge opportunity 426 00:27:01,920 --> 00:27:08,000 Speaker 1: ahead of him to bring about transformation. But in a 427 00:27:08,160 --> 00:27:17,280 Speaker 1: world where his shareholders have really serious political challenges at home, 428 00:27:17,840 --> 00:27:20,760 Speaker 1: it is not going to be easy. And finally, Larry Yea, 429 00:27:20,880 --> 00:27:24,400 Speaker 1: let's come revisit Israel, something you raised on this program earlier. 430 00:27:24,600 --> 00:27:27,560 Speaker 1: You saw I had some possible risks, not just for 431 00:27:27,800 --> 00:27:31,360 Speaker 1: the politics in Israel of b Bing and Yajo's aggressive 432 00:27:31,400 --> 00:27:33,800 Speaker 1: pursuit of reform of the judiciary, but also some possible 433 00:27:33,840 --> 00:27:36,760 Speaker 1: effects to the economytunly the tech sector. We're now seeing 434 00:27:36,760 --> 00:27:38,960 Speaker 1: an even with respective the shekel. What is it going 435 00:27:39,000 --> 00:27:41,680 Speaker 1: on in Israel now? From your perspective? Is it getting better? 436 00:27:41,760 --> 00:27:44,840 Speaker 1: Is it getting worse? Where is it? I'm very concerned 437 00:27:45,640 --> 00:27:53,399 Speaker 1: the first reading of the judicial reform passed through the 438 00:27:53,520 --> 00:28:03,240 Speaker 1: CADACID that was very troubling legislation. Not because ultimately judicial 439 00:28:03,320 --> 00:28:09,920 Speaker 1: reform is important in Israel in my view, but that 440 00:28:10,640 --> 00:28:16,240 Speaker 1: particular set of judicial reforms driven through by a narrow 441 00:28:16,280 --> 00:28:22,760 Speaker 1: majority in a hurry at a fragile political moment, will 442 00:28:22,880 --> 00:28:29,840 Speaker 1: raise profound questions for the owners and deployers of capital, 443 00:28:30,440 --> 00:28:34,320 Speaker 1: both in Israel and around the world. And I think 444 00:28:34,359 --> 00:28:40,600 Speaker 1: it is a matter of very substantial economic importance for 445 00:28:40,760 --> 00:28:46,840 Speaker 1: the remarkable economic story that Israel has been that we 446 00:28:47,000 --> 00:28:54,120 Speaker 1: move from a phase of driven legislation to a phase 447 00:28:54,520 --> 00:29:04,120 Speaker 1: of compromise and deliberations. Judicial reform moves forward. Okay, Larry, 448 00:29:04,160 --> 00:29:05,960 Speaker 1: thank you so very much for being here. That's Larry 449 00:29:05,960 --> 00:29:08,280 Speaker 1: Summers of Harvard are a very special contributor here on 450 00:29:08,440 --> 00:29:14,120 Speaker 1: Wall Street Week. Coming up, forget the NFL, the big banks, 451 00:29:14,160 --> 00:29:17,600 Speaker 1: go for the real money in sports, English football clubs. 452 00:29:18,040 --> 00:29:25,480 Speaker 1: That's next on Wall Street Week on Bloomberg. This is 453 00:29:25,560 --> 00:29:34,000 Speaker 1: Bloomberg Wall Street Week with David Weston from Bloomberg Radio. Finally, 454 00:29:34,160 --> 00:29:37,120 Speaker 1: one more thought. You can't keep a good bank down. 455 00:29:37,720 --> 00:29:40,200 Speaker 1: Major US banks have had their ups and downs in 456 00:29:40,240 --> 00:29:43,320 Speaker 1: recent years, from the near disaster of the Great Financial 457 00:29:43,320 --> 00:29:45,760 Speaker 1: Crisis at Morgan Stanley when we were having a hard 458 00:29:45,760 --> 00:29:48,440 Speaker 1: time a small responsibility, I'll take that to the major 459 00:29:48,480 --> 00:29:51,480 Speaker 1: bank revival in the wake of the pandemic. We're back 460 00:29:51,480 --> 00:29:54,240 Speaker 1: in the activity levels and what goes on day to 461 00:29:54,320 --> 00:29:57,400 Speaker 1: day is bigger than it was before the pandemic. Recently, 462 00:29:57,480 --> 00:30:00,479 Speaker 1: things have been getting a bit tougher again for the banks. 463 00:30:00,640 --> 00:30:05,000 Speaker 1: With trading down. You are watching Goldman Sacks come down 464 00:30:05,040 --> 00:30:08,560 Speaker 1: to earth quite a bit, provisions for credit card losses rising, 465 00:30:08,840 --> 00:30:13,080 Speaker 1: and concerns over an economic downturn. But American consumers eventually 466 00:30:13,120 --> 00:30:15,560 Speaker 1: the excess money they have is running out. That will 467 00:30:15,600 --> 00:30:18,600 Speaker 1: probably happen sometime midyear next year, all of which has 468 00:30:18,640 --> 00:30:21,240 Speaker 1: led the banks to start trimming their sales through job 469 00:30:21,280 --> 00:30:24,840 Speaker 1: cuts and reduced compensation. The Bank of America is now 470 00:30:24,960 --> 00:30:28,040 Speaker 1: joining the ranks of many of its peers in considering 471 00:30:28,160 --> 00:30:31,120 Speaker 1: job cuts. But now the major US banks have found 472 00:30:31,160 --> 00:30:34,080 Speaker 1: a new land of plenty across the Atlantic Ocean in 473 00:30:34,120 --> 00:30:37,480 Speaker 1: the high flying world of European football. Please don't call 474 00:30:37,480 --> 00:30:41,719 Speaker 1: it soccer. I own my own socket. See you just 475 00:30:41,720 --> 00:30:44,480 Speaker 1: said the word soccer, did not, as the big banks 476 00:30:44,480 --> 00:30:48,000 Speaker 1: step up big time to help fund astronomical prices for 477 00:30:48,000 --> 00:30:52,440 Speaker 1: football clubs the Premier League's with English Premier Leagues Chelsea 478 00:30:52,520 --> 00:30:55,600 Speaker 1: setting a world record for a sports franchise five point 479 00:30:55,600 --> 00:30:59,120 Speaker 1: two billion dollars in a deal banked by Goldman, Sachs 480 00:30:59,280 --> 00:31:03,440 Speaker 1: and Deutsche Bank to Chelsea, not to be outdone. Arguably 481 00:31:03,440 --> 00:31:06,560 Speaker 1: the most successful of the English clubs, Manchester United is 482 00:31:06,640 --> 00:31:09,400 Speaker 1: up for bids which you're expected to shatter the Chelsea 483 00:31:09,520 --> 00:31:14,320 Speaker 1: record and quite possibly top eight billion dollars. Ferrymond Bastow 484 00:31:14,520 --> 00:31:17,160 Speaker 1: was trading it around four billion in terms of market cap, 485 00:31:17,240 --> 00:31:19,560 Speaker 1: so it would be a fifty percent premium. The bids 486 00:31:19,600 --> 00:31:21,400 Speaker 1: came in at the end of last week, with a 487 00:31:21,480 --> 00:31:25,320 Speaker 1: Qataris consortium relying on Bank of America and rival bidder 488 00:31:25,320 --> 00:31:29,400 Speaker 1: British billionaire Jim Ratcliffe turning to Goldman Sachs. Welcome to 489 00:31:30,960 --> 00:31:34,080 Speaker 1: and if that is enough, Liverpool FC is waiting in 490 00:31:34,120 --> 00:31:37,240 Speaker 1: the wings for a possible sale, working with Bys Goldman 491 00:31:37,320 --> 00:31:41,200 Speaker 1: Sachs and Morgan Stanley. Premier League TV revenues are so 492 00:31:41,360 --> 00:31:45,720 Speaker 1: much higher than anywhere else in the world, so when 493 00:31:45,720 --> 00:31:48,000 Speaker 1: we take a look at the big banks trading revenues, 494 00:31:48,160 --> 00:31:50,760 Speaker 1: maybe we should break out what they're making on trading 495 00:31:50,800 --> 00:31:54,000 Speaker 1: football clubs over in England. Though the stuffy banker of 496 00:31:54,120 --> 00:31:58,680 Speaker 1: yesterday might think it all just a bit silly. Sandy 497 00:31:58,760 --> 00:32:01,960 Speaker 1: Mandel had Way. That's it for this editional Wall Street week. 498 00:32:02,000 --> 00:32:04,720 Speaker 1: I'm David Weston. This is Bloomberg. See you next week.